Ten Basic Steps towards Administrative Reform to Ensure the Continuity of Makassed Hospital
By Dr. Rafiq Husseini
Administrative board member appointed to manage the Hospital
In keeping abreast of the events surrounding the financial crisis that hit East Jerusalem’s Makassed Islamic Charitable Society Hospital in the past years, and which was closely followed by many observers and interested parties, several questions have been raised of whether there exists weaknesses in the administrative structure of the Hospital. In fact, many uninformed people, or individuals without prior knowledge to the matter, have circulated rumors attributing the Hospital’s frequent financial crisis to poor management, singling it out as being the main and sole reason.
Political and Financial Challenges
There is no doubt that Makassed Hospital, during the past 20 years, has gone through a number of successive internal and external shocks. Although these blows hardly affected the distinguished and outstanding medical work provided by the medical and nursing staff, it was able to wear out the administrative and financial structure of the Hospital, placing it in a quandary from which it was almost unable to extract itself. The first of these blows immediately followed the occupation of Kuwait in 1990 and the subsequent Gulf War in 1991, as the Hospital was almost entirely dependent on financial funding from the State of Kuwait which had embraced the full coverage of its annual deficit. Suddenly overnight, Makassed Hospital found itself without a major financier. The second blow came in 1997, when the administrative board resigned along with a group of distinguished doctors and administrators, forcing the hospital to recover relying on the decisions of President Yasser Arafat and on referrals and donations provided by the Palestinian National Authority and the late President. The third blow came with the martyrdom of Faisal Husseini, in charge of the Jerusalem File, in 2001, followed by the martyrdom of President Arafat in 2004, by which time the Hospital’s financial dependence on PNA funds had become great.
As a consequence of the second Al-Aqsa Intifada in the year 2000, East Jerusalem was completely closed off and isolated from its Palestinian surroundings, the freedom of movement and access of Hospital patients and staff was obstructed and restricted, in addition to the imposition of full Israeli control over the health services for Palestinian residents in Jerusalem, where it became imperative on the city’s hospitals to be under contract with the Israeli Sick Funds in order to have Jerusalemite patients referred to them.
As a result of the deterioration of the PNA’s economic and financial situation due to the worsening political and security conditions, the reimbursement of Makassed’s financial dues was delayed, while the Hospital has been relying – then and now – on patient referral dues from the Palestinian Ministry of Health, which ranges between 65-70% of Makassed’s full occupancy rate (in contrast, there are some Palestinian hospitals which rely on an 85-95% occupancy rate from PNA referrals).
All the previously mentioned negative data resulted in the accumulation of large debts which reached $32 million in 2013. Makassed’s inability to pay, on a regular basis, dues to suppliers, employee salaries, bank debts and retirement benefits, has led to excess staffing and an increase and accumulation in the number of employees by 5-10%, not to mention the political and security situation in the country preventing a number of West Bank and Gaza Strip employees from accessing Jerusalem, while they continue to receive monthly salaries from the Hospital.
The last blow came in 2011, when the administrative board, due to some financial irregularities, ended the services of most of the Hospital’s administrative and financial leadership team. The crisis was exacerbated at the beginning of 2013, when the dire financial situation at Makassed became extremely difficult, necessitating the direct intervention of the administrative board and the appointment, in August 2013, of Dr. Rafiq Husseini – in his capacity as one of its members – to manage the hospital.
Devising solutions to ensure continuity
In September 2013, the administrative board devised ten basic steps, which ensured – if achieved – the revival and sustainable survival of Makassed Hospital. The process of implementing these steps began in the last four months of 2013, and will need a time period of three years to achieve all of its goals.
Step 1: Re-Drafting Makassed Hospital’s Development Strategy, 2013 – 2018
Makassed Society’s administrative board and the Hospital’s management adopted a development strategy for Makassed after having revised and updated it as a long-term reference for its revival. In short, the general objectives of this strategy aim at enabling the Palestinian people to obtain high quality medical service, providing medical services efficiently to all patients regardless of their ability to pay, ensuring that the Hospital remain the backbone of the Palestinian health system and the main provider of medical services which are advanced and complementary to the services provided by other Palestinian hospitals, in addition to continuing its medical and nursing teaching and training policy.
