How Private Equity and an Ambitious Landlord Put Steward Health Care on Life Support

As bankrupt Steward Health Care faces ongoing Congressional and grand jury probes over the failed management of its hospitals in the United States, OCCRP has found new evidence that Steward’s landlord and a private equity firm, working alongside the hospital chain’s CEO, created deals that severely hamstrung Steward but enriched themselves. 

The end result was a zombie hospital chain that chronically lost money but lived on for years, propped up by the landlord with hidden cash infusions that made Steward look like a thriving business even after executives privately conceded it was insolvent.

More than 295,000 documents obtained by OCCRP, working with the Boston Globe, give new insight into how private equity firm Cerberus Capital Management, Steward’s landlord Medical Properties Trust (MPT), and longtime CEO Ralph de la Torre saddled the health care operation with billions of dollars of unsustainable debt. Meanwhile, Cerberus and de la Torre extracted more than $1.3 billion from the financially troubled company, and MPT profited from charging Steward exorbitant rents that the firm could not afford. 

The documents also reveal the extent to which MPT, a publicly listed real-estate investment trust, opaquely funneled capital into the healthcare firm to keep it afloat, without filing the public disclosures that let regulators and its own investors know how the money was being used and the extent to which Steward needed financial assistance. The publicly listed firm repeatedly told its shareholders that Steward, which it listed in quarterly earnings reports as its largest source of revenue, was financially healthy. In fact, it was badly in debt — to MPT itself. 

Meanwhile, MPT was working behind the scenes to increase its stake in Steward — and its control over the company’s actions — which experts say may have breached complex  U.S. regulations governing real-estate investment trusts. 

At the heart of Steward’s decline was a 2016 “sale-leaseback” deal in which MPT bought Steward’s hospital buildings and other real estate at rates almost nine times above market prices, then charged the healthcare firm equally exorbitant rents, which it could not afford to pay. Although Steward earned a $1.2 billion windfall from this deal, the money was not re-invested in its hospitals but went towards dividends for investors, executive payouts, and massive lease commitments, adding more debt to Steward’s books. 

The 2016 sale-leaseback has been widely reported, but new evidence obtained by OCCRP shows the extent to which MPT’s investors were kept in the dark about the terms of the deals it made with Steward, and how closely entwined the landlord was with its struggling tenant.  

In the following years, Steward went on a spending spree, acquiring dozens more hospitals in deals that put it ever more in debt to MPT, and further along the path to insolvency. 

For years a handful of analysts, short sellers, auditors and regulators demanded more information on Steward’s financial health, whether it could afford its rents and the extent to which MPT was financing the hospital chain. OCCRP previously exposed how Steward used private intelligence firms to target these critics.

Former hospital staff told OCCRP the company's finances had spiraled downward to the extent that even patients’ basic needs were not being met. Stretchers were broken, elevators were out of service, drinking water was rationed and medication ran out at some of Steward’s U.S. hospitals.  

OCCRP partner the Boston Globe found patients died at Steward hospitals in 15 cases, and more than a dozen others were injured, after not receiving acceptable care due to equipment or staff shortages.  

Two Steward hospitals have already been forced to close since it filed for bankruptcy in May, and the fates of dozens more remain uncertain. The closures have put access to medical care out of the reach of entire communities.

Massachusetts senators Elizabeth Warren and Edward J. Markey described the mechanism through which MPT provided capital to Steward so it could keep paying rent as having the hallmarks of a Ponzi scheme. In a letter just before the hospital chain filed for bankruptcy urging MPT to play its part in keeping Steward’s hospitals open, the senators said: “MPT has — along with Steward — plundered these hospitals.” 

At a Senate committee hearing in September probing Steward’s collapse, Senator Bernie Sanders also pointed the finger at Steward’s CEO de la Torre, accusing him of becoming “obscenely wealthy” as he helmed the hospital chain. Sanders cited de la Torre’s $15 million luxury fishing boat, a $62 million private jet held by Steward along with a “backup” private jet used by de la Torre and his family to fly around the world on non-business trips.

In a response to detailed questions from OCCRP about its relationship and financial dealings with Steward, an MPT spokesperson said: “We strongly reject the false and misleading premise of these assertions.”

“MPT’s primary relationship to Steward has always been that of a landlord. … Over the years, MPT has occasionally stepped in to provide bridge loans, rent deferrals, and other forms of financing when no other party was willing to because we have always believed Steward’s hospitals are critical to the healthcare of their communities.”

