They Sold the Hospital's Building, Kept the Rent

Introduction

In 2016, the private equity firm Cerberus Capital Management sold the buildings under nine of its Massachusetts hospitals to a real estate company called Medical Properties Trust, collected its share of $789 million in dividends, and left the hospitals paying rent on buildings they used to own. Eight years later those hospitals filed the largest healthcare bankruptcy in US history. Cerberus calls the deal a sound investment. Senators Elizabeth Warren and Ed Markey called the arrangement "all the appearances of a Ponzi scheme." A year-long Mother Jones review of court records found 83 patient deaths documented in lawsuits against Steward hospitals.

What keeps pulling me back is that none of this was an accident. The whole thing ran on one real estate transaction, and that transaction did exactly what it was built to do.

The Deal Nobody Was Supposed to Read

Start with how Steward got built. Cerberus bought six failing Catholic hospitals in Massachusetts in 2010 for $246 million in cash, per the Private Equity Stakeholder Project's reconstruction of the bankruptcy filings. It grew that into a 31-hospital chain across 10 states serving more than 2 million patients a year. On paper, a turnaround story: distressed safety-net hospitals saved by Wall Street money.

Then came 2016, and the move that defines everything after it. Cerberus sold the real estate under nine Massachusetts hospitals to Medical Properties Trust, a publicly traded REIT whose entire business is buying hospital buildings and renting them back. Cerberus's own statement puts the total transaction at $1.25 billion. The hospitals kept operating in the same buildings, treating the same patients, except now they owed rent to a landlord instead of owning the most valuable asset on their books. The proceeds didn't go back into the hospitals. According to Steward's audited 2016 financial statement, obtained by OCCRP from 295,000 leaked internal documents, the company paid out $789 million in dividends that year. Cerberus's share was at least $473 million by its own accounting, as much as $682 million if you split it by ownership stake. De la Torre and other executives took the rest.

That structure has a name in finance: a sale-leaseback paired with a dividend recapitalization. You sell the building, you pay yourself with the cash, and the operating company you leave behind inherits a rent bill forever. By bankruptcy, those lease obligations to MPT totaled $6.6 billion, with annual rent around $341 million on leases running through 2041 that hospitals owed even if they closed. So the hospitals traded the most valuable asset on their books for a rent bill that ran 25 years, and the dividend came out the same year the leases were signed.

A Landlord That Loaned Money So It Could Collect Rent

Here's where the second villain matters. Medical Properties Trust wasn't just collecting rent checks; it helped design the structure, and its incentives ran against the hospitals ever recovering.

MPT paid above-market prices for the buildings, which let it charge rent as a percentage of inflated values. The clearest example is Carney Hospital in Dorchester. MPT paid $263 million for a property Steward had acquired for $12.5 million less than a decade earlier, OCCRP found. That's 21 times the price. Higher building value, higher rent, and by 2017 Steward was generating 27% of MPT's entire revenue. The REIT's stock doubled between 2016 and 2022 while the hospital chain underneath it was losing hundreds of millions a year.

So what happens when your single biggest tenant starts running out of cash? Where a normal landlord would renegotiate or evict, MPT started lending Steward money. OCCRP documented seven tranches of undisclosed working capital loans totaling $214.9 million between 2018 and 2023, much of it kept off public disclosures for years until the SEC started asking questions in 2023. Warren and Markey laid out the loop in their April 2024 letter to MPT's CEO: "MPT continued to provide capital to Steward, which allowed the hospital system to continue paying rent to MPT." The landlord was funding its own rent checks, which kept its investor reports healthy while Steward's actual condition rotted. In February 2019, MPT's CEO told investors Steward was "doing exceptionally well." Steward's financials that year showed a $279 million loss, per OCCRP's reporting.

What $789 Million Bought, and Who Paid

The dividend went to a short list of named people. The bill landed on patients, the staff who lost jobs, and the towns that lost their hospitals.

The Senate report from Warren and Markey walked through the operational damage. Between 2014 and 2024, Steward closed eight hospitals, cutting roughly 1,533 patient beds and 4,431 jobs. At some Steward hospitals, heart failure death rates rose by up to 40% from 2017 to 2024 while the national average improved about 5%. CMS placed Steward hospitals in "immediate jeopardy" status at least 32 times in five years, around three times the national rate. Nurses told the Senate HELP Committee about rationing IV tubing, absent specialists, broken equipment, and bat infestations.

