[Ellen]

I guess your phal is a hybrid (the tag looks like some sort of cross) but it looks like it has a lot of characteristics of a species like schilleriana. This and other phal species grow best when mounted because they don't like to have their roots contained. The usual hybrids seem to tolerate it fairly well, and I grow them in both sphag and bark mix, not a lot of difference in how well their roots do. The problem, as another person pointed out, is not the medium, but the culture.

The "before" picture shows a lot of broken roots, which I assume you removed for the "after" pic. They haven't been dead long. My guess would be that the vendor took the plant out of a plug tray or some such growing arrangement and crammed it into the sphag right before shipping it to you, breaking most of the roots in the process. The turquoise colored discoloration on some of the roots suggests that it might have been dipped in some sort of copper-containing fungicide solution. The good news is that phals are resilient, and will grow new roots pretty quickly. Good luck with the plant.