Shriners Hospitals for Children History

Company Perspectives:

It is the mission of Shriners Hospitals for Children to: Provide the highest quality care to children with neuromusculoskeletal conditions, burn injuries and certain other special health care needs within a compassionate, family centered and collaborative care environment; Provide for the education of physicians and other health care professionals; Conduct research to discover new knowledge that improves the quality of care and quality of life of children and families. This mission is carried out without cost to the patient or family, and without regard to race, color, creed, sex or sect.

Key Dates:

1872:

The Shrine fraternal organization is founded.

1922:

The first Shriners hospital for children opens.

1937:

A separate corporation for the hospital system is formed.

1963:

The first burn care unit opens.

1980:

A spinal cord injury unit opens in a Philadelphia hospital.

1996:

The name is changed to Shriners Hospitals for Children.

1997:

A flagship hospital opens in Sacramento, California.

2002:

A restructuring plan is announced.

Company History:

Shriners Hospitals for Children is a nonprofit subsidiary of The Shrine fraternal organization, which in turn is composed of Master Masons in the Freemasonry fraternity. Shriners Hospitals operates a network of 18 orthopedic hospitals, three hospitals dedicated to the treatment of severe burns, and one hospital that handles spinal cord injuries as well as orthopedic and burn care. Twenty of the 22 Shriners hospitals are located in the United States, with single units in Mexico and Canada. Shriners Hospitals also funds some 100 research projects in the orthopedic and burn care fields. Care is available at Shriners hospitals at no cost to any child under 18 years of age if, in the opinion of surgeons, they can be helped. In addition, the hospitals spend millions of dollars each year in transporting patients. In recent years, Shriners Hospitals has had to contend with an American healthcare system that is now dominated by health maintenance organizations (HMOs), many of which are reluctant to refer patients out of its network. Despite offering free services, Shriners Hospitals has had to market itself to find enough referrals to keep facilities fully utilized. A downturn in the stock market also has eaten away the organization's endowment fund, forcing Shriners Hospitals to cut costs and even consider closing some of its facilities. Moreover, the parent organization, The Shrine, has experienced a deep erosion in membership over the last quarter-century, placing a greater burden of responsibility on fewer volunteers.

19th Century-Founding of The Shrine

Shriners Hospitals is at the heart of the mission of The Shrine, whose 500,000 members are best known to the public for the red fez hats they wear and clown brigades that appear in parades across the country. The roots of the organization are traced to 1870s New York City, where a group of Masons often met for lunch and discussed the idea of setting up a secondary fraternity where fellowship and fun would take precedence over ritual. Two of those men were Walter M. Fleming, a doctor, and world-renowned actor William J. Florence. It was Florence's sense of theatrics that led to much of the pageantry surrounding The Shrine. While performing in France, Florence attended a party hosted by an Arabian diplomat featuring a comedy routine that concluded with all the guests being indoctrinated into a secret society. He took notes on the ceremony and passed them on to Fleming, who then used aspects of the comedy routine to develop a new fraternity for Master Masons, calling it the Ancient Arabic Order of the Nobles of the Mystic Shrine. The initials--A.A.O.N.M.S.--could be rearranged to spell "A MASON." Fleming and his friends then developed the ceremonial aspect of the organization, including a ritual costume that featured the red fez with black tassel. On September 26, 1872, the First Shrine Temple in the United States was organized by Fleming, Florence, and 11 other men.

The Shrine spread from Manhattan to Rochester in 1875 and then throughout the United States and Canada. By the end of the century there more than 50,000 Shriners belonging to approximately 80 Temples. Although The Shrine was created with fellowship in mind, its members early on became involved in charitable work on a local level. Shriners contributed money to help the victims of the 1888 yellow fever epidemic in Jacksonville, Florida, and the 1889 Johnstown flood. The national office contributed $25,000 to help San Francisco rebuild after the 1906 earthquake, and during World War I it donated $10,000 for European war relief. Following the war Shriners, who now numbered close to 400,000, began clamoring for an official Shriners' philanthropy rather than simply reacting to catastrophes. Heading the organization at the time was Freeland Kendrick, who was inspired to create Shriners Hospitals after paying a visit to the Scottish Rite Hospital for Crippled Children in Atlanta and becoming aware of how many children in the country were crippled and in need of help. The Salk vaccine was still decades away and polio was a scourge, afflicting thousands of children each year. In 1919 Kendrick proposed establishing "The Mystic Shriners Peace Memorial for Friendless, Orphaned and Crippled Children," but the idea was not grand enough for the Shriners. Over the next year, Kendrick visited most of the Temples, drumming up support for an official philanthropy, and modifying his idea. At the 1920 Imperial Session, he proposed establishing the "Shriners Hospital for Crippled Children," to be funded by a $2 assessment from each Shriner each year. After the resolution passed unanimously, a committee was formed to work out the details. Its members came back the next year proposing that instead of a single hospital, the Shriners should establish a network of hospitals throughout the country. Membership agreed and construction of the first Shriners hospital was underway by the time of the next Imperial Session.

