The Senate HELP Committee held a business meeting to consider legislation and committee action.
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NewsTranscript
00:00We're going to begin now, and when the seventh person comes, we'll be in a position to vote.
00:10So the Senate Committee on Health, Education, Labor, and Pensions is coming to order.
00:16Today we will be holding a vote to authorize an investigation into the bankruptcy of Stewart
00:22Healthcare and to subpoena its CEO.
00:26Let me begin by thanking Ranking Member Cassidy for his cooperation on this important issue.
00:32And let me thank Senator Markey of Massachusetts for his outstanding leadership on this matter,
00:39for holding the first hearing on the subject in the subcommittee that he chairs, and for
00:44bringing this issue to our attention.
00:46Ed, thanks very much.
00:49In my view, and I think the view of most Americans, we have a healthcare system today that is
00:55broken, it is dysfunctional, it is wildly expensive, and in many cases it is extremely
01:03cruel.
01:04It is a system that is designed not to make patients well, but to make insurance companies
01:11and drug companies and other people who make money off of the system extremely wealthy.
01:19And in my view, there could not be a clearer example of that than private equity executives
01:27on Wall Street making huge amounts of money by taking over hospitals throughout our country,
01:35loading them up with debt, and stripping their assets.
01:39Perhaps more than anyone else in America, a dubious distinction no doubt, Ralph DeLaTorre,
01:46the CEO of Stuart HealthCare, epitomizes the type of outrageous corporate greed that
01:53is permeating throughout our for-profit healthcare system.
01:58Working with private equity executives, Dr. DeLaTorre became obscenely wealthy by loading
02:05up hospitals from Massachusetts to Arizona with billions of dollars in debt, and selling
02:12the land underneath these hospitals to real estate executives who charge unsustainably
02:19high rent.
02:21As a result of Dr. DeLaTorre's elaborate Ponzi scheme, Stuart HealthCare and the more than
02:2730 hospitals it owns in 8 states were forced to declare bankruptcy with some $9 billion
02:38in debt.
02:40Let us be clear, while Stuart HealthCare declared bankruptcy just a few months ago, its severe
02:47financial problems have been going on for more than a decade.
02:51And here are just a few examples.
02:55In 2014, Stuart shut down the Quincy Medical Center in Massachusetts, laying off 700 healthcare
03:03workers with the exception of its emergency room, which it shut down six years later.
03:09In 2018, Stuart shut down the Northside Regional Medical Center in Youngstown, Ohio, laying
03:15off 468 healthcare workers and closing the only labor and delivery unit in that city
03:23for pregnant women and their babies.
03:26In 2019, Stuart shut down St. Luke's Medical Center in Phoenix, Arizona, laying off 655
03:35healthcare workers.
03:36Last year, Stuart shut down the Texas Vista Medical Center in San Antonio, laying off
03:43827 healthcare workers.
03:46This year, Stuart shut down the New England-Sinai Hospital in Massachusetts and a medical center
03:53in southeast Texas.
03:55It also temporarily shut down Norwood Hospital in Massachusetts, but then stopped paying
04:02the construction workers who are working on the project, making it unlikely that this
04:07hospital will ever reopen.
04:10Stuart has shut down several pediatric wards in Massachusetts and Texas, enclosed neonatal
04:16units and eliminated maternity services at a hospital in Florida.
04:21Its medical center in Louisiana is at risk of closure after being cited on multiple occasions
04:27for putting patients in immediate jeopardy from regulators.
04:32It has failed to reopen hospitals in Utah, Texas, and Florida, even though Stuart received
04:38hundreds of millions of dollars from private equity and real estate firms to serve patients
04:43in those states.
04:45And on and on it goes.
04:48We know that Stuart has gone bankrupt.
04:51We know that several of its hospitals have already been forced to close their doors because
04:56they ran out of money.
04:58We know the communities and the people in those communities that depended on these hospitals
05:04are uncertain about what this bankruptcy means for their future.
05:09It is a big deal when a hospital in your community shuts down.
05:14But here is what is particularly obscene about this whole complicated situation.
05:24In the midst of all of the crises that Stuart's policies have had on hospitals and communities
05:30all over this country, Dr. Dellatorre has been doing phenomenally well financially.
05:39Hospitals shut down, workers laid off, patients suffer, Dr. Dellatorre has been doing extraordinarily
05:46well financially.
