Hadassah and Hubris Part 4: The New Tower

 Health sources: New Hadassah tower helped drive hospital to near-bankruptcy 

Haaretz, Feb. 13, 2014

The new tower at Hadassah University Hospital, Ein Karem is one of the main causes of the near-bankruptcy of Hadassah Medical Organization. 

The 19-floor Sarah Wetsman Davidson Tower contains high-tech operating theaters and private rooms. While the hospital did need these new facilities, the building’s upkeep is so expensive that it rapidly worsened the hospital’s already shaky financial situation. 

Yet there is almost no mention of the new tower in Hadassah Medical Organization’s application for protection from creditors, which was granted by the Jerusalem District Court on Tuesday. The petition, which presumes to list all the causes of the medical center’s financial collapse, mentions salary distortions, a surplus of employees, problematic agreements with Hebrew University and outsized discounts to Israel’s health maintenance organizations. The tower is mentioned only as an asset. 

Most of the funding for the tower – 800 million shekels ($227 million) - came from the New York-based Hadassah, the Women’s Zionist Organization of America, which operates Hadassah Medical Organization, even though its budget deficit was growing rapidly during that time. The state contributed another 197 million shekels. 

During those years, despite the huge influx of cash for the tower’s construction, the medical organization, which also includes Hadassah University Hospital, Mt. Scopus, was scrambling for money. One tactic, revealed recently, was to pull money out of the doctors’ private funds, unbeknownst to the doctors themselves. 

Health sector sources said they had no doubt that paying for the tower’s upkeep was a major burden for the hospital. The new facilities were necessary, as the hospital had been overcrowded and patients’ rooms had been substandard. 

The new tower has 19 floors, including five below ground, and contains 100,000 meters of space, nearly double that of the old building. It could be considered Israel’s best hospital facility, with 500 beds in private or double rooms. By comparison, the Sami Ofer Building at Tel Aviv’s Ichilov Hospital has double and triple rooms, and not one single room. 

The tower’s cost -- $360 million, including $318 million for construction and another $42 million for equipment – was tens of millions of dollars beyond the original budget. 

Since the new building opened, it has increased the hospital’s operating expenses by 30 million shekels a year, sources told TheMarker. Hadassah said that figure is incorrect. 

Some 85% of the new building’s operating budget comes from donations, as is the case with many of the newest hospital facilities in Israel. All of that money is raised by the Hadassah women’s organization. 

Still, the hospital very likely could have sufficed with new facilities that cost less to maintain.
“It’s killing their operating budget,” said a senior official in Israel’s health sector. “A bloated project, ostentatious and wasteful, that doesn’t suit the standards in Israel. One or two patients per room? Someone needs to fund that.” 

Another health sector source suggested that the women’s organization’s promotion of such a building showed it was out of touch with the economics of hospitalization in Israel. 

“The Hadassah women live in the United States, where people pay thousands of dollars for a day of hospitalization. In Israel it costs a few hundred dollars. You can’t maintain the same standard,” he said. 

Audrey Shimron, head of the Hadassah women’s organization in Israel, said building a tower of this standard was a matter of foresight. The tower was built to last 50 to 70 years, she said. 

Meanwhile, former Hadassah Medical Organization director Shlomo Mor-Yosef said yesterday that he is being unfairly blamed for the hospitals’ financial problems. Taken to task for the large salary bonuses he received in his former job, Mor-Yosef, now director general of the National Insurance Institute, refused to take the blame for the Jerusalem hospital’s dire financial straits, saying that the Finance Ministry and the Hadassah women’s organization knew about its financial decline but failed to do anything about it. 

Mor-Yosef was speaking at a session of the Knesset Finance Committee, which he was attending as NII director general. He had initially been asked to attend to discuss imbalances in the NII’s own cash flow. However, Knesset members demanded that he respond to a report in Wednesday's Yedioth Ahronoth newspaper about salary bonuses he received from Hadassah during a period in which the hospital accumulated a huge deficit. 

Hadassah Medical Organization filed for protection from creditors on Friday, and only paid staff at the hospital’s two Jerusalem locations half their salaries at the beginning of the month. The hospital has also been wracked with labor unrest over the past several days. 

Hadassah employees continued with their labor sanctions on Wednesday, as the hospitals continued to offer only life-saving treatment. 

The hospitals are expected to receive a cash infusion of 22 million shekels on Thursday or tomorrow from the Hadassah women’s organization, which would be used to pay salaries, said hospital sources.
The hospitals are also months behind in their payments to workers’ pension and provident funds.
Meanwhile, the halls of the hospitals were nearly empty on Wednesday. Many patients came to Jerusalem’s Shaarei Zedek hospital instead, which appeared significantly busier than usual.