140 year of Shriners

140 year of Shriners

Sunday, July 12, 2009

Cash squeeze forces Shriners hospitals to begin billing insurance carriers

By Cynthia Hubert chubert@sacbee.com Published: Friday, Jul. 10, 2009

The gleaming Shriners children's hospital on Stockton Boulevard in Sacramento stands as a powerful symbol of the fraternal group's history of offering free care to needy children around the globe.

Thousands of people, from young war victims to children with disabling orthopedic problems and spinal cord injuries, have undergone state-of-the-art treatment at Shriners Hospitals for Children Northern California since it opened in 1997. Remarkably, no insurance forms were needed and no medical bills sent out.

But Shriners, famous for the tasseled red fezzes worn by members, has fallen on tough economic times, and change is coming to the group's network of 22 hospitals.

At a national meeting in San Antonio this week, the Shriners, in an effort to avoid financial collapse, considered closing six hospitals, among other dramatic changes.

On Thursday, the group decided that all facilities will remain open for the time being – but the hospitals will begin collecting insurance payments for the first time in the group's 87-year history.

Douglas Maxwell, newly elected president of Shriners Hospitals for Children, said in a prepared statement that the organization's leadership finished its meeting "with a renewed vision for our hospital system" that will involve collecting insurance reimbursement.

Shriners "will continue to provide world-class care for children" 18 and younger, as well as engage in important research and medical education, Maxwell said.

Money to operate the Shriners hospitals until now has come from the group's endowment fund, which is maintained through gifts, bequests and annual assessments paid by the 400,000 or so Shriners members. The fund, battered by the recession, has shrunk from $8 billion to $5 billion in the past year, former chief executive Ralph Semb told The Bee in April.

Shriners gets about $250 million a year in donations and can earn another $250 million from its diminished endowment, but this year's budget is $856 million, said Semb, who was succeeded this week by Maxwell.

Until now, to avoid cumbersome paperwork and bureaucratic interference, Shriners hospitals have not requested or accepted insurance. But investment losses, declining membership and a leveling off of donations prompted the group to reconsider that policy. In an effort to keep the system afloat, Shriners will allow its hospitals to bill the private or government insurance plans of patients who have coverage. Endowment money will continue to be used for patients who are without insurance.

It was unclear Thursday how soon the changes would take effect at Sacramento's hospital.

"We don't really know what the impact will be right now," said Catherine Curran, a spokeswoman for Shriners Hospitals for Children Northern California. Curran declined further comment and said administrators were unavailable to discuss the issue.

A member of the hospital's board of governors, William "Doc" Greelman, said the changes are necessary given the Shriners financial picture. But he predicted the local facility will continue to thrive.

"We're not really structured for this sort of thing," Greelman said of the insurance issue. "We don't want to accept it. We have no choice. But we have a wonderful hospital. There's no way in heck anyone is going to play with Sacramento. We'll be fine."

The Sacramento facility, which opened in April 1997 and replaced a hospital in San Francisco, has 80 beds and cost $79 million to build. It is the flagship Shriners hospital, offering treatment in all three of the network's major medical focuses: orthopedic care, burns and spinal cord injuries. Shriners also repairs cleft palates in children.

It accepts about 300 new patients a month and has treated about 40,000 children since 1997, Curran said.

The only other Shriners hospital in California is in Los Angeles.

Greelman said the Sacramento facility maintains a high patient count and operates within its budget, which Shriners has said is about $60 million a year.

The hospital works closely with researchers and physicians at the University of California, Davis.
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