HCA 421 Health Care Planning & Evaluation WK5-D1


Ethics and Corporate Social Responsibility

Learning Objectives

After reading this chapter, you should be able to:

• Discuss the differences among ethics, morals, and values.

• Describe the purpose of the American College of Healthcare Executives code of ethics.

• Demonstrate an understanding of ethical issues and behavior.

• Analyze the various unethical behaviors that tempt managers and HSOs.

• Identify ethical dilemmas and an approach to coping with them.

• Discuss the nature of corporate social responsibility (CSR) and the role of HSOs in being econom- ically, legally, ethically, philanthropically, and environmentally responsible.

Chapter 10 Boris Lyubner/Illustration Works/Getty Images

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CHAPTER 10Section 10.1 Ethics, Morals, and Values

Ethics and socially acceptable ethical behavior should be embedded into the way people are brought up and the way healthcare business and clinical students are trained. But the sad fact is that unethical behavior does occur in HSOs more than it should. This chapter will clarify the distinctions between ethics, morality, and values, what unethical behavior is and is not, situations that make it difficult to be ethical and how to cope with them, and the degree to which ethics can be taught.

The chapter also discusses corporate social responsibility (CSR)—what it is and the extent to which HSOs have a duty to be socially responsible. Finally, the physical envi- ronment (air, land, water) is—or should be—an important stakeholder for HSOs. What does the responsibility to safeguard the environment mean, and what role should orga- nizations play?

10.1 Ethics, Morals, and Values The terms ethics, morals, and values are often confused or used interchangeably in every- day speech. Before discussing ethics in more detail, it is important to establish definitions of what each means and the differences among them. A traditional definition of ethics is the art and discipline of applying principles to analyze and resolve moral dilemmas (Rossy, 2011).

The Josephson Institute of Ethics, a nonprofit organization based in Los Angeles, defines ethics differently but perhaps more aptly for the busi- ness world: “Ethics is about how we meet the challenge of doing the right thing when that will cost more than we want to pay” (quoted in Maxwell, 2003, pp. 23–24).

This definition gets to the heart of why “doing the right thing” is some- times so difficult: We are unaware of the associated cost. The Institute breaks down the definition into two parts: (1) the ability to discern right from wrong and (2) the commitment to do what is right and good (Maxwell, 2003). People and organizations need to develop a standard to follow and possess the will to uphold it, an ongoing struggle for both. This struggle is evidenced by recent studies suggesting that hospitals aggressively pursuing programs to reduce surgical complications could experience a negative cash flow due to shorter hos- pitals stays and fewer reimbursable services (Krupka, Sandberg, & Weeks, 2012; Eappen et al., 2013). Doing the right thing for patients may be the wrong thing for the financial health of the organization.

© vitanovski/iStock/Thinkstock

Business and ethics may seem to be mutually exclusive, but as John Maxwell pointed out, “There’s only ethics.”

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CHAPTER 10Section 10.1 Ethics, Morals, and Values

A moral person knows right from wrong and chooses right; an immoral person knows the difference too but chooses wrong, while an amoral person either does not know the differ- ence between right and wrong or does not care. This description includes notions of bad versus good. Both require societal and cultural norms of right and wrong, and, because these evolve over time, what is “right” is far from clear.

Values are the tenets most important to people and the ways that govern how they choose to live their lives. That statement also applies to organizations (see Chapter 2). Some peo- ple have been known to die in order to preserve a value very important to them (like freedom, or protecting another’s life); at the other end of the scale are people who think nothing of inflicting harm on others if their cause warrants it (such as killing rival gang members to defend “turf”).

Ethical Behavior and Conduct

Virtually every HSO has an ethics code of behavior and some type of code of conduct, which more accurately might be called a moral code. While a significant percentage of organizations—more than 85%, according to one count—has developed codes of conduct, this apparently has little effect on whether or not employees adhere to it: There is no proof that codes of conduct actually influence ethical behavior (Rossy, 2011). An example of a less-than-successful code was that of HealthSouth, a Birmingham, Alabama-based national chain of outpatient rehabilitation centers. Started in 1984 as one rehabilitation center, it grew rapidly into a national chain with more than $3.5 billion in annual sales. When sales started to falter in 1996, cofounders Richard Scrushy and Aaron Beam cooked the books to the tune of $2.8 billion to distort the picture of its financial health so it could maintain its stock price (“Financial Statement Magic,” 2010). Beam left HealthSouth in 1997 and was later convicted of bank fraud and sentenced to three months’ imprison- ment and a $275,000 fine. In 2003, Scrushy was indicted on 85 counts of fraud related to accounting practices at HealthSouth. He was ultimately acquitted of the fraud charges but was later convicted of political bribery, for which he was sentenced to 88 months in federal prison.

That such actions would be considered unethical seems clear. But what if someone acts unethically by mistake, simply out of ignorance? Here, ethicist Gerard Rossy distinguishes between an unethical act and an ethical “mistake”—the difference, he says, is the intent behind the action. An unethical act is carried out with the full knowledge that it is legally and morally wrong because it violates clear corporate codes of ethics or laws and regula- tions. An ethical mistake, on the other hand, is unintentionally unethical; the individual or group later sincerely regrets this act and would have acted differently had they known (Rossy, 2011).

The following three key factors differentiate unethical actions from ethical mistakes:

• Intent—Were you aware that what you were doing was wrong? Did you feel the need to hide or disguise your motives?

• Remorse—Are you sorry for your actions because they were unethical? Or are you sorry you got caught?

• Accountability—Are you willing to admit your mistake and accept the conse- quences? Are you willing to do your best to set things right? (Rossy, 2011)

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CHAPTER 10Section 10.1 Ethics, Morals, and Values

Professional Obligations

Many people working in healthcare are licensed or certified. In addition to denoting that a person is competent to do his or her job, licensure and certification obligates the individ- ual to a specific code of ethical professional conduct. The American College of Healthcare Executives (ACHE) states that healthcare executives “have an obligation to act in ways that will merit the trust, confidence, and respect of healthcare professionals and the gen- eral public. Therefore, healthcare executives should lead lives that embody an exemplary system of values and ethics” (ACHE, 2011, para. 4). The ACHE code of ethics describes the healthcare executive’s responsibilities to the profession of healthcare management, to patients or others served, to the organization and its employees, and to the community and society.

Physicians, nurses, pharmacists, and other licensed or certified professionals who provide direct patient care have strict standards of ethical conduct that outline primary clinical duties, responsibilities, and obligations. For example, the code of ethics for pharmacists adopted by the American Society of Health-System Pharmacists covers the following eight principles:

• A pharmacist respects the covenantal relationship between the patient and pharmacist.

• A pharmacist promotes the good of every patient in a caring, compassionate, and confidential manner.

• A pharmacist respects the autonomy and dignity of each patient. • A pharmacist acts with honesty and integrity in professional relationships. • A pharmacist maintains professional competence. • A pharmacist respects the values and abilities of colleagues and other health

professionals. • A pharmacist serves individual, community, and societal needs. • A pharmacist seeks justice in the distribution of health resources. (2007, p. 1)

Ethical codes of conduct for medical professionals address more than the business side of healthcare delivery. There are bioethical issues relating to patient care—moral issues involving healthcare decision making such as a patient’s right to refuse medical care and end-of-life care. There are clinical ethics that involve dilemmas in clinical practice. Research ethics involves the protection of research subjects, and public health ethics focuses on identifying, weighing, and balancing moral interests at stake in various public health actions. This chapter will focus solely on business ethics. Be aware, however, that medical ethical issues as well as professional morals and values can influence the culture of the organization (see Chapter 2).

