The Pillaging of Steward Health Care

The report details the collapse of Steward Health Care, tracing its trajectory from a nonprofit system in Massachusetts to the largest for-profit private hospital operator in the US, and finally to a Chapter 11 bankruptcy filing on May 6, 2024. It argues that the system was 'pillaged' through a combination of leveraged buyouts, sale-leaseback transactions with the real estate investment trust Medical Properties Trust (MPT), and massive dividend payouts to private equity investors and executives. These financial strategies resulted in over $9 billion in liabilities, including $6.6 billion in lease obligations to MPT. The report highlights the human cost of this financial engineering, citing hospital closures, service cuts in obstetrics and behavioral health, and critical patient safety failures, such as the repossession of essential medical equipment. It concludes with policy recommendations to increase financial transparency, limit debt-funded dividends, and restrict sale-leaseback transactions in healthcare to prevent similar failures.

• Steward Health Care filed for Chapter 11 bankruptcy on May 6, 2024, reporting total liabilities exceeding $9 billion. The largest portion of this debt consists of $6.6 billion in long-term lease obligations owed to its landlord, Medical Properties Trust (MPT).
• Cerberus Capital Management extracted significant profits during its ownership of Steward from 2010 to 2020, reportedly making $800 million. This included a $484 million dividend paid to one of its funds following a 2016 real estate deal with MPT.
• The report identifies the 'sale-leaseback' model as a primary mechanism for siphoning money out of the health system. In 2016, Steward sold the real estate of nine Massachusetts hospitals to MPT for $1.2 billion, which shifted ownership of the land to the REIT while leaving the hospitals responsible for millions in lease payments.
• Financial distress led to severe patient care crises and operational failures. Examples include a patient's death in Massachusetts after an embolization coil was unavailable due to equipment repossession, and a Florida hospital infested with bats and guano in the ICU.
• Steward's rapid expansion to 37 hospitals across 10 states was largely financed by MPT. This growth occurred alongside significant service cuts and closures, including the loss of at least 2,650 workers since 2018 and the closure of six US hospitals.
• The report alleges that Steward executives engaged in extravagant spending while the system failed. CEO Ralph de la Torre reportedly purchased a $40 million yacht shortly after Steward paid a $111 million dividend to its owners.
• Regulatory oversight in Massachusetts is criticized as ineffective. Despite a five-year monitoring period following the 2010 acquisition of Caritas Christi, the state's 2015 report claimed the most dire concerns had not come to pass, even as the system's debt exceeded equity by several multiples by December 2013.
• The report proposes several policy changes to prevent similar 'pillaging,' including banning debt-funded dividends, limiting sale-leasebacks, and requiring audited financial disclosures for hospital operators and their private equity investors.

APA

Private Equity Stakeholder Project (2024). The Pillaging of Steward Health Care. https://pestakeholder.org/reports/the-pillaging-of-steward-health-care/

Chicago

Private Equity Stakeholder Project. The Pillaging of Steward Health Care. 2024. https://pestakeholder.org/reports/the-pillaging-of-steward-health-care/.

Wikipedia

{{cite report |author=Private Equity Stakeholder Project |title=The Pillaging of Steward Health Care |date=26 June 2024 |url=https://pestakeholder.org/reports/the-pillaging-of-steward-health-care/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{privateequitystakeholderproject2024pillaging, author = {{Private Equity Stakeholder Project}}, title = {{The Pillaging of Steward Health Care}}, institution = {Private Equity Stakeholder Project}, year = {2024}, month = jun, url = {https://pestakeholder.org/reports/the-pillaging-of-steward-health-care/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }