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The Hadassah catastrophe: A failure of governance
By PAUL F. LEVY
02/16/2014
Perhaps Hadassah can be restored to its former glory, but it will take years. Moreover, it will take new leadership to inspire hope.
 
Governance failures are like slowly decaying highways, bridges and water mains. Slowly, but inexorably, the invisible deterioration of an institution continues until there is a catastrophic failure.

Such is the case with regard to a crown jewel of academic medicine, Jerusalem’s Hadassah Medical Organization.

For years, unknown to its donors and constituents, the hospital has been characterized by a lack of strategic planning, by fiscal irresponsibility and a paucity of even basic financial, purchasing and human resources systems. For several months, the hospital has been unable to meet payroll and, for longer than that, it has delayed or held payments to suppliers. Capital investment for renewal of physical plant and medical equipment has likewise stalled.

The owner and governing body of the hospital is the Hadassah Women’s Zionist Organization of America.

How sad and ironic that this organization, which has done so much over the years to support Israel and institutions like HMO, is the cause of its downfall. Now, HMO has filed the equivalent of a request for reorganization.

With remarkable chutzpah, the head of HWZOA has started a petition drive to get American supporters of Hadassah to argue for the government of Israel to support this failed hospital. Look where she puts the blame: “This crisis is the result of dynamics that have been building for years including unsustainably low reimbursement rates for services; unaffordable union contracts; and unrealistic commitments to the university who trains their students and conducts research at HMO facilities.”

Last year, I conducted a review of Hadassah’s overall situation and reported to people at the hospital: “Basic accounting, purchasing, personnel and other controls systems are not in place. As just one example, the CFO currently often does not know what supplies and equipment have been ordered by people in the hospital until the bills arrive on his desk. The human resources system is likewise inadequate. Thus, effective costs controls are impossible.”

Sure, there are structural issues in the Israeli health system that are problematic – and indeed, unfair – for Hadassah, as a non-governmental hospital. But the factor that has led to the hospital’s near demise is fundamentally a failure of governance. As I noted at the time: “Financial and existential crises do not develop overnight.

The current situation has been years in the making, and the inability of the board to acknowledge the trends in a way that would have enabled countermeasures to be put in place indicates a problem in the structure, focus, activities, and perhaps people on those bodies.”

Meanwhile, a hospital that is viewed by loyal supporters and donors as “one of the best in the world,” is far from that. Boaz Tamir, a leading Israeli expert in process improvement, recently commented starkly about the inequality of service within the hospital based on the “class” of the patients: “Normal patients – those who are not Sharap patients [i.e., those with private insurance], ‘personnel,’ medical tourists, politicians or relatives – await transfer to hospital departments for days in the overflowing and choked emergency room, exposed to contagious infections, and the stares of dozens of visitors who visit their loved ones.

In the absence of an available nursing force, thousands wait weeks and months for elective surgery, at the cost of suffering and sometimes even unnecessary loss of life.”

I, too, have witnessed rooms in the hospital where several frail people on ventilator support, separated only by cloth curtains, present an invitation for cross-contamination.

This is not the fault of the staff, as Boaz notes: “Meanwhile, thousands of dedicated workers, professional and loyal, are trapped helplessly in a system that fails to create value for its customers.”

It is appalling and embarrassing that with all the incredibly serious issues facing the relationship between the United States and the State of Israel, HWZOA would try to tap the political capital of American Jewry to solve a problem that is essentially of its own making. By conducting this petition drive, HWZOA confirms that it is so far in denial of its own role in the failure that it should cede its ownership and control of this organization and let it be owned and operated by the Israelis.

Perhaps Hadassah can be restored to its former glory, but it will take years. Moreover, it will take new leadership to inspire hope. Above all, the hospital requires a governing body that will adopt transparency as a watchword and will engage senior leaders whose primary goal is to create value for patients and employees.

The author was CEO and president of Beth Israel Deaconess Medical Center in Boston from 2002-2011. He is an author and advisor to health care institutions and strategic consultant to businesses worldwide.
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