The next four sections focus on business ethics, amplifying the nature of ethical issues and dilemmas, revealing the unprecedented extent of unethical behavior, offering some guidelines for dealing with ethical dilemmas, and discussing the extent to which ethics can be taught.

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CHAPTER 10Section 10.2 Ethical Issues and Behavior

10.2 Ethical Issues and Behavior The chairman of AOL Time Warner Book Group was having dinner in New York one eve- ning with John Maxwell, a prominent author on leadership issues from a Christian per- spective, and he suggested that Maxwell would be the perfect fellow to write a book on business ethics. “There’s no such thing,” replied Maxwell. When asked what he meant, he said, “There’s only ethics” (Maxwell, 2003, p. xi). Maxwell was referring to the ethics of reciprocity, often referred to as the Golden Rule. This conversation spawned the title of the book Maxwell came to write: There’s No Such Thing as Business Ethics: There’s Only One Rule for Making Decisions (2003).

People get into trouble when one set of ethics or values governs their private lives and another their working lives. For example, a typical employee might say, “I’m an honest per-

son, but it is okay to pad my expense report because that’s what everyone in the organization does.” In fact, many people are ethically duplici- tous without realizing it. As Maxwell says, “The same person who cheats on his taxes and steals office supplies wants honesty and integrity from the corporation whose stock he buys, the politician he votes for, and the client he deals with in his own business” (Maxwell, 2003, p. 13).

Ethical issues arise whenever people are tempted to behave unethically or not do the right thing. Maxwell lists the five most common situations that give rise to unethical responses:

© Catherine Yeulet/iStock/Thinkstock

The pressure to achieve results is one reason for unethical behaviors such as “cutting corners” or “bending the rules.”

Discussion Questions

1. Does obeying the law make a person “moral,” and breaking it “immoral”? Discuss the reasons for your answer.

2. Can ethics vary from industry to industry? If you think so, provide an example of an indus- try in which principles, norms, and standards of conduct are different from the healthcare industry, and provide as much detail as you can (even anecdotes).

3. How are principles of business ethics and principles for ethical treatment of patients similar? How are they different?

4. Are there situations where business ethics and professional ethics could conflict? Discuss the reasons for your answer.

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CHAPTER 10Section 10.2 Ethical Issues and Behavior

• Pressure to achieve results when things are not going as planned, which is why people often cook the books, cut corners, or bend the rules. Students often cheat to get higher grades, executives manipulate information to increase stock prices, physicians order unnecessary diagnostic tests to increase revenue. Many of us are under pressure—in 2005, the Ethics Resource Center conducted a national survey of U.S. employees and found that 10% of them at all levels reported feeling pres- sure to compromise ethical standards (Trevino & Nelson, 2007).

• The desire for pleasure (if it feels good, do it) leads people to live beyond their means, abuse drugs (of all kinds), suffer divorce and broken homes, and so on. Executives who have achieved an elevated compensation level may do what- ever they must to preserve their lifestyle. The consequences are never worth the promise of the temptation and are almost always regretted later.

• Abusing the power a person has been given. This, too, can act like a drug: “Hav- ing power is like drinking salt water. The more you drink the thirstier you get” (Maxwell, 2003, p. 80). Powerful executives may develop a sense of entitlement. They believe that they and the institution are one, so they can take what they want when they want it (Maxwell, 2003). Those who want to keep their power at all costs are also most likely to compromise standard ethical behavior to do so.

• While pride itself is not a bad thing—after all, we have all been brought up to take pride in ourselves, our work, our family, and our country—having an exag- gerated sense of pride and self-worth (hubris) is destructive. Pride is essentially competitive; one is proud only of being richer, smarter, or better looking than others. If everyone else were as rich, smart, or good looking, there would be nothing about which to be proud. If your goal is to outdo everyone else, then your focus is entirely on yourself and your own interests (Maxwell, 2003). “Pride can blind you to your own faults, to other people’s needs, and to ethical pitfalls that lie in your path” (Maxwell, 2003, p. 86).

• Priorities. German poet and novelist Johann Wolfgang von Goethe said, “Things that matter most must never be at the mercy of things that matter least” (quoted in Maxwell, 2003, p. 86). Is being liked by others the most important thing to you? Is keeping your job more important than doing the right thing, such as blowing the whistle on some malfeasance? Do you know what your priorities are?

There are three areas in the business world in which ethical issues are commonly encountered:

• Human resources. An obvious example of this type of ethical issue is discrimina- tion, which can lead to rampant unfairness. Sexual and other types of harass- ment may take the form of an individual in a hierarchy taking advantage of his or her position to use power to control others lower in the organizational structure. Harassment may also occur between peers and result in a hostile work environment for those who are the objects of the unwanted attention. Conflicts of interest may take many forms such as bribes and kickbacks, inappropri- ate influence, and the use of privileged information to bestow favor on special friends or interests.

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CHAPTER 10Section 10.3 Unethical Behavior

Discussion Questions

1. This section introduced the notion that people behave unethically rather than bear the costs of ethical behavior (an economic reason). Do you think this is prevalent in HSOs today? Why or why not?

2. We have all heard of the Golden Rule: “Do unto others as you would have them do unto you.” According to John Maxwell, it is the only guide to ethics one needs. Do you agree?

3. Assuming you do the “right” thing all or most of the time, how do you know it? Elaborate on your answer as best you can.

4. Ethics exist in law, business, medicine, and other spheres of life, even politics. Other than the settings in each sphere, would you say that the concept of ethics was the same or differ- ent in all spheres? Discuss.

• Consumer confidence. In many business situations, a person may be privy to confidential information that he or she may not reveal regardless of his or her position. To breach that confidentiality and divulge such information is a serious ethical violation, not to mention a violation of federal privacy laws if the dis- closure involves patient information. When services are misrepresented, hyped beyond the benefits they provide, or false claims are made, this transgresses truth in advertising ethical boundaries. In the medical professions, there is an ethical obligation to base all actions on the best interest of the patient. A physi- cian recommending treatments to a patient for which the only motivation is the physician’s ability to bill for that treatment would be a violation of the physi- cian’s ethical responsibility.

• Use of organizational resources. These issues range from what may seem to be mundane to the extremely serious. Many people do not give a second thought to making personal calls from work, taking a long lunch or break, or taking first aid supplies from the supply room for personal use. All of these are examples of stealing organizational resources. Using business letterhead for personal reasons or allowing a personal view to be construed as the organization’s stance are mis- appropriations of the HSO’s reputation. Most people would clearly recognize the ethical wrong in falsifying data to make an organization’s financial results look better or receive approval for a new drug (Trevino & Nelson, 2007).

The root problems in most of these instances are lack of respect and self-interest.

10.3 Unethical Behavior Every day brings reports of some new ethical violation or the disposition of a case brought against someone or an organization for unethical behavior. Unethical behavior consists of conduct undertaken to benefit a person or organization while knowingly (or being oblivious to the possibility of) harming others. Behavior is still considered unethical if

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CHAPTER 10Section 10.3 Unethical Behavior

the act is wrongful, whether or not it results in harm; for example, a deceit- ful representation would be consid- ered unethical even though not acted upon. Allowing a known impaired professional to continue to care for patients is unethical, yet studies have shown that only 37% of nurses who work with a colleague suspected of being impaired due to drug or alco- hol abuse will report that concern to supervisors (Kunyk & Austin, 2010).

