Markey, Warren Call Out Medical Properties Trust and Macquarie Infrastructure Partners for Exploiting Steward Hospitals, Urge Them to Help Keep the Hospitals Open

"MPT and MIP have played a key role in this steep financial decline and must play a role in the recovery of these hospitals in order to preserve and protect access to care for communities in Massachusetts."

Text of Letter (PDF)

Boston, MA - United States Senators Edward J. Markey (D-Mass.) and Elizabeth Warren (D-Mass.) sent a letter to Edward K. Aldag, Jr., Chairman and CEO of Medical Properties Trust (MPT) and Karl Kuchel, CEO of Macquarie Infrastructure Partners (MIP), pushing them to play a role in stabilizing Steward Health Care in Massachusetts. MPT and MIP share ownership of Steward's Massachusetts hospitals' real estate, and have been collecting huge lease payments from Steward on property the company used to own. This is a key reason that Steward's Massachusetts hospitals have huge debts that have driven the company to the financial brink.

"Steward's Massachusetts hospitals are in deep financial distress and appear to be in danger of closure because of years of mismanagement, private equity schemes, and executive profiteering," wrote the senators. "MPT and MIP have played a key role in this steep financial decline and must play a role in the recovery of these hospitals in order to preserve and protect access to care for communities in Massachusetts."

MPT has been enmeshed with Steward since 2016, when Steward's then-owner, private equity firm Cerberus Capital Management (Cerberus), made a $1.25 billion sale-leaseback deal with MPT. In doing so, Cerberus saddled Steward's Massachusetts hospitals with long-term leases and millions of dollars in rent payments. MPT has also loaned hundreds of millions of dollars to Steward, which were then used to pay the rents owed to MPT - further driving up the hospitals' debt.. MIP became involved with Steward in September 2021, when the company bought a 50% stake in MPT's ownership of Steward's Massachusetts properties.

"(T)hese investments have all the appearances of a Ponzi scheme that is continuing to harm Steward-owned hospitals: MPT continued to provide capital to Steward, which allowed the hospital system to continue paying rent to MPT," the senators wrote. "This allowed MPT to avoid devaluing its real estate purchases and the leases that it held, bolster its stock price, and report lucrative cash flows."

However, by 2023, Steward ran up a $50 million shortfall. According to MPT's October 2023 financial report, Steward's Massachusetts hospitals owed cash rent of nearly $60 million annually on leases that run until 2041 and include "escalator" clauses indexed to inflation. This debt, as well as the high rents these hospitals continue to pay, are a massive barrier to providing quality care to these communities.

"MPT has - along with Steward - plundered these hospitals," wrote the senators. "While we seek answers to these questions about MPT's past behavior and MIP's involvement in Steward's financial problems, your companies also have an important opportunity to help Steward's Massachusetts hospitals overcome this crisis by offering long-term reductions in lease payments or early termination of leases to make it financially feasible for new operators to take over these hospitals."

To address the senators' concerns, they are requesting MPT and MIP answer questions on their involvement with Steward by April 22, 2024.

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