 Sent detailed questions by email, a spokesperson for de la Torre replied: 

“Throughout his career, Dr. de la Torre’s mission has been to expand access to high-quality care for underserved communities.  Dr. de la Torre has consistently fought for Steward hospitals and the communities that they serve.” The spokesperson said media like OCCRP and the Boston Globe, and “certain politicians,” were “trying to fan flames with exaggerated numbers and factually inaccurate soundbites that do not tie to public or audited sources.”

Cerberus, in a statement posted online to which it referred journalists seeking comment, said:

"Like many, Cerberus has learned through the media and other reports about Steward’s recent staffing issues, equipment and supply shortages, and patient tragedies due to inadequate care. A review of the testimonies, events, and multiple litigations by vendors and others pending at the time of Steward’s bankruptcy filing in May 2024 appear to be overwhelmingly related to the post-Cerberus ownership period."

The Making of a Sacrificial Lamb

Steward’s CEO de la Torre, appeared to be a success story — the son of Cuban immigrants who went on to graduate from Harvard and MIT, and become a cardiac surgeon. 

“Ralph wasn’t an academic guy but he was a good clinical surgeon,” said Frank Sellke, a former Harvard professor and doctor who hired de la Torre to be a cardiac surgeon at Beth Israel Deaconess Medical Center in Boston. “The guy is incredibly convincing, and he’s smart.” 

He was also ambitious.

“For about two years things went great, and then something … switched. And … he got it in his mind that he could create his own healthcare system.” Sellke said. He added that de la Torre impressed some in Beth Israel’s management with his vision for a plan to create low-cost medical care that was also high in quality. 

“They kept saying how great this guy is, and how unique his approach is. But there were no details,” he said. 

De la Torre’s business ambitions took him to Caritas Christi Health Care, a small, Catholic non-profit hospital chain affiliated with the archdiocese of Boston that catered to low-income patients, who often needed government assistance to pay their bills. Caritas itself also paid out millions per year to cover indigent patients. It was often the only place they could go to receive health care.  

But it was struggling financially, so in 2008, Caritas hired de la Torre to lead a financial overhaul. By that time its six hospitals required hundreds of millions of dollars in capital investment, and its staff pension system was significantly underfunded. 

Within a year of being brought in as CEO, de la Torre had developed a plan to privatize the hospital chain. Caritas quickly started talks with potential partners, and settled on New York-based Cerberus Capital Management, a massive private equity firm with broad interests including retail, technology, and health, which agreed to acquire the hospital chain in exchange for an investment of $895 million. 

Under an agreement with the Massachusetts Attorney General’s office, which had to approve the deal since Caritas was a non-profit, this money had to be invested to pay off Caritas’ debt, fund its pension program and make $400 million in capital improvements in the six hospitals. Cerberus also agreed to keep the hospitals open for three years (later extended to five), and to not sell or transfer ownership or take dividends that would end up as debt on the company’s books for three years.

Not all of these promises would be kept. 

A new for-profit company was created by Cerberus as a vehicle for the acquisition, Steward Healthcare Systems LLC. Cerberus gained almost full ownership of the business, including the hospital operations and the real estate. De la Torre was named CEO of the new company, and given a nine percent stake in the company.

De la Torre quickly set Steward on a very different path from the non-profit model championed by Caritas. During a Wall Street Journal panel in 2013, he told attendees the industry was changing: “At the heart of what is going on is that medicine, like many other industries, is undergoing a commoditization period. Everything goes from art, to science, to commodity, just like the car industry and the finance industry.”  

“The man is likening lifesaving medical care to candy and cars but this is not a commodity, it is a human right,” said economist and lawyer James Henry. “That right there, that mentality, is the problem and what ultimately wrecked Steward.”

There was a three-year moratorium on Steward selling its hospitals, but under Cerberus and de la Torre the company immediately began to sell off other assets to raise cash. 

It leased out medical office space for 99 years for $100 million to the Healthcare Trust of America and then leased some of it back. It sold its laboratory testing and cytology services business to Quest Diagnostics for $35 million. It sold exclusive rights to treat hospitalized patients to an inpatient care provider for $44.5 million.

But despite the asset sales and an early cash injection from the private equity firm, Steward did not significantly improve its finances. In fact, it began to regress.

A December 2015 report by the Massachusetts Attorney General’s office reviewing the results of the deal found that Steward’s financial condition had declined since 2012. It said Cerberus had invested only $246 million of the promised $400 million in capital investments, and there is no evidence it made any outside investment into the pension program, which remained severely underfunded. In fact, it never invested the full $895 million promised. Despite the paucity of Cerberus’ investment, by 2020 it would take more than $1.1 billion in profits from a company that almost never made a profit. 

Despite the damning report, Cerberus insisted that these commitments were met, and even exceeded. “In total, during Cerberus’ ownership [of Steward], nearly $900 million was invested in hospital infrastructure, technology, personnel, and other major projects,” Cerberus said. 

