By: Robert Weisman; Boston Globe
A pair of US senators Thursday said they’ll ask a Senate panel next week to subpoena Steward Health Care founder and chief executive Ralph de la Torre to testify about his role in leading the national hospital chain, which filed for bankruptcy on May 6.
The senators, Ed Markey of Massachusetts and Bernie Sanders of Vermont, said they’ll also ask the Health, Education, Labor and Pensions Committee, which Sanders chairs, to investigate “financial schemes” that left Steward with about $9 billion in debts. The committee is expected to vote next Thursday on issuing the subpoena and opening the inquiry.
Markey and Sanders said de la Torre had “arrogantly refused” past invitations to appear before Congress to testify about Steward mismanagement.
Steward is selling about 30 hospitals in eight states along with its nationwide physicians network to pay off creditors. Bids for eight of its Massachusetts hospitals were due Monday, but the company has yet to disclose how many bids were received and for which hospitals.
A spokesperson for Steward, which moved its headquarters from Boston to Dallas in 2018, declined to comment. Steward has cited rising interest rates and labor costs, and inadequate government health insurance payments, as factors in its bankruptcy.
Markey has been an outspoken critic of de la Torre, a former Boston cardiac surgeon who founded Steward in 2010 with the financial backing of New York private equity firm Cerberus Capital Management.
“Perhaps more than anyone else in America, Dr. Ralph de la Torre, the CEO of Steward Health Care, is the poster child for the type of outrageous corporate greed that is permeating our for-profit health care system,” Markey and Sanders said in a joint statement Wednesday.
Markey brought a subcommittee of the Senate panel to Beacon Hill in Boston for an April 3 field hearing at the State House, where he and Senator Elizabeth Warren cited Steward’s financial meltdown this year as a textbook case of private equity abusing the health care system. Markey chairs the Subcommittee on Primary Health & Retirement Security.
De la Torre had declined an invitation to testify at that event. Pointing to an empty chair, Markey told the crowded hearing, “Dr. de la Torre’s chair is as empty as the promises he made” to Massachusetts leaders that he would provide low-cost, quality health care at the hospitals.
Hired by the Archdiocese of Boston in 2008 to run Caritas Christi Health Care, a chain of financially struggling Catholic hospitals in Eastern Massachusetts, de la Torre engineered their sale to Cerberus two years later and renamed the system Steward. He then expanded nationally, buying hospitals in Florida, Texas, Arizona, and several other states.
Along the way, Steward made several financial transactions that would be the focus of an inquiry by Markey’s subcommittee. In 2016, it struck a $1.25 billion deal with a real estate investment trust, Medical Properties Trust Inc., selling its hospital properties to the firm and agreeing to pay it millions of dollars in rent each year. Those lease payments have been a major deterrent to prospective buyers of the Steward hospitals.
Steward also borrowed $335 million in 2021 to buy out the Cerberus interest in the company. It then paid a $111 million divided to its shareholders, with de la Torre, the principal owner, receiving most of the payout, according to a lawsuit filed by a Steward creditor.
The company long refused to disclose its finances, including executive compensation, to state regulators. But de la Torre purchased a 90-foot sports fishing boat and a 190-foot yacht, according to public records.
In filing required by the US Bankruptcy Court in Houston last weekend, Steward said it paid de la Torre a gross salary of $3.7 million in the 12 months before the company filed for bankruptcy. Eight other Steward were also paid more than $1 million each during that period.