Ashford General Hospital - Final Paper

9 Values, Vision, Culture, and Ethics

Learning Objectives

After reading this chapter, you should be able to:

• Explain the difference between and use of mission, vision, and values statements in health organizations.

• Describe the key elements of organizational and community cultures for health organizations.

• Address legal, medical, and administrative ethical concerns for health administrators.

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St. Joseph Health: Faith in Action St. Joseph Health (SJH) is a large Catholic health care organization with more than 24,000 employ- ees and $5 billion total net revenue in 2013. SJH provides a full range of care to patients in Califor- nia, western Texas, and eastern New Mexico through an integrated delivery system that includes 16 acute care hospitals with more than 4,100 licensed beds, home health agencies, skilled-nursing facilities, community clinics, and physician organizations.

SJH’s mission, vision, and values statements reflect its religious tradition and community service orientation.

Our Mission: To extend the healing ministry of Jesus in the tradition of the Sisters of St. Joseph of Orange by continually improving the health and quality of life of people in the communities we serve.

Our Vision: We bring people together to provide compassionate care, promote health improvement and create healthy communities.

Our Values: The St. Joseph Health is comprised of four core values:

DIGNITY: We respect each person as an inherently valuable member of the human community and as a unique expression of life.

SERVICE: We bring people together who recognize that every interaction is a unique opportunity to serve one another, the community, and society.

EXCELLENCE: We foster personal and professional development, account- ability, innovation, teamwork, and commitment to quality.

JUSTICE: We advocate for systems and structures that are attuned to the needs of the vulnerable and disadvantaged and that promote a sense of com- munity among all persons. (St. Joseph Health, 2014)

Source: Reprinted by permission from St. Joseph Health (SJH) System. http://www.stjhs.org/About-Us/Mission -Vision-and-Values.aspx

To achieve its mission and operationalize its values, SJH has declared three strategic goals: To assess progress toward achieving these goals, SJH has become a highly data-driven organization, devoting considerable resources to measure and monitor patient and employee satisfaction, clinical quality of care, and population health status.

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Section 9.2Inspiration as a Foundation for Action

9.1 Introduction to Health Organizational Values, Vision, Culture, and Ethics

This chapter begins with a discussion of the role of vision and values in health care organi- zations, which are primarily (or should be) mission driven and patient centered, and how leaders at every level of the organization express—or fail to express—their commitment to both by their behavior. Culture is addressed from two perspectives, considering both corporate culture and a health care organization’s cultural proficiency to serve an increas- ingly diverse patient population. Ethics is a major focus in this chapter, incorporating legal, medical, and administrative concerns and professional guidelines.

9.2 Inspiration as a Foundation for Action Organizational statements of mission, vision, and values are declarations of what the orga- nization practices, what it hopes to become, and what it stands for. In health organizations these statements are particularly important not just for their public relations value, but because they help build trust in the organization as part of a healing system staffed by committed, caring people. The statements are also a means to articulate to employees what is important to and valued by the organization.

Web Field Trip: St. Joseph Health

The website pages linked to the St. Joseph Health system goals discuss the specific steps the organization is taking to achieve each goal. See: Sacred Encounters (http://www.stjhs.org /About-Us/Mission-Vision-and-Values/Sacred-Encounter.aspx), Perfect Care (http://www.stjhs .org/About-Us/Mission-Vision-and-Values/Perfect-Care.aspx), and Healthiest Communities (http://www.stjhs.org/About-Us/Mission-Vision-and-Values/Healthiest-Communities.aspx). Use the information from these web pages to answer the following questions:

Reflection Questions: 1. How would an atheist, agnostic, or nonreligious person react to the idea of a sacred

encounter? Does the website clearly indicate that this is not an attempt to impose the teachings of the Roman Catholic Church on patients?

2. The SJH web page on Quality Information (http://www.stjhs.org/About-Us/Quality -Performance/Quality-Information.aspx) provides more specific information on how the organization strives to achieve clinical excellence. It includes several external web- sites from state, federal, and private quality-rating systems. How close do SJH facilities come to delivering perfect care, according to these rating systems?

3. In what specific ways does SJH contribute to the health of the communities it serves? How do these actions benefit the health system?

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Section 9.2Inspiration as a Foundation for Action

Vision

Although the SJH vision statement is more oriented toward the present, the vision statement is generally oriented toward the future, describing the organization when it is fulfilling its purpose most effectively. Vision statements focus on ideals and commu- nicate a compelling picture of how the organization’s leaders ultimately envision the business in terms of growth, quality, customer satisfaction, and community contribu- tions. Vision statements are grounded in an understanding of the company’s history and often emphasize the founders’ purpose and philosophy. Future trends in the health care environment and the perceived strengths of the organization are also key consid- erations for leaders formulating the organizational vision.

Additional examples of different types of health organizations’ vision statements are:

• Merck: We make a difference in the lives of people globally through our innovative medicines, vaccines, and consumer health and animal prod- ucts. We aspire to be the best healthcare company in the world and are dedicated to providing leading innovations and solutions for tomorrow. (Merck, n.d., p. 1)

• Kaiser Permanente: To be the model for quality health care in the nation by being the best place to work and the best place to receive care. (Kaiser Permanente, n.d.)

• Sharp HealthCare: Sharp HealthCare’s vision is to be the best health sys- tem in the universe. Sharp will attain this position by transforming the health care experience through a culture of caring, quality, service, innova- tion and excellence. Sharp will be recognized by employees, physicians, patients, volunteers and the community as the best place to work, the best place to practice medicine and the best place to receive care. Sharp is known as an excellent community citizen embodying an organization of people working together to do the right thing every day to improve the health and well being of those we serve. (Sharp HealthCare, 2014)

Role of Leaders—Articulate the Vision Describing a leader as “visionary” is a high accolade, especially for leaders of health orga- nizations that are operating in a dynamic, often turbulent environment. It is a core value for the Malcolm Baldrige National Quality Award, the nation’s highest recognition for organiza- tional performance excellence (Visionary Leadership, n.d.). In developing an organizational vision, the leaders of a health care organization function as pathfinders—not only describ- ing the destination, but also charting the course to reach it. They must also sustain the vision and suffuse it throughout the organization—recognizing and rewarding employee behavior that exemplifies the vision and communicating about how these employees contribute to making the vision a reality. Thus, a critical success factor for health care organizational lead- ers is to galvanize followers throughout the organization to work together enthusiastically and diligently to pursue a compelling vision through higher levels of performance. As Fig- ure 9.1 indicates, the path to excellence begins with leadership.

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Section 9.2Inspiration as a Foundation for Action

Figure 9.1: Malcolm Baldrige organizational profile of health care performance

excellence criteria

Leadership is the critical first step along the path to excellence in health care.

Source: Baldrige Performance Excellence Program. 2013. 2013–2014 health care criteria for performance excellence. Gaithersburg, MD: US Department of Commerce, National Institute of Standards and Technology.

