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Sen. Bernie Sanders (I-VT), along with fellow senators and staff, looks to the chair reserved for Steward Health Care CEO Ralph de la Torre that sits empty after de la Torre failed to appear and testify at a Senate Health, Education, Labor and Pensions hearing to examine the bankruptcy of Steward Health Care, September 12, 2024, on Capitol Hill in Washington.
Ralph de la Torre, the abusive former cardiac surgeon who used other people’s money to buy some 43 community hospitals across the United States, then mortgaged them to buy yachts and planes and sumptuous accommodations on at least three continents, is not a man known for his sense of shame.
In 2023, de la Torre hired a U.K.-based private intelligence firm called Audere International to orchestrate a “false flag operation” against one of his critics, the short seller stock analysis firm Viceroy Research. Audere in turn deployed a team of operatives to smear Viceroy founder Fraser Perring, including former spy and famed author of the Trump “pee tape” dossier Christopher Steele, whom the firm paid 29,000 pounds to prep British parliamentarian Liam Byrne for a speech he delivered to the House of Commons savaging Perring as an agent of the Kremlin who was working to undermine British defense contractors. Five security professionals from a firm called Greyprism staked out Perring’s house and installed a tracker on his car, and an unidentified team created a fake Twitter persona called @viceroyleaks to taunt Perring and his colleagues with vague threats, accusations, and references to a fellow short seller he had dated.
But it wasn’t enough, a man professing to be a former Audere executive claimed in a recorded phone call. De la Torre wanted more, he told the intelligence firm’s principals, including the former executive, on a conference call.
“He asked, how much would it cost to cut the brakes on Fraser Perring’s car,” the executive said on the recording, a portion of which Perring provided to the Prospect after posting on X about the incident. “This is … just the type of person he is,” he went on. A Viceroy attorney said the executive had contacted Perring’s research firm last spring after leaving Audere over his disagreements with the firm’s conduct throughout the Steward project; in January, a trade publication reported that the intelligence firm had in recent months been plagued by departures.
A spokesperson told the Prospect that “Dr. de la Torre vehemently denies making any such statements.”
Last month, de la Torre was asked to appear before the Senate to answer questions about the financial decisions that led to the bankruptcy of his hospital chain, Steward Health (from which he stepped down as CEO this week). Instead he retained a new lawyer, William Burck, famous for representing Mike Pompeo, Steve Bannon, and New York Mayor Eric Adams, to file a lawsuit against Bernie Sanders, Bill Cassidy, and 18 other members of the 21-member Senate Health, Education, Labor and Pensions committee that had subpoenaed him, accusing the senators of violating his constitutional rights in the service of a show trial with “no legislative purpose.”
Even veteran Ralph watchers were dumbfounded by the move. “The balls on this guy, galaxy balls,” one analyst said upon hearing the news. “Didn’t even show up to plead the Fifth, then sues committee for being held in contempt … it’s unreal.”
But did his lawyers have a point?
AS UNIQUELY AND UNAPOLOGETICALLY SHAMELESS as Ralph de la Torre is, he is not terribly unique from a business model perspective. He founded Steward with backing from Cerberus Capital Management in 2010, the year the Affordable Care Act passage triggered what would become a trillion-dollar stampede of private equity funds into hospitals, nursing homes, surgery centers, pediatric dental clinics, and so forth. An increasingly voluminous body of research has been published documenting the consequences of this craze: showing that private equity control of health care institutions is associated with a 27 percent increase in patient falls, a 38 percent increase in central line infections, a 10 percent increase in nursing home mortality, price increases ranging from 26 percent for anesthesiology practices to 90 percent for emergency medicine, etc. De la Torre’s cash-starved hospitals, for their part, were more than three times likelier than the average hospital be cited by CMS inspectors for placing the health of patients in “immediate jeopardy,” the most serious infraction.
