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steward health care
Democrats Renew Effort to End Private Equity Looting
"Union-busting, pollution, and bankruptcy aren't side effects of the private equity model: They are the model," said one campaigner backing the bill. "It's a smash-and-grab, plain and simple."
Oct 10, 2024
Less than a month away from the U.S. general election, over a dozen congressional Democrats on Thursday renewed their fight to "fundamentally reform the private equity industry" with a bill that Rep. Mark Pocan said "will finally hold these predatory firms accountable and protect workers from being plundered by corporate greed."
"It's long past time for billionaires and big corporations to stop gambling with hardworking Americans' and their communities' assets in service of corporate greed," declared Pocan (D-Wis.), who is leading the Stop Wall Street Looting Act with Congressional Progressive Caucus Chair Pramila Jayapal (D-Wash.) and Sen. Elizabeth Warren (D-Mass.).
"In Wisconsin, we've seen what happens when private equity firms like Sun Capital raid companies for their wealth and leave workers and communities to pick up the pieces," he noted. "When Sun Capital took over Shopko—a Wisconsin-based retail chain that had stood strong for more than 50 years—they drained it dry, buried it in debt, pushed it into bankruptcy, and abandoned roughly 14,000 workers."
"Private equity takeovers are legal looting that make a handful of Wall Street executives very rich while costing thousands of people their jobs, putting valuable companies out of business, and in the case of healthcare, is literally a matter of life and death."
Warren's state is also dealing with fallout from the industry. As The Boston Globereported Thursday, the legislation is "designed to rein in the growing power of private equity firms and limit the sort of leveraged buyout deals that led to the crisis at Steward Health Care, whose bankruptcy continues to roil communities in Massachusetts and seven other states."
The bill "was reintroduced in part as a response to the unfolding crisis at Steward, which before its bankruptcy was the nation's largest private for-profit hospital system," the newspaper noted. It follows the Senate's unanimous approval of a resolution to hold CEO Dr. Ralph de la Torre in criminal contempt of Congress for his refusal to comply with a subpoena to testify before a committee. Shortly after the vote—the first of its kind since 1971—he resigned.
"Private equity takeovers are legal looting that make a handful of Wall Street executives very rich while costing thousands of people their jobs, putting valuable companies out of business, and in the case of healthcare, is literally a matter of life and death," Warren, a former bankruptcy law professor, said Thursday. "Our bill is designed to close loopholes and end incentives for private equity pillaging—and it will make sure what happened at Steward never happens again."
As a fact sheet from the sponsors details, the bill would make private equity firms responsible for liabilities including debt, legal judgments, and pension-related obligations; limit how much money they can extract from companies; close a loophole they have used to conceal assets from bankruptcy courts; implement various protections for workers and customers; increase transparency; impose guardrails for receiving public funds; and drive real estate investment trusts out of healthcare.
"From healthcare to housing, millions of Americans are seeing private equity take over companies with the promise of improving services, only to strip them for parts and hurt both workers and working families," said Jayapal. "It's time for Congress to take action to protect Americans from the dangers of private equity and corporate greed, and that's exactly what our Stop Wall Street Looting Act will do."
The legislation is backed by Reps. Raúl Grijalva (D-Ariz.), Rick Larsen (D-Wash.), Barbara Lee (D-Calif.), Delia Ramirez (D-Ill.), Jan Schakowsky (D-Ill.), Alexandria Ocasio-Cortez (D-N.Y.), and Eleanor Holmes Norton (D-D.C.), along with Sens. Tammy Baldwin (D-Wis.), Jeff Merkley (D-Ore.), Bernie Sanders (I-Vt.), Tina Smith (D-Minn.), and Ed Markey (D-Mass.).
The bill is also endorsed by dozens of groups including the American Federation of Teachers, Americans for Financial Reform, Economic Policy Institute, Indivisible, National Employment Law Project, National Nurses United, Public Citizen, Service Employees International Union, Student Borrower Protection Center, Take on Wall Street, United for Respect, and Working Families Party.
"Union-busting, pollution, and bankruptcy aren't side effects of the private equity model: They are the model," said Porter McConnell of Take on Wall Street. "It's a smash-and-grab, plain and simple. That's why we are so pleased to see comprehensive legislation like the Stop Wall Street Looting Act introduced in Congress today. We created the loopholes in the law that allowed the private equity industry to thrive, and we can end them."
United for Respect co-executive directors Bianca Agustin and Terrysa Guerra stressed that "Wall Street private equity firms have proven themselves to be a parasite on workers, our economy, and American retailers by gutting companies for profit and driving mass layoffs. Holding billionaire profiteers accountable for the damage they do to our working families and communities is imperative to addressing growing economic inequality."
