PA OWES EAST JERUSALEM HOSPITALS FOR WEST BANK

UNCLAS JERUSALEM 001697

SIPDIS

SENSITIVE
SIPDIS

LONDON PASS TO A/S WELCH AND D/NSA ABRAMS; NEA FOR FRONT
OFFICE; NEA/IPA FOR WILLIAMS/GREENE/WAECHTER; NSC FOR
ABRAMS/DORAN/LOGERFO; STATE PASS TO USAID/BORODIN; TREASURY
FOR ADKINS

E.O. 12958: N/A
TAGS: ECON EAID EFIN KWBG IS
SUBJECT: PA OWES EAST JERUSALEM HOSPITALS FOR WEST BANK
PATIENTS DESPITE EMPTY COFFERS

REF: KANESHIRO/O'DOWD EMAIL:4/26/06


1. (SBU) Summary. According to East Jerusalem medical care
providers, the Palestinian Authority (PA) continues to incur
costs of over USD 800,000 per month for specialized care for
the cases it refers from the West Bank despite empty
coffers. (Note: A negligible number of cases are referred
from Gaza. End Note.) However, as of February 2006, the PA
has not been able to deliver these payments, and it is
unclear how the government will be able to meet its financial
commitments. The PA owes USD 9.8 million to these providers
for services already provided. Although one of the providers
(St. Joseph) has threatened to cut off its specialty care
services to West Bankers, the majority of providers have
indicated that they will turn to donors for emergency funding
to continue providing services to referrals. End Summary.



2. (SBU) Due to a lack of specialty care providers in the
West Bank and Gaza, the PA Ministry of Health (MOH) routinely
refers Palestinian patients to East Jerusalem hospitals for
specialty care, or to treatment centers overseas. The
Minister or Deputy Minister of Health signs an official
referral document authorizing the patient to receive care
outside of the West Bank or Gaza. The PA has entered into a
contractual obligation to pay for the costs of its referrals
with each hospital in the East Jerusalem consortium with the
exception of the Palestine Red Crescent Society (PRCS)
Maternity Hospital.

Al-Makassad Islamic Charitable Hospital agrees
to USD 375,000 per month for PA referrals
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3. (SBU) Al-Makassad Hospital, an East Jerusalem hospital on
the Mount of Olives with tertiary care and training
facilities, as well as a blood bank, treats 2,700 inpatients
and 3,500 outpatients per month; 60 percent are PA referrals
from the West Bank. (Note: Al-Makassad has 250 beds. End
Note.) According to General Director Haitham al-Hassan, as
of January 1, the PA had agreed to pay NIS 1.75 million (USD
375,000) per month, compared to estimated actual costs of NIS
2.30 million (USD 495,000) per month. Despite this fixed
cost, he stressed that the number of PA referrals from the
West Bank continued to increase. Thus far, the PA had only
made a fixed payment for January and were overdue on payments
for February and March.


4. (SBU) Al-Hassan said that over the last six years, the PA
had accrued debts of NIS 32.5 million (USD 7 million) to
Al-Makassad. Although al-Hassan had contacted the PA
Ministries of Health and Finance for payment, no one had
responded to his inquiries. He said he needed payment from
the PA in order to continue providing services to
Palestinians from the West Bank. To maintain services,
Al-Makassad has been forced to carry an overdraft of NIS 4
million (USD 860,000). Financial Director Rushdi Asshab said
the hospital had appealed to the EU, as part of the East
Jerusalem consortium of six hospitals, to transfer a
commitment of 1.5 million euros (USD 1.9 million) from a
capacity-building project to the emergency fund to cover
unfunded ongoing costs. Asshab said they had not approached
the GOI given political sensitivities. (Note: 332 members
of Al-Makassad's 512-person staff are from the West Bank.
Out of the monthly budget of NIS 5.5 million (USD 1.2
million),salaries comprised two-thirds or NIS 3.5 million
(USD 750,000),while medical supplies were the remaining
one-third of the budget, or NIS 1.5 million (USD 322,000).
End Note.)

Augusta Victoria Hospital agrees to
USD 322,000 per month for PA referrals
--------------


5. (SBU) Located in the Sheikh Jarrah section of East
Jerusalem, Augusta Victoria Hospital (AVH),a secondary and
tertiary care hospital, admits 440 patients per month.
Monthly PA referrals have averaged 341 inpatients and 180
outpatients. Director of Finance Alex Kuttab told EconOff
April 4 that, as of February 1, AVH had signed a one-year
agreement with the PA to set up monthly payments for
referrals at USD 322,000, including oncology treatments. By
the end of December 2005, Kuttab said the PA owed AVH USD

1.25 million. In the interim, AVH carried an overdraft with
local banks and had already begun to appeal to church donors
to provide emergency funding. Kuttab said AVH would organize
appeals to the USG and European governments in the next few
months.


6. (SBU) Kuttab said dialysis product suppliers would stop
shipments to AVH until they were paid. The PA's delinquency
was also hurting West Bank-based pharmaceutical companies, he
underscored. Kuttab warned that if the PA did not pay up,
AVH could not sustain the cost of oncology treatments for
West Bankers. United Nations Relief and Works Agency (UNRWA)
has a contractual relationship with AVH with an annual
ceiling of USD 900,000 for services provided by AVH to
refugees. In 2005, UNRWA paid USD 625,000 to AVH for actual
services provided (ref email). (Note: Payment of salaries
comprises 68 percent of the budget. 165 members of the
211-person staff are from the West Bank. End Note.)

