Senators pressure Steward for answers
Warren, Markey want details of the company’s financial wrangling
With state and federal regulators scrambling to get a handle on the crisis at Steward Health Care and its struggling Massachusetts hospitals, the for-profit company received another demand for information on Thursday.
Seeking to unravel more than a decade of financial maneuvers that left some of the hospitals in a precarious state, Senators Elizabeth Warren and Edward Markey sent a six-page letter to Steward with two dozen queries. The letter requested everything from the total compensation of chief executive Ralph de la Torre and other top executives to notes from meetings approving the 2016 transaction to sell the company’s Massachusetts real estate to an Alabama trust.
The letter also repeated unanswered questions from a Feb. 9 letter from the lawmakers, including seeking a list of each hospital’s assets and liabilities and the terms of the company’s leases and loans. Now based in Dallas, Steward operates nine hospitals in Massachusetts and more than 30 nationwide.
“You owe Congress, state officials, and the public answers for the record of failure and greed that has culminated in the current Steward Health Care crisis,” the senators wrote. The answers could reveal whether Steward has violated securities laws and whether its executives have violated their fiduciary duties, the senators said.
Piled under with obligations from the real estate deal and various other financial transactions, Steward’s Massachusetts hospitals have not been paying bills for rent, services, and critical medical equipment, stirring fears that some of the facilities might have to close. Last month, the company said it had obtained $150 million cash infusion and was looking at options to sell its physician network and other assets with help from advisory firm Alix Partners.
In a statement to the Globe, Steward said it was reviewing the requests in the senators’ letter. The company said it has already provided “voluminous data” to the state attorney general and health and human services department, including detailed hospital level financial information.
“We are committed to our patients, our employees, and communities,” Steward said in the statement. “We have no plans to close hospitals and are working with state officials on transition plans that we believe will be in the best interests of the Commonwealth.”
Steward last month appointed Dr. Octavio Diaz, the company’s chief medical officer, as president of its North region overseeing Massachusetts. He replaced Dr. Michael Callum, executive vice president of physician services, who shifted to oversee facilities in the Midwest and South.
The company turned over some information to the state, including audited financial records through 2021, after Governor Maura Healey last month criticized Steward for failing to be “forthcoming, truthful or responsive.”
The senators letter also sought information about the transaction that paid off private equity firm Cerberus Capital Management, which created Steward by acquiring Catholic hospital system Caritas Christi Health Care in 2010. Cerberus sold the last of its stake in 2020 to a group of Steward doctors. Steward ultimately borrowed $335 million from its landlord, Medical Properties Trust, in January 2021 to finance the transaction
The senators said they had also asked Cerberus for information about Steward’s various transactions. But the private equity firm largely refused to answer, the senators said in their latest letter, responding that questions would be “more appropriately addressed to Steward and MPT.”
Warren and Markey are hardly the only ones looking for answers. In addition to requests from the Healey administration, the Securities and Exchange Commission is also demanding that Steward’s landlord, Medical Properties, disclose the hospital operator’s financial results to the public.