April 16, 2024

Warren, Markey Call Out Medical Properties Trust and Macquarie Infrastructure Partners for Exploiting Steward Hospitals, Urge Them to Help Keep the Hospitals Open

“MPT and MIP have played a key role in this steep financial decline and must play a role in the recovery of these hospitals in order to preserve and protect access to care for communities in Massachusetts.”

Text of Letter (PDF)

Boston, MA – United States Senators Elizabeth Warren (D-Mass.) and Edward J. Markey (D-Mass.) sent a letter to Edward K. Aldag, Jr., Chairman and CEO of Medical Properties Trust (MPT) and Karl Kuchel, CEO of Macquarie Infrastructure Partners (MIP), pushing them to play a role in stabilizing Steward Health Care in Massachusetts. MPT and MIP share ownership of Steward’s Massachusetts hospitals’ real estate, and have been collecting huge lease payments from Steward on property the company used to own. This is a key reason that Steward’s Massachusetts hospitals have huge debts that have driven the company to the financial brink.

“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,” wrote the senators. “MPT and MIP have played a key role in this steep financial decline and must play a role in the recovery of these hospitals in order to preserve and protect access to care for communities in Massachusetts.”

MPT has been enmeshed with Steward since 2016, when Steward’s then-owner, private equity firm Cerberus Capital Management (Cerberus), made a $1.25 billion sale-leaseback deal with MPT. In doing so, Cerberus saddled Steward’s Massachusetts hospitals with long-term leases and millions of dollars in rent payments. MPT has also loaned hundreds of millions of dollars to Steward, which were then used to pay the rents owed to MPT – further driving up the hospitals’ debt.. MIP became involved with Steward in September 2021, when the company bought a 50% stake in MPT’s ownership of Steward’s Massachusetts properties.

“[T]hese investments have all the appearances of a Ponzi scheme that is continuing to harm Steward-owned hospitals: MPT continued to provide capital to Steward, which allowed the hospital system to continue paying rent to MPT,” the senators wrote. “This allowed MPT to avoid devaluing its real estate purchases and the leases that it held, bolster its stock price, and report lucrative cash flows.”

However, by 2023, Steward ran up a $50 million shortfall. According to MPT’s October 2023 financial report, Steward’s Massachusetts hospitals owed cash rent of nearly $60 million annually on leases that run until 2041 and include “escalator” clauses indexed to inflation. This debt, as well as the high rents these hospitals continue to pay, are a massive barrier to providing quality care to these communities.

“MPT has – along with Steward – plundered these hospitals,” wrote the senators. “While we seek answers to these questions about MPT’s past behavior and MIP’s involvement in Steward’s financial problems, your companies also have an important opportunity to help Steward’s Massachusetts hospitals overcome this crisis by offering long-term reductions in lease payments or early termination of leases to make it financially feasible for new operators to take over these hospitals.”

To address the senators’ concerns, they are requesting MPT and MIP answer questions on their involvement with Steward by April 22, 2024.

Senator Warren has been leading oversight on Steward and has repeatedly called out the impact of private equity and consolidation on health care costs and quality of care: 

  • On April 8, 2024, Senators Warren, Markey, and the rest of the MA delegation urged the FTC and DOJ to closely scrutinize the sale of Steward Physician Group to Optum.

  • On April 3, 2024, Senator Warren delivered remarks at a Senate hearing in Boston titled, “When Health Care Becomes Wealth Care: How Corporate Greed Puts Patient Care and Health Workers at Risk,” which centered on Steward Health Care’s Massachusetts hospitals.

  • On March 26, 2024, Senator Warren released a statement about Steward’s plan to sell its physician group Stewardship Health to UnitedHealth Group’s subsidiary Optum.

  • On March 26, 2024, Senators Warren and Markey sent a letter to Steward CEO and Chairman Dr. Ralph de la Torre, calling on him to testify at a congressional hearing in Boston.

  • On March 8, 2024, Senators Warren and Markey sent a letter to Dr. de la Torre, blasting him for years of financial mismanagement, private equity schemes, and executive profiteering that have led to Steward Health Care’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.

  • On February 15, 2024, Senators Warren and Markey, along with all nine members of the Massachusetts congressional delegation, sent a letter to Cerberus seeking answers from the private equity firm for its role in creating the current financial challenges at Steward hospitals.

  • On January 29, 2024, Senator Warren released a statement about Steward’s financial situation and allegations of patient neglect at Steward facilities.

  • On January 23, 2024, Senator Warren led the Massachusetts congressional delegation in a letter to the CEO of Steward Health Care pressing the company to brief them on Steward’s financial position, the status of their Massachusetts facilities, and their plans to ensure the communities they serve are not abandoned. 

  • On October 4, 2023, Senator Warren and Representative Jayapal sent a letter to the Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC), urging them to carefully scrutinize UnitedHealth Group’s (UHG’s) pending acquisition of Amedisys. 

  • On September 19, 2023, Senator Warren and Representative Becca Balint (D-Vt.) led lawmakers in submitting a public comment letter to the Federal Trade Commission and the Department of Justice in support of the agencies’ proposed merger guidelines, including the guidelines’ focus on serial acquisitions of small health care providers by private equity companies that drive private equity market dominance in health care.

  • In June 2023, at a hearing of the Senate Finance Committee, Senator Warren raised concerns about how profiteering in Medicare Advantage (MA) is driving vertical consolidation in health care.

  • In March 2023, Senator Warren sent a letter to FTC Chair Lina Khan and Commissioners Alvaro Bedoya and Kelly Slaughter urging them to carefully scrutinize CVS Health Corp’s (CVS) pending acquisition of Oak Street Health, Inc (Oak Street).

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