Saturday, July 5, 2003

TAMPA, Fla. (AP) — 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.

At the organization’s annual meeting tomorrow 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 of them 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 Shriners 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 Shriners hospital has a billing department.

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

Doctors recently were asked for ideas on how to reduce 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 farther distances for treatment.

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