Sen. Kane with Delco Senate and House Delegation Introduce New Bills to Reform Abusive For-Profit Hospital Deals

June 16, 2022

Delaware County – June 16, 2022 – Today, State Senator Tim Kearney (D-Chester/Delaware) was joined by Senator John Kane, Senator Anthony Williams, Representative Gina H. Curry, Representative Leanne Krueger, Representative Jennifer O’Mara, and Representative Mike Zabel, to discuss new legislation that will prevent financial looting of Pennsylvania hospital systems by private-equity and for-profit companies. The package of bills was created in response to decisions made by Prospect Medical Holdings – the parent company of Crozer Health- to close numerous departments, cut healthcare staff, and discontinue services within several Delaware County hospitals.

“What’s happening with Crozer Health is a tragedy and underscores the need for legislators to work to protect our local healthcare systems from manipulative and predatory private-equity practices in the future,” said Senator Kearney. “We want to give the state more oversight over these transactions and create other policies that deter these bad actors from looting our healthcare systems and then running once the resources vanish. If private equity in healthcare prioritizes investors and protects their assets, then this legislative delegation will work equally as hard to protect our constituents, and the integrity of our health care systems.”

Prospect Medical Holdings and its former majority owner Leonard Green & Partners have a history of abusing healthcare systems to maximize profits for executives and investors and then disregarding the well-being and on-going quality care of patients. Crozer’s financial collapse could have been avoided had there been state protections against irresponsible debt recapitalizations and other financial actions taken by the system’s owners.

“Each time they strike these kinds of deals and real estate splits, they know the end of their scheme will leave communities without access to quality healthcare,” said State Senator Anthony Williams. “We saw this happen with Hahnemann and now we’re seeing it happen with Crozer, by a company that has a history of these despicable actions. At this point, it’s clear Leonard Green & Partners is operating from a playbook that puts profit over people. This legislation will put a stop to that and let any private equity company know people over profit is the only option in Pennsylvania.”

“As a former labor union leader, I know how important it is to keep these essential jobs secure and without the worry of being fired due to corporate greed,” said Senator Kane. “As cancer survivor I have experienced firsthand what a high functioning hospital does to ensure the health and protection of a community. There’s no place for private-equity firms in Pennsylvania and we’re going to make it very painful for them to just bleed us dry and walk away.”

Six Senate bills will be included in the package introduced today. The bills will address:

SB 1270 – For-profit hospital purchase moratorium
SB 1271 – Prohibition of new for-profit hospitals
SB 1272 – State oversight of health system change in ownership
SB 1273 – Minimum severance package for mass layoffs
SB 1274 – Prevention of exploitive real estate splits
SB 1275 – Moratorium of dividends after health system acquisitions

“A healthcare system that prioritizes patients over the interests of private equity firms is the foundation to a healthy community,” said Senator Amanda Cappelletti, who is also a sponsor of the bill package. “Senate Bill 1275 would protect our communities from private equity firms making acquisitions only to extract the resources from the acquired companies and subsequently walk away from the community altogether.”

Each Senate Bill will have a companion bill in the State House. Rep Mike Zabel added, “There is nothing preventing what’s happening with Prospect Medical Holdings from happening again. Let’s not forget that these closures or fire sales not only affect the community at large, but they are also regional employers that impact our economy and the lives of hundreds and thousands of employees. There’s much that’s gone wrong with Crozer; let’s not waste this opportunity to learn from the mistakes and then affect the law in Pennsylvania going forward.”

“Access to life-saving, professional medical care should not be consumed by corporate greed and get rich quick schemes. My colleagues and I will do everything we can to prevent community hospitals from being exploited by for-profit systems,” said Rep. O’Mara.

“In Delaware County, we have seen firsthand what it looks like when a for-profit hospital system puts profits over people,” said Rep. Krueger. “This is why I have introduced legislation that would stop investors from acquiring hospital just to pay themselves massive dividends.”

Representative Curry, Dr. Monica Taylor, Delaware County Council Chair, and Jamie Blair, of Put People First! PA, also spoke during the press conference to call attention to the need for high quality and reliable healthcare in the area.

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