05:48The hospitals he managed closed down and he makes huge sums of money.
05:55While Stuart was busy shutting down hospitals all over America, Dr. Dellatorre received
06:00a $100 million payday that he used to purchase a $40 million yacht.
06:09There is Dr. Dellatorre's lovely yacht.
06:13While Stuart's hospitals were laying off health care workers, Dr. Dellatorre
06:18received some $16 million a year in compensation, enough to afford this $15 million custom-made
06:28luxury fishing boat.
06:31Not quite sure how you pay $15 million for a fishing boat, but while they were shutting
06:36down hospitals, that's what he managed to do.
06:40Now, while Stuart-owned hospitals could not afford to pay for life-saving supplies, it
06:52had enough money to purchase a $62 million private jet.
06:59Hospitals shut down, workers laid off, patients without care, private jet.
07:05But apparently, for Dr. Dellatorre, one private jet is not quite enough.
07:14So what did his company do?
07:16Because how can you get by in this day and age with one private jet, you know, it's tough.
07:21So what his company did is bought a backup jet worth an estimated $33 million just in
07:29case the first jet broke down.
07:31It's kind of normal medical procedure.
07:36And it is almost hard to make this stuff up.
07:39The greed that we are seeing here is really quite extraordinary.
07:43Now how many of Stuart's hospitals could have been prevented from shutting down?
07:49How many lives could have been saved?
07:52How many health care workers would still have their jobs if Dr. Dellatorre spent $150 million
07:59on high-quality health care instead of his yacht, two private jets, and a luxury fishing boat?
08:08We are here this morning because time and time again – this is an important point
08:12to make – time and time again, Senator Cassidy, Senator Markey, and I have invited Dr. Dellatorre
08:21to come before Congress, to come before this committee, to testify about the financial
08:27mismanagement at Stuart.
08:29And time and time and time again, he has arrogantly refused.
08:34Well, today we are saying enough is enough.
08:38It is time for Dr. Dellatorre to get off of his yacht and to explain to Congress the financial
08:44chicanery which made him extremely wealthy while the hospitals he managed went bankrupt.
08:52It is time for Congress to hold Dr. Dellatorre accountable for his extreme greed.
09:00And let us also be clear.
09:02This is not just about Dr. Dellatorre.
09:05Cerebus, the private equity firm he partnered with, made an $800 million profit from its
09:13investments in Stuart Health Care.
09:16Where did that money go?
09:17Other than Dr. Dellatorre, who else benefited financially from these financial schemes?
09:23Those are just some of the questions we will be asking.
09:26Further, this is not just about Stuart Health Care.
09:30In America today, rather alarmingly, private equity firms own 460 hospitals, 22 percent
09:39of all for-profit hospitals in our country.
09:43How many of these hospitals are being loaded up with debt in order to make a handful of
09:47executives at private equity firms even wealthier?
09:51How many of these hospitals are in danger of being shut down?
09:57How many patients are at risk because these hospitals may no longer afford to purchase
10:03life-saving medical equipment?
10:05These are questions that the American people deserve to know.
10:09And these are questions that we must be asking.
10:12Senator Cassidy, you are recognized for an opening statement.
10:15Thank you, Chair Sanders.
10:17Today, we are voting to subpoena the testimony of Stuart Health Care's Chief Executive Officer,
10:21Dr. Ralph Dellatorre.
10:23The HELP Committee has never issued a subpoena to compel testimony.
10:26There is a reason for doing so now.
10:29Subpoenas should only be used when absolutely necessary when all other efforts have failed.
10:37And the subpoena we are voting on today meets that criteria.
10:40In 2010, private equity firm Cerberus Capital Management purchased a group of failing hospitals
10:48in Massachusetts, saving them from bankruptcy and preserving access to care for the communities
10:52they served.
10:53They formed Steward and a joint venture with Dr. Dellatorre and his executive management
10:58team to manage the hospitals, which became the largest private for-profit hospital operator
11:05in the United States.
11:06And the hospitals were successful.
11:08To impart to Cerberus is investing hundreds of millions of dollars in facilities and resources.
11:14Cerberus also assumed hundreds of millions of dollars in pension liabilities.
11:18However, Dr. Dellatorre remained responsible for the management of Steward and its day-to-day
11:23operations.
