Ethical Suggestions for Columbia/HCA Corporation

Posted: November 30th, 2013

Ethical Suggestions for Columbia/HCA Corporation




Ethical Suggestions for Columbia/HCA Corporation

The main objective of a firm is to create returns from its business practices. Over the years, corporations have made large profits from their invisible business practices, which have led to the rise in corporate corruption and fraud schemes for enabling themselves to receive large profits. Firms such as Enron and WorldCom have been on the verge of bankruptcy due to the fraudulent business schemes they practiced (Markham, 2006). However, the experiences learnt from the mistakes of these corporations have sensitized the need for ethical practices and standards to be created and adhered to in the organization in order to prevent negative public credibility and autonomous business losses.

Columbia/HCA Healthcare Corporation was formed in 1994 because of a merger between the Hospital Corporation of America (HCA) and the Columbia Healthcare Corporation. Columbia/HCA by 1997 had grown to become one of the largest profit making health care providers in the United States, working 343 hospitals, 136 outpatient surgery centers and 550 home health localities. It also provided subsidiary and outpatient services in 37 states as well as in Switzerland and United Kingdom. The firm had a labor force of nearly 285000 employees. However, in 1997, Columbia/HCA Healthcare Corporation had its modes of doing business investigated by the federal government. Finally, the firm pleaded guilty to 14 felonies and compensated over 1.7 billion dollars in fines for committing fraud. It was the biggest corporate healthcare swindle in the United States of America (Ferell, Fraedrich and Ferell, 2010 p.445).

Apart from the ethics and compliance program adapted into the healthcare provider after the occurrence of the fraud (Ferell, Fraedrich and Ferell, 2010 p.448), there are other suggestions that could have been implemented in the organization to sensitize the employees to ethical issues. Failure to sensitize the employees to these issues increases the organization’s susceptibility to lawsuits, detrimental publicity and disagreements arising from disobedience with statutory requirements. The first suggestion would be encourage transparency in the accounting books of the company. Since Columbia/HCA was a public corporation, it was necessary for it to declare transparency in its financial activities. For instance, the company overstated its home health care laboratory expenses and classified other expenses in order to increase the amounts for seeking reimbursement from the government (Ferell, Fraedrich and Ferell, 2010 p.447). The importance of transparency is to ensure that all financial activities, costs or expenses, investments and profits match with the figures in the financial statements even in the case of auditing. Lack of financial transparency would lead to negative public image, reduction in investor confidence, late notification of potential liabilities, decreased financial performance, eventual scandals and lawsuits, bankruptcies and slow financial recovery (Pagano and Pagano, 2004 p.23).

Another suggestion that would have sensitized Columbia/HCA employees to ethical issues would be for employees to report any fraudulent practices to independent auditing firms and other inspection organizations. For instance, some employees such as physicians at the hospital were given illegal incentives (Ferell, Fraedrich and Ferell, 2010 p.446). The effects of these fraudulent activities are depressing to employees and the firm since both stand to forfeit due to the inability of employees to expose the ongoing fraudulent dealings in the organization. Such dealings do not only influence the financial state of the company, but also repress the quality of the services provided and the resignation of skilled employees who are vital for the company.

Employees and management should also operate in the best interest of the organization they are attached. Their decisions should not be motivated by personal increase or interest but should be based upon the gains the business will inherit. Unethical practices in organization usually arise when an individual’s personal interests weigh over the company’s interests leading to the occurrence of a conflict of interest. In Columbia/HCA Corporation, conflicts of interest arose when some of the company’s executives filed false cost reports of their own healthcare branch that resulted in health care government programs losing more than 4.4 million dollars (Ferell, Fraedrich and Ferell, 2010 p.447). Therefore, it would be highly beneficial for Columbia/HCA management who were mostly responsible for the fraudulent activities of the company to act in the best interests of the organization as underlined in the ethical codes of conduct of the company as well as per the objectives set for the organization.

Encouraging employees as well as the management to transact business ethically and in good faith with clients, suppliers, other employees, competitors and other business entities is also another suggestion. It should also be emphasized that employees are prohibited to take advantage of one another through manipulation, harassment, misrepresentation of material facts or any other iniquitous commercial practices. This guideline should also be adhered to by the management. Columbia/HCA Corporation management manipulated their employees by making them discharge patients who were not yet fully recovered or transferring them to other hospitals in unstable conditions (Ferell, Fraedrich and Ferell, 2010 p.446). In order to avoid such unethical actions from the management and employees, it is essential to incorporate fair dealing practices between clients and business organizations in order to ensure customer satisfaction and retention, positive image and maximum company profits.

It is important for companies to exercise ethical practices and guidelines in order to prevent the loss of customers as well as loss in financial gain due to negative credibility. Employees should be upfront in exposing fraudulent business activities and keeping in line with the codes of conduct to ensure smooth operation of the company.


Ferrell, Fraedrich and Ferrell. (2010). Business ethics: ethical decision making and cases : 2009 update. Mason, OH, South-Western Cengage Learning.

Markham. (2006). A financial history of modern U.S. corporate scandals: from Enron to reform. Armonk, N.Y., M.E. Sharpe.

Pagano and Pagano. (2004). The transparency edge: how credibility can make or break you in business. New York, McGraw-Hill.




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