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Shriners Facing Possible Hospital Closures

April 10, 2009

Faced with decreasing donations and increasing operating costs, the charity wing of the Shriners organization is being forced to consider closing almost a fourth of their of their children’s hospitals across North America.

Given their increasingly dire financial situation, the group’s director says they may have no choice in the matter.

Officials say that the organization has had to divert about a million dollars daily from their endowment fund just to compensate for their hospitals’ budget deficits.  In the last year alone the fund shrank by roughly $3 billion dollars, as an ailing economy has simultaneously weakened their financial investments and caused a dramatic drop in private donations.  Even before the current economic crash, however, the fund had already been declining.  The current crisis has merely accelerated the process.

“Unless we do something, the clock is ticking and within five to seven years we’ll probably be out of the hospital business and not have any hospitals,” said Ralph Semb, chief executive officer of Shriners Hospitals for Children, to the Associated Press.

SUPPORTERS RALLY BEFORE UPCOMING VOTE

Leaders from the group will meet this summer to vote on which of their 22 hospitals in the US, Canada and Mexico will be the first to close.  At the same time, Shriners’ supporters and hospital staff around the country are coming together to organize fundraisers and online charity drives.  Friends of the organization are going to neighborhoods and churches with buckets in hand collecting donations.

“I’ve collected $92 dollars in two days,” said 14-year Brooklyn Myers, a former patient the Shriners’ hospital in Greenville, S.C.  “Me and my mom feel like it’s heartbreaking (that) we’d have to drive all the way to Lexington (Kentucky) and we’ve made special bonds right here.”

Preceding even the social programs of the Great Depression, the first Shriners hospital opened in Shreveport, La. in 1922 as a specialty center for treating polio.  Within 40 years the organization had evolved into a nationwide hospital system and had branched out into diverse areas of specialized medical treatment.  In all, the hospitals have treated more than a million children throughout North America free of charge.

In 2007 the fraternal group came under public scrutiny amidst accusations that members had diverted money intended for the charity fund to finance private parties.  Regardless of whether the rumors were true, Semb explained, very little of the hospital’s funds today are actually raised by group today.  The majority of the hospital’s activities are financed by the interest earned on their endowment funds.

The total operating budget for the hospital system this year is $856 million, said Semb.  The annual budget rose by $100 million in both 2007 and 2008 while donations remained stagnant.  This led the Shriners’ board of trustees to close down four of their eight medical research centers and lay off some 40 administrative personnel last month.

In July, some 1,200 Shriners will meet at a conference in San Antonio to decide whether they will close hospitals in Shreveport, La; Spokane, Wash.; Erie, Pa.; Springfield, Mass., and Greenville, S.C. ““ closing a total of about 225 hospital beds if they do decide to shut them all down.  According to Semb, these hospitals have been selected primarily because they have been operating below full capacity.

Additionally, the group will decide whether their Galveston hospital ““ which has been closed since 2008′s hurricane Ike ““ should be reopened.

A NO-WIN SITUATION IN THE SHORT-TERM

Semb confessed that the prospects for these hospitals don’t look too good.  Nevertheless, he expressed optimist that the charity will be able to reorganize and consolidate expenses to hopefully start rebuilding the endowment fund.  Meanwhile though, hospital closures seem to be the only viable option in the short term.

While members will choose between keeping all the hospitals opened or introducing a nationwide 30% budget cut, Semb argues that both options are dead-end streets for the organization.  In the long-run, it is imperative that the endowment fund start growing again ““ something that is extremely unlikely in the immediate future given the current state of the economy.

According to The Center on Philanthropy at Indiana University, individual and group donations of more than $1 million have been steadily declining since 2007, with a dramatic drop in the final two quarter of 2008.  Even in the relatively prosperous 1990′s, however, donations to health care organizations have grown much more slowly than other areas, said Melissa Brown, associate director at the Purdue-based center.  She believes that the decrease in donations to groups like the Shriners may be the result of a generational-cultural shift, as these kinds of fraternal groups simply no longer have the social prominence that they once did.

The two-thirds majority vote needed to close down the hospitals will not come easily, said Semb.  Many of the Shriners have devoted years of their lives volunteering for fund-raisers and raising money for these hospitals.  Numerous patients and their families have also promised to attend the meeting which is sure to add an emotional aspect to the proceedings.

And if the vote fails, it wouldn’t be the first time.  Despite mounting financial problems, a plan to shut down several hospitals in 2003 was handily defeated.

Meanwhile at the 50-bed hospital in Greenville, local businessman Jason Burbage continues his volunteer work as has for years.  He says that the work has become more difficult amidst all the talk of the organization’s financial problems, as employees try to remain optimistic and keep the patients from worrying about it as well.

Mr. Burbage, who was born without fingers and was himself a patient of the hospital, doesn’t yet think that all is lost.  “It’s not a done deal,” he says.

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