In 2010 a private equity firm called Cerberus Capital Management purchased six struggling community hospitals from the Boston Catholic Archdiocese, creating a company called Steward Health Care. After closing one hospital, in 2016 Steward sold those properties to a real estate investment company, and then leased those same properties back, making tons of money – about $1 billion – which they then used to expand further. They merged with another hospital company, taking over another 36 hospitals, bringing the total hospitals under their control to more than 40 in at least seven states. The CEO, Ralph de la Torre, said that “our model shows how the industry can shift toward a more cost effective local, coordinated approach that puts people first.”
In reality, patients came last as they raked in profits. From starting with only six struggling hospitals they turned a profit of more than $800 million in just over ten years, paid out millions in dividends and $100 million to just its top leadership team. De la Torre is said to have been paid at least $250 million, which he then used to buy huge mansions, $40 million yachts, and travel the world going to glamorous sporting events.
And how did they and he make this money? First through the shell game of selling and then leasing their own properties to manufacture money in their accounts. Second, by simply not paying for basic supplies and staffing that all hospitals need. Without getting into the stingy and tragic details, the extensive Boston Globe series that chronicles the Steward Health Care story found at least 15 cases in which people died in Steward hospitals directly because of lack of basic supplies and staffing.
By 2023, the crisis conditions had attracted the attention of state legislators, who are forcing Steward to give up ownership of hospitals in Massachusetts, and the company has filed for bankruptcy. But in only 13 years, struggling but vitally necessary community hospitals had been turned into profit machines, while hundreds of thousands of patients and 16,000 employees were treated like garbage and may now be left with no hospitals and no jobs.
The Steward Health Care saga tells us all we need to know about what is wrong with capitalism – it always puts profits before people.
