Written by Judith Garber and Imari Daniels
Private equity acquisitions in the healthcare sector have increased rapidly over the past decade, and hospitals are no exception. As of January 2024, at least 460 hospitals are owned by private equity firms, accounting for 30% of for-profit hospitals in the United States.
Previous reports have shown the dangers of private equity takeovers of rural hospitals, but these hospitals are not the only ones at risk. Steward Health Care, a for-profit system once owned by a private equity firm, is selling nine hospitals in Massachusetts because it no longer has the money to operate them. Here's what happened and what this fallout means for Massachusetts communities.
Steward's Downfall: Timeline
Caritas Christie acquired by private equity firm
Cerberus Capital Management bought the struggling hospital system Caritas Christi for about $830 million and rebranded it under a new company called Steward.
Steward closes 124-year-old hospital
Steward closed Quincy Medical Center three years after acquiring the hospital, despite pledging to keep it open for at least 10 years.
Massachusetts hospital building sold to real estate investment company
Steward has a $1.25 billion sale-leaseback agreement for Massachusetts hospitals with a publicly traded company called Medical Property Trust (MPT), with the system facing hundreds of millions of dollars in annual rent obligations. is imposed.
Steward Health Care becomes America's largest for-profit hospital system
Steward's merger with the IASIS Healthcare LLC hospital system allows it to acquire 36 hospitals across 10 states.
Cerberus begins withdrawal, Steward CEO purchases yacht
Cerberus transferred ownership of Steward Hospital to its own doctors, making a whopping $800 million in profits over 10 years. Steward's ownership team will pay out his $100 million dividend and CEO Ralph de la Torre will buy his $40 million yacht.
Patient safety issue reported
Preventable patient deaths at Good Samaritan Hospital have authorities warning of a “lack of patient safety” and staffing issues. Officials ordered the hospital to resolve staffing issues within 23 days. Since then, quality and safety concerns have been investigated at other Steward hospitals.
Bankruptcy leads to hospital closures
Steward's landlord says the health system is $50 million behind in rent and is considering selling hospitals nationwide.
Community impact
What's at stake for Massachusetts communities when it comes to Stewards' financial health? Data from the Lown Hospitals Index shows that many of these hospitals serve critical needs in their communities. is showing. Last year, all of Steward's hospitals in Massachusetts earned A or B ratings for both community benefit and comprehensiveness. Steward said 70 percent of his inpatient admissions are covered by Medicare and Medicaid. Closures can make it difficult for this vulnerable population to access care.
| hospital | Community Benefit Grade, 2023 | Inclusivity Grade, 2023 |
|---|---|---|
| carney hospital | a | B |
| St Anne's Hospital | B | a |
| St. Elizabeth Medical Center | B | a |
| morton hospital | B | B |
| Holy Family Hospital – Methuen | B | B |
| Nashoba Valley Medical Center | B | B |
| Good Samaritan Medical Center | B | B |
All Steward hospitals have had financial aid spending or Medicaid revenue share above the state average in recent years (see table below). Some hospitals, including Kearney Hospital, Holy Family Hospital in Methuen and Nashoba Valley Medical Center, have exceeded the state average on one or both of these metrics in all three years.
Financial aid expenditure, expenditure percentage
| hospital | 2021 | 2020 | 2019 |
|---|---|---|---|
| carney hospital | 0.79% | 1.25% | 1.26% |
| St Anne's Hospital | 0.57% | 0.75% | 0.66% |
| St. Elizabeth Medical Center | 0.43% | 0.63% | 0.53% |
| morton hospital | 0.52% | 0.71% | 0.60% |
| Holy Family Hospital – Methuen | 0.58% | 0.81% | 0.70% |
| Nashoba Valley Medical Center | 1.51% | 1.12% | 1.52% |
| Good Samaritan Medical Center | 0.76% | 0.98% | 1.07% |
| Massachusetts average | 0.77% | 0.82% | 0.93% |
Medicaid revenue as a percentage of patient revenue
| hospital | 2021 | 2020 | 2019 |
|---|---|---|---|
| carney hospital | 26.21% | 25.47% | 25.17% |
| St Anne's Hospital | 12.61% | 13.14% | 12.80% |
| St. Elizabeth Medical Center | 12.23% | 13.26% | 12.05% |
| morton hospital | 14.62% | 13.79% | 12.96% |
| Holy Family Hospital – Methuen | 18.06% | 19.08% | 16.98% |
| Nashoba Valley Medical Center | 10.78% | 11.23% | 10.76% |
| Good Samaritan Medical Center | 12.84% | 14.48% | 13.42% |
| Massachusetts average | 12.86% | 13.07% | 12.98% |
Patients are feeling the effects of the ongoing crisis through treatment interruptions, last-minute surgical schedule changes, and reduced provider availability. The potential eviction of Steward's 16,000 health workers and the risk of losing a vital hub hospital further exacerbates concerns. Reports of staffing shortages and service limitations, such as the closure of childcare centers and the absence of lactation consultants, highlight the strain on resources.
Additionally, nonprofit organizations that relied on Steward Hospital for funding, such as the Allston-Brighton Health Collaborative's Meal Voucher Program, remained unpaid for months. According to WGBH, St. Elizabeth's Hospital “quietly withdrew more than $600,000 in community donations” as the steward system faced financial difficulties.
Beyond the immediate concerns of employees, there is a real risk that the disruption of health care services to approximately 200,000 patients will deepen economic challenges and health disparities within the region. As Steward Hospital transitions to new ownership, it will be a challenge to the concerted efforts of all involved parties to overcome these obstacles and continue to support the well-being of the communities we serve. Sho.
