February 25, 2025

Warren Questions Private Equity Executive Who Helped Bankrupt Steward Hospitals, Feinberg Squirms Without Answers

Trump Nominee Seeks A Top Pentagon Leadership Role

Washington, D.C. – At a hearing of the Senate Armed Services Committee, U.S. Senator Elizabeth Warren (D-Mass.) questioned Mr. Stephen A. Feinberg, President of Cerberus Capital Management and nominee for Deputy Secretary of Defense, about his troubled private equity history and his qualifications for the job of second-in-command at the Pentagon.

Senator Warren called out Mr. Feinberg’s involvement in Steward Health Care, a now-bankrupt hospital system, which once owned 31 hospitals nationwide. In Massachusetts specifically, Mr. Feinberg enriched himself and his investors at the expense of the hospitals, sucking out over $700 million while leaving the hospitals understaffed, underresourced, and severely indebted. In part due to his corporate extraction, the system went bankrupt and, two Massachusetts hospitals shut down for good, leaving Massachusetts communities without access to the care they need.

Mr. Feinberg claimed Steward hospitals were doing “well” at the time Cerberus sold the company. However, “[m]any Steward hospitals were financially struggling as Cerberus began to make its exit in 2020,” according to the Private Equity Stakeholder Project. More importantly, before he left, Mr. Feinberg sold the hospitals’ real estate, cashing out the profits but leaving the hospitals with massive liabilities in the form of years of increasing lease payments for the land they used - a key factor in the hospitals’ 2024 bankruptcy.

Mr. Feinberg claimed he “turned [Steward] around, fixed them, grew them, [and] had a tremendous amount of success.” However, he slashed a full medical center, a primary and specialty care unit, a surgery department, an urgent care department, and a VA Clinic at a Quincy Medical Center, leaving nothing but an emergency room. Additionally, just two years after Cerberus took over Steward, nurses in Massachusetts filed more than 1,000 “unsafe staffing” complaints, a significant increase from previous years.

Transcript: Hearing to Consider the Nomination of Mr. Stephen A. Feinberg to be Deputy Secretary of Defense
U.S. Senate Armed Services Committee
February 25, 2025

Senator Elizabeth Warren: So, Mr. Feinberg, you’ve been nominated to be Deputy Secretary of Defense, in charge of DOD’s $850 billion budget. Your main qualification is that you have built one of the world’s largest private equity companies. You’ve spent your entire career honing the private equity tools used to hollow out businesses, from department stores to veterinary practices. And, presumably, those are the skills that you would bring to the Department of Defense. So, I just want to look at how that’s worked.

Let’s start with how you treat people. In Massachusetts, in 2010, your private equity firm bought six non-profit hospitals, turned them into for-profit hospitals called Steward. Ten years later you cashed out, having made a profit a little shy of a billion dollars, and leaving behind a hospital system that was staggered under a load of debt and, four years later, collapsed into bankruptcy.

Now, Mr. Feinberg, when we met in my office, you told me that your private equity outfit made an average 23% annual return each year that you owned our hospitals. If Steward nurses had gotten the same 23% salary increases that your investors effectively got every year, do you know how much they would be paid at the time you sold off your hospitals?

Mr. Stephen A. Feinberg, nominee for Deputy Secretary of Defense: Well, I do know that in 2010, the hospitals were going under, and we were asked –

Senator Warren: I’m sorry, Mr. Feinberg, we’re going to have very limited time here and I actually want to spend it on your qualifications to do this job. And it’s about how you treat people. The average nurse in the Steward hospitals at the time you bought them made $85,120.

At a 23% annual raise, how much money would they be making right now?

Mr. Feinberg: I’m not going to do the math, but what I could tell you –

Senator Warren: Okay, I’ll do the math for you. $829,828. Now, of course, the nurses didn’t do that well. During that same period of time, Carney Hospital, one of the hospitals you bought in Massachusetts, raised nurse salaries about 1.5% a year - and that was the best increase across the Steward hospitals that you were running.

Mr. Feinberg: That’s incorrect.

Senator Warren: In other words, you seem to think that when it is time to reorganize a business, that equity should get about fifteen times as much return on their investment as the people who actually do the work.

So, let’s take a look at the second issue, and that is maintaining critical functions –

Mr. Feinberg: Senator, would you like me to respond to Steward? Because a lot of inaccurate statements.

Senator Warren: We need to make cuts at the Department of Defense, but we also need to maintain our national security.

Chair Wicker: Mr. Feinberg, she’s entitled to make a speech.

Mr. Feinberg: I apologize.

Chair Wicker: She’s entitled to go on and on.

Senator Warren: So let’s go back to Steward Hospitals. Did you cut fat or cut vital functions?

Now, Mr. Feinberg, the town of Quincy used to have a full medical center, with primary and specialty care, a surgery department, an urgent care department, and a VA Clinic. That was its basic function. After your private equity company finished with it, what was left?

Mr. Feinberg: Well, when we exited the investment in 2020, the company was doing well –

Senator Warren: I’m asking what was left of the Quincy hospital. When you took it over –

Chair Wicker: Now, Senator, he’s trying to answer a question. You finally stopped for a breath.

Senator Warren: Well, that’s what I’m asking –

Chair Wicker: Do you intend to let him at least have maybe 20, 30 seconds to answer a question?

Senator Warren: Well, can I have my time back?

Chair Wicker: Yes, I said you’re entitled to make a speech, but you stopped for – you stopped with a question mark and he started to try to answer the question.

Senator Warren: All right, what’s the answer to the question? What was left of the Quincy hospital? That was my question.

Mr. Feinberg: Lots happened after we exited. And there has been mismanagement. We did save –

Senator Warren: My clarifying question: what was left when you exited?

Mr. Feinberg: I’m not certain about that –

Senator Warren: It was an emergency room, and nothing more.

Mr. Feinberg: But, but, we took those hospitals from collapse in 2010 – we were going to shut it down as the tenth largest employer in Massachusetts, turned them around, fixed them, grew them, had a tremendous amount of success, worked closely with the governor, and the problems with Steward happened after we exited the investment.

Senator Warren: I am asking about questions as you exited and during the period of time you ran it. Now, of course, a hospital is supposed to provide good quality care—and that takes qualified nurses and other staffers. Mr. Feinberg, for the hospitals that didn’t close down, during the time you ran it, do you know how many “unsafe staffing” complaints were filed?

Mr. Feinberg: I do know the vast majority of problems happened after we left. And by the way, our nurses were among the highest paid in the country.

Senator Warren: Is that a no, that you don't know how much? How many “unsafe staffing” complaints were filed?

Mr. Feinberg: I don’t know.

Senator Warren: Well, let me tell you. There were over a thousand filed, that is five times the normal rate in Massachusetts.

Mr. Feinberg: What year was that?

Senator Warren: These are the years that you were in control. For the two hospitals –

Chair Wicker: Senator Warren, perhaps you would like to take another round?

Senator Warren: No, I’d like to just finish. I just have a quote.

Chair Wicker: Your time is expired, Senator. Your time is expired.

Senator Warren: I spent a great deal of that time listening to the Chairman telling me how I have to conduct my questions.

Chair Wicker: The senator's time is expired.

Senator Warren: Could I just close?

Chair Wicker: Senator Sullivan.

Senator Warren: Could I just close, Mr. Chairman? I’d just like to say why I care about this issue.

Chair Wicker: The senator's time has expired. She can have another round.

###