Role of Followers—Implement the Vision Discussions of visionary leadership have traditionally focused on the role of senior-level executives, especially the CEO, overlooking the critical role that other managers and professionals play in making the vision a reality. The leaders may be committed to the approach, but achieving it means performing at higher levels and making the vision part of daily life in the organization. Although visionary leadership is essential, so are activities such as collecting data and ensuring financial stability, as depicted in Figure 9.1. The Mal- colm Baldrige National Quality Award criteria for performance excellence (http://www .baldrige21.com/BALDRIGE_GLOSSARY/HC/Performance.html) include many detailed outcome measures for processes and services, which document the performance of the

1 Leadership

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Knowledge Management

Organizational Profile: Environment, Relationships, and Strategic Situation

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Section 9.2Inspiration as a Foundation for Action

organization on every conceivable level (Performance, n.d.) As strategic planners Swayne, Duncan, and Ginter (2008) note:

Grand strategies and futuristic visions are important for health organiza- tions. If the vision is to become meaningful to nurses, pharmacists, medi- cal laboratory technicians, and others, middle and first-line managers must take the lead in redefining the organizational vision in terms that are meaningful to departments and work groups.. . . With regard to building involvement and commitment to service and quality, middle managers are in the best position to appeal to the social and economic motives important to health care employees. (p. 175)

Values

As fundamental principles of what the organization and its people believe in and stand for, health care organizational values focus on ethical behavior, social responsibility, and respect for patients. Some common health organizational values include patient-centered care, devotion to quality, and respect for human dignity. Organization-specific values determined by stakeholders may include innovation, shared governance, fiscal responsi- bility, and the pursuit of perfection. Value statements are useful to employees because they provide guidance about behaviors that are expected and those that are not acceptable.

Nearly all health organizations have mission, vision, and value state- ments. They typically appear at the beginning of a strategic plan, and many accrediting agencies, such as the Joint Commission, require them. More important than what leaders say about values, however, is how they behave—walking the walk as opposed to merely talking the talk. A health care organization’s values are the foundation for its common morality. Ruth Brinkley, CEO of Ken- tuckyOne Health and senior vice president of operations at Catholic Health Initiatives, emphasizes the importance for health care leaders to maintain a moral compass to guide their decisions, especially when their organizations are undergoing major environmental changes such as those required by the Affordable Care Act. For example, transitioning to a population health management service delivery model will likely decrease the need for acute care services and could result in the loss of those services in selected communities (Brinkley, 2013). Since hospitals are often major employers in smaller communities, these changes may have a substantial negative impact on the local economy.

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A moral compass guides health care professionals’ behavior and decision making.

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Section 9.2Inspiration as a Foundation for Action

Mission and Margin

More concrete and oriented toward the present than a vision statement, the organizational mission statement declares the organization’s purpose and describes its distinguishing character in as few words as possible. Studies have shown that almost 85% of hospi- tals and 90% of state-level public health departments have mission statements (Swayne, Duncan, & Ginter, 2008). Health organizational mission statements are noble and global, designed to express the organization’s business purpose and contribution to the greater good of the health care system. They need to specify what business the organization is in, the primary stakeholders it serves, and the scope of its operations and markets. Mission statements are enduring, changing only when the company makes fundamental changes in its core business purpose. Medical device maker Medtronic’s mission statement—to alleviate pain, restore health, and extend life—was crafted in 1960 and has not changed since then (Moore, 2010).

A common saying in health organizations is “No margin, no mission.” Kent Giles (2010) argues that since about half of hospitals in the United States are losing money, margin improvement could become the most important skill set for future health care leaders; he offers the following concise definitions of margin:

As we discuss margin improvement, there are two core measures to con- sider. The first is operating margin, . . . which measures how well your organization is managing the business of patient care and compares patient care costs to patient care revenues. Net margin takes patient care expenses and revenues and also includes revenues and expenses from non-patient care operations such as income on investments, philanthropy or cafeteria sales. (p. 1)

Without a positive margin, the organization cannot fulfill its mission. The phrase is still highly relevant, since health organizations face intense pressures to control costs in order to sustain not just their own organizations but the health care system overall.

Mission-Margin Conflict Organizational values are not infrequently at odds with economic and business growth goals and can be implicitly and sometimes explicitly compromised as a result. An increas- ingly common example is hospital partnerships with medical screening companies to offer a package of tests promoted as a means to prevent strokes or heart disease. Patients pay out of pocket for the screenings, with prices ranging from $140 to $350. The hospital partner typically receives no revenue from the tests, but patients are asked to sign a form allowing the hospital to contact them to discuss abnormal findings and are given a list of hospital-affiliated physicians. However, The U.S. Preventive Services Task Force, an inde- pendent government panel that evaluates preventive health care services, recommends against the use of several of the tests offered by two of the leading medical screening companies for adults without symptoms or risk factors. Two of the tests, electrocardio- grams and ultrasounds for blocked carotid arteries, are among the 130 procedures that the Choosing Wisely coalition of 19 medical organizations cautions are overused and should be questioned by both patients and physicians (Appleby, 2013).

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Section 9.2Inspiration as a Foundation for Action

Physician Self-Referrals Another example of mission-margin conflict with far bigger economic stakes involves physician self-referrals of patients for services to entities they control or own. A 2012 report from the Department of Health and Human Services Office of the Inspector Gen- eral (OIG) estimated the annual revenue from spinal surgical implants at $20 billion. The OIG found that in up to 20% of Medicare-funded spinal surgeries, the surgeons used devices purchased from physician-owned distributorships (PODs), in which the surgeons had an ownership stake. Hospitals that purchased devices from these PODs experienced a 16% increase in spinal surgery volume within 6 months of the switch, 2 to 3 times the vol- ume increase for hospitals generally during the same time period. The OIG investigators concluded that PODs encouraged surgeons to perform a greater number or more complex surgeries in order to increase device sales. Supporters of PODs argued that the arrange- ment saved the hospitals money by allowing them to purchase generic devices directly from the POD instead of purchasing brand-name devices through commercial orthopedic device companies. However, the OIG found that for five types of devices the cost differ- ences between devices sold by PODs and other companies were minimal, and for another category the POD prices were more expensive (Carlson, 2013). A 2013 OIG report found that self-referrals from urologists for intensity-modulated radiation therapy (IMRT), a treatment with a high Medicare reimbursement rate, was twice as high for self-referring urologists compared to non-self-referring urologists—despite evidence that IMRT yields no better outcomes than other, less expensive treatment options (Robeznieks, 2013).

Values-Based Leadership Health ethicist Kurt Darr (2011) characterizes health-service organizations as social enter- prises with an economic dimension, whereas most businesses are the opposite: economic enterprises with a social dimension. Financial management is a fundamental responsibil- ity of health executives, yet that responsibility must be aligned with the organization’s values. William Nelson (2013), an adviser to the American College of Healthcare Execu- tives (ACHE) Ethics Committee, argues that there is a larger responsibility for health orga- nization executives not to waste money on providing high-cost services with minimal or no benefit to the patient. Not only does this practice waste money, these interventions can harm patients by producing false positive results that lead to further unnecessary interventions and possible complications. Prioritizing economics over patient interests is thus not only a misuse of resources but an ethical failure because it can lead to actions that undermine organizational values. While decreasing the use of nonbeneficial interventions can reduce revenue and may compromise the margin, Nelson insists that it is the right thing to do. One approach for identifying such services and discouraging providers from providing them would be to support the Choosing Wisely campaign and distribute or direct patients to its guide of beneficial and nonbeneficial practices, as the Johns Hopkins health system has done (Choosing Wisely, 2014).

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Section 9.2Inspiration as a Foundation for Action

Actions That Foster the Vision, Exemplify the Values, and Further the Mission

Vision, values, and mission statements are carefully crafted and often beautifully eloquent statements that help both employees and organizational stakeholders understand and identify with the organization’s purpose and direction. More importantly, these statements serve as a foundational framework for translating lofty goals into effective action plans for the organization to produce high-quality health care services, delivered by informed, engaged, and empowered employees (Mosely, 2009). These statements also help the orga- nization present itself favorably to the general public and to future stakeholders such as physicians who might join the medical staff, health care professionals who are poten- tial future employees, vendors that might do business with the organization, and regula- tory agencies. Two critical aspects of a health organization’s presence and prestige are the knowledge and engagement levels of its employees at all levels.