Private equity, whose business model is based on quick returns for investors, is generally not a good match for the long-term stability needed by healthcare operations, said Rosemary Batt, an expert in private equity and co-author of the book “Private Equity at Work: When Wall Street Manages Main Street.”

“Private equity firms view healthcare organizations as ‘financial assets’ to be bought and sold – completely divorced from the human care mission of healthcare organizations,” said Batt. 

But that was just the start. The Attorney General’s moratorium on selling Steward hospitals ended in 2015. De La Torre was ready. 

The Deal that Sealed Steward’s Fate

In the summer of 2015, de la Torre flew to Birmingham, Alabama, the headquarters of Medical Properties Trust, for a meeting that would change the course of Steward’s trajectory. 

Like Steward, MPT was led by an ambitious and hard-charging CEO, Edward K. Aldag, Jr., who founded the company in the early 2000s to take advantage of a niche he had pioneered: hospital real estate. MPT bought up buildings and land belonging to hospitals, then leased them back to the facilities, a proposition it claimed was mutually beneficial since it freed up capital for hospitals to use on bolstering their core services. But along the way, the company had developed a practice of overpaying for the hospital properties, boosting the value of its stock by luring investors with the promise of high lease payments. 

According to an account of the meeting published in MPT’s annual report for 2016, De la Torre was ready to expand out of Massachusetts and was looking for more capital to help him do that. MPT was trying to expand its model of snapping up hospital real estate, then leasing it back to the health care companies. “It seemed a natural fit,” MPT said of the two companies. 

A leaked email conversation between MPT executives describes a meeting from around the same time in blunter terms. In these talks, de la Torre’s focus was on “world domination,” an MPT executive recounted. The email suggests that MPT was also ready to go all in. “How much capital is too much for MPT in any given investment or year?” the executive asked.

Sources told OCCRP that de la Torre and Aldag had developed a strong affinity for each other. MPT’s annual report described their relationship in glowing terms: “Each was impressed with the strengths of the company the other had built, and they felt destined to work together,” it said. “Plus they liked each other personally, and trust — the most important element — began to build.”

Aldag also praised de la Torre privately to his staff. “Ralph focuses on the big picture and doesn’t sweat the little stuff if he gets the big picture,” he wrote. “He will NOT be dependent on lawyers…. I think Ralph gets it.” (When asked about the relationship between the two CEOs, de la Torre’s representative said he had no pre-existing relations with Aldag, but had “developed a relationship with him throughout negotiations as one would expect.” Aldag did not respond to a request for comment.) 

The following year, MPT agreed to buy Steward’s real estate — nine acute care hospitals in Massachusetts —  for $1.2 billion, paying $600 million for five of the hospitals, and another $600 million to finance the mortgages of four others. Then, Steward would lease the hospital buildings back from MPT. 

"We knew that no one else could move as fast as we could move together,” Aldag was quoted as saying in the annual report.

On the face of it, the deal looked advantageous to both sides. Steward would earn a windfall of $1.2 billion, a valuable cash injection for a hospital business operating on slim margins. MPT would expand its property portfolio and acquire an amenable new tenant to pay high rents, helping lure investors to pay a premium price for its shares just ahead of the deal. 

But there was also something about the deal that didn’t make sense: The prices paid by MPT were hugely inflated — nine times more than Cerberus had paid when it purchased the same group of properties in 2010 and 2011 as part of its buyout. 

In one case, MPT paid $263 million for Carney Hospital, a teaching hospital in Boston’s low-income Dorchester neighborhood. Steward had paid just $12.5 million for the same hospital less than a decade prior. And unlike when Steward made the purchases, MPT was buying only the real estate, not the business.

And since the price paid for the real estate was massive, so were the rents MPT could charge Steward, according to their financial statements: In 2016 the estimated $104 million annualized rent for nine Steward hospitals was an astounding 75 percent of the original price paid for the properties themselves, although it’s not clear how much rent was actually paid. 

The agreement also tied Steward to an aggressive master lease obligating it to make these rent payments for up to 30 years, even if the hospitals closed. 

 “Steward hospitals are now facing a death sentence,” said Henry, the lawyer and economist, of the situation after the 2016 deal. “They are trapped in these exorbitant leases that aren’t the price on paper and no longer own their most valuable asset: the actual hospitals.”

Experts interviewed by OCCRP explained that hospitals are limited in their ability to grow profits and large debt loads can be destructive, so the new lease commitments and debt had a significant impact on Steward’s financial health.