Palestine Red Crescent Society (PRCS) Maternity
Hospital has no agreement with the PA
-------------- --


7. (SBU) Palestine Red Crescent Society (PRCS) Maternity
Hospital in Beit Hanina, a specialized maternity and
gynecology hospital, has an average of 250 monthly admissions
with 75 cases from the West Bank. PRCS staff told EconOff
April 4 that patient fees are the primary source of funding
for its USD 3 million budget. Out of an estimated 3,200
annual deliveries, 190 cases did not pay their fees, while
162 were written off as social cases. The PA pays nothing
for its referrals, but continues to send patients. PRCS
estimated that the PA owed PRCS about NIS 100,000 (USD
21,500) for referrals over the last two years. Although PRCS
had contacted the PA Ministry of Finance, they had received
no response to their request for payment for referrals from
the West Bank. Financial Director Ziad Mushasha said PRCS
had not made any other appeals to other agencies and had not
appealed to GOI for assistance. (Note: PRCS monthly budget
is USD 3 to 4 million, of which salaries comprise 65 percent.
90 members of the 135-person staff are from the West Bank.
End Note.)

The Jerusalem Princess Basma Center for Disabled Children
agrees to USD 20,000 per month for PA referrals
-------------- --------------


8. (SBU) The Princess Basma Center, a rehabilitation and
education center for disabled children on the Mount of
Olives, treated 849 patients at the center in 2005; 60
percent were PA referrals. There are 40 in-patient beds, all
reserved for West Bankers. Day-care education and
physiotherapy is only available for Jerusalemites, who can
travel to the Center on a daily basis. Director Betty Majjaj
told EconOff April 4 that patient fees cover 64 percent of
their annual budget of USD 1.4 million. She said that the PA
Ministry of Health owed the Center USD 236,000 for patient
care from 2001. At the beginning of 2006, the PA had agreed
to pay the Basma Center USD 20,000 per month for PA referrals
from the West Bank. As of April 4, the PA owes the center
USD 60,000 on payments from January until March.


9. (SBU) Given the PA's financial insolvency, Majjaj was
concerned that the annual amount of USD 240,000 promised by
the PA would go unpaid. She said she was informed that a
donation of USD 120,000 per year to the center, previously
approved by Arafat, would also stop. The Basma Center would
turn to fundraising from private donors and trusts,
particularly to meet basic needs like utilities which cost
upward of USD 1,300 per week, she added. (Note: Salaries
comprised 68 percent of the budget for 90 staff; 30 of them
from the West Bank. End Note.)

St. John Eye Hospital agrees to
USD 80,645 per month for PA referrals
--------------


10. (SBU) Located in the Sheikh Jarrah section of East
Jerusalem, St. John Eye Hospital, the main hospital for
ophthalmologic tertiary referrals from the West Bank and
Gaza, treating 3,400 outpatient cases per month with 50
percent of outpatient referrals coming from the West Bank.
(Note: There are 72 inpatient beds, typically reserved for

West Bankers, who comprise 90 percent of inpatient referrals.
End Note.) According to Chief Executive Steven James, half
of its annual budget of USD 7.9 million dollars is offset by
payments from the PA for West Bank referrals. The PA is
often late in reimbursing St. John for referrals, meaning St.
John has to carry fifteen months of unpaid debt on its books.
As of March 28, 2005, the PA owed St. John USD 1.0 million
for accrued patient costs in FY2005 for 2,753 West Bank
Palestinians.


11. (SBU) Per a March 16 agreement with St. John, the PA
Ministry of Health said it would pay NIS 375,000 (USD 80,645)
per month for referrals. (Note: The actual cost of care for
PA referrals in FY2005 averaged NIS 458,000 (USD 98,500) per
month. End Note.) If the PA is unable to fulfill its
agreement to pay St. John, James said they would turn to
fundraising to cover the costs of the Palestinian referrals.
Most of their fundraising is directed towards St. John's
priories as well as private trusts and foundations. (Note:
Salaries comprise 70 percent of the annual budget for 190
staff, half of them from the West Bank. End comment.)

St. Joseph's Hospital will stop accepting PA referrals,
unless PA pays agreed-upon amount of USD 40,000 per month
-------------- --------------


12. (SBU) Also located in the Sheikh Jarrah section of East
Jerusalem, St. Joseph's Hospital, a secondary and tertiary
facility, has a monthly load of about 500 patients. Of
those, PA outpatient referrals amount to 20 to 25 cases for
brain surgery, urology, and orthopedic surgery. Director
General Jamil Kussa told EconOff April 10 that the PA used to
refer these specialized cases to Jordan or Israel, and would
pay in cash. Over the last two years, the PA has accrued a
debt of NIS 1.2 million (USD 258,000) for referrals to St.
Joseph's. As of September 2005, the PA had agreed to pay a
fixed amount of USD 40,000 per month, in addition to USD
10,000 - 20,000 worth of prosthetic equipment each month.
(Note: According to Kussa, the actual cost for 20 - 25
referrals is closer to USD 100,000 per month, and that USD
40,000 covers only three or four patients at the most. End
Note.)


13. (SBU) Kussa said the PA had promised to pay St. Joseph's
the week of April 16, but he anticipated that the PA would
not be able to fulfill its promise. As a result, he said he
would be forced to nullify the contract by the end of April
and would refuse to accept any further PA referrals. He
stressed that his Israeli prosthetic suppliers demanded a
cash payment every month and would not accept any delays.
(Note: Out of a 105-person staff, 56 are from the West Bank.
Salaries comprise 65 percent of the total budget. End Note.)
WALLES