As Hospitals Floundered, Hadassah Paid PR Expert’s Firm Over $500k

Debt-ridden medical organization still found the money to pay strategic consultants at the same time as employees' salaries were frozen, cut.

Olivier Fitoussi

Hadassah Medical Organization spent more than 2 million shekels ($511,000) in 15 payments over the past year on outside spokespeople and strategic consultants.

Between October 2013 and this month, the debt-ridden medical organization, which runs the two Hadassah hospitals in Jerusalem, made the payments to a company called The Free World Ltd., which belongs to public relations expert Racheli Goldblatt and strategic consultant David Spector.

The payments were recorded under various descriptions, including “spokesman’s services and media advice,” “advice to the director general,” “advice to the board of directors,” “retainer for Racheli” and “retainer for David.” Each individual payment ranged from 35,000 shekels to 418,000 shekels.

At the same time, the organization’s parent — Hadassah, the Women’s Zionist Organization of America — was also paying Spector to serve as the American organization’s representative in Israel and Goldblatt as its spokeswoman.

Because Hadassah is owned by the American organization, it isn’t obliged to issue tenders for external consultants like other public hospitals are.

Spector and Goldblatt were hired by the medical organization’s previous administration without a tender, and consulting industry sources said the payments they received are quite high for the market — especially for an organization in a deep financial crisis, and considering that they were also being paid by the organization’s parent.

During the period when Free World Ltd. was receiving these payments, employees of Hadassah’s hospitals saw their salaries frozen and went on strike as doctors and other workers suffered pay cuts billed as a temporary loan to the hospitals. The payments to Goldblatt and Spector continued even when the hospitals suspended payments to other service providers under a court-ordered stay of proceedings.

The payments also continued after a recovery agreement was signed in May that forced suppliers to forgive part of their debt.

Free World “was hired to advise Hadassah’s offices in Israel, and the contract with it ended a few weeks ago,” said the Israeli office of the Hadassah women’s organization. “The details of the contract with the company are an internal matter.”

Sources in the medical organization’s administration said the contract with Spector and Goldblatt was signed by the previous management and ended in November. They also said the payments covered four people — Spector, Goldblatt and two of their employees — with Spector and Goldblatt receiving 30,000 shekels a month each and the other two 12,000 shekels a month. But these monthly payments account for only about half of the total. The sources said the other 1 million shekels were for Spector’s consulting services to the medical organization’s board of directors.

Avigdor Kaplan, who was the medical organization’s director general when the contract was signed, declined to comment on why he hired a firm that was already working for the Hadassah women’s organization.

Hadassah Medical Organization blamed the previous board and noted that it no longer has a contract with Free World.

“After a long period of dysfunction, Hadassah Medical Organization is on the track to rehabilitation, both financial and professional. We regret that some of the unions aren’t getting behind this goal and are continuing to talk with the administration via the media instead of conducting a proper relationship,” it said in a statement. “All the agreements in question were signed by the previous administration and the previous board, and the contract was ended by the current management. Regarding the motivation for the agreements and the amounts, the current management can’t answer, since it didn’t make the decisions. This statement isn’t meant as criticism of the professional abilities and investment of the service providers in question.”

Free World said it provided “dedicated and faithful” service to the new management, “which fought day and night for the hospital’s future, without fear of a violent, inciting group within the hospital that acted in bad faith and out of personal, extraneous considerations against those doing the work of saving the hospital. ... It’s too bad you’re giving a platform to this same group, whose conduct toward the previous administration didn’t enable a true recovery plan to be carried out and led to a 1.3 billion shekel deficit.”

As part of the recovery effort, the company said, Hadassah hired Free World to provide strategic consulting, lobbying, marketing, advertising and spokesman’s services. In part, it noted, this was because an international consultant advising the recovery plan had recommended cutting various staff positions, including the director of external relations, the spokeswoman and the assistant spokeswoman, all of whom Goldblatt and her staff effectively replaced.

“The contract with Free World Ltd. constituted a huge savings in costs for the hospital,” it said.

“There is and can be no disagreement about the nature of the services and the huge success in managing the crisis and formulating an agreement between the Hadassah women’s organization and the state,” the statement continued. This agreement paved the way for the creditor’s arrangement and the recovery agreement, “which brought in huge additional sums and returned assets to the hospital.”

The payments to Free World are “insignificant beside the enormous savings and the additional funds” Spector secured via his negotiations with the state, which enabled the organization to exit the stay of proceedings, Free World said.