Steward Health Care CEO found in contempt for refusing to testify to Senate committee

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ARI SHAPIRO, HOST:

A national hospital company is in bankruptcy after piling up billions of dollars in debt. The Senate Committee on Health, Education, Labor and Pensions has been investigating that company, Steward Health Care. Today, the committee voted unanimously to hold Steward’s CEO in criminal contempt for refusing to testify about the situation. From member station WBUR in Boston, Priyanka Dayal McCluskey reports.

PRIYANKA DAYAL MCCLUSKEY, BYLINE: After Steward Health Care acquired the nonprofit hospital in Boston where nurse Ellen MacInnis works, she started noticing a difference. Staffing levels dropped, and medical supplies ran low.

ELLEN MACINNIS: We need to keep our patients safe, clean, warm, dry, comfortable, fed, manage their pain.

MCCLUSKEY: But MacInnis says this work sometimes feels impossible because of Steward’s cost cutting.

MACINNIS: Sometimes it gets so bad, it’s like you can’t even get to toilet somebody, or you know somebody’s hungry and you should’ve gotten them something to eat, or you know that they’re due for pain medication. To not be able to do that is just – it brings you to your knees.

MCCLUSKEY: Steward’s dramatic failure is rattling communities across the country that rely on its hospitals for medical care and jobs, and it’s stirring anxieties about all investors who seek to profit off health care. Vikas Saini heads the Lown Institute, a Boston-area think tank that studies money in health care. He says Steward executives launched their company with private equity backing and ambitions to deliver high-quality care at lower costs. But then things changed.

VIKAS SAINI: The Steward story in some ways is straight out of the private equity playbook, which is that you load up companies with debt and then use that borrowed money to pocket for yourself massive profits because, hey, why not?

MCCLUSKEY: Steward was founded 14 years ago by a cardiac surgeon named Ralph de la Torre, who accumulated millions of dollars in wealth, even a luxury yacht. That’s while his hospitals failed to pay for basic medical supplies and patients sometimes suffered, according to court records and Steward employees. Steward declined interview requests, but in written statements, executives blame low insurance payments for the company’s financial distress. A lawyer for de la Torre says politicians are unfairly blaming the CEO for the broader ills of the health care system. Dr. Zirui Song says Steward represents just one of many private equity deals in American health care.

ZIRUI SONG: Private equity firms own roughly 460 hospitals in the U.S.

MCCLUSKEY: Song is a researcher at Harvard Medical School. He found that when private equity firms acquire hospitals, patients are 25% more likely to suffer infections, falls and other problems. Song says lawmakers should establish some guardrails around private investment in health care because it’s different from other industries.

SONG: We deal with people’s livelihoods and their health and hopes and dreams and fears and uncertainties. These are not goods that roll off of a conveyor belt.

MCCLUSKEY: Four months after filing for bankruptcy, Steward is selling or transferring most of its 30 hospitals to new owners. The company closed two Massachusetts hospitals despite pleas and protests to keep them open. Steward’s CEO says it’s his constitutional right not to testify about his company. Now it’s up to the full Senate to decide whether he’ll be prosecuted and possibly face jail time for refusing to answer questions before Congress.

For NPR News, I’m Priyanka Dayal McCluskey in Boston.