PA Attorney General Sues PE-Backed Hospital System Over Mismanagement, Closures
By Consumers for Quality Care, on November 20, 2024
Pennsylvania Attorney General Michelle Henry is suing Prospect Medical Holdings and its former parent company, private equity firm Leonard Green, over its failure to provide adequate care for consumers, resulting in two hospital closures, according to Healthcare Dive.
Based out of Los Angeles, Prospect Medical has been the subject of an ongoing CBS News investigation about how private equity firms have contributed to the collapse of hospital systems around the country.
Attorney General Henry alleges that Prospect failed to uphold its end of a deal when it purchased Crozer Health, a four-hospital system, and agreed with the state to keep all the hospitals open for at least ten years. According to Attorney General Henry, Prospect has broken their end of the bargain, closing one hospital and suspending inpatient and emergency services at another, while also laying off hospital staff. Now, she wants the courts to prohibit Prospect from closing any more hospitals and further disrupting patient care.
Henry accuses Prospect of “corporate greed,” saying that the company “agreed to prioritize affordable, accessible healthcare — but instead broke their promise with years of neglectful, self-serving practices that have put lives at risk.”
Though Prospect and Crozer have struggled, their private-equity owner, Leonard Green, has turned a $450 million profit off the deal.
Local lawmakers support the lawsuit and are calling for increased oversight on private equity’s involvement in these health care deals.
When private equity acquires health care systems, it can lead to fewer options and higher costs for consumers. CQC urges lawmakers and regulators to closely monitor hospital deals such as these, which can have detrimental consequences for communities and consumers alike.