Running head: Corporate Governance and Social Responsibility

DR. DORIGHT AND UNIVERSAL HUMAN CARE HOSPITAL
LEG 500
Professor

“Corporations are said to be “creatures of statute;” they exist because state laws allow human beings to organize themselves into entities that separate ownership and management functions as the outline above delineates. The business rule is there a presumption that making a business decision, the offices act in good faith with the belief that their actions is what is best for the company (Halbert/Ingulli, 2012 pg. 31).” “Dr. DoRight is now the President of “Universal Human Care Hospital,” where he is responsible for all departments within the hospital and the large amount of patients within the facility. He oversees a large number of employees as well and has a social responsibility to all sides. However, he quickly learns that patients within the hospital have been dying as a result of a variety of illegal procedures by doctors and nurses, and negligent supervision and oversight on their part (Halbert/Ingulli, 2012).” “Internal stakeholders participate in the co-ordination, resourcing, but also partnerships whereas: external stakeholders contribute their views and along with issues that are important to them as patients, service users, and members of the local community (Health Knowledge, n.d. para. 10)”. In response to question 1: Who are the stakeholders? Who are the persons/entities that are generally involved in the medical industry? In other words who are the people or category of persons, or entities that Dr. DoRight work with and would be answerable to? “A stakeholder is any group within or outside the organization that has a stake in the organization’s performance. Each stakeholder has a different criterion of responsiveness because it has a different interest in the organization (Daft, 2010, p. 139).” The organization’s performance affects stakeholders, but stakeholders can also have a tremendous effect on the organization’s performance and success. Some internal stakeholders that Dr. DoRight has to deals with are shareholders, managers and employees. “Human capital (employees) refers to the economic value of the combined knowledge, experience, skills, and capabilities of employees (Daft, 2010, p. 309).” According to Daft, there are a variety of internal and external stakeholders within an organization, but for Dr. DoRight three internal stakeholders would be employees who are focused on the day-to-day business operations up to and including customer service, human resources, doctors and nurses to name a few. Also, with management to help address the needs of various other internal and external stakeholders at Universal Human Care Hospital (Halbert/Ingulli, 2012).” Lastly, shareholders have a genuine interest, ensuring the hospital is running properly and profitably because without shareholders no organization could survive. These stakeholders play an important role in the running of the hospital whether it’s a shareholder who is vested in the hospital, employees or management who should have a genuine interests in running the hospital with the utmost of care and within regulations. The doctors and nurses who are partaking in illegal procedures and patients within the hospital dying or negligent supervision is unacceptable.
The external stakeholders Dr. DoRight answers to are patients, community organizations and corporations who have various reasons for doing business with the hospital. There are 20,000 patients at Universal Human Care Hospital whom are major external stakeholders, because they are the main source of income and what helps drive business at Universal Human Care Hospital. “A basic assumption of classic microeconomic theory is that the overriding goal of any business is to be profitable. As trustees (fiduciaries) of the shareholders, managers have a primary responsibility to try to improve the value of shareholder investment (Halbert/Ingulli, 2012, pg. 11).” Community organizations are supporters of hospitals because they provide basic to long-term care for the citizens of the community as well as corporations that have any dealings with the hospital. Corporations have an influence as well because they do major business with hospitals and these entities do not want to be tied to a company who is not following protocol when handling patients. The Universal Human Care Hospital has a large amount of patients; which helps drive business for the organization. These three external stakeholders are important to bringing money into the organization, but also that the community and other corporations are just as important because each has something different to bring the success of the hospital.
In response to question 2: What are the potential conflicts that exist between these stakeholders? Dr. DoRight’s loyalty will definitely be in conflict between the duties that he owes to internal vs. external stakeholders. As stated earlier in this paper internal stakeholders want to know that the hospital is being run according properly, but his loyalty seems to be on both sides to the doctors and nurses who are the ones responsible for illegally performing procedures on patients, however he won’t report them to anyone outside of the hospital. “Conflict refers to antagonistic interaction in which one party antagonistic interaction in which one party attempts to block the intentions or goals of another (Daft, 2010, p. 519).” Dr. DoRight has loyalty to both internal and external stakeholders, but is in the middle of conflict when it comes to either side, as they are equally important. “The duty of loyalty is the principle that directors and officers make decisions in their capacities as corporate fiduciaries, must act without personal economic conflict (Legal Information Institute, n.d. para. 1).” External stakeholders are just as important and the main conflict that could arise is that the families of the patients dying begin to file major lawsuits against the hospital because patients continue to die and nothing is being done about the situation. Dr. DoRight is essentially creating a situation between the two (2) sides; which could create a huge conflict of interest because he is not standing up for either side and reporting the illegal procedures doctors and nurses are performing. He has an ethical responsibility to both sides so the conflict is one that he’s creating because he won’t take a side and this could pit both sides against one another. In response to question three: Has Dr. DoRight fulfilled his ethical duty in reporting this issue to the Board? “While law concerns what we must do, ethics concerns what we should do (Halbert/Ingulli, 2012, pg. 1).” No patients means no business; which is why it’s important for Dr. DoRight to address the issue in at the hospital by doctors and nurses, and negligent supervision and oversight on their part (Halbert/Ingulli, 2012).” Companies having a responsibility to their stake or stockholders—is not new, most businesses prefer to be ethical so they stay out of crisis management mode— or until and unless the profit imperative simply becomes too strong. An organizations culture that supports ethical decision-making can be put at risk. Health care is essential to safe products and working conditions that not only attract customers, but also lower the internal costs of accidents. (Halbert/Ingulli, 2012, pg. 36-37).”
