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Senate Co-Sponsorship Memoranda
Senate of Pennsylvania
Session of 2025 - 2026
Regular Session
MEMORANDUM
| Posted: | January 13, 2025 03:16 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. Just yesterday, Prospect Medical Holdings (PMH), the for-profit private equity owner of Crozer Health filed for Chapter 11 bankruptcy. This disturbing and disruptive pattern of behavior by PMH will lead many of Delco’s 575,000 residents to lose access to health care. Prospect Medical Holdings conduct, and business dealings were so bad and so many lives were at risk that the Office of Attorney General, led by Attorney General Michelle Henry, filed a lawsuit in Delaware County Common Pleas Court against Prospect Medical Holdings to appoint a receiver to manage the two remaining hospitals in the Crozer Health System until a suitable buyer could be found. In the legal filing Attorney General Henry said that the suit was being filed due to PMH’s “years of mismanagement, corporate looting, and the neglect of the hospital system, it’s patients, and its staff.” We have worse news to share about this issue. This is not just a Delaware County issue and may be coming to your local hospital if we don’t pass legislation to stop it. Private equity firms employing leveraged buyout strategies have increasingly entered and grown in the healthcare sector, growing from 325 private equity deals in 2010 to over 1,400 in 2021 across the United States of America. We have seen private equity firms buy, ravage, squeeze every last dollar of profit and real estate assets from critical health care systems at Mercer County’s Sharon Regional Medical Center and Philadelphia County’s Hahnemann Hospital. This scourge of private equity health care has also infected and collapsed or brought to near collapse healthcare institutions in Rhode Island, Massachusetts, Connecticut, Iowa, California, and other states. 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 revenue, and then selling the hospital and health system real estate assets to another for-profit entity owned by the private equity firm. This leaves the hospital and health systems with major financial burdens, debts, and large rent payments to the for-profit real estate owner. To deal with this financial burden, the for-profit company running the hospital and health systems is cutting down healthcare and hospital services and cut staff to generate a short-term profit and sizeable dividend. 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. 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 Health, Sharon Regional, and Hahnemann examples show us that it does not provide high quality, accessible healthcare to Pennsylvania residents. 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. |
Memo Updated: January 13, 2025 03:19 PM