“Cerberus and its private equity executives received $800 million in profits,” but “the current financial challenges at Steward Health Care hospitals threaten access to medical care for thousands of people in eastern Massachusetts”

Text of Letter (PDF)

BOSTON — Congresswoman Ayanna Pressley (MA-07), Senators Elizabeth Warren (D-MA) and Edward J. Markey (D-MA), along with all members of the Massachusetts congressional delegation, sent a letter to Cerberus seeking answers from the private equity firm for its role in creating the current financial challenges at Steward hospitals, which threaten access to medical care for thousands of people in eastern Massachusetts.

“We are particularly concerned about the extent to which Cerberus and its affiliates literally stripped out and sold the property from underneath these hospitals, creating hundreds of millions of dollars in profits for private equity executives, while leaving the facilities with long-term liabilities that are magnifying – if not creating – the current crisis,” the lawmakers wrote.

Cerberus owned these hospitals from 2010 until 2021, when the company completed “an unusual exit” that raked in $800 million in profit. Six years after their initial purchase, Cerberus sold Steward’s hospital properties for $1.25 billion to Medical Properties Trust (MPT), locking Steward into multi-year, multi-million-dollar lease payments.  

Cerberus then began its exit in May 2020 by transferring its ownership stake “to a group of the company’s own doctors in exchange for a note that would provide regular interest payments.” Steward borrowed another $355 million from MPT in January 2021 to buy this note. From 2016-2021, Steward took on over a billion dollars in liabilities – while Cerberus walked away with a massive profit.

The lawmakers are asking Cerberus to provide answers about the firm’s investments in Steward and Steward-affiliated entities, liabilities imposed on Steward, and profits, dividends and total compensation for the firm and its top executives. 

A copy of the letter can be found here.

Last month, following a Boston Globe report indicating that Steward Health Care System (Steward) is in dire financial condition, Rep. Pressley, Sen. Warren, and the Massachusetts congressional delegation pressed Steward to brief them on Steward’s financial position, the status of their Massachusetts facilities, and their plans to ensure the communities they serve are not abandoned. 

###