Released: May 8, 2025
Delaware County, PA — At the May 7 Delaware County Council Public Meeting, held at the Government Center in Media, a national watchdog group delivered a scathing account of how private equity stripped hundreds of millions of dollars from the Crozer Health system—leaving behind closed emergency rooms, shuttered services, and a decimated healthcare infrastructure.
Mary Bugbee, Healthcare Director at the Private Equity Stakeholder Project, presented “Raiding the Safety Net: How Private Equity Extraction Led to the Closure of Crozer Health.” Her presentation outlined how Leonard Green & Partners, a Los Angeles-based private equity firm, acquired Prospect Medical Holdings in 2010 and went on to extract more than $650 million in dividends and fees from the hospital system through debt-driven financial engineering.
Bugbee explained how dividend recapitalizations—a practice where companies borrow money solely to pay investors—and sale-leaseback agreements were used to enrich Prospect’s owners while burdening hospitals with long-term rent payments and reduced assets. When Leonard Green exited in 2021, it walked away with $437 million in profits. The hospitals were left without the real estate they operated in, and with unsustainable operating costs.
“Private equity didn’t just fail this community—it exploited it,” said Council Vice Chair Richard Womack. “They drained a once-thriving hospital system of its resources, its workforce, and its integrity.”
“This wasn’t a one-off failure,” said Council Chair Dr. Monica Taylor. “What we saw in Delaware County is part of a broader national strategy: extract wealth, leave liabilities, and move on. It’s asset-stripping dressed up in financial jargon.”
The presentation, delivered virtually, drew on case studies from across the country. Bugbee described similar outcomes in Texas and Connecticut, where Prospect hospitals were reduced to outpatient centers or sold to non-healthcare buyers, like hotel developers. She also noted that seven of the eight largest healthcare bankruptcies in 2024 involved private equity-backed companies.
“This is not mismanagement,” Womack said. “This is a business model. One that prioritizes investors over patients, profits over people, and leaves communities like ours to pick up the pieces.”
Bugbee, a former employee of a Prospect-owned hospital, said the regulatory environment that allows such practices to continue is “fundamentally broken,” and called on state and federal governments to implement guardrails—including limits on debt-financed buyouts and requirements for transparency from parent companies.
Council Member Elaine Paul Schaefer called the presentation “thoughtful and very helpful,” and said that it confirmed much of what residents and local officials had feared. “Prospect has been a stunningly bad actor,” Schaefer said. “They were motivated by greed. They took everything they could and turned their back on this community when there was nothing left to take.”
Schaefer emphasized the need for systemic reform. “This is not just about one company in one county. It’s about a system that fails to recognize the pillaging of public health infrastructure as the crime it is,” Schaefer said. “We can’t allow this to happen again—not here, not anywhere.”
Taylor pointed to the sale-leaseback strategy as a turning point. “While we were holding meetings, assembling partners, and trying to keep services alive, the liabilities created by Prospect hung over every negotiation like a boulder,” she said. “We must leave behind the people who caused this damage—and the financial structures that enabled them.”
Council members urged residents to remain engaged and committed to ensuring such a collapse never happens again. “Healthcare must be treated as a public good,” Taylor said. “And Delaware County deserves a system that puts people—not private equity—at the center.”
The presentation was well received by residents in attendance, several of whom voiced support for further investigations and reforms. Council concluded by thanking Bugbee and the Private Equity Stakeholder Project for their ongoing advocacy and research.
Residents seeking more information or resources can visit www.pestakeholder.org or contact Bugbee at mary.bugbee@pestakeholder.org.