{"id":197757,"date":"2025-10-02T18:34:07","date_gmt":"2025-10-02T18:34:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/197757\/"},"modified":"2025-10-02T18:34:07","modified_gmt":"2025-10-02T18:34:07","slug":"lessons-from-the-collapse-of-steward-health-care","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/197757\/","title":{"rendered":"Lessons from the collapse of Steward Health Care"},"content":{"rendered":"<p>The monitor that had been tracking Mearl Hodge\u2019s heartbeats started to show an abnormal rhythm. So, a technician at Glenwood Regional Medical Center alerted nurses that the electrodes that should have been affixed to Hodge\u2019s chest seemed to have popped loose. No one checked. It was a granddaughter, arriving for a visit 20 minutes later, who discovered that her grandmother no longer had a pulse.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-1834647 size-large\" src=\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/10\/DeathRecordPhotoCDN-4856288-26544574-2.png\" alt=\"Mearl Hodge\" width=\"266\" height=\"305\"  \/>Mearl Hodge. Courtesy of the Hodge family.<\/p>\n<p>The circumstance of Hodge\u2019s death in northeast Louisiana is among more than 650 documented instances of deficient care at nearly three dozen hospitals across eight states that were owned by Steward Health Care before the entire system collapsed last year in a spectacular bankruptcy. Hodge\u2019s death, four days after she was admitted to Glenwood with covid the winter of 2022, triggered an inquiry<a id=\"citation-1\" class=\"citation\" aria-describedby=\"citation-tooltip-1\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">1<\/a> by the Louisiana Department of Health. Beyond the unattached heart monitor leads, the mask helping Hodge, 90, to breathe was sitting, useless, on her stomach. And though her medical chart made clear she wanted to be resuscitated in any emergency, the staff hadn\u2019t tried.<\/p>\n<p>For these mistakes, the state health department fined Glenwood $1,750.<a id=\"citation-2\" class=\"citation\" aria-describedby=\"citation-tooltip-2\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">2<\/a> Light as that penalty was for a life, what is uncommon about the case is that the hospital was fined at all. The scarcity of sanctions when some Steward facilities made even grave errors is part of a pattern in government regulation of America\u2019s hospitals that we identified in a case study of Steward Health Care. The collapse of Steward has attracted considerable attention, mainly depicted as a poster child for the perils of for-profit hospital owners fueled by self-enriching executives and their private equity patrons. In contrast, our examination of the Steward system points to a less obvious culprit: Across the country, oversight of hospitals by states and the federal government is inadequate\u2014at times weakly enforced, at times absent.<\/p>\n<p>This portrait of the feeble regulation of a troubled health system emerges from our data analysis of Steward\u2019s hospitals and review of current regulatory practices. The multi-prong analysis reveals substantial flaws in how government oversees hospitals. On the one hand, main ways the Centers for Medicare and Medicaid Services (CMS) require U.S. hospitals to publicly report on their finances and their quality failed to point to Steward\u2019s deepening fragility.<\/p>\n<p>On the other hand, two sources of data that we analyzed\u2014information that regulators do not routinely track\u2014make clear that the company\u2019s hospitals were increasingly in trouble. One is a roster of nearly 130 lawsuits that mounted as the bankruptcy neared; vendors\u2014from suppliers of medical devices to air-conditioning\u2014went to court, alleging that Steward neglected to pay its bills. The other is a growing pile of hospital deficiencies\u2014flaws, including in Mearl Hodge\u2019s care, of varying severity that states examined in response to complaints.<\/p>\n<p>This combination\u2014public data that didn\u2019t show the problems, revealing trends that regulators didn\u2019t watch\u2014does not suggest that many of the United States\u2019 hospitals are poised to fail. A <a href=\"https:\/\/jamanetwork.com\/journals\/jama\/fullarticle\/2813379?guestAccessKey=e0cef9be-d55c-4bcf-8892-412af8f24355&amp;utm_source=For_The_Media&amp;utm_medium=referral&amp;utm_campaign=ftm_links&amp;utm_content=tfl&amp;utm_term=122623\" rel=\"nofollow noopener\" target=\"_blank\">slim body<\/a> <a href=\"https:\/\/www.acpjournals.org\/doi\/10.7326\/ANNALS-24-03471\" rel=\"nofollow noopener\" target=\"_blank\">of research<\/a> into the more than 450 hospitals with private equity financing indicates that they tend to be more problem-prone. But those account for a small share of the nation\u2019s for-profit hospitals, and <a href=\"https:\/\/www.nber.org\/system\/files\/chapters\/c6761\/c6761.pdf\" rel=\"nofollow noopener\" target=\"_blank\">evidence<\/a> of whether the entire group has lower quality than nonprofits is mixed. Still, the lax regulatory climate means that state and federal early warning systems for troubled hospitals are largely absent. As Jonathan Blum, who held senior roles at CMS during the Obama and Biden administrations, said in an interview: \u201cWe need to build some sentinels. . .to catch things before a crash happens.\u201d<\/p>\n<p>In the meantime, certain hospitals and the communities that rely on them can be vulnerable. That is especially the case now that looming funding cuts to Medicaid and other federal health care programs\u2014set forth in a <a href=\"https:\/\/www.congress.gov\/bill\/119th-congress\/house-bill\/1\/text\/enr\" rel=\"nofollow noopener\" target=\"_blank\">broad tax and spending law<\/a> that Congress adopted in June and other recent policy shifts\u2014are widely predicted to erode the financial underpinnings of rural and other already-strapped hospitals. As such, hospitals struggle to cope, some may hunt for new, deep-pocketed owners.<\/p>\n<p>We need to build some sentinels. . .to catch things before a crash happens<\/p>\n<p>            Jonathan Blum, former principal deputy administrator and chief operating officer, Centers for Medicare and Medicaid Services<\/p>\n<p>To make clear what we learned through this case study, we will start with a quick history of Steward\u2019s twisting path, then depict our data findings. From there, we will focus on the company\u2019s intersection with one state government as a microcosm, offer a few ideas that could improve hospital oversight, and end with a reminder of the human cost of Steward\u2019s troubles.<\/p>\n<p>\n  \t\t\tThe rise and fall of Steward\u2014a brief history<\/p>\n<p>Massachusetts, Steward\u2019s birthplace, is a hub of academic medical centers. It had never been home to a for-profit hospital financed by private equity\u2014an arrangement in various aspects of U.S. health care in which investors look for high returns. But in this century\u2019s early years, a local Roman Catholic health system called Caritas Christi was faltering after a widespread priest sex scandal was revealed, a scandal that financially drained the Archdiocese of Boston. Eventually, Caritas began looking for a buyer, and Massachusetts officials joined the search. They were having little luck, especially finding one willing to heed Caritas\u2019s no-abortion policy and other Catholic values.<\/p>\n<p>So, Massachusetts officials viewed it as good fortune when Ralph de la Torre, a prominent cardiac surgeon in Boston who had become Caritas\u2019s chief executive two years earlier, proposed what he said would be a new model of care. A fan of value-based payment models\u2014accountable care organizations (ACOs) in which providers share in savings and, sometimes, financial risks\u2014he argued that these community hospitals could offer good treatment at relatively low expense. In 2010, the system affiliated with Cerberus Capital Management, an established private equity firm. In purchasing Caritas, Cerberus pledged to solidify its underfunded pension system, shore up the half-dozen hospitals and, for the first five years, be monitored by Massachusetts\u2019 attorney general. The system would be renamed Steward Health Care. With certain conditions, the attorney general and a judge <a href=\"https:\/\/web.archive.org\/web\/20120517101408\/http:\/www.mass.gov\/ago\/docs\/nonprofit\/caritas\/statement-of-the-attorney-general-caritas-christi-transaction.pdf\" rel=\"nofollow noopener\" target=\"_blank\">approved the deal<\/a>.