U.S. Sens. Ed Markey and Elizabeth Warren blasted the leadership of Steward Health Care Wednesday as they each unveiled plans aimed at protecting patients — and the health care system broadly — from what they described as predatory moves by private equity firms.
Markey and Warren visited the State House for a U.S. Senate subcommittee field hearing examining “how corporate greed puts patient care and health workers at risk,” inspired by the financial turmoil that’s created an uncertain future for Steward’s Massachusetts hospitals.
Markey said Steward CEO Dr. Ralph de la Torre declined an invitation to testify, and a chair was left open throughout the hearing, with a placard bearing de la Torre’s name.
"That seat for their testimony was empty today, as empty as the promises which Steward and Ralph de la Torre had made to the state of Massachusetts," Markey told reporters after the hearing. "So we're going to make sure that Dr. de la Torre and Steward become nationally famous, that they become the example of the dangers of allowing private equity to take over a health care system, and we're not going to stop until we put the safeguards in place that protect patients and protect doctors and nurses from having a medical system that is looted."
A financial crisis at Steward has sparked concerns about whether its hospitals here will stay open, spurred Gov. Maura Healey to call for the Dallas-based hospital chain to leave Massachusetts, and prompted both federal and state lawmakers to dig in on the role of private equity in health care.
Steward Health Care formed in 2010, when Cerberus Capital Management acquired a system of six nonprofit Catholic hospitals in Massachusetts. Cerberus told the state’s Congressional delegation in February that it "has had nothing to do with Steward's operations" for nearly four years.
Warren called the Steward situation "a clear-cut case of private equity exploiting for-profit health care," but said her concerns are broader than one company.
"When private equity firms buy up nursing homes, they cut costs to the bone. They reduce staff and suck money out the door to boost investor profits," she said. "During the pandemic, private equity-owned nursing homes had a 40% higher COVID mortality rate than other nursing homes. I will say it bluntly: turning private equity loose in our health care system kills people."
Warren said she plans to introduce legislation that would give the federal government power to claw back compensation from health care executives and Wall Street investors "whose predatory financial engineering endangers the viability of a hospital. Her bill would also ban health care entities that receive federal funding from selling or mortgaging their assets to real estate investment trusts.
"We can change the rules," Warren said. "We can put some regulations in place and stop this kind of looting."
Markey announced he’s seeking public comment on draft legislation that would require more transparency from private equity–owned health care entities and other for-profit health systems. His bill, dubbed the “Health Over Wealth Act,” would also require public notification and community input before hospitals close or cut services, among other measures.
Markey said he and Warren intend to partner with state lawmakers "to make sure that Massachusetts is the leader in putting protections in place against a repetition against what Steward has done to our health care system."