11:24From 2015 on, Steward, under Dr. Dellatorre's leadership, began to expand at an unsustainable
11:30rate.
11:31In 2016, Dr. Dellatorre made the questionable financial decision to sell Steward's real
11:36estate holdings to Medical Property Trust, or MPT, and have Steward Hospitals lease
11:41them back.
11:42That deal allegedly earned Dr. Dellatorre and his executive team a very large payday.
11:48From there, his bad management decisions continued.
11:51In 2018, Steward entered into a public-private partnership with the country of Malta to run
11:56a number of hospitals in Malta.
11:59The deal is now under investigation by the Department of Justice over allegations of
12:02fraud and corruption.
12:05In the wake of COVID-19, there were disagreements regarding Steward management.
12:10Cerberus sold its controlling ownership stake in the company in June 2020 to a group of
12:15physicians, again led by Dr. Dellatorre.
12:19To secure the funds to purchase Cerberus's controlling interest, Dr. Dellatorre secured
12:24a loan from MPT.
12:26The buyout allegedly earned him a $100 million dividend.
12:30While Dr. Dellatorre was paying himself millions, Steward fell behind in its mortgage payments,
12:36owing approximately $50 million in January 2024, or one-half of the dividend Dr. Dellatorre
12:43received.
12:44In May, Steward filed for bankruptcy, publicly declaring debts of approximately $9 billion.
12:51Now, we must learn about these financial deals because it spelled the beginning of the end
12:55for Steward and its more than 30 hospitals across the country, including in my home state
13:01of Louisiana in West Monroe.
13:03Stepping back, it's important to recognize that Steward is not a private equity firm.
13:07Private equity did not cause the situation we're seeing today, and fast, robust private
13:12equity investment kept the hospitals afloat in 2010.
13:16Now, I practiced medicine for 25 years, and so you have the mindset.
13:22If you're going to make the right decision for a solution, the right prescription, if
13:26you will, you have to have the correct diagnosis.
13:30Blaming private equity for Steward's mismanagement is not productive.
13:34It ignores that private equity invested hundreds of millions of dollars into failing hospitals,
13:38made them successful, and then sold them to a private management team, which was not private
13:43equity.
13:44So to make the correct diagnosis is important if we're going to come up with the correct
13:51prescription.
13:53Steward's financial troubles have seriously impacted its hospitals, threatening patients'
13:57access to life-saving care.
14:00Hospitals have had essential medical supplies repossessed by banks to pay off Steward's
14:05debts.
14:06Workers at its facilities have been laid off, leading to a reduction in outpatient services
14:11and an increased burden on the remaining staff.
14:14The facility in West Monroe is Glenwood Regional Medical Center.
14:19According to the reports from the Centers for Medicare and Medicaid Services, a physician
14:23at Glenwood in West Monroe told a Louisiana state inspector that the hospital was performing
14:28quote third-world medicine.
14:31Because of management decisions resulting in limited resources at Glenwood, the state
14:35had to force the hospital to operate at one-third its capacity.
14:39One patient died waiting for a transfer to another hospital because Glenwood did not
14:44have the resources to treat.
14:46Inevitably, nearby hospitals, in fact hospitals across the state, absorbed that burden, straining
14:51those facilities' ability to deliver quality care.
14:55Addressing this must be a top priority.
14:58Reportedly this week, someone may purchase Glenwood.
15:01While this needs to be approved by a bankruptcy judge, it's a good sign, now we need answers
15:06as to how Glenwood got to this point.
15:08Unfortunately, Glenwood is not unique.
15:10At a Stewart-owned Massachusetts hospital, a woman died after giving birth when doctors
15:17realized mid-surgery that the supplies needed to treat her had been repossessed due to Stewart's
15:24financial troubles.
15:26These examples are across Stewart's hospitals.
15:29Dr. De La Torre and his executive team's poor financial decisions and gross mismanagement
15:34is shocking.
15:36Patients' lives are at risk.
15:38Americans deserve answers.
15:39On June 25th, Chair Sanders and I asked Stewart's CEO, Dr. De La Torre, to testify before the
15:44committee.
15:45He refused without further discussion and did not counter with another date.
15:49He did not offer another company official to appear.
15:52Let me be clear.