Many cases involve greed, like schemes to defraud Medicare. Sum- marized in Case Study: False Claims to Medicare is an example of a recent case that involves fraudulent Medi- care billing.

© studio_77-28/iStock/Thinkstock

If it is known that a professional is abusing drugs or alcohol, it would be unethical to allow him or her to continue caring for patients.

Case Study: False Claims to Medicare

When Orisbel Espinosa Hernandez acquired the durable medical equipment company Active Medical Solutions (AMS) and the out- patient rehabilitation facility Total Care Therapy Specialists (Total Care) based outside of Miami and Jacksonville, respectively, he was able to obtain the Medicare numbers of beneficiaries as well as the names and Medicare provider numbers and names of phy- sicians. He used this information to submit fraudulent claims to Medicare.

Between November 2005 and September 2008, the average monthly amount AMS billed to Medicare was approximately $4,871 for all services. After AMS was acquired by Hernandez in 2008, between October and December of that year, it billed $1.5 million to Medicare (average monthly amount of $500 mil- lion). After Total Care was acquired by Hernandez, the facility billed Medicare for approximately $1 million for therapy services

that were either never performed or were not necessary.

In July 2009, Hernandez was indicted on charges of healthcare fraud, mail fraud, aggravated iden- tity theft, and false statements related to healthcare matters. Investigators believe that Hernandez caused his two companies to submit approximately $2.5 million in false claims to Medicare. On February 20, 2013, Hernandez was arrested at Miami International Airport after arriving on a flight from Cuba. He was awaiting criminal prosecution as of December 2013 (Office of Inspector Gen- eral, 2013a).

©Alan Diaz/AP/Corbis

A federal agent seizes files from a home health agency in a nationwide crackdown on Medicare fraud that occurred in 2012.

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CHAPTER 10Section 10.3 Unethical Behavior

Not all unethical behavior can be attributed to an individual acting out of the prospect of personal gain. Organizations may collectively make unethical decisions that result in harm to others. In May 2012, Concord Hospital in New Hampshire was fined $205,000 for hazardous waste violations involving improper disposal of pharmaceutical, alcohol, solvents, and used oil hazardous wastes and failure to follow certain hazardous waste management practices (New Hampshire Department of Justice, 2012).

It is worth repeating the idea that consumers do not expect HSOs to act like a business. They expect healthcare organizations to care more about their patients than financial reim- bursement or insurance contracts. Patients place a large degree of trust in HSOs, and thus these organizations are typically held to a higher standard than other industries (Morri- son, 2006). Although baseless, for-profit HSOs may be tarred with the brush of unethical behavior in the interest of making profits. Some consumers are particularly concerned about the quality of patient care at for-profit HSOs because of the cost-containment incen- tives facing administrators, physicians, and employees in these organizations. Studies of healthcare quality at for-profit and nonprofit HSOs have not verified these concerns (Schlesinger & Gray, 2005). In addition, a survey of 558 for-profit and nonprofit orga- nizations conducted in 2007 by the Ethics Resource Center found that 55% of nonprofit employees had observed workplace misconduct, which was only 1% lower than those in for-profit organizations (“Ethics Eroding,” 2008). There is also fear that hospitals driven solely by profit motives will be less inclined to provide care to indigent patients and those with inadequate insurance coverage, although this has not been substantiated (Salinsky, 2007). Are CEOs of for-profit HSOs primarily motivated by profit? Not according to a 2012 study of four CEOs of for-profit Medicaid managed care organizations in Colorado and New Mexico. The executives indicated that social responsibility is their major motiva- tor when making decisions. On the financial side, a predictable rate of profit rather than actual profit is viewed as most important (Waitzkin, Yager, & Santos, 2012).

An ethical concern that may not be as obvious as the preceding examples, because the harm is harder to identify, has to do with the immensely complicated “fine print” that we seem to confront on an increasing basis. Every time a consumer receives healthcare services, he or she is required to sign various consent and privacy notification documents. Although state and federal regulations often dictate the verbiage on these documents, there may be clauses that consumers do not understand or terms they agree to only because their medi- cal needs are immediate and urgent.

Unethical HSOs take advantage of these circumstances in various ways—for example, by overcharging for services, selling patient information to pharmaceutical companies, improperly billing insurance companies, and the like.

It may be simplistic to say that people cheat, lie, fudge, and line their own pockets because they can, or because it is unfortunately more acceptable nowadays, or because no one will find out. But is this not at the heart of ethical behavior—to do the “right” thing, even when no one is looking? Doing otherwise is unethical, and there must be many more unreported instances where people and organizations intentionally get away with such behavior, thus, in their minds, legitimizing it. Kirk O. Hanson, professor at the Markkula Center for Applied Ethics, Santa Clara University, suggests that hospital governing boards regularly monitor for ethic risks such as the following (Hanson, 2012):

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CHAPTER 10Section 10.3 Unethical Behavior

• Cost cutting without sufficient consideration • Hiding data when facing requests for transparency • Manipulating financial or quality data reported to external groups • Exaggerating marketing claims • Raising funds with excessive promises • Hiding data from physicians

and accountable care organi- zations and other partners

• Avoiding confrontation of inappropriate physician behavior

• Hiding financial reserves allegedly for a “rainy day”

• Temptations faced by pur- chasing officials

Hospitals or other HSOs that fail to “do the right thing” can put patient safety at risk, as evidenced by the sit- uation described in Case Study: Crim- inal Responsibility for Choosing Profits Over Patient Safety.

MedicImage/Universal Images Group/Getty Images

An anesthetist injects a local anesthetic into a patient’s back. Healthcare services must be reasonable and “medically necessary” in order to be reimbursed by Medicare and Medicaid.

Case Study: Criminal Responsibility for Choosing Profits Over Patient Safety

In the early 1990s, United Memorial Hospital (UMH) in Greenville, Michigan was experiencing financial difficulties. In August 1993, UMH recruited Dr. Jeffrey Askanazi to provide full-time anes- thesia services in hopes of attracting other physicians to join its staff and thus increase revenue. Dr. Askanazi provided anesthesia services and also performed pain management procedures. According to hospital records, the number of pain management procedures performed by Dr. Askanazi rose from 24 in January 1994 to 230 in December of that same year. By September 1994, UMH’s senior leaders began to receive complaints about Dr. Askanazi. Nurses, staff physicians, and patients raised questions about the quality of Dr. Askanazi’s practices and frequency of proce- dures performed (for instance, performing the same procedures on patients without benefit and frequently without conducting a sufficient examination to make an accurate diagnosis). The UMH leadership team dismissed these concerns, saying that Dr. Askanazi generated significant income for UMH. Complainants were told to keep their concerns to themselves or leave the hospital.

In May 1995, UMH board members became aware of the complaints but were rebuffed by man- agement when they asked for additional information or requested that an outside expert review Dr. Askanazi’s work. The CFO reported to the board that Dr. Askanazi’s work “had a favorable finan- cial impact on hospital operations,” and the CEO advised the board that Dr. Askanazi’s practice generated approximately one third of the hospital’s income, so it was not advisable to hurt his reputation in any way (United States v. United Mem Hosp., 2003, p. 6).


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CHAPTER 10Section 10.3 Unethical Behavior

Case Study: Criminal Responsibility for Choosing Profits Over Patient Safety (continued)

The additional profits generated by Dr. Askanazi’s pain management procedures contributed greatly to a significant rise in UMH’s net income, which grew from $424,101 in 1993 to $2,187,215 in 1994.