"The Stop Wall Street Looting Act will help close loopholes in our laws that for too long have allowed private equity to pillage companies and amass huge profits while workers lose their jobs and are left with nothing," they added. "United for Respect is proud to support this bill—and we need all legislators to join us in protecting workers and putting Wall Street on the hook for the havoc they reap."
While the bill is unlikely to go anywhere in the currently divided Congress, it's a clear statement from the sponsors where they stand, as early voting gets underway to determine the future of the Senate and House of Representatives as well as the next occupant of the White House—Democratic Vice President Kamala Harris or former Republican President Donald Trump.
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'No One Is Above the Law': Sanders-Led Panel Votes to Hold Steward CEO in Contempt
"Even though he may be able to afford some of the most expensive lawyers in America—no, Dr. de la Torre is not above the law," said Sen. Bernie Sanders.
Sep 19, 2024
A U.S. Senate panel led by Sen. Bernie Sanders voted Thursday in favor of holding Steward Health Care CEO Ralph de la Torre in civil and criminal contempt after he refused to appear at a hearing last week in defiance of a congressional subpoena.
The Senate Health, Education, Labor, and Pensions (HELP) Committee passed the contempt resolutions in a near-unanimous vote, with Sen. Rand Paul (R-Ky.) abstaining.
The vote marked "the first time in modern American history that the HELP Committee has issued a civil or criminal contempt resolution," according to Sanders' office.
The approval of the two resolutions, which now head to the full Senate for consideration, could mean jail time for de la Torre, who has come under fire for purchasing two yachts as his private equity-backed company faced financial turmoil. De la Torre was paid a salary of nearly $4 million the year before Steward ultimately filed for bankruptcy.
A lawyer for de la Torre insisted in a letter to Sanders (I-Vt.) on Wednesday that the CEO "lacks the authority to speak on behalf of Steward with respect to the ongoing bankruptcy proceedings and he is prohibited by a federal court order from doing so."
Ahead of Thursday's vote, Sanders said de la Torre's decision not to comply with the Senate HELP Committee's subpoena was "unfortunate and unacceptable."
"For months, this committee has invited Dr. de la Torre to testify about the financial mismanagement and what occurred at Steward Health Care. Time after time he has arrogantly refused to appear," said Sanders. "Dr. de la Torre has given us no choice but to move forward this morning on two resolutions to enforce the subpoena and to hold him accountable for his actions."
"Even though Dr. de la Torre may be worth hundreds of millions of dollars, even though he may be able to own fancy yachts and private jets and luxurious accommodations throughout the world, even though he may be able to afford some of the most expensive lawyers in America—no, Dr. de la Torre is not above the law," Sanders added.
Sen. Ed Markey (D-Mass.), a member of the Senate panel, said in a statement that "as a physician and as the CEO of Steward from its founding, there is no one who understood the potential consequences of Steward's failures more than Dr. Ralph de la Torre."
"Dr. de la Torre led Steward when it sold out hospital real estate to Medical Properties Trust and allowed [the private equity firm] Cerberus to extract over $800 million in profit," said Markey. "Dr. de la Torre led Steward as eight hospitals closed, 2,000 patients were endangered, and at least 15 patients died. Dr. de la Torre led Steward as it filed for bankruptcy."
"We are making clear to Dr. de la Torre, the Steward Board of Directors and senior leadership, and other CEOs, private equity investors, and corporate executives who treat the healthcare system like their piggy bank: Your millions do not shield you from accountability to a legal order issued by the United States Senate," Markey added.
The Senate panel's passage of the two resolutions comes a week after Steward nurses told the committee—in de la Torre's absence—that Steward-owned hospitals were disastrous for patients and healthcare workers. A report published by the Senate HELP Committee earlier this month found that "death rates for certain conditions at some Steward-owned hospitals increased as death rates for those same conditions held steady or decreased across the country."
Lisa Gilbert, co-president of the consumer advocacy group Public Citizen, said in a statement Thursday that the Senate panel's "actions today are an important reminder that no one is above the law."
"Congress and the American people deserve answers on what happened under Dr. de la Torre's watch at Steward, as his damaging actions had real consequences for patient health," said Gilbert. "Dr. de la Torre and others like him should not be able to ignore congressional subpoenas without accountability."
If the full Senate approves the criminal contempt resolution, it would "refer the matter to the U.S. Attorney for the District of Columbia to criminally prosecute Dr. de la Torre for failing to comply with the subpoena," Sanders' office said.