Building Several Hospitals in the 1920s

The first Shriners hospital opened in Shreveport, Louisiana, in 1922. Initially, children had to be under 14 years old to receive treatment, but the age limitation would soon be increased to 18. Thirteen other hospitals followed during the 1920s. In 1923 hospitals were opened in Honolulu, Minneapolis, and San Francisco. A year later hospitals opened in St. Louis, Spokane, and Portland. In 1925 the Shriners added facilities in Salt Lake City; Springfield, Massachusetts; and Mexico City. A pair of hospitals opened in 1926, in Philadelphia, Pennsylvania, and Lexington, Kentucky. Finally, in 1927 the Shriners opened a children's hospital in Greenville, South Carolina. It was also during the 1920s that The Shrine established one of its most enduring fundraising events, the East-West Shrine College All-Star Football Game, played each year in San Francisco. Not only did it raise money, it raised the profile of the Shriners hospitals, especially after the advent of television.

The Shriners building program came to an end as the nation lapsed into the Great Depression of the 1930s. Shrine membership fell off during this period, placing a financial burden on the fraternity. The organization began to draw money from its endowment fund to support its hospitals, putting the long-term stability of the Shriners in jeopardy. As a result, in 1937 two nonprofit corporations were created to provide financial separation between the fraternal organization and the hospital network. Despite the difficulties imposed by the Depression, however, Shriners Hospitals was able to scrape by and did not have to close any of its facilities.

As the U.S. economy recovered during the early 1940s, primarily due to defense spending, Shriner membership once again began to grow. Shriners Hospitals also was able to resume its expansion. In 1945 the organization opened a hospital in Mexico City. Then, in 1952, the Shriners opened three more hospitals, in Houston, Los Angeles, and Winnipeg. Funding during the 1950s also increased rapidly. Shriners Hospitals during this period faced the pleasant problem of a decreasing waiting list for services due to medical advances, in particular the introduction of the Salk vaccine for polio, the impact of which was dramatic. In 1955 there were 28,985 cases of polio. Two years later that number fell to 14,647, in 1957 it dropped below 6,000, and soon the one-time scourge of childhood was eradicated. The Shriners now had to decide how to best use its largesse, and it began to apply more resources to clinical research, in which network hospitals had been involved since the beginning. In the late 1950s Shriners Hospitals began creating a computer database of patient records, made available to its own staff and others by way of microfilm, a project that was a boon to clinical research. Then in the early 1960s Shriners Hospitals began to dedicate funds to specific research projects to enter the structured research field, which became another major part of the organization's mission.

Also in the 1960s Shriners Hospitals formed a special committee to look for new areas of concentration. It reported back in 1962 that the burn care field for children, both in terms of treatment and research, was severely limited in North America. In fact, the only burn treatment center in the United States was located on a military base. The matter was brought before the Imperial Session and Shriners Hospitals was directed to immediately pursue this new area. Burn units were initially established within non-Shriner hospitals. The first, a seven-bed ward for the care of severe burns in children, was opened in November 1963 in the John Sealy Hospital in Galveston, Texas. A few months later, in February 1964, a similar unit was established in the Cincinnati General Hospital, followed two months later by a five-bed ward in the Massachusetts General Hospital in Boston. At the same time, Shriners Hospitals began constructing 30-bed pediatric burn hospitals in the vicinity of these units. The first, located in Galveston, opened in March 1966, followed by Cincinnati in February 1968 and Boston in November 1968. Aside from treatment, Shriners Hospitals committed funds for burn research and teaching. Due in large measure to its efforts, a child's chance of surviving severe burns has more than doubled since the 1960s. Also of note, during the 1960s Shriners Hospitals opened a pediatric hospital in Erie, Pennsylvania, in 1967.

Shriners' membership reached 960,000 in 1979, but the organization had no way of knowing that this would be the high-water mark. The rolls would begin to decline steadily, placing an increasing burden on a graying membership. But Shriners Hospitals, the beneficiary of a large endowment fund, was actually ready to embark on an era of major expansion. In addition to burns, the organization now began to focus on spinal cord injuries in children. In 1980 the Shriners Hospital in Philadelphia opened the first ward in the United States dedicated to spinal cord injuries in children and teenagers. Other units were opened in the San Francisco and Chicago Shriners hospitals in 1984. Another new area of focus in the 1980s was spina bifida, a birth defect where the backbone and spinal canal do not close before birth. A number of the Shriners Hospitals developed programs to provide care for afflicted children. Moreover, during the 1980s Shriners Hospitals expanded its prosthetic services and research efforts, and the burn hospitals developed a re-entry program to help patients make the difficult

