“You owe Congress, state officials, and the public answers for the record of failure and greed that has culminated in the current Steward Health Care crisis.”
Senators raise questions about potential violations of state and federal law.
Washington (March 8, 2024) - Senators Edward J. Markey (D-Mass.) and Elizabeth Warren (D-Mass.) sent a letter to Steward Health Care CEO and Chairman Dr. Ralph de la Torre, blasting him for years of financial mismanagement, private equity schemes, and executive profiteering that have led to Steward Health’s financial crisis, which threatens to upend access to health care in Eastern Massachusetts communities and yank jobs from the health care workers employed at the company’s facilities. The senators are seeking answers from de la Torre on a series of troubling transactions from 2010 to the present that have saddled Steward’s Massachusetts hospitals with crippling debt and contributed to the growing crisis. The letter follows a February 2024 letter to Cerberus Capital Management (Cerberus) from the Massachusetts congressional delegation seeking answers from the private equity firm for its role in creating the current financial challenges at Steward hospitals.
“Steward’s Massachusetts hospitals are in deep financial distress and appear to be in danger of closure because of years of mismanagement, private equity schemes, and executive profiteering. You have run this hospital system for 14 years, and reportedly have had access to two private jets while owning two luxury yachts,” said the lawmakers. “Meanwhile, suppliers were unpaid, the system piled on debt, and patients in Steward hospitals…suffered because of inadequate care. And now, as a result of years of failures by you and the private equity ownership at Steward, access to health care is at risk for Massachusetts communities, and thousands of health care workers’ jobs could be lost.”
Cerberus invested in and created Steward in 2010 out of Caritas Christi Health Care, which de la Torre headed at the time. Steward then sold its hospital buildings to the real estate investment trust Medical Properties Trust (MPT) in 2016 for $1.25 billion, locking the system into massive rent payments that saddled the hospitals with crushing debt.
Then, in May 2020, Cerberus began its exit from Steward and transferred its stake to a group of Steward doctors, led by de la Torre. Steward borrowed an additional $335 million from its landlord, MPT, in January 2021 to finance the transaction, and took out another 2023 loan that quickly went bad, creating unsustainable levels of debt that precipitated the current crisis.
“You have been involved in every major transaction involving the hospital system for nearly two decades,” continued the lawmakers. Steward “is hundreds of millions of dollars in debt, raising questions about unpaid vendors, patient care, and job losses for front-line health care workers, while creating ongoing uncertainty about whether hospitals will close, and if not, how they will be restructured.”
“Each step in this process reveals mismanagement, the perils of private equity investment in health care and corporate greed – and raises questions about compliance with state and federal securities laws and other requirements… You owe Congress, state officials, and the public answers for the record of failure and greed that has culminated in the current Steward Health Care crisis,” the lawmakers concluded.
The lawmakers are requesting information from de la Torre on these deals and how they contributed to this crisis no later than March 21, 2024.
###
