U.S. Sens. Ed Markey and Elizabeth Warren excoriated Steward Health Care's top executive inside Beacon Hill's largest hearing room Wednesday, where they set up an empty chair for CEO Ralph de la Torre, who declined to testify about financial decisions that have jeopardized operations at its Massachusetts hospitals.
During their Senate subcommittee hearing exploring the harms of private equity in the health care sector, Markey and Warren also promoted two new proposals designed to regulate private investments in health care, protect quality of care for patients, and prevent another health care crisis like Steward's from unfolding elsewhere across the country.
As Markey pointed out, Steward's footprint extends beyond its hospitals in Massachusetts to its other facilities in Ohio, Florida, Louisiana, Pennsylvania and Texas that he said are also without the supplies they need.
Markey said de la Torre declined to speak at the hearing, and he said Steward also refused to send another executive who could answer lawmakers' questions.
"So that seat for their testimony was empty today, as empty as the promises which Steward and Ralph de la Torre had made to the state of Massachusetts," Markey told reporters after the hearing, which lasted just under two hours in Gardner Auditorium.
"So, we're going to make sure that Dr. de la Torre and Steward become nationally famous, that they become the example of the dangers of allowing private equity to take over a health care system," Markey continued. "And we're not going to stop until we put the safeguards in place that protect patients, protect doctors and nurses from having a medical system that is looted."
Markey, Warren and state legislators trained their focus on Steward this year after the company's financial problems spilled into public view, in part stemming from a backlog of unpaid rent tied to the sale of Steward's real estate to Medical Properties Trust. Gov. Maura Healey has rebuked Steward for not providing financial documents to state regulators and called on the company to exit the commonwealth's health care market.
A Steward spokesperson declined to comment about why de la Torre did not appear at the state capitol. The spokesperson also declined to weigh in on the senators' scathing remarks made about de la Torre and the company during the hearing.
Warren called de la Torre's absence "cowardice."
"Shame on Dr. de la Torre," Warren said. "He owes the residents of Massachusetts an explanation for his part in looting Steward hospitals."
Last week, Markey said Steward "is emblematic of a national problem that requires a national solution" and said transparency and accountability reforms are needed "to guarantee that our country has a health care system, not a wealth care system."
Markey said his draft bill unveiled Wednesday, called the Health over Wealth Act, could bolster transparency and accountability for private equity and for-profit companies. Markey said it would require private equity companies to set aside funding to safeguard access to patient care, provide a "bigger voice" for health care workers and patients to review and block potential deals, and require for-profit companies to disclose their financial information and staffing levels, among other components.
His proposal would require health care entities owned by private equity to report on debt, fees collected by the private equity firm, dividends paid by the health care entity to the private equity fund, lobbying or political spending, sale leaseback agreements, lease payments, interest paid on lines of credit, and transactions with vendors or service providers.
Markey said he's seeking public comment through May 3, as the senator aims to prevent "Steward's failures from becoming America's health care standards."
Warren said Wednesday she also intends to introduce legislation to regulate private equity in health care.
Warren said her proposal would prohibit health care entities that receive federal funding from selling or mortgaging their assets to real estate investment trusts. It would also authorize the federal government to claw back compensation from health care executives and private equity investors "whose predatory financial engineering endangers the viability of a hospital," she said.
"I will say it bluntly: Turning private equity loose in our health care system kills people," Warren said. "Steward Health Care is a clear-cut example of private equity exploiting for-profit health care. Investors looted the hospital and got rich, while nurses, doctors and other workers tried hard to provide care. Supplies ran out and contractors walked away because they weren't getting paid."
Dr. Ellana Stinson said she previously worked as an emergency medicine physician at three Steward facilities, including Carney Hospital in Dorchester. Reflecting on how resources and specialty services dwindled, Stinson said she felt like she could no longer provide safe or quality care.
Private equity firms have led buyouts, mergers and acquisitions of more than 30 percent of hospitals in the U.S., said Stinson, president of the New England Medical Association.
"Having spent time at other PE sites around the country the level of deprivation was seemingly worse in some areas," Stinson said. "Increasing wait times (and) critical shortages of staff lead to dangerous boarding levels and critically dangerous patient-to-nurse ratios in the emergency department, seeing upwards to 14-to-1 ratios at times."
Dr. Donald Berwick, former administrator of the Centers for Medicare and Medicaid Services, warned that patients are facing unprecedented risk due to private equity investors prioritizing profits over the care system's underlying mission to heal people.
Reform is needed to prevent private equity firms from threatening the "adequacy and quality of care," said Berwick, president emeritus of the Boston nonprofit Institute for Healthcare Improvement.
"We should forbid the typical private equity approach of loading health care organizations with s, extracting capital and leaving stripped down organizations in bankruptcy or worse," Berwick said. "Personally, I would forbid private equity firms from owning or controlling health care delivery."
Steward's for-profit model has ripple effects on the overarching health care landscape, including non-profit hospitals that must adapt their operations and commitment to patients to stay competitive, Berwick said.
"We are one system, so you can't damage one component without seeing damage downstream," Berwick said.
Michael Curry, president and CEO of the Massachusetts League of Community Health Centers, issued a similar warning during a listening session hosted by Markey last week. Curry said Steward's crisis "poses serious threats to access to care for health center patients and communities."
"Health centers will be there, stepping up with whatever means they have, because by design health centers are responsive to the needs of the communities they serve. Doing their critical work is becoming harder every day due to unprecedented workforce shortages," Curry said. "As we shared with Senator Markey today, we urge policymakers to take a critical eye to how the growth of for-profit health care is contributing to the challenges our system is facing."
State lawmakers also held an informational hearing on private equity in health care last week.
The accelerating pace of private equity investments across the national health care system -- including in hospitals, nursing homes, ambulatory surgical centers and physician specialties -- has resulted in steeper patient costs and poorer quality of care, researchers told the Joint Committee on Health Care Financing.
The panel was presented with options to strengthen the state's regulatory authority over health care transactions, particularly expanding the Health Policy Commission's ability to impose conditions on proposed major changes to medical entities.
Committee co-chairs Sen. Cindy Friedman and Rep. John Lawn attended part of Wednesday's hearing.
"Sen. Friedman had a great hearing last Monday up here in the State House, so our intent is to partner with her and the other state legislative leaders to make sure that Massachusetts is the leader in putting protections in place against a repetition of what Steward has done," Markey told reporters.
The HPC has said it plans to review a deal to sell Steward Health Care's physician network to for-profit insurer Optum Care, an arrangement that quickly raised red flags last week for House Speaker Ron Mariano and Warren, who warned of "significant antitrust concerns." Warren said Optum already covers more than 10 percent of doctors across the country.
Berwick called Optum, a subsidiary of UnitedHealth Group, "another aggressive for-profit company." He predicted the deal, should it move forward, would drive up costs for patients.
"They're absolutely the world's experts on upcoding," Berwick said, a term that Warren said means "charging more."
Fearing the collapse of Steward, Warren emphasized a solution is needed and "not an opportunity to make things worse."
"A quick sale to another outside investor could do more harm here than good," Warren said.
Drawing applause, she added, "Federal and state regulators should think once, and think twice, and think three times before they let another corporate investor suck more money out of the Steward system."
