As Hadassah Ails, Jerusalem's Second Medical Center Thrives

Heads of the capital’s two major medical centers engage in verbal sparring over their respective institutions’ finances, scale and reputation

If you ask people who don’t live in Jerusalem about the city’s Shaare Zedek Medical Center, it may sound familiar to some of them, but no more than that − just another hospital in addition to the world-renowned Hadassah University Hospital. On the other hand, residents of Jerusalem are well aware that Shaare Zedek is a growing institution that is approaching the size and scale of Hadassah.

Last week the directors of the two institutions engaged in verbal sparring that shattered the delicate status quo that had been maintained since Hadassah’s financial crisis erupted last month. Hadassah has sought court protection against creditors amid labor unrest among staff who have not received their full salaries. As part of the status quo, Shaare Zedek’s administration maintained their silence over the troubles at Hadassah and even heaped praise on it. Jonathan Halevy, Shaare Zedek’s director general, opted not to offer jobs to Hadassah medical staff seeking to jump ship.

Verge of collapse?

But the situation changed after Hadassah Director General Avigdor Kaplan dispatched a widely distributed email last week asserting that Shaare Zedek is also on the verge of financial collapse. Halevy rejected the allegation. He said Shaare Zedek finished 2012 with a 53 million shekel ($15.3 million) surplus and that 95% of his hospital’s accumulated deficit of 1.35 billion shekels are long-term pension obligations that are more than offset by the hospital’s assets. The hospital is capable of meeting its pension obligations from its current budget, he said.

Getting personal, however, Halevy told TheMarker “if the situation had been reversed, Kaplan would have been dancing on our blood.”

The two hospitals are both independent, non-profit organizations that, unlike most of the country’s hospitals, are neither owned by the government nor by Clalit, the nation’s largest health maintenance organization. Neither gets government funding other than for specific purposes.

Since it acquired the city’s ailing Bikur Holim Hospital in 2012, Shaare Zedek has begun approaching Hadassah in size, with 840 beds to about 1,000 at Hadassah and 125,000 emergency room visits a year, compared with Hadassah’s 139,000. Measured by the number of babies delivered, Shaare Zedek’s 20,500 surpassed Hadassah’s 11,500 last year. Nonetheless, Hadassah still performs considerably more operations − 35,000 compared with Shaare Zedek’s 27,000 − and in terms of revenue from medical service, including so-called Sharap private medical services conducted in hospital facilities. At 1.7 billion shekels, Hadassah’s revenues are still considerably larger than Shaare Zedek’s 1 billion shekels as of 2013.

But by certain measures Shaare Zedek it way behind Hadassah. It doesn’t enjoy the kind of backing that the Hadassah’s two hospital campuses in Ein Karem and Mount Scopus get from the New York-based Hadassah women’s organization. The organization has provided half a billion shekels to the medical center over the past five years on top of the money it provided to build the new hospital tower at Ein Karem. By contrast, Shaare Zedek must do its own fundraising and manage with the contributions that it gets in addition to revenue generated from medical services.

Another major difference is research and teaching, which is much more extensive at Hadassah. Jointly with the Hebrew University, Hadassah runs a medical school, a dental school, a nursing program and a military medicine program, and trains 75 percent of Jerusalem’s medical students. It invests large sums in medical research, carrying out no less than 40 percent of the country’s hospital-based research. Shaare Zedek also trains medical students and conducts research, but on a much smaller scale.

But there is also no disputing that Shaare Zedek’s finances are in better shape. Halevy said the hospital’s 2013 financial report, which has not yet been released, will show an operating surplus of about 40 million shekels.

Challenge to Hadassah

“It’s been close to 30 years that Shaare Zedek has been paying full salaries on time to all its employees, without recovery plans and without government support,” Halevy wrote to Kaplan.

It’s also worth noting that Shaare Zedek’s ability to survive and thrive on its own poses a challenge to Hadassah, for all its differences, in Hadassah’s dispute with the government. Hadassah claims that the state is responsible for the medical center’s current plight − although the government does not provide a direct allocation to the hospital, it places a cap on the revenues that Hadassah can derive for medical services.

Shaare Zedek also poses a challenge to the argument that Sharap medical fees that go to Hadassah’s doctors are draining its finances. Shaare Zedek has Sharap services, although on a smaller scale.

But on a conciliatory note, Halevy said he expects Kaplan, his counterpart at Hadassah, to bring Hadassah back to health with the involvement of the state, the hospital staff and the Hadassah women’s organization.

Daniel Bar-On