In 1995, Dr. Askanazi partnered with the UMH physician chief of staff and the physician director of the emergency department to build a free-standing clinic for the purpose of providing additional pain management services. These same doctors were involved in reviewing the quality of care provided to patients at UMH and did not recuse themselves from evaluating Dr. Askanazi’s hospital practices. Other physicians at UMH continued to complain about Dr. Askanazi’s practices but were told by the CEO that the comments were not welcome.

The physician committee responsible for overseeing and regulating physician practices at UMH finally sought the opinion of an outside expert regarding the appropriateness of the procedures performed by Dr. Askanazi. This expert was unable to complete the review because many of Dr. Askanazi’s patient records were found to have very scant documentation. Eight months after receiving this expert’s report, the physician committee merely counseled Dr. Askanazi to improve his record documentation.

In July 1996, one of Dr. Askanazi’s patients died following one of his questionable procedures. This patient had undergone more than 22 of Dr. Askanazi’s procedures in a 1-year period. The medical examiner determined the patient died from a puncture to her cervical spine, which caused respira- tory distress and eventual death. One day after the patient’s death, the hospital provided copies of 80 of Dr. Askanazi’s patient records to the Peer Review Organization of Michigan (a group that contracts with Medicare to evaluate healthcare quality). After reviewing these records, in Novem- ber 1996 this group found several quality concerns and issued a report noting that “continuing to allow invasive procedures without objective evidence of improvement in pain level, narcotic use, functional improvement or return to work is not warranted” (p. 9). By this time Dr. Askanazi had voluntarily resigned his medical staff membership after meeting with the UHM board attorney.

The Department of Justice (DOJ) in the western district of Michigan criminally prosecuted UMH for overbilling by one of its nonemployee anesthesiologists. On January 8, 2003, UMH entered a guilty plea that, among other requirements, obligated UMH to pay a fine of more than $1,050,000 for “medical necessity fraud.” Medical necessity fraud occurs when the procedures provided (e.g., tests or lab studies) do not meet medical necessity criteria. Medicare and Medicaid pay only for those services that are reasonable, medically necessary, and used for diagnostic and therapeutic purposes in connection with healthcare services provided to beneficiaries. In addition, the hospital agreed to plead guilty to wire fraud, reimburse third-party payers $750,000, pay $12,500 to the DOJ, and perform other nonmonetary relief.

The crux of the government’s case was that, notwithstanding information learned through quality review and many complaints from patients received by the hospital, the leadership team allowed the hospital to continue to bill and collect its fees, certifying each time that the services were medi- cally necessary when, in fact, the hospital knew they were not and chose to ignore evidence of Dr. Askanazi’s behavior and thwart legitimate efforts by the medical staff to correct it (United States v. United Mem Hosp., 2003).


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CHAPTER 10Section 10.4 How to Approach Ethical Dilemmas

Case Study: Criminal Responsibility for Choosing Profits Over Patient Safety (continued)

Questions for Critical Thinking and Engagement

1. Assume the role of a consultant hired by United Memorial Hospital. Prepare a briefing on the critical ethical issues involved in this case. What recommendations would you make to the hospital board relative to public concerns about employee ethics, patient safety policies, and the impact of the hospital’s reputation following this egregious case?

Discussion Questions

1. List as many reasons as you can as to why an HSO would be interested in being ethical. Clas- sify the reasons in terms of whether they represent moral or economic motivation.

2. Do you think business executives, particularly CEOs, have a general public image of behaving selfishly and unethically? Do you think that reputation is deserved? Discuss.

3. Imagine you are looking for a job. Is the organization having an ethical culture or behavior important to you? If so, how would you go about determining this?

4. Imagine you are hiring people. Your organization is proud of the fact that it makes a profit by being ethical. How would you ensure you are hiring people with a similar ethos?

5. Cite some examples of trust in business from your personal experience or from reading the newspapers. What happens when trust is lost?

6. What other sectors of the healthcare industry have exhibited unethical behavior? Cite examples to justify your choices.

10.4 How to Approach Ethical Dilemmas Every person will be faced with ethical dilemmas throughout life; it is inevitable. By defi- nition, the “right answer” is elusive. An ethical dilemma arises when a person is presented with a choice (ordinarily of action) in which one consideration is the rightness or wrong- ness of the action (Abraham, 2012). Some ethicists evaluate the action in itself, whatever the consequences. Consider a situation in which a person is attempting to shoot someone but realizes too late that the gun is not loaded; the act is unethical even though the tar- get did not die. Others focus their evaluation on the consequences. For example, lying, which is a “bad” act, may have good consequences. Within the workplace, the “right thing to do” is usually complicated by time pressures and conflicting financial and politi- cal demands, and it often comes with a price tag. While we never seem to have the right answer when we need it, there are five questions we can ask ourselves when faced with an ethical dilemma that might well help us avoid making the wrong decision:

1. What’s in it for me? How will I benefit? How will my friends and family benefit? What are the costs, whether in terms of money, time, work, or reputation? To understand what motivates your self-interest in a scenario, it can help to con- sider how comfortable you would be sharing your true motives publicly.

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CHAPTER 10Section 10.4 How to Approach Ethical Dilemmas

2. What decision or action would lead to the greatest good for the greatest number? This presupposes that one knows and understands the legiti- mate interests and values of others. John Stuart Mill’s classic work on utilitarianism holds that the preferred decision is the one that will return the highest net social benefit to all stake- holders (those people who might be affected by the outcome) (Mill, 1906). Value conflicts can make achieving such a noble outcome dif- ficult; how do we define the “greater good”? Many environmental and air-quality regula- tions, for example, are motivated by a desire to protect the general public and act on its behalf.

3. What rules, policies, and social norms (written or unwritten) apply in this situation? Immanuel Kant, the German philosopher, believed that moral decisions should follow a principle he called the Categorical Imperative: Act as though the rationale behind your action were to become general law, binding on everyone. Patricia Werhane, director of the Institute for Business and Professional Ethics at DePaul University, asks the following germane ques- tions implied by such a rule-based perspective:

• Does the action set positive or negative precedents? • Is the action acceptable to others? • Can the action be applied to similar situations? • Does it respect, or at least not disparage, human dignity? (Werhane, 1994)

4. What are my obligations to others? To understand this, one has to appreciate the role of reciprocity and trust in society. The Golden Rule—“Do unto others as you would have them do unto you”—and its various iterations in multiple cultures is one illustration of reciprocity as a universal norm; implicit in this view is that people have to trust one another. How do you feel when someone you’ve previ- ously helped rejects your request for help? Will you ever forget when someone you have helped many times does not reciprocate?

5. What will be the long-term impact on me and on important stakeholders? This requires looking at the big picture and ensuring that your self-interest is aligned with the interests of others and the greater society. In other words, doing what is also right for others is part of one’s true self-interest. The motives of environmental- ists are perhaps the most obvious illustration.

Tanya Constantine/Blend Images/Thinkstock

Reciprocity is a human norm and exists in all human cultures.

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CHAPTER 10Section 10.4 How to Approach Ethical Dilemmas

These five questions in fact constitute a framework for identifying ethical dilemmas and can help one think through any potential conflicts among various values and responsibili- ties to others. The following three criteria will help you to choose from and resolve those conflicts:

• Importance. Which questions are most applicable to the values that are important to you and your organization in this situation?

• Balance. If you must compromise among your values, what scenario is the best tradeoff?

