Editorial Board

A Hospital Bankruptcy Offers a Cautionary Tale on Private Equity

Regulators should strike a balance between encouraging investment and preventing reckless behavior.

June 4, 2024 at 12:00 PM UTC

By The Editorial Board

The Editorial Board publishes the views of the editors across a range of national and global affairs.

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Steward Health Care System LLC was once thought to be the future. Its chief executive officer, Ralph de la Torre, was named “health care’s new maverick” by Fortune in 2012. With the help of private equity giant Cerberus Capital Management LP, de la Torre turned six Boston-area facilities into one of the nation’s largest for-profit hospital chains.

Now Steward is on the brink of financial ruin. The company owes millions in rent and has been sued by several vendors for unpaid supplies and services. Last month, Steward filed for Chapter 11 protection, making it one of the biggest hospital bankruptcies in decades. Tens of thousands of patients and workers are in turmoil.