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Bikur Holim Hospital, which first opened in Jerusalem's Old City in 1826, may finally shut down at the end of the month following a series of financial crises and closure threats.

After years of financial woes, the hospital's fate hangs in the balance as various ministries continue to discuss the management's plea for financial assistance.

Bikur Holim executive board members told the Knesset Finance Committee this week that without NIS 30 million in support until the beginning of 2012, the hospital would have to close down on December 31.

The hospital's doctors, nurses and other staff members intend to demonstrate on Sunday to protest the imminent closure.

Bikur Holim has undergone numerous upheavals in recent years. In 2003, under the direction of the Bikur Holim Hospital association headed by Rabbi Meir Porush, the management stopped depositing the sums it deducted from its workers wages into their pension and study (keren hishtalmut ) funds.

The hospital was shortly subjected to a liquidation process under the auspices of the Jerusalem District Court. The receiver's office, assigned to supervise the process, then appointed Bari Bar-Zion as hospital general manager.

In June 2007, Russian-Israeli billionaire Arcadi Gaydamak bought the hospital properties from the state for $32 million in an agreement which stipulated that the hospital's 650 employees would receive 65-85 percent of their previous benefits, relative to their seniority.

In exchange, the state wrote off the hospital's debts, including moneys owed to income tax and the National Insurance Institute. A new association called Bikur Holim was set up to manage the hospital, headed by the prominent ultra-Orthodox PR agent and publisher Dudi Zilbershlag.

Gaydamak agreed to the workers unions' request to make up the NIS 500,000 monthly difference between the pension amounts appearing in the agreement and the sums they had received prior. He paid the money from October 2007 to November 2008, but then stopped - creating a NIS 2 million deficit in the hospital's budget.

Zilbershlag appointed Motti Shtauber hospital manager and the latter began hiring private contract workers, in addition to those already employed on the basis of collective wage agreements. Wage expenses soared from NIS 6.3 million to NIS 9.3 million a year.

Shtauber resigned in July of this year, after informing the executive board the hospital would have an accumulative deficit of NIS 24 million by the end of the year. Shortly after that, the First International Bank of Israel canceled Bikur Holim's credit line.

In September Dr. Yoram Blachar, former Israel Medical Association chairman, replaced Zilbershlag as executive board chairman. The workers unions loaned the hospital part of their wages for four months - until the end of September - to overcome the crisis.

"After that, we have no money to pay employees their wages. If we don't receive help the hospital will close or go into receivership. The workers have reached the end of their tether," Blachar said.

Gaydamak still holds the hospital properties, but their legal status is unclear and some of them may have been confiscated by his debtors. The Bikur Holim association is running the hospital based on the receiver's decisions.

The NGO registrar is investigating suspicions that Zilbershlag, who quit his position at the hospital on October 4, illicitly deposited NIS 1.6 million of Bikur Holim funds into Mifal Chaim-Meir Panim, an NGO he owns.

The hospital's executive board is considering taking legal measures against Zilbershlag to make him return the money.

The Jerusalem hospital's status has been turbulent for years. In 1864, when philanthropist Sir Moshe Montefiore laid the cornerstone for the Ashkenazi Perushim Hospital, as it was then known, on the slopes of Mount Zion in the Old City, the Bikur Holim association was forced to take a loan-shark interest rate to buy the plot.

In 1875, the hospital was closed following a financial crisis in the city and six years later the association started raising contributions abroad, mainly in Eastern Europe.

The hospital began to take in First Aliyah (the first modern widespread wave of Zionist immigration to Palestine, mostly from Eastern Europe ) patients, including farmers from Petah Tikva and Zichron Yaakov.

Construction of the new hospital building outside the Old City walls began in 1912 but stopped in 1914 with the outbreak of World War I, to be resumed five years later. Since Israel's establishment, the hospital has treated casualties from the Independence War, the Six-Day War and victims of terrorist attacks.

Bikur Holim's maternity ward is seen as a gold mine in Jerusalem's health system. The ward performs some 6,000 deliveries annually, mostly for women from nearby ultra-Orthodox neighborhoods.

"All the other hospitals are coveting the money our maternity ward is making," Blachar said, referring to the Finance Ministry's recent suggestion to merge Bikur Holim with another hospital in the city. "But if this suggestion is adopted, the remaining hospital wards would shut down."