<\/p>\n<p>Though the fledgling system made some hospital improvements, Steward didn\u2019t always adhere to the deal\u2019s terms, as we describe in more detail below. And, under de la Torre\u2019s leadership, it quickly became clear that the company had larger ambitions. Three months after Steward was formed, the fledgling system tried\u2014and failed\u2014to take over a half-dozen Florida hospitals, including Jackson Memorial, a public safety-net anchor in Miami. Later in 2011, Steward bought four more Massachusetts hospitals and another in 2012. But Steward\u2019s big growth spurt started in 2016, just after the state monitoring ended, when the system entered into a deal with Medical Properties Trust (MPT), a major real estate investment trust, a type of company that pools money from many investors to buy and own income-producing real property. MPT bought all of the Steward hospitals\u2019 buildings and land in a \u201csale-leaseback\u201d arrangement, providing the system with cash in exchange for escalating rents. Steward, together with MPT and Cerberus, went on a buying spree, expanding for the first time beyond Massachusetts. Less than a year later, it owned 36 hospitals in 10 states\u2014adding facilities in Arizona, Arkansas, Colorado, Florida, Louisiana, Ohio, Pennsylvania, Texas, and Utah.<\/p>\n<p>In none of the other states into which Steward spread did regulators have a role reviewing the purchases, according to our analysis of health care \u201ctransaction\u201d laws, <a href=\"https:\/\/www.ncsl.org\/health\/the-evolving-landscape-of-state-health-care-transaction-laws\" rel=\"nofollow noopener\" target=\"_blank\">compiled by the National Conference of State Legislatures<\/a>. In some of the states, such as Arizona, an attorney general reviews only sales of nonprofit hospitals; Steward grew almost entirely by acquiring hospitals that already were for-profit. Other states, such as Florida, review sales of nursing homes, but not hospitals. Still others, such as Texas, do not oversee any health facility sales.<\/p>\n<p>As the company expanded and contracted, financial troubles, staff and supply shortages, and de la Torre\u2019s voracious <a href=\"https:\/\/www.youtube.com\/watch?v=R9CZmHCUv9w\" rel=\"nofollow noopener\" target=\"_blank\">spending on luxuries<\/a>\u2014including a $30 million, 190-foot yacht\u2014were materializing. Steward sold seven hospitals in Ohio, Colorado, and Utah. In January of 2024, <a href=\"https:\/\/www.bostonglobe.com\/2024\/01\/25\/business\/steward-health-care-mother-death\/?event=event12\" rel=\"nofollow noopener\" target=\"_blank\">the Boston Globe broke the story<\/a> of a 39-year-old woman who died of profuse bleeding from her liver the day after giving birth at Steward\u2019s St. Elizabeths Medical Center in Boston; an unpaid vendor had repossessed common metal coils that doctors use to stem internal bleeding.<\/p>\n<p>Less than four months later, on May 6, 2024, the whole Steward system <a href=\"https:\/\/restructuring.ra.kroll.com\/steward\/Home-Index\" rel=\"nofollow noopener\" target=\"_blank\">filed for bankruptcy<\/a> in Texas, where the company had moved its headquarters six years before. That September, the Senate unanimously held de la Torre, the CEO, <a href=\"https:\/\/www.help.senate.gov\/rep\/newsroom\/press\/video-senate-votes-to-hold-steward-health-ceo-in-contempt-for-failure-to-comply-with-congressional-subpoena\" rel=\"nofollow noopener\" target=\"_blank\">in criminal contempt<\/a> for defying a subpoena to testify about his company. This summer, the remnants of <a href=\"https:\/\/restructuring.ra.kroll.com\/steward\/Home-DownloadPDF?id1=Mzc3NTQxMQ==&amp;id2=-1\" rel=\"nofollow noopener\" target=\"_blank\">Steward sued de la Torre<\/a>, who resigned in the fall of 2024, and three others, accusing them of \u201cgreed and bad faith misconduct\u201d that had sunk the company\u2014allegations a spokeswoman for the former CEO denies.<\/p>\n<p>The bankruptcy set off a scramble, overseen by the bankruptcy court, for new owners of Steward\u2019s by-then 31 hospitals. Two in Massachusetts closed outright. As de la Torre was in France with his wife, <a href=\"https:\/\/www.bostonglobe.com\/2024\/08\/07\/metro\/bankrupt-steward-sells-closes-hospitals-ralph-de-la-torre-visits-versailles-watch-olympics\/\" rel=\"nofollow noopener\" target=\"_blank\">attending the Olympics\u2019 equestrian events<\/a> at the Palace of Versailles, community members losing their hospital and workers losing their jobs were protesting outside Carney Hospital and Nashoba Valley Medical Center, as well as Boston\u2019s gold-domed statehouse.<\/p>\n<p>\n  \t\t\tHospital regulation and its data<\/p>\n<p>The tale of Steward crystalized a central question for us: When problematic actors take over a hospital system, who is minding the store?<\/p>\n<p>This overarching question led us to consider the government\u2019s role in shielding the public from hospitals providing unsafe and ineffective care. To explore this question, we first examined two main types of data that virtually every acute care hospital in the United States is required to submit each year to CMS. One type is a set of financial data, known as Medicare cost reports. The other is a set of quality metrics, known as Care Compare, which forms the basis of a star rating system CMS maintains for consumers.<\/p>\n<p>  \t\t\tFinances<\/p>\n<p>Nearly every acute care hospital that treats patients on Medicare must provide CMS an annual cost report containing specified financial information. In our analysis of these reports, we looked at four measures that are routinely considered indications of a hospital\u2019s financial condition. They are operating profit margin, net profit margin, current ratio, and equity financing ratio.<a id=\"citation-3\" class=\"citation\" aria-describedby=\"citation-tooltip-3\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">3<\/a> CMS makes these cost report data publicly available.<\/p>\n<p>For each of these measures, we compared the average<a id=\"citation-4\" class=\"citation\" aria-describedby=\"citation-tooltip-4\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">4<\/a> for Steward\u2019s hospitals against\u00a0the average for U.S. hospitals\u00a0overall. We also compared these measures with slightly different audited financial statements for the entire Steward system. Unlike with nonprofit hospitals and private ones that are publicly traded, such audited statements are not routinely available for health systems backed by private equity\u2014but they were for Steward.<a id=\"citation-5\" class=\"citation\" aria-describedby=\"citation-tooltip-5\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">5<\/a><\/p>\n<p>Between 2011, the first full year of Steward\u2019s existence, and 2023, the most recent year for which data are available, we found that\u00a0the company\u2019s\u00a0hospitals\u00a0did not appear substantially different from U.S. hospitals\u00a0overall.\u00a0However,\u00a0audited financial statements for the\u00a0whole\u00a0Steward system,\u00a0available in\u00a0separate\u00a0public records,\u00a0reveal that, for all four measures we analyzed, the\u00a0company struggled from early on.<\/p>\n<p>Here is what we found for each of the four metrics:<\/p>\n<p>Figure 1 shows that, from 2011 to 2019, the average operating profit margin reported to CMS by each individual Steward hospital appears to be outperforming the average for all U.S. hospitals. However, system-wide audited financial statements from that first year through 2021, the most recent year\u2019s data available, indicate that Steward was struggling from its inception. For the period 2012 to 2022, Steward reported to CMS operating margins of over 5%, while its audited financial statements showed operating margins that were negative in all but two years.<a href=\"#_ftnref1\" name=\"_ftn1\"\/><\/p>\n<p>Figure 2 shows that, unlike in the operating margin, the average net profit margin for the individual Steward hospitals was weak from the start, below the national average for most years, until the figures reported to CMS rose considerably shortly before the bankruptcy. The individual hospitals appear in better shape than the health system in all but three years.<\/p>\n<p>Figure 3 reveals that, in Steward\u2019s early years, the average current ratio of assets to debts for individual hospitals tracked closely with system-wide audited financial statements. But starting around the time that Steward affiliated with Medical Properties Trust in 2016, they quickly diverged, with the individual hospitals\u2019 financial data reporting less debt than the system-wide statements. The audited system-wide financial statements show that, starting its first full year in 2011, Steward was struggling, with its current ratio three times lower than the national average for U.S. hospitals.<\/p>\n<p>As Figure 4 indicates, the equity financing ratio from Steward\u2019s system-wide audited financial statements was, from the outset, below both the national average and the ratio <a href=\"https:\/\/www.allianz-trade.com\/en_US\/insights\/equity-ratio.html\" rel=\"nofollow noopener\" target=\"_blank\">experts regard<\/a> as appropriate. However, this ratio plunged once Steward affiliated with Medical Properties Trust in 2016. And starting around that time, the ratio was consistently far below the average reported by the company\u2019s individual hospitals. Most dramatically, Steward\u2019s system-wide average was negative 35% in 2021, compared with an average for all U.S. hospitals that year of 60%.