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The purpose of this case study is to identify the unethical issues occur in the Columbia/ HCA case, and analysis the reason or cause factor and the better solution for this unethical issues occur.
This case is about a healthcare Company name Columbia / HCA Healthcare Corporation. According to O. C. Ferrell, John Fraedrich, Linda FerrellIt (2009), Columbia / HCA Corporation is a company merged by Hospital Corporation of America (HCA) establish in 1968 with Columbia Hospital Corporation in 1994 as the faster growing of HCA. In 1997, Columbia/ HCA Healthcare Corporation had become one of the largest health- care companies in United States. Besides that, Columbia/ HCA Healthcare Corporation also have provided their service in United Kingdom and Switzerland. (O. C. Ferrell et al., 2009)
To achieve their own Vision, Mission and goals, they focus on cost effectiveness and financial performance only to become the largest chain of the healthcare center (O. C. Ferrell et al., 2009). As that focus profit strategy, the company has face many unethical issues. For example of O. C. Ferrell et al (2009), Corporation manipulated the bill charge on the government program and focus on cost effective by cut down the duration training on their employee which result low quality provided.
Therefore in 1997, Columbia/HCA Healthcare Corporation faces some of the lawsuit file by government on their unethical issues. Thus to rebuilding their reputation and image, CEO and chairman of Columbia / HCA had change to Dr. Thomas Frist. New CEO and chairman had move Columbia / HCA focus on new corporate culture. (O. C. Ferrell et al., 2009) That was shifting their focus from emphasis on company profit toward emphasis and practice code of ethic among their employee.
According to O. C. Ferrell et al., 2009, the first steps Columbia /HCA take move toward new corporate culture by reshape Columbia / HCA vision and mission. Their new mission of Columbia / HCA more focus on ethics and quality issues on their services provided.
Besides changing their mission, they also hired a senior executive, Alan Yuspeh to supervise hospital ethics and quality issue. After Yuspeh had given this responsible, he reorganizes its monitoring techniques, improve workers' ethics and compliance. Besides that, he also has developed a new code of conduct and an internal mechanism for the worker to report any non-compliance. It also has provided training for the worker about the ethics issue and new code of conduct. (O. C. Ferrell et al., 2009)
Problem and issue identification
Columbia/ HCA Healthcare Corporation are a healthcare center that provides healthcare service by focus on the cost effective and profit seeking rather than their patient needs. Therefore the corporation has incurred some of the unethical issues that affect their reputation. Thus in all the issues we identified, we found that it can group into two major problem issue that are document fraud and Low quality of service provided.
The first major issue is the document fraud. According to O. C. Ferrell et al., (2009), the problem was incurred in late July 1997, where the corporation was detected incurred health-care fraud in one of the Columbia/HCA Corporation, which is Fawcett Memorial Hospital that located at Port Charlotte, Florida. Government indicted that the three mid level executive of the corporation were filling false cost report, in which they were overcharging the Medicare and other federal health program for government. Losses of $4.4 mil in the government programs as from the false cost report. A whistleblower claimed that the Columbia/HCA's former CEO, Richard Scott and former president, David Vandewater were already known the government fraudulent because they briefed routinely on this issue. (O. C. Ferrell et al., 2009)
Next, the problem in this major issue was overuse of home-health services was found in this case. Columbia/HCA Corporation overstated the home-health care laboratory-test expense and intentionally categorized the unrelated expenditures to the customer account for reimbursement. For instance, For fear that auditor will catch the inflated amount; the hospital had 'reserved' an amount of money to pay back to government. (O. C. Ferrell et al., 2009)
Lastly, the problem of concealed the internal document from federal regulator was found in this case on the document fraud. O. C. Ferrell et al., (2009) stated that a whistleblower claimed that the hospital tried to hide the internal document that would disclose information regarding the fraud to federal regulator. Moreover, the top executive of Columbia/HCA instructed the employee to 'soften' the language that used in the internal financial audit. (O. C. Ferrell et al., 2009)
The other major issue is low quality provided by Columbia/ HCA Healthcare Corporation. This issue occurs because the corporation focusing on profit instead of patient oriented was found in the case too. The hospital's goal which focuses to profit was different with the stated vision that was patient oriented. For instance, the hospital had shorter the training period to two weeks instead of six month. Then, they offered illegal incentive to physician to in exchange for patient referrals too. (O. C. Ferrell et al., 2009)
Moreover, the 'patient dumpling' was happened in the Columbia/HCA Corporation. According O. C. Ferrell et al., (2009), they discharged or transferred the emergency room patient to other hospital even though they know that the conditions of the patients were still unstable. The Department of Health and Human Services Inspector General's Office was imposing the fines on the cases of patient dumpling. (O. C. Ferrell et al., 2009)
Therefore from the two major issues mention above (document fraud and low quality service provided), we can assume that the corporation is an healthcare center that focus on profit seeking and not practicing any ethical standard in employee working culture and theirs' responsibilities. Does this focus profit strategy a good strategy use by the corporation?
