Treasury, Hadassah Trade Blame for Hospital's Financial Woes

Hospital rejects the Treasury's statement that long-term mismanagement is responsible for debts of over NIS 1 billion.

Tensions between Hadassah Medical Center and the Finance Ministry escalated this week, after the ministry issued a press release blaming the financial crisis at the Jerusalem hospital on mismanagement.

The statement marked the first time that the ministry had explicitly pointed a figure at the hospital's executives. The blame, said a Finance Ministry source who asked not to be identified, does not belong to any one administrator, but to mismanagement by hospital administration over a lengthy period.

The ministry's statement was a response to an assertion by Hadassah's management that the government was responsible to a large degree for the hospital's current financial state.

Saddled with over NIS 1 billion in debt (around $285 million), including a NIS 300 million deficit in the past year alone, the hospital wants the government to cover the debt, at a minimum, and to revise the formula by which the medical center is paid for services it provides to Israel's health maintenance organizations.

"For four months, management has been knocking on the doors of the health and finance ministries asking that a rapid recovery plan be concluded between the government, the employees and the Hadassah Women's Organization [which owns the hospital] that will balance the budget and let the hospital function normally," Hadassah said in a statement. "Unfortunately, the government has shortchanged the hospital for many years and a sizable part of the deficit stems from this policy."

Unlike other hospitals and Israel's health maintenance organizations, which receive government financial support to the tune of hundreds of millions of shekels annually, Hadassah receives nothing from the government. Instead, its budget comes from the global women's organization, which contributed some NIS 2 billion to the hospital budget from 2005 until the first half of 2013, for both current and capital expenditure. Hadassah officials say the Treasury is cynically taking advantage of the situation by counting on Hadassah women to cover the hospital's costs and indirectly subsidize the HMOs by forcing the hospital to charge them inordinately low fees for services.

"It is most ironic that most of the money that the Hadassah women's organization gives to the medical center finds it way to the HMOs, in the form of the heavy discounts [on services] they receive," Hadassah CEO Avigdor Kaplan said in a letter to the finance and health ministers.

Talks on a rescue and recovery plan have been underway with the Finance Ministry over the past several weeks.

The ministry's statement was just the latest fracas in Hadassah's long-running negotiations with the government. Last week, four Israeli board members of the Hadassah Medical Center tendered their resignations, asserting that they had been excluded from negotiations with the government over a financial bailout. Chairwoman Esther Dominissini was one of the four who resigned. The four accused Kaplan and Marcie Natan, president of the Hadassah women's organization, of conducting talks to rescue the financially distressed institution without input from the board.

Joyce Rabin was appointed as temporary chairwoman in Dominissini's place and new Israeli board members are expected to be appointing in the coming days to replace those who resigned.

Moti Milrod