Facing hard times, Shriners may close 6 hospitals
By KATRINA A. GOGGINS
GREENVILLE, S.C. (AP) — Shriners hospitals, which have provided free care since before the Great Depression, are considering closing a quarter of their facilities as donations stagnate, costs increase and the charity's endowment shrivels.
The group's director says it's the only viable option.
Officials at the Florida-based organization say it is siphoning $1 million a day from its endowment to balance the budget for 22 hospitals in the U.S., Canada and Mexico. Meanwhile, they say, that fund has fallen to $5 billion from $8 billion in less than a year because of the sputtering stock market and a charitable giving slump that has hurt philanthropies nationwide. The fund has been declining since 2001. The group will vote this summer on the closures.
"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," Ralph Semb, chief executive officer of Shriners Hospitals for Children, told The Associated Press.
In cities where hospitals may close, supporters and hospital staff are scheduling fundraisers and posting online messages of support on social networking Web sites.
In Greenville, S.C., Bridget Myers and her daughter are turning to churches and friends, collecting money in a bucket tagged with pictures of X-rays and Shriners patients.
"I've collected $92 dollars in two days," said Brooklynn Myers, 14, who received scoliosis treatment at the Shriners' Greenville hospital. "Me and my mom feel like it's heartbreaking we'd have to drive all the way to Lexington (Kentucky) and we've made special bonds here."
Widely known today for burn and orthopedic care for children, the Shriners Hospitals system opened in 1922 with a facility in Shreveport, La., that specialized in treating polio. By the 1960s, the group had hospitals nationwide and expanded its care to include spinal cord injury rehabilitation, cleft lip and palate care and medical research.
More than 1 million children have been treated at the hospitals, which were created by the fraternal organization of the same name whose members are known for wearing red fezzes and driving miniature cars in parades. The care is free to all.
In 2007, the fraternal group was hit with accusations it used money intended for the hospitals to throw parties — but only a fraction of the hospitals' funds are raised by the group. Most of the money to operate the hospitals has come from interest from the endowment, Semb said.
Semb said this year's operating budget for the hospital system is $856 million. The budget has risen by $100 million each of the past two years while donation levels remained static, he said.
Last month, the Shiners' board of trustees voted to close four of the group's eight research centers and lay off about 40 people at its administrative office.
At the organization's annual meeting July 6-8 in San Antonio, about 1,200 Shriners will vote whether to close hospitals in Shreveport, La.; Erie, Pa.; Spokane, Wash.; Springfield, Mass., and Greenville. Semb said they were chosen mainly because of too many vacant beds.
The system would shed around 225 hospital beds with the closures, according to data from Shriners hospitals Web sites.
Patients would be sent to other Shriners hospitals that specialize in their ailments.
The organization also will consider whether a hospital in Galveston, Texas — closed temporarily after damage from Hurricane Ike — will remain shuttered.
"The outlook is not good, but we know that we can right it," Semb said. "And we can within a five-year period of time get our expenses down far enough to equal the income we have coming in and hopefully start building on that endowment fund."
Closing these hospitals is the only viable option, Semb said. While members will also consider keeping all 22 facilities open — or a nationwide 30 percent budget cut — Semb contends doing either would be a death knell to the organization. He said to continue functioning as they do now with all the hospitals open, Shriners would have to grow the endowment to about $12 billion by 2014 — unlikely, given the economy and nationwide trend toward less large-sum charitable giving.
Fewer groups and individuals gave gifts of more than $1 million in 2007 compared to 2008, and such donations fell even more in the final two quarters of last year, according to preliminary findings of a study due out this summer from The Center on Philanthropy at Indiana University. Even when giving was more robust — from 1991 to 2005 — gifts to health care groups grew at a much slower rate than those for other entities, like universities, said Melissa Brown, associate director of research for the center.
She said the aging of once-prominent fraternal organizations might be affecting their ability to grow donations. "It could be that what they are seeing is a generational shift," Brown said.
Getting the two-thirds majority needed to close the hospitals will not be easy, Semb said.
Patients and their families are vowing to rally at the annual meeting. And some Shiners who have spent years raising money and volunteering say they'll oppose the move. They've done it before: A plan to close hospitals in 2003 was quickly voted down despite warnings of financial problems.
In Greenville, letters of support from patients cover the wall of one hallway at the 50-bed hospital.
Jason Burbage, who was born with no fingers, has been going to Shriners Hospitals since he was born in 1976 — first as a patient and now as a volunteer to give encouragement to patients. The work has become more difficult because of the financial troubles, he said.
"We don't want the patients to focus on it," said Burbage, a 33-year-old Greenville businessman. "It's not a done deal."