CEO of Failed Hospital System Raked in Massive Profits
By Consumers for Quality Care, on September 18, 2024
Steward Health, a hospital system once backed by private equity, filed for bankruptcy this year and has begun closing hospitals and laying off thousands of employees in multiple states. Nonetheless, Steward’s CEO has collected more than $100 million in compensation, according to USA Today.
Since filing for bankruptcy in May, Steward Health has closed two hospitals in Massachusetts and has laid off more than 2,200 employees in both Massachusetts and Ohio. Advocates worry that these closures and staff cuts will endanger the health of thousands of consumers.
Despite this, Steward’s CEO, Dr. Ralph de la Torre, has received over $100 million in compensation. He has declined to cooperate with lawmakers, recently refusing to comply with the Senate’s subpoena to testify. According to Senator Bernie Sanders (I-VT), de la Torre “epitomizes the type of outrageous corporate greed that is permeating throughout our for-profit health care system.”
Private-equity firm Cerberus Capital Management took over Steward Health in 2010 and continued acquiring other hospital systems, eventually making them the largest private for-profit hospital chain in the country. In the early months of the COVID-19 pandemic, Cerberus was able to exit the deal, turning a $800 million profit but leaving Steward on the verge of financial collapse. Too often, private equity firms benefit financially at the expense of hospital systems and consumers.
Both of Massachusetts’ U.S. Senators, Ed Markey and Elizabeth Warren, have since called for increased scrutiny on private equity firms, proposing measures to hold private equity executives accountable and increase transparency surrounding these deals to ensure consumers are protected.
CQC is deeply troubled by the growing trend of private equity-owned hospitals, especially given that their business tactics don’t line up with the care that patients should receive. Health care providers must prioritize patients over profits to ensure lower cost, high quality care.
