Just 17 months ahead of the end of a government-funded financial recovery program designed to rescue the Hadassah Medical Organization from financial collapse, the hospital’s director general pronounced the hospital in sound financial shape last week and said it has actually become “a leader in the high quality of medicine in Israel.”
“We had the miracle of Chanukah,” insisted the official, Zeev Rotstein. “The turnaround was very successful. Hadassah today is going to get out of the recovery agreement with flying colors.”
Rotstein’s rosy picture of the hospital came during a nearly two-hour interview here with The Jewish Week on the sidelines of the 99th annual convention of Hadassah, the Women’s Zionist Organization of America, the group that founded and funds the hospital. His upbeat assessment is in sharp contrast to the dire view of the hospital’s financial condition painted by a Times of Israel report.
The investigative report published last week stated that the hospital’s accumulated deficit is expected to be $146 million by the end of this year — $45 million higher than the recovery plan’s year-end target. … And senior health officials estimate that Hadassah’s financial hemorrhaging is far from over.”
The Times of Israel report said also: “Following years of financial mismanagement, Hadassah had accumulated a deficit of close to $281 million by 2014. Unable to pay salaries and its accumulating debts, the hospital was close to ceasing operation and becoming defunct.”
The government agreement to pump $422 million into the hospital for a seven-year period ending at the end of 2020 was predicated upon the hospital management’s commitment to “a long-term, sound operation … while maintaining financial balance throughout,” the newspaper reported. “However, as soon as the agreement was put into action, both the hospital management and the government oversight authorities seemed to ignore many of these required policies and measures. Various warnings have been issued over the years, but the departure from the bailout framework has continued.”
But in his interview with The Jewish Week, Rotstein said that with the help of “all the women of Hadassah, working shoulder-to-shoulder together with us, we worked to put together a plan that increased our activity, returned back the trust of the people, and flooded us with patients — the hospital was 50 percent empty when I got there [in January 2016]. Today, it’s full. I don’t have a single bed to put a patient. Patients are coming in big numbers.”
Rotstein insisted that The Times of Israel story is filled with “lies.” He quoted the expert who was appointed to oversee the financial recovery as saying that in the period between January and September of last year the hospital “continuously operated as a public hospital and succeeded in meeting its financial liabilities. … HMO materially strengthened its financial position, including: decreasing accumulated deficit, [and] high liquidity… .”
Rotstein revealed he has “finished all the calculations and built a budget to the end of December 2025. I worked on the plan with the Ministry of Finance. We have followed the recovery agreement very nicely. Look at the accumulated deficit. It will go down to 438 million shekels ($121.7 million) from 887 million shekels ($246 million) in 2014. The Ministry of Finance said if you continue the same way as you have in the last three and a half years, by 2023 you will have a positive” financial picture.
The Times of Israel story asserted that after the staff of the hospital’s hematology-oncology department walked out en-masse after a vote of no-confidence in Rotstein’s management just 15 months after he was hired, Rotstein “recruited new doctors who, according to the Finance Ministry investigation, were paid hundreds of thousands of shekels to join Hadassah. This, along with several other inflated salaries paid to recruit ‘star’ doctors for other departments in the hospital, is a violation of the bailout agreement. In fact, one section of the agreement issues a hospital-wide salary freeze for the entire duration of the bailout and forbids increasing the number of employees at the hospital over said period.”
Rotstein maintained that the hospital has lived up to the letter of the recovery agreement. He pulled out charts he had made that showed the hospital was “holding total wages constant” while stabilizing the work force and increasing the hospital’s activities and income. In addition, he said, the hospital has reduced the accumulated deficit beyond the milestones set forth in the recovery agreement.
Ron Aloni, the chief financial and operating officer of the HWZOA, said in an email that although there are no official government statements showing the hospital’s financial records, “those figures are straight out of the hospital’s audited financial statements (KPMG Israel is the auditor), which are filed with the Israeli’s company registrar and are available to the public at https://www.guidestart.org.il/home.”
Rotstein said that once the recovery plan ends at the end of next year, the Finance Ministry has tentatively agreed to provide the HMO with an annual subsidy of $25 million — the first time the hospital will have received a government subsidy even though every other hospital receives one.
The subsidy is needed, Rotstein said, because “the government is forcing us to work below our cost,” causing the deficit.
“It is not inefficiency,” he insisted.
The subsidy is dependent upon the HWZOA committing to an annual donation of $20 million. But a spokeswoman for the organization said it is “too early to make any commitment or decisions.”
From 2015 to 2018, the HWZOA gave the hospital a total of $189.5 million (including the forgiveness of $12.5 million in loans), according to Aloni.
Clarification: This article has been updated to, among other things, remove certain statements that misstated the organization facing financial challenges. That entity is the Hadassah Medical Organization, the organization that operates Hadassah Medical Center, and not Hadassah, the Women’s Zionist Organization of America (HWZOA). HWZOA is the founder and owner of Hadassah Medical Organization and its largest benefactor after the government of Israel. HWZOA says it has representation on the board of Hadassah Medical Organization but does not manage or administer the hospitals.