Knowledge Management Knowledge management refers to how an organization captures, distributes, and uses knowledge. A widely cited definition of the term is “a discipline that promotes an integrated approach to identifying, capturing, evaluating, retrieving, and sharing all of an enterprise’s information assets. These assets may include databases, documents, policies, procedures, and previously un-captured expertise and experience in individual workers” (Koenig, 2012, para. 4). As discussed earlier in this chapter, the Malcolm Baldrige National Quality Award recognizes health care organizations that have achieved near-benchmark performance on criteria for leadership, strategy, customer service, workforce effectiveness, and operations. Analysis of hospital award winners from 2002 through 2008 found that they were distin- guished from other hospitals by the extent and rigor of their knowledge-management prac- tices. These exceptionally high-performing hospitals and health systems had developed comprehensive and sophisticated knowledge-management systems that aligned both cul- ture and business processes throughout their organizations. They made deliberate efforts to inform every worker about relevant events and to communicate frequently and accurately with both customers and employees (Griffiths, 2013).

The Baldrige performance excellence criteria emphasize identifying best practices and developing benchmark measures based on the known best values of performance for peer organizations. Award-winning organizations systematically searched for information about other organizations to learn about best practices and develop benchmarks. They established formal structures and processes to maintain control over information and decision processes and to ensure content accuracy in all their communications. Award recipients also invested considerable resources in staff training—up to 100 hours of train- ing per full-time equivalent employee each year, in one case. Most importantly, these high-performing health care organizations used the knowledge they obtained and cre- ated to actively reinforce an organization-wide emphasis on excellence that encourages all workers to contribute to mission achievement (Griffiths, 2013).

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Section 9.2Inspiration as a Foundation for Action

Employee Engagement Exceptional organizations exemplify their visions and fulfill their missions through engaged employees. Each year, the Gallup polling and market research firm recognizes exceptional organizations through its Great Workplace Award program. In 2013 Gallup designated 32 Great Workplaces throughout the world, representing all types of busi- nesses. These award-winning companies had employee-engagement ratios that were more than 5 times the average ratio of other U.S. companies and 20 times that of compa- nies globally (Kannry, 2013). Twelve of the 2013 winners were health organizations, pri- marily hospitals and health systems. Among them was the MemorialCare Health System, which includes six hospitals in southern Los Angeles and Orange County, California, as well as physician groups, an Independent Practice Association, retail clinics, and numer- ous outpatient health centers. MemorialCare has also been recognized among the top 20% of U.S. health systems rated by Thompson Reuters and as one of the top 100 integrated health care networks by Becker’s Hospital Review (Quinnan, 2013; Rodak, 2013).

In addition to offering many community health-promotion and education programs, MemorialCare is dedicated to creating a culture of wellness in the workplace for both staff and patients. Recognized by the American Heart Association as a Fit-Friendly Worksite in 2012, MemorialCare’s Good Life Employee Wellness Program provides a supportive workplace where employees are encouraged and helped to take care of their own health needs. The system hospitals offer employees cafeterias with nutritious food choices, work- place walking trails and gyms, and weight-management and tobacco-cessation programs (MemorialCare Health Systems, 2010).

Theory in Action: Walking the Walk, Operationalizing Values

CalOptima is a Medicaid managed care health plan in Orange County, California, with approximately 500,000 members, an annual budget of $1.5 billion, and more than 600 employees (CalOptima, 2013). CalOptima’s mission and vision statements reflect its organizational purpose and aspiration, and its detailed values statement recognizes the importance of both mission and margin and notes how the organization acts in ways that reflect its values.

Our Mission: To provide members with access to quality health care services delivered in a cost-effective and compassionate manner.

Our Vision: To be a model public agency and community health plan that provides an integrated and well-coordinated system of care to ensure optimal health outcomes for all our members.. . .

Our Values: CalOptima CARES about our members and providers. As a public agency, we abide by our core values to ensure the public’s trust and to meet our members’ health care needs. As a health plan, we must ensure sufficient provider reimbursement while operating cost-effectively and compassionately, as stated in our mission.

Collaboration: We seek regular input and act upon it. We believe outcomes are better through teamwork and effective communication with our members, providers, community health centers and community stakeholders.

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Section 9.2Inspiration as a Foundation for Action

Theory in Action: Walking the Walk, Operationalizing Values (continued)

Accountability: We were created by the community, for the community, and are accountable to the community. Our Board of Directors, Member Advisory Committee and Provider Advisory Committee meetings are open to the public.

Respect: We respect and care about our members. We listen attentively, assess our members’ health care needs, identify issues and options, access resources, and resolve problems.

• We treat members with dignity in our words and actions. • We respect the privacy rights of our members. • We speak to our members in their languages. • We respect the cultural traditions of our members.

We respect and care about our partners. We develop supportive working relationships with providers, community health centers and community stakeholders.

Excellence: We base our decisions and actions on evidence, data analysis and industry-recognized standards so our providers and community stakeholders deliver quality programs and services that meet our members’ health needs. We take risks and seek new and practical solutions to meet health needs or solve challenges for our members.

Stewardship: We recognize that public funds are limited, so we use our time, talent and funding wisely, and maintain historically low administrative costs. We continually strive for efficiency. (CalOptima, 2013, pp. 5, 10)

A few individual executive actions also illustrate how health plan leaders “walk the walk”:

• The former chief medical officer periodically attended grand rounds, complex case conferences, and ethics committee at the plan’s contracted hospitals to better understand the challenges facing and demonstrate appreciation for providers who care for extremely ill CalOptima members. At the academic medical centers, she would also make a point of meeting with medical residents, encouraging them to consider practicing in safety net organizations serving low-income patients.

• The founding CEO donated a significant portion of her salary to community nonprofit agencies. Other executive team members followed her example, and after she left they continued the practice by establishing an annual award in her name that recognizes an outstanding community agency with an unrestricted monetary award.

• At the urging of the former director of provider relations, the plan hired a seriously disabled individual to staff the member advisory board and recruited members of the board and the health plan to serve as member service representatives, with emphasis on bilingual/bicultural abilities and community ties.

Reflection Questions: 1. CalOptima refers to its customers as members, rather than subscribers or enrollees,

which are more customary terms for insurers. What does the use of this term mean in terms of the way CalOptima views and treats its customers?

2. California’s Medicaid program pays providers far less than other states, so finding physi- cians who are willing to accept Medicaid patients is an ongoing challenge (Melnicoe, 2013). How does this impact CalOptima’s relationships with providers and members?

3. What competing pressures do CalOptima’s leaders face to fulfill its mission and sustain a margin?

4. What other actions can you think of to “walk the walk”?

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Section 9.3Culture

9.3 Culture “Culture is a learned system of knowledge, behavior, attitudes, beliefs, and norms that is shared by a group of people” (Ledlow & Coppola, 2014, p. 14). It is also a key factor that both shapes and is influenced by the organization’s vision and values and impacts the organization’s ability to fulfill its mission. There are two types of culture impor- tant to health care organizations. The first is organizational culture, which focuses on employees and other internal stakeholders. The other is community culture, which focuses on patients and other external stakeholders. Health leaders need to under- stand and apply their knowledge of both types of culture. First, they must inspire and galvanize followers to buy into the vision and act in accordance with the values. They must also communicate the vision and values to a broader range of internal and exter- nal stakeholders, showing how the vision and values guide the organization’s actions and future direction. With both types of cultures, diversity is an underlying theme—as a concern, value, and goal—and for most health care organizations, it is a business imperative.

