One of the most venerable traditions in pediatric orthopedic care and research is in danger of fading: The 85-year-old Shriners hospital system, which provides completely free care to children with limb differences, orthopedic conditions, burns, clefts, and spinal cord injuries, is debating whether to close more than a quarter of its facilities due to a shrinking endowment, dwindling donations, and rising costs. Shriners will vote on the closures in July.
Ralph Semb, CEO of Shriners Hospitals for Children, told The Associated Press, “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.” Semb called the closures “the only viable option” and contended that the two other choices-keeping all 22 hospitals open or cutting the nationwide hospital budget by 30 percent-would spell the end of the organization. He said, however, that finding a two-thirds majority needed to close the hospitals would not be easy. Patients, families, and even some Shriners oppose the move, and a similar 2003 plan to close hospitals was voted down.
According to The Washington Post, the organization has been in a budget deficit since 2001 and is currently fulfilling the needs of its 22 hospitals in the United States, Canada, and Mexico by draining $1 million a day from its endowment. The endowment has slumped from $8 billion to $5 billion in less than a year because of the shaky financial market and an international decline in large-scale charitable giving. Semb concluded that if the organization was to continue spending at present levels, it would have to increase its endowment to $12 billion by 2014, an unlikely prospect given the international economy.
At the Shriners annual meeting from July 6-8 in San Antonio, Texas, the membership will vote on the closure of hospitals in Shreveport, Louisiana; Springfield, Massachusetts; Greenville, North Carolina; Erie, Pennsylvania; and Spokane, Washington. Shriners may also decline to revive the Galveston, Texas, hospital, which is being repaired from damage by Hurricane Ike. Semb said that the hospitals under the ax were relatively underused. Children being treated at those hospitals would be welcomed for continued treatment at all other Shriners facilities.
In March, the Shiners trustees voted to close half of the eight Shriners medical research centers and lay off about 40 administrative employees. Semb told the Post that the budget has risen by $200 million in the past two years, and that donation levels remained static. According to the organization website, the hospitals treated more than 102,000 children in 2008, when its budget was $826 million, of which $722 million was targeted for operating expenses and research. In 2007, the New York Times revealed that Shriners members raised about $32 million from fundraisers, but that more than 57 percent of that was lost to embezzlement or spent on parties, alcohol, and travel expenses for members.
“The outlook is not good, but we know that we can right it,” Semb told the Post. “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.
