Tuesday, February 11, 2014

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.


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