“I don't understand how in any situation, having money going out the door to pay rent every month when you used to own the real estate is going to benefit the hospital,” said Mary Bugbee,  healthcare director at the Private Equity Stakeholder Project, a non-profit watchdog. “Perhaps if there's a leaseback transaction where every penny was reinvested back into capital improvements of the hospital.”  

That’s not what happened. Instead of reinvestment and capital improvements, Steward’s owners Cerberus along with de la Torre and his management team used the new cash to pay themselves hefty dividends. Despite the incoming money, Steward’s debt load would triple in the space of one year. 

Just three months after the deal went through, Steward recorded a loss of $300 million, its financial statements show. The year before, it had made a $116 million net profit. Steward also declared net losses of $207 million and $279 million in 2017 and 2018 and would continue to lose money every year until its bankruptcy excluding one time charges. 

Steward’s lawyers have said as part of bankruptcy proceedings that MPT’s leases crippled Steward for years and accused MPT of “self-interested involvement and interference” in the post-bankruptcy sale of the hospitals.  

MPT didn’t directly respond to OCCRP on its involvement, including on the leases and their impact on Steward. 

Hundreds of millions also flowed out in dividend payments. Steward’s audited financial statement from the end of 2016 shows the hospital chain paid out a massive $789 million in dividends that year, which went to Cerberus, de la Torre and the Steward management team.  

If the dividend was split according to 2016 ownership stakes, Cerberus would have received $682 million, de la Torre $73 million and other Steward executives $34 million.

In a response to OCCRP questions, the spokesperson for de la Torre said Steward management received $55 million in cash of a total $68 million dividend, the rest of which was paid in MPT stock. 

Internal emails reveal that Steward incurred a $600 million debt in October 2016 due to what is described as “the Cerberus leveraged recap transaction.” This suggests Cerberus’ took what is known as a recap dividend, a highly controversial practice used by some private equity firms in which a company is saddled with long-term debt to pay cash dividends to investors or shareholders. OCCRP could not find any evidence MPT ever disclosed that the sale-leaseback deal included a dividend recapitalization.   

In response to OCCRP, Cerberus denied having taken a recap dividend, saying that this payment was a $246 million return on their investment and a $473 million dividend with the rest going to de la Torre and management. 

When asked about the 2016 dividend by Congress earlier this year, Cerberus declined to reveal the amount it received from the deal, saying: “Cerberus does not disclose the names of investors or the specific returns earned on CCM funds by investors.” 

De la Torre claimed in a response to OCCRP that Cerberus took out $1.1 billion from Steward in the last four years of its ownership, a number confirmed by OCCRP. This came in the form of $719 million in debt-based dividends, including the recap; $335 million from the sale to Steward management; and miscellaneous dividends worth more than $77 million.

Cerberus has denied this, writing on its website: “The statement made by Dr. de la Torre that Cerberus received $1.1 billion from Steward during the last four years of its ownership is false and inaccurate. There were no proceeds exchanged at the time of the 2020 management buyout of Cerberus’ equity.”  

To fund the sale-leaseback deal, MPT used money from a carefully timed stock sale. A week before the deal, on the promise of lucrative lease payments, the REIT raised almost $800 million in what’s known as an “overnight equity offer” by placing nearly 58 million shares at about 70 percent above the then-market price. 

"Selling stock is totally normal and in many respects required for a REIT,” said Rob Simone of the investment research firm Hedgeye, one of Steward’s earliest and most vocal critics. “But selling stock without fully disclosed uses of proceeds, or to overpay for assets so as to potentially boost executive compensation and create the illusion of ‘earnings growth,’ is highly problematic.” 

MPT did not respond directly to questions on specific aspects of the sale-leaseback deal

From 2016 to 2022, MPT prospered, and its stock price more than doubled. Over the same period, the company issued an estimated $3.2 billion in dividends to itself and its shareholders. It paid for these by issuing new shares and debt, not from actual cash flows.

How Ambitious MPT Sought to Control Steward 

MPT wasn’t satisfied with being Steward’s landlord; it also sought to control the health care firm, internal documents show. 

Its ambitions are laid bare in slides from a presentation the company made to its board in May 2020, which reveals that the REIT had tried to gain a large stake in Steward twice, in 2016 and 2017. As a REIT, MPT would not have been permitted to directly own a large stake in Steward, so it had proposed setting up a taxable subsidiary known as a TRS that would allow it legally to hold those assets, the slides said. But it was thwarted both times by Cerberus, which the slides said had “reneged” on the deal. 

“These situations have left Ralph with a minority stake in the company and the risk that Ralph and his team will become discouraged that they will not be able to achieve their long-term goals of controlling Steward’s growth opportunities and moving away from Cerberus’s strategic and operational control and lack of investment support,” MPT wrote.