15:53The committee would have been open to working with Stewart to ensure cooperation.
15:58They ended the negotiation before it started.
16:02The decision to subpoena Stewart does not come lightly, but the situation is actively
16:06impacting patients and the communities we represent.
16:10Congress has a responsibility to act.
16:13Patients should not be turned away or denied care because of Dr. De La Torre's irresponsible
16:18business practices.
16:20My goal is to ensure that residents in the communities served by Stewart hospitals, such
16:25as West Monroe, served by Glenwood, receive the care they get and to get to the bottom
16:31of these problems to make sure they do not happen again.
16:34That is our top priority.
16:36I thank Chair Sanders for his collaboration in our bipartisan investigation.
16:40I urge colleagues to support the subpoena.
16:43Senator Cassidy, thank you very much.
16:45I wanted Ed Markey to say a few words because Senator Markey has been active in this.
16:51And I want to do a vote soon, but if you wanted to say a few words.
16:54Thank you, Mr. Chairman, very much.
16:56And first of all, thank you for allowing me to have a hearing in Boston on April 3rd on
17:02this issue, which illuminated the breadth of the absolutely irresponsible conduct that
17:12Ralph De La Torre and Stewart Health have been engaging in.
17:16I want to thank you and Senator Cassidy for your leadership on this issue.
17:23And I'll just briefly make the point that on March 10th of 2010, Dr. Ralph De La Torre
17:31celebrated the creation of Stewart HealthCare, the purchase of several non-profit hospitals
17:36in Massachusetts with a commitment to offer world-class medical care.
17:41Unfortunately, Dr. De La Torre invited private equity and real estate entities into the halls
17:47of our health care system and a disaster began.
17:52Under Dr. De La Torre's leadership, health providers and hospital administrators watched
17:56emergency room lines grow, forced to face patients knowing that they did not have the
18:02resources nor the staff needed to provide the world-class care that Stewart and Dr.
18:07De La Torre had promised as he had purchased the non-profit Catholic system in our state
18:14and turned it into a for-profit system, and he promised even better care.
18:19Stewart let the physical and financial infrastructure of those hospitals in Massachusetts and Louisiana,
18:26Pennsylvania, Arizona, Arkansas, Florida, Ohio, and Texas wither, and while all of that
18:33was going on, as you have pointed out, he was purchasing yachts, private jets, personally
18:43enriching himself and his other colleagues as this hospital system was left in disarray
18:51and not satisfied with going from just the six Catholic hospitals in Massachusetts, which
18:57are now in a state of collapse.
19:01He then expanded across the country to 30 hospitals in our country and then went international
19:09to Malta to take over their system as well, where he is now being investigated for the
19:17very same irresponsible conduct that our committee is investigating here in the United
19:24States.
19:25So this is a story of private equity with no constraints, taking over a massive hospital
19:33system and then looting it for their own personal wealth, allowing for the healthcare of the
19:41patients to wither while simultaneously enriching the individuals at the top.
19:47So I thank you, Mr. Chairman, and Ranking Member Cassidy, for this leadership because
19:54I think this hearing that we are going to have here before us is going to be an historic
20:02one.
20:03This is the focus on the role private equity is playing in this hospital sector.
20:11This is not taking over a widget company.
20:13It's not taking over a coffee company.
20:16This is where they take over hospitals and they apply the very same standards to those
20:21hospitals which they would apply to a widget company.
20:25So all I can say to Dr. De La Torre is you cannot treat communities as expendable.
20:31You are accountable.
20:33Your day of reckoning is going to arrive here on September 12th in the health committee.
20:40Thank you very much, Senator Markey.
20:41Thanks for your work.
20:42Okay.
20:43We're going to have two votes.
20:44I note the presence of a quorum and we will now move to votes.
20:49I move that pursuant to its authority under Rules 25 and 26 of the standing rules of the
20:54Senate and Rule 17 of the Rules of Procedure of the United States Senate Committee on Health,
20:59Education, Labor, and Pensions, the Senate Committee on Health, Education, Labor, and
21:03Pensions hereby authorizes an investigation into the bankruptcy of Stuart HealthCare,
21:09including authorizing the committee to hold hearings for the purpose of taking sworn testimony
21:14and testimony by subpoenaed witnesses in this investigation.
21:18The clerk will call the roll.
21:22Senator Murray.
