PROVIDENCE – Lifespan Corp. and Care New England Health System gave their top executives significant pay raises in 2020, WPRI-TV CBS 12 reported on Thursday.
Lifespan paid its CEO and president Dr. Timothy Babineau $3.9 million in 2020, up 22% from the $3.2 million he earned in 2019, according to IRS filings obtained by WPRI. Lifespan’s main competitor and second largest health system in the state, Care New England, also gave a raise to its CEO and president, Dr. James Fanale, who earned $1.8 million in 2020, a 16% jump from the $1.5 million from 2019.
Jane Bruno, a spokesperson for Lifespan, told WPRI Babineau received a $768,000 bonus “as a result of achieving established incentive goals.” She said the pay is determined by the board of directors’ compensation committee in collaboration with a consulting firm, SullivanCotter.
Babineau was one of five Lifespan executives to earn more than $1 million 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).
Jessica McCarthy, spokesperson for Care New England, told WPRI that the compensation is “below fair market value” for someone serving Fanale’s multiple roles.
“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,” McCarthy told WPRI. “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.”
The news comes a day after it was reported that the state’s two largest hospital systems had combined operating losses of more than $100 million for the fiscal year that ended Sept. 30.
Lifespan, which owns Rhode Island, Miriam, Bradley and Newport hospitals, lost $77 million in operating revenue in fiscal year 2022, which ended Sept. 30. Interim CEO and President Arthur Sampson in a statement blamed the financial losses on inflationary price hikes as well as “unfavorable” patient volume, which came in 9.2% below budget forecasts.
Including operating and investment declines, Lifespan’s net loss amounted to $187.6 million for the year that ended Sept. 30, a stark contrast to fiscal year 2021 when Lifespan ended in the black with an $89 million operating profit.
Care New England, which owns Women & Infants, Kent and Butler hospitals, posted a $34.2 million loss for the fiscal year 2022. By comparison, CNE ended fiscal year 2021 with a $16.1 million profit, boosted in part by $77.5 million in federal and state stimulus grants. The company allotted another $24.5 million in federal COVID-19 aid to its fiscal 2022 balance sheet, but was still unable to overcome skyrocketing staffing and supply costs, ushered in by a “third wave” of COVID in 2021, the company stated.
Both Lifespan and Care New England are also in the midst of leadership transitions due to the departures of their respective CEOs. Fanale retired as president and CEO of Care New England on Dec. 1, and Dr. Michael Wagner, former president and CEO of Tufts Medical Center, took on his role. Meanwhile, Lifespan has named John Fernandez, current president of Mass Eye and Ear and Mass General Brigham Integrated Care, as its next leader, filling the spot left after former President and CEO Timothy J. Babineau abruptly resigned earlier this year. Fernandez doesn’t start until early next year; Sampson has been serving in the role on an interim basis since Babineau left.
