Hadassah: Too Big to Fail

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Health Ministry Director General Roni Gamzu told a session of the Knesset’s Labor, Welfare and Health Committee this week devoted to the crisis at Jerusalem’s Hadassah University Hospital that he has not been monitoring what has been happening at the crisis-mired medical center because it is a private hospital and he has no oversight authority there.

The cash-strapped hospital, which consists of two Jerusalem hospital campuses sponsored by the U.S.-based Hadassah women’s organization, filed for protection against creditors last Friday. Privately-owned hospitals, Gamzu said, don’t want to be regulated, “but when they’re in trouble they come and ask for assistance from the state.”

There are other similarly troubled private hospitals in Israel, Gamzu noted, most of which, unlike Hadassah, are very small.

Hadassah is actually one of the largest hospitals in the country, with revenues in 2012 of close to 2 billion shekels ($569 million).  It is the major hospital service provider in Israel’s capital. The vast majority of its revenues are paid to Hadassah Hospital by the country’s four health maintenance organizations (kupot holim). The HMOs pay for regular services rendered through the public health system and also through their supplemental insurance plans for medical care provided by doctors at Hadassah on a private basis − sharap services, as they are known by their Hebrew acronym. All in all therefore, the hospital is supported almost entirely from public funds. And in addition, Hadassah’s revenues are limited by the state, as part of government curbs at all the country’s hospitals, in an effort to rein in healthcare spending.

When Hadassah became mired in its current financial problems, it came running to the state to be rescued. The state is considering injecting half a billion shekels into the hospital even without taking it over. The hospital is a classic example of an institution that is too big to fail, meaning that the public is being relied upon to ensure its continued operation. Even though it is owned by the Hadassah women’s organization rather than the State of Israel, it is a public hospital for all intents and purposes. But if that’s the case, why isn’t it under the state’s oversight?

The Health Ministry’s response is that it has no legal mandate to impose oversight, which is true from a technical standpoint. The ministry’s supervision of hospitals − all hospitals, including government ones − is based on a 1940 order of the pre-state British Mandatory government. Written at another time by another government authority, you won’t find mention of financial oversight in the order, or in fact the issue of oversight itself.

Paradoxically enough, the Justice Ministry is the agency that provides oversight of the medical system here, but it lacks legal teeth. In the case of private hospitals, it has never occurred to anyone at the Health Ministry in the 66 years of Israel’s existence to address this absurd legal vacuum. The ministry’s failure to create even a legal foundation for such regulation became apparent at hearings by a committee headed by Health Minister Yael German that is trying in part to address the inherent conflict of interest at her ministry among the hospitals, custodial nursing care insurers, providers of services such as mental health care or equipment, the supervisor of hospitals and the HMOs. But the Health Ministry has no intention to provide oversight, so why knock oneself out to enact modern legislation over its authority?

Among the evidence presented to the committee was testimony that the subjects of the ministry’s oversight, meaning hospital directors, the most prominent of whom have been on the job for 10 to 20 years, show contempt for requests the ministry makes of them. When it comes to government-owned hospitals, the Health Ministry has authority and actually owns the facilities, but that doesn’t mean it has genuine authority over the hospital directors − so it learns to live with them.

Private fiefdoms

The ministry deals with the contempt shown by the hospital heads by cornering the hospitals when the time is ripe. When the hospitals make a request of the ministry, it in turn conditions a positive response on getting missing data. In short, the overseer makes a deal with the overseen to get information that the law requires the hospitals to provide in any event.

Zeev Rotstein, the powerful head of the Sheba Medical Center at Tel Hashomer east of Tel Aviv, even built a helicopter landing pad at his facility and hid the project from the health and finance ministries. Rafael Beyar, the director of Haifa’s Rambam Medical Center, has also been on a collision course with the government after media reports disclosed his plan to build a private hospital within the confines of his public one. He wants to build a hospital tower funded by private contributions that will not be owned by the hospital itself.

The country’s government hospitals are like private fiefdoms under the absolute rule of their directors general, who are appointed for life and do whatever they please. Supervision by the Health Ministry there is more in the nature of a recommendation. And paradoxically, the fact that these are public hospitals even enhances the hospital directors’ absolute power, because the state has nowhere to go to purchase the most advanced kinds of medical care for the public other than the large public hospitals.

If you want to get advanced care on an immediate basis at these places, it’s available only through connections − and the best connection is directly to the hospital head. And since everyone is potentially in need of these connections, it’s no wonder that the directors of the country’s public hospitals are among the most powerful people in Israel.

The problem is larger than Hadassah

So Hadassah is a privately-owned example of a much more public problem. If the Health Ministry exerted no oversight over Hadassah, it’s not just because it’s a private facility but because it doesn’t really supervise any of the hospitals, even the ones it owns. And there is no chance that it will impose supervision on any hospital if it continues to tremble in fear before the hospitals’ directors. The fact that the Health Ministry’s own directors general have historically been senior physicians has only buttressed the ministry’s distaste for the prospect of going head-to-head with the hospital heads.

It’s doubtful that the Health Ministry’s attitude will change for the better as long as the power of the country’s senior doctors, first and foremost the hospital directors, is not curbed. This major confluence of power among a handful of people exceeds that of any corporate tycoon or any consortium of financial firms.

The healthcare system cannot be improved as long as this concentration of power is not broken up through the most basic administrative action: term limits for hospital directors. No one in such a position needs to be there for life. That’s true in the public sector in general, and all the more so when it comes to something as sensitive as the lives of members of the public. It’s not right as a matter of proper management. It’s also ethically flawed and it’s a major source of inequality in Israeli society. Those with pull get more of a chance to stay alive just because they have a hospital director’s personal cellphone number. The time has come to put an end to this situation and limit the terms of the hospital directors.

Hadassah University Hospital, Ein Karem. When will it go into recovery?

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