Steward Health Care steps into the spotlight, 3 years after quietly moving its HQ to Dallas

Steward Health Care moved to Dallas three years ago without the typical fanfare that accompanies a multi-billion dollar corporation move.

The hospital and operations center operator’s roots are in a cluster of troubled Catholic nonprofit hospitals in the Boston area that a private equity firm bought a decade ago before paying out a profit of $ 800 million. It was owned by private equity when Steward acquired a group of community hospitals that were scattered across Texas.

Steward is now doctor-owned and ready to grow in the Lone Star State.

The closest hospital to Dallas is 180 miles east in Texarkana. There, Steward is investing $ 227 million in the 66-year-old Wadley Regional Medical Center.

The company’s move to Dallas should create a stronger “national mindset,” said Dr. Sanjay Shetty, Stewards recently appointed President for North America. The company employs 730 people at its Uptown headquarters and a Richardson facility.

It was the first in-depth interview with the company’s executives since Dallas was established as its headquarters.

Steward wants to be “part of the state,” said Shetty. “We’re very part of Texas.”

The private company also operates hospitals in Odessa, San Antonio, Houston, Big Spring, Port Arthur and Beaumont. In addition to investing in Texarkana, Steward recently embarked on a $ 92 million renovation of St. Joseph Medical Center in Houston.

According to Steward, his network in Texas treats around 300,000 patients annually.

In June, the company signed a $ 1.1 billion deal with Tenet Healthcare, a major investor-owned hospital and operating center operator, to acquire five Florida hospitals. It was Steward’s first takeover since he was taken over by Doctors.

Steward was founded by New York private equity firm Cerberus Capital Management in 2010 when investment firm Caritas Christi Health Care bought the second largest hospital group in Massachusetts at the time. Earlier this year, Cerberus paid out its stake in the company for reported profits of $ 800 million.

Cerberus announced its exit a year ago with the transfer of ownership of Steward to a group of in-house doctors led by Dr. Ralph de la Torre, Steward’s Chairman and CEO.

Steward now operates 34 hospitals in nine states, five in Malta and Colombia, as well as a large network of medical practices. The company, which once sued the state of Massachusetts for keeping its finances private, reported $ 6.6 billion in sales in 2018 – the latest data it released publicly.

His doctor-led business model is controversial in the healthcare industry.

Britt Berrett, professor and director of the Center for Healthcare Leadership and Management at the University of Texas at Dallas, said the controversy actually dates back to the origins of hospitals before and after the industrial revolution. In the past, hospitals were almost always run by religious organizations. Eventually, people flocked to these facilities via smaller, less technically advanced hospitals.

“It wasn’t until the economy became very, very attractive that doctors returned to looking around medical hospitals,” Berrett said.

Doctor-owned hospitals can transfer patients who cannot afford treatment to other hospitals or recharge paying patients to offset so-called charity care costs. Berrett said there was no evidence that doctors recommend expensive treatments, but there were high numbers of paying patients in doctor-run hospitals in the 1980s and 1990s.

“Doctors who had a commercial interest began referring their patients who paid to their hospitals and those who did not pay to the nonprofit hospitals,” Berrett said.

With the passage of the Affordable Care Act in 2010, the federal government imposed a moratorium on the opening of medical hospitals. A 2016 study by Health Affairs magazine looked at 106 Texas hospitals to see if hospitals had changed operations to increase profitability with the new ACA restrictions.

The study found that several doctor-owned hospitals opened on the model before ACA was implemented. Between 2011 and 2013, nine doctor-owned hospitals opened in Texas, and none accepted Medicare. According to the study, there was no evidence that existing hospitals were no longer adopting Medicare.

Shetty said doctor-owned hospitals enable doctor-owned hospitals to put long-term investments over short-term returns. This is in line with the company’s mission to be community and patient-centric, with an emphasis on prevention, behavioral health and quality emergency care, he said.

“We are able to make investments that will pay off in improved health and wellbeing and improve outcomes in the medium and long term,” said Shetty.

Although Steward began expanding outside of the United States before being owned by Doctors, Shetty’s new position as President of Steward North America will reinforce that focus on building Steward internationally. It also enabled de la Torre to take on additional roles as Executive Chairman of Steward International.

Before Shetty was the first to take on the newly created position, she worked for the company for 11 years. Previously, he ran the company’s southern region and oversaw operations in Texas, Florida, Arkansas, and Louisiana.

Shetty’s medical specialty is radiology. He holds a degree in biochemistry, a doctorate in medicine and a master’s degree in business administration from Harvard. Shetty said he still occasionally practices medicine.

Like all health organizations, Steward has seen big changes during the COVID-19 pandemic and continues to take steps to ensure it is prepared for any new outbreaks or issues. Shetty said the company invested $ 400 million in its facilities to meet COVID demand and buy equipment and PPE for its 42,000 employees.

In June, the Wall Street Journal reported that Steward lost more than $ 400 million in 2020 and reported nearly $ 1 billion in unpaid vendor charges and other bills. Steward raised more than $ 700 million last year through a series of complex transactions with a real estate investor helping private equity firms cash in on their investments.

“It’s been an incredibly difficult year for our people,” said Shetty. “I would recognize her again and again. They really are true heroes. It’s not a cliché. “

Steward hasn’t asked employees to get COVID-19 vaccinations, but Shetty said full vaccination was the company’s “clear goal and expectation”.

This year, Steward is applying what he has learned about the peaks and valleys of the pandemic to be prepared for a resurgence in cases, but plans to continue to offer other forms of care.

“I worry that a lot of care was neglected when people became so focused on COVID,” Shetty said.

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