Op-Ed: What Went Wrong at Hadassah Hospital?
The organization lost 90 million dollars in the Madoff scam and 40% of its investments in the US stock market.
Nancy Falchuk, former president of Hadassah Women's Organization, is following the developments at Hadassah hospital carefully. "The organization is important to me and I will do whatever they ask me to do", she says in a phone conversation from her Boston home.
Falchuk is one of the most powerful women in the organization that supports the Jerusalem hospital of that name. She was president when the collapse began and left her position two years ago. "I am still a member" she says, "and anything I say or do will be after I consult with the organization."
Her friends in Israel are not impressed by this new burst of humility from someone who was known as an involved and tough administrator. "Hadassah Women and Falchuk bear part of the responsibility for the hospital's collapse" says an Israeli businessman who was a board member of the hospital. "Now they are trying to stay out of sight, but they knew everything. They cannot even claim that their inability to understand Hebrew prevented them from knowing what was happening, because all the reports are in English and the meetings were held in English.
"There was a quarterly board meeting that took place in Israel twice a year and in Jerusalem twice a year. They came to Israel between meetings, not a week passed without a visit from a high ranking member. They knew every single thing that occurred in the hospital. They came with me to meetings in the Finance Ministry, met with the Prime Minister. The financial information they received from the board was not always enough for them, and their financial experts dug deeply into our balance sheets, checked every line and wrote comments…"
Hadassah Women's Organization, with 330,000 members, is the largest Zionist organization in the United States. It owns the hospital.
Former board members feel that the women failed at running Hadassah Hospital. "Not only did they know everything", said a board member, "they also dictated everything, and were able to do this because most of the board members were Americans and represented them."
Only five of the 15 members of the board of Hadassah Hospital are Israelis. "I told everyone who was willing to listen, that it is not good to have most of the board made up of Americans", said a former chairman of the board. "I spoke to MK's and ministers, but nothing helped. The women were not willing to change the board's makeup. The Americans were experienced and well known, but they were familiar with American administration and did not understand the way Israel functions. They didn't know Israel's healthcare system. And even though they only donated between 4-10% of the budget, they wanted control."
"I bridged the differences between the Israelis and Americans on the board more than once", said Zalman Shoval, former Israeli Ambassador to the US and an owner of Bank Yerushalayim, who was once on the hospital's board. "Most of the time I tried to smooth things over pleasantly. The Israeli board members found themselves in a weird situation: on the one hand, they know life in Israel and how work is done differently here, but on the other hand, wanted the women to continue supporting the hospital. We relied on them, they are the most important Zionist organization in American, an organization of saints. Much of what is happening now is the government's fault. Hadassah is an androgynous, a public hospital that doesn't receive government allocations."
Q. This androgynous being has owners. What is their responsibility?
A. "One of their mistakes was that they did not find ways to get government support. They did not do well in negotiations with the government."
Q. And where were you, the Israeli board members, to help in that?
A. "We relied on their accountants. It is possible that the reports did not reflect every issue adequately. Even when we disagreed with the American board members we couldn't change historical ways of doing things. We were not the majority and what we said did not carry much weight."
Avner Naveh, formerly deputy head of the IAF and then a Hadassah board member, claims that the very existence of the board is problematic. "No hospital in Israel is run by a board. The ten American members who were supposed to make policy interfered in the ongoing running of the hospital, would speak to department heads without coordinating it with the administration and were not tough enough in sticking to the recovery plan. Hadassah Women deserve much credit for all that they did for healthcare in Israel, but it is hard for Americans to control a hospital that treats Israelis."
Q. What part did the board play in the collapse of the hospital? You are all well known businessman who are familiar with the Israeli picture.
"We ran a place that we could not influence. The Americans held a majority, they decided everything. Who listened to us?"
One board member remembered how Hadassah Women fought David Brodet, former general manager of the finance ministry, who was chairman of the board for eight years, til 2008. No one understood why Brodet lost favor in their eyes, says the board member. "The women felt that he was ineffective and he was forced to resign. We thought that he was a good chairman who prepared a good recovery plan and that his leaving was a mistake."
