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In the past year, this society, which has always trumpeted market capitalism as the best financial and political system on earth, has witnessed something of an ethics meltdown among the powers that be. Arthur Andersen, the accounting firm once revered as the gold standard of auditing, has collapsed after being found guilty, in a federal trial, of fraudulent accounting practices. Executives of cable firm Adelphia, telecommunications giant WorldCom, even Enron (although most of its top leaders, for some reason, as of this writing remain untouched by the long arm of the law) have been arrested and taken away in handcuffs. The former head of Tyco, Dennis Kozlowski, is being sued by his own company for using $245 million in unauthorized employee loans to buy yachts and fine art and then failing to repay the money. Columnist and author Bob Greene, an advocate for abused children, was forced to resign from the Chicago Tribune staff in September after admitting that he had had a sexual relationship with a teenager. Even that paragon of good behavior, Martha Stewart, is under investigation by the Justice Department (after she refused to provide information to Congress) for what might delicately be called creative investment practices.
Small wonder, then, that a Chicago Tribune poll conducted in July found that, among other things, 66 percent of the public believes that "compared with 10 to 20 years ago, ethical standards of major corporations have changed for the worse," and 76 percent believe that "top corporate executives put their own personal interests ahead of the interests of workers and shareholders." Gee, I wonder why.
Health care executives and trustees might view all this as something of a spectator sport, but it isn't. Our sector has had some big-time moral meltdowns of its own. Sherif Abdelhak, former head of the Allegheny Health, Education, and Research Foundation, which declared bankruptcy after all its money mysteriously disappeared, began serving prison time in September after pleading guilty to pillaging many of the health system's protected charitable endowments. Five former hospital CEOs are doing time for embezzlement, two more for Medicare fraud, and one for racketeering and conspiracy. Cryolife, which sells organs and tissue, and Eclipsys, a health care software vendor, both face class action suits for accounting irregularities. Employees of pharmaceutical firm TAP have been indicted for paying kickbacks to physicians, and Eli Lilly has been subpoenaed in Florida for questionable marketing of Prozac.
Kansas City, Missouri, pharmacist Robert Courtney diluted cancer drugs to increase his profits. Several physicians have been convicted of fraud and unnecessary surgery; in one case in Chicago, patients died as a result. Both the hospital CEO and the surgeon are in prison. And the Connecticut attorney general has launched an investigation of United HealthCare after the health plan, which is required to pay for child immunization, urged patients to obtain them instead from the state's free program for low-income residents. And at a time when the drums of war are beating and our military men and women are being lauded (and sometimes politically exploited) as heroes, the Veterans Administration health system has adopted a policy of not "actively recruiting" any new patients. This includes the World War II veterans who helped save this planet from the Third Reich.
I don't think these health care leaders have anything to crow about. They should be eating crow instead, and, sadly, not all of them are; Abdelhak is still pleading that his actions were justified.
In an interview in the February-March 1999 issue of American Heritage, Pulitzer Prize-winning historian David McCullough explained why he had chosen the Johnstown Flood as the subject of his first book. He replied that the flood--which was caused when the dam of an artificial lake used exclusively by the very wealthy broke and inundated the valleys below, killing hundreds of people--illustrated one of the "darker aspects of history." He said that the flood was "a morality lesson about our pathetic human inclination to think that because people are in positions of responsibility, they are therefore behaving responsibly."
Health care leaders occupy positions of singular responsibility. Most of them deserve it. Despite this fact, it might be a good time to get back to some ethics basics, as a sort of instant refresher course. Given that the readers of this column are health care professionals, and, one assumes, not strongly attracted to felonious activity, we will skip the parts about child molestation, embezzlement, fraud and other criminal behaviors. We already know that they are wrong.
So here are some basic ethics precepts. Because this is a secular publication, I will not call them 10 commandments, but rather 10 suggestions.
First, the primary duty of any health care executive, trustee or employee is to provide the best possible care to the people who seek it. I realize that teaching institutions have other major duties as well, but this is the primary one. And too many teaching hospitals get confused on this point and think that they exist to conduct research that will discover things that will make individuals wealthy, or to control academic education fiefdoms. I will always remember the health care professor who bemoaned the fact that he had to teach, which he considered a dreadful chore. The principle here is not rocket science: Patients come first. You won't get much done without them.