Dr. DoRight over a two (2) year period of time brought the issue of patients dying due to illegal procedures done by doctors and nurses, and negligent supervision and oversight on their part up to the Regional Director Compliance Manager and Executive Committee in January 2009 (Halbert/Ingulli, 2012).” Even though he repeatedly mentioned this at meetings a long period of time went by and nothing was done; which means patients are still dying and the hospital staff responsible for taking care of these patients are continually getting away with these procedures. It is the responsibility of all stakeholders involved to take an interest in an ethical way ensuring that it’s the best decision for the hospital and not one entity. It is the responsibility of Dr. DoRight to ensure the safety of patients within the organization, if he has to be a whistle blower by reporting the deaths and illegal procedures done on patients to an outside organization and ask them to investigate the hospital then he has done the job he was hired to do and that is be President of Universal Human Care Hospital while having the best interest of all involved at the forefront of his day-to-day interactions within his job.
“Whistleblowers are people who decide to report unethical or illegal activities, usually activities under the control of their employers. What unites all whistleblowing is the urge to bring a disturbing situation to light, the urge to bring about some corrective actions (Halbert/Ingulli, 2012, pg. 46).” Dr. DoRight’s job as President is to ensure a safe environment for all entities involved, patients are external stakeholders that help drive business and don’t expect to go into the hospital to have an illegal procedure performed on them resulting in their death. Dr. DoRight has a huge responsibility to one of the most important stakeholders and should have pressed the Executive Committee to perform their investigation as quickly as possible so that the mortality rate could decline. He has to blow the whistle on the length of time the hospitals Executive Committee has taken or not taken to rectify this situation and the deaths that have occurred over two (2) years and continue to occur.
In the business judgment rule, the presumption is that in making a business decision, directors of a corporation act on an informed basis, in good faith and in the honest belief that the action taken is in the best interests of the company (Halbert/Ingulli, 2012, pg. 31).” Dr. DoRight should have done more in pushing the issue with the Executive Committee, whether they investigated the allegations and if there were any findings from the information he had provided to them. It is the corporation’s responsibility to ensure the safety of the patients within the hospital, but to also investigate why doctors and nurses are performing illegal procedures and why it has gone on for so long. Dr. DoRight’s ethical duty hast not been fulfilled because he has not reported the things going on at the hospital and he should not accept the award for “Medical Business Executive of the Year” in 2011. This is mainly because he did not ensure the safety of or fulfill his ethical duty to the patients of “Universal Hum Care Hospital.”
Question four describe and explain two of the ethical practices covered in Chapter 1- deontology and utilitarianism. The utilitarian and deontological frameworks are inadequate in a fundamental sense; while both set forth logical bases for deciding what might be called moral minima—the floor beneath which no one should drop in terms of ethical choices—they are silent on the concept of moral excellence. They focus on the moral acceptability of actions (Halbert/Ingulli, 2012 pg.20).”
Deontology is marked to universal principles—respect for life, fairness, telling the truth, keeping promises—no matter what the consequences. At the core of the approach is the understanding that moral action should be guided by, certain overriding rights and duties. Immanuel Kant believed that human beings could reason their way to a set of absolute rules for their behavior; a person should never lie because it seems to produces a good result. He also believed that everyone should be treated with respect as the equal of every other and vice versa (Halbert/Ingulli, 2012 pg. 18).”
In using the deontology process has no respect for life or fairness because he has been aware for two (2) years that patients have been dying at the hands of doctors and nurses. Even though he has reported it, it is his ethical duty to stay on top of the matter and inform anyone he needs to about the situation that has been allowed to continue for an unacceptable period of time. He has a responsibility to each patient that enters hospital allowing them the right to live and be cared for in the highest professional manner possible.
“Utilitarianism is the principle of the right way to behave in a given situation is to choose the alternative that is likely to produce the greatest overall good. This type of analysis evaluates the short and long-term consequences to stakeholders while paying close attention to the size of the group, the nature of the effects on each group, and the likelihood that particular consequences would actually ensue. Ultimately, if the benefits that flow from a decision appear to outweigh the harms, we would identify that decision as ethical. As an ethical theory, however, utilitarianism asks us to compare the harms and benefits of an action not just for the decider, but for all who will be affected by the decision. (Halbert/Ingulli, 2012 pg.14).” Dr. DoRight has not acted in a just way and as the President of a Hospital he has an appointed duty to ensure the safety for the utmost care of concern for all entities involved.
Even though Dr. DoRight reported this information to the Executive Committee, he has not done his job ethically in reporting these incidences to an organization that could help determine the outcome of the situation and stop the illegal procedures doctors and nurses who are trusted by patients from performing on them ultimately resulting in death. Applying the utilitarian principle would be the best way for Dr. DoRight for him to go because it analyzes the short and long-term consequences of the situation and at this point there has been more damage done because that’s two (2) years of deaths and potential build up of lawsuits that the families of the deceased could file if they found out the truth behind why their beloved relative is no longer living. At some point, it seems as though Dr. DoRight even though he seems concerned was in it for self and not or the benefit or greater good of the entire organization. Otherwise he would have gone to any lengths to make sure the deaths ceased immediately and began to save lives; which is what hospitals are known for, instead of contributing the deaths of patients.

References
Halbert, t., & Ingulli, E. (2012). Law & Ethics in the Business Environment (7th ed.)
Mason, OH: South-Western Cengage Learning
Daft, R. (2010) Management (9th ed.) Mason, OH: Cengage Learning
Identifying and managing internal and external stakeholder interest. (n.d.) Retrieved from: http://www.healthknowledge.org.uk/public-health-textbook/organisation-management/5b-understanding-ofs/managing-internal-external-stakeholders Legal Information Institute. Duty of Loyalty. Retrived from:
http://www.law.cornell.edu/wex/duty_of_loyalty