<\/p>\n<p>So, what accounted for the discrepancies between what Steward\u2019s individual hospitals reported and its audited system-wide data? The discrepancies\u00a0reflect that\u00a0the company shifted many expenses to the central office\u2014a common practice among health systems that Steward took to an extreme.<a id=\"citation-6\" class=\"citation\" aria-describedby=\"citation-tooltip-6\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">6<\/a> As a result, the cost reports are \u201cnot a valid\u00a0data set for analyzing the\u00a0financial condition of the\u00a0hospitals,\u201d as Nancy Kane, an emerita professor of health policy and management at the Harvard TH Chan School of Public Health, said in a conversation for this case study.<\/p>\n<p>As KFF noted last year <a href=\"https:\/\/www.kff.org\/health-costs\/gaps-in-data-about-hospital-and-health-system-finances-limit-transparency-for-policymakers-and-patients\/\" rel=\"nofollow noopener\" target=\"_blank\">in a report<\/a> on gaps in\u00a0hospital financial\u00a0information,\u00a0the data\u00a0submitted\u00a0in\u00a0cost reports\u00a0for individual hospitals\u00a0is not standardized\u00a0or rigorously scrutinized\u2014and\u00a0does not\u00a0reflect the\u00a0financial condition\u00a0of\u00a0their\u00a0parent\u00a0health\u00a0system. Plus, these reports typically lag by a year or two.<\/p>\n<p>More fundamentally, these public cost reports are not a tool for federal oversight of hospitals\u2019 condition. CMS uses\u00a0the reports\u00a0to\u00a0help ensure that Medicare is paying hospitals\u00a0correctly, not to\u00a0monitor\u00a0their financial\u00a0health.<a id=\"citation-7\" class=\"citation\" aria-describedby=\"citation-tooltip-7\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">7<\/a><\/p>\n<p>So, are states filling this oversight gap? Of the 10\u00a0states\u00a0in which Steward\u00a0operated,\u00a0seven require\u00a0hospitals to report at least some financial data and make it publicly\u00a0available, according\u00a0to a review we did of state\u00a0financial transparency laws.\u00a0But\u00a0just three\u2014Colorado,\u00a0Massachusetts,\u00a0and Pennsylvania\u2014say they\u00a0currently\u00a0analyze\u00a0the data\u00a0for hospitals\u2019 expenditures or financial condition.<a id=\"citation-8\" class=\"citation\" aria-describedby=\"citation-tooltip-8\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">8<\/a><a href=\"#_ftnref1\" name=\"_ftn1\"\/><\/p>\n<p>  \t\t\tQuality<\/p>\n<p>As with the financial data, our analysis found that important measures of hospitals\u2019 quality did not reveal the trouble that was occurring at many of the Steward facilities. Using CMS Care Compare\u2019s hospital data, we analyzed four metrics. They involve serious medical complications, patients who leave an emergency department without being evaluated or treated, pneumonia deaths within 30 days of discharge, and readmissions. <\/p>\n<p>For each of these four, we examined the average performance<a id=\"citation-9\" class=\"citation\" aria-describedby=\"citation-tooltip-9\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">9<\/a> reported by the company\u2019s hospitals in comparison with the national average for U.S. hospitals from 2013, the earliest year for which CMS has consistent data, to 2024, when Steward declared bankruptcy. We also focused on the individual performance of five Steward hospitals that, we knew from other sources (see discussion of hospital deficiency citations below), were especially problem-ridden. For the most part, even those five hospitals did not appear markedly worse in quality than the average for hospitals nationwide.<\/p>\n<p>Here are what four metrics show:<\/p>\n<p>The average rate of serious medical complications for Steward\u2019s hospitals was consistently near that of the nationwide hospital average. Only one hospital in Figure 5, Mountain Vista Medical Center in Mesa, Arizona, had a substantially higher rate than the national average for most of the years we analyzed.<\/p>\n<p>Figure 6 shows that the average percentage of patients who left a Steward hospital emergency department without having been evaluated or treated closely paralleled the nationwide hospital average and, except for 2024, was slightly lower. Most of the five individual Steward hospitals we singled out as problematic had rising rates of untreated emergency department patients in the final years before the company\u2019s bankruptcy.<\/p>\n<p>Deaths from pneumonia within 30 days of a patient\u2019s discharge are considered by many experts to be a better harbinger of a hospital\u2019s quality than mortality from other causes, because some patients develop pneumonia while hospitalized. Within the Steward system, Wadley Regional Medical Center in Texas and Glenwood in Louisiana had substantial increases in pneumonia deaths in the few years preceding Steward\u2019s bankruptcy, but the rate for the system as a whole consistently hovered near the average for U.S. hospitals (Figure 7).<\/p>\n<p>Throughout the dozen years we analyzed (Figure 8), the average rate at which patients were unexpectedly readmitted for all reasons to a Steward hospital remained close to the average for U.S. hospitals. Even as the bankruptcy neared, most of the five problem-ridden hospitals did not show any substantial rise in readmissions.<\/p>\n<p>In the end, our analysis showed that the main metrics that CMS collects each year from U.S. hospitals about their financial condition and their quality failed to provide much sign of Steward Health Care\u2019s deteriorating condition as the system was heading toward collapse.<\/p>\n<p>So, we wondered, weren\u2019t there any clues that could have warned that the health system was in trouble? It turns out that there were\u2014in two types of information that state and federal regulators do not routinely scrutinize.<\/p>\n<p>  \t\t\tThe clues<\/p>\n<p>Having seen <a href=\"https:\/\/www.healthcaredive.com\/news\/steward-health-care-mismanagement-lawsuits\/710102\/\" rel=\"nofollow noopener\" target=\"_blank\">news accounts<\/a> about lawsuits filed by vendors who alleged that Steward wasn\u2019t paying its bills, we studied this litigation. We relied in part on a schedule within <a href=\"https:\/\/restructuring.ra.kroll.com\/steward\/Home-DownloadPDF?id1=MzEzNjgxNA==&amp;id2=-1\" rel=\"nofollow noopener\" target=\"_blank\">the bankruptcy court docket<\/a> that lists lawsuits by Steward creditors that were still unresolved within a year of the bankruptcy filing. The schedule categorized these lawsuits, and one category, \u201cbreach of contract\u201d cases, consisted of complaints over allegedly unpaid bills. We found additional lawsuits in an offshoot of LexisNexis called CourtLink, which contains cases filed in all federal courts and many state and local courts.<\/p>\n<p>In all, we reviewed 127 legal complaints against the Steward system or its individual hospitals in which vendors were suing to get paid. These cases totaled $139 million in allegedly unpaid bills.<a id=\"citation-10\" class=\"citation\" aria-describedby=\"citation-tooltip-10\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">10<\/a><\/p>\n<p>Unlike the financial and quality data collected by CMS, these lawsuits show a clear pattern leading to the system\u2019s collapse. The number of suits brought by vendors over unpaid bills escalated in 2022, when nine filed legal complaints, then soared to nearly 60 in 2023 and 47 more in the first months of 2024, before May\u2019s bankruptcy filing.<\/p>\n<p>Many of these vendors had been working with Steward for several years, although some had longer relationships with the company. Most waited a year or two after they allegedly had not been paid to bring the suits, signifying that the company had trouble covering bills earlier in this decade.<\/p>\n<p>For instance, one small company, Eklund Refrigeration, sued<a id=\"citation-11\" class=\"citation\" aria-describedby=\"citation-tooltip-11\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">11<\/a> Steward for $32,640 in March 2023, contending it had sent 37 invoices for air-conditioning service to two Arizona hospitals after it had last been paid in 2021. The suit was filed about one and a half years before Arizona health officials stepped in, <a href=\"https:\/\/npr.brightspotcdn.com\/7f\/2b\/91f3c94f4914b5733e1b4f6487ba\/suspension-paperwork.pdf\" rel=\"nofollow noopener\" target=\"_blank\">shutting down<\/a> one of them, a Phoenix psychiatric hospital called St. Luke\u2019s, when the broken air-conditioning caused the temperature inside to reach 99 degrees F. in the August heat.<\/p>\n<p>Figure 9 notes that the lawsuits spanned a range of services for which hospitals routinely hire outside companies. Medical equipment and supplies, as well as maintenance services, were the most common.<a href=\"#_ftnref1\" name=\"_ftn1\"\/><\/p>\n<p>The typical sums for which vendors sued varied considerably by the type of service. As Figure 10 shows, the largest cases involved contract staffing, with the average lawsuit seeking nearly $2.4 million in allegedly unpaid bills.