Week 11 Discussion Response- Healthcare Finance

Week 11 Discussion Response

Healthcare Finance

Colleague 1- Scott Davis

MMHA 6400: Week 11 Discussion Post

Yes.  Overstating the financials would be a breach of ethics, even if the organization’s mission is to provide a needed community service. A good mission does not justify misleading lenders, donors, board members, or the community. The ethical issue is not simply whether the organization can obtain financing; it is whether it obtains that financing through honest, accurate, and transparent representation of its financial position and realistic projections (American College of Healthcare Executives [ACHE], 2021; Hegwer, 2019).

The  American College of Healthcare Executives Code of Ethics emphasizes that healthcare leaders should conduct professional activities with honesty, integrity, respect, fairness, and good faith, and should act in ways that merit public trust (ACHE, n.d.). Inflating projected revenue, understating costs, or presenting overly optimistic assumptions as likely outcomes would conflict with those duties because it would distort the information stakeholders rely on to make decisions. In this scenario, the board’s responsibility is not only to secure funding but also to protect the organization’s credibility and the community it intends to serve. Misleading financials could lead to unsustainable debt, service disruption, or loss of trust if the venture cannot perform as promised (ACHE, n.d.; Hegwer, 2019).

The  ACHE ethical decision-making guidance is also relevant because it frames ethical decision-making as necessary when leaders face competing values, such as organizational survival, community benefit, financial constraints, and professional standards (ACHE, 2021). The organization’s desire to serve a community in need reflects beneficence, but overstating financials could violate nonmaleficence by creating foreseeable harm. For example, if the organization receives financing based on inaccurate projections and later fails, the community may lose access to the promised service, employees may be affected, and funders may suffer financial loss. A more ethical approach would be to present realistic financials, clearly disclose assumptions and risks, and explore alternative financing strategies (ACHE, 2021).

The  Healthcare Financial Management Association article “Beyond compliance: Healthcare CFO’s face many situations in which ethics can guide decision-making” further supports this conclusion by explaining that ethical finance leadership goes beyond simply following rules; it requires integrity, courage, and careful consideration of actions, consequences, perceptions, and the community’s best interests (Hegwer, 2019). This is important because the board might argue that exaggerating projections is necessary to fund a socially beneficial service. However, ethical leadership requires resisting that pressure and choosing a path that preserves honesty and accountability (Hegwer, 2019).

Similarly, HFMA’s discussion of financial ethics notes that financial leaders should prioritize the preparation, presentation, and disclosure of financial information with integrity and should distinguish clearly between facts, opinions, assumptions, and falsehoods (Hegwer, 2019). The  HFMA article “Facts in Healthcare Finance: Is Spinning the Numbers Unethical?” is especially applicable because overstating financials is a form of “spinning the numbers” if leaders knowingly make the business plan appear stronger than the evidence supports. Ethical projections can be optimistic, but they must be grounded in reasonable assumptions and transparently labeled as projections rather than presented as guaranteed outcomes (Martin, 2017).

Therefore, overstating the financials would be  unethical because it compromises honesty, transparency, professional integrity, accountability, and stakeholder trust (ACHE, n.d.; ACHE, 2021; Hegwer, 2019; Martin, 2017). Although the organization’s mission to serve a community in need is ethically important, that mission does not excuse presenting inaccurate or overly optimistic financial information. The organization can still advocate strongly for its mission, but it should do so by presenting accurate financial information, clearly explaining the community need and value of the venture, identifying assumptions and risks, and offering realistic best-case, expected-case, and worst-case scenarios. This approach better aligns with ethical healthcare finance principles because it supports the mission without misleading stakeholders, weakening trust, or placing the organization and community at unnecessary risk (ACHE, 2021; Hegwer, 2019; Martin, 2017).

