The Organizational Costs of Ethical Conflicts

Everyone who writes knows the feeling – “I wish I had written that!” That was my reaction to “The Organizational Costs of Ethical Conflicts,” by Nelson, Weeks and Campfield in the January/February issue of the Journal of Healthcare Management.

Nelson and his colleagues present vignettes illustrating common ethical problems - end-of-life decisions, conflicts of interest (as about a preferential nursing home admission), and truth telling after an adverse event. The distinctive aspect of the article is that the analysis is managerial, not "philosophical."

The authors delineate three areas of organizational function for which the ethical conflicts created new costs. The cost implications are remarkably broad:

Operating costs include staff time spent dealing with the ethical issue, opportunity costs of the diverted time, and - perhaps most important - potential for decreased staff morale from chronic or recurrent ethical conflict, leading to burnout and even increased turnover.

Legal costs include risk management staff time, legal fees, and the potential for litigation, settlement costs, and even long term increase in malpractice premiums.

Public relations costs include staff time dealing with adverse publicity, the cost of rebuilding a damaged public image, and the potential for loss of referrals and political/philanthropic support.

Nelson and his colleagues recommend the health organizations move from what is typically a "reactive" approach to ethics - consultation after an ethical problem has hit the fan - to a "proactive" stance. This would involve two main strategies. First, after an ethics committee or ethics consultant responds to a conflict, a process of root cause analysis should be conducted, to determine what could be done to prevent similar problems in the future. Second, organizations should proactively identify areas of likely ethical conflict so that policy development, skill training, and guideline dissemination can be conducted in advance.

I have seen first hand how on target Nelson and his colleagues are. In 2000, Harvard Pilgrim Health Care, a not-for-profit health insurer that has been rated top in the nation for the past three years, got into financial diffuculties, and was briefly put into receivership by the Massachusetts Attorney General. At a meeting of the Harvard Pilgrim Ethics Advisory Group, a body that includes purchasers, physicians from the network, consumers, and public leaders, as well as Harvard Pilgrim staff, a public official stated - "you have to get back to being an effective insurance company...but if that's all you are you aren't worth saving...what makes you special is your commitment to activities like this!"

Nelson and his colleagues teach us that ethics activities aren't just a goody two-shoes, politically correct pursuit. Ethics is properly seen as part of quality improvement, patient safety and strategic management as well.