Brodet refused to comment. Three other chairmen have come and gone since he left the post. Joyce Rabin, representing Hadassah Women, has been serving as chairman for the last few months. Hadassah has promised that an Israeli chairman will be appointed soon.
Two general managers also left during the past three years: Shlomo Mor Yosef left in 2011, Ehud Kokia resigned in January 2013. "Now they have decided that they need a financial wizard and brought us Avigdor Kaplan" says an Israeli board member. "Why they think Kaplan is a financial wizard is unclear to me, so far he has not shown signs of being one."
The women of Hadassah mean well, said Professor Joel Donchin, former head of anesthesiology in the hospital. "They are very dedicated to Israel, they work and volunteer, but they haven't a clue as to what happens in Israeli medicine. "
This is not the first time Donchin has had words with Hadassah Women. He was opposed o the construction of the new hospital tower dedicated a year ago at Ein Kerem. "I was a member of the construction committee and decided to leave when I saw there was no one to talk to", he said, "They brought the best architects from America and bult a megalomaniacal tower. The departments are as large as American ones and we have to run miles from one end to the other. Israeli hospitals are more modest. They wouldn't listen to us about the tower. Shlomo Mor Yossef was their favorite for years, until they began arguing about the tower, and Falchuk stopped liking him…They brought the hospital to the forefront of healthcare, but did not understand that it costs money. .."
The crisis began six years ago, when the organization lost 90 million dollars in the Madoff scam and 40% of its investments in the US stock market. "We in Israel lost only 4% in the stock market slump", says a former board chairman, "but they lost 40%."
The losses affected the hospital. Hadassah Women's Organization announced that its annual $40 m. allocation would be reduced to $19m. "We tried to convince them to reconsider", says the former chairman, "but they refused and said they were broke." Palachek explained that her plan was to eliminate the operating budget support and concentrate on development.
Falchuk remained optimistic because even after Madoff and the stock market crash, donors continued to transfer funds to Hadassah. "We predict an exciting future for the organization", she said to the Jewish Telegraph Agency.
According to the Wall Street Journal, Hadassah's assets are valued at a billion dollars. It was made public that 26 assets of the organization in Israel are worth IS200m. and include residential apartments, office buildings in Jerusalem and Tel Aviv and agricultural land in Hadera.
"I invite anyone [who says negative things about Hadassah Women] to come and stand before the Hadassah president who dedicates every day of the week to the hospital" says Audrey Shimron, Hadassah Women's representative in Israel. "It is unfortunate that you do not understand that the biggest problem comes from the health system, which did not allow us to open the agreements we had with the health funds, thereby causing our deficit to grow. Everyone is so nice to us, sitting and talking - and dragging their feet for months."
Q. Is it possible that the American board members, who do not understand the Israeli mentality, are responsible for the deficit?
A. "They don't run the hospital. The Israelis on the board who understand the Israeli mentality didn't help us. They all got up and resigned and left us by ourselves."
Q. Why does an Israeli hospital require such a fancy tower if its construction and maintenance are especially expensive?
A. We have a vision of modern hospitals. We aspire to raise the level of medicine in Israel, that is our only crime.
Q. Why don't you create a "friends of Hadassah" group in Israel to elicit donations for the hospital?
A. We want to begin raising money in Israel. We don't think we need a donors group to do that. We will employ professionals.
Q. You mentioned Madoff's scam as a reason for losing money. But what about the money lost on the stock market?
A. I would like to ask the geniuses of the state of Israel if we are the only ones who lost money in the stock market crisis. We have an investment portfolio. We consult with experts and like many others, we lost in the crash, but much less than others. "
Q. Why did you replace Brodet?
A. " We have a built in maximum terms of office. He wanted to remain on the board. Hadassah's president changes every 4 years. That is the way we operate, and so far, it has not worked out too badly. We laid the foundations for Israel's healthcare system. Our 330,000 members are Israel's most powerful lobby in the USA. We are not working against one another, we are all one nation, all in the same boat."
Translated from Makor Rishon, the Hebrew weekly.