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Exclusive: PA financial crisis leaves East Jerusalem hospitals on last legs

Jerusalem24 – A spate of good news has slowly been reaching the hospitals in East Jerusalem, which mere weeks ago were reeling under the effect of the suspension or threatened suspension of services by medical service providers due to accumulated debt.

US President Joe Biden is expected to visit Augusta Victoria hospital later this week and announce a substantial cash infusion to the embattled institutions. And in June, European Union representatives met with Palestinian Prime Minister Mohammad Shtayyeh to finalize the details of an agreement to disburse EUR 224 million in funds to the Palestinian Authority.

However, neither the Augusta Victoria Hospital (which receives funds from the PA), nor the Lutheran World Federation which operates the hospital, were wallowing in the temporary relief afforded by these incoming cash injections.

“Getting the money soon will not solve the financial crisis and the difficult financial situation the hospital is in,” says Dr. Fadi Atrash, CEO of Augusta Victoria Hospital.

“The EU funds are not the only money we are waiting for,” says Sieglinde Weinerenner, Lutheran World Federation (LWF) representative in Jerusalem. “We also need regular payments from the Palestinian Authority.”

In this Jerusalem24 exclusive, Dr. Atrash and LWF representative Weinerenner reveal how East Jerusalem hospitals have stayed afloat during this protracted financial crisis; how the PA’s financial crisis has led it to fail in its responsibilities towards the hospitals; and what US President Biden’s impending visit might mean for the future of the hospitals in East Jerusalem.

Dr Fadi Atrash, CEO of Jerusalem’s Augusta Victoria Hospital. [Credit: Lutheran World (LWF) /A. Danielsson]

A crisis ten years in the making

The Augusta Victoria Hospital (AVH) is one of six health centers that comprise the East Jerusalem Hospital Network (EJHN), along with Al-Makassed Hospital, Saint John Eye Hospital Group, St. Joseph’s Hospital, Princess Basma Center for Children with Disabilities, and the Red Crescent Maternity Hospital.

All six institutions are burdened with a financial crisis that began over a decade ago, prompted by extensive delays in the payment of bills for patients referred by the Palestinian Ministry of Health (PMOH).

Patients are referred to East Jerusalem hospitals when PMOH facilities cannot offer treatment due to lack of qualified personnel, drugs, equipment, or medical devices, or due to high occupancy rates. Under government health insurance rules and regulations, the patient agrees to pay a co-payment of the total cost of treatment. The amount paid by the patient and by the PA respectively is decided by the Regional Referral Committees on a case by case basis.

The total debt owed by the PA to the EJHN is estimated at EUR 100 million with around EUR 70 million owed to the AVH alone.

“[The PA] should give money to the hospitals on a monthly basis – a decent amount that allows us to continue operations.”

The financial crisis was compounded last year by an unplanned delay in European Union funding, with AVH in particular reaching breaking point.

In a 10 June 2022 letter addressed to President of the European Commission Ursula Von der Leyen, two days before the President’s planned tour of Israel and Palestine, LWF called for “urgent action to unfreeze and expedite the funding”, specifying over 500 cancer patients were at risk of having treatment interrupted within days.

The letter addresses Von der Leyen (who is a trained physician) personally: “Given your background in medicine, you would be well acquainted with the potentially fatal consequences of such interruptions.”

In an apparently unrelated development, three days later on 13 June, Von der Leyen announced during a press conference with Palestinian Prime Minister Mohammad Shtayyeh in Ramallah that EU funds were officially unfrozen and would be disbursed “rapidly.”

As part of the EUR 224 million funding package announced by Von der Leyen, 13 million have been specifically earmarked to settle the bills of the EJHN.

However, EU funds alone will barely put a dent into the deficit currently faced by the hospitals.

Dr. Atrash emphasizes that the EU delay is far from “the only factor” in the current crisis. “The whole critical financial situation of the PA has affected the operations of the hospital and the continuity of the operation of the hospital.”

“We are depending on the reserves from the PA. It should give money to the hospitals on a monthly basis – a decent amount that allows us to continue operations.”

European Union in Palestine [Credit: Augusta Victoria Hospital]

Nowhere to go for cancer patients

The Augusta Victoria Hospital, a “center of medical excellence” located in occupied East Jerusalem, provides all 5 million Palestinians in the West Bank and Gaza with specialized care not available anywhere else in occupied Palestine, including radiation therapy for cancer patients and pediatric hemodialysis.

The delay in funds has had grave repercussions on the hospital’s ability to provide cancer treatments to its existing and incoming patients. “Now, around 500 patients are not able to be treated at the Augusta Victoria Hospital because of this financial situation,” says Dr. Atrash.

“We don’t even know how high the number is if we include those who weren’t referred to us.”

Weinerenner elaborates: “We had patients that were referred to us by the Ministry of Health, and we said we cannot accept those patients because we do not have medications.”