• Acceptance. How will your decision and its underlying rationale fare if submitted to public scrutiny? (Rossy, 2011)

Remember to ask all five questions before making a decision. Keep your values center stage and in focus. Weigh short-term against long-term consequences. Be persistent and patient; resist the temptation to find a quick but probably wrong solution. Trust your instincts, but be willing to ask others for advice. Finally, be brave: The ethical answer may not always be the most politically popular. As a way of thinking through the ethical criteria just presented, consider the following examples of common, everyday situations that many employees face in Case Study: Everyday Ethics, and answer the related questions.

Case Study: Everyday Ethics

• Sheryl often takes home pens, pencils, printer paper, and other small office supplies for her personal use—even though she does not perform any work from home. Is Sheryl’s behavior ethical or unethical? Why or why not? Is there any “gray area” to what Sheryl is doing? In other words, under any circumstances, is her behavior ethical? What are the potential consequences of Sheryl’s behavior to others? To her organization? How about to herself?

• Eric is the director of health information management in a hospital that is currently selecting an electronic health record (EHR) system. He discovers that the hospital’s IT director, one of the people involved in the project, is a close friend of a person working for a vendor that has submitted an EHR system proposal. Is the activity that Eric has learned of unethical? Why or why not? If Eric is reasonably sure that the information he’s learned is accurate, would it be unethical if he chose not to disclose it to the exec- utive in charge of the project? Why or why not? What are Eric’s options?

• In order to retain and grow market share, John, the hospital CEO, asks Peggy, the qual- ity manager, to post inaccurate quality measurement data results on the hospital’s website—making the hospital’s quality score look better than it is. John justifies this decision by saying, “I’m very hopeful the hospital will soon be able to achieve the good results being reported on the website.” What are the potential consequences of John’s request? Is John’s behavior unethical, or is he just doing what it takes to stay competi- tive in a tough economic climate? Peggy wants to be loyal to her employer but feels uneasy complying with John’s request. If she posts inaccurate data on the hospital’s website, is her behavior unethical? What are Peggy’s options?


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CHAPTER 10Section 10.4 How to Approach Ethical Dilemmas

The fact that all employees at some time or another may face ethical dilemmas raises the question of whether ethics can be taught and, by extension, whether students can be taught to respond to ethical dilemmas in thoughtful, rational ways. Today, every health services administration school and medical professional curriculum includes courses in ethics or requires discussion of ethical issues to be a part of every class. Judging by the results, however, the requirements have not made much difference. In one study, 82% of college alumni reported cheating while completing their undergraduate education (Yard- ley, Rodriguez, Bates, & Nelson, 2009). Emphasizing ethics in school and expecting aca- demic ethical behavior is important because there is a positive link between academic dishonesty and workplace cheating (Lucas & Friedrich, 2005).

Case Study: Everyday Ethics (continued)

• Suzanne works in the billing office of an outpatient clinic. She discovers that some physicians routinely copy and paste electronic patient notes from previous visits into the notes for current visits. This can cause serious billing errors if the cloned information is incorrect. Suzanne expresses her concerns to the clinic man- ager. Although the manager is aware of potential inaccuracies in the bills and understands the ramifications of filing false claims, he tells Suzanne that it is unlikely any errors will actually be discov- ered. Is the decision of the clinic manager unethical? Why or why not? If Suzanne chooses not to pursue the issue any further and submits bills that are occasionally inaccurate, is she acting ethically? What are Suzanne’s options? Are there any risks to Suzanne should she decide to expose her employer’s billing practices? Do the benefits of blowing the whistle on clinic policy outweigh the risks?

• Cathy gets to work in the morning at the required hour and spends about 20 minutes having coffee with her friends before heading to her desk. Cathy then spends the first hour of her day checking her personal email, Facebook account, and even online dating sites. By about 10:00 a.m. she starts working, but she keeps Facebook and her personal email account open throughout the day. Is Cathy’s behavior ethical or unethical? Is there any “gray area” to what Cathy is doing? In other words, is her behavior accept- able? Would the answer be different if she is able to complete her assigned tasks and meet deadlines?

• Joan works in the communicable disease surveillance unit of the county health depart- ment. While reviewing reports of diseases, she notices an increased incidence of Giar- diasis (an intestinal illness caused by a microscopic parasite) among workers at a local restaurant owned by her father-in-law. Instead of alerting her superiors, she phones her father-in-law to tell him of this problem, which, if made known to the public, could affect the restaurant’s business. Is Joan’s behavior ethical or unethical? Why or why not? Would the answer be different if the outbreak of Giardiasis had not been at a res- taurant but at a business not involved in preparation of food for sale to the public?


Taking long coffee breaks with coworkers even though one manages to get one’s work done is a behavior that falls into an ethical “gray area.”

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CHAPTER 10Section 10.4 How to Approach Ethical Dilemmas

Yet, as it turns out, most people are taught values early in life. If they do have a set of values that includes honesty, fairness, and selflessness, being around others who dismiss their values out of self-interest will quickly erode them. Parents will attest to changes that take place when their teenage children begin paying more attention to their peer group than to them. Peer behavior affects cheating behavior. Students are more likely to cheat if they observe other students cheating (O’Rourke et al., 2010). The same is likely to be true for employees who observe unethical behavior by others in their workplace. It becomes really challenging when people learn that in order to “win” (whether it is passing a test or climbing the career ladder), they have to sacrifice their values and ethics. In the mid-1990s, Joseph Badaracco, an ethics professor at Harvard Business School, did some research on MBA graduates who had taken an ethics course at Harvard and faced ethical dilemmas in the business world. Half of these graduates worked for companies with official ethics programs. He wrote:

Corporate ethics programs, codes of conduct, mission statements, hot lines, and the like provided little help . . . the young managers resolved the dilemmas they faced largely on the basis of personal reflection and indi- vidual values, not through reliance on corporate credos, company loyalty, the exhortations of senior executives, philosophical principles, or religious reflection. (Badaracco & Webb, 1995, p. 9)

These managers had learned their personal values from their family upbringing, not from ethics courses.

To conclude, the values and ethics ingrained in us from a very early age by our parents and family are the most reliable indicator of how we will fare when ethically tested later in our careers, no matter what those careers are. However, even people with good values and ethics can, when thrust into morally and ethically want- ing workplaces, behave unethically. When told by your manager to fudge some data or do something else that’s wrong, do you comply in order to remain in his or her good graces, or do you stand your ground and risk not only your prospects but also your job? And when you are a few years from retirement, do you succumb to such demands or lose everything, knowing that getting another job at

your age is highly unlikely? Thankfully, many HSOs have developed an ethical system and culture that encourages employees not only to behave ethically, but also to want to behave ethically. One way that organizations can teach, encourage, and promote ethical behavior is to create and model social responsibility and good citizenship through their policies. Corporate social responsibility policies will be covered in the next section.

© LuckyBusiness/iStock/Thinkstock

It has been shown that peer behavior affects cheating behavior, even early in life; students are more likely to cheat if they observe other students cheating.

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CHAPTER 10Section 10.5 Corporate Social Responsibility

10.5 Corporate Social Responsibility Corporate social responsibility (CSR) is about the “human face” of your organization—its values and behaviors and how it aligns these with those of stakeholders. Stakeholders of an HSO include consumers, employees, purchasers, regulators and accreditation groups, suppliers, investors, communities, and society as a whole. All HSOs work to improve and maintain consumer and community health, and those needs should be addressed as part of the strategy formulation process.

