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Tuesday, October 29, 2013

Hadassah hospital crisis deepens as Israeli board members resign

The four Israeli board members of the Hadassah University Hospital tendered their resignations Tuesday, asserting that they had been excluded from negotiations with the government over a financial bailout for the medical center. One of the four was board Chairwoman Esther Dominissini.

The four accused CEO Avigdor Kaplan and Marcie Natan, president of the Hadassah women's organization, which owns the Jerusalem hospital, of conducting talks to rescue the financially distressed institution without input from the board.

"The conduct we are witnessing lately does not conform with proper corporate governance, violates the chairwoman's authority and consequently neutralizes the board and its ability to help and wield its influence," the directors stated in a resignation letter addressed to Natan.

The four directors who quit are Chairwoman Dominissini, a former director-general of the National Insurance Institute, former Finance Ministry director-general Yarom Ariav, Yossi Rosen, a former Oil Refineries Limited chairman, and businessman Uri Neiger.

"Holding meetings with outside parties on substantive issues that could determine the hospital's future without the knowledge of the Israeli directors is peculiar... Public and legal responsibility rests on each and every director regarding the situation that has arisen in recent months, while any authority to change and influence are effectively lacking," the four said in their joint letter.

The directors also called for the Hadassah organization to stand by its commitments to inject more funds into the hospital. "This is essential for the hospital's continued proper functioning, until a long-term solution is found with the help of the government and employees," they wrote.

Saddled with over NIS 1 billion in debt, including a NIS 300 million deficit from the past year alone, the hospital wants both government finance, to cover at least the debt, and a revision of the formula according to which the medical center is paid for services by Israel's health maintenance organizations. Talks regarding a rescue and recovery plan have been held with the Finance Ministry over the past several weeks.

Hadassah Hospital has been in a state of turmoil since the outbreak of its financial crisis. Dominissini's resignation is the third by the head of the board in three years and it's the second time that all Israeli directors have resigned. The crises have involved different chairmen, different CEOs and different presidents of the women's organization, suggesting fundamental flaws in the hospital's corporate structure and the allocation of managerial authority.

Kaplan informed hospital employees on Monday, that they would be paid only half their October salaries at the beginning of next month, while the hospital tries to come up with the funds to cover the rest. Some employees will be exempt, he said, inlcuding those earning less than NIS 5,000 a month. Half-salaries were also paid last month. with the balance paid several days later.

Kaplan told staff that he had warned Finance Minister Yair Lapid and Health Minister Yael German last week that the hospital was in danger of imminent collapse. The government is not satisfied with proposals offered by the hospital so far.

Steps already taken as Hadasssah grapples with its deficit include pay cuts for doctors and nurses, laying off 200 administrative workers and shutting down most of the dental school's operations. The latter is operated jointly with the Hebrew University of Jerusalem.

One idea that has been floated is to transfer control of the hospital, or part of its operations, to one of the HMOs, most likely Maccabi. The Hadassah women's organization and the hospital, however, have emphatically rejected the idea, which has apparently been dropped.

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