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L e a r n i n g O b j e c t i v e s

C H A P T E R 1 1

L E A D I N G : C U LT U R E A N D E T H I C S

Clarifying the value system and breathing life into it are the greatest

contributions a leader can make.

Thomas Peters and Robert Waterman,

management consultants

Studying this chapter will help you to

➤ define culture and subculture in an organization;

➤ explain why culture is important for management;

➤ identify factors that create and shape culture;

➤ learn how to interpret culture in an organization;

➤ define ethics;

➤ describe four types of ethics and four ethical principles important for healthcare;

and

➤ explain how to lead, create, and maintain desired cultures and ethics.

C o p y r i g h t 2 0 1 9 . H e a l t h A d m i n i s t r a t i o n P r e s s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

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Here’s WHat HaPPeneD Changes outside Partners HealthCare (in its external environment) forced changes inside the healthcare organization (HCO). Thus, managers had to lead thousands of employees to change. In the process, managers were helped by their organiza- tion culture—the values, norms, and guiding beliefs that were considered correct at Partners. The HCO had developed a culture that valued technology, innovation, openness, preparedness, and adaptiveness. This culture had evolved over the years because of leaders who emphasized and rewarded these values. Also, past success with technological innovations and adaptation had reinforced innovation and adap- tation as “the way we do things around here.” When employees tried to figure out what really mattered at work and how to succeed in their jobs, they were influenced by the organization’s cultural emphasis on technology, innovation, and adaptation. This shared set of values, norms, and beliefs was appropriate for an HCO that had to adapt to frequent changes in its external environment. It enabled managers to lead employees in developing an innovative Connected Cardiac Care program that uses telehealth for remote patients with heart disease. If Partners’ culture had not valued technology and innovation, managers would have struggled to lead employees toward this goal.

L earning what happened at Partners HealthCare helps us realize that leading HCOs requires careful management of organization culture and ethics. It is among the most important work leaders do at all levels of an HCO. This idea might surprise people

who view culture and ethics as the “soft side” of management. Yet, experienced managers know that the culture and ethics of an organization determine what employees actually do, how the organization performs, how satisfied stakeholders are, and whether the organization thrives or even survives. Culture and ethics are especially important for HCOs. In a 2016 national survey of hospital CEOs and other senior staff, 83 percent of respondents said they think their HCO will invest more resources in changing their organization culture (Kaufman 2017).

This chapter explains what organization culture and subcultures are and how to interpret them. It also discusses the factors that create and influence culture in HCOs. The chapter explains how to use that knowledge to change culture to achieve new plans and goals. Next, it focuses on ethics (which is part of culture) and four types of ethics that guide behavior and decisions in HCOs. The chapter explores how managers can create and maintain the ethics they feel are needed. Top-level managers in an HCO create and maintain the culture and ethics for the overall HCO. Then managers and supervisors in departments, teams, and other organization units create and maintain the right culture and ethics in their specific areas. When you are a manager, you will do this work. The tools and methods presented in this chapter will help you successfully manage culture and ethics.

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WH at Is cu Lt u r e? You have probably heard of culture, such as “the Chinese culture” or “the culture of pro- fessional sports.” We talk about the culture of a group of people, such as the Chinese or professional athletes. Similarly, an HCO comprises a group of people and has a culture. Smaller subgroups of people within an HCO may have subcultures.

Culture in an organization is “the set of values, norms, guiding beliefs, and under- standings that is shared by members of an organization and taught to new members as the correct way to think, feel, and behave” (Daft 2016, 386). The norms and values that make up culture can be espoused or enacted (Griffin, Phillips, and Gully 2017, 527). The espoused values and norms are those that the organization explicitly states on its website, in employee orientation videos, on posters in the cafeteria, and in public relations speeches. However, enacted values and norms are what employees actually do based on what they observe in their organization. Sometimes espoused values differ from observed values, and when they do, “actions speak louder than words.” Therefore, leaders must be role models who demonstrate their espoused (stated) culture.

As we saw earlier in the Here’s What Happened, culture helps people understand what matters and how things are done in an organization. Suppose Kathy takes a job with a home health care agency in Framingham. She might wonder what it takes to get along in this HCO: How formal should I be? Is it OK to speak up if I see a problem? Does effi- ciency matter here? Do diversity and inclusion matter here? What does matter here? The organization culture will help her answer these questions.

Here are some other important points about culture:

◆ Culture is shared and learned.

◆ Culture evolves gradually and does not change quickly.

◆ Culture is mostly invisible, so it is interpreted by observing and listening to what can be seen and heard.

◆ Culture guides behavior and is powerful in doing that.

Managers should never forget this last point. In fact, some managers feel that “culture beats strategy” because culture is so powerful. For example, the executive direc- tor of an HCO tried to implement a new strategy of innovation that conflicted with the long-term culture that “we do not like mistakes.” Innovation requires trying new ideas, some of which might not succeed. So what happened? The culture prevailed. The strategy failed. Culture beat strategy. People were afraid to try new ideas that might not work and would be viewed as mistakes. Managers soon realized they first had to change the organi- zation’s culture so that employees would feel it was acceptable (and safe) to try new ideas that might not succeed.

culture

The values, norms,

guiding beliefs, and

understandings

shared by members

of an organization

and taught to new

members as the correct

way to think, feel, and

behave.

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The power of culture is evident in the fact that 30 percent of failed mergers are the result of culture clashes (Walston 2017). To avoid failure, what did Baylor Health Care System and Scott & White (a multispecialty academic medical center) do when they considered merging? Did they first examine the balance sheets, income statements, and financial status of each HCO (as is often done for proposed mergers)? Nope. They first examined the culture of each HCO to decide if the two cultures could fit together and work as one (Jacob 2013). That lesson is important when we recall from chapter 1 that many hospitals, medical groups, health insurers, ambulatory clinics, long-term care facilities, and other HCOs have been joining in mergers, alliances, networks, integrated delivery systems, accountable care organizations, and other collaborations. If their cultures clash, their strategy will not succeed. Culture beats strategy.

