Perez, Kenneth M.

22-54459 BSA 1204

GED 107 – ETHICS TTH 8:30-10:00 AM
The Bon Secours Richmond Contract Renewal

I. Executive Summary
Central Virginia's leading not-for-profit healthcare system is Bon Secours Richmond. In
the 1990s, Bon Secours Richmond Health System contracted with every local healthcare
insurance. The organization's price structure was clearly lower than comparable hospitals' 25–
40%. This is because less fortunate patients may afford the organization's health care and to
acquire more market share with the increased patient volume owing to low cost. Throughout the
1990s, most health plans struggled to grow and had few options. They can merge, buy, or open
restricted HMO Networks. Aetna, one of Bon Secours' collaborating healthcare insurers, merged
with US Healthcare and acquired Prudential and NYLCare's central Virginia business to cut
costs and allow patients to use other excluded hospitals. The Bon Secours Richmond setback
began here. Aetna hid this tactic that hurt Bon Secours from its commercial partners. Aetna
failed to take responsibility for their actions, costing Bon Secours millions. Bon Secours
Richmond had to decide whether to cancel the contract with Aetna or accept the new price
structure, considering that they would lose 8% of revenue, jeopardizing their wage rise and
capital investment plans. In the end, Bon Secours consented to the planned price drop, which was
a mistake because Aetna was the only organization to gain. Bon Secours ended its deal with
Aetna.

The two organizations' opposing agendas were one of the main causes of workplace
moral difficulties. While Aetna concentrated on income, Bon Secours considered all
stakeholders, how it would affect them, and how to cut costs while still providing high-quality
patient care. Aeta's morality may be dubious after additional analysis. Whether they lied or not,
Aeta suppressed crucial information from Bon Secours, which led to a further setback for their
organization and eventually due to a lack of contingency planning. The easiest approach to tackle
this problem is to demand openness and accountability and follow Bon Secours' contracts,
especially since third-party health insurance firms control Bon Secour’s earnings and can
manipulate the situation to their advantage. Second, creating a better strategy to avoid mistakes
like Bon Secours's decision to accept Aetna's price drop, caused more problems for the
company. Finally, fostering local healthcare provider competition. Long-term strategic
cooperation with diverse business divisions for mutual economic gain can create culturally
competent care and avoid bad patient care.

II.Statement of the Problem

Bon Secours lacks good decision-makers, which is a major issue. Most, if not all, company
decisions have advantages and cons that must be weighed when choosing the best option for
the company. First, contracting with all central Virginia insurers was risky. Most definitely
not a bad one, especially since they were able to accumulate a good amount of benefits from
it, but not have to track every single insurer to ensure the safety of Bon Secour and without
securing if the insurer reflects or at least has similar ethical viewpoints was something to
ponder. Well, a hospital has so many obligations that neglecting something is typical. Yet,
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realizing that Bon Secour is a not-for-profit organization that operates through "profit"
should be enough to prioritize income since without it, how can Bon Secour serve its
patients? This long-term issue cost Bon Secour millions of dollars which could have helped
with employee remuneration, service quality, and business expansion. Another issue was that
Aetna and Bon Secours have competing goals. It is clear that Bon Secours focuses more on
how much and how little their community can spare for healthcare that they were able to
accept a lower charge structure to attend to less fortunate patients, unlike Aetna, whose main
goal was to earn revenue that they even chose to merge with a different healthcare provider
without tapping on Bon Secour, causing the latter to lose a huge sum of money. Bon Secour
resolved the issue by discontinuing their Aetna contract.

III. Decision Criteria and Alternative Solutions

Demand accountability. Before signing a deal with a third-party firm, both parties
should agree to be transparent with their business transactions and choices, especially
if they could affect each other. It's no secret that businesspeople may behave without
considering how their decisions would affect other stakeholders to make a profit,
therefore accountability is as crucial, if not more, in partnerships. As Bon Secours
lost many million dollars, Aetna should bear responsibility for how the network
provider changes affected them. The story resonates with Aetna and Bon Secours for
neglecting to assess their contracts periodically, as they should. A million dollars was
too much for Bon Secours employees to be stupid.
Improve the strategy team. After accepting Aetna's price cut, Bon Secours' internal
strategy team may be ineffective. After losing so much income, it was surprising that
Bon Secours accepted Aetna's offer after having the data to better evaluate the risks
and advantages of each decision. They also underestimated Bon Secours' financial
ability to lose Aetna, which helped them refocus following the incident.
IV. Recommended Solution, Implementation, and Justification
Transparency and accountability are the easiest and most crucial of the three methods. It
could be formed verbally between two businesses or legally through a contract to prevent
one party from acting against the other's wishes or ethics. In contrast to the first solution,
establishing a more effective strategy team is more labor-intensive because it requires
reevaluating the existing strategy teams and assessing whether they are suitable for the job.
If not, it is only logical to hire another set of teams for the betterment of the organization.
Finally, creating healthy competition between local healthcare providers may be the hardest
to implement, but communicating with each organization to create a safe space where they
can freely share knowledge and learn new skills to provide high-quality healthcare to the
community, especially the underprivileged, is essential.

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Leading Innovations, Transforming Lives, Building the Nation