The Chapter 11 filing by Steward Health Care was not a surprise to anyone in the healthcare world. Its former PE owner, Cerberus Capital, will be attacked because they made a significant profit when they finally exited their 2010 investment 10 years later. No one wants to remember that they bought six failing hospitals in Massachusetts and rejuvenated them. Without that purchase, there was a good chance they would have been shuttered.
Medical Properties Trust will be attacked because its leases ended up being too expensive, even though it helped Steward grow, took an equity interest in the company and provided new capital.
Everything seemed to be going swimmingly, and then COVID hit, and then interest rates went up, and then cash flow was not enough to cover debt and lease payments. Sound familiar? Unfortunately, this happens, and yes, perhaps the company became too leveraged and did not plan for the bad times that came. But who does? Who can?
Whether you like it or not, we live in a capitalist country, but there are many people who believe private capital should not be involved in health care. That sounds nice, but then where will the capital come from? Who will risk capital and fund innovation, new drug therapies, innovations for the senior care industry?
Think about it, and if your solution is the government, think harder.
