The Perils of For-Profit Health Care

Blog#190- 2/12/24

By Richard Davis

Luckily, Vermont is mostly protected from the inhumane harm that can be done when for-profit health care entities decide to leave a community because they can’t make enough money. Sadly, there is another story playing out in Massachusetts in a way that may do a lot of harm to a lot of people.

Steward Health Care operates nine hospitals in Massachusetts. Many of them are hospitals that have served their local community for a long time. If they close because of current financial troubles, it would create hardship for thousands of people and leave them scrambling to find health care providers as well as having to drive long distances to get to emergency rooms and doctors’ offices.

This country has embraced the notion that health care should be just another commodity from which profit should be extracted. After all, it would be unamerican for a business not to be able to extract profit while trying to manipulate market forces to its advantage. That is the American way.

The Steward story centers around CEO Dr. Ralph de la Torre. In all reports of him he comes across as something of a headstrong bully who carries a big stick and talks a tough game. He has reaped millions of dollars in profits from his health care ventures and he has made many of his top administrators very rich.

De la Torre owns two yachts. One is worth $40 million and was recently anchored off the shores of the Galapagos Islands and Panama. Yacht number two is only worth $15 million. When the Globe writes stories about him they can’t find anyone to actually talk about all of the bad things he has done for fear of retribution.

When the Globe tried to interview de la Torre, “Steward declined to make de la Torre available for an interview. The company has blamed its financial problems largely on the COVID-19 pandemic and low reimbursement rates from Medicare and Medicaid, which insure more than 70% of its patients. Steward has also pointed out it pays taxes that nonprofit hospitals do not pay. But some health care leaders have suggested de la Torre’s ambitions were too great, and he lost his way trying to create a national and international health care conglomerate.”

The Globe has diligently kept its focus on Steward because they realize the potential for suffering they are poised to cause.

According to a recent Globe story, “But it’s also in serious debt. Earlier this year, MPT revealed that Steward owes $50 million in back rent, and it has loaned the company tens of millions of dollars. Because Steward is a private company, its financial documents and details of its executive compensation are not public. But a 2020 audit of Steward’s books indicated the company had a $1.5 billion deficit. Other financial reports show that in 2021, Steward paid MPT an $11 million dividend as part owner of Steward. Health care industry experts said that suggests even more money went to de la Torre and the Steward management team, since they have an even larger stake in the company.”

This kind of situation should never play out in the health care world. We continue to allow the commodification of health care and as long as this continues we become no more important than refrigerators and bathroom fixtures. Just something for people to make profit from.

Steward has announced it is closing New England Sinai Rehabilitation Hospital in Stoughton, MA. My father spent a few months there in 2007, before I believe Steward got its grip on the place. It has been one of the premier rehab hospitals in the area and when it closes it is likely more people who need rehab after hospitalization will linger in hospital beds waiting for rehab placement.

In addition to New England Sinai’s troubles it was also reported that, “Steward had promised to renovate Norwood Hospital, which was damaged by flooding in 2020. It’s unclear if the facility will ever reopen. Although Steward executives have said they have no current plans to close any other Massachusetts facilities, several health care leaders in the state questioned the financing deal Steward announced last week to keep its operations in the state afloat.”

When I grew up in Massachusetts Norwood Hospital was the hospital for my region of the state. Although it was in a large suburban area it felt like a small community hospital to locals. It is gone, most likely forever.

For-profit health care is beginning to disrupt lives in Massachusetts. It is unlikely this scenario could play out in Vermont because all of our hospitals are non-profit. But greed continues to control health care throughout the rest of the county.

When will we act to make health care a human right as have all other industrialized countries around the world?

Comments | 2

  • Profiteer creep

    While it is true that Vermont has some protections because our hospitals are non-profits, that doesn’t keep profiteers, especially those with private equity financing, from making inroads where they can. Nursing homes are one example. Genesis used to own some Vermont nursing homes. I think they’ve sold them to some other company. These are not non-profit corporations.

    We are also not immune to the incursion of Medicare Advantage plans. Anyone about to turn 65 was probably deluged with all the mailings I received at that age, and if you are a retired teacher, you’ve been pushed–or incentivized–onto a Medicare Advantage plan. Meanwhile, two for-profit Direct Contracting Entities–Vytalize Health and Lore Health–have been granted contracts with several Federally Qualified Health Centers in Vermont. None are in Brattleboro, but if they manage to expand more of us on traditional Medicare will end up having our healthcare managed by a for-profit entity.

    Then there is health care for the incarcerated, which has been contracted out to a revolving door of for-profit corporations. I think the current one is called Wellpath, with is something of a misnomer since wellness isn’t their priority.

    Wall Street sees healthcare as a good investment sector. That has nothing to do with our health or the working conditions for healthcare workers. The likely consequences are closing unprofitable hospitals or services (e.g. birthing centers), staff cuts, and fewer covered services.

    And though our hospitals are non-profits, they have to compete in a terrain that is governed by a business model, not a wellness model. And the business model is not good for our health.

  • Non-Profit

    Ellen, Well said. Other than not paying local property taxes, non-profits often behave like the rest of the for-profit bad boys. It would be interesting if there were many more requirements for non-profits to maintain their tax free status. Imagine what it would do to Brattleboro’s tax base if the Retreat and BMH had to pay taxes like other businesses.

Leave a Reply