Private Equity Drives Health Care Inequity:  Regulatory Guardrails for Private Equity Investment In Health Care 

Introduction

On July 25, 2024 Dr. de la Torre–former CEO of Steward Healthcare Systems LLC–was issued a subpoena by the Senate Health Education Labor and Pensions (HELP) Committee.  The Senate HELP committee sought testimony from Dr. de la Torre regarding the bankruptcy of the privately owned healthcare system and its impact on patient outcomes. On the same day, Senator Edward Markey introduced the Health Over Wealth Act, a proposed amendment to the Public health Service act of 1944.  This would be the first legislation of its kind, establishing regulatory guidelines for private equity investment in health care systems.  This new regulation aims to better in-patient outcomes and decrease private equity acquired healthcare system failures. 

Prior to the investigation of Steward Health, limited research existed on how private equity ownership affects patient outcomes. One of the few studies, published in the Journal of the American Medical Association in 2023, found that patients in private equity acquired hospitals had increased rates of falls and central line bloodstream infections [1].  Although this study acknowledged that its sample size may be too small to make a generalization concerning private equity investments in healthcare, it nonetheless called for further research and investigation into the role of private equity in the sector [2]. Steward Healthcare LLC, the primary case study for the Health Over Wealth Act, serves as the most relevant example of the adverse effects of private equity investment on healthcare systems and the communities which they serve.

 

Steward Health: A Case Study of Corporate Greed in Healthcare

Between 2014 and 2024 Steward Healthcare Systems closed eight hospitals across four states, resulting in an estimated loss of 1,533 Hospital Beds and 4,431 Jobs [3]; half of these closed hospitals served communities with high percentages of low-income, Black, or Hispanic populations [4]. Carney Hospital, a former Steward Health hospital, primarily served patients from the Boston neighborhoods of Dorchester, Quincy, and Mattpan; communities which are made up of mainly the working class and people of color [5]. The hospital had 83 medical/surgical beds, 19 intensive care unit beds, 7 pediatric service beds, and 50 psychiatric service beds [6].  Last fiscal year, prior to closure, Carney hospital treated 15,248 emergency room patients and performed 101,098 outpatients procedures. Carney Hospital’s closure ripped a hole in Metro Boston healthcare systems, severely limiting the area's access to care. 

Another case is Northside Regional Medical Center in Youngstown, Ohio–another tragic failure under Steward Healthcare ownership. Before its closure, Northside had 398 beds and employed 388 people; operating as the only labor and delivery center in the entire town of Youngstown [7]. Given that Youngstown’s population is 43% Black, the hospital’s closure had severe consequences. In the years that followed the closure, the proportion of births in which the mother had a singular prenatal care visit decreased, and the infant mortality rate increased–-most dramatically for Black babies [8].  

Steward Hospitals that remained in operation did not fare any better. Former Steward nurse Ellen MacInnis gave testimony at the Senate HELP committee hearing, providing insight on the realities faced by Steward Health employees. Every day at Steward Healthcare hospitals was a struggle; chronic staffing shortages made providing the standard of care impossible [9]. The need for more employees was frequently communicated to those in-charge but the pleas fell on deaf ears–leaving patients to bear the consequences. At Steward-owned Holy Family hospital, two men—aged 38 and 81—died after going undiagnosed and without proper monitoring due to a lack of available medical staff [10]. 

Another issue present at Steward Healthcare hospitals was the constant lack of medical supplies, due to Steward failure to pay its vendors [11].  Nurse MacInnis details events in which nurses had to buy desperately needed medical supplies with their own money, from IV’s to bereavement boxes–which were needed to transport deceased infant bodies to the morgue [12].  At another hospital, a 39-year-old mother tragically died after an embolism cord needed to save her life was repossessed by the vendor, because Steward Healthcare did not pay [13]. Beyond the lack of staff and supplies, the physical infrastructure was severely neglected. At Steward owned St. Elizabeth Medical Center–nurse MacInnis’s former place of employment– there was a day when several floors went without electricity for 36 hours due to faulty wiring [14].  Nurses had to run extension cords throughout the building to keep patients' monitors working [15].  In another Steward-owned hospital, a suicidal patient died after jumping from a window that should have been secured but was pried open due to going unrepaired for an extended period [16]. While Steward Healthcare owned hospitals went understaffed, undersupplied, and severely in need of repair, corporate entities like Dr. de la Torre accumulated extreme personal wealth– a reflection of the obvious disconnect between corporate gain and patient safety. 