CSR was conceptualized by Archie B. Carroll of the University of Georgia as a pyramid that represents various kinds of social responsibility (see Figure 10.1). Economic respon- sibilities, at the base of the pyramid, are met by all well-managed organizations; the ones that are not well managed fail or are acquired. The economic responsibility is to make as much profit as possible in order to stay in business and grow (which creates wealth and jobs). For a nonprofit HSO, the economic responsibility is to have sufficient net revenue to stay in business in order to fulfill its mission. Then follow, in order of importance, legal, ethical, and philanthropic responsibilities. The pyramid is useful because it not only provides a structure for discussion but also demonstrates the complexities of the topic— different people perceive CSR to mean different things.

Discussion Questions

1. Consider the case of a highly profitable HSO that is awarding its top management generous compensation packages with guaranteed bonuses. Its rank-and-file employees, however, do not get raises or bonuses or otherwise realize the effects of such impressive organizational performance. In fact, the profit is achieved by keeping labor and other costs down. Is this an ethical issue? Do such organizations perceive it as an ethical issue? Why or why not?

2. The role of unions has been to give a voice and some power to employees as stakeholders. Have they balanced the ethical issue? Do you see the rise in power of unions as a bad thing because they constrain what management can do and increase labor costs? Discuss.

3. If an HSO did not have an ethics or compliance officer, to whom would someone report a breach of organizational ethics? What if the alleged perpetrator were that person’s manager?

4. When are ethics and ethics standards especially important in HSOs? 5. Organizations often require that their employees work overtime or work long hours. If you

worked for such an HSO but had young children or elderly relatives to care for, you might find that your job would be jeopardized if you declined working additional hours. Is it uneth- ical for a manager or an organization to expect so much of employees despite their needs as parents or caregivers, or other life outside work? Discuss.

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CHAPTER 10Section 10.5 Corporate Social Responsibility

Figure 10.1: Corporate social responsibility pyramid

Adapted from Carroll, A. B. The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4).

Corporate social responsibility is illustrated as a pyramid that represents various kinds of social responsibility.

Legal Responsibilities

HSOs are duty bound to honor the law and not break it in whichever location they do busi- ness. This is called their legal responsibilities. Many regulations and laws are enacted to protect the public and the public good, and there are a plethora of federal government agencies responsible for enforcing them, including the following:

• Environmental Protection Agency for protecting the environment • Food and Drug Administration for ensuring the quality and safe use of medical

products including drugs, biologics, medical and radiation-emitting devices, and special nutritional products (e.g., infant formulas)

• Internal Revenue Service for collecting taxes owed the federal government • National Labor Relations Board for minimizing unfair labor practices and ideally

preventing them from happening

Philanthropic Responsibilities

Ethical Responsibilities

Legal Responsibilities

Economic Responsibilities

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CHAPTER 10Section 10.5 Corporate Social Responsibility

• Occupational Safety and Health Administration for ensuring safety in the workplace

• Securities and Exchange Commission for ensuring the proper functioning of the securities industry (online and stock exchanges) and the integrity of financial reporting for public companies

• The U.S. Consumer Product Safety Commission, while not a government agency, still has the authority to ensure the safety of consumer products sold in the United States.

• The U.S. Department of Health and Human Services regulates many aspects of healthcare services including health information privacy rights, protection of patients from discrimination in certain healthcare and social service programs, and human research protections.

• The U.S. Nuclear Regulatory Commission ensures the safe use of radioactive materials, such as those used in nuclear medicine, to protect people and the environment.

In addition, HSOs are subject to myriad legal requirements found in state and local regulations.

These agencies came into being to enforce appro- priate regulations and laws to prevent orga- nizations from inflicting harm on particular constituencies—patients, employees, stock and bond holders, the environment, and so on. Orga- nizations know about these laws and the conse- quences for breaking them; it is their obligation to be aware of the laws. Despite this, they may com- mit both errors of commission (they know about the laws but still try to circumvent them) and omission (they are not aware of particular laws or their consequences or do not agree with them). But are these laws effective? Do they succeed in changing the behavior that is at the root of much malfeasance?

As far back as 1975, Christopher Stone (1975) of the University of Southern California Law School explored this very topic. He found maximiza- tion of profits to be the dominant characteristic of corporations and that, by and large, corrective actions by the law in terms of fines and penalties for wrongdoing had little effect on changing behavior. They were perceived as a “cost of doing business” so long as they were a relatively small percentage of profits, so firms simply paid them and then went about business as usual. In 2003, HCA Inc. (formerly known as Columbia/HCA and HCA—The Healthcare Company) paid the largest fine in history—$1.7 billion—for a variety of unlawful practices, including false claims it submitted to Medicare and other federal health programs, cost report fraud, and the payment of kickbacks to physicians (U.S. Department of Justice, 2003).

© Everett Kennedy Brown/epa/Corbis Wire/Corbis

The Food and Drug Administration ensures the quality and safe use of medical products.

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CHAPTER 10Section 10.5 Corporate Social Responsibility

To make penalties so severe as to jeopardize an organization’s ability to continue to provide services and possibly force it out of business would be counterproductive and perhaps viewed as overregulation. Stone made persuasive arguments in his book that the law, as part of the punishment for specific kinds of wrongdoing, should insert into the corporation a probation officer or trustee, answerable to the court, to make sure that procedures are changed and that the problem does not recur. This has been the trend in the settlement of large healthcare compliance violations. The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) no longer lets offending organizations just pay a fine. Instead, HHS requires corporate integrity agreements that include expensive postsettlement monitoring in exchange for not being excluded from participation in Medicare, Medicaid, or other federal healthcare programs. A comprehen- sive CIA typically lasts 5 years and includes requirements to

• hire a compliance officer/appoint a compliance committee; • develop written standards and policies; • implement a comprehensive employee training program; • retain an independent review organization to conduct annual reviews; • establish a confidential disclosure program; • restrict employment of ineligible persons; • report overpayments, reportable events, and ongoing investigations/

legal proceedings; and • provide an implementation report and annual reports to OIG on the sta-

tus of the entity’s compliance activities. (OIG, 2013b, para. 2)

It seems that laws and regulations play a necessary but far from sufficient role in trying to get organizations to behave more responsibly; so long as HSOs can absorb the costs incurred when they are indicted, in all likelihood they will continue to do whatever they want in pursuit of profit. The best solution, as Stone surmises, is for organizations and individuals to want to behave ethically. While a good number do, that number is not nearly large enough.

Ethical Responsibilities

Ethical behavior is especially critical in healthcare organizations—the need for profits does not excuse illegal, immoral, or unethical behavior (Rolland, 2009). Notwithstanding the ethics of individuals within an HSO, some organizations may be reluctant to become ethically responsible on their own. These HSOs are typically pushed to do so by critics or investors. Leaders in healthcare organizations accredited by The Joint Commission are specifically required to provide care, treatment, and services “in accordance with licen- sure requirements, laws, and rules and regulations” and “be financially sustainable, serve its community, and behave ethically” (Governance Institute, 2009, p. 15).

Ethical responsibilities refer to the general responsibility to do the right thing and avoid harming others. An example of ethical concerns that can arise even in small HSOs involves healthcare workers providing services to family members, friends, and neighbors. Care- givers must take precautions not to breach the patient–provider relationship; patient information must be kept private. Violation of this trust not only infringes on patient rights; it can also expose the HSO to legal ramifications.

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CHAPTER 10Section 10.5 Corporate Social Responsibility

When HSO leaders design strategic and operational plans, they must carefully examine the interrelationship of cost, quality, and access to care. Donabedian (1982) describes these factors as the triad of healthcare. When costs are cut, for example, quality as well as access may be adversely affected. When access is limited, quality can be compromised. Substan- dard quality can result in higher healthcare costs and so on. Socially responsible HSOs consider the impact of their decisions on the community as a whole, not just on the future of the organization.

