In an unexpected move following confidential negotiations, the leaders of Leumit Health Fund and Kupat Holim Meuhedet have announced that they plan to merge into a single health fund. The merged fund will be Israel’s third largest, after Clalit Health Services and Maccabi Healthcare Services. The merger is scheduled to begin on January 1, 2004.
Knesset Finance Committee chairman and former Leumit Health Fund chairman Abraham Hirchson led the merger negotiations. After Hirchson resigned from Leumit Health Fund six months ago, the merger negotiations were conducted by Leumit Health Fund chairman and acting director general Michael Zoller and Kupat Holim Meuhedet managing director Uzi Salant.
Leumit Health Fund current has 700,000 members, and hundreds of branches around Israel. Kupat Holim Meuhedet has 740,000 members, but only a few dozens branches. The merged fund will therefore have 1.4 million members, amounting to 19% of the population.
The merger is designed to create one large fund, which is likely to save hundreds of thousands of shekels a year per year, through elimination of duplicate functions, branches, and personnel. The merged fund will have a NIS 5 billion annual budget.
Ministry of Health deputy director-general Michal Abadi-Boyanju told “Globes” that her ministry supports the merger. She said, “It’s the right thing to do, because it makes up for the disadvantages of each of the funds. The merger will create a third group in the system that can compete with the major health funds: Clalit and Maccabi.”
Another reason for the merger is Leumit Health Fund’s crisis in 2002. The fund finished that year with a NIS 900 million deficit. Following the crisis, Leumit Health Fund asked the Ministry of Finance for hundreds of millions of shekels in aid, but the ministry has not given the money.
Abadi-Boyanju added that Leumit Health Fund had streamlined dramatically in the past two years, following which it is expected to nearly break even in 2003, with an operating deficit of only NIS 30 million, compared with NIS 200 million deficit in 2001.
In contrast to Leumit Health Fund, Kupat Holim Meuhedet is considered the most stable of Israel’s funds, breaking even most years.
Senior health officials told “Globes” that the Ministries of Finance and Health had supported the merger, and would provide aid to the merged fund. The amount of the aid has not been determined.
The Ministry of Health said that Maccabi would break even in 2003, while Clalit would have a NIS 600 million deficit.
Published by Globes [online] -l www.globes.co.il - on July 14, 2003