The nation's largest private, for-profit hospital chain reportedly paid out $790 million in dividends before filing for bankruptcy a few years later, most of which went to Manhattan-based private equity owners.
Steward Healthcare System, a Boston-based network of 30 hospitals that operates in rural and low-income areas, paid Cerberus Capital Management in 2016, the same year the chain posted a net loss of $300 million. The Wall Street Journal reported.
The payment came from a lease agreement with Alabama real estate company Medical Properties Trust, according to The Wall Street Journal.
“Steward had sufficient capital and liquidity to pay its dividend in 2016,” Cerberus spokesman Michael Sitrick told The Wall Street Journal.
Cerberus received $719 million of the dividend, and the remaining $71 million was paid to the steward management team, led by CEO Dr. Ralph de la Torre, according to Sitrick.
Cerberus, which bought Steward in 2010, hasn't received any other dividends from Steward during its ownership of the company, according to The Wall Street Journal.
In April 2020, Cerberus conducted an analysis that concluded the hospital chain would need $750 million over the next seven years to execute its business strategy. Steward had posted a net loss of $408 million during the COVID pandemic.
A month later, Cerberus sold the company to a group of doctors led by de la Torre.
In May, Dallas-based Steward filed for bankruptcy and attempted to sell all of its hospitals to repay $9 billion in debt. The Wall Street Journal reported that Steward had regularly missed payments to vendors and many of its facilities lacked adequate staff and equipment.
Mr. Delatore has resisted attempts by a bipartisan group of senators to force him to answer questions about his company's bankruptcy in Congress, but he has lived a lavish lifestyle that included corporate jet flights to exotic locations and a multimillion-dollar mansion — all paid for with company money. According to the Boston Globe.
De la Torre spent lavishly despite his company reporting nine-figure losses for 2020, 2021 and 2022.
Delatore has asked for his testimony before Congress to be postponed in response to a subpoena requiring him to appear before lawmakers on September 12.
The CEO also reportedly tried to get Steward to sign deals with other companies in which he had an ownership interest.
A whistleblower told Parliament that De la Torre and other Steward executives had boasted about being able to give “brown bags” to Maltese government officials to illegally secure hospital contracts. CBS News reported.
A De la Torre spokesman called the allegations “outrageous” and said the company had acted “lawfully and in a transparent manner throughout the period it operated” in Malta.
According to the Globe, de la Torre's accounting practices and financial transactions are currently the subject of an investigation by a federal grand jury in Boston.
