Dear Friends of Shriners Hospital for Children – Spokane,

First let me say thank you to all those Nobles and their ladies out there that tell me how much they enjoy reading these articles.  I am glad that you like them and find them informative.  It is important that you know what is going on with “YOUR” hospital in Spokane.  

I had occasion to speak recently at two Shrine group meetings.  The first was at Masada Temple’s Stated meeting on Friday, September 12th.  The second talk was for the Panhandle Shrine Club in Sand Point, Idaho on Tuesday, September 30th.  I spent the majority of my time discussing our budget for the remainder of the 2008 fiscal year and our 2009 budget submission.

First, we are running very close to budget for 2008 and as of this writing will finish the year only $2,600 dollars under budget.  There are two primary reasons for this.  We have had travelling nurses working in the Surgery Department for the majority of the year.  They helped us through a staffing/experience shortage and provided extra hands as we prepared for eMERGE go live in July.  The extra costs of the travelling nurses used up any excess salary funding we had for the year.  The second reason we are so tight on budget this year is due to an increase in the number and expense of spine surgeries performed

We are on track to perform 50+ spine fusion surgeries this year!  This is a 38% increase over 2006 and a 20% increase over 2007.  In addition, the cost per spine fusion case has increased from $9,150 to $16,600 per case.  We said in early 2007 we wanted to be the place for children in the Inland Northwest to come for spine surgery and we are!  The dilemma for us is that we did not anticipate this much growth or increase in cost when we submitted the 2008 budget.  All would agree that Dr. Tompkins has been a great addition to the team.  We just didn’t know how big an impact he would have on our productivity in such a short time.

By asking hospital staff to travel less (this includes clinic staff going to outreach clinics in Montana) for the remainder of the year we will make ends meet and be able to continue to fund spine surgeries through year’s end.  I want to thank the hospital staff and the Shriners in Montana for their understanding and support of this difficult decision.   

Now for the challenge of the 2009 budget!  As you all know the endowment that funds our system’s operations is heavily tied to the stock market’s performance.  So as you might guess the events of the recent past reduced the interest income that was projected to be earned by the endowment.  To put this in round numbers the endowment lost nearly $900 million dollars in the last few months.  All 22 hospitals are projected to spend $835 million in 2008.  We have lost nearly the equivalent of one year’s budget!

As a result we were asked to submit a zero growth budget for 2009.  At the same time we were also asked to factor in a 4.5% pay raise for our staff.  To accommodate the pay raise but submit a zero growth budget meant we had to find savings of nearly $400,000 dollars in the 2009 budget.  In addition, we knew we needed to put additional funding in the 2009 budget for surgery or we will be faced with a similar dilemma next fall as well. 

So how did we do in the 2009 budget?  First you need to know that we actually submitted a 1.11% growth budget as opposed to zero growth.  In accordance with headquarters guidance (and there was plenty of it this year), we passed along the portion of the pay raise we felt we could not absorb (approximately 1.5%).  In addition, we passed along a $41,000 dollar projected utility cost increase.  We found the remaining $315,000 out of our own programs. 

First and foremost we did not have to terminate any employees!  We fully fund surgery to the tune of almost one million dollars.  So what didn’t get funded?  With the Board of Governors support and approval we cut our travel budget in half.  The Board also supported our decision to suspend outreach clinics in Montana next year.  Staff travel for continuing education will also be impacted.  We will not conduct any tele-medicine clinics in 2009 and several consulting specialty clinics in the hospital were stopped.  Thanks to dedicated Directors and managers we found enough other savings to get to the bottom line. 

It wasn’t easy and it wasn’t fun, but I must tell you I am so proud of our team and the Board of Governors for supporting this budget process.  We have put together a budget for 2009 that ensures we continue to provide the best care available to children, fund care production/delivery, and allows us to continue to fulfill all three of our missions (acute care, teaching and research).  We will know the final results of our efforts around Thanksgiving time.

We viewed this budget year with determination not despair.  We have all been through tough times before and probably will be again.  Rest assured that we will do everything in our control to be as efficient as we can and deliver as much care as we can for the dollars we are given without compromising quality or safety. 

As always, thank you all for everything you do every day to help us continue to perform the mission and help these wonderful children “Defy the Odds”!