Second, leaders of proprietary organizations must find an ethically acceptable balance between duty to stockholders and duty to patients. I have certainly written and said enough about this inherent conflict at other times and in other places. But my view about the inadvisability of having care provided directly by for-profit organizations is irrelevant for the purposes of this discussion. If you work for or represent a proprietary entity, you do have a responsibility to stockholders. But that is secondary to your duty to patients, and, quite frankly, abrogating your duty to patients will sooner or later hurt your stock's price. And, as we have seen in the past months, such a reversal of fortune can occur very quickly--too quickly for ethically challenged executives to exercise their stock options and cash out.
Third, leaders of nonprofit organizations need to keep in mind that there is a reason for their being excused from paying certain kinds of taxes. Nonprofit status, technically, has to do with taxes. Nonprofit status, philosophically, has to do with being trusted to perform services that would otherwise have to be funded with tax monies. The provision of care to the uninsured poor is paramount among those services, even if the specific requirement that this be done was (unfortunately) removed from the federal tax code some time ago. In my opinion, there is no worse hypocrisy than a tax-favored nonprofit organization lavishing money on itself and on insured patients while ignoring the uninsured poor, some of whose taxes are indirectly funding that same organization.
Fourth, consider who's on the board, and why, and what is required of them. Reporting on the Tyco mess, CBS correspondent Anthony Mason said that he wondered "what rock the board had its head under." One does have to question where the board was when the CEO used a well-intentioned employee loan program to steal $245 million--on top of the $100 million he was already being paid. But there are health care boards that are just as far out of the loop--or, worse yet, in the case of Allegheny, were in the loop and gleefully pursued their own interests. People (this is a subtle hint to those of you who still have all-male boards, or boards with one token female who sits on the Lawn and Garden Committee) who are appointed or elected to boards should not be there solely because they are big donors, or have access to fancy equity lines of credit, or are someone's golf buddies. Being a trustee of a special, trusted organization requires expertise, intelligence, personal honor and a strong sense of community. It also requires a strong sense of responsibility. As Anthony Mason also said of Tyco, "The board won't survive. [In a situation like this], if a CEO goes down, the board goes down with him."
Fifth, investment, banking and purchasing practices should be aboveboard (no pun intended). One CEO I know, who in previous years ran a very large teaching facility in a relatively small city, made it a point to see that the organization had exactly the same amount of money in every bank in town. Whenever possible, he also bought products and services locally. In these days of mega-purchasing outfits, that is not always possible. But if the price is the same, supporting the community that supports your organization seems to be the better path.
Similarly, investments are not simply a matter of returns (besides, very few investments are returning much of anything these days). Investment practices should reflect the philosophy and mission of the organization. If yours is a women's hospital, investments in reputable firms that have a good record in employment and promotion of women might be a good idea; if your community is diverse, minority-owned companies deserve a look. I know that there are all kinds of rules and laws about investing, but there is still room for independent decisions and choices, and health care organizations should make those choices responsibly. After all, it was not so long ago that activists and college students helped bring about democracy in South Africa by condemning and boycotting firms that invested in that country.
Sixth, there is a difference between a healthy paycheck and personal inurement. Most of us, I'll wager, were a little surprised that Dennis Kozlowski of Tyco couldn't survive on his $100 million annual take. I could probably struggle along with that amount of money. But, as many observers (including an official of the Federal Reserve) have stated recently, executive compensation has gotten a bit out of hand. Twenty years ago, the average CEO made 42 times what the lowest-paid employee made. Today, he makes 400 times what the lowest-paid employee makes (and this is not even counting employees in outsourced services, who may make even less).
Running a health care enterprise means long hours and hard work, and no one is suggesting that executives should get $25,000 a year. But there has to be some sense of moderation involved. And, quite frankly, I am sick and tired of the argument that you have to pay Person X some huge sum because otherwise he will desert the organization. That argument was used successfully by Enron in front of a bankruptcy judge, who allowed 1,700 of its high-echelon employees to split $140 million in "retention bonuses." Meanwhile, thousands of former Enron workers no longer have pensions.
