Week 2 Discussion Post 18 Document

BothFor-profitandnonprofithospitalsprovidepatientcare,but

therearesomedifferencesinthewaytheyfunction,theirfocus,

governingstrategies,etc.Nonprofithospitalsarecommunity-

orientedandaretheretomeettheneedsofacommunitywhereas

for-profitsaredrivenbyamodelofprovidingbenefitstotheir

shareholders.For-profithospitalsaremorecost-conscious,theymay

notofferservicesthatmayresultsinanoperatinglosseventhough

thoseservicesmaybeneededinthatcommunity.For-profitsliketo

operateatalowercoststructure.Nonprofithospitalshavealong-

termapproachwhereasfor-profitsdonotoperatewithlosses,they

maysellthecompanyorlookforanotherbusinessventureifthey

cannotgenerateaprofit,theyarefocusedontheshort-term

profitabilityoftheorganization.Nonprofithospitalsarefocusedon

thelong-termoutcomesofthehospitalandarewillingtotakesome

short-termlosses(Cheney,2019).

Not-for-profithealthcareorganizationsreceiveaspecialtax

treatment.Theyareeligiblefortax-deductibledonationsandare

exemptfrompayingcorporatetaxesandpropertytaxes.Another

differenceinregardtotheNotforprofit(NFP)hospitalsandfor-

profit(FP)hospitalsisthedifferencesinthepricingstrategies.The

NFPorganizationsarefocusedonnetrevenueswhereasFP

organizationsfocusonprofits.Thisaffectstheperformanceofthese

organizationsintermsofthecost,quality,efficiencyinthedelivery

ofhealthcareservicesTheNFPhospitalsaremoreconcernedwith

communityneedsthanprofitmotives.Hospitalshaveresponsibilities

tothecommunitiestheyserveandareexpectedtoprovidehealth

caretoallirrespectiveoftheirabilitytopay.NFPhospitalsare

thoughttoutilizemoreresourcesforresearch,education,and

health-promotingactivities,butthiscanvaryamongthedifferent

NFPorganizations.Teachinghospitalsmightbeinvolvedinclinical

researchwhereasalocalcommunityhospitalmighthavenoresearch

activities.Also,medicaltrainingisprovideddifferentlyamongvarious

NFPhospitals,mostofthemedicaltrainingmightbeinthe

Universityaffiliatedteachinghospitals.Tertiarycarefacilitiesarealso

usuallyrunbyNFPhospitalsastheseprovidethemoreexpensive

treatmentand,inmanycases,canbeuncompensatedcare,FP

hospitalsusuallydonottakethoseoperativerisks(Rotariusetal,

2005).

For-profitfacilitiesandserviceschargehighercostsand

providelowerqualitycomparedwithnot-for-profithospitals.For-

profithospitalswouldbelookingformaximumreturnontheir

investmentsandthereisachancethatexcessdebtifaccumulated

couldresultinbankruptcyortheclosingofthehospitalinan

underservedarea(Geyman,2021).

Thus,buildingafor-profithospitalinacommunitycouldresultin

increasedcostsandunavailabilityofallservicesandpatientsmay

havetodependonothernonprofittertiaryhospitalsandthereisa

likelihoodofthehospitalclosingifitcannotgenerateaprofit.Onthe

otherhand,anacademichealthcenterinacommunitywillprovide

morespecializedservicesandtrainfutureclinicians,andbeinvolved

inclinicalresearch.

References

Cheney,C.(2019).3StrategicDifferencesBetweenNonprofitand

For-Profithospitals.Retrieved

fromhttps://www.healthleadersmedia.com/clinical-care/3-strategic-

differences-between-nonprofit-and-profit-hospitals



Geyman,J.(2021).Investor-ownedHealthCare.TheHiddenBlight

onAmerica’sSystem.“International Journal of Health Services,51(4),

494-500.

https://doi-org.ezproxy.snhu.edu/10.1177/00297314211015806



Rotarius.T,Trujillo,A.J&Ramirez,B.(2005).Not-for-profitversus

for-profithealthcareproviders-partI:comparingandcontrasting

theirrecords.Health Care Manager, 24(4),296-310.https://doi-

org.ezproxy.snhu.edu/10.1097/00126450-200510000-00002

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