July 24, 2011; Source: StarTribune | Shriners are well known for wearing their red fez hats while raising money through football games, and parades. These events and other efforts gave over one million children free healthcare at their hospitals throughout the United States, Mexico and Canada. Now, rising health care costs and a tough economy are forcing the national nonprofit to find a new revenue stream – insurance companies.
For 89 years, the Shriners fraternity, 325,000 members strong, supported over 20 hospitals. In recent years, members saw their endowment decline and their fundraising efforts remain flat. Starting this August, hospitals will bill insurance companies and charge families co-payments. Those children without insurance will still be treated at no cost.
Shriners Hospitals were started in the early 1920’s to fight polio. Today, most of their work focuses on helping children who need orthopedic care or have spinal cord injuries.
The new funding scheme was pushed forward as the organization watched its endowment value plummet from $8 billion to $5 billion. Eight hospitals were scheduled to close. Instead, new revenue from insurance companies will ensure that all hospitals remain open. Still, the organization’s expenses are exceeding revenue by $230 million a year.
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The organization is facing a new set of challenges with this transition. Initially, Shriners weren’t able to sign contracts with several major insurers until the by-laws were changed. And the hospitals lost a few million dollars before they realized that direct reimbursement payments to patients were not being properly collected.
The old business model of free-standing and self contained operations is no more. Newer hospitals are working with local medical institutions to share equipment and costs.
Today, collaborating and connecting with other institutions is replacing football games to ensure that Shriners Hospitals will be there for both today’s children and future generations.—Nancy Knoche