Two state elected officials said Prospect Medical Holdings Inc., the parent company of Crozer Health, is considering taking in management fees as Crozer transitions to nonprofit, writes Kenny Cooper for WHYY.

 “Unfortunately, they’re very often used by private equity companies, as a sort of a wealth extraction tool … It would be kind of shameful for them to kind of do this to the Crozer system at this point,” said state Sen. Tim Kearney said.

A deal to sell Crozer Health to the nonprofit ChristianaCare fell through.  Prospect announced instead that Crozer Health would return to its nonprofit status.

The fees would give Prospect a steady reliable stream of income but don’t address Crozer’s financial difficulties, according to state Rep. Mike Zabel.

Eileen O’Grady, a research manager for the Private Equity Stakeholder Project, questions why management fees are more beneficial to the hospitals and community than simply creating a traditional nonprofit structure for Crozer.

 Medical Properties Trust owns the land where Crozer hospitals stand so Crozer is already burdened by having to pay $35 million a year in rent, Zabel points out.

Read more at WHYY about possible management fees paid by Crozer to Prospect Medical Holdings.  attaching management fees to Crozer Health even if it returns to nonprofit status. 

Award-winning civil rights attorney Areva Martin talks about the profit in nonprofit, and it’s not what you think.