Charles Krupa/AP Photo
A “Save Our Hospital” sign is displayed outside the former Nashoba Valley Medical Center, which closed on August 31, 2024, and was part of the bankrupt Steward Health chain, seen here on September 19, 2024, in Ayer, Massachusetts.
Last week, the few hundred remaining employees of two hospitals in Warren, Ohio, got an email informing them they were suspending hospital admissions following a sudden rise in costs precipitated by a Houston bankruptcy court ruling.
A week earlier, the 3,200 employees still working for the gutted Crozer Health system outside Philadelphia received an email wishing them a happy “Employee Appreciation Day” in spite of the fact that they would all be imminently losing their jobs, thanks to the ruling of a bankruptcy judge in Dallas.
A week before that, the Yale New Haven Health system signaled it was backing out of a deal it had made in 2022 to buy three Connecticut hospitals, in a statement characterizing the facilities’ condition as so degraded from years of failing to pay vendors as to render the transactions “impossible.” And a hospital on Florida’s central coast announced it was shutting down next month, blaming “years of neglect [that had] left the facility in such poor condition that it did not meet the system’s standards for patient-care environments.”
The stock price of MPT has, unlike virtually every security in your portfolio, been surging.
Just a few weeks before that, doctors and nurses in South Florida showed up at a Hialeah City Council meeting to beg authorities to intervene in the management of five struggling hospitals in the region that they said haven’t been paying their anesthesiologists or obstetricians and have been routinely delinquent on pay to nurses and other staffers. The hospitals have also been reportedly threatening to shut down the area’s last remaining maternity ward, which delivered 1,400 babies last year, and a linen supplier recently filed a motion threatening to repossess all five hospitals’ sheets, scrubs, hospital gowns, and towels in retaliation for over $2.6 million in unpaid bills.
And on January 6, the only hospital in Sharon, Pennsylvania, a scenic former mill town on the Ohio border near Youngstown, shut its doors and laid off roughly 850 staffers, many of whom had worked at the hospital for three or four decades, though authorities promised the facility would reopen under new management in the very near future. (They’re still waiting.)
Thirteen of these hospitals on the brink of closure are owned or predominantly financed by Medical Properties Trust, an Alabama real estate investment trust that calls itself “the very heart of healthcare”; the 14th was owned by MPT until a bankruptcy sale six months ago. MPT acquired the hospitals from private equity–ravaged hospital chains in dubious transactions designed to enrich or conceal the insolvency caused by insiders taking all the money.
What’s puzzling is that the stock price of MPT has, unlike virtually every security in your portfolio, been surging. Since the start of the year, MPT shares, which trade under the ticker MPW, have jumped more than 50 percent, while the S&P 500 index has fallen. That’s despite the bankruptcy filing in early January of yet another of its biggest tenants, looming deep cuts to Medicaid funding that are poised to devastate hospitals that predominantly treat elderly and lower-income patients, the saber-rattling rhetoric against MPT of politicians from Gov. Josh Shapiro (D-PA) to Sen. Chuck Grassley (R-IA), sell or hold recommendations from 11 out of 12 of the equity analysts who cover it, and a credit rating deep in junk territory that ratings agencies have downgraded twice over the past year.
In late January, however, MPT scored something of a coup: It convinced creditors to refinance $2 billion in bonds that were coming due for repayment on shockingly sweet terms. While similarly creditworthy companies are generally paying interest rates of 12.5 percent, underwriter Goldman Sachs convinced Silver Point Capital, GoldenTree Asset Management, and other institutions to not only lend to MPT at a downright charitable 8.5 percent, but to largely scrap a no-brainer covenant that would have restricted MPT’s ability to pay dividends to common stockholders. Retail investors stampeded back into the stock, which has a tantalizing 8.5 percent dividend, confident that MPT will find cash left over after paying its roughly $500 million in annual interest expenses to give them a $200 million annual handout as well.
What MPT decisively does not have any money left over for is keeping the doors open of the hospitals at the supposed “heart” of its business.
BACK IN SEPTEMBER, MPT AGREED to take over the operations of 17 hospitals bankrupted by its tenant Steward Health, as part of a settlement to end litigation alleging the illegal extraction of billions of dollars out of said hospitals. Under the terms of the settlement, MPT agreed to find new operators for the hospitals while Steward focused on the hard work of bullying creditors into dropping claims against them and frustrating the federal criminal investigation into its activities.