The hospital was forced to deny access to treatment to more than 400 newly diagnosed cancer patients since September 2021, leaving Palestinians with nowhere to turn to for cancer treatment.

“We don’t even know how high the number is if we include those who weren’t referred to us,” says Weinerenner.

The Palestinian Ministry of Health (PMOH) stopped referring Palestinians in the West Bank and the Gaza Strip to Israeli hospitals in 2019, though an exception continues to be made for patients on a case-by-case basis. According to a press interview with PMOH spokesman Osama al-Najjar in March 2019, the decision was made in order to protest the expensive medical treatment prices that Israel imposes on referrals by the PMOH.

Israel considers referrals of Palestinian patients a form of “medical tourism,” justifying the high prices.

The Israeli government also automatically deducts payments for referrals from the tax money it collects on behalf of the PA – contrary to referrals to the EJHN where the Palestinian Authority chooses when it settles its bills. The Israeli government deducted NIS 73.4 million from PA tax money to pay for referrals during the first five months of 2022, according to a financial report by the Palestinian Ministry of Finance.

All Palestinians referred to the hospitals, either in Israel or in occupied East Jerusalem, must secure hard-to-obtain travel permits with no published or clear criteria for approval. According to a report published by World Health Organization, factors which appear to affect permit eligibility include age, sex, residency, civilian status, timing of travel, nature of medical treatment, and family relationships, in addition to unexplained ‘security’ reasons of Israeli authorities.

Gazan cancer patients are also unable to obtain the permits necessary to receive adequate medical treatment outside the Gaza Strip, negatively impacting their emotional state and chances of recovery, according to a statement by Physicians for Human Rights Israel demanding an end to one-day-only permits for patients and the family member accompanying them.

“It’s a difficult situation for cancer patients,” says Weinerenner.

In addition to new referrals being turned away, the treatment plan of patients already accepted at the hospital was also affected and in some cases interrupted.

“Cancer patients’ treatment is expensive,” says Dr. Atrash.

He emphasizes treatment “should be given on time, on a certain schedule and program, so you can have the maximum benefit of the treatment.”

AVH continued to provide treatment uninterrupted for as long as it could, but exhausted its options once the debt to its suppliers passed a certain threshold and suppliers started refusing their services, threatening the replenishment of stocks of vital medications.

“We exhausted our services and have no money,” says Weinerenner. “We already have a high debt, and we have not paid our suppliers delivering the medication.”

“Palestinians are paying the cruelest price for political decisions made in Brussels.”

“If no money comes from the EU or the PA, we will have to reduce more and more of our services, meaning that we can take less patients,” says Weinerenner. “We cannot buy medications and our stock will be empty as well as the pharmacy – and we cannot treat people.”

“We contacted everyone”

The Norwegian Refugee Council (NRC) released a statement on 24 May excoriating EU officials for the continued delay in funding and describing the dire effects on the patients.

“These restrictions punish terminally ill patients who cannot get life-saving medicine and force children to go hungry when parents cannot afford to buy food,” said Jan Egeland, NRC Secretary General.

“Palestinians are paying the cruelest price for political decisions made in Brussels.”

The LWF has exhausted “all financial reserves and lines of credit. Suppliers have stopped providing the necessary goods and services.”

While third-party organizations such as the NRC were advocating on behalf of patients, Dr. Atrash tells Jerusalem24 that the hospitals initiated contact with “all the European Commission representatives, the heads of corporations, and the EU delegation, explaining the situation of our hospital and the rest of the Jerusalem hospitals network.”

The 10 June LWF letter to Von der Leyen laid bare that the LWF had exhausted “all financial reserves and lines of credit. Suppliers have stopped providing the necessary goods and services.”

The letter was a Hail Mary, says Weinerenner. “At the time we did not know [about the funds]. There was an LWF Council meeting in Geneva and at the time the Council just knew the president of the EC was visiting, but we had no information about what the situation was with the money.”

“We sent this letter because we were hoping that if she was coming, that she wasn’t coming empty-handed.”

The European Commission postponed the transfer of $223 million in aid to the PA in the second half of 2021 when EU Commissioner for Neighborhood and Enlargement Olivér Várhelyi, who is tightly aligned with Hungary’s right-wing government, put forward a condition to change the curriculum in West Bank schools because of “incitement against Israel and anti-Semitic content” – even though the textbooks were found to be broadly compliant with UNESCO standards.

When Von der Leyen announced “all the difficulties are gone” at the press conference with Shtayyeh, she said the funds would be disbursed rapidly, although an exact timeline hasn’t yet been set as of the time of publication.

The EJHN is now waiting to receive its share of EU funding through PEGASE, the EU Programme of Direct Financial Support to the Palestinian Authority. PEGASE is used as the main mechanism for the EU to support Palestinians, providing support to selected windows of the PA’s budget, with special regard to public services and to the most vulnerable Palestinians.

The use of the PEGASE mechanism is not exclusive to EU funds, and countries such as the US have made use of it.

