Private equity funds are buying up hospitals and some of them are just milking the hospitals to death. Some hospitals don’t even own the buildings the hospitals are located in, they rent the buildings.
In Massachusetts the state has been hit hard with the collapse of Steward Health.
The Boston Globe
By Mark Arsenault, Liz Kowalczyk, Robert Weisman and Adam Piore
March 29, 2024
There was no sugarcoating the financial crisis that had befallen Steward Health Care.
“Let’s face it 2023 was a tough year,” company chairman Ralph de la Torre acknowledged this past January, in a letter to employees of the for-profit hospital chain.
Worse than tough. News stories about its hospitals read like dispatches from a war zone: bat infestations, patients collapsing while waiting for care, shortages of life-saving equipment. The company, which owns more than 30 hospitals across the country, including nine in mostly low-income Massachusetts communities, is on the verge of bankruptcy. State officials are clambering for ways to keep the hospitals open and avert a crisis that could overwhelm the state’s health care system.
How could this have happened? De la Torre’s letter ticked off many reasons: rising interest rates and labor costs; more people on Medicaid, which doesn’t pay hospitals enough; and free care provided to undocumented immigrants.
He left out one: Ralph de la Torre.
Since this article they have filed for bankruptcy.
First and foremost was the decision in 2016 to sell the buildings and land out from under the hospitals and then lease them back for multimillion dollar payments. That move took hundreds of millions in equity out of the chain and left the hospitals paying rents they can no longer afford. And then there was the company’s reported issuance in 2021 of a $111 million dividend to equity holders, including de la Torre himself, as the chain’s debts piled up.
Say WHAT?
To me it sounds like they milked the all the assets out of the chain, selling everything and anything they could lay their hands on.
Fierce Healthcare writes,
The Dallas-based for-profit health system filed for Chapter 11 on Monday, a move anticipated by government leaders in Massachusetts and other states who have been concerned that the company’s dire finances could lead to healthcare service interruptions or degradation.
It currently operates 31 hospitals and about 400 total facilities across eight states, providing care for more than 2 million people and employing almost 30,000 staff including 4,500 physicians.
During a Tuesday morning meeting with a U.S. Bankruptcy Court in Texas, Steward attorney Ray Schrock, with Weil, Gotshal & Manges, described the system as an “impressive” and “very good” company. He said it, along with its CEO Ralph de la Torre, M.D., has “been taking a lot of flak, and frankly taking a lot of punches in the press over the last several months” amid word of its unpaid vendor obligations, $50 million in overdue rent and impending financial implosion.
[…]
The embattled health system signed a definitive agreement to sell Stewardship, one of the largest primary care provider organizations in the country, for a proposed purchase price of $245 million, according to court documents filed in federal bankruptcy court Aug. 12. The court documents (document 1953 and 1954) can be found on an online portal set up for court filings and other restructuring information about Steward Health Care.
But don’t forget that they don’t own anything anymore. They don’t own the buildings, they probably don’t own the equipment and just rent them. So what are they really selling?
So where did all the equity go that was in the hospitals?
Daily Mail
By Alex Hammer
18 August 2024
Steward Health Care System CEO Dr. Ralph de la Torre was reportedly paid out at least $250 million over the past four years - while the hospital chain collapsed.
Steward, which operates 30 hospitals across eight states, filed for bankruptcy in May, drawing government scrutiny.
The payouts to its chief exec, first reported by The Wall Street Journal, are based on public disclosures viewed by the newspaper, and were all dished after de la Torre took over majority ownership of the firm from its private-equity owner in 2020.
He went on to use the money on a 500-acre ranch in Waxahachie, Texas - a $7.2million property that comes on top of a 190-foot, $40 million yacht also owned by the former cardiac surgeon, who became CEO of Steward's predecessor in 2008.
He also owns an 11,108-square-foot mansion in Dallas, valued at $7.2 million. Neighbors include George W. Bush and Mark Cuban in the sought-after location.
'He basically stole millions out of Steward on the backs of workers and patients and bought himself fancy yachts, mansions and now apparently lavish trips to Versailles,' said Massachusetts Gov. Maura Healey said last week, referring to how the hospital owner was recently in France watching Olympic equestrian events at Versailles.
'I hope he gets his just due and that federal investigators will come after him for his actions,' she said in a statement, as Steward two Massachusetts hospitals were flagged for closure. Both failed to get bids amid a recent flash sale.
Plus, the British Independent reports that,
The report read that Steward’s disclosures have covered only the 12 months in most cases, before it filed for chapter 11 bankruptcy. Some of the $250 million was paid to de la Torre directly, while other payments were to companies that did business with Steward where he had big ownership stakes.
[...]
De la Torre became the majority shareholder in Steward in 2020 when the company’s private-equity owner, Cerberus Capital Management, transferred its 90% stake to a physician group he led, in exchange for a $350 million promissory note, the report showed.
He received $81 million out of the $111 million Steward distributed to shareholders in 2021, with him owning 73% of the company.
The WSJ also viewed previously undisclosed Steward financial statements, which showed that by the end of 2021, Steward had a $2 billion deficit, lost $365 million in 2021, and $269 million in 2022.