References:

American College of Healthcare Executives. (n.d.).  ACHE code of ethics. https://www.ache.org/about-ache/our-story/our-commitments/ethics/ache-code-of-ethics

American College of Healthcare Executives. (2021, December 6).  Ethical decision-making for healthcare executives. https://www.ache.org/about-ache/our-story/our-commitments/ethics/ache-code-of-ethics/ethical-decision-making-for-healthcare-executives

Hegwer, L. R. (2019, December 16).  Beyond compliance: Healthcare CFOs face many situations in which ethics can guide decision-making. Healthcare Financial Management Association. https://www.hfma.org/leadership/financial-leadership/beyond-compliance-the-ethical-cfo/

Martin, W. M. (2017, May 11).  Facts in healthcare finance: Is spinning the numbers unethical? Healthcare Financial Management Association. https://www.hfma.org/accounting-and-financial-reporting/quality-and-cost-reporting/54039/

Colleague 2- Rick Gagarin

In healthcare leadership, we often face the "dirty hands" dilemma -- the temptation to do a minor wrong to achieve a major good. However, overstating financials to secure funding, even for an underserved community, is a textbook breach of administrative ethics.

While the board’s intent is altruistic, their proposed method (lying on projections) violates core tenets of healthcare governance including but not limited to the following:

Violates ACHE Truthfulness Standards: The ACHE Code of Ethics (Section II) is unambiguous: leaders must be truthful in all professional communications and avoid deceptive practices. Falsifying financial projections to secure capital is, by definition, fraud.

The Fallacy of "Virtuous Deceit": As Laura Hegwer notes in  Beyond Compliance, ethical financial leadership goes beyond avoiding legal penalties -- it’s about setting an organizational culture of integrity. If a board greenlights deceit "for a good cause," they compromise the organization's moral baseline.

The Practical Fallout (The "Justice" Principle): Built on a foundation of inflated numbers, the venture is highly likely to fail when actual revenues don't match the hype. An abrupt closure or bankruptcy harms the underserved community far more than a delayed launch, destroying long-term institutional trust.

Instead of choosing between financial transparency and community service, an ethical leader uses the ACHE Ethical Decision-Making Framework to pivot:

Radical Transparency: Present the true, modest numbers.

Creative Financing: Look for grants, philanthropic backing, or public-private partnerships specifically designed to subsidize low-margin, high-need community ventures.

Phased Rollouts: Scale down the initial launch to match the available, authentic funding.

At the end of the day, you cannot build a sustainable mission on a fraudulent foundation.  True administrative leadership means facing the funding gap honestly, transparently, and finding creative ethical pathways to close the financial gap.

References

American College of Healthcare Executives. (n.d.).  Ethics self-assessment . https://www.ache.org/about-ache/our-story/our-commitments/ethics/ethics-self-assessment

American College of Healthcare Executives. (2021, December 6).  Ethical decision-making for healthcare executives . https://www.ache.org/about-ache/our-story/our-commitments/ethics/ache-code-of-ethics/ethical-decision-making-for-healthcare-executives

Hegwer, L. R. (2019, December 16).  Beyond compliance: Healthcare CFOs face many situations in which ethics can guide decision-making . Healthcare Financial Management Association. https://www.hfma.org/leadership/financial-leadership/beyond-compliance-the-ethical-cfo/

Discussion

Overstating Financials and Ethical Responsibility

Overstating financial projections to obtain financing would constitute a breach of ethics, even if the organization's mission is to provide essential healthcare services to an underserved community. The organization's mission is to benefit society, but intentionally overreporting financial statements misrepresents the organization's actual finances and does not follow the ethical guidelines of honesty, transparency, and accountability. Healthcare administrators have a fiduciary responsibility to supply precise monetary details to lenders, investors, donors and governing boards. Getting stakeholders wrong leads to a lack of trust and can lead to serious financial problems, legal ramifications and future reputation issues(Shalaby & Agyapong, 2020). Ethical decisions must be based on organizational objectives in harmony with professional integrity, not at the expense of short-term financial gain.

From a healthcare financial outlook, transparency fosters good stewardship of healthcare resources and helps to contribute to sustainable organizational growth. Financial forecasts are essential for determining the financial viability of a project and are vital for lenders and investors to assess risk. Financing decisions will be made on false information if an organization is intentionally inflating revenue or deflating expenses. If the organization doesn't succeed in achieving the expectations for performance, it might go bankrupt, cut down services for patients, or be unable to pay back debts, all of which would negatively affect the community it was supposed to help. It is the ethical obligation of administrators to show reasonable estimates, share money problems and conduct comprehensive analysis of strategies to lay the groundwork for better financial results, rather than playing games with financial statements.

