GALVESTON — Ralph Semb, CEO of Shriners Hospitals for Children, spent more than an hour Monday besieged by hundreds of employees, volunteers and patients — some who said they had been betrayed and misled — demanding answers to many questions, including those about how managers had allowed the endowment that funds the island hospital along with 22 other pediatric centers to lose $3 billion.
If anger and passion were enough to save the 30-bed hospital world renowned for research and treating badly burned children, then Monday’s meeting would have been a success. But it would take several billion dollars and possibly years to reopen the hospital as the Tampa, Fla. based-philanthropic organization seeks to cut $200 million in this year’s expenses at all its facilities, Semb said.
“I know some of you feel like I betrayed and lied to you,” Semb said in a crowded Willam C. Levin Hall at the University of Texas Medical Branch, made stifling by the lack of air conditioning. “I didn’t lie to you.”
Markets In Turmoil
Semb blamed the indefinite closure of the hospital, which employs about 325 people, on turmoil in financial markets that caused its endowment to drop from about $9 billion to $6 billion in a matter of months.
Organizations such as Shriners earn money from investing their endowments in a mix of stocks and bonds, which all have taken a hit during the economic downturn.
But on Monday morning, before the meeting, stock markets didn’t mean a lot to J.J. Guerra, 15, who suffered third-degree burns over 75 percent of his body in a house fire when he was 3 1/2. He and his mother had arrived at the hospital at 9 a.m. Monday to try to put a face on who would be most hurt by the hospital’s closure.
Before the storm, Guerra, who is having difficulty breathing because of the injuries he sustained, was scheduled for surgery. The surgery has been postponed. Since his injuries, the Channelview resident has had more than 100 surgeries. Shriners employees and volunteers helped him feel confident.
“They sent me to camp where I could be with other children like me,” he said.
Best Information
Semb’s remarks throughout the meeting often were met with mocking laughter and disdain by hundreds of employees who said they believed him in September when he said they would not lose their jobs.
Semb had met with some employees after Hurricane Ike struck Sept. 13, severely flooding most of the island and damaging the hospital.
Some employees had relied on his assurances when they used insurance money to rebuild their damaged homes, they said.
Semb had given them the best information he had at the time, he said.
The hospital has been closed since the storm.
Last week, Shriners halted renovations and repairs to the hospital, 815 Market St.
Some researchers and doctors accused the organization’s governing board of having not clearly thought out how to preserve the hospital or the ramifications of closing the facility.
One doctor asked why Shriners had not made safer investments in funding and demanded to know why officials made the decision to suspend operations and stop storm reparations when Dr. David N. Herndon, director of research for the hospital, was out of the country.
Herndon left his seat at the stage and walked over to shake the young doctor’s hand, a gesture that inspired emphatic applause.
Herndon has not responded to a request for interviews.
Bylaws Cited
Semb said investors for the organization’s endowment were skilled and that few organizations or corporations had escaped the punishing financial markets.
After the meeting, Semb said bylaws prohibited the philanthropic organization from using endowment funds to cover losses.
Combined, Shriners has an $810 million budget. The governing board of the organization also requires that by 2012 the organization grow the endowment to $12 billion.
The indefinite closure of the island hospital was for the greater good of the system, Semb said.
Employees will be paid until March 31.
Semb had several meetings Monday, including with executives of the University of Texas Medical Branch.
The medical branch does not manage the hospital but works closely with it.
Semb said it was possible that the island hospital could merge with Shriners pediatric center in Houston.
