MedPage Today : PESP raises concerns over Pentagon official’s PE ties

A new MedPage Today story spotlights growing fears that Deputy Defense Secretary Steve Feinberg, founder of Cerberus Capital Management, could push further privatization of U.S. military healthcare. Advocates worry that military families and veterans may face the same dangers that came when Cerberus ran Steward Health Care. Under Cerberus’ ownership, Steward rapidly expanded while paying out hundreds of millions to investors, only to collapse in 2024 in one of the largest hospital bankruptcies in U.S. history

Feinberg’s private equity firm oversaw Steward Health Care from 2010 to 2020, during which the system ballooned from six hospitals in Massachusetts to 37 across 10 states. That rapid expansion generated hundreds of millions in payouts for investors but left Steward deeply indebted. In 2024, Steward filed for bankruptcy with $9 billion in debt, one of the largest hospital collapses in recent history

“It’s concerning, given his position in leadership at DOD right now,” Noble told MedPage Today. “It is not like it just happened overnight. The financial decisions that led up to it being bankrupt happened over the course of time and also during Cerberus’ ownership.”

Noble emphasized the risks of putting military healthcare in the hands of leaders with this track record: “We don’t want to see that happen to providers that are providing for our military and our veterans. So I think the concerns lie in the conversation around what it means to privatize that type of healthcare.”

This latest coverage builds on earlier PESP research, which highlighted how another Cerberus-owned company, government contractor DynCorp, paid more than $9 million to settle Department of Justice lawsuits alleging fraud against the U.S. government during the same period Cerberus controlled Steward

PESP Executive Director Jim Baker warned at the time:

“It’s extremely concerning that the man who could now lead the U.S. Department of Defense oversaw Cerberus as one of its companies was accused of defrauding the U.S. government. How are we to trust a private equity billionaire whose firm looted a national hospital system, owned a contractor accused of defrauding the government, and whose portfolio companies have high levels of safety violations and layoffs?”

Together, these scandals underscore the dangers of entrusting critical public systems—from civilian hospitals to military healthcare—to executives with deep private equity ties.

Read the full MedPage story here →MedPage Today
Read PESP’s prior coverage here →PESP blog