Imagine a hospital chain crumbling under the weight of its leaders’ alleged greed. Steward Health Care, once a titan among for-profit hospital systems, is now in bankruptcy, pointing fingers at its founding CEO and other insiders for draining over $245 million. This isn’t just a corporate collapse—it’s a cautionary tale for investors and communities alike.
According to CBS News, Steward Health Care accuses its founder, Ralph de la Torre, and three former colleagues of defrauding the company, leading to financial ruin that forced the sale of hospitals and left workers jobless.
Founded in 2010 by de la Torre, Steward grew into the nation’s largest for-profit hospital chain, operating facilities in states like Massachusetts, Texas, and Florida. But behind the expansion, court filings claim a pattern of self-enrichment began early.
In January 2021, while Steward struggled, de la Torre allegedly took a staggering $111 million dividend payout. Court documents also claim he pocketed another $81.5 million, while other executives—Michael Callum, Sanjay Shetty, and James Karam—received millions in payouts ranging from $728,456 to $10.3 million.
That same year, Steward’s international arm, majority-owned by de la Torre, reportedly received $4.3 million of the dividend haul. Meanwhile, de la Torre’s spending raised eyebrows, with CBS News reporting purchases like a $30 million yacht and a Texas horse ranch.
Also in 2021, Steward’s court filing alleges de la Torre overpaid by $200 million for five Miami hospitals in a $1.1 billion deal, driven by ambition rather than sound economics. This kind of decision-making, the company claims, bled resources dry.
By 2022, de la Torre sold assets tied to Steward’s Medicare Advantage business to CareMax, with $60.5 million in cash going to Steward’s physicians group. Yet, nearly $134 million in CareMax stock allegedly flowed to a holding company tied to de la Torre and his colleagues. CareMax itself later filed for bankruptcy, adding another layer of financial wreckage.
While executives cashed in, Steward hospitals faced dire shortages. CBS News found unpaid bills risking access to life-saving supplies, with one tragic case in Massachusetts where a critical device was repossessed, contributing to a new mother’s death after childbirth.
The fallout hit hard in Massachusetts, where the sale of six hospitals in August of a prior year was followed by the closure of the final two facilities. State officials reported that roughly 1,200 workers lost their jobs as a result. This isn’t just numbers—it’s livelihoods destroyed.
Steward’s court filing pulls no punches, stating these insiders “pilfered” assets for personal gain, leaving hospitals “undercapitalized and insolvent.” The company is now under a court-appointed administrator working to recover funds for creditors. De la Torre, currently under federal investigation for potential fraud and embezzlement, refused to testify before a Senate committee in 2024 despite a subpoena. Senators held him in contempt, signaling growing public frustration.
Massachusetts Gov. Maura Healey expressed outrage in a 2024 interview with CBS News, calling the behavior “selfish” and driven by “greed.” Meanwhile, de la Torre’s spokesperson insisted he disputes the allegations and will defend himself vigorously.
Steward’s spokesperson claims the company has “actively invested” in its hospitals, especially in Massachusetts, where it saved failing facilities. Yet, the track record of unpaid bills and tragic outcomes paints a darker picture.
For investors, this saga is a stark reminder: due diligence matters. Private equity and real estate deals, like those with Medical Properties Trust that forced costly lease-backs on hospitals, can hollow out even vital industries like healthcare when unchecked.
Communities and workers bear the cost of such mismanagement, but so do creditors and shareholders. Look closely at leadership and capital allocation before investing in healthcare stocks. Research filings, track executive compensation, and beware of firms prioritizing dividends over operational stability—your portfolio could depend on it.