Ethics Scenario #70: Heartland Hospital

70. Heartland Hospital, a 501(c)(3) nonprofit tax-exempt institution located on a beautiful lake and a sprawling, well-manicured campus, is nationally known for the quality of medical care delivered by its staff. It medical attracts some of the best medical professionals, partially because of its attractive location, but perhaps more from its penchant for offering lucrative salaries and perks to its staff. A few years ago, the institution purchased a marina and a private golf course, and encourages its employees to use these facilities, and charges them almost nothing. The institution has always provided millions of dollars annually in “charity” care, and the leadership has always highlighted the exact amount in its presentations to the public.  The leadership recently hired a nationally recognized public relations firm after a series of newspaper articles in the regional newspaper chronicled some of the less attractive and embarrassing policies of the institution, such as paying its CEO a seven-figure salary, providing NFL tickets and other perks to local government officials who might be in a decision-making capacity with respect to the validity of the hospital’s local tax exemptions, providing incentives to its medical staff for scheduling more bypass surgeries--which tend to pad the bottom line and are often highest on the list of the most unnecessary surgeries--and finding ways to discourage admissions and transferring patients whose government subsidies for care are not likely to result in net revenue for the institution. The series did confirm that the millions of dollars in so called charity care provided by the institution was indeed accurate, although in almost every case, the institution used aggressive collecting agencies and a team of sophisticated lawyers to harass patients into paying all or part of their debts, and only after all of their strategies were exhausted did the hospital list what was still owed as “charity care.”

a. Is Heartland Hospital’s behavior ethical?