Despite the failure of those proposals, MPT chipped away at building its stake — running up against the legal boundaries of how far REITs can be invested in their tenants.

REITs are not allowed to own more than 10 percent of either the value of the company or its voting rights. But documents obtained by OCCRP raise questions over whether MPT overstepped the line. 

The LLC agreement signed as part of the 2016 deal capped MPT’s equity stake at 9.9 percent. 

In its 2017 annual report, MPT declared to the U.S. Securities and Exchange Commission (SEC) that it held 9.9-percent equity investment in Steward, just below the 10-percent threshold required for REITs to maintain their favorable tax status. Going over the threshold would have disastrous financial implications for the REIT. MPT frequently consulted with lawyers on how to structure deals to avoid this possibility.  

But within Steward, whose financial statements were not made public since it was a private firm, MPT’s role was portrayed differently.

A handful of internal Steward emails list MPT’s ownership at 11 percent — above the REIT limit —  with one stating: “Steward overall is owned by …MPT (apr.11%).”  The email goes on to say that Steward internally equated MPT’s 11 percent preferred interest to 9.9 percent common interest. MPT disclosed the 9.9 percent figure, but never the 11 percent figure.

And in 2017, the same year MPT said it held 9.9 percent equity in Steward, the health care company’s then-auditors Ernst & Young concluded MPT’s interest was sufficient to make it a “related party” 

That came as part of an audited financial statement which showed MPT held a 10.98 units preferred membership interest in Steward — a form of ownership that gives a priority claim on dividends but does not usually include voting rights. 

The 2016 operating agreement between Cerberus and Steward specified that however many preferred interests were issued to MPT, they could only ever equate to a maximum 9.9 percent equity, Ernst & Young’s conclusion raised questions over whether MPT’s share was more significant in practice than it looked on paper.  

"Related party means ‘not independent’ or ‘not arm’s length.’ It can also mean that one company exerts influence or control over the other, in a relationship (tenant-landlord) where each party would act only in his or own commercial interests,” said Hedgeye’s Simone. 

“In this case it likely means that MPT was not just a passive landlord and noncontrolling 9.9% minority owner — it probably refers to a degree of ‘control’ or ‘influence’ by MPT over Steward, or vice versa.”

In a response to questions about MPT’s REIT status as it related to its ownership of Steward, a spokesperson for de la Torre said: “Your question conflates preferred membership interests (i.e., shares of ownership) with the percentage of ownership represented by those shares. To our knowledge, MPT has never owned more than 9.9% of Steward.”

The Road to ‘World Domination’

By the end of 2017, MPT was already listing Steward as its largest source of revenue, accounting for 27 percent of the REIT’s earnings, even though Steward itself wasn’t profitable. But the companies had been growing rapidly — hand in hand.

Steward had been buying up hospitals across the U.S. with MPT’s encouragement. In September 2017 it acquired IASIS Healthcare in a deal valued at more than $2 billion, taking the number of hospitals it operated to 36, including the top-performing Davis and Jordan hospitals in Utah.

MPT indirectly financed the deal by giving Steward $1.4 billion for 11 of the properties almost immediately after Steward acquired them. Steward would then lease them back from MPT. MPT issued mortgage loans that added to Steward’s debt load, and financed the deal by issuing higher-risk unsecured corporate notes.

Documents seen by OCCRP show that MPT used mortgage arrangements as a way to pump money into Steward. For example, after MPT acquired the real estate of St. Joseph’s Medical Center in Houston for $131.3 million in 2017, it “sold” the property back to Steward just six months later for $148 million by issuing Steward a mortgage note. In late 2018, MPT acquired the real estate back from Steward by canceling its mortgage debt and added an unspecified “cash consideration.”

MPT’s communications with the SEC show Steward’s purchase of St Joseph’s briefly pushed it into representing more than 20 percent of MPT’s assets, meaning that the REIT should have filed Steward’s audited financial statements for 2017. (As a private company Steward did not usually have to file financials, unless requested by the SEC). When asked by the SEC why it had not submitted Steward’s financial statements even though it had crossed the 20 percent asset threshold, MPT said it was because St Joseph’s had quickly been sold back to MPT. 

By 2019, Steward’s annual lease payments to MPT were $350 million, according to MPT’s filings, representing 42 percent of MPT’s total revenues, despite accounting for less than 9 percent of the hospitals in its portfolio. (MPT did not respond to questions on this apparent imbalance.) 

Meanwhile, Steward’s international arm had secured a massive deal to take over Malta’s state hospitals for $2.1 billion. The deal would eventually be rescinded and led to an investigation into whether the Prime Minister had been bribed, as OCCRP has reported. 

