Wouldn’t it be nice to invest in a business proposition in which you make money no matter how well or poorly the business does? Sweet deals like that are hard to come by unless you are private equity investing in hospitals. Steward Health Care is a prime example of what can happen and how many lives can be lost and patients and workers hurt when private equity employs its financial tricks to assure it makes money no matter what. You can read all about it here.

Steward Health Care is no more. It declared bankruptcy in May of 2024 after many years of troubled operations. It was not always so. In 2008, hospitals were a hot commodity and a venture capital target following the passage of the Affordable Care Act, which was anticipated to result in a great increase in the number of insured patients hospitals would see come through their doors. A private equity company purchased some hospitals and formed Steward Health Care. At one point Steward owned 30 hospitals and billed itself as the largest for profit hospital chain in the United States.

The anticipated profit gusher never materialized and the private equity company took steps to limit its losses. Steward began to close its poorest performing hospitals. Patients were left without care and workers were left without jobs. Cuts were made at the hospitals that remained open. Necessary supplies were often in short supply or not there at all. Maintenance was postponed. Staff was cut leaving those who were still employed trying to do more with less.

As you might expect, the quality of the health care at the hospitals that remained open declined precipitously. Staffing levels at emergency departments were cut. As a result, the emergency departments were overwhelmed when the patient load greatly exceeded the ability of the emergency department to provide care. Emergency patients at Steward hospitals stayed in the emergency department far longer than the average at other hospitals. Some left without ever receiving the care they needed. Patient deaths at Steward hospitals rose, even when patient deaths for the same conditions were declining throughout the nation. Healthcare outcomes, a key measure of the quality of care at a hospital, declined. Hospital-acquired complications rose, as did falls, and bloodstream infections.

Four of Steward’s hospitals were located here in Arizona: Tempe St. Luke’s, Mountain Vista Medical Center in Mesa, St. Luke’s Medical Center in Phoenix and Florence Hospital. Tempe St. Luke’s and Mountain Vista were ranked near the bottom of hospitals in the state for quality of patient care. St. Luke’s Medical Center was closed was closed with the loss of 219 hospital beds and 655 jobs. The rest of Steward’s hospitals in Arizona have been taken over by HonorHealth.

The cruelest blow came in 2016 when the private equity owners of Steward engineered a series of deals to sell the real estate under the hospitals for over $3 Billion. They used the money they received to award bonuses to themselves and to repay their investors. The already-struggling hospital chain now had a new problem. How to afford the rent on the property it used to own. The annual rent exceeded $400,000,000. Steward staggered under this additional burden and fell.

The venture capital firm that formed Steward made its exit before the final fall and reports that it made $800,000,000 on its investment in Steward Health Care. Not bad for a few years work. It did well, even though Steward collapsed.

Senator Edward Markey of Massachusetts, in whose state many of the Steward hospitals were located, led an investigation and released a report on the threat private equity participation presents to our already troubled health care delivery system.

Greed has no place in our health care system. Private equity, under the best of circumstances, has an agenda that prioritizes its investors as opposed to patients or the greater good of the community. We cannot afford to have it making decisions that affect the lives and well-being of patients and health care providers.

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