 

Corporate Actors: Steward Health, Cerberus, and Medical Properties Trust

Steward Health care’s story began in 2008 when Caritas Christi Health systems, a financially struggling non-profit six hospital health system in Boston which catered to low income patients, brought in Dr. Robert de la Torre to save the struggling hospital chain [17].  Dr. de la Torre appeared to be the perfect fit for the job; he was a Harvard and MIT graduate, a practicing cardiac surgeon at Beth Israel Deaconess Medical center, and had large ambitions to create low-cost high quality medical care [18].  Dr. de la Torre’s plan to revive Caritas Christi required major capital investment, his plan to acquire involved seeking private equity firm investments.  Dr. de la Torre then met with New York City based private equity (PE) firm Cerberus, who agreed to acquire the hospital system for $895 million dollars [19].  The acquisition was contingent on the approval of Massachusetts Attorney General, who agreed to approve only if the hospital system: submitted to five-years of state monitoring, maintaining employment of health workers, committing $400 million for reinvestment and keeping the hospitals open [20]. 

In November 2010, Caritas Christi Health Systems became Steward Healthcare Systems and Cerberus gained nearly full ownership of the hospital systems–naming Dr. de la Torre the new CEO of the new for profit corporation. Despite the agreement’s terms, Cerberus and Dr. de la Torre failed to meet their obligations. Rather than funding the $400 million from their own pockets Cerberus used debt—which was saddled on Steward Health—and the selling off of Steward Healthcare’s medical property to reach its mark [21]. A report from the Attorney General's office in 2015 reported that the hospital system had severely declined in its financial condition after purchase, citing that Cerberus had only invested $256 million in the hospital system [22]. Although their investment was scarce, $1.1 billion was taken from the hospital system which was financially suffering [23]. This marked the beginning of Steward Health’s exploitative and predatory practices.

After the fiver-year agreement ended, Dr. de la Torre was ready to expand his corporate empire; but needed more funds.  Enter Medical Properties Trust (MPT), a real estate investment trust, who would make Dr. de la Torre’s financial dreams a reality and put the final nail in Steward Healthcare’s coffin. In 2016 MPT and Steward Health entered into a $1.2 billion dollar leaseback deal [24]. This provided Dr. de la Torre with a capital injection to acquire more hospitals, and made MPT the landlord of nine Steward Health hospitals. The problem with this deal was that the high prices MPT paid resulted in exorbitant rents to be charged to the hospitals, hospitals which were being looted by Steward Health and Cerberus Capital management.  

 With the capital raised through its sale-leaseback deal Dr. de la Torre acquired over 30 hospitals across the nation. Now free from state monitoring and assessments, Steward Health was able to run these hospitals in the typical private equity fashion. Maximizing dividends was the only concern for Steward Health, audited financial statements at the end of 2016 revealed that $789 million in dividends were paid out to investors [25]. These corporate entities continued to take from Steward Health, and reinvested none of it leaving hospitals to fend for themselves. With the money looted from Steward hospitals Dr. de la Torre used some of his earnings to purchase a $40 million dollar yacht, a $15 million dollar fishing boat, a $62 million dollar private jet, and a $33 million dollar backup jet [26]; the list of these purchases and payments goes on. The constant looting, debt accumulation, and high rents put immense pressure on the hospitals, leading to their collapse. 

Eight days before Dr. de la Torre’s scheduled appearance, his legal team alerted the Senate HELP Committee Dr. de la Torre was invoking his fifth amendment right; which was overruled by the committee one day after receiving notice [27]. On the day of the hearing, Dr. de la Torre did not show and was held in civil and criminal contempt for his non-compliance [28]. This was the first time in history the committee had issued a civil or criminal contempt resolution, which was passed in the Senate by unanimous decision [29]. Dr. de la Torre’s legal team responded with a lawsuit, alleging the committee's decision violated his constitutional rights [30]. 

 

Legislative Response: The Health Over Wealth Act

The Health Over Wealth is a necessary piece of legislation to govern the boom of private equity investment in healthcare systems and hold those responsible for their survival accountable. Last year PE investment in healthcare saw its second largest surge in years-to-date, $115 billion dollars invested and 515 deals disclosed [31]. Steward Health Care is a cautionary tale for the fate of healthcare systems if private equity investments are allowed to continue unregulated. The avoidable deaths in Steward Healthcare hospitals must not be allowed to propagate due to negligent and greedy corporate entities like Dr. de la Torre, Cerberus, and Medical Properties Trust.  The avoidable deaths in Steward Healthcare hospitals must not be allowed to propagate due to negligent and corporate greed by entities like Dr. de la Torre, Cerberus, and Medical Properties Trust. 

The bill's contents largely come from lessons learned when revising the failures of  Steward Healthcare.  The bill is comprehensive in its approach to protect health care systems and the communities which they serve. The bill sets new standards for health care ownership transparency; it will require each covered firm–for profit corporation that owns or indirectly owns a health care entity–to submit comprehensive reports of their financial conditions and transactions to that State's Secretary [32].  This regulation will allow for timely observance of the financial state of health systems to ensure the hospitals are financially equipped to provide for their patients and hospitals are not closing unexpectedly leaving communities without a health center. The bill also prohibits the selling to or leasing from a real estate investment trust if the action will weaken the financial status of the health care entity or place the public health at risk [33]. All proposed deals must be first submitted to the State’s Secretary. The bill also promotes measures to support research into the impact of private equity in healthcare entities and outlines  maintenance of healthcare access for communities following service discontinuation and hospital closure [34]. If passed, this bill will have a major positive impact on the health outcomes of patients, livelihoods of healthcare workers, and conditions of hospitals acquired by private equity firms. 

