Private-equity firms have been buying hospitals in increasing numbers over the past decade. Several relied on an Alabama real-estate company to help pay for their purchases, the Wall Street Journal reported. Medical Properties Trust Inc. was willing to buy the bricks and mortar, and lease the facilities back to the hospital operators. That provided financing for the deals and helped some of the private-equity firms take money out of their investments. As a result, the Birmingham-based company became one of the nation’s biggest owners of hospital property. The real-estate investment trust, or REIT, offered investors an appealing story: It had long-term leases with tenants that provide essential services, and it paid a lucrative dividend. Yet as the company grew fast and bought more properties, it faced large losses at its biggest tenant, financial filings show. Steward Health Care System LLC accounted for 30% of the company’s revenue in 2020, according to a filing by MPT with the Securities and Exchange Commission. Steward lost more than $800 million between 2017 and 2020, its financial statements show, with COVID-19 adding to its financial challenges. Since the pandemic began, MPT has struck a series of deals involving Steward and its chief executive that together resulted in hundreds of millions of dollars flowing from MPT to Steward. Former MPT employees familiar with the company’s transactions said they saw deals with Steward as a way for MPT to provide it with cash as it notched losses, which in turn helped Steward make its rent payments and kept MPT growing. In response to questions for this article, MPT said that during the pandemic it collected almost 98% of rents and interest payments and that its financial results demonstrate the success of its strategy.
