Masterson (2017) noted that non-profit or for-profit status does not indicate the status or lead to
the health system’s profitability. In fact, several of the most profitable hospital systems in the
U.S. are not-for-profit systems. However, the health system’s location, size, ability to scale, and
share of the local market dictates its profitability, and non-profits are, in many ways, facing the
same struggles that for-profits are (Masterson, 2017). Both offer charity care, but unlike for-
profit entities, not-for-profits must prove they provide a community benefit because non-profit
hospitals are community-oriented institutions, driven by mission and deemphasizing shareholder
returns as a consideration of operational business decision-making (Kahn, 2019). In addition,
Kahn (2019) wrote that the Affordable Care Act requires non-profit hospital systems to report on
the provision of charity care and other community benefit investments providing communities
with leverage to shape their health care systems in ways that benefit the most vulnerable
residents.
Although much political jousting gives lip service to healthcare, many leading health policy
experts agree that hospitals are the driver of runaway medical cost inflation, which is largely
ignored by pundits and policymakers alike (Rosenthal, 2019). Rosenthal (2019) wrote that Most
economists think hospitals could do just fine with far less than they get today from private
insurance and, while on paper many hospitals operate on the thinnest of margins, that is in part a
choice, resulting from extravagance including staffing choices. “While non-profit and for-profit
hospitals are engaged in the same fundamental activity—patient care—tax status leads to
divergent approaches to strategy and governance (Cheyney, 2019).” Maybe because cost-
consciousness is a hallmark of for-profit health systems, surprisingly, findings indicate that non-
profit hospitals pay all hospital professionals higher than for-profit hospitals (NurseLabs, 2015).
“Staffing issues are more of a challenge for smaller, rural hospitals that are generally less able to
compete for nurses or pay for overtime, traveling nurses, and premium pay relative to their
larger, more urban peers, and the situation is not expected to subside any time soon (Holloran,
Repucci, & Sonola, 2021).”
Ninety percent of the hospitals in Colorado, where I live, are classified as non-profit. Even so,
Colorado Hospitals are high costs, high prices, and high profits (Colorado Department of Health
Care Policy & Financing, 2021). While profits soar, matching increases in charity care programs
are not following. If a new non-profit system were to open in Colorado, they could offer more
generous financial assistance eligibility criteria to reduce the financial risk exposure to
disadvantaged, uninsured, or underinsured patients in the Colorado Springs area. The Colorado
Department of Health Care Policy and Financing (2021) suggested there is an opportunity to
consider minimum requirements for community investment contribution levels, collaboration on
investment priorities, and a long-term collaborative planning approach that could be adopted to
address this trend.
References:
Cheyney, C. (2019, September 3). 3 strategic differences between non-profit and for-profit
hospitals. Retrieved March 31, 2022, from Health Leaders Media:
https://www.healthleadersmedia.com/clinical-care/3-strategic-differences-between-nonprofit-
and-profit-hospitals
Colorado Department of Health Care Policy & Financing. (2021). Hospital cost, price & profit
review. Colorado Department of Health Care Policy & Financing. Denver: Colorado Department of
Health Care Policy & Financing. Retrieved March 31, 2022, from
https://hcpf.colorado.gov/sites/hcpf/files/Hospital%20Cost%20Price%20and%20Profit%20Review
%20Full%20Report_withAppendices-0810ac.pdf
Holloran, K., Repucci, S., & Sonola, O. (2021, Octoboer 27). Not-for-profit healthcare staffing
shortages has long-term effects. Retrieved March 31, 2022, from Fitch Ratings:
https://www.fitchratings.com/research/us-public-finance/not-for-profit-healthcare-staffing-
shortage-has-long-term-effects-27-10-2021
Kahn, K. (2019, September 10). Now do non-profit and for-profit hospitals differ? It's
complicated. Retrieved March 31, 2022, from Nonprofit Quarterly:
https://nonprofitquarterly.org/how-do-nonprofit-and-for-profit-hospitals-differ-its-complicated/
Masterson, L. (2017, May 25). Non-profit, for-profit hospitals play different roles but see similar
financial struggles. Retrieved March 31, 2022, from Healthcare Dive:
https://www.healthcaredive.com/news/nonprofit-for-profit-hospitals-play-different-roles-but-
see-similar-financ/442425/
NurseLabs. (2015, September 2). How for-profit hospitals affect staffing. Retrieved March 31,
2022, from NurseLabs: https://nurseslabs.com/how-for-profit-hospitals-affect-staffing/
Rosenthal, E. (2019, September 5). Analysis: how your beloved hospital helps to drive up
healthcare costs. Retrieved March 31, 2022, from Kaiser Health News (KHN.org):
https://khn.org/news/analysis-how-your-beloved-hospital-helps-to-drive-up-health-care-costs/
