Shriners Hospitals for Children, reeling from a $3 billion-plus loss in its endowment fund due to the tumbling stock market, has suspended some capital projects and is looking at cutting budgets at most of its 22 hospitals.
Not in Sacramento, however.
Shriners’ flagship Northern California hospital began taking patients from the network’s medical center in Galveston, Texas, after it was closed following damage by Hurricane Ike last year. The uptick in patients means Sacramento will be one of the few hospitals in the network likely to escape cuts this year, said Ralph Semb, president and chief executive officer of Shriners.
“Most hospitals will see a decrease in their budgets in ’09-’10, but with Northern California accepting patients normally going to Galveston, it would be hard to cut theirs,” he said. “Four or five hospitals in the system, unless there’s a voluntary program, will have to be kept at the same level.”
A handful of capital projects in other markets have been suspended by the children’s health care system, based in Tampa, Fla.
Plans for a new hospital in St. Louis have been put on hold; the existing hospital will have to do for now. In Los Angeles, the health system has hired an architect to look into retrofitting the existing facility to meet California earthquake standards instead of replacing it. And in late January, Shriners announced it was suspending renovation of the Galveston hospital until the organization’s finances improve.
The Shriners board will meet March 23 for three or four days to hash out plans to deal with finances. The endowment fund had declined in value to $5 billion from $8 billion by late January.
“It’s probably more now, the way the market is going,” Semb said. “We have a ship that’s going into a hurricane.”
The drop is crucial because Shriners relies on donations, annual fees paid by each Shrine fraternity and interest from the endowment fund to operate its 22 hospitals.
The health system does not accept insurance. It provides free care to children up to age 18 who suffer from burns, spinal-cord injuries or orthopedic problems.
“We’re beginning to tap into the endowment fund we are never supposed to touch,” Semb said. “It’s supposed to be there for eternity. Retained earnings are going down, and interest on the endowment fund is not enough. What else can we do?”
The health system is now tapping the fund for $2 million a day.
Donations up
The 80-bed, eight-story Shriners hospital on the UC Davis Medical Center campus in Sacramento is the only one in the network to combine all four Shrine specialties — burns and scars, spinal problems, orthopedics and research — in one location.
The hospital sees about 3,000 new patients a year, but many of them require multiple services.
About 30,000 services are provided annually, including clinic visits, surgery, in-patient care, physical and occupational therapy, motion analysis and diagnostic imaging.
The local orthotics and prosthetics lab custom designs and fabricates about 300 devices a month.
“We do things no other hospital does,” said spokeswoman Marlena Lagina-Kleine in Tampa. “Not only do we care for children and prepare them to integrate back into their lives, but if they need an MRI or CT scan we don’t provide, we pay for it or pay the balance of what insurance didn’t pay.”
Patients are grateful. This propels donations, even in the bad economy.
While many nonprofits and charitable organizations report donations are down, Shriners had a 10 percent increase in gifts and donations in 2008 — and a 15 percent increase in income from wills and bequests, Lagina-Kleine said.
The research budget in Sacramento has more than doubled to $6 million in the past two years; research staff has increased from 70 to about 100.
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