Money crunch leaves Shriners hospitals ailing

TAMPA, Fla. – Shriners Hospitals for Children, a venerable organization where the practice of medicine has long been unfazed by finances, is struggling with a money crunch that may force some of its hospitals to close.

Rising health care costs and an endowment that has lost $2 billion – a quarter of its value – in three years may give Shriners no other choice but to shrink the 22-hospital system to save it.

At the organization’s annual meeting Monday in Minneapolis, 1,400 Shrine representatives are scheduled to vote on closing the hospital there.

Officials at the Shriners International headquarters in Tampa say the Minneapolis hospital is used less than others. They declined to identify any other hospitals, but say up to eight could close or take other unprecedented cost-cutting measures.

The future of the Twin Cities hospital has become an emotional debate for the Shriners’ half-million members, some of whom have spent a lifetime raising money and volunteering for the children who rely on the hospitals for free treatment.

“We are just faced with big-time financial problems,” said John D. VerMaas, chairman of the board of trustees.

The Minneapolis hospital is targeted for closing because less than a quarter of its 40 beds are occupied on any given day, and it costs about $15 million a year to run. The average occupancy rate for Shriners hospitals is 42 percent.

About 5,000 children seek treatment at the 80-year-old hospital each year. Shriners officials believe those children can be treated at outpatient clinics or Shrine hospitals in Chicago or St. Louis.

“This is a combination of a business decision, trying to be as efficient and prudent as possible, but also heavily weighed with this emotional angle,” said Lew Molnar, the organization’s chief operating officer. “We would hope the Shriners would be able to focus on the fact we are going to continue providing care, just in another facility.”

But the prospect of closing hospitals is hard for some Shriners. The system employs 6,400 people and costs $1.7 million a day to operate. It has long boasted of its ability to remove the influence of money on medicine. Not a single Shrine hospital has a billing department.

The hospitals also serve as research centers for new medicines and treatment methods, Shrine officials said.

Doctors recently were asked for ideas on how to lower the $10 million spent yearly just on the hardware needed to treat patients suffering from scoliosis, a disease that causes curvature of the spine.

“We’re policing ourselves,” said Peter Armstrong, director of medical affairs for the hospital system. “What we are not going to say is let’s find the cheapest way.”

In Minneapolis, Shriner Bill Messerli is leading an effort to save that hospital. He said he fears the organization would try to shift its focus to only the toughest medical cases and research – which would justify sending patients further distances for treatment.

“That changes our whole tradition of what we have been doing,” Messerli said. “We have been providing care free of charge to children and parents for 80 years at a hospital which is relatively close to their home.”

Parents express concern, too, even in cities where the hospitals are unlikely to close. In Tampa, the Shriners hospital recently competed a $13 million, 30,000 square foot expansion.

Peggy Facemire, whose 14-year-old daughter, Carrie, has scoliosis, said she can’t imagine how difficult it would be to get treatment. When Carrie fell a month ago and bruised her spinal cord, she went to the Shriners hospital.

Carrie walked out of the hospital with the aid of crutches earlier this month.

“They take care of everything here,” Peggy Facemire said. “You walk in and they do it all.”

Facemire said insurance would pay only for 62 consecutive days, including weekends when a nearby rehabilitation center was closed.

“I don’t think there was ever a question about how long she was to be here. It’s if she’s better, then it’s time to go home,” Facemire said. “These people do a wonderful job. It’s sad more people can’t do the same thing.”

Trustees Chairman VerMaas said if delegates do not vote to close the Minneapolis hospital, the shortfall will have to be made up through cuts elsewhere.

There’s not much support for the Shriners hospitals starting to take insurance, he said, adding that would further erode the system’s tradition.

“It’s a business decision, that’s what I keep saying,” said VerMaas. “We have got to operate these hospitals like a business. It’s tough to say that.”