Corporations and researchers developed a new idea—instead of being socially respon- sible, why not be socially responsive? As long as an organization was “responsive” to the demands of society and tried to anticipate and meet these demands, it did not have to worry about being “responsible.” In other words, it would have no obligation to be moral or ethical. Corporate social responsiveness is primarily pragmatic and perverts the connection between ethics and strategy. It is simple, easy, and wrongheaded (Freeman & Gilbert, 1988, p. 90). It conveniently sidesteps the true notion of responsibility.

Unless an organization’s culture and public declarations put a priority on behaving ethi- cally, individual managers and staff members may have a hard time being true to their values—swimming against the tide, so to speak. It is much easier to “go along” if it is okay with everyone else. In the rare instance when it is not okay, that individual will tender his or her resignation and join an organization whose values are aligned with the individual’s own.

Philanthropic Responsibilities

Philanthropic responsibilities encompass the organization’s participation in activities that promote human welfare and goodwill. These take the form of donations of time or

money to any of a number of deserv- ing causes, charities, and civic- related projects. However, because such activities may be voluntary, fail- ure to be philanthropic is not consid- ered unethical, and some do not even consider it a responsibility (Trevino & Nelson, 2007).

For hospitals to be tax-exempt chari- table organizations, providing com- munity benefits is required under section 501(c)(3) of the Internal Rev- enue Code. According to IRS reports and the American Hospital Associa- tion, in 2011 hospitals delivered more than $41 billion of uncompensated care to patients and uncounted bil- lions more in community services and programs designed to promote health and wellbeing (AHA, 2013).

Pascal le Segretain/Sygma/Corbis

Many healthcare organizations have significant corporate social responsibility programs, which enables them to contribute to relief organizations such as Doctors Without Borders.

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CHAPTER 10Section 10.5 Corporate Social Responsibility

Beyond what is required of tax-exempt organizations, many HSOs feel it is their duty to “give back” to society and to contribute where the need is greatest. For example, in 2012 a group of healthcare professionals and church representatives in Yamhill County, Oregon opened a free clinic. The intent was to meet the healthcare needs of the many people in the community lacking health insurance or with low socioeconomic status. Although there is a federally qualified health center in the county, the waiting lists are long and a shortage of primary care physicians makes it difficult for people even with private health insurance to get the services they need. The clinic, located in the First Baptist Church in McMinnville, Oregon, provides free medical care, social services, and spiritual support to members of the community (http://www.mcminnvillefreeclinic.org). The clinic is open for 4 hours two Saturdays a month and is staffed by volunteer physicians, nurses, social workers, mental health counselors, emergency medical technicians, medical assistants, and others. In addition to healthcare professionals donating their time, the local hospital and other HSOs help support the clinic with free supplies and donations.

ZoomCare, a for-profit network of neighborhood urgent care clinics in Idaho, Oregon, and Washington, formed a foundation for the purpose of providing free access to healthcare for low-income individuals and families. On the second Wednesday of every month, the ZoomCare Foundation supports free clinic appointments from 6:00 to 9:00 p.m. at one of its Portland, Oregon clinics (ZoomCare, 2012).

In the United States, there is a tradition of philanthropy on the part of wealthy individuals and businesses. In support of this, the federal tax code includes tax incentives to do so. Many of the wealthiest individuals and families in the United States are prolific givers. Bill Gates tops the list, having given generously to the Bill & Melinda Gates Foundation over the years to help remedy the disparities in human health between the developed and developing world (Trevino & Nelson, 2007). Other forms of philanthropy support the arts (such as symphony orchestras, opera companies, and museums), city beautification proj- ects (such as commissioning a work of art or a garden), scholarships for students, research facilities at universities, hospitals, libraries, and so on.

Many high-profile healthcare organizations have significant corporate social responsibil- ity programs. For example, following the devastating 2010 earthquake in Haiti, Nashville, Tennessee-based Hospital Corporation of America (HCA) contributed $1 million to relief organizations including the Red Cross and Doctors Without Borders and also donated needed medical supplies (“HCA Pledges,” 2010). Philanthropy goes beyond “doing the right thing” because it is something no one has a right to expect but something for which everyone is thankful.

Environmental Responsibilities

Externalities are costs (or benefits) to society that are not reflected in the costs of an organi- zation’s goods, services, or overall cost structure (Kuttner, 1999). Air and water pollution is a simple example. Historically, it was cheaper for such businesses to pollute than not to; profits won out over the harm being done to society. The only way to protect society was

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CHAPTER 10Section 10.5 Corporate Social Responsibility

through regulation. Thus, despite the aversion that HSOs have for regulations, not all are bad; some force an ethical standard on organizations that otherwise would be ignored.

Because environmental responsibilities were not included in the pyramid shown in Figure 10.1, one should not assume that they are “less important” or of a “lower order” of responsibility than philanthropic responsibilities. On the contrary, they are a vital part of corporate social responsibility and becoming more so with each passing year. It is estimated that each day U.S. hospitals and health systems produce 14,000 tons of waste (plastics, chemicals, paper, food, needles, packaging, and electronics) (HHI, 2013). This waste affects the environment and health of people in local communities. Managing this waste responsibly must be a priority for all HSOs.

A growing number of HSOs are becoming more environmentally responsible—lead- ing two scholars to label the phenomenon business’s new megatrend (Lubin & Esty, 2010). In 2000, the Environmental Protection Agency (EPA) and the American Hospital Association partnered on a nationwide project to reduce harmful hospital waste, includ- ing a goal to virtually eliminate all mercury waste generated by hospitals (EPA, 2000). This “Hospitals for a Healthy Environment” project transitioned into today’s “Practice Greenhealth,” a nonprofit organization that provides training and resources to assist HSOs in creating better, safer, greener workplaces and communities.

While organizations are motivated by current pressures and existing laws to “clean up after themselves” in the short term, they may resist making investments in greener work- places. Groups such as Practice Greenhealth and the Healthier Hospital Initiative (HHI) are showing HSOs how these investments pay off. The 2012 Milestone report from the HHI involving more than 350 hospitals documents how reducing the HSO’s environmen- tal footprint lowered costs and improved community health (HHI, 2013). While there are no clear answers to solving our environmental problems, becoming aware of the prob- lems is a first step, followed closely by HSOs getting together to try to mitigate them.


The concept of corporate sustainability has recently been introduced into the lexicon of organizational responsibilities. “Sustainability relates to the maintenance and enhance- ment of environmental, social and economic resources, in order to meet the needs of current and future generations” (Gilbert, Stevenson, Girardet, & Stren, 1996, p. 11). The characteristics of a sustainable HSO include the following (Shrivastava & Kennelly, 2013):

• Minimizes the use of nonrenewable resources and seeks to use renewable resources at a rate that does not exceed the rate at which they are renewed.

• Collaborates with other people and groups in the community to meet social needs such as individual health and well-being, nutrition, education, and shelter.

• Manages its financial resources to effectively promote environmental and social sustainability.

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CHAPTER 10Summary & Resources

Discussion Questions

1. In your opinion, what is the most pressing corporate responsibility facing HSOs? Explain your choice.

2. In your opinion, does the threat of criminal prosecution and large financial fines for filing false Medicare and Medicaid claims sufficiently deter HSOs from this illegal practice? Why or why not?

3. What are some particular advantages for HSOs that promote human welfare and goodwill through philanthropic activities, besides giving people a warm, fuzzy feeling?

