Business & Tech

Talk of Steward Health moving out of Mass. is making the rounds

Carney Hospital is part of the Steward Health Care network.
Pat Greenhouse/Globe Staff/File 2015
Carney Hospital is part of the Steward Health Care network.

Steward Health Care System grew rapidly in the past year from a local hospital company to a national one, essentially quadrupling in size.

Now, the Boston-based company is planning changes to its corporate offices to keep up with its national ambitions.

The talk making the rounds in the local health care industry is that Steward chief executive Dr. Ralph de la Torre will move some top management jobs elsewhere. A spokesman for Steward declined to comment. But people familiar with Steward’s deliberations told The Boston Globe that Dallas is the likely location for a new corporate office.

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Steward’s $2 billion acquisition this fall of Tennessee-based IASIS Healthcare roughly doubled its size, after the company purchased eight hospitals from another chain, Community Health Systems, earlier in the year. As a result, Steward now has three times as many hospitals outside of Massachusetts than inside the state.

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Steward’s headquarters in the tower at 111 Huntington Ave. in the Back Bay is a relatively small one considering the size of the overall company — one that expects to generate nearly $8 billion in revenue next year.

It makes sense for a for-profit company with roots in Boston to be looking at real estate elsewhere now that its 36-hospital footprint spans 10 states, most of them outside of the Northeast.

It’s unclear how many people would make the move. Most of Steward’s employees would be unaffected because they work for hospitals and medical practices that will continue to operate in Massachusetts.

The IASIS deal brought with it six hospitals in Texas and hospitals in Arizona, Arkansas, Colorado, Louisiana, and Utah. Steward said that acquisition also made it the largest private, for-profit hospital operator in the country with about 37,000 employees, including about 17,000 in Massachusetts.

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Steward’s national expansion largely was made possible through a deal that took place in 2016, when a real estate investment trust called Medical Properties Trust decided to invest $1.2 billion in the company’s real estate and $50 million in the company’s equity.

Steward was founded seven years ago as a way for the New York private equity firm Cerberus Capital Management to acquire the struggling Caritas Christi hospital network, which includes Carney Hospital in Dorchester and St. Elizabeth’s Medical Center in Brighton.

At the time, Steward received approval from the Massachusetts attorney general’s office to take over the former Caritas hospitals and convert them from nonprofit to for-profit properties.

Company officials committed to keeping their headquarters in Greater Boston. But the terms of their five-year agreement with the state have expired, leaving Steward free to relocate corporate offices.

Steward is a rarity in the Massachusetts health care market: a private for-profit company. Most health care providers here are structured as nonprofits.

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Steward executives have long clashed with state officials over rules that require hospital operators to submit detailed financial information to the state.

Steward has failed to submit several years of financial information to the state Center for Health Information and Analysis, racking up more than $300,000 in fines that the company has not paid.

Last month, Steward sued the state agency in Suffolk Superior Court, arguing that the agency has no right to demand sensitive and proprietary information about the company’s finances.

Scott Drenkard, director of state projects for the Washington-based Tax Foundation, said Texas is considered to have a more favorable business climate than Massachusetts. The think tank ranks Texas in the top third, in terms of a probusiness tax climate, while Massachusetts is in the middle.

It is difficult to compare corporate taxes in Massachusetts and Texas, largely because of the complex approach that Texas takes, he said. Meanwhile, Texas is one of seven states with no individual income tax whatsoever, and is one of nine that do not impose an income tax on wages, Drenkard said, while Massachusetts has an income tax of 5.1 percent.

Jon Chesto can be reached at jon.chesto@globe.com and on Twitter @jonchesto. Priyanka Dayal McCluskey can be reached atpriyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.