A Providence Journal editorial that was abruptly deleted after briefly appearing on the newspaper's Web site last week has reignited charges that Rhode Island's largest health-care provider is mishandling its finances.

The lengthy editorial criticizes Lifespan's 1997 purchase of the New England Medical Center in Boston and questions its March 2001 purchase of the Coro Building in Providence. It also calls upon Rhode Island Attorney General Sheldon Whitehouse to investigate the health-care giant's handling of charitable funds.

Formed in the midst of consolidation of the hospital industry, Lifespan was established with the 1994 merger of Rhode Island Hospital and The Miriam Hospital. Since then it has grown to become a $1.2 billion non-profit corporation by acquiring Emma Pendleton Bradley Hospital in East Providence, New England Medical Center, Newport Hospital in Newport, the Visiting Nurses Association of Rhode Island, and Hospice Care of Rhode Island. According to its annual report, Lifespan lost $34.3 million on its operations in fiscal 2000, but had an income of $34.6 million thanks to its sizable endowment.

Entitled "Questions for Lifespan," the editorial critical of Lifespan's financial management appeared early Thursday, November 29 on the Journal's Web site. It was scheduled to appear in the print version of the newspaper on the same day, but was replaced by a lengthy editorial about the recession. Although the Lifespan editorial was removed from the Web site later in the morning of November 29, it remained in the newspaper's electronic archives -- available to anyone with an Internet connection -- until vanishing before mid-day on Tuesday, December 4. Although the editorial was never published in print, the electronically archived version indicated that it had been published on page B-6 on November 29.

During the past week, printouts of the editorial have circulated from hand to hand in the Rhode Island Department of Health and Lifespan institutions. While the Phoenix was unable to learn why the editorial was pulled from the Web site and never published in the newspaper, the Journal's actions sparked renewed charges that Lifespan executives are using funds to build an empire, rather than providing Rhode Islanders with good health-care.

Journal editorial board member Froma Harrop confirms that she wrote the editorial. She first became aware it was not to be printed was when she came to work Thursday, November 29, and discovered it was not in the newspaper. A 15-year Journal employee, Harrop writes unsigned editorials twice a week and authors a biweekly column that appears in the Journal, Philadelphia Inquirer, Seattle Times, and other daily newspapers. She is noted for her liberal views on health-care issues.

Harrop refused to say why the editorial did not appear, but states, "The publisher [Howard G. Sutton] does have the right to pull or change anything he wants." After editorial page editor Robert Whitcomb prepares the opinion pages, Harrop relates, they are printed on "stats" every day and reviewed by Sutton. "They're his pages -- he's the publisher," she adds.

Asked about the editorial controversy, Whitcomb quickly responds, "I'm sorry, Steve, I can't talk to you. Bye-Bye," and he hung up. In keeping with past practice, Sutton failed to respond to a phone call from the Phoenix.

The disappearance of the editorial follows a growing trend toward self-censorship at the Journal since the Dallas-based Belo Corporation purchased the newspaper in 1997 (see "Disappearing ink," News, November 23, 2000). In the one instance, the newspaper delayed publication of a column critical of the :CueCat, a since-failed computer peripheral backed by Belo to the tune of $37.5 million, by Wall Street Journal technology columnist Walter Mossberg.

Morale at the Journal, already damaged by a bitter labor dispute between management and the Providence Newspaper Guild, has been worsened by the recent implementation of a buyout that has thinned the newspaper's journalistic resources. And in the aftermath of an episode earlier this year in which a reporter was taken off a domestic violence after complaints from a source (see "ProJo editors cave on reporter after subject complains," This just in, August 2), many insiders remain troubled by the Journal's direction.

Harrop says her suggestion of an editorial on Lifespan's finances was approved at a daily 10 a.m. editorial board meeting. She is "comfortable" with the piece critical of Lifespan, adding, "Obviously, I wanted to go with it or I wouldn't have submitted it."

Editorials she has authored have been killed in the past, she notes, but not often.

"It's a very fine editorial board," Harrop says, "and I think the Journal has a first-rate editorial page."

The Phoenix obtained a copy of the editorial from several sources, including the Journal's electronic archives. It begins, "Why, Rhode Islanders might ask, are we sending $8.7 million a year to a money-bleeding hospital in Boston?" After noting that Lifespan "is supposed to be a `charitable organization' -- not a company," the editorial attacks the health-care conglomerate's 1997 acquisition of New England Medical Center (NEMC), a Boston-based hospital. According to health department records, Lifespan has transferred $34 million to NEMC since 1998 and is committed to send another $52.2 million ($8.7 million a year over the next six years).

Although controversial at the time, the NEMC deal was made when hospitals throughout the US were seeking merger partners to strengthen their bargaining positions with insurance companies. Only large networks of hospitals would have the strength to negotiate adequate insurance reimbursements necessary to survive financially, experts believed. Lifespan officials defended the purchase at the time as a key entry into the Boston health-care market -- a step, they said, that would help the corporation's Rhode Island hospitals to survive.

