Markey and Warren rip Steward’s bosses for ‘rot of their greed’ at State House hearing

“Dr. de la Torre’s chair is as empty as the promises he made,” Markey told a crowded hearing of his subcommittee of the Senate Health, Education, Labor and Pensions Committee, which convened in the State House on Beacon Hill.

“Cerberus made more than $800 million in profit,” he said. “Dr. de la Torre is still sailing on his yacht.”

Markey cited de la Torre’s pledge to state regulators and health care leaders in 2010 to upgrade the community hospitals, create a low-cost system, and improve care with a cash infusion from Cerberus.

Senators Ed Markey and Elizabeth Warren held a subcommittee hearing on the rise of for-profit health care in the State House Gardner Auditorium.Pat Greenhouse/Globe Staff

He said de la Torre and Cerberus “sold themselves as saviors” when they struck a partnership to buy the Massachusetts hospitals in 2010 from their nonprofit operator, Caritas Christi Health Care, promising to strengthen the hospitals and provide quality health care.

“Instead, Dr. de la Torre and Cerberus, like the mythological dog that it is named after that guards the gates of the underworld, trapped their hospitals in financial instability as the rot of their greed spread,” Markey said.

Warren was similarly unsparing, repeatedly calling de la Torre a coward for declining an invitation to testify before the subcommittee in Boston.

“While we hold this hearing,” Warren said, “Dr. de la Torre is hiding out. Shame on Dr. de la Torre. He owes the residents of Massachusetts an explanation for his part in looting Steward hospitals. This refusal to appear at today’s hearing is cowardly.”

A spokesperson for Steward declined to respond to the senators’ criticisms or explain why de la Torre declined the senators’ invitation to take part in the hearing.

The company has previously said it is doing its best to operate within a challenging market for community hospitals, citing factors including relatively low insurance reimbursement rates at such facilities.

Inside the Gardner Auditorium, a panel of health care experts and professionals agreed it was time to place restrictions on private equity firms, like Cerberus, that deploy financial tactics such as heavy borrowing, real estate sale-leasebacks, debt-funded dividends, and the rollup of assets to extract windfall profits from hospitals and other health providers.

“We have allowed American health care to become too much the servant of the profit motive,” said Dr. Donald Berwick, president emeritus of the Institute for Healthcare Improvement and former administrator of the Centers for Medicare and Medicaid Services under President Obama.

Markey and Warren are introducing Senate bills seeking to bring tougher oversight, and more transparency and accountability to private equity transactions involving health care providers. But it’s not yet clear how much support the measures can gain in a divided Congress.

Markey’s bill, called the “Health Over Wealth Act,” would provide safeguards for workers and patients and empower regulators to block some private equity and real estate deals. Warren’s bill, the “Stop Wall Street Looting Act,” would eliminate some tax breaks for buyout firms and make them liable for debt run up by their portfolio companies. His staff said he recently field a discussion draft for the bill.

Like the senators, panelists blamed corporate greed and mismanagement for the financial woes that have called into the question the future of Steward and left other hospitals, doctors groups, and fertility and hospice clinics across the country struggling under the weight of debt.

Dr. Ellana Stinson, president of the New England Medical Association, said she worked from 2013 to 2020 as an emergency medicine physician at Steward-run Carney, Good Samaritan Medical Center in Brockton, and the former Quincy Hospital, which Steward ultimately closed.

“I began to realize how resources were being dwindled down and pulled from each facility …” Stinson said. “Not having blood products, respiratory therapy at times, or certain specialty services, [it] no longer felt like I was able to provide safe or quality care. What is happening here in the Commonwealth is happening around the country.”

Private equity ownership of health care providers has increased dramatically over the past two decades. Buyout firms manage about $13.1 trillion in assets now compared to less than $1 trillion in 2004, said Eileen O’Grady, health care research and campaigns director for the Private Equity Stakeholders Project, a nonprofit group.

“Hospitals owned by Steward Health Care are facing an existential threat,” O’Grady told the subcommittee, citing the backing of Cerberus, which cashed out of its investment in 2021. “The experience of Steward is unfortunately not unique. There have been many stories of private equity firms looting health care companies at the cost of patient care.”

Steward’s financial crisis has prompted lawsuits from suppliers and the loss of leased medical equipment. Last October, a woman died after giving birth at St. Elizabeth’s, where a vital device called an embolism coil had been repossessed by creditors.

A subcommittee hearing on the rise of for-profit health care at the State House was filled with spectators.Pat Greenhouse/Globe Staff

The public, Warren said, needs accountability for what went wrong at Steward.

“And law enforcement authorities should carefully review every aspect of this fiasco,” she said. “We also need to change the law. Private equity should not be allowed to loot one business after another.”

In February, Steward obtained new loans from its landlord, Medical Properties Trust, and other creditors as part of a plan that depended on selling assets such as its physician network. Other hospital operators in Massachusetts are also in the running to take over Steward facilities.

Governor Maura Healey and other politicians have called for Steward to leave the state.

Steward last week struck a deal to sell its nationwide physician network to insurance giant UnitedHealth’s Optum unit. The companies haven’t disclosed a purchase price.

Warren sounded a note of skepticism while discussing the proposed deal during Wednesday’s hearing.

“Optum may be willing to pay Steward hundreds of millions of dollars, but the deal provides no guarantee that the hospitals would stay open,” Warren said. “None.”

The sale will be reviewed closely in Massachusetts, where policy makers have called on Steward to plow the proceeds into its struggling hospitals and to prevent closures.

Robert Weisman can be reached at [email protected]. Travis Andersen can be reached at [email protected].


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