But the attorneys and advisers who run such affairs are not cheap—its bill for professional fees had topped $186 million by January—and by fall the hedge funds fronting the cash to foot the bankruptcy bills decided they needed more revenue from the estate. Some of that money would come from Steward’s former workers and patients: The estate is allegedly holding hostage more than $60 million in deferred compensation employees had placed in retirement funds, along with the assets of a captive malpractice insurer to which it has failed to make premium payments for eight years. It has also tried to wring bailout funds from various governments, suing to collect a 100 million euro termination fee it claims the government of Malta owes Steward for kicking the company out of the country and suing it for fraud, along with $22 million it claims it is owed by the state of Massachusetts under a succession of bailout facilities the state created to ward off the hospitals’ closure. (The state has said it expects the bill for bailing out Steward’s hospitals to ultimately reach $700 million, but the cost has already exceeded that, at $786 million, according to an internal communication reviewed by the Prospect.)
But mostly, Steward’s lenders have returned to MPT to squeeze the cash to pay their legal bills, negotiating about $65 million in concessions and payments from the REIT to compensate for some buildings it had pledged as collateral, and demanding extra cash from MPT’s hospitals in what it described in a filing as a determination that it would need to generate an “incremental” $30 million in “transition services” revenue during the first quarter of 2025.
Health care workers, community organizers, and local nonprofits have been scrambling to fill the gaps.
This seems to have wreaked chaos throughout health care systems across the country. A hospital in Hope, Arkansas, claims it was told it would not be able to access patient medical records unless it agreed to a 380 percent hike in the monthly cost of its transition services, to $120,000 a month from $25,000. An executive from Insight Health, the operator MPT handpicked to run two former Steward hospitals in Ohio and a trio of former MPT hospitals in New Jersey, blamed the same price hikes for a sudden decision to suspend all non-emergent admissions to its hospitals earlier this month. And the company MPT tapped to run eight former Steward hospitals in Florida, Louisiana, and Houston alleges that Steward’s lenders had since December withheld $32.9 million in mostly Texas Medicaid funds, invoiced for more than $6.2 million in fake or non-itemized services, and even billed the hospitals for tens of thousands of dollars in fees assessed by Steward’s attorneys and restructuring advisers.
Health care workers, community organizers, and local nonprofits have been scrambling to fill the gaps. A western Pennsylvania nonprofit footed a $90,000 bill to repair the climate control systems at the Sharon hospital; the nurses’ union in Rockledge, Florida, launched a grassroots lobbying campaign to pressure the new owners into keeping the hospital open; and last week, after a bizarre public shaming from Gov. Shapiro, a local nonprofit agreed to float the operations of the Crozer hospital system, from which MPT’s private equity conspirators had extracted well over $100 million after acquiring it in 2016, for two more weeks.
Perhaps most infuriatingly, Pennsylvania earlier this year quietly agreed to essentially abandon a pair of lawsuits filed last fall against MPT and some of its private equity collaborators, giving up workers’ and patients’ last chance at clawing back any of the spoils of what then-acting Attorney General Michelle Henry had termed a “corporate looting” when she filed the Crozer case. Messages left with the state’s newly elected attorney general Dave Sunday were not returned, and the Prospect wasn’t alone; The Philadelphia Inquirer also noted the refusal of officials in both the offices of the governor and the AG to respond to questions “about whether officials had tried to get money for Crozer from Sam Lee and David Topper, two Prospect [Medical Holdings] owners and executives who collected $160 million in dividends funded by debt that was loaded onto Prospect hospitals.”
But two community leaders in regions with MPT-ravaged hospitals told the Prospect that state officials had been under extreme pressure from MPT and its surrogates to cease and desist all antagonistic rhetoric about the REIT and its glorified shell company operators, lest they shut down the hospitals entirely. In the interim, they say, many have grown to realize that something is not always better than nothing. Healthcare Systems of America (HSA), the operator that assumed the reins at Steward hospitals in Florida, Louisiana, and Texas from MPT, has been late on paychecks, and in January a 29-year-old patient died of hypothermia after being locked out on a roof at one of its facilities. In a December deposition recently filed as Exhibit F in another former MPT hospital system bankruptcy, an official of the company MPT assigned to run Steward’s Ohio hospitals said he’d been ordered to conserve cash by swiping employees’ payroll taxes from their paychecks—which were in turn being liberally subsidized by the state of New Jersey. An attorney for another firm, Tenor Health, that MPT handpicked to manage a hospital in Pennsylvania accused the aforementioned HSA of stealing its employees’ payroll taxes, after having conceded in another filing that he, too, had in an earlier life helming a now bankrupt MPT-affiliated hospital chain been habitually “behind” on his payroll taxes, because MPT CFO Steve Hamner refused to advance the hospital money to buy supplies.
