Steward balks at state record request
Officials threaten to impose fines on health care firm
Steward Health Care is refusing to turn over to state officials its audited financial statements, setting off a behind-the-scenes tug of war that could lead to fines being assessed on the for-profit company.
Steward, which is owned by the New York private equity firm Cerberus Capital Management, is notoriously tight-lipped about its finances. The only reliable source of information on the company’s overall performance and its financial relationship with Cerberus has been its audited statements. For the past two years, Steward filed the statements with state regulators, who turned them over to CommonWealth in response to public records requests.
But this year, Steward is refusing to turn over the financial records. Mark Rich, Steward’s chief financial officer, said in a June letter to state officials that the company provided detailed financial information on all of the hospitals it owns. Rich said Steward was not going to turn over the 2013 consolidated financial statement of the company as a whole because it “combines the results of hospital operations with our non-hospital businesses that are not covered by the regulations.”
Nancy Maroney, associate general counsel of the state’s Center for Health Information Analysis, has insisted that state regulations require Steward to turn over the consolidated financial statements. She said in a June 9 letter that Steward could be subject to reductions in its Medicaid payments and other financial penalties if it refuses to comply.
The audited financial statements don’t provide a lot of information, but they do give a picture of Steward’s overall performance and offer some insights into Cerberus’s financial support for the health care company. The fiscal 2011 statement indicated Steward as a whole had a net loss of $56.9 million. That loss narrowed to $33 million in fiscal 2012. A company spokesman said the 2012 numbers were in line with the company’s business plan, but a year earlier a Steward attorney had forecasted “positive net income” in 2012.
Cerberus incorporated Steward in late 2010 to purchase and operate six struggling Catholic hospitals in Brighton, Dorchester, Norwood, Brockton, Fall River, and Methuen. Since then, Steward added five more hospitals in Ayer, Haverhill, Taunton, Quincy, and Stoughton. It has also acquired a number of physician groups.Ralph de la Torre, Steward’s CEO, is attempting to mold the group of struggling hospitals into a market force capable of challenging the region’s top health care networks. Some analysts suspect Cerberus may be readying the company for a sale to recoup its investment.
The consolidated audited financial statements would provide some indication of how de la Torre’s makeover of Steward is going financially. The refusal to release the documents, however, makes it nearly impossible to gauge that effort.