Amid increasing healthcare mergers and acquisitions, hospital-private equity partnerships are not always fruitful. The marriage of private equity giant Cerberus Capital Management and hospital operator Steward Health Care System led to a $14.6 million operating loss in its first year, reported The Boston Globe.
In addition to the loss, the venture had a total deficit of $56.9 million, according to a new report from Massachusetts Attorney General Martha Coakley.
"Our first year of review reinforces previous findings that Steward acquired community hospitals in deteriorating financial condition and with significant deferred capital investment needs," Coakley wrote in a letter that accompanied the report, according to the Globe.
Steward was formed when Cerberus acquired the six hospitals previously operated by Caritas Christi Healthcare in 2011. It has since acquired five more properties along the Eastern Seaboard.
Coakley noted that Steward met all of its covenants to transition the nonprofit hospitals to a for-profit operator. Steward also agreed to be under her office's scrutiny for five years after the deal.
The system would have posted a profit if it did not have to invest so much capital into shoring up the infrastructure of the hospitals, Steward spokesman Chris Murphy told the Globe.
Meanwhile, Boston NPR affiliate WBUR noted that some of its audience worries that Steward's cost-cutting plans could erode patient care.