W H at c a u s e s a n D c r e at e s c u Lt u r e ?

How do organizations—such as your college, your favorite store, and HCOs—end up with the cultures they have? What causes and creates culture? Why does culture differ among HCOs? For example, some HCOs have a cautious, risk-averse culture whereas others have an innovative, risk-taking culture. Organization culture is partly a result of leaders deciding which norms, behaviors, and values they want in the HCO. But there is more to it than leaders deciding which culture they want. Strong forces and factors determine what the culture actually will be, and as we learned earlier, that might be different from what managers want it to be! Many forces and factors—some external and others internal—influence an HCO’s cultural values, norms, and beliefs (Daft 2016). A model of these forces and factors is shown in exhibit 11.1; the forces and factors (Daft 2016; Griffin, Phillips, and Gully 2017; Walston 2017) are listed here, with relevant healthcare-related examples. The Using Chapter 11 in the Real World sidebar has additional real-world examples from HCOs.

◆ External laws, standards, demands (e.g., nondiscrimination laws, accreditation standards, public demands for diversity and inclusion)

◆ Organization mission (e.g., mission to improve the population health status of all people in the local community)

◆ Organization structure (e.g., decentralized structure giving lower-level employees more autonomy in their work)

◆ Rewards and punishments (e.g., praise for improving clinical integration throughout the continuum of care)

◆ Training and education (e.g., an online video tutorial that demonstrates how to use active listening to improve the patient experience)

◆ Physical work setting (e.g., remodeling and redecorating work spaces to support creativity)

◆ Beliefs, values, and norms of formal leaders (e.g., the vice president believes that too much competition among staff might cause unethical behavior)

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◆ Beliefs, values, and norms of informal leaders (e.g., a longtime employee telling new employees during lunch that honesty is what really matters in the HCO)

◆ Beliefs, values, and norms of employees (e.g., a dental hygienist values cleanliness)

◆ Ceremonies, symbols, rituals, and activities (e.g., the daily morning huddle celebrates yesterday’s handling of an emergency and then prepares the team for today’s priorities)

◆ Stories and legends (e.g., the story about how Andrea made it to work despite three feet of snow—or was it four?—back in 2007 because her patients needed her)

◆ Language (e.g., the way the supervisor talked enthusiastically about teamwork and collaboration)

exHIbIt 11.1 Model of Forces and Factors That Influence HCO Culture

Healthcare organization

culture

External laws, standards, demands

Rewards and punishments

Ceremonies, symbols, rituals,

activities

Beliefs, values, norms of

formal leaders

Physical work setting

Training and education

Beliefs, values, norms of

informal leaders

Beliefs, values, norms of

employees

Organization structure

Organization mission

Language

Stories and legends

Sources: Information from Daft (2016); Griffin, Phillips, and Gully (2017); Walston (2017).

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P u r P o s e a n D b e n e f I t s o f c u Lt u r e

Culture infl uences employees to work, act, think, feel, and behave a certain way. When managers develop the right culture for their organization, employees are more likely to know what to do to achieve the mission and goals (Daft 2016). In the Here’s What Happened at the beginning of this chapter, managers developed a culture that guided staff to support and

USING CHAPTER 11 IN THE REAL WORLD

Nemours Children’s Health System based in Talleyville, Delaware, created an organiza-

tion culture that guides staff toward performance improvement. Refl ecting this chapter’s

defi nition of culture, this “set of values, norms, guiding beliefs, and understandings that

is shared by members” of Nemours Children’s Health System includes some interesting

values-based behaviors needed to improve performance (Van Dyke 2017):

• Be in the moment

• Be authentic

• Have courageous conversations

• Be curious

• Be accountable

At Baptist Medical Center South in Jacksonville, Florida, the beliefs, values, and

norms of formal leaders have been a powerful force in creating the HCO’s “caring and

caregiving culture.” Nicole B. Thomas, FACHE, became the organization’s CEO in 2016

and has continued to instill that culture by living and demonstrating those values. She

explains, “I set the example of the hospital experience that ultimately will become our

reputation” (Thomas 2017, 80). Ms. Thomas strives to remove barriers for physicians

and to empower them to achieve the HCO’s patient experience goals. She makes rounds

among frontline workers and emphasizes that patients judge the hospital by their inter-

actions with the staff. While rounding, she expresses her gratitude to volunteers. With

leaders who directly report to her, she takes time to get to know them professionally and

personally so she can help them succeed. Her engagement with the larger leadership

team of about 40 department managers supports them in ways that show she cares.

Thomas says, “When we support our leadership team, we nurture better leaders. And

they, in turn, are sensitive to their teams. Ideally, compassion fl ows down to where it

impacts our patients and families. If I care about my team, they’re going to care about

their team and so on” (Thomas 2017, 81).

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achieve Partners HealthCare’s mission and goals. Culture also helps employees figure out what to do in situations that are not covered by specific rules and policies. Finally, organi- zation culture helps workers understand how to adapt to and “fit in” at their organization.

Healthcare has been learning from other fields just how important culture is to achieve safety. Consider this frequently cited example: In a tragic, stunning accident, the space shuttle Columbia exploded as it returned to Earth and disintegrated, killing all seven crew members. The shuttle accident investigation concluded that “no specific individual was at fault, but many individuals were influenced by the culture of the organization as a whole” (Haraden and Frankel 2004, 21). In its early years, the National Aeronautics and Space Administration (NASA) had a safety-first culture, but then NASA moved to a low-cost, high-productivity culture in which safety was given less attention. Think about that. Then think about safety in HCOs, where there have been too many medical errors (e.g., wrong amputations), burns from unsafe equipment, accidents, and other patient safety problems. Some of these errors happened because, like NASA, some HCOs moved to a low-cost, high-productivity culture in which safety was given less attention. Now, because of pressure from stakeholders, the culture of HCOs has been changing so that safety is valued more. Top executives in HCOs are making rounds in patient care areas to talk directly with frontline workers about patient safety, develop more trust with them, and solve safety problems (Jarrett 2017).

