Shriners in Galveston

Shriners tells employees hospital won't reopen

By Rhiannon Meyers
The Daily News
Published January 23, 2009

GALVESTON — Some walked out crying; others carried boxes of stuff.

Still others had anger in their voices when they left a meeting, closed to the media and general public, in which executives officially announced to staff that Shriners Hospital for Children in Galveston would close indefinitely as it struggles with a nearly $3 billion shortfall in an endowment that funds it and other pediatric centers.

Closing the 30-bed hospital would save the Tampa, Fla.-based philanthropic organization as much as $30 million in yearly operating expenses, officials said in a confidential letter to employees. But employees wondered what it would mean for children and burn research. The island has been home to Shriners for years.

Ahmed Al-Mousawi, a research fellow at the hospital world renowned for treating badly burned children, was upset about how hospital officials and executives handled the decision to close the Galveston hospital, or what he called the “right arm” of the national hospital network, he said.

He doubted that thousands of philanthropic Shriners would allow one of the nation’s top burn institutes to close, he said.

“I don’t think they’ll accept this decision lying down,” he said.

Others weren’t so sure.

Kathy Cooper, a nurse at the hospital, said she took the announcement to mean she ought to look for a new job.

The closure came as a surprise to the 325 employees who had been assured by hospital officials for more than four months that their jobs were secure, Cooper said.

“It’s over,” she said. “It’s over here. And that’s sad.”

Financial Constraints

Shriners officials blame financial constraints for the indefinite closure. The hospital has been closed since it was damaged by Hurricane Ike, which struck Sept. 13.

But crews had been making repairs and in November, officials were adamant the hospital would reopen.

But the hospital this week suspended operations and stopped repairs to the damaged building, 815 Market St.

With the financial markets battered and Shriners’ endowment down by nearly $3 billion, it didn’t make sense to reopen the hospital until funds and the economy recovers, officials said.

That could take months or years, officials have said.

Many foundations earn money from investing their endowments in a mix of stocks and bonds, which took a hit in 2008.

Expenses this year are expected to exceed the total amount of gifts and bequests, dividend and interest income and other sources of operating income, officials said in a confidential letter to employees.

Officials promised to pay employees salaries and benefits until March 31.

Shriners also would adjust work hours and schedules to allow for the transition of current patients to alternative health care providers within and outside its system, officials said in the confidential letter.

Media Kicked Out

Many employees streaming out of Thursday’s meeting declined to comment or provide their names.

They said they were told if they spoke to the media they would be fired immediately and would not receive their paychecks.

Hospital employee Robert Gaona removed The Daily News from the meeting because he said it was a private affair for employees only.

Later, security guard Karl Piazza removed reporters from the hospital’s sidewalk and then called the police.

A letter explaining the decision, which was distributed at the meeting, was stamped “confidential.”

“This is one of many steps in a systemwide effort to achieve long-term financial stability,” the letter states.

The closure will cost most of the 325 employees their jobs and force young patients to receive treatment at other Shriners hospitals in Boston, Cincinnati and Sacramento, which also specialize in treatment for burns, officials said.

Unnerved, Uncertain

While Shriners CEO Ralph Semb earlier this week said closure of the hospital isn’t permanent, some employees speculated it would be difficult to reopen within the next two or three decades once staff members and researchers seek other employment opportunities elsewhere.

“I don’t think this is the right decision,” Al-Mousawi said.

Natasha Brooks, a University of Texas Medical Branch graduate student who conducts her research at Shriners hospital in Galveston, said the meeting was filled with tears and anxiety.

She left feeling unnerved and uncertain about her research but remained hopeful that “things would work out,” she said.

The economic downturn also has forced the organization, with 23 hospitals, to stop reconstruction work on facilities in Los Angeles and St. Louis, Semb said.

Reporter Laura Elder contributed to this report.