Step 2: Drafting a three-year action plan
An action plan was drafted and an operational plan ratified by Makassed Society’s administrative board in September 2013, which aimed to fully achieve an annual output by the end of December 2016. The plan has identified 13 objectives, each one being SMART (Specific, Measurable, Achievable, Realistic and Time-scaled). Specific activities to achieve those objectives were also formulated through inputs and outputs (financial, administrative and otherwise) and through a clear methodology.
Step 3: Appointing capable senior staff to lead the work at the Hospital
Makassed Society’s administrative board, upon the recommendation of the Hospital’s management, appointed new administrative and financial staff, while maintaining the highly competent employees already existing. The new team was made up of distinguished, qualified and up to date seasoned professionals, most of them being people of experience and holders of graduate degrees from Arab and international universities. While the total monthly cost of these appointments exceeded $35,000 per month in 2013/2014, but the actual additional cost to the Hospital did not exceed $6,000 per month, because the majority of the new staff was working either on a full or semi voluntary basis, or because those positions were being covered from external sources.
Step 4: Working on increasing income and effectiveness, and reducing expenses by all available means
Work began immediately on re-negotiating and amending the prices of the medical services provided, especially to the Palestinian National Authority and the Israeli Sick Funds, since these prices were very low and they were not adjusted for over 10 years. Besides, rates at West Bank hospitals were much higher than those at Makassed, even though the opposite should have applied because of the higher cost of the standard of living in Jerusalem, in comparison to the West Bank. This move has led to an increase in revenues by at least 20%. Productivity was also increased through the performance of operations and medical procedures, admissions into the Hospital, etc, which led to an increase in income of at least 5-10%. The serious chasing of old and new debts, accuracy and timely billing, in addition to several general and specific measures for cost containment, including the tightening of financial and management controls on measures that have financial implications, have resulted to savings in costs by at least 5%.
Together, these measures have increased revenue by at least 30%, resulting in no operating losses at the Hospital as of January 2014, while achieving some operational surplus in the budget of the same year. However, there is a backlog of old debts worth $32 million to be repaid through this surplus. Moreover, there is still an urgent need to support the development of the Hospital’s infrastructure and modernize its medical equipment, which is going on today through communication and contact with Arab and international donors.
Step 5: Introducing confidence building measures with the citizens and donors
In September 2013, the decision was made to appoint as auditors for the Hospital the international firm of PricewaterhouseCoopers (PWC), famously renowned for its ability and integrity in auditing. Moreover, Makassed obtained JCI accreditation in March 2014, which is the most important global certificate for hospitals in the areas of quality and safety of the patient, and retained its ISO global certificate in quality, which was renewed in July 2014 for a period of two years. These measures have certainly enhanced the confidence of the citizens in the Hospital, financially and also in terms of the quality of medical services provided.
Step 6: Professionalizing fundraising and resource development
During 2013/2014, dozens of projects were drafted in a professional manner, in both Arabic and English, and a projects’ consultant was appointed within the new structure in order to closely and diligently follow-up on them with current and potential donors, providing them with new projects, and pursuing financing and implementation. The Hospital has also been trying to find funding and donors to cover some operational costs, such as the Residents’ Training Program ($2 million spread over five years), and the Poor Patients’ Fund ($250,000).
Consequently, contact with current donors continued, and strategic relations with new donors were strengthened, resulting in the collection of over $6 million for the development and construction of new projects, and the strengthening of relationships with a large number of donors – including but not limited to – Al-Aqsa and the Saudi Funds through the Islamic Development Bank, the Arab Fund in Kuwait, the Qatari-Palestinian Committee in Support of Jerusalem, the Qatari Red Crescent, the UAE charity organization Human Appeal International, Bayt Mal Al Qods Al Sharif Agency in Morocco, the Organization of Islamic Cooperation (OIC) in Jeddah, the Government of Norway and the Norwegian Aid Committee (NORWAC), USAID, the German Agency for International Development, the Welfare Association, Al Noor Association and the Oohdat Al Fadl Association in Bahrain, the Women Cultural Social Association in Kuwait, the OPEC Fund for International Development in Austria, the United Nations Development Program, the Islamic Relief Organization in the UK, the European Union, United Palestinian Appeal in Washington, the Palestine Investment Fund, the Consolidated Contractors Company (CCC) in Greece, and the Bank of Palestine.