I n t e r P r e t I n g c u Lt u r e

An HCO’s workers figure out its culture based on what they see and hear. Although underly- ing cultural beliefs, values, and norms (e.g., “Honesty matters” and “You have to be creative to get ahead”) cannot actually be seen, employees might infer that honesty matters and feel that they have to be creative to get ahead. Because people interpret an organization’s culture based on what they can see and hear, they may be confused by conflicting signs or mixed signals.

For example, suppose managers want a culture of competence. The written dress code explains how employees should dress to convey competence. But a new employee sees that workers often do not follow the written code. The enacted culture does not match the espoused culture. So employees look, listen, wonder, ask, infer, think, and learn by trial and error to determine what the culture really is and “what really matters around here.” Some factors that influence culture (see exhibit 11.1) can be seen and heard and thus offer useful sources of information for interpreting the culture. The following list provides examples for some of these factors (see also the model for interpreting culture in exhibit 11.2):

1. Organization structure (e.g., management’s official standards, rules, policies, and scripted procedures for how employees should interact with patients for excellent patient experience)

2. Rewards and punishments (e.g., an award for zero medical errors in the intensive care unit last month)

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3. Physical work setting (e.g., open office doors in the C-suite that suggest managers are open to hearing from employees)

4. Actions, words, and behaviors of informal leaders (e.g., Jenna, an informal leader on the third shift, tells a new employee, “We’re from four generations, yet we’re all on the same team”)

5. Actions, words, and behaviors of formal leaders (e.g., each day for lunch the director of human resources sits with different employees in the cafeteria)

6. Actions, words, and behaviors of employees (e.g., a nurse calls, “Time out!” and asks the surgical team to verify which leg is to be operated on)

7. Ceremonies, symbols, rituals, and activities (e.g., the medical school dean presents diplomas at commencement)

8. Stories and legends (e.g., a favorite story in the maintenance department about how Rick planned ahead and thereby prevented flooding in the building when a hurricane struck)

9. Language (e.g., the sincere caring words used in the “Annual Report to Our Community”)

s u b c u Lt u r e s

When everyone in the organization interprets the culture the same way and describes the culture in similar terms, the culture is strong and consistent. That culture creates the

exHIbIt 11.2 Model for

Interpreting an HCO’s Culture

Healthcare organization

culture

Actions, words, behaviors of

formal leaders

Stories and legends

Rewards and punishments

Language Organization

structure

Ceremonies, symbols, rituals,

activities

Actions, words, behaviors of employees

Actions, words, behaviors of

informal leaders

Physical work setting

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advantages of employee harmony, working in the same direction, and presenting a consistent image to customers. However, a rigidly strong and consistent culture may have disadvantages and impede the performance of some individual parts of the organization. An individual department or team may need its own values, norms, guiding beliefs, and understandings that differ somewhat from the organization culture. This creates a subculture, which is the culture of a distinct part of an organization (e.g., a team or department) that exists within the organization’s overall culture.

Consider a large organization with many departments that have different pur- poses and functions. In chapter 4, we learned that because of the kind of work they do, some departments should be mechanistic whereas other departments should be organic. Thus, within the same organization, different departments may need different cultures. An accounting department may have a bureaucratic, rule-driven culture, while the marketing department may have a loose, creative culture. Yet, both of these subcultures must fit with the overall organization culture as much as possible. Leaders should strive for the HCO to have a strong overall culture yet also allow for some varied subcultures. Managers will have to decide how much a subculture can vary from the overall culture. For example, how much informality will be allowed in the marketing department of a hospital that strongly values a formal professional image?

In one healthcare trend, many hospital systems have been buying, owning, and oper- ating physician practices. These medical groups often have different cultures than hospital systems do. The culture of medical groups is a subculture within the larger hospital system’s overall culture. Executives have to decide to what extent the culture of medical practices can differ from the system’s organization culture. Top managers and leaders must balance between (1) developing a strong, consistent, overall organization culture and (2) letting individual facilities, subunits, departments, and teams develop their own subcultures to fit their own distinct goals and needs. When you are a department manager, team captain, group leader, shift supervisor, or work unit coordinator, you will have to develop the right subculture for your unique area of responsibility (without moving too far from the HCO’s overall culture). The next section explains how to develop culture.

sH a P I n g a n D ma n a g I n g cu Lt u r e To successfully lead an HCO, managers must deliberately shape and influence the culture so that it guides employees to achieve the HCO’s goals and mission. This is a social process. Managers must use organizational socialization—the process by which employees learn (and share with others) their organization’s culture, including what is and is not acceptable behavior (Griffin, Phillips, and Gully 2017). Just as Partners HealthCare had to socialize employees, so do other HCOs.

We can connect this concept with strategic planning, which we studied in chapter 3. Let’s consider a group of primary care physicians that has a traditional, physician-centered

subculture

Culture of a distinct

part of an organization

(e.g., a team or

department) that

exists within the

organization’s overall

culture.

organizational

socialization

The process by which

employees learn (and

share with others)

their organization’s

culture, including what

is and is not acceptable

behavior.

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practice in which physicians decide what to do for patients. The group analyzes its envi- ronment and realizes that stakeholders and external forces favor patient-centered medical practices rather than physician-centered practices. In their strategic planning process, the physicians and their group practice manager decide to implement the patient-centered medical home (PCMH) model of primary care. Doing so will require much change, including changes to the group’s organization culture. The physicians, manager, and other employees will think, feel, and behave differently than they do in their current, traditional approach. They will engage patients to partner with clinicians in deciding how to treat their own medical problems. Staff will communicate more openly and completely with patients. Active listening will be practiced and valued more. Employees will work more as a team, and the team will be less hierarchical. These changes will require a different culture—a different “correct way to think, feel, and behave.” If a group practice in West Chester wants to become a PCMH, it will need a PCMH culture to guide physicians and others to behave that way.