However, this Act may face significant opposition. The Trump administration is unlikely to support a bill that will promote corporate regulation due to its firm deregulatory stance.  On January 31st, 2025 President Trump signed an executive order meant to curb the ‘regulatory onslaught’ of the Biden administration [35]. President Trump believes that regulation is hindering America’s economic prosperity due to the increasing compliance costs and the risk of costs of non-compliance [36]. With the House of Representatives and the Senate both being red, it will take a bipartisan effort to approve this bill. Hopefully, elected officials will see the need for this legislation to protect the U.S. healthcare system from private equity looting and mis-management. The Health Over Wealth Act represents more than just a policy fix–it is a call to action which will protect our nation’s most vulnerable from profit-driven practices that propagate negative health outcomes and weaken community health systems. Without meaningful regulation, private equity firms will continue to operate unchecked, prioritizing profits over patients and exploiting a healthcare system already under strain. Passing this bill would be a critical step toward restoring accountability, safeguarding public health, and ensuring that healthcare institutions serve people–not private portfolios.

 

[1] “The Steward Health Care Report | U.S. Senator Ed Markey of Massachusetts.” 2024. Senate.gov. Edward Markey. 2024. https://www.markey.senate.gov/stewardreport.

[2] Id.

[3] Id. at 1

[4] Id. at 1

[5] Id. at 1

[6] Diaz, Octacvio. Letter to Stephen Davis. “Carney Hospital - Notice of Hospital Closure.” Official Website of the Commonwealth of Massachusetts, August 5, 2024. https://www.mass.gov/doc/carney-notice-of-intent-to-close-2-pdf-carney-hospital/download. 

[7] Id. at 1

[8] Id. at 1

[9] “Ellen MacInnis, RN Steward St. Elizabeth’s Medical Center Testimony Before HELP Committee,” 2024. 

[10] Id.

[11] Id. at 10

[12] Id. at 10

[13] Id. at 10

[14] Id. at 10

[15] Id. at 10

[16] Id. at 10

[17]Sharife, Khadija. “How Private Equity and an Ambitious Landlord Put Steward Health Care on Life Support.” OCCRP. Accessed March 19, 2025. https://www.occrp.org/en/investigation/how-private-equity-and-an-ambitious-landlord-put-steward-healthcare-on-life-support.

[18] Id. 

[19] Id. at 17

[20] Coakley, Martha. Rep. Interim Reports on Steward Health Care System Pursuant to 2010 and 2011 Assessment and Monitoring Agreements. Boston, MA: Massachusetts Office of the Attorney General, 2013. 

[21] “How Private Equity Has Looted Our Hospitals,” October 10, 2024. https://www.aft.org/hc/fall2024/bugbee.

[22] Id.

[23] Id. at 21

[24] Id. at 21

[25] Id. at 17

[26] Bernie Sanders Leads Senate HELP Committee Hearing On Impacts Of Steward Health Care’s Bankruptcy, 2024. https://www.youtube.com/watch?v=-mn6HgmyHD8.

[27]“NEWS: In Historic First, HELP Committee Holds Steward CEO Ralph de La Torre in Civil and Criminal Contempt with Bipartisan Vote | The U.S. Senate Committee on Health, Education, Labor & Pensions,” September 19, 2024. https://www.help.senate.gov/dem/newsroom/press/news-in-historic-first-help-committee-holds-steward-ceo-ralph-de-la-torre-in-civil-and-criminal-contempt-with-bipartisan-vote.

[28] Id.

[29] Id. at 27

[30] “Senator Markey, Rep. Jayapal Introduce Health Over Wealth Act, Setting Guardrails for Private Equity in Health Care | U.S. Senator Ed Markey of Massachusetts.” Accessed April 21, 2025. https://www.markey.senate.gov/news/press-releases/senator-markey-rep-jayapal-introduce-health-over-wealth-act-setting-guardrails-for-private-equity-in-health-care.

[31] Bain. “Healthcare Private Equity Market 2024: Year in Review and Outlook,” January 9, 2025. https://www.bain.com/insights/year-in-review-and-outlook-global-healthcare-private-equity-report-2025/.

[32] Id. at 30

[33] Id. at 30

[34] Id. at 30

[35] The White House. “Unleashing Prosperity Through Deregulation,” January 31, 2025. https://www.whitehouse.gov/presidential-actions/2025/01/unleashing-prosperity-through-deregulation/.

[36] Id. at 35