“I’m afraid that too many people viewed private equity as just a player in the American economy and whatever they do to any sector of the American economy, it’s just part of the way the American economic system has evolved,” Sen. Ed Markey (D-MA) told the Prospect last year when asked why none of MPT’s top executives faced any accountability.
But in keeping with this “evolution,” perhaps another reason MPT and its stock have enjoyed such good fortune in recent months could be linked to two shadowy and unlikely figures who recently made enormous investments in the REIT’s shares.
DANIEL YET, A FOOD WHOLESALER who recently moved to greater Houston after four decades in the San Francisco Bay Area, was the first to start plowing into the stock back in September, ultimately amassing more than 52 million shares worth well over $300 million. Little is known about Yet in this country, but in Vietnam’s An Giang province, west of Ho Chi Minh City near the Cambodian border, 33 fish farming families are still smarting from a late-2000s scam that involved a multinational operation called Anvifish where Yet was a top executive.
Anvifish matched Vietnamese fish farmers with banks to secure a steady supply of pangasius, a type of large catfish indigenous to the Mekong Delta that exploded in popularity during the late aughts. The banks loaned the farmers money to dig and expand ponds for raising the fish and pay for fish food, and Anvifish imported the fish to restaurants across the United States, where Yet, the co-owner of Anvifish USA and a 10.67 percent shareholder in the Vietnamese company under the name Diep Vinh Xuan, had lived for decades by that point. He successfully secured the group an exemption from an anti-dumping tax most Vietnamese fish farms had been forced to pay under pressure from the American catfish industry, and for years Anvifish was the “darling” of the country’s seafood industry, processing 250 tons of seafood per day at its peak according to a 2021 report. At the end of each month, Anvifish was supposed to pay for the fish they had harvested and delivered to the company’s massive processing plants. But the payments stopped showing up, and in 2014 the CEO of Anvifish, Luu Bach Thao, sold his shares and left Vietnam for the United States to seek “medical treatment” at an unspecified facility, dissolved Anvifish USA, and allegedly left the fish farmers without pay for some $5 million in seafood they had delivered, and eight banks on the hook for roughly $43 million in bad loans. The Hanoi Stock Exchange “blacklisted” the company’s shares in 2016 after it refused to release audited financial statements.
An investigation led to the indictment in Vietnam of Luu and four other co-conspirators, whose import-export companies allegedly falsified 100 loan documents that enabled the men to strip Anvifish of its assets and wire them offshore. Yet was not indicted, despite serving on the board of the parent company and co-owning the American subsidiary, and news reports on the case do not suggest he played a role in defrauding the banks or fish farmers.
Food wholesaler Daniel Yet was the first to start plowing into the stock back in September.
Yet’s wholesaler D&T Foods, which has been based in Santa Clara, California, since 1989, also has a sketchy past. In 2001, the company was indicted on federal felony charges of causing meat and poultry products to become adulterated after food safety inspectors reported harrowing conditions inside its warehouse, amid a nationwide crackdown on rogue meat wholesalers coinciding with the mad cow disease scare. Adam Braun, a former assistant U.S. attorney who visited the warehouse 24 years ago in conjunction with the case, recalled vividly the stench of spoiled fish and sight of ubiquitous rat droppings inside the facility. Yet and a business partner both pled guilty to misdemeanor charges in the case.
A few weeks after Yet announced his stake in the hospital landlord in a securities filing, a Houston-based former math professor named He Zhengxu announced that he, too, had piled into the stock, of which he now owns more than 42 million shares worth close to $250 million. Reached on his mobile phone last week, He encouraged the Prospect to call him “John He” and said he was attracted to MPT for its rich dividend yield.
He—pronounced “Huh” in Mandarin—emigrated to the United States from China in the 1980s as a graduate student and taught mostly at the University of California San Diego until 2005, at which point he decamped for a post at the Chinese Academy of Sciences in Beijing while maintaining a home in Reno, Nevada, with his wife Ying Fang and their then young daughters. In 2007, the couple incorporated a nonprofit foundation, through which they invested millions of dollars in an unusual grab bag of stocks, many of them obscure and thinly traded. Over the years, he amassed and sold off sizable stakes in the supermarket chain Winn-Dixie, a couple of mid-cap oil and gas firms, a Taiwanese semiconductor testing firm, a few decidedly old-economy newspaper and phone book marketing plays, and a succession of lesser-known real estate investment trusts. But until MPT, his biggest transactions were valued in the low eight figures.