But financial filings and internal communications seen by OCCRP show that despite its ambitious plans and global expansion, Steward was in fact falling apart. 

How MPT Bankrolled An Ailing Steward 

MPT’s Aldag insisted in a February 2019 earnings call that Steward was “doing exceptionally well” — even though Steward’s annual report for 2018 had just shown a $280 million loss.  Aldag again repeated on an earnings call the following year that Steward “continues to see good progress, both operationally and financially.” As a private company, Steward did not have to publish its annual reports, so MPT investors would have had no way of knowing its true financial prospects. (Aldag did not respond to a request for comment.)

By 2020, Cerberus executives had privately conceded that Steward was in financial peril, and the private equity firm negotiated exiting the business.

It turned out that Steward looked from the outside like a successful business in part because MPT was finding discreet ways to bankroll the hospital chain. Internal emails obtained by OCCRP detail just how dependent Steward had become on MPT for its survival. 

In 2018, MPT began making direct loans to Steward, but may not have disclosed the extent of its lending in a timely manner — or in some cases, at all. Under SEC rules, publicly traded companies like MPT are expected to announce significant or “material” events to shareholders within four days. However, some of the loans MPT made to Steward were not disclosed for more than three years, and in some cases OCCRP could find no evidence that MPT had ever made the required filings.   

Emails suggest that these loans were being used to cover the exorbitant rents that made the hospital chain look so lucrative to Steward’s investors. 

During the bankruptcy proceedings, Steward’s lawyers quoted its creditors as saying that MPT’s leases were “disguised financing,” and that it had resorted to sending the hospital chain money to cover them. 

In response to a question about this allegedly disguised financing, the spokesperson for de la Torre said: “As we have cited numerous times in our communications with HELP Committee, Dr. de la Torre is prohibited from discussing the bankruptcy process based on confidentiality obligations.”

Over the course of 2018 and 2019, internal documents show that MPT lent Steward more than $53.5 million in working capital in three tranches. In 2023, under pressure from the SEC, MPT gave details of seven outstanding loan tranches totalling $214.9 million — but that number falls far short of the loans evidenced in the documents and communications seen by OCCRP. 

Simone, the REIT analyst from investment researcher Hedgeye, said MPT appeared to be funding Steward’s operations, acting more as an owner or major investor in the company than a landlord. (MPT blamed Simone and Hedgeye for much of the short interest in the company and records obtained by OCCRP show MPT and Steward asked business intelligence firms to disseminate negative information about them.)

“MPT behaves like Steward is 100% theirs,” Simone said.

In response to questions from OCCRP, MPT said it had made all the required disclosures regarding Steward. “MPT stands firmly behind our rigorous underwriting process as well as the completeness and accuracy of our disclosures. We have unfailingly disclosed each of our transactions – including those with Steward – as and when required under applicable securities law. ”

De la Torre’s representative said the former CEO still believed Steward’s partnership with MPT was a “prudent decision” because the trust “represented a long-term capital partner whose returns on investment were conditioned upon Steward’s continued success.”

“MPT, as a REIT that owns public hospitals, is by its own definition a long-term investor. Cerberus, as a private equity firm, by definition has a different incentivization structure governing its Steward investment, rendering it more focused on short-term return for its investors,” she said. De la Torre was not involved in MPT or Cerberus’ financial reporting, she added.

As Steward Sank, Executives Prospered 

As Steward’s debt grew, de la Torre and other executives continued to prosper. Besides the debt based dividends that de la Torre and his team earned, variously reported as $55 to $71 million in 2016, leaked documents show that they benefited from huge loans including through share and off-balance schemes, some of which were later written off. 

Internal emails show that in 2018 multiple Steward executives had outstanding loans with the U.S. arm of Steward totalling more than $3 million. Some executives’ loans featured on Steward’s balance sheet but others did not, including an unspecified amount loaned to de la Torre, according to the emails. A loan to Steward U.S. President Mark Rich was due to be forgiven, the emails say. The loans were secured by Steward shares owned by the executives. 

Leaked emails show that in 2021 Steward executives were also being loaned money by the healthcare company’s international arm, Steward Health Care International (SHCI) which offered de la Torre a credit line of up to $27 million, with the repayment transferred to companies he owned.

In a response to a question on this, de la Torre’s spokesperson said: “In 2018, Steward Healthcare International was a subsidiary of Steward Healthcare System. Therefore, any loan between these two entities at this time reflects an arrangement between a parent company and a subsidiary. We are not aware of promissory notes from Steward Health Care System for $27 million or $3 million.” 

