It’s unclear what impact, if any, the deal will have on ChristianaCare’s interest in acquiring Crozer Health — the ailing four-hospital system in Delaware County — from Crozer parent Prospect Medical Holdings. The health system said in the press release that the due diligence process for the transaction is ongoing.
The acquisition of Jennersville “makes sense” for ChristianaCare, one of the largest providers in the mid-Atlantic, according to Mark Richman, vice president of Springfield-based InnoVative Capital, LLC. Richman’s company serves as a financial advisor to hospitals and other entities such as housing agencies and municipalities nationwide. He has been keeping a close eye on the hospital reorganizations that have been taking place in his backyard.
“[Christiana] wants to gain market share in the Pennsylvania region. They already have an outpatient center in Chadds Ford,” Richman said. “I think it would be really good for the community.”
Richman said that ChristianaCare, as a nonprofit hospital system, sees southeastern Pennsylvania as an area where it can make a difference — especially given the financial struggles faced by some of the area’s other providers.
However, he was also surprised that ChristianaCare entered into this deal while it was already in talks with Prospect to acquire Crozer. Now two transactions could potentially happen almost simultaneously.
While Richman said it’s hard to tell whether or not ChristianaCare is still interested in Crozer, he worried the healthcare system could “overwhelm itself,” similar to Tower Health’s 2017 acquisition of Jennersville and Brandywine and 2018.
Pulling Crozer out of a financial hole while trying to rebuild Jennersville would be a “big job,” Richman said.
Longer term solutions to Pa. hospital problems?
Pennsylvania is one of only 15 states nationwide that doesn’t have state regulatory mechanisms for handling events like hospital acquisitions and closures.
In Rhode Island, for example, a strict regulatory framework allowed the state to protect two Prospect-owned hospitals from financial vulnerability. Pennsylvania officials were warned about Prospect’s history of siphoning money from his hospitals, but had no power to act.
The kind of regulatory mechanism that saved Rhode Island hospitals could help protect Pennsylvania hospitals from future closures, Richman said.
“I believe Pennsylvania needs to meet to start developing a health care protection protocol — and there isn’t one,” Richman said. “Counties don’t know what to do when their hospitals go under.”
The status quo has not been enough to help the region’s healthcare system.
“That’s a lot of lost healthcare. That’s a lot of lost jobs,” he said. “That’s a lot of patients who need help — and it’s just overcrowded other hospitals and drained resources.”