Analysis and evaluation of fact
Before we state the analysis the major issues of the case, we need to know who the stakeholders of these issues are. Stakeholders are the person that can affect or being affected by the organization's actions. Based on this case, stakeholders' of HCA Healthcare Corporation are their clients (government and patients )and their employee.
For the client, their claim toward Columbia/ HCA Healthcare Corporation is to get a quality service and reasonable price based on the services they received. In this case, government wants a fair fees claim from Columbia/ HCA Healthcare Corporation. However, HCA healthcare deceive the government millions of dollars by inflating the fess through health insurance programs. (findarticles.com, 1998) Government challenges HCA healthcare with a limited budget of insurance fees. It is difficult for HCA healthcare to fulfill the government claim within a limited budget given by the government. (findarticles.com, 1998) Therefore Columbia/ HCA Healthcare Corporation cannot fulfill client claim.
For patient in Columbia/ HCA Healthcare Corporation claim was want an excellent quality service received from Columbia/ HCA Healthcare Corporation. Excellent quality service means safety secure from the hospital through the cleanliness and sterilized equipments used by the hospital as well as a professional care from their employees. Unfortunately, HCA healthcare focus on profits rather than the patient's benefits. For example moved the patient to other hospitals with unstable conditions Therefore Columbia/ HCA Healthcare Corporation cannot fulfill the patient claim also.
For the employee of the Columbia/ HCA Healthcare Corporation their claim are to get enough training to guidance them in carry out their responsibilities. However Columbia/ HCA Healthcare Corporation to be more cost effective they had cut short their training duration. This might result the employees getting not enough training to handle the serious problem and complicated new equipment. Therefore Columbia/ HCA also cannot fulfill the employees claim.
From the above unfulfilled claim by Columbia/ HCA Healthcare Corporation to its stakeholder, it can bring challenges, threats or opportunity to corporation. For the patient stakeholder would give their opinion regarding the healthcare services given the hospital. It would be an opportunity for the hospital to enhance its public image and reputation if the opinion is good; or a threat to deteriorate its public image and reputation if the opinion is bad. Therefore it was a challenge for the corporation to provide a good quality service to their patient. For the employee stakeholder, they are the person who gives the service to the patient of the corporation. Thus if there provide good and quality service then it has an opportunity to increase corporation reputation however if reverse then corporation reputation would be affected. Therefore the type and duration training that the corporation needed to organize to the employee is a big challenge to corporation.
After identified the stakeholder and challenges, threat and opportunity in this case, start to analysis our main issues. Our main issue in this case is document fraud and low quality service provided due to the emphasis on profit strategy. By using the profit strategy in their corporate strategy, do they fulfill their corporate social responsibility?
The corporation has the responsibility to economic; adhere to the law and rules. They have be profitable by maximize sales and minimize cost as they apply profit seeking strategy in their business strategy. However they fail to complied with law and rule. They required following the accounting standard regarding the record of costs report. Besides, they also required to follow the agreement with the government to provide service within their budget. Unfortunately, they fail to do so. They did not follow the accounting standard by manipulate the cost report and fraudulent the expenses. Although they have fulfilled the economic, they fail to comply with rule and regulation.
