Organizational ethics and

the Law

Legal basis

• Establishes powers and governance structure

• Sets limitations on powers

Five Types of organizations

• Governmental entity

• Nonprofit corporation

• For-Profit corporation

• Partnership (limited or general)

• Sole proprietorship

ULTRA VIRES Acts

“Acts by a corporation outside of its authority.”

Three key components of a hospital

Governing Body(Board)

Management(CEO et. al.)

Medical Staff

Governing Board (Duties)• Duty to act with due care• Preservation of Assets• Basic Management duties:

– selection of corporate officers and other agents– general control of compensation of such agents– delegation of authority to the chief executive officer and

subordinates– establishment of policies– exercise of businesslike control of expenditures– provision for planning– supervision of and vigilance over the welfare of the whole

corporation

• Duty to provide satisfactory patient care• Duty of loyalty (corporate opportunities, self-dealing,

conflict of interest)

Governing Board (liabilities)

• Criminal liability (e.g. kickbacks)• Civil liability (e.g. gross negligence)• Liability limits and insurance (D&O liability

insurance)

• Selection and Dismissal• Board members must be selected in accordance

with applicable laws, articles of incorporation, and by laws.

CEO

• Functions as the agent and employee of the governing board.

• General supervision of all operations

• Responsible for implementing board approved policies.

CEO

• Authority over the hospital employees

• Selection, Evaluation and Discharge of hospital staff.

• Liability– Criminal (e.g. fraud)– Civil (e.g. gross negligence or ultra vires)

• Management Contracts

Chinese Saying:

“He whose virtues exceed his talents is a superior man; he whose talent exceeds his virtues is a dangerous man.”

Source: Porter-O’Grady & Wilson

HCA Corporate Strategy

…..put the patient first in all of our decision-making. ….the core value of the company lies in the inherent

worth of our individual facilities and groups of facilities in local communities. It follows that this value is created by locally-generated visions, strategies, and market initiatives…

 …simultaneous need for both standardization and

decentralization…. THOMAS F. FRIST, JR., M.D. CHAIRMAN & CHIEF EXECUTIVE OFFICER

JACK O. BOVENDER, JR. PRESIDENT & CHIEF OPERATING OFFICER

Del Sol Medical Center

Mission StatementAbove all else, we are committed to the care

and improvement of human life.

In recognition of this commitment, we strive to deliver high quality, cost effective healthcare in the communities we serve.

Value Statements

• We recognize and affirm the unique and intrinsic worth of each individual.

• We treat all those we serve with compassionand kindness.

• We act with absolute honesty, integrity and fairness in the way we conduct our business and the way we live our lives.

• We trust our colleagues as valuable members of our healthcare team and pledge to treat one another with loyalty, respect and dignity.

Therefore I say:One who knows the enemy and knows himself

will not be in danger in a hundred battles.

One who does not know the enemy but knows himself will sometimes win, sometimes lose.

One who does not know the enemy and does not know himself will be in danger in every battle.

Sun Tzu

"The 1995 Restatement of The Oath of Hippocrates circa 400 B.C." as introduced by The Value of Life Committee, Inc., June, 1995. Copyright held by The National Catholic Center, Boston, MA 02135

I swear in the presence of the Almighty and before my family, my teachers and my peers that according to my ability and judgment I will keep this oath and stipulation:

To reckon all who have taught me this art equally dear to me as my parents and in the same spirit and dedication to impart a knowledge of the art of medicine to others. I will continue with diligence to keep abreast of advances in medicine. I will treat without exception all who seek my ministrations, so long as the treatment of others is not compromised thereby, and I will seek the counsel of particularly skilled physicians where indicated for the benefit of my patient.

I will follow that method of treatment which according to my ability and judgment, I consider for the benefit of my patient and abstain from whatever is harmful or mischievous. I will neither prescribe nor administer a lethal dose of medicine to any patient even if asked nor counsel any such thing nor perform act or omission with direct intent deliberately to end a human life. I will maintain the utmost respect for every human life from fertilization to natural death and reject abortion that deliberately takes a unique human life.

With purity, holiness and beneficence, I will pass my life and practice my art. Except for the prudent correction of imminent danger, I will neither treat any patient nor carry out any research on any human being without the valid informed consent of the subject or the appropriate legal protector thereof, understanding that research must have as its purpose the furtherance of the health of that individual. Into whatever patient setting I enter, I will go for the benefit of the sick and will abstain from every voluntary act of mischief or corruption and also from the seduction of any patient.

