Trends

An updated version of this essay appears on the Nothing but the Truth about Quality book.

As the Enron scandal unfolded, it was tempting to believe that those terrible practices could never happen in healthcare. Alas, Dr. Westgard has examined the facts of the Enron case and seen the hidden face of our healthcare industry. We have much of Enron in our laboratories, our institutions, our regulators, our control and diagnostics manufacturers, even in our professional standards. Read this essay to see what we can learn -- and unlearn -- from the Enron scandal. (Preview)

Enron and Quality - When Opposites Detract!

• Quality and values
• Enron - significance in a word
• Lack of business leadership and values
• Mystifying charges and accounting practices
• Undue influence on rules and regulations
• Undue influence to delay rules and regulations
• Undue influence on standards and practices
• Business conflicts in auditing and inspection
• Enough is enough!
• References

February 2002

Enron - a verb meaning to hide liabilities, cover-up problems, and keep debt and delinquency off the books.

The Enron case shows that truth can be more unbelievable than fiction. Enron is another very public example of big business going astray because of the lack of professional responsibility and inadequate government regulation. Enron is even more interesting than the Firestone tire example because Enron made a lot of its money by providing services, not products. In that sense, the Enron experience should open some eyes in healthcare organizations because we are also service oriented. We tend to think we're different from businesses that produce products (like Firestone) and, therefore, those examples don't apply to us. Maybe we can learn something from Enron.

Many people suffered financial losses from the Enron bankruptcy, most noticeably the small investors and company employees, not the managers, officers, directors, bankers, lawyers, or accountants! Enron certainly gave credence to the "greed is good" philosophy espoused by Michael Douglas in the popular 90s movie Wall Street.

Even the politicians who took money from Enron realize something major went wrong with our free market system. As they conduct their hearings, congressmen are expressing their outrage at Enron's top managers, their supposed lack of knowledge of what was happening within the company, and the lack of leadership and values that allowed the business to go out-of-control.

Quality and values!

Enron memorabilia is now being widely sold over E-Bay. One of the hottest items is the Enron Code of Ethics Manual, which is a very rare item, as you might imagine. One copy of this rather short book went for over $50 last week. The Enron "values photo cube" is more readily available, just $9.99 last week. One now occupies a special place on my desk to remind me of the importance of integrity, communication, respect, values, and excellence.

Quality has a lot to do with these values. Quality is about doing what's right! Doing the right things right is one of the simplest and most effective definitions of quality. Doing something wrong, deliberately wrong, is the highest affront to quality and the values needed to achieve quality. That's why this Enron debacle is relevant to our interests in quality management. Any culture that makes Enron possible makes quality difficult. If that culture is widespread and represents corporate America, not just Enron, then it becomes more and more difficult to achieve quality in healthcare.

Significance in a word

The importance of the Enron financial implosion is evident by a new word that has already crept into our language - "enron," a verb meaning to hide liabilities, cover-up problems, and keep debt and delinquency off the books. A more proper definition that may be found in Business Schools and MBA programs is "to aggressively enhance profits and reduce losses, remaining in compliance with the laws, while influencing the government to change the rules and regulations as necessary to maximize financial opportunities and minimize liabilities."

Enron's trademark, now known as the "crooked E," has come to symbolize the art of hiding problems, adhering to the letter of the law, keeping the public from knowing what's really happening, making all the money you can now, regardless of the long term consequences. It is short-term thinking at its finest and fits well with the business practices in healthcare and healthcare laboratories. We've finally got a business model that fits these practices, unfortunately it's Enron's crooked E, fallen flat on its back!

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This complete article and many more essays can be found in the Nothing but the Truth about Quality manual, available in our online store. You can also download the Table of Contents and additional chapters here.