Tuesday, February 11, 2014

Hadassah, a doctor's view

I don't want to spend too much reiterating the various forces that have led to the collapse of Israel's Hadassah Medical Organization, but I think it is important both to recognize the thoughtful presentation by one of the doctors there, while also explaining why the doctor's conclusion is incomplete.

In this letter, the physician details the current system of hospital payments and shows why Hadassah is put at a disadvantage by government policies that have existed for many years.  Recall that my report last year addressed those same points, when I said:

The current system of health care finance in Israel works to the disadvantage of HMO.  Unlike government and health plan hospitals, it receives no financial support to meet operating deficits.  In addition, the system of capping patient revenues that is employed by the health maintenance organizations and the government causes financial losses to accelerate as patient volumes increase.  The discounts demanded by the health plans further aggravate this situation.  The lack of appropriate cost sharing by the university is an additional contributor to the deficit.

I gather than this doctor offers his analysis in part in defense to what he is reading in the newspapers.  He says, "Most of the blame for the monetary crisis should be put on the ministry of finance and not on the Hadassah management, its doctors and its other workers."

Where I part company with this thoughtful doctor is based on the fact that the circumstances he described have existed for years.   The hospital has faced annual financial losses for many years, and each year, the owner of the hospital, HWZOA, graciously and generously made up the difference, until--for a variety of reasons--it was unable to do so.  One part of the hospital CEO's job was to go on an annual trip to New York, hat in hand, and request (and receive) the number of dollars needed to balance the budget.  During the period of HWZOA largess, everybody in the hospital became accustomed to being fiscally irresponsible.  There were virtually no cost controls, no centralized spending plans or oversight authority by central management.  Most service lines were run without regard to their profit or loss.  The view of more than one chief of service was, "Our job is to spend money; management's job is to raise it."  Meanwhile, too, major philanthropic gifts were secured for new capital facilities, like the recent huge building project, without thought given to how the people, equipment, and supplies needed in those new spaces would be paid for.

This doctor is right that it would be wrong to blame the doctors and other workers for this.  After all, they were operating under the conditions established by the Board and the CEO.  But those conditions reflect an utter failure of executive leadership and the governing body.  Yes, now the government will need to help, but there are major structural changes still needed in the organization if it is to carry out its purpose in an efficient and equitable manner.


Anonymous said...

Even if the government does step in to help, it won't resolve all of the internal bad practices of runaway spending, no cost controls, poor management, adverse relationships between the clinical and administrative leadership. And, it won't solve the governance issues - governing boards need to pay attention to more than just fundraising. One wonders what the board has been doing all this time on that front. If the operating deficit issue has existed for a while and been covered by fundraising, did anyone on the board understand the business issue it caused? Or foresee that such a day might come? Did the board even know enough from a business standpoint to ask such questions? It appears not. Hard to imagine how such fundamentally awry business practices can have been allowed to continue otherwise. One way or the other, this is a governance failure.

Susanna Levin, NP said...

I used to work for a non-profit health care organization that once decided to pay its clinical staff what it was worth, instead of what it was getting. That year my salary went up 40%, & I was making more than the assoc. exec. director. Although the board's heart was in the right place (they wanted to increase staff retention), they never planned on how they would pay for the increase in the long term. Though the organization survived, patient care suffered & there was a mass exodus of staff (to may a very long, sad story short).

Anonymous said...

The doctors and staff at the hospital have to share the blame for the financial crisis. They and the administration were like kids in a candy store taking salaries and benefits that they were not earning. The administration at the hospital covered up the growing deficit preventing the correction that was needed. Finally I am sure that you have some basis to state that the new hospital tower was being built with no thought being given to equipping it, etc.. Unfortunately you are wrong and obviously listening to those who love to criticize without factual support.

Paul Levy said...

The proof of the statement is that the hospital had insufficient cash to meet its obligations, even as the new tower was being completed.

Anonymous said...

Unfortunately your proof of the statement process nothing. If the hospital had insufficient cash the fund raising for the new tower had no connection to that situation. The Tower fund raising always contemplated the necessity for equipment, etc. . The hospital administration which was lining its pockets by mismanagement and doling out cash to all under the bookkeeping cover of salaries and bonuses drained the bank.
We all know the problem that now exists and don't need continuing finger pointing. Let us move on and sort the recovery of the hospital United as one.

Paul Levy said...

Money is fungible. The hospital was funding the equipment and supplies of the new building at the same time they were cutting salaries and delaying payments to other vendors. The Tower fundraising did not include all the money for those equipment and supplies.

You say not to point fingers and then you accuse the administration of lining its pockets. Practice what you preach!

Anonymous said...

As I said continued finger pointing which obviously meant from there on. My problem is your continuing to state facts which are completely accurate such as the funding of the equipment. I now realize that you will slant the facts against HWZOA and do not understand your agenda. So be it, at least it is obvious that not many people read your blogs.

Paul Levy said...

Please read my first post again, with excerpts from the report I wrote. I don't see how you can consider that as slanted against HWZOA.

And, unlike you, I use my own name and tell people who I am so they can try to understand where I am coming from. You are entitled to remain anonymous in this forum, but it really undercuts your persuasiveness.

This is a time for people to stand up publicly for what they believe and not stand behind anonymity.