![]() In June 2020, Steward became the nation's largest physician-owned health care system, after Steward physicians acquired a 90 percent controlling interest in the company. Steward Health Care was started by Ralph de la Torre, when Caritas Christi Health Care system was sold to the private equity firm Cerberus Capital Management in 2010 after the transaction, Caritas was converted to a for-profit company and renamed Steward Health Care. Steward Health Care is led by CEO Ralph de la Torre, a Cuban-American physician, engineer and cardiac surgeon. Headquartered in Dallas, Steward's integrated health care model employs 40,000 people at thirty-nine hospitals and hundreds of urgent care, skilled nursing, and primary and specialty care medical practice locations across nine states. Policymakers need to revisit their tax-exempt status and rein in their behavior.Steward Health Care is the largest physician-owned private for-profit health care network in the United States and attends to 2.2 million people during more than twelve million physician and hospital visits annually. ![]() Appelbaum said, "We shouldn't be subsidizing financial actors who make outsized profits at the expense of patients and workers. "However, their actions are anything but that-their aggressive actions and costly rents undermine the ability of health care providers to survive and serve patient needs, according to Batt. REITs control over $3.5 trillion in assets in the U.S., but pay no taxes because the law defines them as passive investors. Even so, the Steward system was deeply in the red-the worst financial performer of all hospitals in Massachusetts in 2019-before the pandemic hit." To pay the rent on prime city properties, the private equity owners required deep cuts in staffing, supplies and equipment. "The hospitals were suddenly paying inflated rents on property they had owned for over 100 years. ![]() But the hospitals were left in shambles." As soon as the attorney general's oversight expired, Cerberus sold the hospital property for $1.25 billion to a health care REIT, Medical Properties Trust. The Massachusetts attorney general oversaw the conversion of the hospitals from non-profit to for-profit status, and monitored Cerberus' compliance with requirements for charity care and investment for five years. Cerberus Capital, a private equity firm, bought six Catholic hospitals in the Boston area in 2011. Cook Professor of Women and Work, provides an example: "Take the Steward Health Care System. Sale-leasebacks provide quick returns for private equity firms and stable long-term returns for the REITs.īatt, the ILR School's Alice H. The REITs buy the real estate and lease it back to hospitals or nursing homes in long-term leases that typically increase at 3% annually. Private equity firms buy out health care providers, load them with debt and plan to exit them in a four- to five-year window. Their tactic is known as a sale-leaseback. The perpetrators, the researchers say, are private equity firms in partnership with "real estate investment trusts," known as "REITs." Both are Wall Street investment funds that most people have never heard of, but that have increasingly penetrated the health care industry. 1 by the Institute for New Economic Thinking and the Center for Economic and Policy Research. In their new study, Batt and Appelbaum describe how investors are undermining the financial stability of hospitals and nursing homes by selling off their real estate and pocketing the proceeds for themselves, rather than reinvesting the money to improve patient care. These findings are documented in research by ILR Professor Rosemary Batt and Eileen Appelbaum, co-director of the Center for Economic and Policy Research.
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