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Medical Properties Trust Inc.

Crozer Health May Get New Owner Under Preliminary Agreement with CHA Partners LLC

Strategic Insights

— 2 min read

Crozer Health, a financially beleaguered Delaware County health system, may soon have a new owner under a preliminary agreement announced Wednesday by Prospect Medical Holdings Inc. The tentative buyer is CHA Partners LLC, a New Jersey real estate company that specializes in buying hospital properties and redeveloping them into mixed-use medical facilities. This development comes after years of financial struggles and a long period of seeking a buyer. The agreement calls for CHA to work with Healthcare Preferred Partners, an affiliated company, on the management of Crozer and its conversion back into a nonprofit.

Key Takeaways:

  • Crozer Health may get a new owner under a preliminary agreement with CHA Partners LLC, a New Jersey real estate company.
  • The agreement was announced Wednesday by Prospect Medical Holdings Inc, which has controlled the financially beleaguered Delaware County health system for eight years.
  • CHA has a history of buying hospital properties and redeveloping them into mixed-use medical facilities, including the former Memorial Hospital of Salem County in New Jersey.
  • The plan calls for CHA to work with Healthcare Preferred Partners to manage Crozer and its conversion back into a nonprofit.
  • The sale requires regulatory approvals and is expected to take several months to complete.
  • Crozer's financial struggles began under Prospect's ownership, with admissions declining from 20,038 in 2018 to 13,684 in 2022, a sharp decline exacerbated by the COVID-19 pandemic.
  • Prospect borrowed $1.12 billion in 2018 to pay off debt and issued a $457 million dividend to its owners, further exacerbating the health system's financial woes.
  • The sale is a result of a preliminary agreement announced in January by the Pennsylvania Office of Attorney General, which laid out a timeline for Prospect to seek a nonprofit buyer for Crozer.
  • CHA plans to eventually sell Crozer to a nonprofit entity, similar to its previous experience with the former Memorial Hospital of Salem County in New Jersey.

Statistics:

  • 8 years: length of time Prospect Medical Holdings Inc. has controlled Crozer Health.
  • 2018: year Prospect borrowed $1.12 billion to pay off debt and issued a $457 million dividend to its owners.
  • 20,038: number of admissions at Crozer-Chester Medical Center in 2018.
  • 13,684: number of admissions at Crozer-Chester Medical Center in 2022.
  • $1.4 billion: amount Prospect sold most of its real estate to Medical Properties Trust Inc. (MPT) in 2019.
  • $35 million: annual rent Crozer Health was required to pay MPT for its properties.
  • $155 million: current value of Crozer's properties, according to MPT.

Sources:

  • "Byline: Harold Brubaker Aug. 7"
  • "The Philadelphia Inquirer at www.inquirer.com"
  • "Tribune Content Agency, LLC"

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