Internal correspondence shows the cavalier way in which the executives discussed the large sums they were spiriting away. In an email titled “cash for the boss, Rich asked SHCI in late 2022 to deposit 500,000 euros into an account controlled by de la Torre. When asked if SHCI would be repaid, Rich responded, “Thanks on the 500. I doubt you will be getting it back anytime soon.”

Armin Ernst, the president of the international arm of Steward, also received a $2 million loan from SHCI. The company’s lawyer explained the repayment of the loan to Ernst: “short of saying that the loan will not be claimed is the only wording[,] which without saying is our position.” Ernst did not respond to a request for comment. 

In 2021, 8.8 million euros went toward a Madrid residence that de la Torre used as his European base, documents obtained by OCCRP reveal. De la Torre also lived lavishly in a baronial Dallas residence, and had exclusive use of a corporate jet and a penchant for buying yachts. 

A Steward bankruptcy document shows de la Torre took $4.2 million in salary from Steward Health Care Systems, which ran the U.S. hospital operations, in the year preceding its bankruptcy declaration, from May 2023 to May 2024. 

A spokesperson for de la Torre said his salary was consistent with other executives of his stature. “A nationally recognized compensation consultant analyzed and made recommendations for Dr. de la Torre’s salary, and his salary was found to be, and remains on the lower end of the recommended salary range for an executive like Dr. de la Torre.” The spokesperson declined to name the consultant that made the recommendations. 

De la Torre failed to comply with a subpoena to testify in September at a hearing of the Senate’s Committee on Health, Education, Labor, and Pensions, led by Sanders, on Steward’s bankruptcy. Through his attorney, de la Torre argued that his testimony would conflict with the bankruptcy process.  

In a response to emailed questions, a spokesperson for Mark Rich said: 

“Mark Rich resigned as CFO of Steward Health Care in 2017, and did not hold that position again until March 2023. As such, he was not in a position to oversee the vast majority of the instances you have posed, most notably the 2021 dividend. Mark Rich has never received a loan from SHCI.” 

The Final Battle 

After years of trying to take control of Steward, MPT made a final push to oust Cerberus in 2020. A presentation to MPT’s board in May that year said that Cerberus's continued ownership would “impede MPT's opportunity to grow with Steward." 

The slide deck from the presentation reveals more about the bitter battle that had been taking place between the private equity firm and the REIT. 

"More recently, during 2019, we have been in discussions with Steward and Cerberus to try to achieve our collective goal of MPT owning a significant stake in Steward while taking out Cerberus' ownership,” the slides say. "Once again, Cerberus attempted to re-trade management by threatening to manipulate Steward into bankruptcy with the belief that they can force MPT to renegotiate lease terms."

But as the COVID-19 pandemic spread across the world in early 2020, putting extra pressure on hospitals, Cerberus finally agreed to exit. By that time Steward was effectively broke and needed $510 million to “keep the lights on,” including covering capital expenditure, rent, and interest on its debt, as well as $750 million in capital investment over seven years, according to a confidential April 2020 memo authored by Cerberus’ head of operations, Chan Galbato. Meanwhile, earnings before taxes and rent was around $375 million but likely less, the memo said.

The memo argued that Steward’s management had “deluded itself” on the hospital chain’s expected operating earnings. Galbato added that de la Torre had little ability to manage a business and that a “real conversation” was needed with MPT on “the art of the possible.”

In a response to a question on the memo, Cerberus called it “a thought exercise by an operating executive who had been asked for his ‘10,000 foot’ view during the earliest months of the COVID-19 pandemic – a time of great uncertainty for healthcare businesses around the world. The very first sentence of the memo states that ‘comments should be regarded as hypothesis needing some clarification and validation.’” Cerberus added that “the cover email transmitting the April 2020 document to which you refer clearly stated that it was specifically offered as a ‘discussion document,’ the content of which needed to be ‘discussed and analyzed.’”

Eventually MPT, Cerberus and Steward figured out a deal in which everyone would get something. To work out the details of the 2020 carve up, MPT’s management said in internal communications that they needed to “get creative.” The result of that creativity was dubbed “Project Easter.” 

Cerberus agreed to sell its controlling ownership share of Steward (listed then as 86.3 percent percent) to de la Torre and his management team for $350 million via a promissory note that the hospital chain had no means of paying. It would later get the money from MPT to retire that note, albeit for the slightly lesser amount of $335 million. 

MPT’s equity participation rights in Steward (the rights to dividends and earnings from the sale of assets) quietly increased to 37 percent with the deal. The MPT board presentation illustrates the REIT’s still ambitious plan for the hospital chain: The slide deck says MPT values the franchise at $2.5 billion and adds that de la Torre and Steward management had been exploring various “international opportunities.”

But the whole Project Easter carve-up came with a major caveat — hundreds of millions had to be be pumped into Steward. 