The most thorough accounting came from Mother Jones, which spent a year reviewing every malpractice, personal injury, and wrongful death case filed against Steward hospitals in state and federal courts. They found 469 lawsuits documenting 83 patient deaths. Pinning each death precisely on the financial structure is hard, and Mother Jones says so directly. The broader research shows the same pattern at hospitals nobody named Steward: a 2023 JAMA study of 51 private-equity-acquired hospitals found a 25% jump in hospital-acquired conditions after acquisition, including a 27% rise in falls and a 37.7% rise in central-line bloodstream infections.

This is also where the third name belongs. Ralph de la Torre, Steward's CEO, collected at least $250 million over four years, a figure Senator Bernie Sanders put on the record at the September 2024 hearing: "the companies he owns received $250 million in compensation over a 4-year period." That included a company he majority-owned billing Steward $30 million a year in management fees. Sanders also tallied the assets: a $40 million yacht, a $15 million sport-fishing boat, two private jets. De la Torre refused a Senate subpoena and was held in criminal contempt, the first time the HELP Committee has done that since 1981.

Who Benefits

Follow the money to the end and three parties got paid before the system collapsed.

Cerberus turned a $246 million cash investment into roughly $800 million in profit over a decade, by Sanders's estimate and PESP's reconstruction. The timing was the whole trick: take the real estate value out in 2016, exit in 2020 before the lease obligations crush the operating company, and let whoever's left holding the hospitals deal with the bill. Cerberus says it took no dividends before its exit and reinvested all cash flows. The audited financials say the dividend went out the door in 2016.

Medical Properties Trust got a rental income stream worth a quarter of its revenue and a stock that doubled while its main tenant was insolvent. CEO Edward Aldag personally received about $70 million from 2017 through 2021, per Sanders's remarks. The undisclosed loans were how MPT kept the rent flowing and the insolvency hidden long enough to hold the share price up. When Steward finally filed, MPT held $6.6 billion in lease claims against the estate.

De la Torre got the fortune and the empire. The bankruptcy trustee is now suing him and other insiders for more than $3.4 billion, alleging years of value extraction through the same sale-leaseback playbook that started in 2016. He has denied wrongdoing and called the compensation figures misleading. The case is active.

The Same Structure Is in 488 Hospitals Right Now

Steward wasn't one rogue chain. Private equity owns roughly 488 hospitals in the US, about 22.6% of all for-profit hospitals, according to PESP's April 2025 tracker. The sale-leaseback is a standard tool, not a Steward invention. MPT itself ran the same play with Pipeline Health in Los Angeles, which declared bankruptcy about a year after MPT bought its hospitals.

What makes the structure work is also what makes it hard to stop. Medicare requires hospitals to report financial data, but it doesn't regulate how an owner structures the company's capital or how much it pays itself in dividends. The Massachusetts attorney general approved Cerberus's 2010 acquisition with a five-year monitoring agreement that expired in 2015. The sale-leaseback came one year later, with the oversight already gone.

Four Laws in Three Months

Steward isn't just a post-mortem anymore. In the past few months lawmakers have started writing rules aimed directly at the maneuver it made infamous, and they're moving fast.

Connecticut went first and most directly. On May 27, 2026, Governor Ned Lamont signed Public Act 26-22, the first explicit state ban on hospital sale-leasebacks in the country. Starting July 1, 2027, no hospital in Connecticut can enter the kind of transaction that started the Steward collapse. PESP told Fierce Healthcare it appears to be the first law that restricts the tactic head-on. Washington's HB 2548 took effect June 11, 2026, so that selling hospital real estate to a REIT now triggers a 60-day notice to the state attorney general. Vermont's H.583, signed June 15, 2026, bars private equity and hedge funds from controlling medical decisions at facilities they invest in. And Senator Chris Murphy introduced the federal Take Back Our Hospitals Act in March 2026, which would block private-equity-owned hospitals from billing Medicare at all.

All three states cited Steward by name as the reason they acted.

Whether the Money Comes Back

Two things tend to get blurred together here. The hospitals failed, and that's a tragedy with 83 deaths documented in the court record. But Cerberus got its return, MPT got its rent and its doubled stock, and de la Torre got his yacht, and every one of them was paid out before the buildings they emptied stopped being able to keep patients alive.

The open question is whether the laws now being written can actually reach the money. Connecticut bans the sale-leaseback starting in 2027, but the firms that already ran the play kept their dividends, and a ban on the next transaction doesn't claw back a dollar that left in 2016. The next firm just needs the extraction to clear before anyone writes the rule. Watch whether any state figures out how to make the people who already got paid give it back.