After comparing Lifespan's payments to NEMC to the American Red Cross's short-lived plans to divert donations for the victims of the September 11 terrorist attacks to other needs, the ProJo editorial notes, "The funds being sent to Boston include charitable donations that had been made out to Rhode Island institutions. Did Aunt Tilly in Cranston give money to Bradley Hospital thinking that it would end up in Boston?"

Next, the editorial criticizes the Lifespan-orchestrated purchase of the massive Coro Building by Rhode Island Hospital for $28.8 million in March 2001. Located in Providence's Jewelry District, the building was owned by Coro Center Partners, according to health department documents, a Rhode Island limited partnership whose general partner is developer Richard Baccari. At hearings, Rhode Island Hospital president Joseph Amaral defended the purchase as necessary to provide space for research, administration and laboratory, radiology, and other clinical services at a large building near Rhode Island Hospital.

Like Harrop, however, the health department's Health Services Council expressed serious reservations about the Coro building purchase in an October 2001 report. "Significant hospital funds ($28 million) have been invested in outpatient off-campus uses when timely investment for core inpatient clinical services has been delayed," the council concluded. Negotiations to buy the Coro Building began in February 2001, the council's report noted, and a purchase and sales agreement was quickly reached by August 1, 2001. Yet Miriam Hospital intensive and cardiac care unit improvements, which were proposed at the same time, were debated internally by the Miriam and Lifespan for two years before being submitted for health department approval, the council noted. And needed improvements in the Jane Brown Building and the Main Building at Rhode Island Hospital, identified by a consultant in 1997, have not begun.

Harrop's editorial also questions why Lifespan would make deals with Baccari. A controversial developer long identified with the now-defunct Downing Corporation, Baccari gained notoriety in the late 1980s and early 1990s for making tens of thousands of dollars in political contributions, failing to pay the state concessionary fees on leased parking facilities at T.F. Green Airport, and owing the City of Providence hundreds of thousands of dollars in back taxes. He also, as the editorial notes, lost his state license to operate Liberty Honda and Chevrolet in Providence in 1994 after allegedly selling saltwater-damaged cars, knowing that their warranties had been cancelled.

"More shocking," than doing business with Baccari, the editorial states, are the details of the Coro Building sale. In addition to the sale price, the editorial notes -- a detailed confirmed by a copy of the purchase and sale agreement on file at the health department -- is that Lifespan loaned Coro Center Partners $60,000 to pay its mortgage. In addition, the agreement includes a Property and Construction Management Agreement that guarantees Churchill & Banks, a Rhode Island corporation headed by Baccari, $250,000 a year to serve as property manager and six percent of renovation costs to serve as construction manager.

"Who at Lifespan is behind all these questionable dealings is not certain," the Journal editorial states. "The name that comes up most often, however is former Lifespan chairman and current board member Bruce Selya."

Appointed to a federal judgeship by President Ronald Reagan on the recommendation of the late US Senator John Chafee, Selya currently sits on the US Court of Appeals for the 1st Circuit in Boston. A close advisor to Chafee when he was governor, Selya was also once one of Baccari's business partners, as the editorial notes, and chairman of the Bryant College board of trustees from 1986 to 1992.

In 1984, Baccari, Selya, and state Senator Jack Revens (D-Warwick) purchased the 44.6-acre Black Point property in Narragansett, according to a 1989 Journal article. They then threatened to develop it, forcing the state to seize the land. After a seven-year court battle, Judge Thomas Needham ruled in 1996 that a fair sale price was $6.1 million.

Without documenting any current link between Selya and Baccari, the editorial then tackles another subject. "Isn't there also at least a conflict-of-interest question about having a powerful judge serve as chairman and board member of Lifespan?" the Harrop piece asks, observing that "boards are heavily weighted with businesspeople who might have to appear in Judge Selya's court at some point."

The editorial then closes with call for Attorney General Whitehouse, as guardian of charitable funds, "to do his job and find answers to unsettling questions." Whitehouse spokesman Jim Martin says Whitehouse has neither seen the editorial nor been contacted concerning its content. "We would not comment on an editorial. It's someone's opinion," Martin says. "It's someone's opinion which the Providence Journal chose not to publish."

Another article containing criticism of Lifespan was also killed by the Journal last week, according to sources both inside and outside the newspaper. A column by deputy managing editor Peter Phipps, discussing the removal of Barnet "Bunny" Fain as Lifespan's chairman, was reportedly scheduled to appear on Sunday, December 2.

Responding to a request for comment, Phipps left a message, saying, "I am in no position to comment. I appreciate your call, but you should talk to somebody else here --not me -- if you want to talk about that subject."

Issue Date: December 7 - 13, 2001