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06/17/2024 04:31 PM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20230&cosponId=40280
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Senate of Pennsylvania
Session of 2023 - 2024 Regular Session

MEMORANDUM

Posted: March 22, 2023 02:22 PM
From: Senator John I. Kane and Sen. Timothy P. Kearney, Sen. Anthony H. Williams, Sen. Amanda M. Cappelletti
To: All Senate members
Subject: For-Profit Healthcare Reform: Prohibit For-Profit Hospitals
 
Health care in Delaware County is under siege from for-profit operators. Crozer Health, Delaware County’s major hospital system, is on the brink of collapse. Many of Delco’s 575,000 residents will lose access to healthcare.

In fact, the stakes are extremely high and getting higher. In 2022, Crozer Health’s for-profit owner Prospect Medical Holdings closed Springfield Hospital and Delaware County Memorial Hospital despite promises to keep these hospitals open when they originally purchased them in 2016. Yet while other hospital systems are finding ways to deal with headwinds in the industry Prospect Medical Holdings  decided last week to increase the pain and anxiety on Delaware County residents by announcing the elimination of 215 jobs in Crozer Health System and reducing healthcare services.

Prospect Medical Holdings, the private equity firm that purchased Crozer Health has a history of acquiring hospitals, siphoning funds from the hospitals to generate substantial owner dividends, and then selling the hospital and health system real estate assets in sale-leaseback agreements to pay for extraction of wealth. This leaves the hospital and health systems with major financial burdens, debts, and large rent payments to the for-profit real estate owner. The cuts to services and staff are so dramatic, that hospitals and health systems find themselves underfunded, understaffed, and overwhelmed, eventually resulting in closure. In other words, this is all according to their plan.

This same situation played out several years ago when Hahnemann Hospital, which opened in 1852 was bought and driven into the ground by a private equity firm. Before the hospital closed, the for-profit entity sold the real estate assets to a for-profit entity that it controlled. It is unacceptable to allow the closure of hospitals when private companies rake in hundreds of millions from the closure, while leaving hundreds of thousands of Pennsylvanians without critical healthcare services. The legislation we plan to introduce is in direct response to the for-profit financial abuse of hospital and health systems thanks to one-sided private equity deals.
 
The bill we are introducing would prohibit for-profit entities from owning or managing hospitals in Pennsylvania. As it stands, there is very little oversight of this unsustainable business practice and worse, the Crozer-Prospect and Hahnemann examples show us that it does not provide high quality, accessible healthcare to Pennsylvania residents.
 
Last year, we introduced this bill as Senate Bill 1271. Co-sponsors included Senators Saval, Muth, and Costa.

Please join us in co-sponsoring this bill to allow for better management and organizational practices for hospital systems, lower healthcare costs for Pennsylvanians, accessible healthcare for constituents, and prevent hospitals in the Commonwealth from further closure due to deceptive, for-profit private equity ownership of hospitals and health care systems.
 
 



Introduced as SB546