Organizational Culture

Social psychologist Edgar Schein, a retired professor of management at the Massachusetts Institute of Tech- nology’s Sloan School of Manage- ment, was a pioneering scholar in the study of organizational culture and how people in organizations learn, transmit, and change corporate cul- tures. His work from the 1980s has been the foundation of much of the management scholarship on orga- nizational culture since that time. Schein (1984) proposes a model of organizational culture with three dis- tinct levels, as displayed in Figure 9.2, beginning with this formal definition:

Organizational culture is the pattern of basic assumptions that a given group has inven- ted, discovered, or developed in learning to cope with its problems of external adapta- tion and internal integration and that have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems. (p. 1)

Schein’s model of organizational culture begins with the top layer of visible artifacts. These include visual signs and symbols in the physical environment such as the organizational

Figure 9.2: Schein’s model of

organizational culture

Basic underlying assumptions are the foundation of an organization’s culture.

Artifacts

Values

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Section 9.3Culture

architecture, furniture, decorations and office layout, and employee style of dress and appearance. In addition, artifacts include verbal behaviors such as the degree of formal- ity in communications (in some hospitals, even the CEOs do not call doctors by their first names), office jokes, and socialization patterns. The second layer is espoused values that govern behavior. These are explicit or visible norms expressed in official publica- tions such as the values statement or deduced from organizational documents and for- mal statements by organizational leaders, both written and oral. To really understand an organization’s culture, however, one must uncover the underlying assumptions, which are often so deeply embedded that they are taken for granted and become unconscious determinants of members’ perceptions, thoughts, and feelings. Examples of such assump- tions in health care organizations are the ideas that medical care should save lives and that businesses should be financially sustainable.

Theory in Action: Organizational Culture Typologies

Several management scholars have developed organizational culture typologies to categorize and describe the differences. Gordon and DiTomaso (1992) found from a study of insurance companies that a strong culture, as measured by the consistency of employee perceptions of company values, was associated with higher organizational performance, regardless of the culture type. Gordon and DiTomaso categorized the companies they analyzed in terms of behaviors that the company emphasized and encouraged, as shown in Table 9.1.

Table 9.1: Gordon and DiTomaso’s organizational typology of preferred employee behaviors

Orientation Desirable behaviors

Aggressive/action Getting things done

Innovation Managerial risk taking and creativity

Confrontation Expressing different opinions, openly addressing issues

Planning Proactive analysis, avoiding surprises

Results Holding people accountable for mea- surable achievements

People Employee development opportunities

Team Cooperation and collaboration across organizational units

Communication Open communication, transparency

Source: Gordon, G. G., & DiTomaso, N. (1992). Predicting corporate performance from organizational culture. Journal of Management Studies, 29, 783–797.

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Section 9.3Culture

Theory in Action: Organizational Culture Typologies (continued)

Understanding the organizational orientation as an expression of the organization’s culture is an important element in health professionals’ career planning. It will help them determine the type of organization where they will best fit in, demonstrate desired behaviors as employees, and recruit more effectively as hiring managers.

Table 9.2 presents another well-known metaphorical typology of organizational cultures based on their view of employees, developed by Jeffrey Sonnenfeld of the Yale School of Management (Ledlow & Coppola, 2014):

Table 9.2: Sonnenfeld’s organizational persona typology

Culture type Description

Academy Hospitals, universities, and large orga- nizations exemplify this type of culture, where highly skilled employees work their way up through the ranks over many years.

Baseball team In these fast-paced, high-risk, high-stakes organizations such as investment banking and advertising, employees with highly prized skills move from one company to another as “free agents.”

Club Here the critical success factor is fitting in; employees start early in their careers and move up according to seniority; promotions are almost exclusively from within, such as with the military.

Fortress In these organizations, exemplified by savings and loan companies and large automobile manufacturers, oppor- tunities abound for people with the right skills to enter the organization at various levels; however, these organi- zations often undergo major shifts and reorganizations in response to chang- ing economic and market conditions, so job security is minimal.

Source: Ledlow, G. R., & Coppola, M. N. (2014). Leadership for health care professionals: Theory, skills, and applications (2nd ed.). Burlington, MA: Jones & Bartlett.

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Section 9.3Culture

Theory in Action: Organizational Culture Typologies (continued)

Reflection Questions: 1. Identify the organizational culture of your workplace or an organization in which you

participate in terms of employees’ or participants’ desired behaviors. 2. What type of organizational persona best describes your ideal workplace and why? 3. Imagine that you are a manager in a health organization with some followers who do

not display the desired employee behavior(s). How would you communicate with them about this misalignment, and what actions would you take to address it?

Diagnosing Organizational Culture The underlying assumptions and beliefs that determine the type of organizational culture are the key to analyzing the culture—but can be difficult to discern because they are taken for granted. Schein (1984) recommends four approaches to gathering data to better under- stand an organization’s culture:

1. Learn how new members are socialized by interviewing supervisors and more experienced peers.

2. Study responses to critical incidents in the organization’s history by examining documents and stories that the organization’s public documents recount, looking for major themes from the reasons given for the actions taken.

3. Analyze the beliefs and values of the company’s culture creators or culture carri- ers, such as founders, longtime staffers, and former and current leaders.

4. Explore with corporate insiders any anomalies or puzzling features discovered through document analysis or interviews with current or former employees.

Employers wisely assess a prospective employee’s fit with the organization’s culture as well as his or her knowl- edge, skills, and abilities. Health pro- fessionals are well advised to consider and assess the culture of organiza- tions where they work or those that they aspire to join. As with any type of research, collecting and analyzing data from a variety of sources will provide a more complete picture.

High-Performance Organizational Culture Research shows that organizational culture is the strongest driver of innovation in all types of businesses.

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Fitting in is important for both the employer and employee.

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Section 9.3Culture

In a series of organizational culture studies involving almost 300,000 employees, high scores on three key characteristics were strongly associated with higher organizational performance: adaptability, mission, and involvement. Adaptability was the most impor- tant factor in new product development performance, reflecting the ability to proactively respond to market conditions, take risks, and develop ideas for learning and change. A strong mission defines a meaningful long-term direction and is the foundation for a vision and strategies that support innovation. Involvement suggests that organizations can enhance innovation by aligning people with organizational goals (Denison, Ko, Kotrba, & Nieminen, 2013).

Building on earlier research demonstrating that hospitals with supportive work environ- ments for nurses experience better patient outcomes, a team of researchers examined the benefits of a high-performance work culture for employees, patients, and hospitals by surveying more than 1,500 hospital-based providers in nine New York institutions as well as analyzing patient satisfaction surveys and discharge data. High-performance work cul- ture was positively associated with desirable work practices, strong retention indicators, and higher quality of care (Weinberg, Avgar, Sugrue, & Cooney-Miner, 2013).

In the early 2000s Baptist Health System in Alabama was a low-performing organization experiencing low employee morale, high turnover, physician dissatisfaction, and below- average patient-quality scores. Health-systems leaders initiated a cultural-change focus to make the company truly customer focused by engaging in a systematic and thorough effort to help employees define and develop examples of how to demonstrate the orga- nization’s core values to patients. After 4 years, Baptist Health System became profitable, 89% of its patient-quality measures were in the top 10% of all U.S. hospitals, and in 2010 it was ranked as one of the top 15 places to work in Alabama (Gostick & Elton, 2012).

Web Field Trip: Best Health Care Workplaces

Watch and listen to the brief video interviews with 14 of the chief executive officers of Modern Healthcare’s 100 Best Places to Work for 2013: http://www.modernhealthcare.com/section /bestplaces-2013#. The winning organizations include a diverse mix of health employers from across the nation—providers and suppliers, urban and rural, large and small.

