March 29, 2024

Warren, Markey Question Citigroup on Bank’s Role in Deals that Led to Demise of Steward Health Care’s Massachusetts Hospitals

“The bank acted as a lender or advisor to Steward on a number of loans, each of which placed the business in further debt.”

“It is unclear whether Citigroup offered advice and loans that helped facilitate Steward’s demise, and if so, whether that advice was consistent with its fiduciary responsibilities.”

Letter Text (PDF)

Washington, D.C. – Today, U.S. Senator Elizabeth Warren (D-Mass.) and U.S. Senator Ed Markey (D-Mass.) sent a letter to Jane Fraser, the CEO of Citigroup Inc. (Citi), probing Citi on the role it played as lender or adviser in the deals that led to the demise of Steward Health Care’s (Steward’s) Massachusetts hospitals. 

After years of poor management and private equity profiteering, Steward is in deep financial distress, threatening closure of its hospitals in Massachusetts, which could reduce access to care for thousands of people in Massachusetts. Citi acted as Steward’s financial adviser, lender, or administrative agent for at least five mergers, acquisitions, sales, and related transactions between 2016 and 2023 – including two key transactions that have created massive long-term liabilities.

“The bank’s role was not merely transactional: the bank acted as a lender or advisor to Steward on a number of loans, each of which placed the business in further debt,” wrote the senators. “This pattern of failure raises questions about the extent to which Citi may have profited from these transactions, and whether the company met its responsibilities as an adviser.”

As a financial advisor to Steward, Citi was obligated to work in Steward’s best interest, but, as the senators wrote, “It is unclear whether Citi offered advice and loans that helped facilitate Steward’s demise, and if so, whether that advice was consistent with its fiduciary responsibilities.”

To better understand the relationship between Citi and Steward, and the role played by the bank, the senators seek answers to a series of questions about five transactions involving the two companies between 2016 and 2023.

Senator Warren has led the investigation into the potential closure of Steward’s hospitals, and has called out the impact of private equity ownership on health care costs and quality of care: 

  • On March 26, 2024, Senator Elizabeth Warren and Senator Ed Markey sent a letter to Steward Health Care CEO and Chairman Dr. Ralph de la Torre, calling on him to testify at a congressional hearing next week in Boston.

  • On March 4, 2024, Senators Warren and Markey 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.

  • 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 regarding Steward Health Care. A week prior to the statement she led the Massachusetts 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.

  • In October 2021, Senator Warren and lawmakers reintroduced the Stop Wall Street Looting Act, a comprehensive bill to fundamentally reform the private equity industry and level the playing field by forcing private investment firms to take responsibility for the outcomes of companies they take over, empowering workers, and protecting investors.

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