Professional healthcare management bodies provide guidelines on ethics, which include principles of fairness, integrity and transparency in financial reporting. Administrators should be transparent with stakeholders and investigate various options for funding, including grants, community partnerships, philanthropy, staged implementation, or reevaluated business plans that improve the likelihood of financial success. These are the ways of maintaining stakeholder trust and promoting the organization's mission. Ethical financial management also helps build good long-term relations with creditors, regulatory authorities, workers and the community. Therefore, overstating financials is both an ethical and professional violation because it involves intentional deception, increases financial risk, and compromises the trust that is fundamental to effective healthcare leadership. Ethical transparency is always the most fitting method at all times and in all circumstances.

References

Shalaby, R. A. H., & Agyapong, V. I. O. (2020). Peer Support in Mental Health- a General Review of the Literature. JMIR Mental Health, 7(6). https://doi.org/10.2196/15572

Week 11 Discussion Response

Healthcare Finance

Colleague 1- Scott Davis

MMHA 6400: Week 11 Discussion Post

Yes.  Overstating the financials would be a breach of ethics, even if the organization’s mission is to provide a needed community service. A good mission does not justify misleading lenders, donors, board members, or the community. The ethical issue is not simply whether the organization can obtain financing; it is whether it obtains that financing through honest, accurate, and transparent representation of its financial position and realistic projections (American College of Healthcare Executives [ACHE], 2021; Hegwer, 2019).

The  American College of Healthcare Executives Code of Ethics emphasizes that healthcare leaders should conduct professional activities with honesty, integrity, respect, fairness, and good faith, and should act in ways that merit public trust (ACHE, n.d.). Inflating projected revenue, understating costs, or presenting overly optimistic assumptions as likely outcomes would conflict with those duties because it would distort the information stakeholders rely on to make decisions. In this scenario, the board’s responsibility is not only to secure funding but also to protect the organization’s credibility and the community it intends to serve. Misleading financials could lead to unsustainable debt, service disruption, or loss of trust if the venture cannot perform as promised (ACHE, n.d.; Hegwer, 2019).

The  ACHE ethical decision-making guidance is also relevant because it frames ethical decision-making as necessary when leaders face competing values, such as organizational survival, community benefit, financial constraints, and professional standards (ACHE, 2021). The organization’s desire to serve a community in need reflects beneficence, but overstating financials could violate nonmaleficence by creating foreseeable harm. For example, if the organization receives financing based on inaccurate projections and later fails, the community may lose access to the promised service, employees may be affected, and funders may suffer financial loss. A more ethical approach would be to present realistic financials, clearly disclose assumptions and risks, and explore alternative financing strategies (ACHE, 2021).

The  Healthcare Financial Management Association article “Beyond compliance: Healthcare CFO’s face many situations in which ethics can guide decision-making” further supports this conclusion by explaining that ethical finance leadership goes beyond simply following rules; it requires integrity, courage, and careful consideration of actions, consequences, perceptions, and the community’s best interests (Hegwer, 2019). This is important because the board might argue that exaggerating projections is necessary to fund a socially beneficial service. However, ethical leadership requires resisting that pressure and choosing a path that preserves honesty and accountability (Hegwer, 2019).

Similarly, HFMA’s discussion of financial ethics notes that financial leaders should prioritize the preparation, presentation, and disclosure of financial information with integrity and should distinguish clearly between facts, opinions, assumptions, and falsehoods (Hegwer, 2019). The  HFMA article “Facts in Healthcare Finance: Is Spinning the Numbers Unethical?” is especially applicable because overstating financials is a form of “spinning the numbers” if leaders knowingly make the business plan appear stronger than the evidence supports. Ethical projections can be optimistic, but they must be grounded in reasonable assumptions and transparently labeled as projections rather than presented as guaranteed outcomes (Martin, 2017).