Reflection Questions: 1. What makes these employers stand out as great places to work? Are there some com-

mon themes that cut across these very diverse companies? 2. Which of these organizations most appeals to you as a place to work and why? 3. How has watching these videos influenced your future career plans?

Culture of Silence As discussed in Chapter 8, communication failures are often one of the root causes of medical errors reported to the Joint Commission. Too often, the problems that lead to these errors are known but neither acknowledged nor addressed, creating what some have called a “culture of silence” in many health care organizations.

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Every day, many healthcare workers stand next to colleagues and see them cut corners, make mistakes, or demonstrate serious incompetence. But only a small percentage speak up and discuss what they have seen—even though they’re standing only a few feet away. As a result, problems go on for years—contributing to avoidable errors, high turnover, decreased morale, and reduced productivity. (Maxfield, Grenny, McMillan, Patterson, & Switzler, 2005, p. 2)

Maxfield and colleagues conducted focus groups, interviews, and workplace observations and surveyed more than 1,700 clinicians and administrators in 13 hospitals of varying sizes throughout the United States. More than half of study participants had witnessed broken rules, mistakes, incompetence, disrespect, poor teamwork, and micromanagement—yet fewer than 10% of these health care workers discussed their concerns with the offending coworker. The small minority who did speak up and were confident about confronting people with their concerns achieved better patient outcomes, were more satisfied with their workplace, and worked harder than their silent colleagues. The authors recommend that hospitals work to create cultures of safety in which workers can forthrightly approach each other about their concerns and that they make efforts to learn from the skilled minor- ity of workers who are able to speak up in a professional manner.

Physicians find it particularly difficult to fulfill an established ethical duty to communi- cate with patients who have been harmed by medical errors, regardless of whether they or another clinician committed the error. Sometimes it is hard to pinpoint who is responsible for the error, since complex groups of clinicians deliver health services across multiple care settings and system breakdowns often lie at the heart of adverse events. A working group of experts in patient safety, medical malpractice insurance and litigation, error disclosure, patient-provider communication, professionalism, bioethics, and health policy developed disclosure and discussion guidelines for clinicians and institutions on communication with patients about clinical colleagues’ harmful efforts (Gallagher et al., 2013). Acknowl- edging that disclosure is difficult, the fact that it is ethically required leaves no doubt that patients and families must be told about a medical error. The clinician’s first obligation is to obtain the facts, then to initiate a colleague-to-colleague conversation about what hap- pened and, if required, how to communicate with the patient. If the clinical colleagues disagree about what happened or whether disclosure is required, the appropriate next step is to request assistance from the health care organization. The working group noted that institutions bear the ultimate responsibility for disclosing medical errors, regardless of which clinicians were involved, and that institutional leadership is especially impor- tant in complex or high-stakes situations involving multiple clinicians or institutions. Some would argue that communication with the patient about a medical error is a moral imperative even when it is not legally required—simply because it is the right thing to do.

Another area with a pervasive culture of silence for hospitals concerns employee reference sharing. The common practice is to share only the employee’s name, dates of employ- ment, and position held; executives fear that sharing any other information places them at risk of being sued by the employee for defamation. This leaves the hiring organization in a double bind—unable to obtain critical information on an applicant from a previous employer and at risk of a negligence lawsuit if it hires someone incompetent or danger- ous. Research demonstrates that the risk of a successful defamation lawsuit is low if the former employer shares information about factual incidents, yet most health care execu- tives remain unwilling to provide comprehensive references for former employees. Some

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Section 9.3Culture

executives do share employee information when they believe the applicant may cause harm to patients or other workers, but they do so off the record and unofficially. Few recognize that there may be serious consequences if they do not share relevant informa- tion about a former employee who is dangerous or extremely incompetent; some states have adopted legislation establishing employer liability for negligence if they misrepre- sent the qualifications of former employees by omitting relevant negative information. Failure to share pertinent negative information allows problem employees to pass from one employer to the next, degrades the overall quality of the health care workforce, and threatens the security and safety of patients, other staff, and the public (Malvey, Fottler, & Sumner, 2013).

Community Culture

The focus of this section is on the importance of cultural proficiency in health care orga- nizations, since they serve an increasingly diverse patient population with nontraditional needs and service preferences. Also known as cultural competence, cultural sensitivity, and cultural conditioning, cultural proficiency encompasses both individual and orga- nizational efforts to understand and overcome cultural differences. A general definition is “the ability and willingness to respond respectfully and effectively to people of all cul- tures, classes, races, ages, ethnic backgrounds and religions in a manner that recognizes and values the worth and dignity of all” (Buchbinder & Shanks, 2012, p. 316). Although there is a large body of research and literature on the role of clinicians in providing cul- turally competent care in the patient’s own language, cultural proficiency is also vitally important for health administrators.

Demographic Shifts The U.S. Census Bureau estimated that in July 2011 the population of the United States reached an important tipping point, with minorities making up 50.4% of the population under 1 year of age (Knowledge,Wharton, 2012). This demographic shift underscores the importance of health care organizations continuing to improve their understanding of different ethnic cultures in the communities they serve, as well as those in the health care workforce. It also suggests a new business imperative—to deliver care in a manner compatible with their patients’ and employees’ cultural health beliefs and practices and to promote products and services in their preferred languages and through ethnic media channels. The Center for American Progress (2011) has developed a series of infographics displaying the numerical gains that communities of color in the United States have made and will continue to make in the 21st century.

Health Disparities Another dimension of cultural proficiency or competence is health disparities, defined as a health outcome seen in a greater or lesser extent between population groups (HealthyPeople.gov, 2010). The Joint Commission defines a culturally competent orga- nization as “one that is vigilant for ethnic disparities in screening, prescriptions, pro- cedures, and health outcomes and has policies and procedures in place to address any disparities found” (Buchbinder & Shanks, 2012, p. 316). Other population groupings

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Section 9.3Culture

Web Field Trip: Federal Health Disparity Reduction Efforts

As part of a broader health disparities action plan, the U.S. Department of Health and Human Services Office of Minority Health published the enhanced National Standards for Culturally and Linguistically Appropriate Services (CLAS) in Health and Health Care. The 2013 standards broadly include racial, ethnic, and linguistic groups, as well as geographic, religious and spiritual, biological, and sociological characteristics. Visit the Office of Minority Health website (http://www.minorityhealth.hhs.gov/). Review the standards, watch the video clip (https:// www.thinkculturalhealth.hhs.gov/FlashPlayer/play508.asp?Video=QHpart1), and answer the following questions.

Reflection Questions: 1. The CLAS standards were adopted in 2000 and enhanced in 2010, and adherence to

them is mandated for all providers receiving Medicare, Medicaid, and other federal funds. Compliance with these standards will cost providers money, yet there is no additional reimbursement for compliance. How do you think this unfunded mandate has impacted or will impact health organizations?

2. What opportunities do the CLAS standards suggest for health professionals who are proficient in languages in addition to English or with intimate knowledge of minority ethnic cultures?

3. CLAS Standard 3 calls for health organizations to “recruit, promote, and support a culturally and linguistically diverse governance, leadership, and workforce that are responsive to the population in the service area” (Department of Health and Human Services, Office of Minority Health, n.d., para. 4). However, there are no measurable objectives nor explicit sanctions for compliance with this standard. As a future health care leader, what efforts would you make to comply with this standard?

where disparities may occur include race, gender, sexual identity or orientation, age, disability status or special health needs, socioeconomic status, and geographic (rural or urban) location. Disparities have been a prime focus of the U.S. surgeon general’s Healthy People reports for more than 20 years. In Healthy People 2020 an overarching goal for the national strategic population health plan was to “achieve health equity, elimi- nate disparities and improve the health of all groups” (HealthyPeople.gov, 2010). Thus, providing culturally effective care also involves active efforts to identify and reduce health disparities.