<\/p>\n<p>As lawsuits by disgruntled vendors provided vivid insight into Steward\u2019s mounting financial problems, we similarly found that investigations of hospitals\u2014spurred by complaints by patients, relatives, or staff\u2014revealed deteriorating quality. The investigations, known as surveys, are conducted by state health agencies on behalf of CMS. If a survey establishes that hospital care or conditions were deficient, state officials write a report and send a copy to CMS. The reports are kept in a federal public database, and states also keep them, though we did not find that either layer of government used the incidents to track the performance of Steward hospitals.<\/p>\n<p>The federal and state records show that hospitals owned by Steward had nearly 680 deficiencies. They climbed from 13 in 2020 to 108 in 2024. The number of Steward deficiencies per hospital in 2024 was about three and a half times as many<a id=\"citation-12\" class=\"citation\" aria-describedby=\"citation-tooltip-12\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">12<\/a> as the average for <a href=\"https:\/\/data.cms.gov\/sites\/default\/files\/2025-04\/CMSFastFacts2025_508.pdf\" rel=\"nofollow noopener\" target=\"_blank\">all U.S. hospitals<\/a> in 2023, the most recent available.<\/p>\n<p>Federal health officials have defined three deficiency levels. From the least severe to the most, they are called standard, condition, and immediate jeopardy, with the latter meaning that a flaw was so significant it caused death or injury or easily could have. As Figure 11 shows, we found that deficiencies grew at every severity level shortly before the system collapsed.<\/p>\n<p>The five hospitals with the greatest number of deficiencies over the past five years were the ones we singled out for the analysis of hospital quality data above, because these deficiencies suggested they were performing poorly. The Medical Center of Southeast Texas in Port Arthur, about 90 miles east of Houston, was cited nearly 90 times for deficiencies since Steward bought it in 2017, with a dozen of them classified as immediate jeopardy cases. The hospital had the most deficiencies in the company and the most in the immediate jeopardy category. In a 2018 case, investigators from the Texas Health and Human Services Commission found that the hospital was using surgical instruments and other equipment beyond the date when they could be guaranteed to be sterile. And operating room staff were not wearing protective shoe covers to make certain they didn\u2019t bring in contaminants from outside.<\/p>\n<p>Even hospitals with fewer deficiencies were found at times to have dramatic flaws. In March 2024, surveyors from the Pennsylvania Department of Health cited Sharon Regional Medical Center, on the state\u2019s western edge, for an immediate jeopardy. The facility lacked the proper supplies for 29 surgery cases, according to the investigation records, which say that, for two patients, \u201ccardiac cases\u2026were attempted but unable to be completed.\u201d<a id=\"citation-13\" class=\"citation\" aria-describedby=\"citation-tooltip-13\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">13<\/a> Some surgical supplies that were available had not been kept clean and sterilized, the records say, while the hospital temporarily stopped performing endoscopies because it had not properly maintained necessary equipment.<\/p>\n<p>In Utah, Salt Lake Regional Medical Center was cited for an immediate jeopardy by the state\u2019s Department of Health and Human Services for an incident the winter of 2023 in which a wheelchair-bound patient, who wanted to wait inside for a relative to take her home, was, instead, dropped off by hospital security staff at a frigid bus stop, where she died, according to state records that cite failed discharge planning, plus a confidential conversation for this case study with a quality control expert familiar with the incident.<\/p>\n<p>CMS is not authorized to fine hospitals for deficiencies. Its only remedy is to ban a facility from Medicare and Medicaid\u2014a step so draconian that it seldom happens, because depriving a hospital of revenue from these public insurance programs would threaten its existence. More often, federal health officials, or state regulators to whom they delegate responsibility, warn hospitals that they face being dropped from the programs unless they correct deficiencies\u2014and then accept the hospitals\u2019 correction plans.<\/p>\n<p>In practice, then, any penalties for hospital flaws are up to the states. According to staff at the Pennsylvania and Utah health departments, those agencies typically prefer to nudge hospitals to improve.<a id=\"citation-14\" class=\"citation\" aria-describedby=\"citation-tooltip-14\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">14<\/a> They told us that they issued no fine against Sharon or Salt Lake Regional for these immediate jeopardy cases or any other deficiency when Steward owned those hospitals.<\/p>\n<p>In Texas, the Health and Human Services Commission issued one fine, totaling $7,200, out of the 21 immediate jeopardy deficiencies it cited at Steward hospitals, according to records. The penalty followed a survey in early 2024 at Wadley Regional Medical Center in Texarkana. That investigation, records show, found a malfunctioning emergency room call system, dirt and debris on food carts and other spots, and leaks through ceiling tiles. After listing these and other flaws, however, the state\u2019s May 2024 notice told the hospital the fine \u201cwas not a demand for payment,\u201d if it was in bankruptcy. As of that month, Steward was. Eventually, the company paid anyhow.<a href=\"#_ftnref1\" name=\"_ftn1\"\/><\/p>\n<p>\n  \t\t\tSteward in Massachusetts<\/p>\n<p>In Steward\u2019s birthplace, Massachusetts, the company\u2019s hospitals racked up 310 deficiencies from the system\u2019s beginnings until its hospitals there closed or were sold in the bankruptcy. The citations included an immediate jeopardy one for the case at St. Elizabeth\u2019s Medical Center, in which absent surgical coils contributed to a patient\u2019s death after giving birth.<\/p>\n<p>The state, however, does not have a system of financial penalties for such flaws.<a id=\"citation-15\" class=\"citation\" aria-describedby=\"citation-tooltip-15\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">15<\/a><\/p>\n<p>That lack of punishment is part of an uneven pattern of oversight of Steward that we found in Massachusetts. In some ways, the state has a more elaborate health-policy apparatus than most of the country. And yet, at important moments, Massachusetts officials allowed the company to skirt agreements and the law.<\/p>\n<p>For instance, when then-Attorney General Martha Coakley in 2011 <a href=\"https:\/\/www.mass.gov\/doc\/quincy-ag-statementpdf\/download\" rel=\"nofollow noopener\" target=\"_blank\">approved<\/a> Steward\u2019s purchase of Quincy Medical Center\u2014a century-old, financially wobbly hospital south of Boston\u2014the agreement\u2019s terms said the company could not sell or close the facility for at least five years. And under <a href=\"https:\/\/www.mass.gov\/info-details\/hospital-essential-service-closures\" rel=\"nofollow noopener\" target=\"_blank\">Massachusetts law<\/a>, hospitals must provide at least 90 days\u2019 formal notice to health officials before shutting down a hospital or ending certain services.<\/p>\n<p>Still, three years after Steward took over Quincy, with less than two months\u2019 notice, the company told the state the hospital was <a href=\"https:\/\/www.boston.com\/news\/business\/2014\/11\/06\/steward-plans-to-close-quincy-medical-center-by-end-of-year\/\" rel=\"nofollow noopener\" target=\"_blank\">about to close<\/a>. At first, the attorney general\u2019s office said it might <a href=\"https:\/\/www.scribd.com\/document\/247018312\/QMC-Letter-to-Szabo-11-18-14\" rel=\"nofollow noopener\" target=\"_blank\">take legal action<\/a> to keep it open. Neighbors and hospital staff <a href=\"https:\/\/www.bostonglobe.com\/business\/2014\/12\/03\/pols-residents-blast-quincy-hospital-closing\/OOOElUKX0TUonuZR3pdsOO\/story.html\" rel=\"nofollow noopener\" target=\"_blank\">jammed a public hearing<\/a> and pleaded for the state to block the plan. In the end, Quincy closed, and the attorney general <a href=\"https:\/\/www.bizjournals.com\/boston\/blog\/health-care\/2015\/01\/steward-will-keep-quincy-medical-centers-er-open.html\" rel=\"nofollow noopener\" target=\"_blank\">required<\/a> only that Steward keep an emergency department and a few other services nearby for at least two years.<\/p>\n<p>We interviewed Rep. Ronald Mariano, the Massachusetts House Speaker who represents Quincy, and asked whether the attorney general did enough to prevent the city from becoming the state\u2019s largest without a hospital. \u201cThe short answer to that is no,\u201d Mariano replied.