Prospect Medical Holdings signed a letter of intent to sell Crozer Health to CHA Partners, Crozer CEO Tony Esposito said Wednesday.
The proposed transaction, which requires the execution of a definitive agreement and regulatory approvals, is expected to close in several months and would transition Upland, Pennsylvania-based Crozer to nonprofit status, Esposito said in a statement. Financial details were not disclosed.
Related: Prospect Medical Holdings must find nonprofit buyer for Crozer
Founded in 2008, real estate company CHA Partners has acquired five hospitals in New Jersey. It also owns ambulatory surgery centers, medical office buildings and skilled nursing facilities.
Esposito said Prospect, Crozer and CHA will work with consulting firm Healthcare Preferred Partners to complete the transaction. He did not provide details on how the proposed transaction would affect leadership and employees.
"We believe this is a positive step for our physicians, employees and the communities we serve, and will help secure Crozer Health’s future as a critical healthcare provider in Delaware County," Esposito said in the statement.
Crozer, a four-hospital system, has struggled financially due to rising costs of care. The system cut about 4% of its workforce in March 2023 as part of a restructuring. Los Angeles-based Prospect said in October it planned to sell Crozer within a year.
The Pennsylvania Attorney General’s Office and nonprofit Foundation for Delaware County agreed in February, as part of a court-approved deal, to pause ongoing litigation against Prospect for about nine months while the company found a nonprofit buyer for Crozer.
Crozer deferred to CHA a request for comment regarding whether the proposed deal would comply with the nonprofit buyer conditions outlined in the February court order. CHA did not respond to requests for comment.
"We're unfamiliar with CHA Partners and looking forward to learning more, and to seeing a formal Agreement of Sale that reveals their plans to turn around the health system for our community," the Foundation for Delaware County said in a statement.
"Although we cannot comment on the specifics of the Letter of Intent because it is not a public document, the Office of Attorney General has been involved in reviewing the operational viability of Prospect Crozer for several years, and we will continue to exercise oversight over any potential sale of the facility to ensure high-quality healthcare options for residents of southeastern Pennsylvania," the Attorney General's Office said in a statement.
The litigation stems from a plan announced in September 2022 to transition Crozer's Delaware County Memorial Hospital to a behavioral health facility. A Pennsylvania judge initially blocked Prospect's plan in October 2022, given ample pushback from the community. However, the hospital was forced to temporarily close a month later due to inadequate staffing.
Wilmington, Delaware-based ChristianaCare backed out of a deal to acquire Crozer from Prospect in August 2022, citing the challenging economic landscape.
Prospect's $435 million deal to sell three Connecticut hospitals to New Haven, Connecticut-based Yale New Haven Health hit roadblocks earlier this year.
The private equity firm is also looking to sell two hospitals in Rhode Island.