Health Management Cultural Competence The Healthcare Leadership Alliance (HLA) is a consortium of the leading health care administration professional associations, representing more than 140,000 profession- als working in many different health care industry sectors. The HLA has developed an extremely detailed Competency Directory with more than 800 distinct competencies based on job analyses and expert opinions from members of the consortium. The 2010 directory lists the following competencies to establish an organizational culture that val- ues and supports diversity:

• Create an environment which recognizes and values differences in staff, physicians, patients, and communities.

• Assess current environment and establish indicators of progress toward cultural competency.

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Section 9.3Culture

• Define diversity in terms of gender, race, religion, ethnicity, sexual orienta- tion, age, etc.

• Analyze population data to identify cultural clusters. • Define cultural competency and permeate principles throughout the

organization. • Confront inappropriate behaviors and attitudes toward diverse groups. • Develop processes to incorporate cultural beliefs into care. (Healthcare

Leadership Alliance, 2010) These managerial competencies are the essential components of a culturally proficient health care organization, because they describe the specific actions managers in such orga- nizations take to analyze and improve their organization’s performance in both the work- place and the community.

Health Care Workplace Diversity An important element of an organization’s cultural proficiency is a diverse workforce that reflects the population of the community the organization serves. Women have always constituted the majority of the health care workforce (primarily because more than 90% of nurses are women), and the proportion of racial and ethnic minority employees has also steadily increased. Yet women and minorities hold only a small percentage of executive- level positions. According to the American Hospital Association, 94% of all hospital exec- utives in 2010 were White (ACHE, 2012a). Since 1992 the ACHE has conducted a series of studies comparing the achievements of health care managers according to race and gen- der. The most recent survey, which focused on gender differences, found that about 11% of women and 22% of men achieved CEO positions and that women on average earned about 20% less overall than men with similar levels of education and experience. The 2008 survey, which focused on racial/ethnic comparisons, found that the majority of upper level management positions were held by White males and that minority executives of both sexes continued to earn less than their White colleagues when results were controlled for experience and education (ACHE, 2012a).

Web Field Trip: ACHE Diversity Resources

Go to the ACHE website section on “Diversity Resources,” http://www.ache.org/policy /diversity_resources.cfm. Review the “Statement on Diversity,” the policy statements on diversity, and download the Diversity and Cultural Proficiency Assessment Tool for Leaders.

Reflection Questions: 1. How does the ACHE as a professional association actively promote diversity in health

care management? 2. What are some specific ACHE recommendations to promote racial and ethnic diversity

in health organizations? 3. How do the CEO Action Steps in the case studies in the Diversity and Cultural Profi-

ciency Assessment Tool for Leaders illustrate the importance of top-level organizational commitment to diversity?

4. If you work in a hospital, find out if your organization has completed the assessment tool and if so, ask to review it.

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Section 9.4Ethics

Cultural proficiency is a good business practice, with demonstrated positive results that include improved customer satisfaction, increased market share, decreased malpractice claims, and higher returns on investment. Workforce diversity is a key element of cul- tural proficiency, with organizational benefits that include decreased turnover, enrich- ment of the future workforce talent pool, fewer lawsuits, and higher employee morale (Buchbinder & Shanks, 2012). In addition, the ACHE, the Medical Group Management Association, and other leading health care professional organizations have established diversity as an ethical and moral imperative for health care organizations and the health management profession.

9.4 Ethics Ethics, like values, are an important component of culture. They are also the foundation of many laws, since they reflect what people consider right and wrong. Ethical viewpoints are grounded in family, community, and religious traditions and therefore are not common across cultures. Professions also have defined codes of ethics. In the context of health admin- istration, ethics encompasses a set of moral guidelines, principles, and behavioral standards. Health care organizations serving diverse communities and with a culturally diverse work- force are not infrequently faced with situations in which the deeply held ethical beliefs of professional caregivers are at odds with those of patients and, at times, prevailing laws. Fur- thermore, nearly all health leaders face ethical dilemmas or challenges during their careers.

Key Ethical Concepts

Four fundamental ethical principles have been recognized as the foundational concepts for health care research, practice, and administration, beginning with the World Medical Association’s Declaration of Helsinki in 1964 and the 1978 report of the National Commis- sion for the Protection of Human Subjects of Biomedical and Behavioral Research (Buch- binder & Shanks, 2012; Roseneau & Roemer, 2008). The principle of autonomy involves respect for persons and people’s right to make informed decisions and consent to their care (including the freedom to refuse treatment), as well as their right to individual pri- vacy and confidentiality, freedom of choice, truthful information about their conditions and treatment options, and receipt of care as promised. Beneficence and nonmaleficence are two parallel principles based on the maxim for physicians to “first, do no harm”; beneficence means “helpful,” and nonmaleficence means “not harmful.” Justice is an ethical principle centered on fairness and equality that underscores the obligation of health care organizations to fairly allocate patient-care and treatment resources.

Legal Considerations Health care organizations are highly regulated by government agencies and accrediting bod- ies, and they must comply with numerous laws imposed by federal, state, and local govern- ments as well as meet increasingly stringent accreditation standards. Complying with many of these regulations and standards is challenging and expensive, and it requires a substantial organizational effort with no or minimal apparent benefits for patients. Ethical health care organizations and their leaders must comply with regulations and meet standards—even

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Section 9.4Ethics

if they question the need or appropriateness of the regulations and standards. By fostering a culture of compliance, leaders not only protect their organizations from legal liability and negative perceptions from community, professional, and advocacy groups; they also protect their organizations’ ethical culture. If they object to a regulation or an accrediting agency standard, they can and should make their objectives known, ideally in concert with other peer organizations and their professional trade organizations.

The financial penalties for ignoring or evading some regulations are severe. For example, individuals or entities that violate the federal statute known as the Stark law face civil pen- alties of up to $15,000 per item billed for knowingly billing an illegal amount or failing to make a refund for illegally billed services provided to Medicare or Medicaid patients (Buch- binder & Shanks, 2012). Violators of the Medicare and Medicaid Anti-Kickback Statute are subject to criminal penalties, including fines of up to $25,000 and prison terms of up to 5 years, exclusion from the Medicare and Medicaid programs, civil penalties of up to $50,000, and damages up to triple the amount of the illegal kickback. The law prohibits compensat- ing or providing anything of value either free or at a reduced cost to a current or potential source of referrals to the Medicare or Medicaid provider (Ledlow & Coppola, 2014).

Medical and Biomedical Concerns Earlier in the chapter, the practice of hospital partnerships with medical screening companies to promote a package of tests of questionable medical benefit was presented as an example of mission-margin conflict. While this practice may be legal, it raises the question of whether it is ethical to promote services that may be unnecessary. The chief executive of the American College of Physicians stated that it was unethical for hospitals to promote screenings that expose patients to the risk of false-positive results and unnecessary follow-up treatments, including surgery (Appleby, 2013). An extensive array of research also demonstrates that physicians’ service volume increases substantially when they have an ownership interest in entities to which they self-refer, such as ambulatory surgical centers and magnetic resonance imaging equipment (KvedtBlog, 2013).

A more positive example of hospitals choosing a more cost-effective treatment is that of bloodless surgery, without the use of blood transfusions. The practice originated from efforts to respect the religious preference of Jehovah’s Witnesses and gained additional traction during the early days of the AIDS epidemic before donated blood was routinely screened for the presence of HIV, which greatly increased the cost of blood supplies. Later research on the risks of nonessential transmissions led hospitals to develop initiatives to reduce surgical blood transfusions. After adopting new blood-use protocols, the Cleve- land Clinic reduced spending for external blood from $35.5 million in 2009 to $26.4 mil- lion in 2012, with additional savings on blood storage and processing costs and fewer transfusion-related complications. Physicians answer a series of questions before ordering blood, and managers regularly review blood use data (Radnofsky, 2013).