Whenever in connection with my professional practice or not in connection with it I may see or hear in the lives of my patients which ought not be spoken abroad I will not divulge, reckoning that all such should be kept secret.

While I continue to keep this Oath unviolated, may it be granted to me to enjoy life and the practice of the art and science of medicine with the blessing of the Almighty and respected by my peers and society, but should I trespass and violate this Oath, may the reverse be my lot.

Hippocratic Oath (Modern Version)You do solemnly swear, each man by whatever he holds most sacredThat you will be loyal to the Profession of Medicine and just and generous to its membersThat you will lead your lives and practice your art in uprightness and honorThat into whatsoever house you shall enter, it shall be for the good of the sick to the utmost of your power, your holding yourselvesfar aloof from wrong, from corruption, from the tempting of others to viceThat you will exercise your art solely for the cure of your patients, and will give no drug, perform no operation, for a criminalpurpose, even if solicited, far less suggest itThat whatsoever you shall see or hear of the lives of men which is not fitting to be spoken, you will keep inviolably secretThese things do you swear. Let each man bow the head in sign of acquiescenceAnd now, if you will be true to this, your oath, may prosperity and good repute be ever yours; the opposite, if you shall proveyourselves forsworn.

ACHE Code of Ethics

PreambleI. The Healthcare Executive’s Responsibilities to the

Profession of Healthcare Management II. The Healthcare Executive’s Responsibilities to

Patients or Others Served, to the Organization and to Employees

III. Conflicts of InterestIV. The Healthcare Executive’s Responsibilities to

Community and SocietyV. The Healthcare Executive’s Responsibility to

Report Violations of the Code

Valuesfor CHCI, Colorado Springs

People are important

Learning is essential

Timing is critical

Integrity is paramount

Ethical dilemma

The support of your board chairman is crucial for a new project that is not popular with your hospital's doctors. You want to spend $10 million on a needed renovation in the intensive care unit, while a good number of the doctors want that money spent on new equipment. The board chairman, who has a lot of influence with the doctors, has told you that his friend’s son would like to do the bond work for the renovation.You fear he won’t get behind the renovation if the hospital doesn't use the firm he wants.

-TERESE HUDSON THRALL

KEITH PRYOR Governance consultant and former system CEO, Bryn

Mawr, Pa.

There are often more valid requests for resources than there is funding. I may improve my position by following a disciplined process for spending money that incorporates physician input. I'm not looking to build doctor support, but to use a process that produces an objective answer. Maybe the ICU renovation isn’t the best thing to do. If that process shows that the renovation should go forward, I'd follow a similar process for selection of legal counsel. Companies should disclose relationships to those in leadership positions at the hospital. If the friends son is recommended via this process, any conflict should be disclosed to the board. In the meantime, I'd give my board reports outlining conflict-of-- interest questions posed by the attorney general of Pennsylvania to the leadership of the Allegheny Health System Board.

WILLIAM GONZALEZ Health care adviser and former system CEO, Chicago

I would erode my relationship with the doctors if they discover that the chairs favored firm did the bond work for a project they don't support. It would look as though I were trying to improve my position with the chair at their expense. Instead, I would reopen the discussion of the ICU renovation, involving physicians and the board's construction committee. Even if I'm not able to get doctor support, I've made an attempt to justify it. I'd also talk with the chair about conflict of interest. He should inform the board about his ties to the law firm, which should be considered along with others based on best terms and interest costs. The chair shouldn't participate in voting or discussion. A trustee should never use his or her position to influence the choice of a vendor, even if that vendor does quality work.

Fraud and Abuse

• False Claims

• Kickbacks

• Self-referral

False Claims

• Gov’t purchasing services vs. goods• Services provided to beneficiaries of programs

rather than gov’t agents• Services provides at thousands of remote sites• Complexity of prof services make it difficult to

question quality and approriateness• Personal and confidential nature prevents

direct observation by the gov’t at time of service.

Problem!!!

• Gov’t must rely on the word of the provider or written documentation.

Types of fraud

• Claims for services never rendered

• “Upcoding”– Some providers see nothing wrong with false

statements to justify service to patients need service and cannot afford it.

Federal offense

• False claims for Medicare/Medicaid is a felony

• New federal offenses apply to private as well as public programs.