Massachusetts senators Elizabeth Warren and Ed Markey are looking into the financial dealings between private equity firm Cerberus and Steward Health Care. Cerberus acquired Steward, a non-profit hospital chain, in 2010 and sold it in 2020.
Cerberus Made Millions, Steward Now Struggles
Cerberus confirmed they made an $800 million profit from their investment in Steward. This comes at a time when Steward is facing financial difficulties and is trying to sell its remaining hospitals in Massachusetts.
Controversial Deal Highlighted
A key point of contention is a 2016 deal where Steward sold its real estate to Medical Properties Trust (MPT) and leased it back. This deal allowed Cerberus to recoup its investment and make a profit for its investors, but it also saddled Steward with significant rent payments.
Senators Allege “Looting”
Warren and Markey allege that Cerberus “looted” Steward and failed to invest in the hospitals, prioritizing profits over patient care. They claim Cerberus left Steward with massive debts that are a major source of the hospitals’ current financial woes.
Cerberus Defends Actions
Cerberus argues that they met their investment commitments and that Steward’s hospitals were in better financial shape when they sold them in 2020. They also claim that the profits benefited investors like pension funds, not just Cerberus executives.
Unanswered Questions Remain
The senators believe Cerberus is not being transparent about the full extent of their profits. They are demanding more information on how much money Cerberus and its executives personally made from the deal.
Hearing to Address Concerns
A Senate subcommittee hearing is scheduled to address concerns about the role of for-profit healthcare and how corporate decisions can impact patient care. The hearing will likely focus on the situation with Steward and Cerberus.
