Financial impropriety allegations swirl around companies behind San Antonio hospital closure
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San Antonio's healthcare-starved South Side is on the cusp of losing a hospital. The loss of Texas Vista, the 40-year old hospital formerly known as Southwest General, would leave just one major facility on the city's impoverished and historically under-resourced South Side.
Employees of Steward Health Care, along with its parent company Medical Properties Trust, have made pleas to the public, saying the only way to save them is through a Bexar County bailout that would cost the taxpayers millions of dollars. The alternative is to leave the South Side in what one health care official called a "public-health crisis."
The announcement surprised Bexar County officials. A spokesperson said they only had one Zoom meeting with Steward Health. It lasted less than an hour, during which Steward Health officials said they didn’t plan to close but needed between $5 million and $10 million to stay open.
Officials with University Health, the county's hospital system, said in a March 1 release that they couldn't talk about negotiations of a takeover. But they did not think discussions with Steward and MPT produced a good deal for taxpayers. They questioned why they should bail out billion dollar for-profit companies.
"It has become increasingly clear that our mission and values are not aligned with Medical Properties Trust," the University Health statement read.
While University Health didn't elaborate on the meaning of that statement, the financial world was abuzz with possible explanations.
One explanation was that Steward Health and Medical Properties Trust was being investigated by multiple law firms on behalf of investors for securities laws violations. The companies were recently called a "den of thieves" by one group of financial investigators, who said the healthcare provider's associated businesses were, among other things, under international criminal investigation.
Viceroy Research is a financial investigative research group owned by a short-seller with a history of releasing damning reports and at times incurring fines as a result. It has taken a special interest in Steward and MPT, issuing more than one dozen reports on the companies in a few weeks.
In a January report, the group said it was shorting MPT and Steward because the companies had created billions of dollars in uncommercial or paper transactions to overstate the company's value and potentially steal money.
"[Medical Properties Trust] has disappeared hundreds of millions of dollars in what appear to be fraudulent transactions," the report said.
Viceroy said the company faked building projects, including one hospital expansion in Texas, to disappear funds. In its “Den of Thieves” paper, released Friday, Viceroy said Steward Health Care System laundered money to international politicians and fraudsters.
“We have decided not to respond to your inquiry,” said Josephine Martin, a Steward Health Care spokesperson. The no comment came a day after TPR sent its questions and was assured they would respond.
Steward Health Care owns 39 community hospitals in nine states and the nation of Malta, according to its website.
Bexar County has made no such allegations, but officials questioned the bailout of the for-profit institution. University Health said the lifespan of the South Side hospital without significant investment was limited. An investment of this size, it said, is better served by the new facility it is building further south near the Texas A&M San Antonio campus. That hospital is not scheduled to be completed until 2027.
“It is part of UHS’ original charter to care for the indigent population of Bexar County. This service has largely fallen on TVMC’s shoulders over the past few years,” said Steward Health in its March 1 press release. Steward said that means the hospital often goes unpaid for services.
The release also called University Health System “well-healed” and implied it was interested in only serving affluent areas, noting the new headquarters in the medical center.
The closure of a sizeable hospital — 327 beds — in a region with far less access to health care was undoubtedly a bad thing for the region and its local government representatives.
“We’re gonna be without a hospital for 2-3 years,” said Adriana Rocha-Garcia, the area’s councilwoman.
Earlier this week, Rocha-Garcia called on the University Health System to take over Texas Vista. But when she heard the allegations made by law firms and short sellers, she tempered those comments.
“My concern is the healthcare and business of helping the residents,” she said. “There is no way I am in the business of encouraging a bailout for any group using unethical practices.”
She still hoped there was a way to meet the need of the healthcare starved area. University Health System did not immediately respond to TPR's questions about the allegations.
The future of the South Side hospital appears bleak.