In addition, new avenues were opened to collect individual donations via social networking websites, e-mail appeals and visits abroad, enabling the Hospital to collect more than $1.8 million through these new means within a year.
Step 7: Introducing new essential systems
Through a number of donations, work began on the installation and operation of a new computerized information system, HMIS, for all departments and sections, and a modern human resources software. The introduction of these two systems will cause a big and qualitative shift in the Hospital’s style of work and supervision. Furthermore, a consulting company was hired – funded by the Islamic Development Bank – to review the structure and the work of the Hospital, and to recommend essential changes in its institutional structure and function in order to improve performance and quality. With the beginning of 2015, the Hospital will introduce a system of incentives and motivation in order to keep talented and distinguished physicians, surgeons and staff, and to entice specialized doctors in rare medical fields to the homeland.
Step 8: Expanding the Hospital’s capacity despite restrictions and limitations
The Hospital’s management intends to increase the number of beds by 15% at the beginning of 2015. This will be done through the relocation of some administrative offices, and the redistribution of spaces. For example, a new Neuro-surgery Department will be opened with a capacity of 25 beds and there will be an increase of six beds in the Delivery Ward following the renovation of a number of private rooms. Work has also begun using pre-fab rooms, to accommodate some of the administrative offices, housing for on-call doctors, and patients’ companions.
Step 9: Terminating employees who reached retirement age or due to illnesses
In an effort to reduce the value of the wage bill, the Hospital is working at terminating the services of employees who have reached retirement age, or are incapacitated by illness. Since this requires an amount of up to $100,000 per employee, in pensions and end-of-service benefits, therefore, the hospital management has developed an appropriate solution: to provide donor funding for a “Revolving Fund”, where 60% of savings, as a result of the retirements, are put back into the fund on a monthly basis. This measure will provide 30 thousand dollars per year for each retired employee. Pending the availability of the support required for this “Revolving Fund”, the Hospital will be using some of the funds currently allocated to it by the savings accumulated for this purpose.
Step 10: Start paying old debts to suppliers and banks
Despite the fact that donors do not usually want to cover old debts to banks and suppliers, which amount to $32 million, the administration has decided to begin the implementation of this important step to restore and strengthen trust and goodwill with supplier companies. Since Makassed will succeed in achieving an operational surplus in 2014, debt repayment to suppliers, in installments, has become possible, particularly if the PNA pays its accumulated dues for the benefit of the Hospital, which will exceed 50 million shekels ($14 million) by the end of 2014. Otherwise, it will be impossible for the Hospital to achieve steps 9 and 10 as required. Therefore, the cooperation of the Palestinian government, represented by the Ministries of Finance, Health and Jerusalem Affairs, is necessary and essential to the implementation of Makassed’s reform plan.
The Role of Makassed during the Recent Events
Between the months of July and October 2014, Makassed Hospital has admitted around 600 injured Palestinians, including 500 to the Emergency Department, from the suburbs and neighborhoods of East Jerusalem, which have been witnessing clashes almost on a daily basis since the beginning of the month of July. Most of these injuries were caused by rubber-coated bullets, sound and tear-gas bombs, and severe beatings; while more than 20 wounded Palestinians arrived from the cities and villages of the West Bank, suffering from wounds caused by live ammunition and the like, in addition to cases of fractured bones.
During that same period, the number of critically wounded Gazans admitted to Makassed, as a result of the Israeli aggression on the Gaza Strip, reached 80. Most of them suffered from severe brain and nerve injuries, amputations, bone lacerations and fractures, and acute burns. It is worth mentioning that all the wounded Palestinians from Gaza, the West Bank and Jerusalem have been treated by Makassed free of charge and without referrals or financial transfers from the Ministry of Health, and this was done in accordance with the Hospital’s firm belief in its national and humanitarian message, and in spite of the dire financial crisis it is going through.
This is a quick review and summary of Makassed management’s administrative and financial achievements during the current year, in an attempt to deny the rumors linking the Hospital’s financial crisis with internal management problems. Although there might have been some administrative problem in previous years, however today, they have become a thing of the past.
If the PNA commits to paying its financial obligations to the Hospital on a regular basis in the coming period – as was agreed upon with the Ministers of Finance and Health – Makassed will remain standing steadfast on the Mount of Olives alongside Al Aqsa Mosque, and will continue offering the best medical services to the Palestinian people throughout the nation.