A group of doctors employed by US-based Steward Health Care, the parent company of the firm that manages three major hospitals in Malta, has gained control of the company.
The two companies announced that the doctor-led group had reached an agreement to buy the share held by Cerberus Capital Management, a New York-based private equity firm that bought into Steward Health Care in 2010.
It is unclear how this change in ownership will affect Malta or Steward Health Care Malta. In 2017 it bought out Vitals Global Healthcare (VGH), the company awarded the concession to manage St Luke’s, Karin Grech and Gozo hospitals. But until Steward took over, VGH had amassed debts of €36 million.
Steward CEO Ralph de la Torre said that Cerberus agreed on Tuesday to sell control of the Dallas-based physician-owned company to a group of Steward physicians he was leading.
“This is a transformational moment for the healthcare industry, with new realities in a COVID-19 world that must be addressed with an equally transformational, patient-first approach,” de la Torre said in a statement quoted by medical journal HealthLeaders.
“As physicians first, we will focus on creating structures and timelines that meet the long-term needs of our communities and the short-term needs of our patients.”
Request for state aid
The transaction makes Steward one of the largest physician-owned and operated companies in the United States. It also ends a 10-year ownership period for Cerberus, which was most recently marked by threats to shutter a Pennsylvania hospital in March, despite the pandemic, if the facility didn't receive state bailout funds.
According to reports, the company had asked for state aid to remain open after Easton Hospital planned to close on April 1. The company then received financial aid from Pennsylvania which pledged $8 million to keep the hospital from shutting down in the middle of the coronavirus pandemic.
Dallas-based Steward has 37 hospitals across nine states, employing more than 42,000 people, plus a network of 42 skilled nursing facilities and over 25 urgent care centres.
“For nearly a decade, we have partnered with Steward Health Care to build an industry-leading company that provides access to affordable, high-quality, community-based care across the United States,” Brett Ingersoll, senior managing director and chairman of the private equity investment committee at Cerberus, said in a statement.
Malta v US
According to a report released by the Massachusetts Centre for Health Information and Analysis last September, Steward had the lowest total margin and operating margin in fiscal year 2018 among 11 multi-acute health systems.
In Malta, the situation is not so postive. It owes Malta between €12 and €15 million in tax and social security arrears.
Steward had taken over the concession to run the Gozo, St Luke’s and Karin Grech hospitals in 2017 after Vitals Global Healthcare failed to deliver on its contractual commitments, which included investing €200 million in new medical facilities.
Inquiry into hospitals deal
The original hospitals deal, signed by former minister Konrad Mizzi, is currently the subject of an in-depth review by the Auditor General. An inquiry in the courts, sparked by NGO Repubblika, is under way despite objections by Mizzi, former minister Chris Cardona and Finance Minister Edward Scicluna.
And another court case against the government instituted by Opposition leader Adrian Delia, asking for the concession agreement to be rescinded, is still pending.
Recently-filed audited accounts show that Steward Healthcare was still paying the two frontmen for Vitals Global Healthcare (VGH), who had no prior experience in healthcare and who are still receiving funds off their failed hospital venture as part of a €15 million ‘settlement’ with Steward.
Ram Tumuluri and Mark Pawley, who headed the company which was awarded a lucrative government concession will receive their final payment from Steward in February 2021.