February 15, 2024

Warren, Markey and Massachusetts Delegation Seek Answers from Cerberus Over Private Equity Firm’s Role in Creating Steward Health Care’s Financial Challenges

“Cerberus and its private equity executives received $800 million in profits,” but “the current financial challenges at Steward Health Care hospitals threaten access to medical care for thousands of people in eastern Massachusetts”

“We have long been concerned about the nefarious role of private equity in our economy. Ownership by private equity investors increases health care costs and reduces quality of care, and private equity firms have played a role in the collapse of hospitals around the country, hurting communities and the health care workers and other staff that serve them.”

Text of Letter (PDF)

Boston, MA - United States Senators Elizabeth Warren (D-Mass.) and Edward J. Markey (D-Mass.), along with all nine members of the Massachusetts congressional delegation, sent a letter to Cerberus seeking answers from the private equity firm for its role in creating the current financial challenges at Steward hospitals, which threaten access to medical care for thousands of people in eastern Massachusetts.

“We are particularly concerned about the extent to which Cerberus and its affiliates literally stripped out and sold the property from underneath these hospitals, creating hundreds of millions of dollars in profits for private equity executives, while leaving the facilities with long-term liabilities that are magnifying – if not creating – the current crisis,” the lawmakers wrote.

Cerberus owned these hospitals from 2010 until 2021, when the company completed “an unusual exit” that raked in $800 million in profit. Six years after their initial purchase, Cerberus sold Steward’s hospital properties for $1.25 billion to Medical Properties Trust (MPT), locking Steward into multi-year, multi-million dollar lease payments.  

Cerberus then began its exit in May 2020 by transferring its ownership stake “to a group of the company’s own doctors in exchange for a note that would provide regular interest payments.” Steward borrowed another $355 million from MPT in January 2021 to buy this note. From 2016-2021, Steward took on over a billion dollars in liabilities – while Cerberus walked away with a massive profit.

The lawmakers are asking Cerberus to provide answers about the firm’s investments in Steward and Steward-affiliated entities, liabilities imposed on Steward, and profits, dividends and total compensation for the firm and its top executives. 

Senator Warren has repeatedly called out the impact of private equity ownership on health care costs and quality of care: 

  • In January 29, 2024, Senator Warren released a statement regarding Steward Health Care. A week prior to the statement she led the Massachusetts delegation in a letter to the CEO of Steward Health Care pressing the company to brief them on Steward’s financial position, the status of their Massachusetts facilities, and their plans to ensure the communities they serve are not abandoned. 
  • In January 25, 2024, at a hearing of the Senate Special Committee on Aging, Senator Warren called for robust federal oversight of assisted-living facilities to ensure seniors in need receive high quality care.
  • In November 2023, Senator Warren wrote a letter to U.S. Anesthesia Partners (USAP),  investigating their monopolistic business model and use of restrictive non-compete agreements that have reduced patients’ quality of care, increased prices, and suppressed workers’ wages. This letter followed a June 2023 Washington Post investigative report that detailed the excessive power wielded by USAP and its multibillion-dollar private-equity (PE) parent company, Welsh, Carson, Anderson & Stowe, and the Federal Trade Commission’s (FTC) recent suit against USAP for suppressing competition and driving up prices in Texas. 
  • In May 2022, Senator Warren co-wrote a letter demanding answers from private equity firm KKR after a BuzzFeed News investigation revealed that following KKR’s acquisition of BrightSpring Health in 2019, the company provided grossly substandard care and unsafe living conditions in its intermediate care facilities (ICFs) – group homes for people with intellectual and developmental disabilities.
  • In August 2021, Senator Warren led an investigation into the private ownership of Kindred at Home, a hospice care company, by Humana and two private equity firms, TPG Capital and Welsh, Carson, Anderson & Stowe. The investigation centered on a potential reduction in quality of care for hospice patients.