Importance of Laws and Ethics in Healthcare Administration

Everybody hopes their doctors are aware of current laws and ethical concerns in healthcare. After all, without these guidelines, medical malpractice would go unpunished, and more importantly, lives would be lost. All physicians take an oath to “do no harm,” and the concept seems simple. However, the reality of laws and ethics in healthcare is much murkier.

Given that doctors are busy with patient care every day, another professional is necessary to oversee the ethical operation of a medical institution. Enter the MBA in healthcare administration. Healthcare professionals with an MBA in healthcare know the intricacies of medical ethics and laws as well as ways to ensure compliance with these important directives. The following are some of the most important laws affecting healthcare and its ethical applications.


Perhaps the most well-known medical law is the Health Insurance Portability and Accountability Act, or HIPAA. The majority of patients understand that HIPAA protects their privacy with regard to medical treatment and records. However, HIPAA goes beyond that protection, too. HIPAA also “Provides the ability to transfer and continue health insurance coverage [when. . .] workers [. . .] change or lose their jobs; reduces health care fraud and abuse; and mandates industry-wide standards for health care information on electronic billing and other processes” (California Department of Healthcare Services). Given the broad range of HIPAA and the complexities of implementing HIPAA guidelines, it is no wonder a separate professional with an MBA in healthcare is necessary to ensure healthcare organizations are in compliance.

False Claims Act

The False Claims Act covers fraud perpetuated against the government. While you do not need an MBA to know that fraud is unethical, complying with the false claims act is a bit more involved. Administrators are often the last line of defense for a healthcare organization in avoiding overbilling on necessary tests or even ordering unnecessary tests for patients. As Melissa Freerks, writing for Physicians Practice, has noted, the False Claims Act even authorizes “people who are not affiliated with the government to file actions on behalf of the government.” This provision protects ethics whistleblowers from retaliation by their employers.

Stark Law

The Stark Law is one that perhaps only those with an advanced understanding of healthcare administration and law may have heard of. The Stark Law is another safeguard against fraud. Unethical practitioners may attempt to defraud the government by referring a patient to a family member or financial partner, whereby the referring physician receives some financial reward. This sort of unethical practice could be rampant, were it not for administrators keeping it in check. Most online MBA programs in healthcare cover this form of unethical behavior and how to prevent it.

Anti-Kickback Law

While breaking the Stark Law mentioned above is not a criminal offense, failing to comply with the Anti-Kickback Statute is. The Anti-Kickback law is one that physicians, administrators and facility owners alike should be familiar with. This federal law “prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal health care program business.” North Texas saw a high-profile example of this in November 2016 when 21 people were indicted for allegedly taking part in a kickback scheme.

These are only a few of the complex laws and ethical guidelines that healthcare workers must follow. Given the intricacies of healthcare law and ethics, healthcare organizations hire professionals to ensure compliance, leaving doctors more time to concentrate on treating their patients. Without these often-overlooked healthcare administration professionals, doctors would lose time studying new legal and ethical guidelines, rather than focusing on medicine.

Many of these healthcare administrators earn an advanced degree such as an MBA before joining a healthcare organization. For those already working, an online MBA program may be the right option. The flexibility of online courses allows these professionals to immediately apply what they learn in the program and help to eradicate fraud and other unethical practices from the healthcare industry.

Learn more about the Texas A&M-Corpus Christi online MBA in Healthcare Administration program.


California Department of Health Care Services: Health Insurance Portability and Accountability Act

Physicians Practice: Four Major Laws Affecting Doctors

AHLA: Anti-Kickback Statute

The Dallas Morning News: Doctor-owners, execs of bankrupt Forest Park hospital chain indicted in massive kickback scheme