Published On: Mon, Jan 13th, 2014

Hadassah Wants NIS 300 Million ($88 Million) Gov’t Recovery Grant

Despite funding the recovery, the government is unenthusiastic about nationalizing Hadassah’s hospitals or selling them to health funds.
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Hadassah Medical Center may face whole or partial nationalization or a sale to a health fund with a track record in hospital management. These options are in the air in the negotiations between the Ministry of Health and the Ministry of Finance on one hand and Hadassah Hospital’s management and the Hadassah Women’s Zionist Organization of America Inc. on the other.

The question is who will blink first, the government of the women of Hadassah, which owns the two hospitals on Mount Scopus and at Ein Kerem in Jerusalem, which have a cumulative deficit that is rapidly approaching NIS 1.5 billion.

Hadassah Hospital’s management is asking the government for a NIS 300 million grant to finance CEO Avigdor Kaplan’s recovery plan, but the government is prepared to offer a NIS 250 million bridge loan, albeit with a subsidized interest rate, provided that Hadassah Organization matches the funding.

The organization refuses to promise funding for the hospitals’ recovery plan.In recent years, Hadassah Women’s Organization has financed only 10% of Hadassah Hospital’s current costs. It currently provides the hospital with less than NIS 70 million ($19 million) a year (there were years in which the organization covered 40% of the hospitals’ current costs).

Hadassah Women’s Organization is no longer prepared to pledge the current level of donations for the three years of the recovery plan. As the owner, it also refuses to match the financing for the recovery plan, which involves layoffs and extensive restructuring.Hadassah Women’s Organization is only prepared to offer a one-time donation of $25 million, and this is on the condition that the government provide Hadassah Hospital a grant, not a loan, and on the condition that the organization remains its sole owner and in accordance with rules that the organization previously allowed and led. Some people will say that these rules contributed to Hadassah Hospital’s current deficit.

The Ministry of Finance opposes nationalizing Hadassah Medical Center, mainly because it fears that it will have to cover the full financing of its deficits and recovery plan, nor is it yet prepared to openly discuss about the sale of all or part of the hospital.

After all, it is clear to the Ministry of Health and the Ministry of Finance that the moment that Hadassah Hospital is awarded large grants, without any matching contribution by its owner, this will open the door to huge demands by other hospitals, both private and public, and by the health funds. Nonetheless, these options have been raised and implied in some of the talks, either as practical possibilities or to create a balance of terror with the owners,

Meuhedet Health Services once made an offer to acquire the hospital on Mount Scopus, which accounts for a third of Hadassah Medical Center’s total operations. Meuhedet, 40% of whose members live in Jerusalem and its environs, offered to buy the hospital as is, taking over ownership from Hadassah Women’s Organization, and turning the hospital into a community hospital. Negotiations apparently began, but were broken off by the organization.


Who profits from private healthcare?

For the talks with Hadassah, which have lasted a long time, the Ministry of Health drew up a model for measuring hospitals’ output, including a comparison between Hadassah Medical Center and a corresponding government hospital,  Rabin Medical Center (Beilinson Hospital) in Petah Tikva. It found a 10% redundancy in Hadassah Hospital’s medical staff, especially doctors, and a large surplus in administrative and support staff. It also found that private healthcare services at Hadassah Hospital caused it heavy and ongoing losses.

It turns out that Hadassah Hospital receives relatively little from private healthcare services: an average of 15% of the proceeds, with the other 85% going to doctors. The Ministry of Health and the Ministry of Finance are demanding that the hospital’s take rise to at least 35%. Hadassah objects.

The study also found that private healthcare services causes major distortions: patients who were once treated in the emergency room are now privately treated, and the hospitals’ doctors who are supposed to start their private practices only in the afternoon, have for years been working privately in the mornings too. This means that senior doctors are not present enough in the wards.

The study found that patients at Hadassah Hospital’s emergency rooms and wards ultimately end up at doctors’ private practices. As a result, private healthcare, which was once a special supplement, but not critical to the hospital’s operations, and made it Israel’s best hospital, has over time become its biggest problem. This is on top of the heavy expenses on doctors’ salaries, which can reach NIS 300, 000-400, 000 a month.

Under the recovery plan, government aid is subject to private practice being limited to the afternoon and the appointment of a controller and government-appointed administrator to oversee Hadassah Hospital’s operations. Hadassah Women’s Organization strongly opposes this.

Another argument between the government and Hadassah Hospital that also touches on private healthcare is over “long surgical procedures”. Hadassah’s doctors claim that such procedures, which can last for hours, require their presence from the morning. The government wants these procedures to require a special permit from the hospital’s management, and to cap the permits. It also demands that hours of doctors who carry out long surgical procedures in the morning be docked from their private practices. Hadassah Hospital opposes this too.

Published by Globes [online], Israel business news – 

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