Which tools and methods can managers use to change a traditional group practice culture to a PCMH culture? (Hint: Look at exhibit 11.1.) By managing the forces and factors that create culture, managers can re-create the culture to reflect a different set of beliefs, norms, and values:

◆ State the new patient-centered values in the group’s mission, vision, and values

◆ Redesign the vertical, hierarchical structure to a more horizontal, team-based structure

◆ Reward employees who accept and demonstrate the new organization culture; withhold rewards from those who cling to the old approach (Does this sound like motivation theory, discussed in chapter 10?)

◆ Train staff on how to communicate more openly with patients by sharing clinical information that previously was kept from them

◆ Redesign the facility and physical setting for patients’ comfort and convenience

◆ Ensure that the physicians, group practice manager, and other leaders consistently demonstrate (as role models) the new cultural norms, values, and behaviors

◆ Help informal leaders among the staff to demonstrate the new cultural norms, values, and behaviors

◆ Help employees demonstrate to each other the new cultural norms, values, and behaviors

◆ Celebrate the new cultural norms, values, and behaviors in morning staff huddles and other activities

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◆ Share stories among staff that make the new culture come alive

◆ Revise documents, signs, e-forms, webpages, and other materials to use the language of PCMHs

In addition to trying to socialize existing staff to the new organization culture, an HCO should try to hire new people who already fit the desired organization culture. You may recall this approach from chapter 7 on staffing. For example, one HCO evaluates job applicants for how well they fit with the HCO’s culture before evaluating them for job skills (Kash 2016).

Chapter 9 explained that values-based leadership is evident in some leadership theories. That approach to leadership is essential for culture change. “Clarifying the value system and breathing life into it are the greatest contributions a leader can make. Moreover, that’s what the top people in the excellent companies seem to worry about most.” Those words come from the classic book In Search of Excellence (Peters and Waterman 1982, 291). They are still true today—for HCOs as well (Dye 2017; Walston 2017).

WH at Is et H I c s? We now turn to ethics, which is part of values. We learned that values are part of culture, so ethics is also part of culture. Ethics is a code of values and moral principles regarding what is right and wrong (Daft 2016). Like other aspects of culture, ethics influences someone’s

ethics

Values and moral

principles regarding

what is right and

wrong.

TRY IT, APPLY IT

Suppose you work for a large, nonprofit voluntary organization that advocates for chil-

dren’s health. The organization’s 50 employees range in age from 18 to 67 and come

from several different generations. Unfortunately, they don’t always work well together.

There seem to be many small groups of workers who stick together. Some workers dis-

respect older or younger workers. Some don’t cooperate. Some have different attitudes

and methods for advocating for their cause. Now suppose that after donations, grant

funding, and service all decline, a new director takes over the organization. He feels that

if employees work with others rather than against others, performance will improve.

Describe in detail at least five suggestions for how this advocacy organization could

change its culture to better achieve its purpose. Then, discuss your ideas with class-

mates.

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behavior. Four ethical principles have long guided healthcare services (Johnson and Rossow 2019; Walston 2017):

1. Autonomy includes individual privacy, freedom of choice, self-control, and making one’s own informed decisions.

2. Beneficence includes doing good and acting for the benefit of others.

3. Justice includes fairness and equality.

4. Nonmaleficence includes doing no harm, or at least avoiding unnecessary harm.

In HCOs, ethical situations and questions arise often. Some are obvious (e.g., informed consent is required for a medical procedure) and some are subtler (e.g., how much should he tell the supervisor about a problem?). Leaders and managers of HCOs must be concerned with medical ethics, professional ethics, managerial ethics, and social responsibility. Examples of these types of ethics are listed in exhibit 11.3. Some types may overlap.

e t H I c s P r o b L e m s

Every day, all types of organizations deal with a wide range of situations involving ethical behavior and judgment. Managers do not always handle these situations well, as evident in news headlines. Some of the biggest ethical problems in HCOs have been financial, such as HealthSouth’s and Columbia/HCA’s extensive fraud, illegal billing for services, and false financial statements. Executives were jailed and fines exceeded $1.5 billion (Walston 2017). Here are other examples of ethical situations that arise in HCOs:

◆ A medical director at a health insurance company must decide whether to cover experimental treatment for a cancer patient.

◆ A president, director of finance, and director of human resources at a medical supply company discuss which employees will be laid off after a merger.

◆ A physician worries that if she is employed by a healthcare system, she might be pressured to place profits above patient care.

◆ A hospital executive realizes that more emphasis on population health would reduce needed revenue from a very profitable inpatient service.

◆ A personal care home resident tries to “friend” several nurses on Facebook.

medical ethics

Ethics that guide

right and wrong in the

practice of medicine.

professional ethics

Ethics that guide

right and wrong for a

profession, such as the

nursing profession.

managerial ethics

Ethics that guide

right and wrong

in the practice of

management.

social responsibility

Ethics that guide right

and wrong for the good

of society.

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◆ A scientist from the Middle East wonders if the medical school lab will be inclusive and supportive of her culture.

◆ A surgeon considers what to tell a man whose spouse was seriously harmed by a medical error.

◆ A clinic’s marketing director avoids exaggerating the benefits of a new treatment for stress.

◆ A healthcare management professor reviews community data and sees wide disparities in access to care and in health status.

◆ A woman asks if patient-centered care means she can request to be seen by a physician of her own ethnicity.

◆ An indigent care safety-net manager must decide how to use limited funds, staff, and facilities to care for more patients.

◆ Two teenagers bring their friend, a 16-year-old opioid abuser, to the emergency department and plead with the staff not to call his parents.