Perhaps most significantly, the orgy of private equity buyouts was followed by a spate of service disruptions and facility shutdowns that left thousands jobless and made it more impossible for certain types of sick patients to find a hospital bed. Private equity extraction has closed hospitals across the country and nursing homes, maternity wards, and medical clinics in virtually every state, and with those closures have come a litany of headaches for public officials: massive job losses and attendant tax revenues, last-ditch deals to save community hospitals, bad headlines, calls from angry constituents, etc.
As the Steward saga undoubtedly shows, Americans have been badly betrayed by their government.
And so over the past year or so, legislators across the country introduced a flurry of bills designed to subject health care transactions involving private investors to increased preemptive scrutiny, and in some cases protect the clinicians working in those institutions from having their clinical decisions directed by corporate bean-counters. The Oregon House of Representatives passed a bill outlawing a favored private equity trick of appointing “friendly doctors” as sham owners of medical institutions. The Minnesota House introduced a bill banning another favored private equity tactic of doing “sale-leasebacks” on hospital buildings and pocketing the proceeds for investors. The Massachusetts Senate passed a bill explicitly inspired by de la Torre and Steward, giving the state more powers to demand information about and block private equity health care transactions. And both houses of the California legislature passed bills strengthening the state’s corporate practice of medicine doctrine and subjecting private equity health care transactions to enhanced paperwork requirements and attorney general scrutiny. Sen. Ed Markey (D-MA), too, introduced a federal version of some of these bills, the Health Over Wealth Act, that would require private equity firms to get special HHS licenses before acquiring health care providers, and to subject such transactions to increased oversight.
But one by one, all the state bills shriveled: The Oregon bill was killed by a fierce lobbying campaign and an unusually short legislative session; the Minnesota bill never made it to a vote; the Massachusetts bill passed the Senate but—rather unforgivably given that Gov. Maura Healey has admitted that bailing out just five of Steward’s hospitals will likely cost the state around $700 million—the bill never made it to a vote in the House. And then with a stroke of a pen last weekend, California Gov. Gavin Newsom killed off that state’s private equity health care oversight bill, which had passed both houses by overwhelming, ostensibly veto-proof margins, if the California legislature ever bothered to override a veto.
To be fair, the California bill was far from perfect. A literal murderer’s row of lobbyists had spent $3 million festooning the thing with loopholes and carve-outs. Acadia Healthcare Company, the subject of a recent New York Times investigation into the methods the psychiatric hospital chain uses to hold well-insured patients against their will, spent $81,000 lobbying on the bill; LifeStance, a kind of pill mill-meets-involuntary-servitude scheme whose clinicians see 30 patients a day only to end up owing the company six figures, spent about $20,000; InnovAge, a company the Prospect has addressed in previous coverage that provides extremely ill low-income seniors what one regional manager recently described as “the worst care delivery I have seen in my forty years of experience working in healthcare,” spent $7,500; and Kindred LLC, which just spent about $20 million settling with the Justice Department over whistleblower lawsuits detailing the company’s deliberate schemes to recruit patients into its hospice network who were not terminally ill, spent $120,000.
“The bill was rife with exemptions, but it would have made California the first state to really codify a corporate practice of medicine ban that gets close to addressing these ‘friendly’ structures private equity firms use to control physician practices,” said Hayden Rooke-Ley, a lawyer and fellow at the Brown University School of Public Health. “The fact that private equity keeps succeeding here highlights the political challenge of taking on the corporate health care industry.”
STILL, SEN. MARKEY SEEMS TO BELIEVE the sordid Steward saga has given him an opening to do something about the scourge of private equity in health care.
For one, where Cerberus billionaire Steve Feinberg, whose “investments” often end up in bankruptcy, has flown mostly under the radar since the dysfunctional renovation of his Manhattan townhouse became the subject of a Wall Street Journal story in 2008, de la Torre’s lifestyle is ostentatious beyond imagination. He forced Steward to open an international office in Madrid despite having no hospitals within a thousand miles of the Spanish capital, then forced the company to buy him an $8 million mansion in its toniest neighborhood. While the company was stiffing virtually every vendor and physician it contracted in 2022 and 2023, he and other Steward executives used the company jet nearly 600 times to travel almost exclusively to lavish vacation destinations where no Steward hospitals existed. He contracted his cadre of private spies to elaborately catfish a former executive he suspected of disclosing a nine-figure hole in the company’s balance sheet to its auditors, and disseminate to journalists a forged bank document purporting to prove that a Maltese minister who had criticized Steward’s management of three hospitals there had taken an enormous bribe from Vladimir Putin’s brother.
