More than 6,000 staff at Jerusalem's Hadassah medical centre began an open-ended strike on Monday over a salary cut, halting all operations except emergency care.
The privately-owned hospital, which treats nearly a million people a year at its two campuses in the city, has racked up massive debts of 1.3 billion shekels ($368 million/270 million euros), the hospital director said.
On Tuesday the hospital's 850 doctors began a strike after only receiving half of their January salary and on Sunday all Israeli hospitals joined them in a two-hour solidarity strike.
The work stoppage expanded on Monday, with all of the staff at Hadassah Ein Kerem and Hadassah Mt Scopus joining the protest, a labour union spokesman said.
As a parliamentary committee met to discuss the crisis, around 1,000 hospital employees gathered outside the Knesset to demonstrate, union officials said.
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"Working like ants - where is the money?" read one of the signs held up by protesters, an AFP correspondent said.
"Hospital closed - please contact the government" said another, while a third banner read "There are people behind the numbers."
Hadassah employs over 850 doctors, 1,940 nurses, 1,020 paramedical and support staff, and nearly 900 managers who work across two campuses. The two facilities have a total of 1,150 beds, 31 operating rooms, and nine specially-oriented intensive care units, the hospital's website says.
Hadassah's management filed for a stay of proceedings at Jerusalem District Court on Thursday to obtain court protection for implementing its recovery plan, a spokeswoman for the Israeli Medical Association, which represents the striking doctors, told AFP.
The hospital, which is owned and funded by the Hadassah Women's Zionist Organisation of America, has annual expenditures of 2.0 billion shekels, which exceed its income by 300 million shekels, resulting in an accumulated debt of 1.3 billion shekels, financial newspaper Globes said.
Part of the deficit is due to the large discounts awarded to Israeli healthcare funds, the construction of a new hospital tower at Hadassah Ein Kerem, and the huge salaries paid to doctors under private practises, it added.