March 08, 2024

Warren, Markey to Steward Health CEO: Years of Mismanagement, Scheming, and Profiteering Now Pose Urgent Threat to Hospitals in Massachusetts

“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. 

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 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. 

Senator Warren has repeatedly called out the impact of private equity ownership on health care costs and quality of care: 

  • 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. 
  • On January 25, 2024, at a hearing of the Senate Special Committee on Aging, Senator Warren called for robust federal oversight of assisted-living facilities to ensure seniors in need receive high quality care.
  • In November 2023, Senator Warren wrote a letter to U.S. Anesthesia Partners (USAP),  investigating their monopolistic business model and use of restrictive non-compete agreements that have reduced patients’ quality of care, increased prices, and suppressed workers’ wages. This letter followed a June 2023 Washington Post investigative report that detailed the excessive power wielded by USAP and its multibillion-dollar private-equity parent company, Welsh, Carson, Anderson & Stowe, and the Federal Trade Commission’s (FTC) recent suit against USAP for suppressing competition and driving up prices in Texas. 
  • In May 2023, at a hearing of the Senate Special Committee on Aging, Senator Warren called out corporate owners of nursing homes, including private equity firms and Real Estate Investment Trusts (REITs), for their failures to protect patient safety and use of complex legal arrangements to avoid regulatory scrutiny.
  • In May 2022, Senator Warren co-wrote a letter demanding answers from private equity firm KKR after a BuzzFeed News investigation revealed that following KKR’s acquisition of BrightSpring Health in 2019, the company provided grossly substandard care and unsafe living conditions in its intermediate care facilities (ICFs) – group homes for people with intellectual and developmental disabilities.
  • In August 2021, Senator Warren led an investigation into the private ownership of Kindred at Home, a hospice care company, by Humana and two private equity firms, TPG Capital and Welsh, Carson, Anderson & Stowe. The investigation centered on a potential reduction in quality of care for hospice patients. 

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