<\/p>\n<p>The dispute over Quincy\u2019s closing occurred during the final weeks of Coakley\u2019s tenure as state attorney general before Maura Healey replaced her in early 2015, starting the first of two terms as attorney general before she became governor. That December, the attorney general\u2019s office produced a <a href=\"https:\/\/www.mass.gov\/files\/documents\/2016\/12\/rr\/shcs-report-123015.pdf\" rel=\"nofollow noopener\" target=\"_blank\">final report<\/a> from its five years of monitoring Steward.<\/p>\n<p>In describing the parent company\u2019s financial condition, the 60-page report says that Steward\u2019s audited financial statements from the 2012 to 2014 fiscal years \u201cshow consecutive years of substantial losses,\u201d with a net loss for the latter year of about $78 million. For the individual hospitals, the report said their profitability had improved. In keeping with our findings, the report noted that the hospitals appeared in better shape partly because expenses were redistributed to the parent company.<\/p>\n<p>In an interview with Gov. Healey, she told us, \u201cWe issued that report, making clear that there\u2019s a problem here. . .It was very clear about Steward\u2019s financial problems.\u201d<\/p>\n<p>The report\u2019s summary, however, had a positive tone. It listed concerns that had surrounded the creation of the for-profit hospital system with private equity financing, including price increases, revenue diverted to satisfy investors, and unprofitable types of service, such as mental health care, squeezed in favor of more lucrative services. \u201cFive years later,\u201d the report said, \u201cthe most dire of these concerns have not come to pass. Steward has kept the former Caritas system intact and operated the system as it had proposed.\u201d<\/p>\n<p>That conclusion, however, conflicts with that of a consultant who worked as a contractor for the attorney general\u2019s office to analyze the company\u2019s finances for the report. The consultant, Kane, the emerita Harvard public health professor, said in an interview for this case study that, by 2014, the final year of data available for the report, Steward \u201cdid not look healthy. They were still losing gobs of money, and they were piling on debt. We just didn\u2019t see how they were going to pull it off,\u201d Kane said. \u201cWe gave [the attorney general\u2019s office] a draft of the financial position, and they really downplayed how dire the situation was. . .taking out some of the more contentious negativity,\u201d she said, \u201cWe did try to. . .stop that, and we complained, but it was their work product.\u201d<\/p>\n<p>I think that the growth of private equity and the for-profit model outpaced the growth of a regulatory regime to meet that evolution. . .we didn&#8217;t have the right tools to deal with some of this<\/p>\n<p>            Maura Healey, governor of Massachusetts<\/p>\n<p>In retrospect, some health care experts in Massachusetts we interviewed view the five years of monitoring as too brief and shortsighted, though they note that the state at the time lacked other options for new owners to take over the fragile Caritas Christ hospitals. Healey said during our conversation that the attorney general\u2019s office did not have a basis to extend the oversight, saying that Steward \u201chad satisfied everything they needed to under the terms of the five-year monitoring. . .There was no way for that [monitoring] to continue.\u201d<\/p>\n<p>John McDonough, a Harvard public health professor and former Massachusetts state lawmaker, told us, \u201cOnce the oversight ended, then it was party time for Steward.\u201d<\/p>\n<p>Steward\u2019s affiliation with Medical Properties Trust, and its sale-leaseback arrangement, began nine months after the monitoring ended. Because this was a real estate deal, not a health care one, Massachusetts did not have regulatory power to review it.<\/p>\n<p>The following year, 2017, Steward sued<a id=\"citation-16\" class=\"citation\" aria-describedby=\"citation-tooltip-16\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">16<\/a> a Massachusetts agency with which it had been feuding for four years. An uncommon independent agency, the Center for Health Information and Analysis (CHIA), was created in 2012 to collect and publish health care data, including about hospitals. No other hospital had objected to submitting what was required, but Steward soon refused to provide CHIA its audited financial statements, contending that, for a for-profit system, they contained sensitive business information the company needed to protect.<\/p>\n<p>Using the only leverage it had to try to compel Steward to comply, CHIA <a href=\"https:\/\/www.bostonglobe.com\/business\/2017\/10\/31\/steward-health-care-sues-state-over-financial-data\/QWoXVntO8mrAuYqXROoioN\/story.html\" rel=\"nofollow noopener\" target=\"_blank\">levied fines<\/a> of more than $300,000. As Adam Boros, the agency\u2019s first director until 2016, said in a conversation for this case study, \u201cthe fines were not big enough to motivate them in any way.\u201d<\/p>\n<p>Finally, Steward sued, arguing the state\u2019s requirements of financial data did not apply to it. A judge eventually ruled against the company, but the case was still on appeal when the system filed for bankruptcy. In the suit, Steward said<a id=\"citation-17\" class=\"citation\" aria-describedby=\"citation-tooltip-17\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">17<\/a> that, while it was sparring with CHIA over the financial statements, the company negotiated an agreement with the attorney general\u2019s office to provide such information for its monitoring with a confidentiality guarantee. Speaking on the condition of anonymity for this case study, two former senior Steward executives confirmed that this happened.<\/p>\n<p>Healey said the idea that the attorney general\u2019s office \u201ccould have just shared it with CHIA. . .that\u2019s a completely false construct. . .We were advocating strongly and aggressively in court\u201d to pry the data from Steward.<\/p>\n<p>\u201cYou know,\u201d the governor said, \u201cif that information had been provided sooner, the state or federal government might have been able to take action to head off some of the harm that ultimately came to pass.\u201d<\/p>\n<p>Mariano, the House Speaker, recalled starting to get calls from friends of his in the world of health care, telling him tales of lack of equipment and staff at Steward\u2019s facilities, along with money that de la Torre and other top officials were diverting to themselves. As the House speaker said, \u201cThe whole thing was getting crazy.\u201d<\/p>\n<p>The Steward trouble \u201cwasn\u2019t out of sight,\u201d said David Cutler, a Harvard professor of economics who until recently was a board member of the Massachusetts Health Policy Commission, a body that focuses on health care costs and affordability. \u201cPeople were looking at it and saying, \u2018What the hell are they doing?\u2019 But there was nobody who could do anything about it.\u201d<\/p>\n<p>In our conversation, Healey said, \u201cI think that the growth of private equity and the for-profit model outpaced the growth of a regulatory regime to meet that evolution. . .from my perspective, we didn\u2019t have the right tools to deal with some of this.\u201d<\/p>\n<p>In February 2024, weeks after the Globe broke the story of the patient who died after childbirth, the governor dispatched <a href=\"https:\/\/www.mass.gov\/doc\/steward-0220\/download\" rel=\"nofollow noopener\" target=\"_blank\">a stern letter<\/a> to de la Torre. Healey demanded that the company improve its supplies and staffing, submit to more monitoring by state health officials, and immediately disclose financial documents. And, the governor\u2019s letter said, it was time for Steward to leave the state.<\/p>\n<p>After the bankruptcy filing that May, state officials worked with the company and other players in the Massachusetts health care world to find new operators for the Steward hospitals, in some instances spending state money to tide hospitals over. \u201cWe were able to save six of the eight,\u201d the governor told us.<\/p>\n<p>Eleven months later, a week after New Year\u2019s 2025, Healey signed into law a bill that expands hospitals\u2019 oversight. <a href=\"https:\/\/malegislature.gov\/Bills\/193\/H5159\" rel=\"nofollow noopener\" target=\"_blank\">The law<\/a> increases the penalty for not providing CHIA the required data from $1,000 to $25,000 for each violation. For the first time, it requires private equity firms and real estate investment trusts (REITs) to appear with other health care entities at an annual public hearing on health costs. It forbids hospitals from getting a license if their main campus affiliates with a REIT, though such arrangements that already exist are allowed to continue.<\/p>\n<p>Looking back on the 14 years Steward was in Massachusetts, Healey said, \u201cMore and better legal tools needed to be in place and, you know, that\u2019s partly accomplished through this legislation.\u201d<\/p>\n<p>But the governor added, \u201cwe should be looking to see what else needs to happen.