Type of Ethics Examples

Medical ethics guides right and wrong in the practice of medicine and clinical care.

• Remove life support equipment from a terminally ill patient

• Conduct experimental medical research on humans in an academic medical center

Professional ethics guides right and wrong for a profession.

• Maintain confidentiality of private information obtained in professional work

• Avoid exploiting professional relationships for personal benefit

Managerial ethics guides right and wrong in the prac- tice of management.

• Allocate scarce resources in a way that will best fulfill the mission of the medical group practice

• Avoid deceptive advertisements for a clinic

Social responsibility ethics guides right and wrong for the good of society.

• Reduce the amount of toxic waste produced by a hospital

• Provide unprofitable health services that the community needs

exHIbIt 11.3 Types of Ethics in HCOs

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As the list shows, HCOs’ clinicians, managers, employees, and others can face serious ethical problems, questions, and uncertainty. Some involve a conflict of inter- est, in which a person’s (e.g., a physician’s) self-interests (e.g., an extravagant meal from a pharmaceutical company) interfere with an obligation (deciding which medication to order) to someone else (a sick patient). Others involve an ethical dilemma, which is especially troubling because no matter what is decided, someone will suffer. For example, some HCOs consider requiring all workers to get a flu shot to help protect patients. But some employees believe that mandatory flu shots violate their autonomy and self-determination. Other employees may struggle with moral distress, in which an organization’s constraints (e.g., rules and available resources) prevent them from doing what they think is ethically right (Hamric, Epstein, and White 2014). For example, DeAndre is often told to care for so many patients that he feels he cannot give them all the care they need.

Managers and leaders in HCOs must strive to ensure that employees, physicians, volunteers, and others understand (and follow) appropriate ethics. In addition, managers should ensure that their HCO has resources, structures, and processes to help people handle difficult ethical situations. These resources are needed to enable the HCO to achieve its mission, vision, values, and goals. The next section discusses how managers can do this.

s o u r c e s o f e t H I c s

In broad terms, the ethics of an HCO comes from three general sources:

1. The people in the organization

2. The organization itself

3. The organization’s external environment

Ethics starts to develop early in people’s lives. Take a few minutes to think of where your own ethics and morality came from. Perhaps they came from people who influenced you as you grew up—parents, relatives, peers, teachers, leaders of youth organizations, and religious and faith leaders. Even fictional characters in novels, movies, and TV shows can influence what we view as right and wrong. How about laws and legal requirements? Yes, those shape our ethics as well. Maybe you thought of the social norms and cultural values in the community where you grew up. Perhaps you sensed what was considered right and wrong based on who got in trouble at school. Some current events and news headlines also make us think about right and wrong.

Personal ethics and morals formed while growing up become part of a person’s ethics at work. Thus, to create an ethical HCO, managers should try to hire people who

conflict of interest

A situation in which

a person’s self-

interest interferes

with that person’s

obligation to another

person, organization,

profession, or purpose.

ethical dilemma

A situation in which

any decision or course

of action will have an

undesirable ethical

outcome.

moral distress

A situation in which

an organization’s

constraints prevent

someone from doing

what the person thinks

is ethically right.

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already have the desired ethics. As discussed in chapters 7 and 8, careful interviewing can help detect who is likely (or unlikely) to respect a patient’s confidential informa- tion and how someone would respond to a salesman’s offer of free tickets to a Dallas Cowboys game.

Another source of ethics is the HCO itself. Think back to the earlier part of this chapter. We learned that an organization’s culture includes values, and values include ethics. The organization’s ethical climate is the “shared perceptions of how ethical issues should be addressed and what is ethically correct behavior for the organization” (Rorty 2014, 12). This part of the culture can strongly influence HCO employees and shape their sense of right and wrong. An HCO will decide on certain ethics—such as justice and privacy—and emphasize them. However, an HCO faces barriers when developing, maintaining, and actually behaving according to an appropriate ethical climate. Employees are culturally diverse and may have differing views of what is moral and ethical (Walston 2017). Also, stakeholders exert pressures and demands on HCOs that push and pull in different directions.

Some HCOs develop codes of conduct as part of their ethical climate and orga- nization culture. The ethical principles in these codes may be determined at a strategic planning retreat, approved in a staff meeting, or declared by the CEO following a crisis. They may be advocated by an employee. Ethical principles may also be identified when developing organization culture, resolving ethics problems, or in other ways. For example, employers are creating social media codes of conduct to guide employees regarding the ethical use of social media.

Sources outside the HCO also affect what is deemed ethical in the organization. These sources include laws, regulations, court decisions, and Joint Commission accredita- tion standards, to name a few. External professional codes of ethics guide members of many professions, such as nursing, engineering, pharmacy, accounting, occupational therapy, law, teaching, healthcare management, and other fields. Professional codes of ethical conduct may override an HCO’s policies and guidelines when members of a profession feel more allegiance to their profession and its guidelines than to the HCO and its guidelines.

The American College of Healthcare Executives (ACHE) is the largest professional association for healthcare managers. Like many other professional organizations, ACHE has carefully prepared a code of ethics for its members. This Code of Ethics (see exhibit 11.4) lists the healthcare manager’s ethical responsibilities to the profession, patients, organiza- tion, employees, and society. Take time to study the code to better understand managers’ ethics in healthcare. Managers use this code to guide appropriate managerial conduct for a wide range of ethical situations. Other professional associations, such as the Medical Group Management Association, the Healthcare Financial Management Association, and the Association of University Programs in Health Administration, also provide ethical guidance related to healthcare management.

ethical climate

The shared perceptions

of how ethical issues

should be addressed

and what is ethically

correct behavior for an

organization.

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s2 8 0

PREAMBLE The purpose of the Code of Ethics of the American College of Healthcare Executives is to serve as a standard of conduct for members. It contains standards of ethical behavior for healthcare executives in their professional relationships. These relationships include col- leagues, patients or others served; members of the healthcare executive’s organization and other organizations; the community; and society as a whole.

