Crozer Health, a four-hospital system based in Upland, Pennsylvania, recently announced the layoff of around 215 employees, equivalent to about 4% of its workforce. The system cited financial challenges as the reason for the layoffs, as it seeks to reduce duplication in administrative oversight and discontinue underutilized services. Crozer CEO Anthony “Tony” Esposito said in a statement that the restructuring was necessary to ensure resources were allocated properly to meet patients’ and communities’ pressing healthcare needs and stem the financial losses that threatened the organization’s ability to serve Delaware County.
The layoffs come amid struggles to pay vendors and contractors. Rising pandemic and inflation-related costs and the refusal of contracted health insurance plans to renegotiate the terms of their agreements also impacted Crozer’s finances. The health system noted that the restructuring plan included the renegotiation of contractual partnerships, continued discussions with payers, and ongoing talks on clinical affiliations.
Crozer’s parent company, Culver City-based Prospect Medical Holdings, also struggled to keep up with the financial challenges of the healthcare sector. The company was sued by its largest shareholder, Leonard Green & Partners, for alleged fraud and financial mismanagement, and it filed for bankruptcy in the midst of the pandemic.
The pandemic has led to significant financial struggles for healthcare providers worldwide, with hospitals experiencing reduced revenue due to the postponement of elective procedures and surgeries. In response, many healthcare organizations have had to make difficult decisions such as layoffs, furloughs, and operational restructuring to cut costs and maintain financial stability.
Furthermore, Crozer Health’s plan to repurpose the underutilized Delaware County Memorial Hospital in Drexel Hill, Pennsylvania, and convert it into a behavioral health facility was complicated by an order from the Pennsylvania Department of Health. The order barred patient admissions and suspended emergency room services at the hospital due to alleged health regulation violations.
The health system stated that it was losing about $12 million a month when it decided last September to suspend operations at Delaware County Memorial Hospital. Since then, the health system has taken actions that have reduced monthly losses to about $7 million. Nevertheless, the losses are unsustainable in the long run, which underscores the need for the organization to take action to secure its future.
Affected employees will be considered for open positions within the health system, while workers who transition out of the organization will be provided access to outplacement services. Despite the challenges, Crozer Health remains committed to serving the Delaware County community and continues to provide quality care to patients in the region.
The financial challenges faced by Crozer Health and its parent company Prospect Medical Holdings are emblematic of the struggles that many healthcare organizations worldwide have faced amid the pandemic. While operational restructuring and cost-cutting measures may be necessary to maintain financial stability, healthcare providers must balance their financial concerns with their commitment to providing quality care to their patients and communities. The healthcare industry’s challenges during the pandemic highlight the need for long-term solutions that will promote sustainability and resilience in the face of future crises.