Organizational Ethics:

Joint Ventures, Partnerships

&

Cooperation

Presentation Outline

• Review definition of a joint venture

• Review ERDs relevant for considering join ventures

• Briefly consider principles governing cooperation

• Consider relevant questions to ask before entering joint ventures

• Case discussion and questions

Definition of a Joint Venture

• Any formal relationship with another organization(s) in which the parties share a common mission or business purpose and share the risk and reward, regardless of the extent or allocation of governance control.

• Concept has potential applicability to other collaborative relationships (including, but not limited to networks, management contracts, and routine contractual relationships).

Forming New PartnershipsDirective 67• “Decisions that may lead to serious

consequences for the identity or reputation of Catholic health care services, or entail the high risk of scandal, should be made in consultation with the diocesan bishop or his health care liaison.”

Forming New PartnershipsDirective 68• “Any partnership that will affect the mission or

religious and ethical identity of Catholic health care institutional services must respect church teaching and discipline. Diocesan bishops and other church authorities should be involved as such partnerships are developed, and the diocesan bishop should give the appropriate authorization before they are completed. The diocesan bishop's approval is required for partnerships sponsored by institutions subject to his governing authority; for partnerships sponsored by religious institutes of pontifical right, his nihil obstat should be obtained.”

Forming New PartnershipsDirective 69

“If a Catholic health care organization is considering entering into an arrangement with another organization that may be involved in activities judged morally wrong by the Church, participation in such activities, must be limited to what is in accord with the moral principles governing cooperation.”

The Principles of Cooperation

• Formal

• Material– Immediate

• Necessary & Sufficient

– Mediate

• Scandal

Forming New Partnerships

Directive 70

• “Catholic health care organizations are not permitted to engage in immediate material cooperation in actions that are intrinsically immoral, such as abortion, euthanasia, assisted suicide, and direct sterilization.”

Forming New PartnershipsDirective 71• “The possibility of scandal must be considered when

applying the principles governing cooperation. Cooperation, which in all other respects is morally licit, may need to be refused because of the scandal that might be caused. Scandal can sometimes be avoided by an appropriate explanation of what is in fact being done at the health care facility under Catholic auspices. The diocesan bishop has final responsibility for assessing and addressing issues of scandal, considering not only the circumstances in his local diocese but also the regional and national implications of his decision.”

Forming New PartnershipsDirective 72

“The Catholic partner in an arrangement has the responsibility periodically to assess whether the binding agreement is being observed and implemented in a way that is consistent with Catholic teaching.”

Questions to Ask

• The reasons for the joint venture. – Does the proposed joint venture enhance

and extend our ministry, Mission and Values and improve quality of services?

– Is there community need for this joint venture?

– Can the need be met only by the joint venture?

– If a primary reason is to generate capital, is this at odds with Mission and Values?

Questions

• Activities of the joint venture, and the activities and reputation of the potential partner?– Are the proposed partner’s core business

and core practices aligned with our Mission and Values?

– What is the partner’s reputation and would it affect our ministry positively or negatively?

Questions

• Behind all of these practical concerns sits a unifying moral concern: – With whom can we legitimately be

involved?

Questions– Description of the joint venture– Full disclosure

• Who will have control and decision making authority?

• Who has management control? What will the reserved powers be?

• What about exit strategies that keep partners whole?

Questions

• What is the stated rationale for the joint venture?– Is the joint venture extending our ministry?– Is the primary reason to generate

capital/cash advantages?

Questions

• Does this partnership advance the Mission and Values of our organization?– Does the partnership meet an unmet

community need? – Does the joint venture duplicate services?

Or, does it increase the breadth of services

Questions• What are the mission and core values of the

potential partner? Are they aligned with our Mission and Core Values?– Does the potential partner have a code of conduct,

or ethics programming? If so, please explain.– What is the partner’s reputation and would it affect

our ministry positively or negatively?– Are the proposed partner’s core business and

values aligned with our mission and values?– What is the new partner’s charity care and

community benefit practice?

Questions What are the alternatives to the

potential partnership?

Questions• Who are the primary and secondary

stakeholders? How does the proposed joint venture affect the following:– Patients?– Employees?– The institution?– Community?– Sponsors?– Local church?– Physicians?– Partners that may have been excluded?– Those who are poor? – The joint venture partner?

Areas for special consideration• Research: • Employment: Environment:• Activities: Does the potential partner earn greater than 20% of is total

business revenue through the production or sale of:– Contraceptives– Military weapons– Biological/Chemical or nuclear weapons – Tobacco products– Alcohol Products– Gaming– Pornography

• Abortion: • Healthcare: Is the partner a for profit-healthcare provider?• Community benefit: • Does the organization have policies, practices, or partnerships that are

known to be at odds with the Catholic moral tradition?• In your judgment, does the proposed joint venture create any

immediate material cooperation? If not is there any likelihood of scandal?

Conclusions

• Put your best foot forward– Make the case

• Direction of collaboration counts

• Make independent judgment of scandal before approaching bishop

• Never catch a bishop blind-sighted

Case Discussion• Recently St. A’s hospital has been

bombarded from questions about its support of the March of Dimes (MOD). Staff and the community have made allegations that the March of Dimes supports policies that are antithetical to Catholic Church Teaching and the ERDs. They are demanding that all relationships with the March of Dimes cease. A review of relationships indicates the following cooperation:

Case Discussion• MOD is currently selecting a NICU in each state which will be permitted

to use the MOD-developed program and educational materials aimed at reducing the incidence of prematurity and improving infant health and mortality. Being the MOD designated NICU will provide St.A with the valuable program and educational materials and will also serve as an excellent marketing opportunity.

• A MOD grant provided funding for a St. A prenatal education and care initiative in a nearby county that has no Medicaid OB providers. The grant project was aimed at two populations of patients: (1) Spanish speaking childbearing families that seek treatment at an outreach clinic at a Catholic church; and (2) childbearing women in a rural area in the same county.

• St. A’s Marketing Dept. has paid an annual fee to MOD in order to have the St. A’s name and logo appear on banners and materials associated with the MOD infant health campaigns.

• Two of St. A's perinatal program leaders currently serve on MOD boards. The boards are aimed at infant health initiatives rather than MOD research activities.

• St. A does makes contributions to the MOD fund-raising campaign though employee contributions and other fund raising events.