The Code of Ethics also incorporates standards of ethical behavior governing indi- vidual behavior, particularly when that conduct directly relates to the role and identity of the healthcare executive.

The fundamental objectives of the healthcare management profession are to maintain or enhance the overall quality of life, dignity and well-being of every individual needing healthcare service and to create an equitable, accessible, effective and efficient healthcare system.

Healthcare executives have an obligation to act in ways that will merit the trust, con- fidence and respect of healthcare professionals and the general public. Therefore, health- care executives should lead lives that embody an exemplary system of values and ethics.

In fulfilling their commitments and obligations to patients or others served, healthcare executives function as moral advocates and models. Since every manage- ment decision affects the health and well-being of both individuals and communities, healthcare executives must carefully evaluate the possible outcomes of their decisions. In organizations that deliver healthcare services, they must work to safeguard and foster the rights, interests and prerogatives of patients or others served.

The role of moral advocate requires that healthcare executives take actions neces- sary to promote such rights, interests and prerogatives.

Being a model means that decisions and actions will reflect personal integrity and ethical leadership that others will seek to emulate.

I. THE HEALTHCARE EXECUTIVE’S RESPONSIBILITIES TO THE PROFESSION OF HEALTHCARE MANAGEMENT The healthcare executive shall:

A. Uphold the Code of Ethics and mission of the American College of Healthcare Executives;

B. Conduct professional activities with honesty, integrity, respect, fairness and good faith in a manner that will reflect well upon the profession;

C. Comply with all laws and regulations pertaining to healthcare management in the jurisdictions in which the healthcare executive is located or conducts professional activities;

exHIbIt 11.4 ACHE Code of

Ethics*

(continued)

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D. Maintain competence and proficiency in healthcare management by imple- menting a personal program of assessment and continuing professional education;

E. Avoid the improper exploitation of professional relationships for personal gain;

F. Disclose—and when appropriate, avoid—financial and other conflicts of interest;

G. Use this Code to further the interests of the profession and not for selfish reasons;

H. Respect professional confidences; I. Enhance the dignity and image of the healthcare management profession

through positive public information programs; and J. Refrain from participating in any activity that demeans the credibility and dig-

nity of the healthcare management profession.

II. THE HEALTHCARE EXECUTIVE’S RESPONSIBILITIES TO PATIENTS OR OTHERS SERVED The healthcare executive shall, within the scope of his or her authority:

A. Work to ensure the existence of a process to evaluate the quality of care or service rendered;

B. Avoid practicing or facilitating discrimination and institute safeguards to pre- vent discriminatory organizational practices;

C. Work to ensure the existence of a process that will advise patients or others served of the rights, opportunities, responsibilities and risks regarding avail- able healthcare services;

D. Work to ensure that there is a process in place to facilitate the resolution of conflicts that may arise when values of patients and their families differ from those of employees and physicians;

E. Demonstrate zero tolerance for any abuse of power that compromises patients or others served;

F. Work to provide a process that ensures the autonomy and self-determination of patients or others served;

G. Work to ensure the existence of procedures that will safeguard the confidenti- ality and privacy of patients or others served; and

H. Work to ensure the existence of an ongoing process and procedures to review, develop and consistently implement evidence-based clinical practices throughout the organization.

exHIbIt 11.4 ACHE Code of Ethics* (continued)

(continued)

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s2 8 2

III. THE HEALTHCARE EXECUTIVE’S RESPONSIBILITIES TO THE ORGANIZATION The healthcare executive shall, within the scope of his or her authority:

A. Lead the organization in prioritizing patient care above other considerations; B. Provide healthcare services consistent with available resources, and when

there are limited resources, work to ensure the existence of a resource alloca- tion process that considers ethical ramifications;

C. Conduct both competitive and cooperative activities in ways that improve community healthcare services;

D. Lead the organization in the use and improvement of standards of manage- ment and sound business practices;

E. Respect the customs, beliefs and practices of patients or others served, con- sistent with the organization’s philosophy;

F. Be truthful in all forms of professional and organizational communication, and avoid disseminating information that is false, misleading or deceptive;

G. Report negative financial and other information promptly and accurately, and initiate appropriate action;

H. Prevent fraud and abuse and aggressive accounting practices that may result in disputable financial reports;

I. Create an organizational environment in which both clinical and manage- ment mistakes are minimized and, when they do occur, are disclosed and addressed effectively;

J. Implement an organizational code of ethics and monitor compliance; and K. Provide ethics resources and mechanisms for staff to address organizational

and clinical ethics issues.

IV. THE HEALTHCARE EXECUTIVE’S RESPONSIBILITIES TO EMPLOYEES Healthcare executives have ethical and professional obligations to the employees they manage that encompass but are not limited to:

A. Creating a work environment that promotes ethical conduct; B. Providing a work environment that encourages a free expression of ethical con-

cerns and provides mechanisms for discussing and addressing such concerns; C. Promoting a healthy work environment, which includes freedom from harass-

ment, sexual and other, and coercion of any kind, especially to perform illegal or unethical acts;

D. Promoting a culture of inclusivity that seeks to prevent discrimination on the basis of race, ethnicity, religion, gender, sexual orientation, age or disability;

E. Providing a work environment that promotes the proper use of employees’ knowledge and skills; and

F. Providing a safe and healthy work environment.

exHIbIt 11.4 ACHE Code of

Ethics* (continued)

(continued)

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V. THE HEALTHCARE EXECUTIVE’S RESPONSIBILITIES TO COMMUNITY AND SOCIETY The healthcare executive shall:

A. Work to identify and meet the healthcare needs of the community; B. Work to support access to healthcare services for all people; C. Encourage and participate in public dialogue on healthcare policy issues,

and advocate solutions that will improve health status and promote quality healthcare;

D. Apply short- and long-term assessments to management decisions affecting both community and society; and

E. Provide prospective patients and others with adequate and accurate informa- tion, enabling them to make enlightened decisions regarding services.

