The Email That Started a War of Words Between Hadassah and Shaarei Zedek

Message raised questions about who stole $143 million.

An email exchange between the CEO of Hadassah Medical Center and the hospital’s senior physicians has poisoned Hadassah’s already fraught relations with Shaarei Zedek Medical Center in recent days.

Until the deterioration of relations, Shaarei Zedek had been backing Hadassah Medical Center, which filed for protection from creditors last month.

However, after Hadassah CEO Avigdor Kaplan asserted that Shaarei Zedek, which has remained in the black in recent years, is also on the verge of financial collapse, Shaarei Zedek CEO Yonatan Halevi rejected the allegation, countering that Hadassah is pulling the wool over everyone’s eyes.

The crisis between the two Jerusalem hospitals began after a senior Hadassah physician sent a mass email to Kaplan, raising hard questions about the “identity of people who stole 500 million shekels ($143 million)” from the doctors’ research and continuing education fund. The physicians also wondered about continuing the high monthly payments to former CEO Shlomo Mor-Yosef, as well as the salary limits Hadassah was imposing on its doctors.

Kaplan briefly responded, noting that a committee of inquiry had been established regarding the medical center’s financial collapse, that he supported reducing Mor-Yosef’s monthly payment, and that he advocated making the committee findings public to avoid any whitewashing.

In the wake of that exchange, another senior physician asked Kaplan additional questions regarding the hospital’s heavy debt, the emptying out of funds without workers knowing, and the prospects of getting the money back.

After explaining how Hadassah had operated since last year to protect employee funds, Kaplan informed the physician that he had looked at Shaarei Zedek’s financial reports, which he said showed a debt of 1.5 billion shekels, and that Shaarei Zedek owed its employees a similar amount.

That statement set off Halevi, who countered that Shaarei Zedek had no current accounts debt, but rather finished 52.8 million shekels in the black in 2012. He added that 95% of the accumulated debt of 1.35 billion shekels resulted from planned payouts to laid-off workers, and thus was a long-term actuarial debt against which his hospital has funds set aside. He also stated that Shaarei Zedek easily meets its pension payments through its current accounts budget, which is reflected in the financial reports.

Halevi has since continued his front against Hadassah with barbs he had withheld previously. “You know well,” he wrote, “that for nearly 30 years Shaarei Zedek has paid its salaries in full, on time, to all its employees, without recovery plans and without government support; presents an annual balanced budget; doesn’t use pension plans and funds set aside for workers to finance its ongoing operations; and is managed efficiently, which is reflected in the expense rate for salaries relative to income from medical services of 72.5% (compared to 91% for Hadassah).”

Halevi said Kaplan had written out of desperation when he likened the situation of the two hospitals, and expressed surprise at Kaplan’s behavior “especially in light of the relationship of trust that exists between us.” In summation he wrote, “I was disappointed, and I drew conclusions.”

Kaplan responded to Halevi through a mass email to Hadassah staff, asserting that there is no true source of funding at Shaarei Zedek for its pension-related commitments, and that “it is only a question of time before this bubble bursts.”

Halevi told TheMarker that Shaarei Zedek has made significant progress over the last three years to increase the protection of its employee funds. Moreover, the hospital’s budgetary commitments to pension payments stand at 6.2%, and even then the hospital is turning a profit.

“Kaplan is in distress, and he is deceiving the workers and trying to make a vain comparison between Hadassah and Shaarei Zedek,” Halevi said. “He is inciting and misleading the workers - only because he has problems at home. I am sure that if the situation were the other way around, he’d be dancing on our blood.”

Olivier Fitoussi