Prospect Medical plans to divest Delaware County Memorial and Taylor hospitals.

Prospect Medical Holdings has petitioned to exit its bankruptcy case with plans to abandon two closed hospitals within its Crozer Health system located in Delaware County, Pennsylvania. This move marks a significant moment in the ongoing financial struggles of the California-based for-profit healthcare provider.

According to an official filing, Prospect Medical Holdings has received bids of .25 million for the Delaware County Memorial Hospital in Drexel Hill and 5,000 for Taylor Hospital in Ridley Park. These proposed offers starkly contrast with the substantial property taxes claimed by local authorities, prompting Prospect to seek court approval for the abandonment of these properties. In tandem with its bankruptcy plans, the company has cited the untenable carrying costs associated with maintaining the facilities as a primary reason for this decision.

A hearing is scheduled for next week in Texas, where a bankruptcy judge will consider the motion to abandon both hospitals. Should the judge grant this request, it would halt the accrual of further bankruptcy liabilities for Prospect. However, ownership of the properties will remain unchanged, leaving the potential for lender foreclosure if financial obligations are not met.

The filing notably excludes mention of the Crozer-Chester Medical Center in Upland, the system’s largest hospital, which has been closed since May and is also up for sale. Prospect’s bankruptcy motion highlighted property tax assessments set at .74 million for Delaware County Memorial and .67 million for Taylor Hospital, figures that underscore the financial burden the company is grappling with.

In addition to local property tax claims, the healthcare entity is currently facing an estimated 0 million in unsecured claims from vendors and other creditors. These financial pressures have contributed to Prosect’s ongoing disputes over the assessed values of the hospitals, which stem from inflated prices set during a prior deal in 2019 when the company raised over 0 million for its facilities, leasing them back from Medical Properties Trust.

The assessment of the closed Delaware County Memorial hospital stands considerably lower than its 2019 valuation of 4.5 million, currently being pegged at 8 million. Meanwhile, Taylor Hospital’s assessment is at million, influenced by the attributed value of approximately .8 million from the same deal.

Efforts made by officials from Delaware County, alongside the office of Pennsylvania Governor Josh Shapiro, to identify a new operator for Crozer have been unsuccessful thus far, primarily due to the lack of long-term financial backing for prospective operators. As a result, county and municipal authorities are now in a race to replace lost healthcare services, including mental health crisis intervention and emergency medical responses, further exacerbated by the closures.

With this precarious situation unfolding, stakeholders within the community and healthcare landscape in Pennsylvania remain anxious about the future of healthcare access in the region amid Prospect Medical Holdings’ ongoing bankruptcy proceedings.