Steward Health Care System lost hundreds of millions of dollars over the past two years as it expanded rapidly across the country from its Massachusetts base.
The company reported an operating loss of about $270 million in 2018, and $322 million in 2017, according to a recent public filing that was cited in a Friday report from the Massachusetts Center for Health Information and Analysis, or CHIA.
The CHIA report shows that most Massachusetts hospital systems were profitable, and that hospital profit margins increased from 2017 to 2018.
Steward’s loss as compared to revenue was the most severe of any hospital system operating in Massachusetts last year.
The privately held company, which operates several Massachusetts hospitals including St. Elizabeth’s Medical Center in Brighton, has long been secretive about its finances and business dealings.
All hospital systems that operate in Massachusetts are required to file detailed financial information with the state every year. But Steward has not done so for several years, according to CHIA.
Steward, arguing that the state has no right to demand such sensitive and proprietary information, sued the state in 2017. The court dispute continues.
But separately, Steward’s most recent financial statements became public in a filing to the Securities and Exchange Commission in August. The document was filed by Medical Properties Trust Inc., a real estate investment trust that owns Steward’s hospital buildings and owned a 10 percent stake in the company, as of 2018.
Steward’s financial statements show the company’s revenue jumped to $6.6 billion in 2018, from $3.7 billion a year earlier, as the company continued to expand.
Steward was founded in 2010 when the New York private equity firm Cerberus Capital Management bought the struggling Caritas Christi hospitals in Massachusetts.
In 2016, Steward signed a deal with Medical Properties Trust to sell its hospital buildings for $1.2 billion and use the cash to pay back Cerberus and finance a national expansion.
The following year, Steward announced two deals that allowed it to quadruple in size. It now operates three dozen hospitals across several US states and the country of Malta.
Steward also moved its headquarters from Boston to Dallas, closer to many of its new acquisitions.
The report from Massachusetts health officials Friday shows that several of Steward's individual hospitals were profitable last year, but some were losing money. The long-struggling Carney Hospital in Dorchester lost more than $23 million in 2018. (Steward closed Quincy Medical Center amid financial challenges in 2014.)
Steward spokesman Darren Grubb said Friday that the company is financially strong, noting that revenues are increasing. Steward has acquired many hospitals that needed major investments. “Predictably, this has had an expected effect on financial margins,” Grubb said in an e-mail.
Steward’s losses the past two years also reflect acquisition costs, he added.
But Bentley University finance professor Kristina Minnick said Steward’s financial losses and debt levels are concerning.
“They have more debt than assets,” she said after reviewing the company’s financial statements. “They’re in a really bad place financially.”
An official at the Massachusetts Nurses Association said he isn’t overly worried about Steward’s finances because the company appears to have enough money to continue growing and investing in its existing hospitals.
But Steward should submit the required financial information to state officials, said Dana Simon, director of strategic campaigns for the nurses union. “It’s all pretty opaque, so nobody can say absolutely for sure,” he said.
Tim Foley, executive vice president of 1199SEIU United Healthcare Workers East, another union that represents workers at Steward, said in a statement: “It’s crucial that Steward Health Care, like other Massachusetts community hospital systems, remains financially viable. . . . We look forward to the healthcare debate this fall as legislators discuss new funding to support these critical institutions.”