\u201d<a href=\"#_ftnref1\" name=\"_ftn1\"\/><\/p>\n<p>\n  \t\t\tLessons for policy<\/p>\n<p>At its core, our case study has centered on exploring this question: When problematic actors take over hospitals, who is minding the store? Our data analysis and examination of state and federal policy yields this answer: Almost no one is doing enough.<\/p>\n<p>The failings, as we see it, fall into three main camps. Each warrants strengthening at state and federal levels to protect these crucial medical facilities\u2014and the patients who rely on them\u2014from the kind of problems that festered at Steward\u2019s hospitals. These are our thoughts in broad strokes. Additional work will be needed to define how best to accomplish them.<\/p>\n<p>Collect better data on hospital and health systems\u2019 finances and hospital quality that is more likely to detect problems early\u2014and use that information for more rigorous oversight of facilities\u2019 performance.<a id=\"citation-18\" class=\"citation\" aria-describedby=\"citation-tooltip-18\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">18<\/a> At the federal level, this will mean rethinking the caliber, standardization, and analytic depth of the data hospitals must report to CMS. At the state level, this often will mean establishing explicit responsibility within health agencies for such monitoring and analysis, as well as publicizing the results. The goal throughout should be to detect signs of trouble at hospitals and their parent health systems in close to real time, rather than mainly responding retroactively to complaints and catastrophic events.<br \/>\nRaise the stakes for hospitals that provide substandard care. Federal and state health officials are reluctant to levy fines that would cause hospitals to weaken financially, particularly in urban and rural communities that already are medically underserved, for fear of eroding people\u2019s access to health services. But the current mixture of light penalties and no penalties for deficient care should be stiffened to deter hospitals from stinting on staff, supplies, and other ingredients of good care. And government officials should employ tools apart from penalties to coach hospitals to improve.<br \/>\nChange regulatory practices in most states in which the sale of for-profit hospitals often gets less scrutiny than that of their nonprofit siblings. States need the leverage to block or place conditions on a hospital acquisition and its financial arrangements if they do not appear to be in the public\u2019s interest, including in deals that involve private equity firms or real estate investment trusts. Federally, agencies beyond the Department of Health and Human Services\u2014such as the Securities and Exchange Commission and the Federal Trade Commission\u2014should play larger roles in keeping an eye on hospital consolidation and sale-leaseback arrangements.<\/p>\n<p>The collapse of Steward Health Care has served as a poster child in illuminating the failings of current regulation. In Washington and in some statehouses, this neon example has spurred discussions about what more could be done. So far, relatively little of that recent discussion has led to change.<\/p>\n<p>For instance, in January, days before the Biden administration ended, federal officials <a href=\"https:\/\/www.hhs.gov\/sites\/default\/files\/hhs-consolidation-health-care-markets-rfi-response-report.pdf\" rel=\"nofollow noopener\" target=\"_blank\">issued a report<\/a> on health industry consolidation, including hospitals such as Steward\u2019s with private equity financing. The 37-page report by the Departments of Health and Human Services and Justice and the Federal Trade Commission said that, in gathering public comment, the agencies had repeatedly heard advice that \u201cHHS should do more to improve the quality of the data\u201d it collects about health facilities\u2019 owners, prices, staff levels, and patient care.\u00a0<\/p>\n<p>There are no signs of any further consideration of the report.<\/p>\n<p>On Capitol Hill, the Senate Health, Education, Labor and Pensions (HELP) Committee conducted a hearing into Steward\u2019s troubles in September 2024\u2014theatrically placing a name tag for de la Torre, the company\u2019s then-CEO, at an empty witness chair he would have occupied if he hadn\u2019t <a href=\"https:\/\/www.fiercehealthcare.com\/providers\/senate-help-committee-votes-unanimously-civil-criminal-charges-after-steward-ceo-dodges\" rel=\"nofollow noopener\" target=\"_blank\">defied a subpoena to appear<\/a>.<\/p>\n<p>The hearing occurred two months after one of the committee\u2019s members, Sen. Edward J. Markey (D-Mass.), had <a href=\"https:\/\/www.markey.senate.gov\/healthoverwealth\" rel=\"nofollow noopener\" target=\"_blank\">introduced legislation<\/a> with Rep. Pramila Jayapal (D-Wash.) that would have clamped down on private equity in health care. The bill did not receive a committee hearing. According to Markey\u2019s staff, he plans<a id=\"citation-19\" class=\"citation\" aria-describedby=\"citation-tooltip-19\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">19<\/a> to reintroduce the legislation during the current Congress, but has not done so yet.<\/p>\n<p>More recently, another HELP committee member, Sen. Chris Murphy (D-Conn.), <a href=\"https:\/\/www.murphy.senate.gov\/imo\/media\/doc\/a_dangerous_prospect_how_private_equity_decimated_connecticut_hospitals1.pdf\" rel=\"nofollow noopener\" target=\"_blank\">issued a report<\/a> in August on a similar theme, decrying the effects on his state of the other private equity-financed health system, Prospect Medical Holdings, that declared bankruptcy. When Prospect took over three Connecticut hospitals, the report said, \u201cthey cut corners, squeezed staff, eroded patient care, and drove these hospitals into bankruptcy, leaving economic uncertainty for these communities in its wake.\u201d<\/p>\n<p>Murphy\u2019s report notes that the Connecticut legislature failed to pass two bills that would have strengthened the state\u2019s review of health care transactions or outright banned private equity firms from owning hospitals. According to Murphy\u2019s staff, his office is developing federal legislation.<a id=\"citation-20\" class=\"citation\" aria-describedby=\"citation-tooltip-20\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">20<\/a><\/p>\n<p>In other words, the early stirrings of interest on Capitol Hill in addressing these issues have not yet been subject to real scrutiny.<\/p>\n<p>Across the country, <a href=\"https:\/\/www.ropesgray.com\/en\/sites\/healthcare-transactions-laws#Florida\" rel=\"nofollow noopener\" target=\"_blank\">18 states have considered legislation<\/a> during the past few years that would give attorneys general or health agencies greater latitude when health care facilities are sold and acquired. Of those states, 11 passed bills. Most of the new laws require notification of the state of a prospective sale if the transaction involves enough money, but do not give that state the power to stop it.<\/p>\n<p>In 2021, before Steward\u2019s troubles had crescendoed, <a href=\"https:\/\/olis.oregonlegislature.gov\/liz\/2021R1\/Downloads\/MeasureDocument\/HB2362\/Enrolled\" rel=\"nofollow noopener\" target=\"_blank\">Oregon adopted<\/a> what remains the nation\u2019s stiffest law dealing with hospital and other health care transactions. The law sets forth detailed procedures for the Oregon Health Authority to evaluate whether a sale, merger, or acquisition will contribute to Oregonians\u2019 access to affordable health care, then approve or disallow it\u2014or allow it under certain conditions. During the first five years of an approved deal, state regulators must examine three times the effect on health care costs and whether the facility is obeying any conditions the state set. The law also requires a study every few years of the effects of health care consolidations in the state, including an analysis of their impact on the quality of care.<\/p>\n<p>Based on our review, Oregon is the only state that routinely evaluates a hospital\u2019s condition after a transaction takes place.<\/p>\n<p>Apart from Massachusetts, discussed above, none of the 10 states that have had Steward\u2019s hospitals have adopted laws to change their role in health care transactions. In four states\u2014Colorado, Florida, Pennsylvania, and Texas\u2014bills have been <a href=\"https:\/\/www.ropesgray.com\/en\/sites\/healthcare-transactions-laws#Florida\" rel=\"nofollow noopener\" target=\"_blank\">introduced but not passed<\/a>.<\/p>\n<p>In Louisiana, only nonprofit hospitals must notify the state attorney general if they are being acquired. And the Bayou State\u2019s <a href=\"https:\/\/legis.la.gov\/Legis\/Law.aspx?p=y&amp;d=98042\" rel=\"nofollow noopener\" target=\"_blank\">certificate of need law<\/a> gives the health department the ability to review whether facilities are needed if they are nursing homes, home and community-based services, hospices, mental health rehabilitation centers, and more. But not hospitals. Louisiana\u2019s state legislature is not among those that have lately <a href=\"https:\/\/www.ropesgray.com\/en\/sites\/healthcare-transactions-laws#Pennsylvania\" rel=\"nofollow noopener\" target=\"_blank\">considered strengthening such rules<\/a>.