Business Ethics in Healthcare: Beyond Compliance

Fifteen: Community Serving Mergers and Acquisitions

Even the most casual observer of the healthcare industry is well aware that the last decade has been a time of restructuring in healthcare organizations. Acquisitions and mergers are common. Mergers and acquisitions are more than new organizational arrangements; they are more than disruptive periods to be gotten through quickly in order to get back to the business of providing high-quality healthcare services. They often change the way services are available to the community, and they affect the working environment of employees. Mergers and acquisitions often have major long-term consequences. The focus in this chapter is on selected issues related to the impact of mergers and acquisitions on the communities served by the healthcare organizations. The Preamble of the ACHE Code of Ethics includes this statement: The fundamental objectives of the healthcare management profession are to enhance overall quality of life, dignity, and well-being of every individual needing healthcare services; and to create a more equitable, accessible, effective, and ef¤cient healthcare system. Mergers or acquisitions are usually given consideration, in the ¤rst place, because of an organization’s desire to become a more ef¤cient healthcare provider. As proposals are considered and as decisions are made and implemented , it is important to ensure that the pursuit of ef¤ciency does not have negative implications regarding the equitable, accessible, and effective provision of healthcare to the community. Fifteen Community Serving Mergers and Acquisitions Location of Services Case 15.1. Because both institutions are experiencing ¤nancial losses and because their combined bed capacity is clearly excessive, the two acute care hospitals in the region have begun to negotiate a consolidation of services. One institution is a nonpro¤t community hospital in a city with a population of approximately 55,000. It serves almost exclusively residents of the city (which has experienced a declining manufacturing base in recent decades). The other hospital is a nonpro¤t religioussponsored hospital which was located in the city at one time but moved to a location about ten miles outside the city limits about twenty years ago. It serves patients from all over the county. The public announcement indicates that not all services will continue to be available in both locations, but that no ¤nal decisions have been made regarding what will be offered where. The rumors that have circulated say that most services, including medical, surgical, and obstetrics , will be located in the newer suburban facility and that the city facility will keep only emergency services, a primary care clinic, and a mental health unit. Shortly after the announcement, a number of city residents and political leaders voice their strong concern about “losing” their community acute care hospital, which is located in a low-income area and has served the city population for a century. For at least some residents, transportation to the suburban hospital will be dif¤cult. Concern is expressed about speci¤c services (“No more babies will be born in the city”), but the major focus of opposition is on the signi¤cance of not having a full-function hospital in the city. Another frequently voiced concern is that the merger, if it takes place as rumored, will further reduce the employment base in the hard-hit city. The hospital is now the largest employer. Both hospitals are committed to and do provide charity care, but the city hospital does considerably more both as a percentage and in actual dollar amounts.1 As the leaders of the healthcare organizations make decisions about the location of services, they need to decide what kinds of community issues should be taken into account. Being a good citizen means that the healthcare organization recognizes that it has a responsibility to promote the public good. This means, ¤rst of all, a responsibility to improve the health of the community. But it means more than that. It means that in all of its decisions, polices, and practices it is sensitive to the impact of its actions on the public well being. All businesses and corporations have an ethical responsibility to society. In Community Serving Mergers and Acquisitions 141 their text on Business and Society, William Frederick, James Post, and Keith Davis explain the meaning of corporate social responsibility this way: Corporate social responsibility means that a corporation should be held accountable for any of its actions that affect people, their communities, and their environment. Its implies that negative business impacts on people and...