The deadline imposed by Crozer Health parent company Prospect Medical Holdings for some entity to provide $9 million more to keep Crozer afloat appeared to pass quietly on Wednesday.
That deadline was set Tuesday during a federal bankruptcy court hearing by the attorney representing Prospect at those proceedings.
One person with knowledge of the proceedings noted Prospect had threatened to file a motion for closure several times in the past as a way to extract additional funding from whoever it could — the county, the state, The Foundation for Delaware County — and that the motion itself is only that, a motion. That money does not go to Prospect but to operations of the health system.
Closure could really take place whenever Prospect so chooses, that source told the Daily Times.
The Pennsylvania Attorney General’s Office issued this brief notification later Wednesday afternoon: “Efforts to secure the $9 million remain ongoing. We have been assured a closure notice will not be issued today.”
Prospect attorney Bill Curtin said during the Tuesday hearing that if more money wasn’t ponied up by 4 p.m. Wednesday that closing proceedings would begin Thursday morning and take about two weeks, which would exhaust the existing pot of money to pay workers and bills.
Crozer-Chester Medical Center and Taylor Hospital would start turning away ambulances and new patients on Thursday morning, he said Tuesday. The rest of the closure period would involve discharging or moving existing patients from the hospitals.
Curtin was expected to present a bankruptcy judge in Texas with a proposed asset purchase agreement for Crozer during the Tuesday meeting from a consortium of as-yet-unknown entities reportedly trying to turn the plundered system back into a nonprofit.
Instead, Curtin revealed that not only was a deal not in place, but the $20 million in funds provided to the hospital system so far by The Foundation for Delaware County and $20 million provided by the state and county itself has run its course in terms of what Prospect can pay employees for the work they are performing.
Representatives for the foundation indicated they would not be putting up any additional funds, so Curtin was hoping to secure money from “some part of the Commonwealth.”
U.S. Judge Stacey G.C. Jernigan of the Northern District of Texas Bankruptcy Court said it would be a “disaster” if the two hospitals closed and directed all parties to try to find some way of keeping them going.
Jernigan also implored any consortium members watching a livestream of Tuesday’s hearing to continue working toward a long-term solution and noted any investment they put in at this stage would go toward the future of the system rather than the pockets of those who brought it to the cliff’s edge.
The Daily Times reached out to the foundation, Curtin and representatives of Delaware County on Wednesday for updates on what was expected to be a daylong online meeting among them and other interested parties, but heard very little back.
A spokesperson for the foundation doubted it would be providing any update.
‘Financial viability question’
One attorney in Tuesday’s hearing said he hoped no one was engaging in any kind of brinksmanship.
Curtin said he did not know how to respond to that, except to say that the legal side has been figured out after months of work and it just comes down to a question of funding and financial viability.
“If we can’t get over those hurdles, there’s just not a path forward,” he said Tuesday. “And I’ve been the biggest optimist in the room, but there’s just not. And we’re going to find out: Do we get this funding to give us a couple more weeks to address the parties’ — the potential acquirers’ — concerns about long-term financial viability, or not? And if we do, then we’ll take that two weeks and we’ll try to address those concerns. But again, it’s going to come down, at that point, also, to money.
“It’s not a disagreement,” Curtin continued. “There are legal issues that have been worked through. There are some that remain to be worked through, but the ones that remain to be worked through all relate to this financial viability question.”
There was some disagreement Tuesday between Curtin, representing Prospect Medical Holdings as the debtor-in-possession under chief restructuring officer Paul Rundell, and Sam Alberts, an attorney representing receiver FTI Solutions, on exactly when a wind down would need to begin.
Alberts said the receivership still has a little more than $25 million on hand with a little less than $10 million in payroll costs going out this week. He said that there is obviously a point where there would be insufficient resources to continue to stay open, but he was not convinced that day would be Thursday.
Curtin said this has been a conversation that has gone on repeatedly, but it is the debtor who has to make the difficult decision and that is premised on more than just $1 million here or there, but on extensive analysis of how to close the hospital safely.
“I just would hope that people would keep in mind the adage of ‘let’s not make the perfect the enemy of the good,’ ” said Alberts. “There is no perfect solution to this problem. There may be a good solution to this problem, but there will be a much worse situation for a lot of parties if this fails.”
Meanwhile, as someone else familiar with the case pointed out, Prospect has promised to present the bankruptcy court with an APA on at least two occasions and the county has referenced reviewing a draft of that agreement that now appears to have gone up in smoke.
All players have also been extremely cagey about revealing the members of the coalition of potential buyers who may be swooping in to save the day.
Jernigan directed the parties to continue working on the plan via a video call beginning at 9 a.m. Wednesday.
The next hearing is set for 3 p.m. central time Thursday, or 4 p.m. in Delaware County, though the outcome of any work Wednesday may be evident by just watching the emergency room doors Thursday morning at the hospitals.