<a href=\"#_ftnref1\" name=\"_ftn1\"\/><\/p>\n<p>Nothing in Louisiana\u2019s law or regulations kicked in when Steward bought Glenwood Regional Medical Center in 2017, about four and a half years before Mearl Hodge ended up there with covid. Glenwood, Steward\u2019s only Louisiana hospital, racked up 47 deficiency citations after Steward took it over, including four that were designated \u201cimmediate jeopardy.\u201d Patients had started avoiding the hospital, according to local officials and former employees.<a id=\"citation-21\" class=\"citation\" aria-describedby=\"citation-tooltip-21\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">21<\/a> Unpaid bills prompted vendors to cut off supplies needed to insert pacemakers and perform endoscopies, records show.<a id=\"citation-22\" class=\"citation\" aria-describedby=\"citation-tooltip-22\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">22<\/a> One vendor cut off the coffee supply.<a id=\"citation-23\" class=\"citation\" aria-describedby=\"citation-tooltip-23\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">23<\/a><\/p>\n<p>                  <a class=\"photoswipe\" href=\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/10\/image-1-1-e1759361601188.png\" data-pswp-width=\"400\" data-pswp-height=\"225\"><br \/>\n                \t<img decoding=\"async\" class=\"\" src=\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/10\/image-1-1-e1759361601188.png\"   alt=\"Glenwood Family Medical Center\"\/><br \/>\n                  <\/a><\/p>\n<p>        Glenwood Family Medical Center in 2024. Courtesy of KNOE.<\/p>\n<p>Louisiana law allows penalties against hospitals that violate standards. In the months before the bankruptcy, state records<a id=\"citation-24\" class=\"citation\" aria-describedby=\"citation-tooltip-24\" tabindex=\"0\" aria-haspopup=\"true\" aria-expanded=\"false\">24<\/a> show, the health department levied two fines, for $5,000 and $10,000, and said Glenwood would be banned from Medicare if conditions didn\u2019t improve. The hospital promised improvements, and the department accepted the promises.<\/p>\n<p>Hodge\u2019s death came before those fines. Called Meme by her children, grandchildren, and great-grandchildren, her obituary would say, Hodge was born and spent her life living in Farmerville, a town of 3,000 with a summertime watermelon festival, lying about 30 miles northwest of Glenwood. She loved to cook chicken and dressing and to share afternoon coffees with her friends and family, including her husband of 76 years. She prayed for her family daily.<\/p>\n<p>As a one-time \u201cclass A\u201d violation resulting in death or serious harm, and an \u201cimmediate jeopardy\u201d deficiency, state law permitted a penalty up to $2,500 after Hodge\u2019s death and the investigation. Yet even there, state regulation failed to tame an unruly health system.<\/p>\n<p>On May 31, 2022, the state health department fined Glenwood the $1,750. Three months later, the department dispatched a second notice. The check Steward sent, the notice said, had bounced.<a href=\"#_ftnref1\" name=\"_ftn1\"\/><\/p>\n<p>\n  \t\t\tMethodology Appendix<\/p>\n<p>  <a href=\"#\" class=\"accordion-title flex items-baseline justify-between py-3 gap-4\"><\/p>\n<p>            How we did the data analysis for the Steward case study<\/p>\n<p>\t    <\/a><\/p>\n<p>To help us understand whether evidence existed before Steward Health Care\u2019s 2024 bankruptcy that its nearly three-dozen hospitals were in trouble, we performed four data analyses. Each relied on a different type of data. Most of it was information that the federal government and\u2014in some instances\u2014states collect. Other information is contained in the records of Steward\u2019s bankruptcy case in the United States Bankruptcy Court for the Southern District of Texas.<\/p>\n<p>Here is a description of each analysis.<\/p>\n<p>  <a href=\"#\" class=\"accordion-title flex items-baseline justify-between py-3 gap-4\"><\/p>\n<p>            Steward hospital finances<\/p>\n<p>\t    <\/a><\/p>\n<p>We analyzed four measures of hospitals\u2019 financial condition, which we selected based on a review of academic research and work by hospital executives and state health officials. These metrics are among the ones most commonly used to indicate the condition of hospitals\u2019 finances. The data are readily available, because virtually every acute care hospital that participates in Medicare is required to report them as part of an annual Medicare Cost Report submitted to the Centers for Medicare and Medicaid Services (CMS).<\/p>\n<p>The metrics are:<\/p>\n<p>Operating margin. Indicating a hospital\u2019s ability to continue functioning, it is defined as excess operating revenue as a percentage of total operating revenue.<br \/>\nNet profit margin. Another measure of a hospital\u2019s profitability, it is not that different from operating margin, except that this one takes into account all forms of revenue, plus non-operating expenses, such as taxes and payments to shareholders.<br \/>\nCurrent ratio. A way of understanding a hospital\u2019s ability to cover its costs in the short term, it is defined as the ratio of \u201ccurrent\u201d assets it could make liquid within a year to \u201ccurrent\u201d debts that it owes within that year.<br \/>\nEquity financing ratio. A way of understanding how dependent a hospital is on debt, it is defined as the proportion of a hospital\u2019s net assets that it owns in full instead of being financed with debt.<\/p>\n<p>These data come from three sources. One is the <a href=\"https:\/\/data.cms.gov\/provider-compliance\/cost-report\/hospital-provider-cost-report\" rel=\"nofollow noopener\" target=\"_blank\">CMS Hospital Provider Cost Reports<\/a>, published annually based on the cost reports compiled in the Healthcare Cost Report Information System (HCRIS). These data include information about revenues, costs, assets, and debts for every Medicare-certified institutional provider in the U.S. with data available from 2011 to 2022.<a id=\"citation-25\" class=\"citation\" aria-describedby=\"citation-tooltip-25\" aria-expanded=\"false\">25<\/a> We used these data to produce figures on the current ratio and the equity financing ratio. A second source is cost reports published in the <a href=\"https:\/\/tool.nashp.org\/\" rel=\"nofollow noopener\" target=\"_blank\">National Academy of State Health Policy (NASHP) Hospital Cost Tool<\/a>, which is also based on cost reports submitted by hospitals and compiled in the CMS HCRIS. These data include certain information about revenue and costs from 2011 to 2023. We used the NASHP data to produce figures on operating profit margin and net profit margin, but these data do not include metrics on hospitals\u2019 assets and liabilities, so we did not have information for 2023 on the two ratios we analyzed. We confirmed that the data are consistent between NASHP and CMS for the years they overlap. Finally, we used audited financial statements for Steward that were collected by the U.S. Securities and Exchange Commission and by the Massachusetts Center for Health Information and Analysis. We used these financial statements to analyze performance on the health-system level for all the metrics we analyze from 2011 to 2021, excluding 2016.<a id=\"citation-26\" class=\"citation\" aria-describedby=\"citation-tooltip-26\" aria-expanded=\"false\">26<\/a><\/p>\n<p>We made some data adjustments. In periods during which hospitals change the time frame for their fiscal year, the CMS data and NASHP data differ. For example, if a hospital\u2019s fiscal year was July 2016 to June 2017 and it changes to January 2016 to December 2016, the data reported during 2016 is not consistent between the NASHP and CMS data. As a result, we eliminated just that year of data for any hospital that altered its fiscal year (so, for the example above, it would have missing data for 2016).<a id=\"citation-27\" class=\"citation\" aria-describedby=\"citation-tooltip-27\" aria-expanded=\"false\">27<\/a><\/p>\n<p>With this financial data, we began by calculating an unweighted average each year for each metric among the hospitals that Steward owned.<a id=\"citation-28\" class=\"citation\" aria-describedby=\"citation-tooltip-28\" aria-expanded=\"false\">28<\/a> We considered a hospital to be owned by Steward starting the year it was acquired. We then calculated an unweighted average across all U.S. hospitals for all four metrics.<a id=\"citation-29\" class=\"citation\" aria-describedby=\"citation-tooltip-29\" aria-expanded=\"false\">29<\/a> Finally, we calculated these same metrics with the system-wide audited financial statements. Because the audited financial statements are at the system-level, these are weighted values.