PESP testimony to Senate HELP Committee regarding Steward Health Care bankruptcy

The Private Equity Stakeholder Project (PESP) submitted testimony to the Senate Committee on Health, Education, Labor, and Pensions (HELP) for today’s hearing titled “Examining the Bankruptcy of Steward Health Care: How Management Decisions Have Impacted Patient Care.” This hearing examines the financial and operational mismanagement of Steward Health Care, which filed for Chapter 11 bankruptcy earlier this year.

Steward Health Care, which formed in 2010 following private equity firm Cerberus Capital Management’s leveraged buyout of six Massachusetts hospitals, has faced scrutiny over its financial practices and their negative impact on patient care. With the help of hospital landlord Medical Properties Trust (MPT), Cerberus extracted significant profits from the struggling health system even as Steward financially struggled. Cerberus reportedly made $800 million in the decade it owned Steward. Around the time of Cerberus’ exit in 2021, Steward paid its owners a $111 million dividend, including its CEO, Ralph de la Torre. Steward declared bankruptcy in May 2024.

The PESP testimony sheds light on the mismanagement of Steward Health Care, including the significant debts and liabilities revealed during the bankruptcy process, the alarming patient care failures, and the questionable financial practices that prioritized profits over patient well-being. In addition, the testimony highlights the role of Cerberus Capital Management and MPT in the system’s decline.

“The story of Steward is a cautionary tale of how private equity profiteering and legal forms of financial pillaging devastated an entire health system, putting patients and communities at risk,” said Mary Bugbee, Healthcare Director at PESP. “While much focus has been placed on individual health executives like Ralph de la Torre, we must not lose sight of how Cerberus and MPT contributed to Steward’s collapse by prioritizing profits over patient care. Our testimony underscores the urgent need for stronger regulations to protect patients and prevent such crises from happening again.”

This testimony follows PESP’s ongoing efforts to highlight the risks posed by private equity ownership of healthcare systems, including prior research on the impacts of private equity at other hospital chains like Lifepoint Health, Prospect Medical Holdings, and Pipeline Health.