All 11 members of the Massachusetts delegation to Washington, D.C., signed a letter Thursday addressed to Cerberus Capital Management, the private equity firm that owned Steward Healthcare hospitals from 2010 to 2021. asked for information amid “growing concerns” about Steward's current financial predicament. .
“We are particularly concerned that Cerberus and its affiliates are literally ripping the real estate out of the basements of these hospitals and selling it off, generating hundreds of millions of dollars in profits for private equity executives while leaving behind the facilities. “This leaves long-term debt in place, which has exacerbated, if not caused, the current crisis,” the delegation wrote. “We have long been concerned about the pernicious role of private equity in our economy. Equity ownership by private equity investors increases health care costs and reduces the quality of health care. “Private equity firms are contributing to the collapse of hospitals across the country, harming our communities and the health care workers and other staff who serve them. The dire threat of Steward's collapse… This appears to be a classic example of the significant risks posed by private equity takeover of the health care system.”
The delegation's letter specifically asks Cerberus to respond by February 28 regarding its investments in Steward and Steward-related companies, the debt owed to Steward, and the profits, dividends and total compensation of the company and its management. However, the company did not respond. in response to a request for comment from the News Service on Thursday.
Cerberus acquired the hospital system then known as Caritas Christi in 2010, invested $246 million and renamed the hospital Steward. According to the delegation, Cerberus-owned Steward entered into a $1.25 billion deal with real estate investment trust Medical Property Trust in 2016, under which Steward's hospital assets were sold to MPT, which received a 5% stake in Steward. It is said that it has been obtained.
Health officials said they were preparing to close hospitals if the beleaguered Steward Healthcare System continues to experience problems.
According to the letter, the deal returned Cerebus' initial investment but left Steward with multi-year, multi-million dollar lease payments, which are now a large part of the system's financial woes. It is said that there is. Cerebus began the ownership transfer in 2020, and Steward borrowed $355 million as part of the deal, the delegation said.
“The ultimate outcome of these deals appears to be an unfolding tragedy,” the delegation wrote. “Cerberus and its private equity executives received $800 million in profits, while the jobs of thousands of Massachusetts health care workers are at risk and 10 communities across the commonwealth are left in debt. “You are teetering on the brink of finances. You owe Congress and the public an answer and an explanation for your actions.” ”