VI. THE HEALTHCARE EXECUTIVE’S RESPONSIBILITY TO REPORT VIOLATIONS OF THE CODE A member of ACHE who has reasonable grounds to believe that another mem- ber has violated this Code has a duty to communicate such facts to the Ethics Committee.

exHIbIt 11.4 ACHE Code of Ethics* (continued)

Source: ACHE (2017).

*As amended by the Board of Governors on November 13, 2017.

c r e at I n g a n D m a I n ta I n I n g e t H I c s I n a H e a Lt H c a r e o r g a n I z at I o n

The top leaders and managers of an HCO are responsible for creating and maintaining the ethics of the organization. However, they do not, and should not, make all the decisions about ethical issues that arise in the HCO. Senior managers should create organization structures, processes, and cultures that enable managers, supervisors, employees, physi- cians, staff, and others throughout the organization to make ethics decisions in their areas of responsibility. Senior managers take the lead in creating and maintaining ethics for the entire HCO; managers at lower levels take the lead in their own departments and work units. The president of a health research institute is responsible for ethical performance of the entire organization. Shannon, director of neuroscience research, is responsible for ethical performance in her division.

How can leaders create structures, processes, and cultures to strengthen ethical performance throughout their HCOs? Think back to earlier parts of this chapter and to prior chapters to fully appreciate the approaches listed in exhibit 11.5.

Here is an example of leading an HCO’s employees to follow ethics guidelines: The CEO of a large hospital in South Carolina hired a young vice president. The CEO

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told the new vice president, “I’m going to give you a lot of responsibility and one piece of advice. Every time you get ready to make a decision, ask yourself how you would feel if your decision was reported on the front page of the morning newspaper.” The vice presi- dent remembered and benefited from that advice—especially when making decisions with ethical implications.

Approach Principles, Tools, and Methods

Organizing the HCO • Organize work, tasks, positions, groups, systems, and resources to support the HCO’s ethics, and support people dealing with ethical questions.

• Organize an ethics advisory committee or create an ethicist position to advise the HCO’s employees, physicians, supervisors, and others who want help with ethical dilemmas or distress. The committee or ethicist should be available for all ethics situations (not just medical ones).

• Write and promote ethics rules, policies, processes, procedures, and a code of conduct—all to guide employees in ethical situations. Ensure that these documents are based on input from all appropriate stakeholders (not just managers or selected stakeholders). Include processes for how to avoid ethical problems, how to make ethical decisions, and how to contact an ethics advisory committee for help.

• Appoint a compliance officer or position. Monitor the HCO’s ethical performance and compliance with its ethics. Hold employees and others accountable for compliance with ethical standards, principles, policies, and codes.

• Organize hotlines and whistle-blower mechanisms and processes for employees to report possible violations of the HCO’s ethics. When violations are reported or found through monitoring, investigate and take appropriate action to prevent reoccurrence.

• Allocate sufficient resources to implement structures, processes, positions, policies, and an ethical climate. To the extent possible, allocate available resources in such a way that ethical problems, dilemmas, and distress are lessened.

exHIbIt 11.5 Approaches to

Achieving Ethical Performance in

HCOs

(continued)

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C h a p t e r 1 1 : L e a d i n g : C u l t u r e a n d E t h i c s 2 8 5

Staffing the HCO • Write job descriptions to reflect or even explicitly state ethical principles.

• Award merit pay, incentives, and other compensation in a way that encourages positive ethics.

• In performance reviews, evaluate workers on how well they follow ethical standards. Evaluate managers on how well they and their employees follow ethical principles.

• During orientation of new staff, emphasize ethical principles and explain how staff can get help when faced with ethical questions.

• Train and educate staff about the HCO’s ethical climate and principles. Ensure employees know the structures, processes, and resources available to handle ethical situations.

• Require managers to do an ethics self-assessment annually to monitor their own ethics and identify possible improvements.

• Ensure that employees feel safe when asking ethics questions or reporting ethics violations.

• Provide supportive counseling to employees, such as for moral distress and grief related to ethics situations.

Leading the HCO • State clearly and often the HCO’s ethics and ethical climate. • Be a role model for the HCO’s ethics. Live the HCO’s

ethics. Personally support the desired ethics—even if doing so is politically difficult because important stakeholders disagree.

• Lead the development of an appropriate ethical culture and climate. Create a culture in which asking ethical questions and discussing ethics problems becomes “the way we do things here.” Avoid a culture that emphasizes teamwork so much that an employee who has ethical concerns remains silent to be “a team player.”

• When leading meetings, allow time for participants to ask questions and express concerns about the ethics of an issue or decision.

• Motivate employees by using reinforcement, goal setting, Maslow’s hierarchy of needs, and other approaches to drive ethical behavior.

• Use a leader’s power—highly ethical leaders may have referent charismatic power (in addition to other powers) when influencing others about ethics.

• Regularly monitor the ethical performance of the HCO.

exHIbIt 11.5 Approaches to Achieving Ethical Performance in HCOs (continued)

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s2 8 6

Looking ahead to chapter 13 on decision making, managers can use decision-making prin- ciples, tools, and methods for ethical decisions. Leaders must create a fair process in which deci- sion makers carefully consider the views and values of all stakeholders who might be affected by a decision (Nelson 2015). This process ensures that conflicting views and values are considered before the decision is made. This approach, known as procedural justice, uses fair procedures when mak- ing ethical decisions. It is useful when responding to the types of challenges, issues, and develop- ments identified in chapter 1—health disparities, mergers, demographic trends, use of social media, patients’ engagement in their health, physician employment, cost reduction, genetics in health- care, and others. Chapter 13 explains more about how to make such decisions.