De la Torre also bagged $99 million to a company he owns after Steward sold a healthcare business it owned to CareMax, a public company, for cash and stock, the stock of which was transferred to his company.
The WSJ report also revealed that Steward made payments to a consulting firm, Management Health Services, majority-owned by de la Torre, at a rate of $30 million a year.
The firm employed 16 people, including Steward executives, for management services for Steward. The same company owned two private jets, both of which were sold this year.
The report revealed that another company that was 40% owned by de la Torre, CREF, was paid $37 million from May 2023 to May 2024.
Steward is being investigated by a federal grand jury in Boston, including whether it violated antibribery laws in a deal to run state-owned hospitals in Malta. The Maltese investigation has resulted in charges against former Prime Minister Joseph Muscat and dozens of others.
To me it sounds like the private-equity firm used the hospitals as cash-cow milking it dry of capital and not only that but it looks like he owns a share in the company that do business with Steward.
New analysis shows alarming increase in patient complications
Harvard Medical School
By JAKE MILLER
December 26, 2023
At a glance:
- National study of quality of care in hospitals acquired by private equity shows worsening of fall and infection risk, other measures of quality and safety.
- Some post-procedure adverse events increased even though private equity hospitals performed fewer procedures among younger and less disadvantaged patients.
- The new findings amplify existing economic concerns about the growth of this for-profit ownership model.
Do you realize that every other civilized country has national healthcare?
This is from Perplexity AI when I asked it: “What nations have nationalized healthcare?”
- United Kingdom: The National Health Service (NHS) provides healthcare funded by taxation and is free at the point of use for residents.
- Canada: Healthcare is publicly funded through a system known as Medicare, with services provided by private entities.
- Australia: The Medicare system provides access to healthcare funded by the government.
- France: Offers a universal healthcare system known for its accessibility and quality, funded by a combination of public and private sources.
- Sweden: Provides universal healthcare funded by taxes, offering comprehensive services to residents.
- Denmark: Features a government-funded healthcare system accessible to all residents.
- Brazil: The Sistema Único de Saúde (SUS) provides free healthcare to all residents and visitors.
- South Korea: Has a universal healthcare system funded through government subsidies and contributions from employers and employees.
- Germany: Utilizes a social health insurance model with coverage provided by statutory health insurance funds.
- Japan: Offers universal healthcare through a combination of government and employer-provided insurance
You have to ask “Why don’t we have nationalized healthcare?” I think that we all know the answer one party protects the wealth of billionaires. It is a way for them to vacuum money out of our pockets.
Ask it: “Why does the US not have nationalized healthcare?”
Answer
The absence of nationalized healthcare in the United States can be attributed to several factors:
- Complex Historical Framework: The U.S. has developed a complex mix of public and private health coverage over time, which makes transitioning to a universal system challenging. This framework includes employer-sponsored insurance, Medicare, Medicaid, and private insurance, creating a fragmented system that is difficult to overhaul.
- Federalism and State Powers: The U.S. federal system and the interpretation of federal versus state powers complicate the establishment of a fully federal healthcare system. Health is not explicitly governed by the federal government, which limits the ability to legislate a national healthcare system without significant legal and constitutional changes.
- Political and Cultural Factors: The political landscape in the U.S. has historically been resistant to large redistributive shifts and centralization of healthcare. The right-of-center political climate and the belief in individual responsibility over government intervention have hindered efforts to establish universal healthcare.
- Economic Concerns: There is a general unwillingness to dismantle the existing system due to cost considerations. Implementing universal healthcare would require significant upfront costs and logistical challenges, which are seen as barriers.
- Existing Safety Nets: Many Americans rely on safety net providers and existing programs like Medicare and Medicaid, which reduces the perceived urgency for universal coverage. The presence of these programs provides a level of healthcare security, albeit incomplete, for many citizens .
These factors combined have contributed to the U.S. remaining the only major industrialized nation without a nationalized healthcare system.
The next question that I asked it was,
“What is the average cost to the patient with a simple break in the leg between Canada and the US?”
Answer
- The cost of treating a simple broken leg varies significantly between Canada and the United States, primarily due to differences in healthcare systems and insurance coverage.
- In the United States, without health insurance, the cost for treating a broken leg that requires a cast can be as much as $2,500 or more. This includes costs for an X-ray, a cast, and doctor's fees. If surgical treatment is necessary, the cost can range from $17,000 to $35,000 or more. Even with insurance, patients may still face significant out-of-pocket expenses due to copayments and deductibles.
- In Canada, healthcare is publicly funded, which generally means lower direct costs for patients. However, for those not covered by provincial insurance plans like OHIP in Ontario, the costs can still be substantial. For example, out-of-pocket expenses for a simple break might range from $1,000 to $3,000, depending on the specifics of the treatment and the province.
Overall, the costs in the U.S. tend to be higher compared to Canada, especially for those without insurance.
We can never get publicly funded healthcare, the system is too far broken. What we could have is system like Medicare for everyone, a combination of public funding and government funded healthcare like the advantage plans and not have health insurance tied in with employment.
This morning I went to a specialist for a routine exam by a specialist... $45. I have an advantage plan which I like.
