PROVIDENCE, R.I. (WPRI) — Rhode Island’s major hospital groups gave their millionaire chief executives big pay increases during the first year of the pandemic, Target 12 has discovered.
Newly obtained IRS filings reveal that Rhode Island Hospital parent corporation Lifespan paid $3.9 million to its president and CEO, Dr. Timothy Babineau, in 2020 — a 22% raise from 2019, when Babineau took home $3.2 million.
Jane Bruno, a spokesperson for Lifespan, said the not-for-profit health system raised Babineau’s pay in 2020 “as a result of achieving established incentive goals” that earned him a bonus of $768,000. He had received no bonus the prior year, she said.
“The incentive goals were tied to patient experience, length of stay, employee engagement, budget performance and additional individual goals,” Bruno told Target 12. “The agreed-upon incentives are not paid out unless goals are achieved.”
Babineau saw his compensation rise in 2020 despite pledging publicly at the time that he would forego his salary to help Lifespan weather the financial crisis caused by the pandemic. It’s unclear how long he did so, but Bruno confirmed the $3.9 million figure includes the period when he gave up his base pay.
Lifespan is the state’s largest employer and owns Rhode Island, Miriam, Newport and Bradley hospitals. Earlier this week Target 12 broke the news that Lifespan suffered a $77 million operating loss during its most recent fiscal year, even after receiving roughly $300 million in pandemic relief money from federal and state taxpayers.
Babineau unexpectedly announced his resignation earlier this year, shortly after the attorney general blocked the proposed merger between Lifespan and No. 2 hospital group Care New England that Babineau had championed. His replacement as CEO, Boston Hospital executive John Fernandez, is set to take over early next year.
Lawrence Aubin, chairman of Lifespan’s board of directors, declined a request by Target 12 for an interview about Babineau’s 2020 pay package. Bruno said the board’s compensation committee came up with the number.
“Lifespan is a $2.4 billion corporation and competes for executive talent in a national marketplace,” she said. “The compensation committee engages [a] consulting firm, SullivanCotter, to guide compensation decisions for executives based on applicable IRS regulations, national norms and industry standards.”
Bruno declined to disclose how much Lifespan paid Babineau this year, including whether he received any kind of exit package on his way out. The public won’t learn how much he received until the summer of 2024, when the health system will report the number to the IRS.
Babineau was one of five Lifespan executives who took home a seven-figure pay package in 2020, along with Dr. Ziya Gokaslan ($1.6 million), Dr. Margaret Van Bree ($1.4 million), Mamie Wakefield ($1.3 million), and Dr. John Murphy ($1.1 million).
Over at Care New England, IRS filings show its president and CEO, Dr. James Fanale, saw his pay jump to $1.8 million in 2020. That was a 16% jump from 2019, when Fanale had taken home $1.5 million.
Charles Reppucci, chairman of Care New England’s board of directors, also declined Target 12’s request for an interview about its compensation decisions. (Fanale was the only executive there who made over $1 million in 2020.)
Care New England spokesperson Jessica McCarthy defended Fanale’s pay, saying he “was even more underpaid in 2019 than in 2020.” She also said, “it would have put us in an even more precarious spot if the person who knew all of the moving pieces were to leave in that important time frame.”
Asked how she would defend that level of compensation to the public at a time when Care New England was seeking large infusions of taxpayer money, McCarthy wrote in an email: “‘That level’ of compensation is actually below the fair market value for a person serving as president + CEO + [chief operating officer] + VP of Population Health + many other things.”
“If we were to add in these many other roles – as most other systems of this size have – as unique individuals with their own teams, the total cost would be significantly greater,” she continued. “Here at CNE we are extremely lean, and so we need to retain the talent that is able to hold the roles of many on their backs, as a single person. This is in addition to trying to meet the fair market pay for just the single, stated role.”
Like Lifespan, Care New England declined to disclose how much the organization paid Fanale this year. He was succeeded at the start of this month by a new CEO, Dr. Michael Wagner, an executive at Tufts Medicine in Boston.
Target 12 reported earlier this week that Care New England posted an operating loss of $34 million in the fiscal year that ended Sept. 30.
Executive pay at local hospitals has been a flashpoint in Rhode Island for years. Babineau’s predecessor at Lifespan, former CEO George Vecchione, was widely criticized when his pay package totaled $9.5 million in 2008. Target 12 later revealed that Vecchione was paid nearly $40 million during his 14 years leading Lifespan.
State lawmakers have put forward legislation to cap executive compensation at the hospitals, but the health systems’ powerful State House lobbyists have always beaten back such proposals.
Ted Nesi (firstname.lastname@example.org) 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