Documents reviewed by OCCRP reveal that MPT, Cerberus, and Steward were concerned that they could be accused of cashing out of Steward at a time when the hospital chain was insolvent. 

The May 2020 presentation to MPT’s board said that $400 million would be injected into Steward for two reasons: to keep the hospital chain afloat during Covid and to “provide protection to Cerberus from a possible fraudulent conveyance claim.” Such a claim would allow creditors or a bankruptcy court to claw back money that it received for its equity interest when Steward was insolvent.

To raise that $400 million, MPT and de la Torre would form a new company to buy Steward’s international rights and assets for $200 million, according to the MPT board presentation. The other half would be raised by acquiring Steward’s Davis and Jordan hospitals in Utah for $200 million more in cash than they were worth. Those deals were detailed in the final agreement signed by all parties. 

But there was an extra twist — not all of that money turned up on Steward’s balance sheets. 

An email from Steward’s Mark Rich in February 2023 reveals that the $200 million cash due to be raised from the sale of the Utah hospitals was not going to be found by auditors because it had been paid out to partners. 

“So we have to back track all this bad history and bad explaining and “secret decoder ring topside only entries” and come up with a simple, supportable way to explain this. Everyone thinks the audit of Davis/Jordan will explain this. Guess what? It won’t. It’s all buried probably in partner’s equity,” he says. 

In internal emails in December 2020, MPT vice president and CFO Steve Hamner mentioned the REIT would expect to consent to a dividend payout of $111 million off the back of the Project Easter deal, the majority of which would go to de la Torre, who owned 80.7 percent of Steward by that point. MPT itself would get $11 million.

Around that same time, de la Torre was reported by the Boston Globe to have bought the Amaral, a 190 foot superyacht that cost $40 million.  

Project Easter also included permission for Steward to change its operating agreement so that MPT lost the right to approve the issuance of dividends by Steward. That meant de la Torre would be free to issue himself dividends of up to $500 million at any time.

In a response to a question sent to de la Torre about the Cerberus exit deal, the spokesperson said: "The only benefit Dr. de la Torre received from the May 2020 recapitalization was to ensure that the hospitals were not put into a bankruptcy process in the middle of the pandemic and that they had sufficient funds to continue operations during COVID."

Cerberus told OCCRP of the deal: “Cerberus exited Steward in early May 2020 … when we exited, the company was financially healthy and we did everything we could to prudently prepare it for the uncertain impact of COVID-19 by specifically structuring the May 2020 transaction to require the infusion of $400 million of fresh capital into the company, with zero additional debt or leverage.”

With the Project Easter carve-up complete, Steward staggered on, propped up by loans and advances from MPT.

In 2022, with Steward billions in debt to MPT, the hospital chain’s chief financial officer said in an internal chat, apparently working through how much Steward could borrow, that the firm was “deep in the zone of insolvency,” before hours later concluding Steward could “Live to fight another day.” 

That same year, MPT told investors and regulators that Steward was improving and on a path to being “strongly cash flow positive.”  It again described Steward as its largest tenant by revenue — underscoring that its apparently lucrative properties were receiving supposedly consistent rentals. 

By the start of 2023, analysts and the SEC began to question MPT’s business with Steward and the opacity surrounding their relationship. The SEC flagged that its special requests to MPT for it to submit Steward’s audits had not been met. 

The SEC noted it was “unable to locate disclosure clarifying the nature of the assets that are associated with [Steward].”

In an October 2023 earnings call MPT continued to claim the hospital company was performing well, but in the following months MPT injected tens of millions into Steward via bridging loans.   

In May 2024, MPT and Steward finally agreed to file for bankruptcy and put 30 of its 31 remaining hospitals up for sale. 

In a press release announcing the bankruptcy, de la Torre said Steward had “done everything in its power to operate successfully in a highly challenging health care environment.” 

Steward said it had over $9 billion in total liabilities, including $1.2 billion in secured debt, $6.6 billion in rent obligations, and nearly $1 billion in unpaid bills from medical vendors and suppliers. 

But even in bankruptcy, the fight to control the hospital chain continues. Steward has filed an “adversary complaint” — a lawsuit filed within a bankruptcy case — accusing MPT of speaking directly to potential bidders for the hospitals without Steward’s consent, in a bid to get them to sign onto MPT’s leases. 

The complaint claims MPT has pressured Steward to “accede to its demands that all value be siphoned to MPT, leaving the estates bare and risking the Debtors’ ability to maintain and sell their operations in a manner that maximizes value and safeguards patient health and safety.”

Brian Fitzpatrick (OCCRP) and the Boston Globe Spotlight team contributed reporting.