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As Steward CEO Defies Subpoena, Nurses Testify to Horrors of Private Equity Hospitals
The "courage" of healthcare workers, said Sen. Ed Markey, was "matched only by Dr. de la Torre's cowardice."
Sep 12, 2024
The obscenely rich CEO of Steward Health Care, a for-profit network formed with private equity backing, violated a subpoena on Thursday by declining to testify at a Senate hearing on how mismanagement of the now-bankrupt hospital system harmed patient care.
But in Ralph de la Torre's absence, members of the Senate Health, Education, Labor, and Pensions (HELP) Committee did hear from nurses who witnessed firsthand how Steward's prioritization of shareholder payouts and lavish executive compensation left its hospitals in dire straights, with badly insufficient staffing and resources.
Ellen MacInnis, a longtime nurse at St. Elizabeth's Medical Center in Boston, said in response to a question from Sen. Chris Murphy (D-Conn.) that hospital conditions are "noticeably different" under private equity ownership.
"After Steward took over," said MacInnis, the hospital began "violating agreements" it made with nurses and "laid off all the nursing assistants on our maternity floors."
When Murphy said that "the purpose" of hospitals under Steward's ownership was apparently to "make the owners filthy rich," MacInnis responded, "Yes, absolutely."
Earlier in her testimony, MacInnis offered what she described as an "egregious and appalling example" of the incompetence and cruelty of Steward's management: "The failure of Steward to ensure a supply of bereavement boxes, which are the cases used to carry the remains of deceased newborns to the morgue."
"Instead, staff were expected to transport these remains in banker's and shipping boxes," said MacInnis. "To compensate for this indignity it was left to our own nurses to go online and purchase appropriate containers on Amazon."
The "most tragic example," MacInnis said, was the death of a 39-year-old mother "simply because the embolism coil that would have saved her life had been repossessed by another unpaid vender."
Watch the full hearing:
Steward has faced close scrutiny from lawmakers since it filed for bankruptcy in May after de la Torre and his private equity partners raked in massive sums of cash—making the for-profit network a stark example of private equity's parasitic impact on the U.S. healthcare system.
The Senate HELP Committee, led by progressive Sen. Bernie Sanders (I-Vt.), voted to subpoena de la Torre in late July after he refused to voluntarily appear before lawmakers.
The Steward CEO's defiance of the panel's subpoena led Sanders to announce Thursday that he "will be asking the committee to report a resolution to authorize civil enforcement and criminal contempt proceedings against Dr. de la Torre requiring compliance with the subpoena."
A hearing on the proposed contempt resolution is scheduled for next week.
"There's no incentive for a for-profit company that's looking to get every dime out of the hospital and all the services to add more nurses."
As The American Prospect's Maureen Tkacik noted last week, Steward "entered bankruptcy with $8 billion in debt while its CEO siphoned out more than a quarter-billion dollars and blew most of it on an epic midlife crisis, featuring a new wife 29 years his junior, a 500-acre ranch for her prizewinning racehorses, a $77,000-a-month detail for her security while traveling between the couple’s far-flung mansions, an Amalfi Coast wedding choreographed by Gwen Stefani and Blake Shelton’s wedding planner, and not one but two yachts."
Just ahead of Thursday's hearing, The Wall Street Journalreported that Steward paid out $790 million in dividends to shareholders years before filing for bankruptcy. Much of the $790 million went to the private equity giant Cerberus, which owned Steward between 2010 and 2020.
Nurses' testimony at Thursday's hearing made clear that such avarice came at the expense of healthcare workers and patients.
"There's no incentive for a for-profit company that's looking to get every dime out of the hospital and all the services to add more nurses," Audra Sprague, a former nurse at the newly shuttered Nashoba Valley Medical Center, told the Senate Health, Education, Labor, and Pensions (HELP) Committee during Thursday's hearing.
"They don't care how your day is," Sprague continued. "They're not there to actually help patients, they're there to make money."
After the hearing adjourned, Sen. Ed Markey (D-Mass.) held a press conference alongside nurses and other advocates in front of the U.S. Capitol Building.
I’m live in front of the US Capitol after Steward CEO Ralph de la Torre failed to testify at this morning’s Senate HELP Committee. He violated a legal order to appear and must be made accountable. Join us: https://t.co/GThvXuYfFv
— Ed Markey (@SenMarkey) September 12, 2024
Markey, a vocal critic of Steward, applauded the bravery of healthcare workers fighting for their patients in the face of private equity greed.
"Their courage," said the Massachusetts senator, "is matched only by Dr. de la Torre's cowardice."
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