And most famously, following a year in which Steward reported a $400 million loss in spite of having taken nearly $1 billion in COVID bailouts, de la Torre paid himself and a small clique of insiders an $111 million dividend, his $73 million portion of which he used to buy and then renovate a $40 million Jeff Bezos–style mega-yacht named Amaral, estimated to cost $4 million a year to maintain. In hearings on Steward, HELP Committee chair Sen. Bernie Sanders (I-VT) often uses large and humorously captioned photos of Amaral and de la Torre’s other yacht Jaruco, along with photos of Steward’s fleet of business jets. But his Republican colleagues, two of whom had watched Steward hospitals explode in their own states, mostly shared his outrage, and in July voted to do something the committee hadn’t done in more than 40 years and serve de la Torre with a subpoena. Shortly after the hearing, Bloomberg columnist and former Harvard Business Review executive editor Sarah Green Carmichael, an Ivy League boarding school alum not known for populist outrage, wrote a withering column blasting Steward as the apotheosis of “why so many Americans feel betrayed by big business.”
But as the Steward saga undoubtedly shows, Americans have also been badly betrayed by their government. Healey, for one, has spent much of her first term as governor excoriating Steward, yet spent the eight years prior as state attorney general doing absolutely nothing while the hospital chain killed and maimed both patients and small businesses throughout eastern Massachusetts. Both the Securities and Exchange Commission and the Internal Revenue Service have long been aware that Steward’s publicly traded landlord MPT was concealing Steward’s financial distress from investors through what would be most charitably described as opaque accounting and brazen misrepresentations of reality (see page 11 of this report for some “greatest hits” from the past eight years of the REIT’s conference calls). The Department of Justice is investigating Steward over well-documented allegations that it bribed Maltese officials to obtain a fraudulent contract to run three hospitals there, but there is little evidence so far that probe is serious or substantial.
And if a surprising allegation in de la Torre’s otherwise ridiculous lawsuit, which claims the committee did not ask for any documents from Steward’s former CEO, is true, they too have betrayed the public, both because Democratic private equity reform efforts revolve almost entirely around enhanced documentation, and because Steward has spent the last eight years stubbornly refusing to furnish even basic information on its financial situation. In 2017, Steward sued a Massachusetts regulatory agency to get out of disclosing required information on its finances; for years, it refused Securities and Exchange Commission demands that it provide audited financial statements to investors in its publicly traded landlord, Medical Properties Trust; and in an August bankruptcy filing, the company even subpoenaed its former auditor to obtain basic information about its own finances and solvency, suggesting that information on Steward’s finances had been rendered somehow inaccessible to Steward’s own leadership. (Note to DOJ: If indeed you are investigating Steward’s finances, such a situation sure could indicate an attempt to obstruct said investigation!) Meanwhile in Alabama, MPT’s lawyers have been laboring for months in federal court to prevent Viceroy Research, which it sued last year for defamation, from filing a motion that would reveal information gleaned in discovery about how much cash de la Torre and Cerberus purloined from the hospital chain, when they took it, and how bereft and ill-equipped to provide the most basic care those transactions left the hospitals.
De la Torre and his conspirators have not gone to these lengths to hide the proverbial receipts of their misdeeds because they are innocent. They did it because their cash grabs bankrupted the company, caused the deaths of dozens if not hundreds of patients, and left dozens of communities with gaping holes in their health care delivery systems. And if Democrats don’t have the appetite in an election cycle to pass laws preventing this from happening again, at the very least they might devote a small fraction of the legal ingenuity they displayed prosecuting Donald Trump into making a case that sucking billions of dollars out of Medicare and Medicaid coffers to buy yachts and planes and a 500-acre ranch for your trophy wife is not actually a perfectly legal thing to do.
