case study on leadership and ethics problems

case study on leadership and ethics problems

Problem

The case study presents several leadership and ethics problems that could potentially bring the healthcare services provider down. The first ethics problem is financial dishonesty whereby the company’s financial department has been colluding with external parties to siphon revenues from the organization. Additionally, these unscrupulous employees have corrupted the financial reporting and auditing framework such that reporting these misdeeds is a problem. These actions by the financial and administrative teams are tantamount to corruption and fraud.

The second ethical issues plaguing the healthcare services provider is malpractice. Since the United States government had been providing health insurance for its citizens, many health services providers have taken advantage of these services through insurance fraud (Bass & Steidlmeier, 1999). HealthSouth, the company under scrutiny, had in the past been in trouble for overcharging Medicaid for health equipment meaning the insurance companies and government funds would cater to these overcharged costs. The results are that the company owner or other senior executives would pocket these extra costs in a severe instance of insurance fraud. Therefore, malpractice was an ethical issue at the company.

Leadership problems plaguing the company include lack of integrity whereby the company’s executives in the finance and administration departments are corrupt individuals. When an organization’s leadership lacks integrity, not only does the entire workforce become compromised, the organization’s critical resource pool could also be at risk (Bass & Steidlmeier, 1999). Financial management employees, as well as company accountants, were colluding with external suppliers and business partners to rip off the company. Additionally, the company’s administration was involved in insurance fraud.

Another leadership problem present at the company is disrespect. Mr. Scrushy’s treatment of his employees at various levels in matters related to hygiene was disrespectful. He was known to run his fingers on the employee’s desks and wipe off any dust on their shirts to communicate the need for more cleanliness.

Analysis

One element of transformational leadership present at HealthSouth is the idealized influence. This element means organizational leaders must impact their peers and subordinates with the right examples and influence (Elliott & Asghar, 2014). The founder of the company and CEO Mr. Scrushy had started it from humble beginnings and grew it into a significant provider of a wide variety of health services with more than 1800 outlets. His charismatic and risk-taking practices had accorded him operational success with a lot of benefits. However, the executives at the company’s finance and procurement departments were eroding these positive traits by engaging in corruption. Mr. Scrushy’s disrespect towards his subordinates was also detrimental to his personality among his employees.

The second element of transformational leadership is inspirational motivation whereby the organizational leader inspires and imparts confidence as well as a sense of purpose in the workforce (Elliott & Asghar, 2014). HealthSouth’s CEO and founder had become one of the highest paid healthcare administrators in the United States by focusing on the essential aspects of his objective. His charismatic attitude coupled with an appetite for business risk all propelled him to success while inspiring his subordinates and business peers. However, the actions of the CEO with regards to specific malpractice issues in the company diluted his image. His corrupt executives also destroyed both his image and that of the company.

Another element of transformational leadership is intellectual stimulation whereby the business leader challenges his or her peers and subordinates to think progressively and embrace innovation (Elliott & Asghar, 2014). Mr. Scrushy had built one of the most successful progressive healthcare providers in the country by identifying gaps in the healthcare needs of the Baby Boomer generation. However, these achievements were under threat from the recent malpractices at the company involving unscrupulous procurement, accounting, and insurance practices.

The last element of transformational leadership is the individualized consideration which entails learning and adopting the individual needs of all the organization’s employees (Elliott & Asghar, 2014). The company’s CEO and its executives were keen to learn the best avenues from which to develop its human resources. However, their actions contradicted these objectives and had the potential of ruining careers when certain employees such as Michael Vines were involved in these deals.

Compliance principles are an essential part of the healthcare industry as each service provider must adhere to the generally accepted and adopted principles (Bass & Steidlmeier, 1999). However, HealthSouth’s management was involved in malpractice which is a serious ethical issue in the healthcare management environment. Insurance fraud not only undermines the government’s attempt to subsidize costly health care in the United States, but it also demonstrates the greed with which large healthcare services providers operate.

Conclusion and Recommendations

One of the most potent solutions to malpractice and mismanagement in healthcare services companies is a total overhaul of the management. All employees involved in the ethical, leadership, and legal issues pointed out must be identified through thorough investigation and reported to law enforcement officials. Additionally, they must be fired from their positions regardless of if they are junior accountants or the CEO himself. Finally, the board of directors must redraft its strategy on organizational and industry ethics, as well as performance oversight to provide checks and balances for the entire company’s workforce.

References

Bass, B. M., & Steidlmeier, P. (1999). Ethics, character, and authentic transformational leadership behavior. The Leadership Quarterly, 10(2), 181-217. doi:10.1016/s1048-9843(99)00016-8

Elliott, K., & Asghar, A. (2014). Transformational Leadership in Science Education. Reframing Transformational Leadership, 99-115. doi:10.1007/978-94-6209-638-7_7