“This is how it works,” explains Dr. Atrash. “From the whole [EU] funds package the PA receives, there are 13 million euros for the hospitals. This amount of money is divided among the six hospitals on a certain ratio according to the PA.”

Augusta Victoria Hospital. [Credit: Lutheran World (LWF)/Albin Hillert Federation]

Biden’s visit: A possible game-changer?

The United States is also a donor to the hospital. “We have also received money from USAID through the same [PEGASE] mechanism,” says Dr. Atrash, “an amount between 10 and 20 million dollars. We expect that soon they will pay more funds to the hospitals.”

US policy forbids direct US funding to the PA due to the so-called welfare program, which includes payments from the PA to Palestinians detained in Israeli prisons as well as the families of those killed by Israel, including during alleged attacks on Israeli civilians or military. However, Dr. Atrash specifies that “there was an exception made to the health sector. The funds go to the PA to pay up their debts to the hospitals.”

The US is interested in the sustainability of Palestinian health institutions in East Jerusalem because they provide health services not available anywhere else in Palestine.

“The Americans approved 14 million dollars for 2021 which has been put into processing,” reveals Dr. Atrash. He was also told this would be finalized by the beginning of July.

“Biden’s visit is expected to bring more good news with it, but nothing is public about it yet,” says Dr. Atrash.

Weinerenner confirms that the US is interested in the sustainability of Palestinian health institutions in East Jerusalem, “because they provide health [services] that are not available anywhere else in Palestine [West Bank and Gaza].”

“They are working on something more concrete. We are hopeful but we don’t have anything in writing. But they understand the need and we hope that something will come out of this.”

PA spokesperson Ibrahim Melhem tells Jerusalem24 that the PA is also expecting good news from the Biden visit. “We are expecting around $100 million.”

However, Melhem clarifies: “The Americans stopped sending money since Trump and we have not received any money for the PA reserve since then including Biden era – but other on-the-ground projects have been funded.”

In a follow-up interview with Melhem, the spokesperson tells us a total package of $219 million is expected from the US.

A US Office of Palestinian Affairs Spokesperson did not confirm the existence of the $14 million fund for the hospitals put into processing mentioned by Dr. Atrash, but did reveal the existence of another $10 million announced in September 2021.

“The United States is committed to our partnership with people in the West Bank, Gaza, and East Jerusalem. Last year, under the Biden-Harris administration and with Congressional support, USAID provided over $110 million in development, economic, peacebuilding, and humanitarian assistance to the Palestinian people.”

“This included $10 million announced in September 2021 to pay down Palestinian Authority debt owed to the East Jerusalem Hospital Network (EJHN) for patient referrals for critical health care services. USAID disbursed these funds in October 2021. This builds on years of U.S. support to EJHN, totaling $85 million in debt relief between 2014-2021.”

“The United States remains committed to ensuring Palestinians have access to the lifesaving care provided by EJHN. U.S. assistance provides critical relief to those in great need, fosters economic development, and helps lay the foundations for an eventual two-state solution, all of which contribute to stability in a volatile region.”

Hospitals already looking beyond upcoming cash injections

The hospitals still have a long road moving forward. “It will not be like a miracle,” says Weinerenner. “The hospitals are also planning on a diversification of services, and also work on their own efficiency. This is all part of working to being sustainable.”

Weinerenner confirms that the issue will be brought up with LWF donors as well.

LWF fundamentally believes in the hospital’s ability to reach a sustainable future.

Weinerenner reveals they are working with the US to reach a future where the hospitals’ only focus is not “payments which are not paid.”

“We have to look into the future. There is no miracle, everyone has to do their part. Even the Palestinian Authority, they have to see how best they can reform the health sector in order to be more efficient and to better serve the Palestinian people.”

A feeling seconded by Dr. Atrash who, while emphasizing the importance of donor money, also believes that “the main money that we should be getting should be from the PA.”

“We depend on the Palestinian Authority and on their regular payments. We have an agreement that they would pay us NIS 1.8 million a month.”

“The PA are responsible for the healthcare of the Palestinians.”

Weinerenner understands the monthly payments may not always occur. However, she says, they continue to “very much depend” on payments from the PA, and says they plan to have meetings with the PA on this topic.

“So, we hope –  and more than hope, we expect –  that they will continue because this is their responsibility.”

PA spokesperson Ibrahim Melhem tells Jerusalem24, “The PA did not fail its responsibilities towards the East Jerusalem hospitals. We have been under financial siege due to the delay in funds, including European and American funds.”

“We have been working towards helping the hospitals in their crises. We are working on the monthly amounts due for the hospitals. We have helped and solved the Makassed issue not too long ago.”

Dr. Atrash says the hospitals understand how the EU funds delay “has contributed to the difficulties the PA is facing, which limited the ability of the PA to give money to the hospitals for the referral patients.”

But ultimately, concludes Dr. Atrash, “They are responsible for the healthcare of the Palestinians.”

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