a 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).
a a a 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).
a a a 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
