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Franciscan Hospital leader is dismissed

DellaRocco held post for 18 years; improper expense filings alleged

Paul J. DellaRocco led for 18 years. Paul J. DellaRocco led for 18 years.
By Liz Kowalczyk and Marcella Bombardieri
Globe Staff / July 16, 2011

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The board of Franciscan Hospital for Children in Boston, one of the country’s largest hospitals for severely disabled children, has fired its longtime chief executive, Paul J. DellaRocco, citing financial irregularities.

Board chairman Robert Needham said yesterday in written comments to the Globe that DellaRocco was “inappropriately submitting and documenting expenses.

“This type of behavior is clearly at odds with both our policies and our nonprofit mission,’’ he said. “We therefore took proactive steps to remove him from the position.’’

Needham declined to provide further details, but a public relations professional hired by the board said the hospital will not pay DellaRocco severance. He was fired Thursday.

Reached at his home, DellaRocco disputed findings that he billed the hospital for expenses he should not have.

“I have been 18 years on the job; I understand it’s sometimes important to have a change in leadership,’’ said DellaRocco, who indicated that he would fight for the severance pay he believes he is entitled to under his contract.

Chief operating officer Donna Polselli will serve as interim chief executive while the board conducts a national search for a permanent replacement.

Needham stressed that the board retains trust in the current staff to effectively operate the hospital.

“We are confident that this issue will have no impact on the hospital’s continued ability to provide outstanding care to children,’’ Needham said.

Franciscan, a 100-bed hospital and school located in Brighton, has operated largely in the shadow of larger and more famous institutions, such as Children’s Hospital Boston and the Floating Hospital for Children at Tufts Medical Center.

But Franciscan has played a crucial role in caring for children with long-term illnesses, many of them poor, including those with incapacitating brain injuries and those dependent on ventilators. The hospital has treated Haleigh Poutre, a child with severe brain damage at the center of one of the nation’s most passionate and controversial end-of-life cases.

Franciscan, which has relied on donations and state Medicaid funding to cover its costs for most of its 60-year history, had struggled financially in recent years. In 2009, the hospital laid off 40 people, or 10 percent of its workforce, and asked all employees, including DellaRocco, to take a 2 to 3 percent pay cut. Franciscan ended 2009 with a small operating profit.

Despite those troubles, the hospital had loaned DellaRocco $150,000 a year earlier to help him finance construction of a retirement home on the Caribbean island of St. Martin, according to court documents that were part of his acrimonious divorce from his third wife. In those filings, DellaRocco said the hospital’s most recent financial troubles began in 2008, the year of the loan.

The judge’s findings in the divorce, which was granted in April 2010 after a six-day trial, describe the extent to which DellaRocco’s personal spending was entwined with his professional life, though there is no indication this is what led Franciscan to fire him.

DellaRocco owns a company, Haelen Health Systems Inc., which has a management contract with Franciscan. He used Haelen’s assets to pay for many of his personal expenses, including entertainment and interest on his personal loan from Franciscan, according to Judge Dorothy M. Gibson of Middlesex Probate and Family Court in her findings of fact in the divorce. He and his wife invested more than $1.8 million in the St. Martin villa, much of it coming from Haelen, the judge wrote.

In the divorce, Gibson noted the “upper middle-class lifestyle’’ the DellaRoccos enjoyed. They honeymooned for a month in Tahiti, Thailand, Bali, Singapore, and Australia. He furnished their $950,000 Weston home with more than $85,000 in furniture, jewelry, electronics, and antiques.

DellaRocco’s compensation from Franciscan was $225,000 in the fiscal year that ended in September 2009, according to the hospital’s most recent filings with the Massachusetts attorney general’s office. His total income, including wages from the hospital, capital gains, and profits from his company, was about $674,000 in 2007 and about $348,000 in 2008.

DellaRocco said in an interview that he could not speak to the judge’s findings, because “I don‘t have the documents in front of me.’’ But he said the $150,000 loan was his bonus for 2008, which the hospital gave as a loan so that it could meet certain financial obligations required under its debt agreements.

Diana Pisciotta, a spokeswoman for the hospital, said it would not comment on the loan and other financial issues discussed in the divorce proceedings. “However, we are confident that Franciscan Hospital currently has strong policies regarding loans to staff (which require that there be a specific corporate reason for the loan) and clear conflict of interest and disclosure policies,’’ she said in a statement.

The board said that during DellaRocco’s tenure, Franciscan Hospital “carried out its mission of providing quality health care to children in a difficult economic environment, providing care to thousands of children annually and maintaining a stable budget.’’

Indeed, he was once viewed as the hospital’s savior.

DellaRocco, who was trained in clinical psychology and health administration, started Haelen to turn around hospitals and nursing homes in financial distress. He has worked with hospitals on Martha’s Vineyard and in Winthrop, Clinton, and Ludlow, among others.

He was hired by the religious order that operates Franciscan in 1994 when the hospital was close to collapse, with nearly-empty wards and $11 million in debt. A few years later, the hospital was thriving. DellaRocco was praised for his management acumen and work ethic.

The president of the board at the time called the chief executive and his staff “miracle workers.’’

A 2004 profile in the Boston Business Journal described DellaRocco rising at 3 a.m. to “get in three solid hours of work’’ before going into the office.

Liz Kowalczyk can be reached at kowalczyk@globe.com. Marcella Bombardieri can be reached at bombardieri@globe.com.

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