MPT does share one salient characteristic with two of He’s least auspicious investments: a REIT called Uniti Group that holds the cellphone towers and copper networks of the rural telecom provider Windstream Communications, and another REIT called Seritage Growth Properties created to hold the real estate assets of the distressed retailer Sears. Both companies extracted inflated rents from their flagship “tenants” that ultimately drove those tenants into bankruptcy, causing their stocks to plunge.
In 2019, Windstream filed for bankruptcy protection and He sued Uniti for securities fraud, eventually getting himself named lead plaintiff. By that point, He had been named as a lead plaintiff in a half-dozen securities lawsuits, most involving dubious spinoffs of larger companies. In July 2024, he sued Seritage on similar grounds; around the same time, he began buying shares of MPT.
MPT was luckier—and its tenant hospitals far unluckier—than Uniti and Seritage, however. When Uniti’s $650 million-per-year rent obligations plunged its sister telecom’s finances into the toilet, Windstream sued Uniti on grounds that its “lease,” by which it was being forced to fork over a yearly escalating rent for the privilege of using increasingly worthless copper wire assets, was actually a predatory “disguised financing.” A federal judge agreed, which ultimately enabled the telecom to push its landlord down the priority list of creditors and discharge $4 billion in debt in bankruptcy.
MPT’s biggest tenant, the aforementioned hospital chain Steward Health, made the same argument when it filed for bankruptcy protection last May. That’s because MPT’s lease payments had been calculated not upon the basis of any sort of appraisal standards, but on the desire of Steward’s private equity owners to generate a billion-dollar return on their “investment” in the chain; and when the hospitals were too broke to make their first rent payment, MPT simply lent Steward the rent money, eventually causing the hospital chain’s rent obligations to balloon to $450 million a year even as repo men collected everything from medical devices to luncheon meats.
But MPT had allowed many of its tenants to borrow far in excess of rent money; with its “capital improvement” and “working capital” loans, Steward founder Ralph de la Torre had purchased a $42 million super-yacht and luxury estates across the world, along with a security detail befitting a drug kingpin. So after initially challenging the validity of MPT’s bogus leases, Steward backed off and agreed to a settlement in September whereby MPT agreed to assume the responsibilities of operating 15 hospitals no one wanted to buy.
MPT’s stock soared on news of the deal, only to tumble back down as investors digested the reality that the REIT had nothing approaching the cash required to actually operate the hospitals. That’s when Yet and He started snapping up shares.
How these two low-profile gentlemen came up with the funds to finance their nearly half-billion-dollar combined investment in MPT is a head-scratcher. Yet’s seafood wholesaler D&T employs 24 staffers and generates about $7.5 million in annual revenue, according to Experian Business Services; the biggest transaction in which he has publicly engaged is the sale of a vacant property owned by one of his real estate partnerships in San Jose for $6.9 million in 2023. And while He has owned stakes in companies valued as high as $20 million in the past, he declared in 2022 under penalty of perjury that his income totaled just $10,000 a month, in an application for criminal indigent status he filed after local police arrested him for punching and threatening to kill the mother of his then 17-month-old child at the house they apparently shared in Odessa, Florida. He told the Prospect that the case was a personal matter that was dropped.
He said on the application that his sole source of income at the time was the earnings from three businesses he owned in Tampa, presumably a reference to nightclubs he co-owned with various area promoters he would later accuse of defrauding him. He made no mention of his home and assets back in Reno with his presumably estranged wife. The following year, He moved to a condo in Houston and incorporated a number of entities that appear to be hospitality-related, including something called Tyshin, Inc., he formed in partnership with Sun Jiang, a moderately prolific sushi restaurateur.
Both Jiang and Yet now live in Sugar Land, Texas, an affluent suburb about 20 miles southwest of Houston. Perhaps coincidentally, so does Steve Hamner, MPT’s chief financial officer of more than 20 years, whose stately 5,300-square-foot home is about four miles from Jiang’s home and Tyshin headquarters.
WHATEVER THE CASE, THE UNUSUAL TRADING ACTIVITY is just the latest in a long string of five-alarm red flags enveloping the business practices of MPT, an entity the Prospect has investigated in depth for years.
