For-profit and not-for-profit hospitals have many differences, but do
have the common goal of providing quality care for all patients. The
main difference between these two types of hospitals is that for-
profit hospitals pay property and income taxes, while not-for-profit
hospitals do not (Becker, 2014). A for-profit hospital has the
resources to gain capital. Gaining capital will allow a healthcare
facility to upgrade the facility and buy new, costly medical equipment
or information technology systems (Becker, 2014). One thing to
consider when talking about a for-profit hospital is that these
hospitals have shareholders that the hospital needs to listen to. This
means that what the shareholders want may not be in the same
interest as the facility, which could lead to money-losing services
being cut from the facility (Becker, 2014). The shareholders have a
larger say on what procedures will be done at the facility and what
the staffing and salaries are like at the hospital. On the other hand,
not-for-profit hospitals must offer community benefits because they
do not pay any taxes. This means that these facility serve the
healthcare needs of the community, instead of paying taxes
(Masterson, 2017). The profits that the hospital makes, must be
reinvested back into the facility because they are not able to raise
capital gain like for-profit facilities (Masterson, 2017). Due to this,
these facilities will see an increase in the number of patients on
government funded insurance plans, which results in lower
payments.
The financial impact that could result if a for-profit organization was
built within the community would be the division of patients going to
either hospital. For-profit facilities tend to spend a lot of money on
advertising, which can be seen as a waste because these facilities
tend to be located in areas where there are few healthcare facilities
to choose from (Profit vs. Nonprofit Hospital administration: GW
University, 2021). When this occurs, the not-for-profit facility will end
up advertising as well, to stay with the competition. A for-profit
organization may offer less services compared to a not-for-profit
facility due to the lower budget because of the shareholders decision
and also due to the number of patients on a government healthcare
plan.
The benefit of being an academic medical center is that they offer
the specialized surgeries, life saving care and complex treatments.
Being an academic center, they tend to treat many uninsured
patients (Benefits of an Academic Health Center, n.d). This is an added
benefit to communities because these individuals do have a place to
go when needing special care. Overall the financial difference
between not-for-profit and academic medical centers is that
academic medical centers tend to be less extensive for patients (Less,
2019). This is due to the academic aspect of the facility.
References:
Becker , A. (2014, April 25). How different are for-profit and nonprofit
hospitals? CT Mirror. Retrieved March 29, 2022,
from https://ctmirror.org/2014/04/25/how-different-are-for-profit-
and-nonprofit-hospitals/
Benefits of an Academic Health Center. Patient Care | UF Health
Jacksonville | University of Florida Health. (n.d.). Retrieved March 29,
2022, from https://ufhealthjax.org/patient-care/benefits-academic-
health.aspx
Liss, S. (2019, June 10). Are teaching hospitals more expensive? A new
jama study may surprise some. Healthcare Dive. Retrieved March 29,
2022, from https://www.healthcaredive.com/news/are-teaching-
hospitals-more-expensive-a-new-jama-study-may-surprise-some/
556502/
Masterson, L. (2017, May 25). Nonprofit, for-profit hospitals play
different roles but see similar financial struggles. Healthcare Dive.
Retrieved March 29, 2022,
from https://www.healthcaredive.com/news/nonprofit-for-profit-
hospitals-play-different-roles-but-see-similar-financ/442425/
Profit vs. Nonprofit Hospital administration: GW University. George
Washington University. (2021, July 15). Retrieved March 29, 2022,
from https://healthcaremba.gwu.edu/blog/profit-vs-nonprofit-
hospital-administration/