4. Based on your perception from reading the papers and listening to the news over the past few years, what has accelerated interest in environmental responsibilities of corporations? Has it been the growth of environmental “watchdogs,” investor activism, or consumer pressure? Discuss your thinking.

5. How do corporate social responsibilities, as outlined by Archie B. Carroll, compare to the concepts of corporate sustainability?

Summary & Resources

Chapter Summary

• Ethics is about how organizations meet the challenge of doing the right thing when it will cost more than they want to pay, which is a better definition for the business world than the traditional conception of ethics as a philosophical approach to complex moral dilemmas.

• Morality is knowing the difference between right and wrong and choosing right. Someone who is immoral also knows the difference but chooses wrong. Values are tenets that are important to individuals or groups and the ways that govern how they choose to live their lives.

• An unethical act is done with the full knowledge that it is legally and morally wrong. Unethical behavior consists of conduct undertaken to benefit a person or organization while knowingly—or being oblivious to the possibility of— harming others. Behavior is still considered unethical if the act is wrongful, whether or not it results in harm.

• Why do people behave unethically? In most instances, people and organizations who behave unethically are motivated by self-interest. Often they justify such behavior by claiming that others are getting away with it. Organizations overly focused on profits may justify unethical behaviors in pursuit of those profits.

• Ethical issues arise whenever people are tempted to behave unethically or not do the “right” thing. When faced with an ethical issue, asking yourself five ques- tions might help you avoid making the wrong decision: (1) What is in it for me? (2) What decision or action would lead to the greatest good for the greatest num- ber? (3) What rules, policies, and social norms apply in this situation? (4) What are my obligations to others? (5) What will be the long-term impact on me and on important stakeholders?

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CHAPTER 10Summary & Resources

• It is naïve to think that business ethics can be taught either in the workplace or in school. Research has shown that such courses make little if any difference and that one’s values and ethics are molded early on in life by one’s parents, fam- ily, church or religious group, and so on. Those values and ethics turn out to be the most reliable indicator of how we will fare when ethically tested later in our careers, no matter what those careers are. However, even people with good val- ues and ethics can, when thrust into morally and ethically challenged cultures, behave unethically.

• Corporate social responsibility (CSR) is the idea that business has a duty to serve society as well as its financial interests. CSR can be viewed as a pyramid. At the base is economic responsibility, which is in essence the obligation of a corpora- tion to make profits, provide jobs, and pay taxes. Organizations are also duty bound to honor the law.

• Ethical responsibilities encompass the more general responsibility to do what’s right and avoid doing undue harm to others. Philanthropic responsibilities involve the organization’s participation in activities that promote human welfare and goodwill. Many HSOs feel it is their duty to “give back” to society and to contribute in times of emergency or disaster, or to fund community health and social-wellbeing activities. Philanthropy goes beyond “doing the right thing,” because it is something no one has a right to expect but something for which everyone is thankful.

• Environmental responsibilities involve an organization accepting responsibility for and reducing the adverse environmental effects stemming from its opera- tions. While a growing number of HSOs are voluntarily becoming more environ- mentally responsible, others must be forced to do so by regulations.

Web Resources http://healthierhospitals.org The Healthier Hospitals Initiative, a collaboration of world-renowned industry experts, has developed a suite of “how-to” guides for HSOs seeking to reduce their environmental footprint.

http://josephsoninstitute.org The Josephson Institute of Ethics is a nonprofit organization where you’ll find free articles and book excerpts on business ethics topics, including ethics in the public sector.

http://oig.hhs.gov/compliance/101/index.asp The Office of Inspector General, U.S. Department of Health and Human Services, hosts a website that contains free educational resources to help healthcare providers, practitio- ners, and suppliers understand the healthcare fraud and abuse laws and the consequences of violating them.

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CHAPTER 10Summary & Resources

http://oig.hhs.gov/compliance/corporate-integrity-agreements/index.asp The Office of Inspector General, U.S. Department of Health and Human Services, maintains a website that describes corporate integrity agreements, including sample agreements.

http://oig.hhs.gov/fraud/index.asp The Office of Inspector General, U.S. Department of Health and Human Services, oversees fraud investigations of false claims submitted to Medicare and Medicaid. The 2003 corpo- rate integrity agreement between the U.S. Department of Health and Human Services and HCA Inc. can be found on this site.

https://practicegreenhealth.org Practice Greenhealth is a nonprofit organization that provides training and resources to assist HSOs in creating better, safer, greener workplaces and communities.

http://www.ache.org The ethics website of the American College of Healthcare Executives contains a free Ethics Toolkit, policy statements, and an ethics self-assessment.

http://www.ahia.org/index.php The Association of Healthcare Internal Auditors is a network of experienced healthcare internal auditing professionals who come together to share tools, knowledge, and insight on how to assess and evaluate risk within a complex and dynamic healthcare environment.

http://www.ama-assn.org/ama/pub/physician-resources/medical-ethics.page? The Ethics Group of the American Medical Association works to improve patient care and the health of the public by examining and promoting physician professionalism. If you are looking for guidance or insight on ethical issues in medicine today, the AMA Ethics Group offers relevant resources to help you, such as the Code of Medical Ethics.

http://www.ama-assn.org/resources/doc/ethics/organizational-ethics-2000.pdf This link will take you to the publication Organizational Ethics in Healthcare: Toward a Model for Ethical Decision-making by Provider Organizations, in an Institute for Ethics National Working Group Report convened by the Institute for Ethics at the American Medical Association. It was published in June 2000.

http://www.apha.org/membergroups/primary/aphaspigwebsites/ethics The Ethics Special Primary Interest Group of the American Public Health Association pro- vides opportunities to connect and collaborate with colleagues from a wide variety of disciplines who are committed to advancing public health ethics in practice, teaching, and research.

http://www.corporate-sustainability.org The website of the Alliance for Research on Corporate Sustainability includes articles on sustainability and links to other corporate sustainability resources.

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CHAPTER 10Summary & Resources

Key Terms bioethical issues Questions concerning basic human values such as the rights to life and health, the rightness or wrongness of certain scientific developments such as cloning and stem cell research, and soci- ety’s responsibility for the life and health of its members.

corporate integrity agreements Legal arrangements between an HSO and the U.S. Department of Health and Human Services that require the HSO to undertake defined obligations for a set time period (usually 5 years).

corporate social responsibility (CSR) The idea that business has a duty to serve society as well as the financial interest of stockholders.

corporate sustainability An organiza- tion’s ability to maintain and enhance environmental, social, and economic resources in order to meet the needs of cur- rent and future generations.

economic responsibility Making prof- its so that the organization grows and endures while providing jobs and paying taxes.

environmental responsibilities An orga- nization’s obligation to reduce the adverse environmental effects stemming from its operations.

ethical responsibilities Obligations that encompass the more general responsibil- ity to do the right thing and avoid doing undue harm to others.

ethics The art and discipline of applying principles and frameworks to analyze and resolve complex moral dilemmas; how we meet the challenge of doing the right thing when it will cost more than we want to pay.

externalities Costs (or benefits) to society not reflected in the costs of an organiza- tion’s goods, services, or overall cost structure.

legal responsibilities Where organiza- tions are duty bound to honor the law (in whichever location they do business) and not break it.

philanthropic responsibilities Voluntary acts, entailing company involvement in causes and events that promote human welfare and goodwill.

triad of healthcare The three factors of cost, quality, and access to care.

values The tenets most important to peo- ple and organizations and the ways that govern how they choose to live their lives.

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