Culture in an organization is “the set of values, norms, guiding beliefs, and understandings that is shared by members of an organization and taught to new members as the correct way to think, feel, and behave” (Daft 2016, 386). It evolves from forces inside and outside the organization. Because an HCO’s culture is mostly invisible, employees interpret it by observing and listening to what goes on in the HCO. Culture strongly affects staff behavior, goal achievement, stakeholder satisfaction, and the HCO’s performance and survival. To successfully lead an organization, managers must deliberately shape and influence the organization’s culture so that it becomes what they think is best for the organization given its environment, mission, goals, plans, and so forth. Culture change is not easy, but it can be done by managing the forces and factors that affect culture. By organizational socializa- tion, employees learn their organization’s culture, including what is and is not acceptable behavior. Managers and leaders should try to develop a strong, consistent culture through- out the entire HCO. Yet, they must also let departments, work units, and teams develop their own subcultures (within the main culture) that are best for these individual parts of the organization.

An organization’s culture includes its ethics, which are moral principles of right and wrong. Four common ethical principles in healthcare are autonomy, beneficence, justice,

CHECK IT OUT ONLINE

ACHE provides a lot of resources to its members, many of which

are available on its website. The ACHE Ethics Self-Assessment

tool is freely available at www.ache.org/about-ache/our-story/

our-commitments/ethics/ethics-self-assessment. This survey

poses statements to rate yourself on, such as “I fulfill the prom-

ises I make” and “I respect the practices and customs of a diverse

patient population while maintaining the organization’s mission.”

Healthcare managers can use the ACHE Ethics Self-Assessment to

consider their own ethics related to healthcare leadership. Stu-

dents can use it to learn more about ethics in HCOs. Check it out

online and see what you discover.

o n e m o r e t I m e

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C h a p t e r 1 1 : L e a d i n g : C u l t u r e a n d E t h i c s 2 8 7

and nonmaleficence. In HCOs, managerial ethics, medical ethics, professional ethics, and social responsibility ethics are all important. Ethics in HCOs come from personal ethics of staff (especially leaders), the organization itself, and external sources such as accreditation standards and laws. Leaders can use management tools and methods to shape ethics and culture in HCOs.

1. Discuss the factors that shape culture in HCOs. Why do individual HCOs have different cultures?

2. How can you interpret the culture of an organization? Discuss your interpretation of the culture of your college or university.

3. Describe examples of subcultures within an overall HCO culture. What are the pros and cons of having subcultures?

4. Discuss examples of medical ethics, professional ethics, and managerial ethics in HCOs.

5. What captured your interest in the ACHE Code of Ethics? How do you feel about the ethical responsibilities of the healthcare management profession?

6. What can managers do to achieve ethical performance in their HCOs?

FOR YOUR TOOLBOX

• Model of forces and factors that influence HCO culture

• Model for interpreting an HCO’s culture

• ACHE Code of Ethics

• Approaches to achieving ethical performance in HCOs

f o r D I s c u s s I o n

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M a n a g e m e n t o f H e a l t h c a r e O r g a n i z a t i o n s2 8 8

These questions refer to the Integrative Case Studies at the back of this book.

1. Disparities in Care at Southern Regional Health System case: Explain how the ethical principles of autonomy, benefi cence, justice, and nonmalefi cence are relevant in this case. Explain how the four types of ethics—medical ethics, professional ethics, managerial ethics, and social responsibility—are relevant in this case.

2. How Can an ACO Improve the Health of Its Population? case: Explain how the ethical principles of autonomy, benefi cence, justice, and nonmalefi cence are relevant in this case. Explain how the four types of ethics—medical ethics, professional ethics, managerial ethics, and social responsibility—are relevant in this case.

3. “I Can’t Do It All!” case: How would you describe the organization culture of Healthdyne? Using exhibit 11.1, explain how Mr. Brice could use specifi c forces and factors to change the culture to what you think he would want.

4. Increasing the Focus on Patient Safety at First Medical Center case: Explain how Dr. Frame could use specifi c forces and factors to change the culture to what you think she would want.

c a s e s t u D y Q u e s t I o n s

RIVERBEND ORTHOPEDICS MINI CASE STUDY

Riverbend Orthopedics is a busy group practice with expanded services for orthopedic

care. It has seven physicians and a podiatrist, plus about 70 other employees. At its big,

new clinic building, Riverbend provides extensive orthopedic care. Several technicians

provide diagnostic medical imaging, from basic X-rays to magnetic resonance images.

The physicians perform surgery in their own outpatient surgery center with Riverbend’s

own operating nurses and technicians. Therapy is provided by three physical thera-

pists and one part-time contracted occupational therapist. In addition to staff provid-

ing actual patient care, the clinic has staff for fi nancial management, medical records,

human resources, information systems/technology, building maintenance, and other

administrative matters. Occasional marketing work is done by an advertising company.

Legal work is outsourced to a law fi rm. Riverbend is managed by a new president, Ms.

Garcia. She and Riverbend have set a goal of achieving “Excellent” ratings for patient

experience from at least 90 percent of Riverbend’s patients this year.

(continued)

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C h a p t e r 1 1 : L e a d i n g : C u l t u r e a n d E t h i c s 2 8 9

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r e f e r e n c e s

RIVERBEND ORTHOPEDICS MINI CASE STUDY (continued)

Riverbend’s organization culture has evolved somewhat accidentally based on phy-

sicians emphasizing clinical care and Ms. Garcia emphasizing fi nancial control. There

has not been any conscious effort to shape the organization culture. She feels that might

have to change.

mInI case stuDy QuestIons

1. To help Riverbend achieve its goal, identify at least fi ve “values, norms, guiding be-

liefs, and understandings” that should be taught to and shared by Riverbend’s staff.

2. Using this chapter, explain in detail how Ms. Garcia could shape and infl uence River-

bend’s organization culture so that it helps lead physicians and employees to achieve

the patient experience goal.

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