The U.S. senators from Massachusetts have sent a letter to Medical Properties Trust, the largest hospital landlord in the country, criticizing its business model and urging it to take action on the facilities run by beleaguered operator Steward Health Care.
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The letter, sent by Sens. Elizabeth Warren and Ed Markey on Monday, was directed to MPT and landlord Macquarie Infrastructure Partners. The senators called on the landlords to reduce Steward's lease payments or terminate leases and allow new operators to take over to keep hospitals from closing.
"MPT and MIP have played a key role in this steep financial decline and must play a role in the recovery of these hospitals in order to preserve and protect access to care for communities in Massachusetts," the letter says.
For years, the two companies have charged rents that have left operators like Steward struggling to make payments, and the operator has incurred millions in debt and unpaid rent.
MPT has loaned Steward hundreds of millions of dollars to keep it afloat and pay down its debt. MPT argued that the loans were to "help safeguard the value of MPT’s real estate."
But Warren and Markey said the investments have the "appearance of a Ponzi scheme that continues to harm Steward-owned hospitals."
MPT and MIP didn't respond to Bisnow's requests for comment.
Medical Properties Trust has faced criticism about its business model, which involves sale-leaseback deals and charging rents that leave hospital operators with slim margins and lead some hospitals to financial instability and closure.
Because of this, Steward could face bankruptcy if it can't prove to lenders it has the cash to pay down its debts by the end of the month, Healthcare Dive reported Tuesday.
Private equity-backed healthcare companies made up a fifth of the 80 healthcare company bankruptcies last year, according to Bloomberg. A Steward bankruptcy would mark the largest of its kind in decades.
Steward's troubles were in the spotlight at the beginning of the year when MPT revealed it recorded $350M in write-downs associated with the operator and issued a $60M loan to help it pay rent.
Since then, Steward has faced scrutiny for its management of the hospitals it operates and the risk of closures. The company has tried to find a seller to buy its hospitals and set up a deal with UnitedHealth Group to buy Steward's network of doctors to extend its financial runway, WBUR reported.
MPT has also tried to bolster its cash flow with several deals this year, including the sale of a 75% stake in five Steward-run hospitals in Utah to an undisclosed buyer for $866M, and it took out $190M in new debt on the properties.
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