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ChristianaCare and Prospect Medical Holdings, owners of Crozer, announced the talks ended without an agreement.
ChristianaCare won't be acquiring Crozer Health after all.
ChristianaCare and Prospect Medical Holdings, the for-profit company that owns Crozer, made a joint announcement Thursday that the deal isn't happening. Crozer Health operates four hospitals in the Philadelphia suburbs.
The organizations said "negotiations for the purchase of Crozer Health have concluded without an agreement."
"Both organizations worked very hard to reach a final agreement and have significant respect for each other, and remain committed to caring for the health of those in Delaware County," the systems said in an announcement.
ChristianaCare, the largest health system in the state of Delaware, and Prospect signed a letter of intent for the acquisition in February 2022.
The two systems didn't go into much detail on why the deal isn't moving forward.
In the brief statement, which included only three paragraphs, the organizations said "the economic landscape has significantly changed, impacting the ability of the sale to move forward."
Crozer Health could soon be moving to non-profit status, The Philadelphia Inquirer reported Thursday. The news organization cited a letter to Crozer Health employees that said moving to a non-profit statuts would generate more community support and allow for more partnerships with local organizations.
Crozer Health operates its flagship Crozer-Chester Medical Center in Upland, with 499 beds. Crozer's other three hospitals include Delaware County Memorial Hospital in Drexel Hill; Springfield Hospital in Springfield; and Taylor Hospital in Ridley Park. Crozer has 4,000 employees and runs a host of outpatient facilities and physician practices.
Initially, ChristianaCare had planned to convert Crozer Health into non-profit status. Prospect purchased Crozer Health in 2016.
ChristianaCare, which operates three hospitals in Delaware and Maryland, enjoys a strong reputation in the hospital industry. ChristianaCare was named one of America’s 50 best hospitals by Healthgrades and has received top marks in other hospital rankings.
In July, ChristianaCare completed the acquistion of Jennersville Hospital, which had closed at the end of 2021.
ChristianaCare announced in June that it was purchasing the hospital in the Philadelphia suburbs from Tower Health, based in Reading, Pa. Jennersville Hospital shut its doors in Dec. 31, 2021, and local officials were striving to find someone to re-open the hospital.
The hospital industry has seen fewer mergers during the COVID-19 pandemic. Industry analysts have said the pandemic has prevented some health systems from pursuing deals, given all of the other challenges they have faced.
There were only 49 announced hospital transactions in 2021, a sharp drop from the 79 deals in 2020, according to Kaufman Hall, the consulting firm. In the first six months of 2022, there have been 25 hospital deals announced, according to Kaufman Hall's figures.
While the hospital industry is seeing fewer deals, the announced mergers have been bigger.
Atrium Health and Advocate Aurora Health announced plans to merge in May. If the deal is approved by regulators, it would create one of America’s largest hospital systems.
Atrium and Advocate Aurora plan to form a new organization with a combined $27 billion in annual revenue. The merged organization would operate 67 hospitals with more than 1,000 ambulatory sites and more than 148,000 employees.
Some industry analysts expect to see more mergers in the next year or two. Analyst such as KPMG have said some hospitals that are struggling may need to consolidate with other hospitals and systems in order to survive.
Still, the Federal Trade Commission has been exercising more scrutiny over proposed hospital mergers, particularly with organizations looking to consolidate in the same regions.
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