<a href=\"#_ftnref1\" name=\"_ftn1\"\/><\/p>\n<p>  <a href=\"#\" class=\"accordion-title flex items-baseline justify-between py-3 gap-4\"><\/p>\n<p>            Steward hospital quality<\/p>\n<p>\t    <\/a><\/p>\n<p>We analyzed four out of a variety of quality indicators that virtually all acute care U.S. hospitals report to CMS each year. To select measures for our analysis, we conferred with CMS officials and contractors, seeking their judgment about which metrics are the most telling reflection of the caliber of a hospital\u2019s care, rather than primarily a mirror of external factors, such as the socioeconomic make-up of a hospital\u2019s patient base. Using this criterion, we analyzed four measures:<\/p>\n<p>Complications. Composite rate of medical complications from all hospital services.<br \/>\nEmergency department. Percentage of patients who left a hospital emergency department without being evaluated or treated by its staff.<br \/>\nPneumonia deaths. Percentage of deaths from pneumonia within 30 days of patients\u2019 hospital discharge. Considered a better reflection of the quality of care than other mortality metrics, because patients sometimes acquire pneumonia as inpatients.<br \/>\nReadmissions. Percentage of patients unexpectedly readmitted to a hospital within 30 days of their discharge.<\/p>\n<p>For each of these measures, we analyzed data from 2010, the year the Steward system was created, through 2024. We obtained the data for this analysis from <a href=\"https:\/\/wayback.archive-it.org\/org-551\/20170701000000*\/https:\/data.medicare.gov\/data\/archives\/hospital-compare\" rel=\"nofollow noopener\" target=\"_blank\">the Wayback Machine<\/a> and CMS\u2019s <a href=\"https:\/\/data.cms.gov\/provider-data\/archived-data\/hospitals\" rel=\"nofollow noopener\" target=\"_blank\">Care Compare website<\/a>. Each year, CMS reports a score for each individual hospital and calculates a national score\u2014both of which we used in our analysis.<a id=\"citation-30\" class=\"citation\" aria-describedby=\"citation-tooltip-30\" aria-expanded=\"false\">30<\/a><\/p>\n<p>For each metric, we calculated the average score for each year among the hospitals owned by Steward and compared it with the average for all U.S. hospitals. Again, we considered a hospital to be owned by Steward starting the year in which it was acquired. In addition, we focused on the annual quality scores of five individual hospitals. We selected these because, in a different way, they appeared especially problem-ridden, and we were curious whether they appeared worse than the company-wide average. The five hospitals had the most deficiency citations (see explanation below) for the past five years, 2019 through 2024. The hospitals are Mountain Vista Medical Center (AZ), Glenwood Regional Medical Center (LA), Good Samaritan Medical Center (MA), The Medical Center of Southeast Texas (TX), and Wadley Regional Medical Center (TX).<a id=\"citation-31\" class=\"citation\" aria-describedby=\"citation-tooltip-31\" aria-expanded=\"false\">31<\/a><a href=\"#_ftnref1\" name=\"_ftn1\"\/><\/p>\n<p>  <a href=\"#\" class=\"accordion-title flex items-baseline justify-between py-3 gap-4\"><\/p>\n<p>            Lawsuits against Steward<\/p>\n<p>\t    <\/a><\/p>\n<p>To understand Steward\u2019s apparent failure to pay some of its bills, we reviewed lawsuits filed against the company and its hospitals by vendors. To identify lawsuits for this analysis, we relied on two sources of civil suits categorized as breach of contract\u2014all of which alleged nonpayment. One source is in the records for the Chapter 11 bankruptcy case Steward filed in the U.S. Bankruptcy Court for the Southern District of Texas. A document that is an amendment to the \u201cStatement of Financial Affairs for Non-individual Steward Health Care System LLC,\u201d includes all vendors that had a breach of contract lawsuit against Steward alleging unpaid bills that remained unresolved within a year of the bankruptcy filing, May 6, 2024. The other source is a list of lawsuits from LexisNexis\u2019s <a href=\"https:\/\/www.lexisnexis.com\/en-us\/products\/courtlink.page\" rel=\"nofollow noopener\" target=\"_blank\">CourtLink database<\/a>. For those identified via CourtLink, we filtered for breach-of-contract cases in which Steward is the defendant. From these two sources, we identified 152 relevant cases. This sample is almost certainly an undercount, because some cases are too old to have been listed in the bankruptcy document, while some local circuit and district court dockets are not included in the CourtLink database.<\/p>\n<p>For as many of the 152 cases as possible, we collected the original complaint in which the plaintiff describes the alleged breach of contract. For about 16 cases, the information in the bankruptcy docket\u2019s document was insufficient to identify a case number, so we were unable to locate the original complaint. For nearly 10 additional cases, the complaint was not publicly available or could be retrieved only in person at a distant courthouse. In the end, we read the original complaints in 127 cases. And, from the description in each one, we collected and analyzed the service provided, when the vendor began working for the company, when nonpayment was alleged to have begun, when the lawsuit was filed, and the amount Steward allegedly owed.<\/p>\n<p>  <a href=\"#\" class=\"accordion-title flex items-baseline justify-between py-3 gap-4\"><\/p>\n<p>            Hospital deficiencies<\/p>\n<p>\t    <\/a><\/p>\n<p>As another way of understanding Steward hospitals\u2019 quality, we focused on records involving deficiency citations. These are public records that follow complaints accusing a hospital of poor care, filed by patients, relatives, or staff members. Such complaints are lodged with an agency in each state, designated by CMS to conduct an investigation, known as a survey, that confirms a problem\u2014that is, a deficiency\u2014or finds a complaint unwarranted. If a deficiency exists, the agency requires the hospital to submit a plan to correct the flaw. CMS has defined three levels of deficiency citations, depending on their severity: standard, condition, and immediate jeopardy. An immediate jeopardy citation involves an instance in which a patient died or was injured, or easily could have been. The records specify each deficiency\u2019s level of severity.<\/p>\n<p>For our deficiency analysis, we obtained from CMS a nationwide spreadsheet of hospital deficiencies through most of 2024, months after the company declared bankruptcy, and we then extracted from it the cases involving hospitals during the time they were owned by Steward. We identified hospitals as owned by Steward based on both the year and month that the hospital was acquired by the company. We also obtained records from four state health agencies\u2014in Louisiana, Pennsylvania, Texas, and Utah. The state records contained deficiency citations, plus, where they existed, records of fines that the state levied against a Steward hospital found to have an immediate jeopardy citation. The federal government does not have the authority to financially punish hospitals for deficiencies, but some states do. The records contained 678 unique deficiencies for the Steward hospitals.<a id=\"citation-32\" class=\"citation\" aria-describedby=\"citation-tooltip-32\" aria-expanded=\"false\">32<\/a> We analyzed them by level of severity and year, and we examined the narrative description of immediate jeopardy cases to understand what they entailed and which ones led to penalties.<\/p>\n<p>\u00a0<\/p>\n<p>The Brookings Institution is committed to quality, independence, and impact.<br \/>We are supported by a <a href=\"https:\/\/www.brookings.edu\/about-us\/annual-report\/\" rel=\"nofollow noopener\" target=\"_blank\">diverse array of funders<\/a>. In line with our <a href=\"https:\/\/www.brookings.edu\/about-us\/research-independence-and-integrity-policies\/\" rel=\"nofollow noopener\" target=\"_blank\">values and policies<\/a>, each Brookings publication represents the sole views of its author(s).<\/p>\n","protected":false},"excerpt":{"rendered":"The monitor that had been tracking Mearl Hodge\u2019s heartbeats started to show an abnormal rhythm. So, a technician&hellip;\n","protected":false},"author":2,"featured_media":197758,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[966,37269,34619,97,252,2601,28936,253,1728],"class_list":["post-197757","post","type-post","status-publish","format-standard","has-post-thumbnail","category-health-care","tag-article","tag-center-on-health-policy","tag-economic-studies","tag-health","tag-health-care","tag-health-care-industry","tag-health-care-policy","tag-healthcare","tag-research"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/197757","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=197757"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/197757\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/197758"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=197757"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=197757"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=197757"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}