Besides, the corporation is expected to be ethical in their operation that is to avoid questionable practices and take any action that is right and fair. Before the frauds of the corporation were being found in which when they are using the profit seeking strategy in their business strategy, they did not practice any ethical code of conduct. However, after they change their focus to patient needs, the hospital spends roughly $4 million per year to develop its ethical programs. They provided training programs to employees and hotline services for public to comment their dissatisfaction or found to the hospitals. They did a great job because they quickly settle the complaint from customer. It can be showed in the case that they had fired a clerk who steal the hospitals equipment and sell it on eBay after received call from public.
After they start practicing the ethical code of conduct, they try to do some philanthropic responsibility. They start to do some voluntary activities without require return from the society. For example, Columbia/ HCA hospital provide scholarship program for the community. In addition, they also provide employment opportunity for the scholar to work with them after they graduate.
Next, we analyze the major issues base on the ethical theories, which are consequentialism and non-consequentialism theories. In consequentialism theories, utilitarianism is the suitable theories to use in this case analysis. Utilitarianism is a theory which focus on making any decision that can brings the greatest happiness and benefits to the largest number of people. To use this theory, we need to compare its benefit and cost for using the profit focus strategy and patient oriented strategy.
The advantages of HCA Healthcare Corporation practice profit emphasis strategy is the corporation can gain extra profit by claiming the unrelated expenditures to customer for reimbursement. Besides, the corporation can more focus to generate higher profit in planning their business strategy. The cost of applying this strategy is when the unethical action discovered, the corporation would face lawsuit by their patient, then their reputation to the public and corporation profit would be affected also.
On the contrary, the advantage of patient focus strategy is they can provide better quality health care services. As they will give a proper training and adequate training duration for their employee, it can assure the quality service provided by them. Besides, they need not to worry their unethical action will discovered by other as their actions are ethical and patient oriented. Moreover, the hospital can maintain it's reputation to public by complying with law and regulation. The good reputation will give a trust for public and can attract the customer. Consequently, it will increase the profit of hospital. However, the cost of this strategy might not gain back the profit so quickly because they always consider on the patient needs. In doing so, the hospital will spend more to provide higher quality services to patient.
Hence, it is very clearly to see that advantage of patient oriented strategy will give the greatest number of happiness to most of the stakeholder than profit oriented strategy. In summary, practice profit oriented strategy is unethical.
Next, we will analyze in one of non-consequentialist theory which is Kantian ethics theory. Basically, Kantian ethics theory divide into four parts, there are principles of right, principles of duty, universalism and categorical imperative. Under principles of right, there are human right, legal right and moral right. Human right is any action that violates human being is unethical. For the case of HCA Healthcare Corporation, the action of "patient dumpling" base on the profit oriented strategy may affect the condition of patient become worse. Therefore, it is unethical.
For legal right, as long as the action did not violate the law and regulation of their country is deemed to be ethical. In this case, we know that fraud billing and illegal claim for reimbursement which base on profit oriented strategy were the action that violating the standard of accounting. Therefore, it is an unethical action. Then, for the moral right, it is any taken action that will not harms other people, otherwise it i considered as unethical. Shorten the duration of training to employee due to the minimization for the cost of training might cause accident on patient, as the employees were lack of skills. Therefore, it is unethical action also.
Then, we come to evaluate the case based on the principles of duty. The duty of employee is to provide the quality service to patient, in which complied with law and regulation also. Any action against those duties is considered unethical. In this case, HCA Healthcare Corporation didn't provide a proper health care service and prepared their cost report according to accounting standard. So, it is an unethical action.
Next, analyze and evaluate in universalism which means we need to treat other people in the same way that we want to be treated. If the corporation do not want to receive a poor and unsafely service in hospital or if the corporation do not want received unreasonable price on the service received. Then, they should not do all that. Therefore, the action of false cost report and "patient dumpling" is unethical.
