The Health Authority-Abu Dhabi is a governmental regulatory body that is charged with the main responsibility of bringing sanity in the healthcare sector by ensuring that quality services are offered to the community. Its main function is to monitor the health status of the people and analyze the performance of various systems put in place.
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Additionally, the agency has an overwhelming task when it comes to enforcing the standards, inspection of regulations, and enhancement of world class-class services. For all these to be achieved, the agency has to develop awareness programs to sensitize the population about their rights as far as healthcare is concerned.
Before the inception of HAAD, the healthcare sector lacked order and private service providers charged exorbitant prices on poor quality services that never aimed at improving the living conditions of people. Currently, the organization is supposed to ensure that payments and compensation rates of the health system in the region are fair and competitive. Recently, a new law was enacted to curb the increasing cases of fraud and malpractice in the healthcare system.
The latest act is expected to guard the benefits of all individuals in the system, as well as supporting the practical wellbeing of all members. Through the law, the private sector is in a position to develop, as it has the freedom of offering various services at different prices. On the other hand, it is mandatory for the employer to obtain health insurance treatment for its employees, including their families.
Each company in the Emirate of Abu Dhabi has no option but to follow the new law to the later and any organization found to have violated the law is subjected to punitive measures (Williamson, 2002). This paper will look at the causes of poor governance in the HAAD and will suggest some of the ways through which the organization might improve its performance.
HAAD should act as the custodian of the public good meaning that it has to look into the welfare of each interested party, including the service providers and their various clients. Unfortunately, the agency never paid any attention to one of the major articles in the amended version of the law and this led to the violation of the rights and the privileges of one party-the employers.
The chief executive officer of the agency issued a warning erroneously calling on all companies to renew their licenses with the insurance firms, as soon as possible since violators were to be dealt with according as cases would be filed against them in the courts of law. The CEO went on to set the amount that would be payable to the government upon violation of the new policy.
The circular generated a heated debate in various levels of government, as well among private organizations and companies because no consultations were made and implementation of the policy would lead to great losses. Organizations had already drafted their budgets and they faced challenges trying to cope with the new demands. Within no time, the president of the UAE had to intervene by cancelling the order and instructing the agency not to interfere with the performance of companies.
This was upon an extensive consultative meeting with the affected companies in the Emirate of Abu Dhabi. The owners of various companies were concerned with the short notice given in the middle of the year when they had already drafted their budgets meaning that they were going to register huge losses because of poor planning on the side of the agency (Kaen, 2003).
The chief executive of HAAD and the entire board could not sit down and come up with the best strategy to address the issue at hand because of various reasons, as discussed below. First, the country suffers from poor leadership where a leader of any organization or government agency tends to believe that he or she has unlimited powers to draft and implement a policy without proper consultation. Leaders employ a very poor leadership approach where they declare themselves the overall managers whose decisions are final.
It is unsurprising to note that a leader refers to the organization as “my company” or might sometimes use words such as “my governance attitude” to mean his or her leadership style. The board has always conducted its activities without involving other important stakeholders in policy formulation and decision-making and as such, it stays beyond accountability and undertakes its function in whatever way it likes (Duggal, 2013).
The appointment of the board members and directors raises several questions and it is one of the main problems explaining why the agency does not follow the law in executing its important functions.
For instance, the board single-handedly appoints senior managers of the agency, which means that the process of recruitment does not abide by the rules of meritocracy where the individual is chosen based on his or her academic qualifications and experience (Chandrasekhar, 2011). Research shows that managers singled out without sufficient knowledge and experience will never aspire to fulfill the interests of all stakeholders, but instead they will be working for those who appointed them (Solomon, 2013).
Implementation of corporate governance principles in the Emirate of Abu Dhabi is a challenge because proprietorships are allowed to participate in capital markets, yet families control them. Similarly, the cronies of the local leaders run the public agencies and the main leadership style employed is autocratic where decisions are made without consulting any person, apart from the appointing authority. Lewin noted that this form of leadership style causes discontent among various stakeholders and it impedes policy formulation.
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Another problem is government’s participation in the board, as the law requires that the local government be represented in the agency board. Political leaders will never appreciate the views of their opponents no matter strong they might be mainly because this would reduce their popularity (Clarke, 2004).
Finally, the agency lacked quality human resources to assess the situation and advice the senior management accordingly. Studies show that the agency is made up of individuals who are never open to change, which means that they do not like professional challenges that are based on honesty and moral values.
Suggested Solutions for Improving Corporate Governance in the Emirate of Abu Dhabi
The executive (the presidency) should set up a commission of inquiry to investigate the conduct and the performance of the agency, with focus on the appointment criteria. The HAAD has to continue offering its services because the health sector cannot do without the regulator given the fact that fraudsters are ready to deprive citizens of their hardly earned cash by giving them leap services and poor quality products.
One of the recommendations is that disclosure be made mandatory for any insurance company that wants to do business in the Emirate of Abu Dhabi (Sifuna, 2012). Relatives and other close friends run the private companies in the region and they always influence decisions in the government agency, forcing junior managers to serve their interests instead of fulfilling the public interests. Several law making and enforcing institutions should be strengthened to ensure that all individuals abide by the set rules and regulations.
For instance, the police should have arrested the board’s chair and the CEO for contravening the law (Solomon, 2013). Unfortunately, the criminal justice system does not serve the interests of the common citizens, but instead it exists to fulfill the wishes and the desires of the mighty. Finally, the board has to be transparent in dealing with all stakeholders by ensuring that information is circulated at the right time.
Chandrasekhar, R. (2011). Mahindra Satyam-Restoring corporate governance. Richard Ivey School of Business Foundation, 2(9), 1-28.
Clarke, T. (2004). Critical Perspectives on Business and Management: Five Volume Series on Corporate Governance – Genesis, Anglo-American, European, Asian and Contemporary Corporate Governance. London: Routledge
Duggal, A. (2013). Independent directors are becoming important catalysts in good corporate governance. The Economist Times, 12(19), 1-15.
Kaen, F. R. (2003). A blueprint for corporate governance: Strategy, accountability and the preservation of shareholder value. New York, NY: AMACOM.
Sifuna, A.P. (2012). Disclose or Abstain: The Prohibition of Insider Trading on Trial. Journal of International Banking Law and Regulation, 27(9), 23-45.
Solomon, J. (2013). Corporate governance and accountability. Hoboken, N.J: Wiley.
Williamson, O.E. (2002). The Theory of the Firm as Governance Structure: From Choice to Contract. Journal of Economic Perspectives, 16(3), pp. 178–87, 191–92