Virtually wherever MPT has acquired health care facilities, you will find a trail of bodies. There’s been a raft of preventable deaths at the Priory mental hospital chain in the United Kingdom the company now lists as its second-biggest tenant, which pays more than $100 million a year in rent to MPT it might otherwise spend on proper staffing. The Boston Globe last year published detailed profiles of 15 preventable deaths at Steward hospitals directly caused by the corner-cutting and understaffing required to keep up with that bankrupt company’s nearly half-billion-dollar rent check. A dementia patient died at a desperately understaffed Wyoming hospital forced to pay $6 million a year in rent to MPT after being attacked by a psychiatric patient whose wife had admitted him after he’d tried to strangle her, and the hospital told staffers it didn’t have enough money to install locks on the doors—much less hire a security guard—mere months after its owner, Apollo Global Management, booked a $1.6 billion gain on its “investment” in the chain. MPT has repeatedly and emphatically claimed its rents are not the source of its tenants’ financial distress, but Steward’s (admittedly also overpaid) bankruptcy lawyers disagree, having argued in multiple filings that its rent bills “have crippled” the company “for years.”
MPT executives, whose compensation was calculated on the basis of the REIT’s deal volume, explicitly encouraged hospital bosses and private equity firms to gorge themselves on easy money in these transactions that left the hospitals with their ruinous rent obligations. Cerberus Capital Management and Leonard Green & Partners together pocketed roughly $1.5 billion for investors selling their hospital buildings to MPT. Steward founder and CEO Ralph de la Torre allegedly skimmed some $250 million out of the company in the four years before its collapse. Prospect Medical Holdings founders Sam Lee and David Topper allegedly pocketed more than $195 million from the hospitals in Pennsylvania and Connecticut that are now closing or on the brink.
In remarkable messages recently released by the Senate Budget Committee to the ownership of the Prospect hospital chain, which had literally zero cash on hand when it sold its buildings to MPT in 2019, Hamner assured Prospect’s leadership that his firm would never “constrain the parent operator by limiting the amount of parent level debt” a tenant took on, bragging that MPT had “never been unable to satisfy even the most demanding of leveraged lenders who provide financing to our sponsor-backed lessees.” Not long afterward, when Leonard Green, having taken its half-billion dollars in profits, was looking to offload its controlling stake in a deeply insolvent hospital chain no one would ever buy, Hamner sent an email to Sam Lee offering to finance his buyout of the private equity firm’s stake, as MPT had previously done at Steward and other hospital chains. “I would appreciate the opportunity to visit you in your office to describe how we have [provided] real estate financing to help hospital management teams maximize ownership in their operating companies when their private equity sponsors consider exits/IPOs,” he wrote. “I expect to be in LA next week and will be happy to arrange my schedule to meet at your convenience.”
If Hamner sounded a bit too eager, there was a good reason. The Securities and Exchange Commission had been badgering MPT to disclose in its own filings the financial statements of Steward, which with nearly 40 hospitals was in 2018 operating 39.5 percent of MPT’s assets. By increasing MPT’s exposure to new tenants like Prospect, Hamner could bring its exposure to Steward back down to levels at which regulators might leave him alone.
And ultimately, that’s what they did. Last February 29, following nearly a decade of near-constant communication with MPT over its failure to provide financial information on its largest tenants, the SEC sent MPT a letter announcing it was ceasing its efforts entirely. “As you have not provided a substantive response, we are terminating our review and will take further steps as we deem appropriate,” the agency wrote to Hamner. No such steps would materialize. Seven weeks later, Steward would file for bankruptcy protection, listing some $1 billion in assets and nearly $10 billion in liabilities; seven months after that, Prospect would file with well over $2.3 billion in liabilities and less than $3.4 million cash on hand. The two companies collectively owed nearly $10 billion to MPT, virtually none of it recoverable.
And yet somehow the hospital landlord made the crises work in its favor. Vendors were forced to continue servicing its hospitals in hopes of finally, one day, earning a small payout. A glacial criminal investigation into de la Torre’s plunders never expanded to include its chief enablers in Alabama. Massachusetts set the tone for all the other states by committing $700 million to stabilizing its five Steward hospitals it deemed worthy of keeping afloat. Pennsylvania and New Jersey both forked over millions per month to keep the lights on in REIT-ravaged hospitals in their states. And as her state legislature was considering legislation to enact tough new limits on for-profit health care investment in the state late last year, Massachusetts Health and Human Services Secretary Kate Walsh even told a local news program she’d happily do it all again.
“I might take a position that you would might not expect me to take because of what we’ve just been through,” she began. “But I think that the word private equity—substitute private equity for Bank of America. Hospitals are capital intensive resources. They need investment dollars.” Even if all that “investment” kills patients, and ultimately the hospitals themselves.
Correction: An earlier version of this story placed the cost of fixing the Sharon hospital's HVAC system at $900,000. That was a typo; the real cost was just over $90,000. We regret the error.
