PROVIDENCE, R.I. (WPRI) — Rhode Island’s biggest hospital groups continued to pay big salaries to their millionaire chief executives during the second year of the pandemic, according to IRS filings newly obtained by Target 12.
The tax documents reveal that Rhode Island Hospital parent corporation Lifespan paid nearly $3.2 million to its then-president and CEO, Dr. Timothy Babineau, in 2021.
That was a pay cut compared with Babineau’s compensation package in 2020, which totaled $3.9 million thanks in part to a $768,000 bonus. The IRS filings show Lifespan’s board of directors slashed Babineau’s bonus to $50,000 in 2021.
Lifespan is the state’s largest employer and owns Rhode Island, Miriam, Newport, and Bradley hospitals. The nonprofit health system posted an operating profit of $89 million during the 2021 fiscal year.
After nearly a decade in the job, Babineau stepped down unexpectedly as Lifespan’s CEO in June 2022. His departure came soon after Attorney General Peter Neronha killed a proposed merger with No. 2 hospital group Care New England that Babineau had championed.
Lifespan has so far declined to say whether Babineau was paid any sort of exit package as part of his departure, and the nonprofit health system isn’t legally obligated to do so until it reports 2022 compensation numbers to the IRS next year.
Lawrence Aubin, longtime chairman of Lifespan’s board of directors, declined a request by Target 12 for an interview about Babineau’s 2021 pay package. Kathleen Hart, a spokesperson for Lifespan, said the pandemic had made it “especially challenging” for medical organizations to attract and retain “the best talent.”
“As a $3 billion corporation with over 16,000 employees, Lifespan competes for executive talent both regionally and nationally, which requires compensation levels in line with the median salaries for executives in similar positions in health care,” she said.
But Lynn Blais, president of the United Nurses and Allied Professionals union, expressed outrage at how much Babineau was paid.
“That’s obscene,” Blais told Target 12. “Absolutely obscene.”
“We are struggling every day to provide care for the patients,” she continued. “We are told numerous times, we don’t have the money, we don’t have the money, we don’t have the money. And to see a CEO making that kind of money as a CEO in Rhode Island — it’s just unheard of and unacceptable.”
Lifespan declined to provide a more detailed breakdown of Babineau’s compensation despite a request from Target 12. But the IRS filing shows he got $1.3 million in base pay; the $50,000 bonus; $508,000 in unspecified “other” compensation; $1.3 million in retirement and deferred pay; and $31,000 in nontaxable benefits.
About $400,000 of the $3.1 million had been reported as awarded in previous filings but was paid out in 2021, according to the filing.
The tax filing also disclosed another perk: Lifespan paid for Babineau’s membership at the University Club, an exclusive gathering place on the East Side frequented by civic and business leaders. Hart told Target 12 the hospital group paid the club $3,392 in 2021.
Babineau was one of four Lifespan executives who took home a seven-figure pay package in 2021, along with Dr. Ziya Gokaslan ($1.7 million), Mamie Wakefield ($1.4 million), and Todd Conklin ($1.1 million).
Blais rejected as “ludicrous” the argument by Lifespan officials that they need to pay high salaries to their senior leaders because of what the executives might be able to get in other places.
“Because we make the same argument — that our trauma center here in Rhode Island should be being paid the same numbers as the nurses that are working in a trauma center in Boston,” she said. “And we’re told, ‘If you want that money, work in Boston.'”
“So if a CEO wants that money — work in Boston,” she said.
Executive compensation remained more modest at Care New England, which owns Women & Infants, Kent, and Butler.
Care New England’s then-CEO James Fanale earned $1.9 million in 2021, roughly in line with his pay package the previous year, when he received a significant bump in compensation.
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 2021.)
Jessica McCarthy, a spokesperson for Care New England, said its board “works with external consultants and examines industry benchmarks for comparable organizations when setting executive compensation. Our compensation processes and decisions are consistent with IRS requirements, appropriate and aligned with other organizations.”
Care New England posted an operating profit of $16 million in its 2021 fiscal year.
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 Threads, Twitter and Facebook.