STEWARD HEALTH CARE’S financial spiral is giving Julie Pinkham, executive director of the Massachusetts Nurses Association, a bad case of déjà vu. 

“This is Groundhog Day,” she said on an episode of The Codcast hosted by John McDonough, a professor at the T. H. Chan School of Public Health at Harvard University, and Paul Hattis, senior fellow at the Lown Institute. 

As pressure ramps up to find a way to shore up the nine Massachusetts hospitals owned by Steward, which employ about 3,000 nurses represented by the nurses association, Pinkham worries that the state may be in the same position that let Steward get a foothold at the core of the state’s health care system more than a decade ago.

“I have said this before, and I will say this repetitively: 15 years ago, we had this problem,” she said, referring to major hospital systems in turmoil. “None of the nonprofits came forward, and there was no plan in place, health policy-wise, to rectify it. Subsequent to that, we have seen other hospital closures – not the least of which, North Adams Regional Hospital, closed with 72 hours notice.” 

This left the door open to private equity offering solutions, she said. While Steward CEO Ralph de la Torre’s team has dodged efforts by the state to access financial information that could have presaged the current collapse, the crisis is the end result of decades of choices, Pinkham said.

“Look, we invited this in when we deregulated in the 90s and we subsequently didn’t create any sort of guardrails,” she said. “We invited it in. So if we don’t like what we see, we should probably look in the mirror and take some responsibility for what we have.”

Steward Health Care boasted that it was the largest physician-owned and operated health care system in the US in 2020, 10 years after Cerberus Capital Management purchased the original six hospitals of the Caritas Christi system in Massachusetts, which would go on to become Steward.

Early negotiations with Steward-acquired hospitals in Massachusetts were bumpy, Pinkham said. The nurses were working on an agreement for a Taft-Hartley pension plan at the Catholic nonprofit health care system Caritas Christi when Cerberus entered the picture. The system needed cash, and private equity was offering it. In the short term, the system seemed to stabilize, and a large chunk of the hundreds of millions of investment dollars was steered toward protecting the Caritas workers’ pensions.

But trouble was in the air when de la Torre’s appetite for expansion grew, Pinkham said.

In need of additional money to expand, Steward in 2016 entered into an agreement with Medical Properties Trust, an Alabama-based real estate investment group that focused on purchase and lease-back arrangements with hospitals. MPT bought the company’s hospital buildings and leased them back to Steward.

“What made us nervous is for-profits generally, in our experience, aren’t necessarily long-term players,” Pinkham said. “You can wake up and there’s a transfer of ownership. But with MPT in the mix of the real estate investment group, the property was no longer owned. There were no assets anymore. The only real assets that Steward had were the people working there. Frankly, the people delivering the care were the assets.”

Pinkham said the nurses group was in conversations with the attorney general’s office and others at the time to express concerns. Supply issues became more common over the past year or so, she said, leading to issues like canceled surgeries because operating rooms lacked equipment. 

The situation now is being closely watched, Pinkham noted, with ramped up state oversight of the impacted hospitals and pressure from Gov. Maura Healey’s administration for Steward to transfer its Massachusetts hospitals to new operators. But deregulation has left the industry in a delicate position, she said, without mechanisms for the governor or attorney general to bring interested parties to the table to answer hard questions.

“We’re back again where we started, where we sort of justify why we want to get this infusion of cash in a manner that isn’t necessarily a manner that we like,” Pinkham said, referencing Cerberus first entering the Massachusetts scene to acquire the floundering Caritas system. 

“I feel like sometimes we are playing checkers and others are playing chess,” she said. “We’re focused on the hospital industry and the crisis in front of us. And meanwhile, in order to resolve some of those cash issues, are we going to see an expansion of the physician network as for-profit, as well as a number of other health care sectors moving towards private equity and for-profit? So, are we watching our flanks, or are we just gonna substitute one problem for another quickly enough?”