When Strategy Serves the Owners: A Case Study of Steward Health Care
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Master of Science in Nursing Program, Aspen University
N547: Health Care Strategic Management and Planning
Instructor Name
Month Day, Year
When Strategy Serves the Owners: A Case Study of Steward Health Care
Most of this course has followed a composite hospital through strategic thinking, planning and the management of momentum. This final paper turns to a real case in which strategy failed on a large scale, with direct consequences for patients and nurses. Steward Health Care grew from a small group of Massachusetts hospitals into a national for-profit system and then collapsed into bankruptcy in 2024. The paper summarizes the case from public sources, analyzes it with the strategic management concepts used throughout the course, examines the evidence on how ownership strategies of this kind affect patient care, and draws lessons for nurse leaders.
The Case
In 2010, the private equity firm Cerberus Capital Management bought Caritas Christi Health Care, a system of Catholic hospitals in Massachusetts, and formed Steward Health Care. In 2016, Steward sold the land and buildings under its hospitals to Medical Properties Trust, a real estate investment trust, for $1.25 billion and leased them back (Office of Senator Edward J. Markey, 2025). The transaction raised cash for the owners and for expansion, but it converted property the hospitals had owned into long-term rent obligations that had to be paid whatever the hospitals earned. Steward expanded into several other states over the following years.
On May 6, 2024, Steward, then operating 31 hospitals, filed for bankruptcy with more than $9 billion in liabilities. Hospitals were sold, transferred or closed, including two Massachusetts community hospitals, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, which both closed on August 31, 2024, and further closures followed in Florida and Ohio in 2025 (Bugbee, 2025). The Senate's health committee opened an investigation into the bankruptcy and its effect on patient care and held a hearing in September 2024 (U.S. Senate Committee on Health, Education, Labor and Pensions [HELP], 2024); after the chief executive declined to appear in response to a subpoena, the Senate voted unanimously to refer him for criminal contempt of Congress.
Strategic Analysis
In the terms used in this course, Steward's strategy was growth through acquisition financed by selling the hospitals' real estate. Ginter et al. (2018) describe strategy as a set of decisions that should follow from the organization's mission and its analysis of the environment and its own resources. Several of Steward's decisions are difficult to reconcile with that model. First, the sale-leaseback traded a durable resource, owned facilities, for cash that left the system, weakening the hospitals' internal position while adding a fixed cost. An internal analysis of the kind done earlier in this course would have flagged the change: facilities became a liability rather than an asset, and financial flexibility, already thin in community hospitals, shrank further.
Second, the strategy was poorly matched to the environment. The hospitals served many patients covered by Medicaid and Medicare, whose payments are lower and slower to grow than commercial rates. A system facing rising labor costs, the workforce pressures analyzed earlier in this course and lower-paying patients had little room to absorb rent increases. Third, the case shows the absence of the momentum management this course has emphasized. Signs of distress, from delayed payments to vendors to deteriorating facilities, appeared well before the bankruptcy, yet the strategy did not change course in time. When the owners' interests and the hospitals' interests diverge, a strategy can keep serving the first while the second declines.
Evidence on Ownership and Patient Care
The Steward case fits a broader pattern in research on private equity ownership of hospitals. Using Medicare claims for 662,095 hospitalizations at 51 hospitals acquired by private equity firms and more than 4.1 million hospitalizations at 259 matched control hospitals, Kannan et al. (2023) found that hospital-acquired conditions rose 25.4% after acquisition relative to controls. The increase was driven by a 27.3% rise in falls and a 37.7% rise in central line-associated bloodstream infections, even though the acquired hospitals placed 16.2% fewer central lines, and surgical site infections doubled. The study does not concern Steward specifically, and it cannot establish every mechanism, but falls and line infections are outcomes that depend heavily on nurse staffing, supplies and work environment, which are among the first things to suffer when a hospital's cash is diverted to rent and debt.
