Judge Grants Hadassah Temporary Relief From Creditors

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A Jerusalem judge on Tuesday granted Hadassah University Hospital's request for a stay of proceedings and appointed a trustee, who will not have management powers over the hospital struggling under the weight of a 1.7 billion shekel ($482 million) deficit.

Jerusalem District Court Judge David Mintz accepted Hadassah's request in full – leaving Dr. Avigdor Kaplan, the director general, and current management in charge. Attorney Lipa Meir, the hospital's choice, was appointed trustee along with Asher Axelrod.

The decision means that for the next 90 days the hospital's creditors will not be able to collect their debt and the hospital can continue to operate.

Kaplan reacted to the news Tuesday, telling Israel Radio that his top priority is "returning the hospital to its normal functioning and providing the best services possible to patients and, of course, beginning intensive negotiations with the employees' representatives."

He went on to say that Hadassah must bridge its very large deficit, and that management and staffers must lend a hand to that effort. He said the hospital would need to part with a small number of employees and stabilize its sources of income for the sake of the rest of its staff.

Hadassah University Hospital has been misusing funds for years and has recently failed to pay medical liability premiums for its doctors as it struggled with its deficit, a Jerusalem court was told Monday.

The failure to pay the premiums, leaving physicians exposed to malpractice claims, threatened a new crisis as doctors walked off their jobs 10 A.M. Tuesday. They are demanding written proof that their insurance is in force.

The revelations about Hadassah’s finances came as Judge Mintz heard competing claims by the hospital and the Israel Medical Association over Hadassah’s petition seeking court protection from creditors.

“Let’s not hide anything or talk in circles — this is an insolvent organization that for years used funds for purposes for which they were not designated,” Amir Bartov, the attorney representing Hadassah, told the court. “It was given money for research and instead used it for other purposes. This is the reality and it’s not being covered up.”

In seeking protection, Bartov said the misuse would stop. “The financial juggling act is over,” he said.

As the sides fought it out in Mintz’s crowded Jerusalem courtroom, hundreds of hospital employees held rallies in Jerusalem to protest Hadassah’s failure to pay more than half their January wages, amid concerns about their pensions.

“In a properly run country, they would have formed an investigative committee already in 2008,” Ilana Cohen, chairwoman of the nurses' union, told protesters. “We can’t let the workers become an ATM for the health system.”

A storied medical center whose foundations go back more than 100 years and whose fund-raisers are a part of Diaspora Jewish life through its namesake women’s organization, Hadassah's two Jerusalem hospitals have been operating with emergency staffing after doctors walked out last week.

Nurses and administrative workers have joined the doctors in a strike, while suppliers have halted deliveries of even essential goods.

For the first time, Prime Minister Benjamin Netanyahu weighed in on the crisis, although he did not address union calls for him to intervene directly.

“There’s no Jerusalemite who doesn’t know and value Hadassah, a world-renowned medical center,” Netanyahu said at a meeting of the Likud faction. “We need to find a solution that strikes a balance between the need to preserve Hadassah hospital and to prevent another crisis from recurring in another few years, because it will be the citizens of Israel that will bear the burden of the cost.”

Health Ministry Director General Ronni Gamzu told Knesset lawmakers that he supported a government takeover of Hadassah.

“Hospitals like this don’t want regulation, but when a crisis hits, they come asking for aid,” he said, pointing to Hadassah’s keeping just a small percentage of fees its doctors collected for private medical services performed at the hospital.

“When I asked why the hospital takes only 15% from the private medical services, they said, ‘It’s our decision,’” Gamzu recounted.

The Israel Medical Association sought to block the stay of proceedings and make the labor courts the forum for the dispute over Hadassah and for a bailout of the financially troubled medical center.

Orna Lin, representing the medical association, called Hadassah’s petition an abuse of the law. “The plan is to break the Hadassah workers’ committee and avoid negotiations that have been underway for the past year that had reached a draft agreement,” she said.

Starting at 10 A.M. on Tuesday, solidarity strikes at hospitals across the country took place, and were expected to last until noon. Only lifesaving systems will provided during this period. 

“They are trying to use the court as an indirect route to a debt agreement without having to produce a complete and detailed picture of its financial conditions and the factors behind it,” Lin told the court. “In my 35 years working in insolvency cases, I have never seen anything so blunt as this.”

The Hadassah women’s organization, which contributes a large share of the hospital’s operating budget, has largely stayed on the sidelines of the crisis. But on Monday Zvi Agmon, the attorney representing the organization, warned that the medical center faced closure.

“The hospital doesn’t have a cent,” he said. “Israel’s best medical center is in deep trouble and it doesn’t matter who’s to blame. We have to find a solution, and not through the labor court.”

Striking Hadassah doctors in Jerusalem, Feb. 9, 2014. Signs read "Save medicine at Hadassah."Credit: Emil Salman

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