Whether trustees should be paid is still a matter of debate; I don't think it's a good idea, or even necessary, in health care, but if you disagree, fine. Trustee compensation should not be excessive, either, no matter what the potential benefits are to the organization.
Seventh, watch those conflicts of interest. I thought it was fascinating that when the Enron stuff hit the fan and the federal probe began, the entire U.S. Attorney's office staff in Houston recused themselves from the investigation, citing possible conflicts of interest. What on earth were federal prosecutors doing with the boys at Enron that would require such a move? Let us hope that similar questions would never have to be asked about health care executives and trustees. Obviously, the smaller the community, the more likely it is that there are social ties among people who also help run the organization. Obviously, it is desirable to get people with the deepest knowledge, which means that the brightest lights in town will likely be sought for board service or executive employment.
But it's equally obvious that conflicts of interest can develop--between friendship and professional obligation, between duty and the possibility of wealth, between loyalty to one firm or individual and another. When such situations develop, there are three choices: allow the competing interests to affect your decision inappropriately, recuse yourself from the situation and let someone else deal with it, or get other people involved and work it out together. The first choice is not acceptable.
Eighth, you can't be everything to everybody, but your decisions should be fair. One of the underlying rules of practical ethics is that people will accept most decisions and processes if they are perceived to be fair. That means reasonable equity for employees in terms of wages, benefits, personal safety and work environment. That means that disputes with patients and families, no matter how trivial or how impossible, are handled in a respectful and meaningful way. That also means that decisions affecting the community or communities you serve must be weighted toward what is best for that community, however difficult that may be to determine. If the cheapest land available for the new Whatsit Building is the only park the kids have, look elsewhere. Before you eliminate that "loser" service, think about who sees it as a winner. Be fair. Even if your decisions have unhappy consequences, the fact that you tried to be fair will be remembered.
Ninth, there must be standards for personal behavior, and they must be enforced. We are far past the time when sexual or racial harassment, abusive language, or violent behavior can be tolerated. Even the most basic high school ethics course starts with the concept of harmdoing and its unacceptability. Yet supervisors still pressure underlings into sexual situations, members of minority groups are subjected to subtle or overtly bigoted comments, physicians still punch nurses (and, occasionally, the reverse), and employees are harassed or fired for speaking the truth. An ethical organization condemns and punishes such behavior, and also has in place systems for the reporting and investigation of such incidents, and for protection of those who blow the whistle. And no one--absolutely no one--who is found guilty of inappropriate behavior can be above the law. Ask Bob Greene and the Tribune executives who fired him.
Tenth and last, compliance with the law does not constitute ethics success. Years ago in this column, I cited what I call the Ed Meese Rule, named for the Reagan Administration Attorney General who escaped indictment in a scandal. "I was not indicted," he announced at his press conference, "and therefore I am innocent." Hardly. The same general principle applies to the issue of compliance. Health care organizations brag that they are in compliance with all laws and regulations and therefore they are ethically superior; well, that's great, but obeying the law is what we are all supposed to do. To be a leader in ethical behavior, to be confident that whatever you do will look just fine on the six o'clock news, and to know that you have systems in place that will detect ethics lapses before further harm is done, is to meet a much higher standard. It is to set the bar higher, and, in keeping with the philosophy of continuous quality improvement, to keep setting it higher still.
In 1957, an executive gave a major speech in which he asked, "Is our profession so impressed with its ivory-tower position in the public mind that we are not hearing basic criticisms of our work?" The speaker was Arthur Andersen managing partner Leonard Spacek. He ushered in the golden era at Andersen, when its audits were so uncompromising, and its ethics so taut, that they became the preeminent firm in the field. Years later, they squandered all the social and ethics capital they had so carefully garnered, and their once-golden firm lies in ruins.
The same cannot be allowed to happen in health care; the stakes are too high and the possible harm too great. We do not deal in stocks and bonds; we deal in human lives. People trust us. And in a wounded society, being able to retain faith in those whom you have honored with your trust is not just desirable; it is essential. For us, and for those we serve.
This article first appeared in the November/December 2002 issue of Health Forum Journal
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