In categorical imperative, it contains of principle of ends and principle of autonomy. Principle of ends means that any action that is not exploiting other is deemed to be ethical. HCA Healthcare Corporation had shortened their training duration for employee due to cost minimization is deemed to be unethical. It is because the lack of practice may lead to ineffective services provide which would result hazardous to the patient. Then, for principle of autonomy, it means that any action against the freedom to make their decision is deemed to be unethical. For "patient dumpling", the patient did not have the choice on the decision, as they will always listen to the order of hospital, even the order is an unsafely movement.
Besides ethical theories, concept of fiduciary duty also can use in analysize and evaluate the main issue of this case. Fiduciary duty is the duty that gives a trust to the person who give you the responsibility. For this case the people who give Columbia/ HCA Healthcare Corporation are their stakeholders. Columbia/ HCA Healthcare Corporation affect its' reputation and trust to their patient due to provide unsafely health care services. Besides, it affects the trust of government on their services also. it is because the hospital claims the unrelated expense for reimbursement that means they make a fraud billing. Therefore, Columbia/ HCA Healthcare Corporation's top management had breach their fiduciary duty by operate their corporation by profit oriented strategy.
In our opinion, document fraud and poor service of patient care is a significant issue that not merely claims the false expense but also may affect the safety of patient. It will harm other people even may died. However these two issues would happens because they make the decision base on profit oriented strategy rather than ethical and patient need. Therefore, we strongly agree that the profit oriented strategy is an unethical business strategy.
Although the Columbia/ HCA Healthcare Corporation involve those unethical issue, they are trying to take some action to avoid these issues occur in the future. They changed their CEO, reshape the vision and mission of their corporation, and change their corporate culture focus from profit oriented toward patient oriented. Nowadays, HCA Healthcare Corporation has been recognized by the Ethisphere Institute as one of the 2011 World's Most Ethical Companies. The corporation has been successfully creating an ethical culture in their corporate.
Recommendation and Conclusion
In this case, Columbia/ HCA Healthcare Corporation has shift theirs' focus from profit oriented toward ethic oriented. In our opinion, we think that it is a wise choice and action they took on that time. Their reputation was deteriorating, after the unethical action discovered in the hospital. To rebuild their reputation, they need to retrain their employee ethics first. It can be done by increasing the salary of employee and providing the better employee compensation to instill the loyalty among the employee. If the employees of the corporation are loyal, they will not take any action that can harm the corporation. Hence, they will do their job in a more ethics way. This can make sure that the employee will always choose the right and ethics decision when they are facing the dilemma. As a result, the corporation can maintain their high quality service towards patient, and then rebuild the patient trust.
Beside that, we think that Columbia/ HCA Healthcare Corporation should motivate their employee. The corporation can organize some motivation camps or talks to motivate their employee, especially the experienced worker. The motivation talks or camps can instill the motivation on the new employee from the initial stage. For experienced employee, the motivation camp or talk can change their perception towards the corporation as the corporation had already changed to an ethical corporation. The speaker of the motivation talks and camp can emphasize the uniqueness of the corporation, to let them know that their job is meaningful. Hence, the employee will appreciate the opportunity to work in an unique corporation that concern on the patient needs, instead of profit. The case such as patient dumpling will not happen again in the future. In summary, all these motivation talk and camps will encourage the employee to provide better services to the patients.
As we know that the corporation had already changed the corporation corporate culture towards a more ethical and patient care corporate culture. However, the experienced employees are used to the old corporate culture, which are unethical and profit oriented. It might be difficult for them to adapt to a new corporate culture in the short time. For that reason, the corporation can organize a meeting to gather the entire employee according to their department. The employee can voice out their problem and dilemma that they face during the meeting. Then, the other employee can give comment and help them to solve the problem. The employee in dilemma can solve their problem; the other employee can learn from the discussion and view it as a reference and guideline when they are facing the same dilemma next time. Ethic cannot be understood wholly by theoretical, sometimes it need to have a discussion for the employee to find an appropriate solution.
In conclusion, Columbia/ HCA Healthcare Corporation had improve their public image as they changed their focus from profit-oriented towards patient-oriented, hence we think they need to continue their improvement and considering our suggestion.