Lessons for Nurse Leaders
The case offers four lessons. First, financial strategy is patient care strategy. A decision to sell buildings or add debt changes what a hospital can spend on staff and supplies for years, so nurse executives should understand and question such decisions rather than treat them as outside their scope. Second, early warning signs are visible from the unit level: supply shortages, delayed repairs, unpaid vendors, rising agency use and departures of experienced staff. Nurse leaders should report these through formal channels, including to the board's quality committee, and document them. Third, boards need nursing expertise. A board that reviews quality measures alongside financial measures, as the balanced scorecard in this course did, is more likely to see harm developing. Fourth, nurses have a duty of advocacy that extends to regulators and public officials when an organization's leadership does not respond, a duty the profession's code of ethics ties to the nurse's responsibility for ethical and safe practice environments (American Nurses Association, 2025).
What an Evaluation of the Case Would Watch
If a nurse leader were asked to design an early warning set of measures for a hospital under similar ownership, it would combine financial and clinical indicators: rent and debt service as a share of revenue, days cash on hand, days in accounts payable, capital spending on facilities relative to depreciation, nurse vacancy and turnover rates, agency labor share, and nursing-sensitive outcomes such as falls, pressure injuries and central line infections. Reviewed together each quarter, those measures would show whether financial decisions are beginning to affect the bedside.
Conclusion
Steward Health Care's collapse shows what happens when a health system's strategy is organized around extracting value from its assets rather than sustaining its mission. The sale-leaseback weakened the hospitals' internal position, the strategy did not fit an environment of low-paying patients and rising costs, and the organization did not change course when warning signs appeared. Research on private equity ownership suggests that patients can bear the consequences in the form of falls and infections. For nurse leaders, the case completes the argument of this course: strategy is not an executive abstraction, and nurses, who see its effects first, have both the knowledge and the responsibility to take part in it.
References
American Nurses Association. (2025). Code of ethics for nurses. https://codeofethics.ana.org/
Bugbee, M. (2025, May 6). Steward Health Care's bankruptcy: One year later. Private Equity Stakeholder Project. https://pestakeholder.org/news/steward-health-cares-bankruptcy-one-year-later/
Ginter, P. M., Duncan, W. J., & Swayne, L. E. (2018). The strategic management of health care organizations (8th ed.). Wiley.
Kannan, S., Bruch, J. D., & Song, Z. (2023). Changes in hospital adverse events and patient outcomes associated with private equity acquisition. JAMA, 330(24), 2365-2375. https://doi.org/10.1001/jama.2023.23147
Office of Senator Edward J. Markey. (2025). Markey, Sanders, Blumenthal introduce legislation to protect health systems from predatory real estate investment trust deals [Press release]. https://www.markey.senate.gov/news/press-releases/markey-sanders-blumenthal-introduce-legislation-to-protect-health-systems-from-predatory-real-estate-investment-trust-deals
U.S. Senate Committee on Health, Education, Labor and Pensions. (2024). HELP Committee to hold bipartisan vote to launch investigation into bankruptcy of Steward Health Care and subpoena CEO [Media advisory]. https://www.help.senate.gov/dem/newsroom/press/media-advisory-help-committee-to-hold-bipartisan-vote-to-launch-investigation-into-bankruptcy-of-steward-health-care-and-subpoena-ceo
How this N 547 Module 8 example is structured
Aspen does not publish N547 module prompts, so check your classroom for the exact case and instructions. This example summarizes the case from public records, analyzes it with the course's strategic tools, reviews peer-reviewed evidence on ownership and patient outcomes with its limits, draws four lessons for nurse leaders, proposes an early warning measure set, and concludes.
N547 Module 8 questions, answered
What does N547 Module 8 usually ask for?
Aspen's N547 description says strategic situations are presented in case study format, so a closing case analysis that applies the course's tools to a real or textbook organization is a typical final assignment. Check your classroom for the assigned case.
What is a sale-leaseback?
A transaction in which an organization sells property it owns, such as hospital buildings, and then leases it back from the buyer. It raises cash immediately but adds long-term rent obligations and removes the asset from the organization's balance sheet.
Why should nurse leaders care about financial strategy?
Because financing decisions determine what a hospital can spend on staffing, supplies and facilities for years. Research links ownership changes to outcomes such as falls and infections that depend directly on nursing care.
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