21:23Aye.
21:24By proxy.
21:25Senator Casey.
21:26Aye.
21:27Senator Baldwin.
21:28Aye.
21:30Senator Murphy.
21:31Aye.
21:32Aye by, oh, there we are.
21:33All right.
21:34Aye in person there.
21:38Senator Kaine.
21:39Aye.
21:40Senator Hassell.
21:41Aye.
21:42Senator Smith.
21:43Aye.
21:44Senator Lahan.
21:45Senator Hickenlooper.
21:46Aye.
21:47Senator Markey.
21:48Aye.
21:49Senator Cassidy.
21:50Aye.
21:51Senator Paul.
21:52No by proxy.
21:53Senator Collins.
21:54Aye.
21:55Senator Miller.
21:56Aye.
21:57Senator Nielsen.
21:58Aye.
21:59Senator Collins.
22:00Aye by proxy.
22:01Senator Murkowski.
22:02Aye by proxy.
22:03Senator Braun.
22:04Aye by proxy.
22:05Senator Marshall.
22:06Aye.
22:07Senator Romney.
22:08Aye by proxy.
22:09Senator Tupperville.
22:10Aye by proxy.
22:11Senator Mullen.
22:12Aye by proxy.
22:13Senator Budd.
22:14Aye by proxy.
22:15Chairman Sanders.
22:16Aye.
22:17I have 20 ayes, one nay.
22:18The ayes have it.
22:19The motion is agreed to pursuant to its authority under Rules 25 and 26 of the Standing Rules
22:36of the Senate and Rules 17 of the Rules of Procedure of the United States Senate Committee
22:39on Health, Education, Labor, and Pensions.
22:42The Senate Committee on Health, Education, Labor, and Pensions hereby authorizes its
22:46chair to issue a subpoena to Dr. Ralph De La Torre, Chairman and Chief Executive Officer
22:52of Steward Health Care Systems, to give testimony at a hearing of the committee on September
22:5712, 2024 at 10 a.m. in 562 Dirksen Center Office Building or at such other time and
23:05place that may be designated regarding the bankruptcy of Steward Health Care.
23:10The clerk will call the roll.
23:13Senator Murray.
23:14Aye by proxy.
23:15Senator Casey.
23:16Aye.
23:17Senator Baldwin.
23:18Aye by proxy.
23:19Senator Murphy.
23:20Aye.
23:21Senator Kaine.
23:22Aye.
23:23Senator Hassan.
23:24Aye.
23:25Senator Smith.
23:26Aye.
23:27Senator Lujan.
23:28Yes.
23:29Senator Hickenlooper.
23:30Aye.
23:31Senator Markey.
23:32Aye.
23:33Senator Cassidy.
23:34Aye.
23:35Senator Paul.
23:36No by proxy.
23:37Senator Collins.
23:38Aye by proxy.
23:39Senator Murkowski.
23:40Not voting.
23:41Senator Braun.
23:42Aye by proxy.
23:43Senator Marshall.
23:44Aye.
23:45Senator Romney.
23:46Aye by proxy.
23:47Senator Tuberville.
23:48Aye.
23:49No by proxy.
23:50Senator Mullen.
23:51No by proxy.
23:52Senator Budd.
23:53No by proxy.
23:54Chairman Sanders.
23:55Aye.
24:12I have 16 ayes, 4 nays.
24:13The ayes have it.
24:14The motion is agreed to.
24:17That concludes.
24:18Mr. Chair.
24:19Yes.
24:20Cain here.
24:2130 seconds.
24:23You posed a rhetorical question.
24:25How could anyone even spend that much on a fishing boat?
24:27Could you bring the fishing boat picture back up?
24:30You didn't ask for an answer, but I have an answer for you.
24:32The builder of this boat declared that it was, quote, the most ambitious custom sport
24:39fish boat ever built, close quote.
24:42That is how you spend $15 million on a fishing boat.
24:45All right.
24:46Now we've learned something.
24:47Okay.
24:48Our votes are concluded, but if anybody wants to speak briefly on the matter, the floor
24:55is open.
24:56Any thoughts?
24:57All right.
24:58Seeing no one else, let me again thank the ranking member for his cooperation.
25:03I think what we're doing is significant.
25:06And thank all of the members for being here.
25:08The committee stands adjourned.