Hearing on Crozer-Keystone sale set for June 29

Delaware County President Judge Chad F. Kenney has set a June 29 hearing date for the proposed $300 million sale of Crozer-Keystone Health System to California-based Prospect Medical Holdings Inc.

Crozer-Keystone, a nonprofit corporation, reached a merger agreement with for-profit Prospect in January. The merger requires approval from the Orphan’s Court under the Pennsylvania Nonprofits Law before it can close June 30.

Grant Gegwich, a spokesman for Crozer-Keystone, said the hearing is mandatory for the sale to move forward.

The sale price includes funding at least $100 million in pension liabilities and assuming approximately $160 million in debt. Prospect will also deduct $15 million from the sale price for liability insurance, according to court documents.

Prospect, which operates 13 hospitals in California, Texas and Rhode Island, has also pledged at least $200 million in capital improvements for Crozer-Keystone over the next five years and made a commitment to keep all inpatient hospitals open for at least 10 years.

Crozer-Keystone saw operating losses of $32.9 million in 2014 and $8.4 million in 2015. It began seeking a potential buyer in late 2014 after years of weak finances left it with insufficient capital reserves for long-term debt and pension liabilities.

Prospect will offer employment to all current Crozer-Keystone employees and management in good standing under the agreement, and terminate the pension plan after five years with a commitment to fully fund all beneficiaries.

The acquisition will also change Crozer-Keystone’s tax status to forprofit, meaning its hospitals and related entities will contribute to local and county tax revenues.