Why Are Health Care Organizations' Ethics Codes News?

This just in from the Orlando Sentinel,

The head of Central Florida's largest blood bank told Florida senators Wednesday that she has completely overhauled the operation — from the boardroom to the bloodmobile.

'Believe me, I get it,' an apologetic Anne Chinoda told members of a committee investigating the business ways of Florida's Blood Centers and other blood banks across the state.

Chinoda said FBC now prohibits board members from doing business with the agency, has instituted nine-year term limits for board members and has put together a group to review executive compensation. She also unveiled a blood-donor bill of rights she promised to publicize.

Sen. Don Gaetz, chairman of the health regulation committee that asked Chinoda to appear, said he was pleased by her testimony. 'What we saw today was an admission of inappropriate practices in the past and a promise they will be fixed,' he said.


These new ethical standards were a response to a past controversy,

Gaetz's committee has been investigating FBC, which generates $100 million in revenues annually, and the statewide industry since the summer.

The inquiry was triggered in part by a series of stories in the Orlando Sentinel that showed FBC board members have sold millions of dollars in goods and services to the agency each year; that board members had no term limits; and that Chinoda was compensated nearly $600,000 annually. Her salary was not discussed at the hearing.

Like others in the industry, FBC gets its blood for free from donors, tests and repackages it. FBC then sells the blood to 70 hospitals and medical facilities in 21 counties in Central and South Florida.


How often do you hear pleas from local blood banks about urgent shortages? How often do you donate blood, or feel bad because you did not or could not donate? Many people who selflessly donate blood were likely unpleasantly surprised to find out that blood banks sell (at a high price) the blood they donated, and used the proceeds to pay their executives generous salaries, and pay vendors run by their board members.

Here was another example of a previously revered local, not-for-profit health care institution run apparently for the personal benefit of its top insider leaders.

Why was it news when the organization in question adopted a code of conduct that limited self-dealing by board members, limited board members to only(?) nine-year terms, and put in place some sort or organized process to set the CEO's compensation? Do those not seem like they ought to be standard, and not newsworthy practices?

Similarly, an article in the Newark Star-Ledger back in November recounted how Hackensack University Medical Center in New Jersey, whose board members had been accused of self-dealing (see this post), and to which a New Jersey state legislator had been convicted of selling his services (see this post), had instituted "tightened ethics rules," including a provision that "board members will no longer be allowed to do business with the hospital." Again, why should a rule like this be news? One of the duties of board members of all not-for-profit organizations is the duty of loyalty, "a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization." Overpaying crony executives and authorizing business dealings with one's own business seem to obviously violate this duty.

We have noted how the business culture of health care organizations has increasingly come to resemble the larger business culture in an era of laissez-faire capitalism and the rise of new oligarchs and robber barons. So it is telling that it was also news when UBS, a large international bank enacted a code of ethics for its employees that required them to actually comply with "foreign tax reporting rules," (per Bloomberg.)

One would have once thought that health care organizations, given their responsibilities for human life and health, and their formerly sterling reputations, would have clear, comprehensive codes of ethics that are actually enforced. But it is news when a health care organization develops such a code (and it still may be news when such a code is enforced.)

This post summarized some current thinking on organizational ethics policies. In conclusion, I asked readers to think about whether their own health care organization had anything resembling such a policy. I suspect few could identify such policies.

Health care professionals need to inquire why health care organizations, including drug, device, biotechnology and health care information technology companies, health care insurers, to hospitals, academic medical centers, and medical schools, etc, almost never have real organizational ethics policies. Of course, the suspicion is that lack of such policies makes it easier for insiders to direct the organization for their personal benefit. At least if we could make such policies the norm, we could remind organizational leaders that they are supposed to be upholding the mission, not lining their pockets.