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Boston Capital

Ralph de la Torre’s not-quite health care empire

Ralph de la Torre has his hands full.

Ralph de la Torre has his hands full.

It seems like yesterday when Martha Coakley and a few New York investors handed Ralph de la Torre the keys to the biggest for-profit health care experiment ever in Massachusetts.

In fact, it’s been nearly three years since de la Torre started with six mostly broke Caritas Christi hospitals, then bought more medical centers around the state and wooed scores of doctors with lucrative contracts.

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All that became Steward Health Care System, known here as the medical complex that Ralph built. Along the way, the former surgeon became a polarizing figure in Boston medical circles but one of the biggest influences on Massachusetts’ changing health care industry.

The actual results after three years of Steward are debatable. I’d call them a mixed bag, and the company, which is in the business of making money from health care, still looks like a work in progress.

One thing that jumps out: Steward remains a medical empire whose growth has not spread one foot beyond the Massachusetts border. There’s nothing wrong with that, but it’s not at all what de la Torre had in mind. He had grander ambitions.

Now, some people worry that de la Torre might try to unload one or more hospitals that could be hopeless money pits in the eyes of Steward’s private equity owners, Cerberus Capital Management of New York.

I wonder more about the future of Steward’s ownership and de la Torre as the leader of an important, statewide medical institution. To me, Steward’s three-year anniversary feels more like the beginning of the end than the end of the beginning of that relationship.

I doubt he would admit as much, but it’s hard to know for certain because de la Torre was unavailable to talk to me about this subject.

The Steward leader is worth watching because he’s smart enough to develop big ideas and can be charming enough to sell them — to investors, politicians, and many physicians.

He’s also a former cardiologist who has the audacity to pursue profits while challenging health care orthodoxy in a city that’s proud to call itself a world capital of charitable medicine.

Ambitious doesn’t begin to describe it.

You don’t need a Myers-Briggs personality test to get a handle on what makes de la Torre tick. He’s the kind of person who loves deals and the challenge of building things — creative, impatient, bursting with energy. He’s not a guy who gets up in the morning eager to make methodical, incremental improvements to a business.

To his credit, he first kept the lights on and then sunk millions into desperate Steward hospitals that no one else would touch. Critics tend to overlook the difficulty of the problems he took on. Then he started to build a medical organization that actually thought about what things cost.

But Steward still loses buckets of money. Just a few of its hospitals were in the black during the second quarter of this year, and losses of all combined hospital operations remained steep. Steward says it invested heavily and planned to be losing money at this point, but that doesn’t necessarily mean results will change as more time passes.

Just as important, Steward’s empire-building ambitions failed every time de la Torre tried to move beyond his home state. Potential deals in Rhode Island, Maine, and Florida all fizzled, for one reason or another.

Now, there are good reasons to wonder whether Steward’s owners would be more inclined to think about selling the company rather than spending more money on expansion.

At the moment, giant hospital companies might have an appetite to buy outfits like Steward (nationally, see Tenet Healthcare’s $4.3 billion deal to buy Vanguard Health Systems) and continued low interest rates make financing attractive.

Conditions might not be so favorable in a few years, when Cerberus would really start pressing to sell.

De la Torre created Steward as a vehicle to chase grand ambitions. The owners of his company may have less appealing ideas about limited costs and grinding out a profit in the future. Something — or someone — will have to change.

The red herring

Nice work if you can get it: Boston’s Bain Capital hopes its Burlington Stores Inc. will raise as much as $200 million in an initial public stock offering this week. Following common practice, Bain has billed Burlington millions in annual advisory fees since it bought the retailer in 2006. An even better deal: Bain will charge Burlington another $11 million to stop advising the company once it goes public.

Steven Syre is a Globe columnist. He can be reached at steven.syre@globe.com.
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