If Jerusalem’s Hadassah Hospitals Are So Great, Why Are They So Sick?

Everything you didn’t know you needed to know about the financial crisis jeopardizing the medical center your mothers and grandmothers helped build and run.

Ronen Shnidman
Ronen Shnidman
Ronen Shnidman
Ronen Shnidman

How did Hadassah Medical Center get into the mess it’s in today, with the threat of closure hanging over its two hospitals in Jerusalem, staff on strike and debt of around $370 million?

To answer the big question, some background is essential. The center, which today comprises the Hadassah University Hospital on Mt. Scopus and its newer counterpart outside Ein Karem, was founded by Hadassah, the Women’s Zionist Organization of America, and is still operated and funded by the charity.

Between 2005 and the first half of 2013, for example, the organization contributed some 2 billion shekels (about $568 million by current exchange rates) to the center, for both current and capital expenditures.

But the women’s organization is itself in trouble, partly the result of losing millions of dollars due to the Madoff scandal. According to a former consultant to Hadassah, the organization has drastically cut its regular funding to the Jerusalem hospitals, to about $19 million a year from what had been upward of $40 million.

To this must be added the high costs of a major expansion project on the Ein Karem campus, excessively high salaries paid to some staff members and discounts given to Israel’s health insurers.

In January 2013, Prof. Ehud Kokia stepped down as director of Hadassah Medical Center over the debt crisis, after less than two years on the job, and the center tried to launch a financial recovery program that would include contributions from the Israeli government.

So how big is Hadassah Medical Center’s debt?

The center carries debt of 1.3 billion shekels, plus an annual deficit of 250 million shekels to 300 million shekels.

How does management plan to reduce its debts?

By firing 300 employees, cutting salaries and benefits, and increasing the medical center’s share of the revenue from private medical services provided by physicians using its facilities. The center has reached an agreement with the Finance Ministry and with Hadassah over allocations of a total of 100 million shekels over the next three months to keep the hospitals open. On Tuesday a Jerusalem court gave it a three-month respite from creditors, after it sought protection from lender banks.

Is Hadassah Medical Center private or public?

The center straddles the line between public and private. Its hospitals are not owned by the government; it is Hadassah, from its New York headquarters, that hires the center’s CEO and board of directors, and they provides private medical services, paid out of pocket, with private health insurance or with supplementary coverage provided by Israel’s four health maintenance organizations (kupat holim). But the center’s hospitals and outpatient clinics are also part of the national health care system, under which every resident belongs to one of the HMOs.

The possibility of nationalizing Hadassah Medical Center as part of the Finance Ministry’s bailout package has been raised – Health Ministry director general Ronni Gamzu, for one, supports the idea – but for now it’s not on the table.

What set off the current strike, or go-slow, by hospital employees?

Due to its large budget deficit and accumulated debt, workers received just half of their January salaries. After management sought to cut doctors’ salaries, instead of agreeing to reduce immediate wage costs by converting part of their salary into loans to the medical center, physicians initiated work sanctions on February 4. The hospitals were placed on weekend and holiday footing, providing urgent treatment only, and new patients are only being admitted in event of an emergency.

On Sunday, hundreds of doctors demonstrated outside the Jerusalem offices of Prime Minister Benjamin Netanyahu, urging him to intervene in the dispute. On Monday, the remaining hospital staffers joined the strike and colleagues at other hospitals held a two-hour solidarity strike.

How big is Hadassah Medical Center?

Between them, the two hospitals have more than 1,000 beds, 31 operating theaters and nine intensive care units. There are six schools for health professionals, operated jointly with Hebrew University. The 19-story Sarah Wetsman Davidson Tower, completed in 2012 and costing $363 million, added 500 more beds and 20 operating rooms. By its own estimate, Hadassah Medical Center treats approximately one million patients a year. It employs 6,000 medical professionals and support staff, some of them part-time. According to the center’s website, there are 800 doctors in its employ. More than half – 488, to be exact – provide private treatment.

What’s the difference between private and regular medical services at Hadassah?

For one, an average waiting period to receive treatment of seven days for the former, versus 55 days for the latter. Beyond that, surgeons operate on public patients in the morning and on private patients after 12:00 P.M. Similarly, private consults on hospital premises are after 3:30 P.M. only.

How much does the medical center make from private medicine?

Hadassah Medical Center’s net income from private medicine amounts to just 16% of the hospitals’ revenue from private medicine, or around 40 million shekels a year. The center’s physicians earn a total of 128 million shekels a year from private care. For the sake of comparison, the combined annual salaries of all the center’s physicians (including doctors who do not offer private services) for public medicine come to 600 million shekels.

Most Hadassah doctors aren’t making millions. Of the 488 of the center’s physicians who do offer their services privately through the hospitals, some 85% gross less than 50,000 shekels a month. Only between two and three dozen Hadassah doctors earn more than $1 million a year for their work at the medical center.

Hadassah University Hospital, Ein Karem. When will it go into recovery?
Hadassah Hospital employees striking, Feb. 10, 2014. Sign reads, 'Save the medicine at Hadassah.'Credit: Emil Salman

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