Steward bosses kicked out of Malta wanted for Senate grilling in US

The financial problems encountered by the private healthcare giant Steward Health Care in eight Massachusetts hospitals it ran have become the subject of a marathon session of congressional hearings in Boston.

The hearings are led by United States senators Ed Markey and Elizabeth Warren, titled “When Health Care Becomes Wealth Care: How Corporate Greed Puts Patient Care and Health Workers At Risk,” and focus on for-profit healthcare companies like Steward.

Steward branched out in Malta via Steward Healthcare International when it acquired the concession granted to the unknown itals Global Healthcare by the Labour administration, back in 2017. Since then, a Maltese judge concluded that the concession had breached its terms and that changes to the contract under the purview of former prime minister Joseph Muscat and his minister Konrad Mizzi, had been highly irregular.

With Steward kicked out of the three Malta state hospitals it failed to revitalise into a health-tourism hub, the American parent is now under the lens of American politicians after financial losses started to jeopardise operations at its Massachusetts hospitals.

Senator Ed Markey said Steward executives, whose business model is to simply extract maximum rental rates from healthcare institutions, had trapped those hospitals with “the rot of their greed.”

“What we’ve seen in the face of the Steward crisis is uniting people in the face of the greed... all are saying clearly that it is long past time to make sure patient health comes before shareholder wealth in Massachusetts and across our country,” Markey said at the State House hearing.

Both Markey and Warren harshly criticised Steward and its CEO Ralph de la Torre, who declined an invitation to testify at the hearing. “While we hold this hearing, Dr de la Torre is hiding out,” Warren said. “Shame on Dr de la Torre. He owes the residents of Massachusetts an explanation for his part in looting Steward hospitals. And law enforcement authorities should carefully review every aspect of this fiasco.”

The Steward hospitals in Massachusetts employ over 16,000 people, serving vulnerable communities with few other healthcare options.

Leaseback system is profiteering

In 2016, Steward sold its hospital real estate in Massachusetts to the real estate investment firm Medical Properties Trust for $1.25 billion. Steward agreed to pay rent to keep its hospitals running. This year, MPT said the company owed tens of millions of dollars in back rent.

But Warren and Markey said the leaseback deal was a major factor behind Steward’s financial difficulties.

Donald Berwick, a Harvard Medical School lecturer, testified at the hearing saying that such real estate deals caused healthcare costs to rise and only harms patients in the end.

Cerberus Capital Management, the private equity firm that bought the hospitals system that became Steward Health Care in 2010, claimed it had rescued failing Massachusetts hospitals in the deal. In 2020, Cerberus ended its relationship with Steward and placed the hospitals under Steward’s sole control. “At the time that we sold our controlling interest in Steward in 2020 to Dr de la Torre and his management team,” the company’s executives wrote to the senators, “Steward was a success story not just for our investors... but also for its stakeholders, including the numerous communities that it served.”

Senator Markey said it was no surprise that Steward CEO Ralph de la Torre had declined the Senat’s invitation to testify.

“It is a clear reflection for how Steward has failed to show up for the communities they promised to serve.”

De la Torre declines Senate testimony

In their letter to Ralph de la Torre, Markey and Warren blasted him for years of financial mismanagement, private equity schemes, and executive profiteering that have led to Steward Health’s financial crisis.

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.

“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 US 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.

With De La Torre involved in every major transaction involving the hospital system for nearly two decades, the lawmakers said the CEO had to answer for the hundreds of millions of dollars in debt incurred by the hospitals system.