MA Hospital System in Peril Due to Private Equity Firm’s Involvement 

By Consumers for Quality Care, on April 3, 2024

A private equity firm’s controlling stake in a struggling Massachusetts hospital chain has left the system in worse shape after ten years of ownership. Today, the hospital system is still dealing with the fallout, according to Axios.  

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 U.S. By the time Cerberus exited its stake in Steward Health in 2020, the private equity firm had reaped $800 million in profit from its ownership of the hospital chain.  

But now, Axios reports that Steward is in “financial free fall,” struggling under the weight of substantial financial liabilities incurred when it was owned and controlled by Cerberus. The hospital chain has recently stopped paying its vendors and has failed to provide basic financial information to the state of Massachusetts as required by law. To make matters worse, Steward’s financial troubles have damaged its ability to provide quality care to its patients, endangering the health of thousands of health care consumers, including those from low income populations.  

State and federal officials have expressed frustration over the situation, demanding answers from both Cerberus and Steward. U.S. Senator Ed Markey (D-MA) has scheduled a hearing on this matter for April 3. 

Curiously, a spokesperson for Cerberus claimed that the private-equity firm was never in charge of Steward Health, even though it owned a controlling financial interest in the chain and held a majority of its board seats.  

The Biden administration has led the charge in scrutinizing private equity’s role in health care, deals which all too often financially benefit these firms at the detriment of hospital systems and consumers.  

 Health care providers – and the companies that own them – should always put patients before profits.