Health Administration Concerns

A panel of health care ethics experts convened in 2013 found that access to care continues to be the most significant ethical matter in the United States, and the nation stands at a criti- cal juncture to see if the ambitious health care reforms of the Affordable Care Act can be

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Section 9.4Ethics

effectively implemented. Many of the challenges to its implementation—and to the nation’s health care system in the future—will reflect the challenges of balancing quality and safety with efficiency and fiscal viability. Other key ethical issues include sustaining the future health care workforce, addressing end-of-life issues, and allocating limited-supply medica- tions and donor organs (Larson, 2013). End-of-life-care issues are particularly challenging for health professionals, as are legal and ethical concerns about managed care.

Web Field Trip: ACHE Ethics Resources

Review the extensive ACHE resources on ethics www.ache.org, especially the Code of Ethics. Take the Ethics Self-Assessment to learn more about your own ethics as a health professional and as a future health care organizational leader.

Reflection Questions: 1. What statements made you stop and think about the right thing to do? 2. How do you feel about the health care executive’s stated responsibility to report viola-

tions of the code by someone you work with—or for?

End-of-Life Care While end-of-life care is generally considered under the rubric of medical ethics involving patients, their families, and treating physicians, it is also a concern for health administra- tors because end-of-life-care treatment involves financial and administrative as well as medical decisions (Williams & Torrens, 2008). End-of-life care has become much more complicated today, thanks to medical advances and interventions that enable patients’ lives to be prolonged when in previous eras these patients would have died. The Amer- ican Medical Association has defined life-sustaining treatment as “any treatment that serves to prolong life without reversing the underlying medical condition.. . . [It] may include, but is not limited to, mechanical ventilation, renal dialysis, chemotherapy, antibi- otics, and artificial nutrition and hydration” (as cited in Darr, 2011, p. 236).

Ethical challenges in end-of-life care often involve questions of ordinary versus extraor- dinary care and the extremely difficult calculus in judging whether the potential benefit justifies the burden for the patient and the health care system. Darr (2011) opines that the principle of nonmaleficence underlies the distinction between ordinary and extraordinary care: Ordinary care is defined as “all medicines, treatments and operations which offer rea- sonable hope of benefit and which can be obtained and used without excessive expense, pain or other inconvenience”; extraordinary care as “all medicines, treatments and opera- tions which cannot be obtained and used without excessive expense, pain or other incon- venience, or which, if used, would not offer a reasonable hope of benefit” (p. 249).

Health care organizations are now required to obtain an advance medical directive (AMD) from every patient and to identify surrogate decision makers who are explic- itly authorized to make care decisions for patients unable to speak for themselves (Buch- binder & Shanks, 2012). Absent an advance directive, surrogates (typically the patient’s next of kin), can also use substituted judgment based on what the surrogate believes the patient would want were the patient able to make a decision about his or her care.

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Obtaining an AMD often poses further challenges. Research shows that completion rates for AMDs improve when patients receive the forms several days before admission and when physicians receive education, reminders, and feedback about obtaining AMDs. Other research, however, found that physicians and nurses were not well informed about changes in national guidelines for end-of-life care or disagreed with some key recommen- dations such as permissibility of withdrawing treatment (Darr, 2011).

Managed Care Because a fundamental feature of managed health care is limits on both patient and pro- vider choices, both patients and providers, and their respective advocacy organizations, have raised concerns about rationing care and the inherent economic incentives for physi- cians to withhold care when they receive prepaid capitation payments. There are inherent economic incentives with fee-for-service payment systems for physicians to recommend and provide care that is unnecessary or of questionable benefit. However, concerns about these types of perverse incentives tend to come from academics, health economists, and health-policy analysts rather than from patients or clinicians.

The original managed care organizations, health maintenance organizations (HMOs), were established to address two problems in the traditional indemnity insurance system that were considered basic flaws responsible for excessive spending: unnecessary treat- ment and limited preventive services. As more employers adopted some form of man- aged care insurance coverage for their workers beginning in the 1980s, Medicare also encouraged and most state Medicaid programs required beneficiaries of these programs to receive their care from managed care health plans. In the short term the health plans’ economic interests are best served by controlling medical care service utilization and thus conflicts with the members’ interests in obtaining all needed medical care. In the long run, however, plan and member interests are aligned by significant use of preventive services, appropriate screenings, use of primary care physicians as clinical care coordinators, and prudent use of specialty and inpatient care.

Managed care administrators face ethical dilemmas in both marketing and management of their health plans’ services. A plan that includes providers known for treating complex con- ditions faces the risk of adverse selection, attracting more members who will need expensive care. The Centers for Medicare and Medicaid Services (CMS) has adopted strict regulatory prohibitions against steerage, when health plans seek to avoid enrolling high-risk patients. In addition, both public and private payers have developed risk adjustment mechanisms designed to equalize providers’ financial risk from adverse selection.

Utilization management poses a more fundamental ethical dilemma when financial incentives based on use of ancillary services, referrals, and hospitalizations affect clinical decisions, albeit subconsciously. Adhering to principles of nonmaleficence and benefi- cence in a managed care-delivery system is, Darr (2011) argues, “a function of the MCO’s willingness, prompted by its (virtuous) managers acting as moral agents and the organi- zation’s conscience, to institute the safeguards that balance competitiveness and finan- cial factors with furthering the interests of enrollees” (p. 301). A growing number of state insurance regulatory agencies require health plans to use independent review boards to review denial of service requests on the grounds of medical necessity, and some HMOs have established these review boards on their own (Majumder, 2005). Perhaps the most

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Section 9.4Ethics

useful guideline for ethical decision making in managed care organizations is that mem- bers must come first.

Ethical Guidelines for Health Administrators

Many sources external to health care organizations have a say in determining what is con- sidered ethical behavior. In addition to laws, regulations, court decisions, and accredita- tion standards, a wide variety of professional organizations have adopted codes of ethics to guide their members’ behaviors and decisions. Professional codes of ethical conduct may conflict with and, in some cases, trump organizational policies when members of a profession feel a stronger allegiance to their profession and its guidelines than to organi- zational policies, rules, and practices (Olden, 2011).

Professional Codes of Ethics The American College of Healthcare Executives, the nation’s largest health administration professional organization with more than 30,000 members, has developed an extensive code of ethics that articulates a health care manager’s ethical responsibilities to patients, the organization, employees, the profession, the community, and society. Other health professional organizations that have robust codes of ethics include the Medical Group Management Association, the Healthcare Financial Management Association, and the Association of University Programs in Health Administration.

Case Study: Community Health Alliance Code of Conduct

Ed Martin, director of a 25-member collaborative health alliance, knew it was going to be a hard day when he retrieved three furious voice mail messages from members of his board of directors demanding he take immediate action about one member’s attack on another. As head of the alliance for several years, Martin was used to dealing with disagreements among the organizations, which represented a diverse range of ethnic and cultural groups within the region. This time the disagreement was bitterly political with some ugly religious overtones.

