Hadassah hospital fails to pay NIS 10M debts
Jerusalem medical center owned by Women's Zionist Organization of America unable to meet payments to suppliers. In 2009, former director general cut staff's salaries due to decline in donations
In recent days, several of the hospital's suppliers have been complaining that the center has yet to transfer payments worth tens and even hundreds of thousands of shekels, due weeks ago. Hadassah's debt to suppliers is said to amount to nearly NIS 10 million (about $2.65 million).
Two years ago, the hospital was thrown into a crisis when the Women's Zionist Org lost $90 million in the Madoff Ponzi scheme at a particularly unfavorable time for fundraising.
A year ago, Calcalist reported that the organization has reached an agreement with the Madoff Fund trustee, according to which the fund would reimburse Madoff victims a sum of $45 million.
According to US bankruptcy laws, the receiver of Madoff's investment company is authorized to claim all of the funds distributed in the scheme to disburse the victims.
Madoff managed an 11% stake of the Hadassah investment portfolio. The organization made its initial investment in Madoff's fund in 1988 when a French philanthropist donated $7 million to Hadassah under the condition that Madoff would be the one to manage the funds.
In 1988-1996 the organization deposited another $33 million in Madoff's accounts, and in April 2007 Hadassah withdrew $137 million, leaving the account with a $90 million balance.
Following the loss inflicted by the scheme, the organization had to sell its Yehuda Hatzair guest house in Jerusalem for NIS 55.5 million ($14.7 million). Hadassah Organization invests some $91 million a year in Israel and the hospital's annual budget is about NIS 1.6 billion ($420 million).
Following the Madoff affair, the organization cut its annual support of the hospital and, recently, due to the financial crisis, donors are holding on to their money and donations are on a downturn.
The hospital is headed by Prof. Ehud Kokia. In 2009, the hospital's former Director-General Professor Shlomo Mor-Yosef led a recovery program in which employees were required to lend the hospital 4% of their wages, to be repaid after a seven-year period.
Some of the employee benefits were also cut alongside other measures taken by the management.
Sources in the medical industry noted that in recent years, similarly to other hospitals, Hadassah has tapped into another source of income – medical tourism. Nonetheless, it seems it is still having a hard time climbing out of its financial crisis.
Another source of income the hospital established recently is Hadasit, a technology transfer Company which conducts and promotes dozens of developments and studies.
Hadassah was the first medical center to list its intellectual property on the Stock Exchange, through subsidiary Hadasit Bio-Holdings (HBH). In 2006 the company raised NIS 50 million ($13 million).
Hadassah said in response that "unlike other hospitals, Hadassah does not receive any budgeting from the government or the State health system. This is a temporary setback in a minor portion of the payments due to the fact that Hadassah has not received all of its due payments from various parties."
A source within the hospital imparted that he believed suppliers would be paid within the next few weeks.
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