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From financial collapse to federal investigation, 2024 is not Steward Health Care’s year.
In the for-profit chain’s latest setback, the Senate Health, Education, Labor, and Pensions Committee voted on July 25 to launch a formal investigation into the Dallas-based system’s bankruptcy filing and subpoena its CEO Ralph de la Torre.
Senators on the bipartisan committee alleged in their remarks before the vote that de la Torre and other executives mismanaged the company’s finances and made bad business deals—such as selling off the chain’s real estate holdings in 2016—at the expense of patient care.
De la Torre made a gross salary of nearly $3.8 million in the year before bankruptcy, according to court documents obtained by Becker’s Hospital Review. “It is time for Congress to hold Dr. de la Torre accountable for his greed,” committee Chairman Sen. Bernie Sanders said ahead of the vote.
The CEO repeatedly refused to speak to the committee voluntarily, leading to the subpoena, according to Sanders and Sen. Bill Cassidy, the committee’s highest ranking Republican.
He is set to appear in front of the committee on September 12.
What happened? In May, the system declared bankruptcy after accruing nearly $9 billion in debt.
That same month, the chain said in a court filing that all of its 30+ hospitals across Arizona, Arkansas, Florida, Louisiana, Massachusetts, Ohio, Pennsylvania, and Texas were up for sale, the Associated Press reported. The Boston Globe reported that while Steward’s hospitals rationed supplies and at least one surgeon bought his own medical instruments, de la Torre raked in millions and bought two boats: a $40 million yacht and a $15 million fishing boat.
On top of that, the US Department of Justice is investigating Steward over alleged fraud in a separate review of its three Malta hospitals, CBS News reported on July 11.
The bigger picture: Several Democratic lawmakers have pointed to Steward’s previous owner—private equity firm Cerberus Capital Management—as being part of the problem.
Cerberus bought a failing Massachusetts hospital system in 2010, rebranded it as Steward Health, then bought up dozens more hospitals nationwide. It sold its controlling interest in 2020, netting $800 million, according to Bloomberg.
A 2024 report found that private equity-owned healthcare systems are increasingly going bankrupt. As a result, members of Congress have called for more regulation of private equity in healthcare.
“When private equity gets hold of healthcare systems, it is literally a matter of life and death, so if you drive a hospital like Steward into bankruptcy, putting patients and communities at risk, you should face real consequences,” Massachusetts Sen. Elizabeth Warren said in a statement in June.