The firestorm’s spark was a video and social media posting by Independence Free Organization denouncing Islamic community organizations for assisting terrorists and their families to obtain Medicaid coverage and urging the closure of all such organizations throughout the nation. Martin was appalled by Independence Free Organization’s actions, as a gross violation of the alliance’s mission to promote access to health care for all people who needed it. He quickly contacted the board members and agreed to view the video and consider if there were grounds for any type of disciplinary action against an organization that threatened the viability of another alliance member. He knew that it would be vital not to get caught up in an argument about the rights of a particular ethnic group, many of whom were immigrants, to access public benefits. Instead, he needed to frame the issue in terms of the obligations of alliance members to respect fellow organization members and not interfere in their business operations. He contacted the alliance’s legal counsel, who advised that Independence Free Organization had a constitutional right to publicly express its disagreement with the policies and actions of another organization under the First Amendment freedom of speech protections, as well as to stage protest demonstrations at the Islamic Health Center.

(continued)

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Section 9.5Summary and Resources

Mother Rule As Darr (2011) notes, professional codes of ethics provide general guidelines only; they require both incident-specific interpretations and, most importantly, the courage to apply them when the occasion arises. Another more pragmatic consideration is the importance of integrity in a manager’s success—historically, more important than any other skill or factor. Above all, ethical behavior is a foundational principle for the health administra- tion profession—and for life generally. Michael Feuer (2011) emphasizes the importance of evaluating the ethical baselines instilled in job applicants by their parents to accurately assess their integrity, work ethic, and commitment. But the “mother rule” is probably the simplest and best general ethical guideline: “If your mother wouldn’t approve of what you’re doing, don’t do it” (Feuer, 2011, p. 151).

9.5 Summary and Resources

Chapter Summary A health organization’s mission, vision, and values statements express the organiza- tion’s purpose, aspirations, and what it stands for. They are important declarations of what the organization is about to the people served, the general public, current and future

Case Study: Community Health Alliance Code of Conduct (continued)

Hoping to defuse the situation, Martin contacted Independence Free Organization to point out that its action was very disrespectful toward a fellow alliance organization. The executive director said the organization did not mean to disparage the local Islamic Health Center and agreed to remove the posting. However, Independence Free Organization staff members and supporters increased their picketing at the Islamic Health Center.

Martin worked with the alliance attorney to draft a code of conduct that all member organizations would be required to sign and follow as a condition of membership. The proposed code became a hot topic among the alliance members; each side and their attorneys sought to influence Martin and the board officers to support their position. Over the 18 months that it took to reach an agreement, both organizations threatened to leave the alliance if the other were not removed. All organizations eventually did sign the code of conduct, and although they visibly dislike each other, the opposing organizations each still have a seat at the alliance table.

“The alliance survived, but this ugly and protracted fight has taken its toll on the alliance and on me,” Martin told a friend. “I just hope the time and money we spent to put this code of conduct in place will allow us to avoid a similar showdown in the future.”

Reflection Questions: 1. What do you think of Martin’s decision to remain neutral about the political issue

raised by Independence Free Organization? 2. What were the decision choices facing Martin in this controversy? 3. Is Martin’s hope to avoid a similar controversy in the future reasonable? Why or

why not?

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Section 9.5Summary and Resources

employees, and a wide variety of internal and external stakeholders with which the orga- nization and its members conduct business. Although in an ideal world an organization can do well and do good at the same time, sometimes organizational values conflict with business growth goals and economic incentives. Values-based leadership helps resolve this conflict and guide health organization leaders to align mission and margin objectives.

Culture in health care organizations incorporates two perspectives: considering both cor- porate culture and a health care organization’s cultural proficiency to serve an increasingly diverse patient population with nontraditional needs and service preferences. Organiza- tional behavior scholars have delineated a number of organizational typologies that are use- ful analytical frameworks for diagnosing an organization’s culture and the factors associated with high-performing health organizations in order to encourage moving in this direction. Community culture is driven by demographics, which in most communities in the United States are becoming increasingly ethnically diverse; thus, workplace and patient diversity is an important element of a health care organization’s cultural proficiency.

Ethics are an important component of organizational culture and vary across community cultures since they are derived from family, community, and religious traditions. In addi- tion, professions have codes of ethics and conduct that may conflict with organizational policies, regulations, and even prevailing laws. The fundamental principles of autonomy, beneficence and nonmaleficence, and justice undergird the ethical framework for health administrators and guide their behaviors when faced with ethical concerns about issues such as end-of-life care and managed care.

Critical Thinking and Discussion Questions 1. Find and critique (compare and contrast) mission, vision, and value statements

for two similar health care organizations (e.g., medical group practices, hospitals, community health centers, pharmaceutical companies, medical device manufac- turers, etc.).

2. Please provide suggestions on how to realize the HLA Competency Directory’s listed diversity-supporting organizational cultural competencies in your current or future health care organization.

3. Discuss an ethical problem in a health care organization that was reported in the media and why you think the problem occurred.

Key Terms

advance medical directive (AMD) Infor- mally known as a “living will,” a docu- ment stating a patient’s preferences for care and designating a person authorized to make treatment decisions on the per- son’s behalf if the person is unable to make his or her wishes known.

adverse selection A situation that occurs when a health insurer enrolls a dispropor- tionately high number of patients with serious and expensive health conditions.

beneficence A fundamental medical eth- ics principle that medical treatment should benefit the patient.

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Section 9.5Summary and Resources

cultural proficiency The organizational and managerial competence serving a diverse patient population and directing a diverse workforce.

espoused values (Schein) The middle level of social psychologist Edgar Schein’s model of organizational culture, consisting of organizational statements and explicit or implicit behavioral rules.

health disparities The health outcomes that vary among different population groups in ways that indicate inequitable access to care or quality of treatments experienced by some groups.

justice A medical ethical principle that health care providers should fairly allocate medical care and treatment resources to individual patients and communities.

knowledge management A process by which an organization obtains, shares, and uses information pertinent to its business activities and growth goals.

life-sustaining treatment As defined by the American Medical Association, a treat- ment that prolongs life without affecting the underlying medical condition.

mission statement A declaration of an organization’s purpose, its community or customers served, and what it stands for.

net margin The ratio of excess of revenues over expenses divided by total revenue; similar to operating margin but includes revenues from both operational and non- operational revenues (e.g., investments).

nonmaleficence A medical ethical prin- ciple that treatment should not harm patients.

operating margin The ratio of operating income to operating revenue, measuring how much of a firm’s operating revenues remain after paying the costs incurred to generate those revenues.

physician self-referrals Patient referrals for specialized therapies by physicians to themselves or to companies in which they have an ownership stake.

risk adjustment Compensation methods by insurers to mitigate providers’ financial risk if a disproportionately large number of sicker patients seek treatment from them; a mechanism used by Medicare and Medicare programs to protect contracting health plans from adverse selection.

Stark law Also known as the physician self-referral law, this federal statute pro- hibits physicians from referring Medicare or Medicaid patients to an organization in which they have a financial interest and establishes financial penalties for services provided to illegally referred patients.

steerage Actions by an insurer to avoid enrolling individuals in poor health, expressly prohibited by federal regulations for contracting Medicare and Medicaid health plans and providers.

substituted judgment Allowing a patient’s next of kin, in the absence of an advance medical directive, to make treatment decisions on behalf of an inca- pacitated patient based on what type of treatment the family member believes the patient would want.

surrogate decision makers The individual(s) authorized in an advance medical directive to make medical treat- ment decisions on behalf of a patient unable to speak for him- or herself.

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Section 9.5Summary and Resources

underlying assumptions (Schein) The unconscious beliefs embedded in the worldview held by members of an orga- nization that are the foundation of the organizational culture model developed by social psychologist Edgar Schein.

values Guiding principles of organiza- tional beliefs and standards of behavior.

visible artifacts (Schein) The top level in social psychologist Edgar Schein’s model of organizational culture, consisting of visual symbols and employees that charac- terize an organization.

vision statement The description of what an organization aspires to become.

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