Launching an Expansion Program in the 1980s

Early in the 1980s the Shriners decided to launch an expansion and reconstruction program. In 1985 Shriners Hospitals opened a pediatric hospital in Tampa, Florida, the first new Shriners hospital to be built in nearly 20 years. The Winnipeg facility had closed in 1977, so the addition of Tampa returned the network to 22 hospitals in size. Over the course of the 1980s and 1990s, the other 21 hospitals would be either renovated or replaced. The Cincinnati and Galveston burn hospitals were replaced in 1992. The San Francisco hospital was closed and replaced with a new hospital in Sacramento in 1997. It became the flagship facility, the only one in the Shriners system to offer all of the organization's major disciplines, providing orthopedic, burn, and spinal cord care, as well as conducting research.

During the 1990s, Shriners Hospitals changed its corporate name, dropping the word "crippled," a move that not only reflected the hospitals' involvement in burn care and other pediatric areas, but also removed any stigma that might be attached to the term. Appearances, as the Shriners well knew, mattered. One of the problems the organization now faced was convincing more people to take advantage of what the Shriners Hospitals had to offer. For one, the Shriners with their red fezzes and motorcycle clown brigades had unintentionally cultivated a public image of a fun-loving and unserious group. Moreover, people wanted the highest quality healthcare for their children, and most of them assumed that anything free had to lack quality, which was far from the truth about what Shriners Hospitals had to offer. Starting in the 1980s Shriners Hospitals took pains to change this public perception in order to drive up demand for its services. In 1986 it became one of the first healthcare organizations in the country to provide an electronic press kit to television news departments. It also used marketing ploys such as shopping cart signage, the Goodyear blimp, and newspaper stand rack cards to promote its message.

When Shriners Hospitals celebrated its 75th anniversary in 1997, it was operating in an environment decidedly different from when the organization was founded. The most significant change resulted from the rising dominance of HMOs, which affected patient referrals. Many doctors who had once sent patients to Shriners Hospitals were now required by their managed care contracts to keep patients within the HMO network. At the same time, the organization did not want to be put into a situation in which it was subsidizing an HMO. Traditional government relationships also were changing, as some states now assigned Medicaid patients to HMOs and other managed care systems rather than to Shriners Hospitals. As a result, occupancy rates at Shriners hospitals declined, especially in Houston, Lexington, and Minneapolis.

Marketing a free service, however, would lessen in importance as Shriners Hospitals moved into a new century. Shriners membership continued to fall, dipping below 500,000, or roughly half the 1979 number. The Shriners took cold comfort in knowing that other service clubs--such as the Kiwanis, Lions, and Rotary clubs--found themselves in similar straits. The networking opportunities that once made such organizations appealing were less attractive to many people, who were overextended and opted to spend free time with their families. Moreover, the concept of giving back to the community had lost some of its importance in contemporary society. As a result, the Shriners had half the number of people doing twice as much work, and because the money that came out of members' dues earmarked for Shriners Hospitals was reduced, the system was increasingly dependent on the money earned by its $8 billion endowment fund. But with a sharp drop in the stock market in the early 2000s the fund lost about one-quarter of its value.

Facing a financial crunch as well as a changing healthcare landscape, Shriners Hospitals formulated a restructuring plan, announced in late 2002. Under consideration was the idea of establishing satellite clinics, whereby Shriners staff could bring healthcare to the children, a less expensive approach than paying the transportation costs of parents and children to Shriners hospitals. The hospitals also looked to make more use of videoconferencing. But the most controversial recommendation was the closing of the Minneapolis hospital, which had experienced declining occupancy rates, which now averaged around 25 percent. There were also rumors that several other system hospitals might be closed as well. The Shriners voted against closing the Minneapolis hospital in July 2003, electing to study the matter further. Clearly, Shriners Hospitals was entering a period of change and uncertainty. What was not questioned, however, was the organization's commitment to its mission: providing the highest quality healthcare to children at no cost.

Further Reading:

• Andrews, Michael C., "Today the Goodyear Blimp, Tomorrow the Moon," Public Relations Quarterly, Spring 1993, p. 39.
• Keen, Russ, "Shriner Discusses Possible Closure of Minnesota Hospital, Rising Costs," American News (Aberdeen, S.D.), November 14, 2002.
• "Shriners Prepare to Close Some of Their Children's Hospitals Because of Financial Problems," New York Times, July 6, 2003, p. A10.
• Ward, Tyler E., "A Noble Cause--With Concerns About Its Future," Tampa Bay Business Journal, January 24, 1997.

Source: International Directory of Company Histories, Vol.69. St. James Press, 2005.

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