Therefore, overstating the financials would be  unethical because it compromises honesty, transparency, professional integrity, accountability, and stakeholder trust (ACHE, n.d.; ACHE, 2021; Hegwer, 2019; Martin, 2017). Although the organization’s mission to serve a community in need is ethically important, that mission does not excuse presenting inaccurate or overly optimistic financial information. The organization can still advocate strongly for its mission, but it should do so by presenting accurate financial information, clearly explaining the community need and value of the venture, identifying assumptions and risks, and offering realistic best-case, expected-case, and worst-case scenarios. This approach better aligns with ethical healthcare finance principles because it supports the mission without misleading stakeholders, weakening trust, or placing the organization and community at unnecessary risk (ACHE, 2021; Hegwer, 2019; Martin, 2017).

References:

American College of Healthcare Executives. (n.d.).  ACHE code of ethics. https://www.ache.org/about-ache/our-story/our-commitments/ethics/ache-code-of-ethics

American College of Healthcare Executives. (2021, December 6).  Ethical decision-making for healthcare executives. https://www.ache.org/about-ache/our-story/our-commitments/ethics/ache-code-of-ethics/ethical-decision-making-for-healthcare-executives

Hegwer, L. R. (2019, December 16).  Beyond compliance: Healthcare CFOs face many situations in which ethics can guide decision-making. Healthcare Financial Management Association. https://www.hfma.org/leadership/financial-leadership/beyond-compliance-the-ethical-cfo/

Martin, W. M. (2017, May 11).  Facts in healthcare finance: Is spinning the numbers unethical? Healthcare Financial Management Association. https://www.hfma.org/accounting-and-financial-reporting/quality-and-cost-reporting/54039/

Colleague 2- Rick Gagarin

In healthcare leadership, we often face the "dirty hands" dilemma -- the temptation to do a minor wrong to achieve a major good. However, overstating financials to secure funding, even for an underserved community, is a textbook breach of administrative ethics.

While the board’s intent is altruistic, their proposed method (lying on projections) violates core tenets of healthcare governance including but not limited to the following:

Violates ACHE Truthfulness Standards: The ACHE Code of Ethics (Section II) is unambiguous: leaders must be truthful in all professional communications and avoid deceptive practices. Falsifying financial projections to secure capital is, by definition, fraud.

The Fallacy of "Virtuous Deceit": As Laura Hegwer notes in  Beyond Compliance, ethical financial leadership goes beyond avoiding legal penalties -- it’s about setting an organizational culture of integrity. If a board greenlights deceit "for a good cause," they compromise the organization's moral baseline.

The Practical Fallout (The "Justice" Principle): Built on a foundation of inflated numbers, the venture is highly likely to fail when actual revenues don't match the hype. An abrupt closure or bankruptcy harms the underserved community far more than a delayed launch, destroying long-term institutional trust.

Instead of choosing between financial transparency and community service, an ethical leader uses the ACHE Ethical Decision-Making Framework to pivot:

Radical Transparency: Present the true, modest numbers.

Creative Financing: Look for grants, philanthropic backing, or public-private partnerships specifically designed to subsidize low-margin, high-need community ventures.

Phased Rollouts: Scale down the initial launch to match the available, authentic funding.

At the end of the day, you cannot build a sustainable mission on a fraudulent foundation.  True administrative leadership means facing the funding gap honestly, transparently, and finding creative ethical pathways to close the financial gap.

References

American College of Healthcare Executives. (n.d.).  Ethics self-assessment . https://www.ache.org/about-ache/our-story/our-commitments/ethics/ethics-self-assessment

American College of Healthcare Executives. (2021, December 6).  Ethical decision-making for healthcare executives . https://www.ache.org/about-ache/our-story/our-commitments/ethics/ache-code-of-ethics/ethical-decision-making-for-healthcare-executives

Hegwer, L. R. (2019, December 16).  Beyond compliance: Healthcare CFOs face many situations in which ethics can guide decision-making . Healthcare Financial Management Association. https://www.hfma.org/leadership/financial-leadership/beyond-compliance-the-ethical-cfo/