Ethics Scenario #65: Harristown Community Hospital and Healthcare System

65. The Board of the Harristown Community Hospital and Healthcare System, a 501(c)(3) tax-exempt charity, is considering a proposal being made by its president and CEO, Michael, to increase its net revenue in the wake of likely massive cuts to its Medicare reimbursements. He is proposing that the hospital shut down its emergency room at its location in the inner-city of Harristown, and invest the millions of dollars being saved by doing this to create satellite clinics and walk-in health centers in the surrounding suburbs. Michael and his CFO, Courtney, explain that the emergency room is draining the hospital of its reserves, and that the satellite centers in the suburbs offer a lucrative investment that can make up for the forecasted revenue shortfalls emanating from Medicare cuts. He dismisses the protests from the only African-American on the board joined by only two others who live in the city as not recognizing the realities, and suggests that the emergency health care needs in Harristown can be served by a regional hospital that is located ten miles away in the neighboring community of Indiantown.

a. Is the President and CEO’s proposal ethical?