One year has passed since Steward Health Care filed for bankruptcy, launchingthe largest healthcare provider restructuring in decades, including a monthslong effort to sell its 31 hospitals.
Five Steward hospitals have permanently closed since its bankruptcy, while two more temporarily paused services. Many of the remaining facilities have landed back in the hands of private equity and investor owners, according to a new report from the Private Equity Stakeholder Project.
The outlook for the hospitals is grim, after those that were “lucky enough not to close” were “simply punted from one investor-owned company to another, with little oversight or conditions from regulators to protect patients and community access to critical healthcare services,” the report says.
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Steward sent shockwaves through the healthcare industry when it filed for bankruptcy last year. The operator had over $9 billion in total liabilities, including nearly $1 billion in unpaid bills and $6.6 billion in long-term rent obligations to its landlord, Medical Properties Trust.
The majority of Steward’s hospitals ultimately transitioned to new owners. However, five hospitals have closed since May 2024, resulting in layoffs of approximately 2,400 employees and adding strain on healthcare resources across Massachusetts, Florida and Ohio.
Hospital closures and layoffs at Steward facilities since May 2024
Approximately 2,400 workers have lost their jobs since the health system filed for bankruptcy.
For example, Boston-based Carney Hospital closed in August 2024 after failing to find a buyer. After the closure, Boston Emergency Medical Services reported a 20% increase in transport times and emergency departments at nearby facilities reported crowding, according to the Private Equity Stakeholder Project report.
Similarly, the closure of nearbyNashoba Valley Medical Center, also in August, pushed EMS services to “the verge of collapse” and created a “crisis situation... on multiple fronts due to the increased distances and times for ambulances and first responders to travel,” according to fire chiefs and town administrators cited in the report.
Steward facilities that remain open may not fare better for long. Multiple hospitals were purchased by groups with dubious track records of hospital management, the report said.
For example, Healthcare Systems of America, which purchased five Steward hospitals in Florida, is run by CEO Michael Sarian. Sarian has ties to Steward’s controversial landlord Medical Properties Trust and a history of running behind on bills to vendors, according to the report.
Ohio lawmakers have also begun to look into Insight Health, which purchased Steward’s Ohio portfolio. Insight halted hospital operations at Hillside Rehabilitation Center and Trumbull Regional on March 27, laying off nearly 700 employees after Steward allegedly failed to transfer money to Insight that was owed for health services.
Sen. Bernie Moreno, R-Ohio, sent a letter to Steward Health Care, Medical Properties Trust and Insight Health Systems in April alleging the companies had engaged in “predatory and potentially illegal actions. Closing Hillside also threatened the viability of Trumbull County’s 911 Dispatch Center, Moreno said.
Critics have alleged de la Torre and other Steward investors, including Steward’s former private equity owner Cerberus Capital Management, got rich while the health system floundered.
When the private equity firm exited its position in 2020, the health system paid out a $111 million dividend to its owners, including de la Torre. In total, Cerberus and de la Torre extracted approximately $1.3 billion from Steward, according to the report.
De la Torre stepped down from his post as CEO in September. The executive has rebuffed lawmakers’ repeated calls to testify about his management practices. In September, de la Torre defied a congressional subpoena to appear before the Senate Committee on Health, Education, Labor, and Pensions Committee, causing the Senate to hold him in contempt.
On Tuesday, Sens. Edward Markey and Elizabeth Warren, both Democrats from Massachusetts, urged the Department of Justice to prosecute de la Torre for contempt of court and asked the Securities and Exchange Commission to investigate whether MPT’s relationship with Steward “misled its investors and violated securities laws,” according to letters sent to the agencies.
Meanwhile, the Private Equity Stakeholder Project, a nonprofit watchdog that analyses the impact of private equity, is pushing for stricter laws overseeing healthcare transactions.
The organization applauded legislation passed in Massachusetts this winter that aims to increase transparency into hospital deals — but laws should go even further, the nonprofit said in the report published Tuesday.
“State and federal legislation should go above and beyond transparency and disclosure measures to actually limit or ban the extractive business practices that should have no place in healthcare,” the report said. “This includes limiting or banning sale-leasebacks for all hospitals, prohibiting hospital investors from paying themselves debt-funded dividends from health systems (also called dividend recapitalizations), and limiting the amount of debt that can be used to finance hospital and other healthcare facility acquisitions.”
