PROVIDENCE, R.I. (WPRI) — Lifespan President and CEO Dr. Timothy Babineau is stepping down at the end of May, marking a monumental shift in leadership at Rhode Island’s largest hospital group.

Lifespan’s board of directors announced Thursday they had accepted Babineau’s resignation, saying he would stay on as a consultant through the end of September. Babineau would have reached his 10-year anniversary as CEO in August.

“Dr. Babineau has led Lifespan with integrity, vision, and courage for the last decade, particularly during the last two years of the pandemic,” Lifespan Chairman Lawrence Aubin Sr. said in a statement. “Thanks to his leadership, Lifespan has risen to new heights and has become the pre-eminent health system in the state and region.”

The board announced it would appoint an interim in the “coming weeks” and conduct a national search to find his successor.

While the reason for his departure wasn’t made immediately clear, Babineau’s announced resignation comes two months after the latest attempt to merge Lifespan and the state’s second largest hospital system, Care New England, fell apart.

The deal — which also included a partnership with Brown University — broke down in February after the Attorney General Peter Neronha and federal regulators moved to block it, arguing the merger would have created an unfair monopoly controlling about 80% of the state’s hospital market share.

In a statement, Lifespan leaders said part of what had attracted Babineau to Rhode Island was the “promise and opportunity to bring Lifespan, Care New England and Brown University to create a Rhode Island-based, integrated academic health system that will improve quality, access and affordability of health care for all Rhode Islanders, a vision that unfortunately did not come to fruition.”

But the collapse of the CNE merger isn’t the only challenge facing Lifespan. Last month the hospital group disclosed that it’s facing a $63 million operating loss for the current fiscal year, which ends Sept. 30. Executives had expected a $44 million operating profit when they crafted their budget last year. Rising expenses and lower-than-expected revenue are among the drivers of the loss.

However, Babineau and his leadership team emphasized to bondholders that the $63 million loss isn’t a foregone conclusion, and that they have taken steps to try and stem the red ink. Those include the creation in January of a new “Transformation Office” tasked with improving operations and profitability.

In his statement Thursday, Babineau expressed optimism about the outlook for the organization.

“I joined Lifespan because I thought I could make a difference and I was impressed with the compassion, intelligence, and experience of those who work here and the quality of care provided to our patients,” he said. “Despite some recent challenges brought on by the pandemic, Lifespan is well positioned for continued future success on its journey to achieve the vision set forth in Lifespan 2025, our organization’s strategic plan.”

“I am incredibly optimistic about Lifespan’s future and feel gratified to be leaving it on sound footing,” Babineau added.

The timing of Babineau’s departure may come as a surprise to many, as he has recently suggested he was in no hurry to step aside. Last month, he described leading Lifespan as “the best job in Rhode Island,” saying he was ready to serve for more years to come.

“As long as the board will keep me around for a few more years, I’m happy to be here,” Babineau told 12 News at the time.

Regardless of the specific reason for his departure, Lifespan board members and other health and educational leaders praised Babineau for his leadership at the hospital group, which includes Rhode Island, The Miriam, Newport and Bradley hospitals.

“Over the past decade, Dr. Babineau led the way transforming Lifespan into a world class academic health system,” said Dr. Ziya Gokaslan, a Lifespan board member.

Brown President Christina Paxson said it was a pleasure to work with Babineau, adding that his leadership helped deepen the working and research partnership between the university and Lifespan.

“His dedication to elevating the quality of care for patients has been a great asset to Rhode Island, and the role he has played in identifying solutions to confront issues affecting population health — especially throughout the COVID-19 crisis — has demonstrated the immense importance of strong leadership to support the well-being of the people of our state,” Paxson said in a statement.

Lifespan credited Babineau for recruiting world-class physicians to Rhode Island, improving public, private and academic partnerships to advance public health, and his leadership throughout the coronavirus pandemic that took an exceptional toll on the health care industry.

The hospital group also highlighted that he helped fundraise $211 million, which recently included $42 million for Hasbro Children’s Hospital — the largest capital campaign in Lifespan’s history.

It wasn’t immediately clear what’s next for Babineau, who turns 62 next week. IRS filings show he earned $3.2 million during the 12 months ended Sept. 30, 2020.

“My initial impressions of Lifespan and our workforce have not only been validated but exceeded repeatedly over the years,” he said. “It’s been nearly 10 years since I took this role, and while it has been difficult at times, it has been an extremely rewarding experience. It is hard for me to put into words the incredible honor and privilege I have been given over these past several years to lead such an incredible organization.”

Ted Nesi (tnesi@wpri.com) is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter and Facebook

Eli Sherman (esherman@wpri.com) is a Target 12 investigative reporter for 12 News. Connect with him on Twitter and on Facebook.