Financial Impacts of Competition
What are some business and financial implications of the differences between
community not-for-profit hospitals and large academic medical centers that may
affect staffing, programs offered, and policies and procedures?
From the get go many not for profit hospitals have the incentive of being exempt
on all taxes which include federal, state and local taxes. Even though nonprofit pay no
taxes somehow financially they are all in debt. However, while they may not have the
funds for top of line equipment this doesn’t mean the quality care is worse, in fact its
better.“The icing on the cake is that the lower-cost care does not come with a
corresponding drop in quality level. Statistics show that despite charging more, for-profit
hospitals perform worse than nonprofit hospitals when it comes to treating common
illnesses, and, consequentially, have higher death rates.” (Healthcare Management Degree
Guide. 2021.)
Because of tax exempts nonprofit hospitals are obligated to provide services and
programs to include vital community health services which large academic medical centers
don’t. One of many are alcohol and drug rehabilitation and psychiatric programs. “They
may also provide their communities with intensive care units (ICU), trauma centers, burn
units and organ transplant centers, which may not be available at for-profit hospitals, due
to the high cost to operate them with little potential for profit.” (Carevoyance.,n.d.)The
care doesn’t end there. Many partnerships are formed in their community for support in
other medical and educational organizations for nutrition, diabetes and cancer groups.
Nonprofit hospital are usually training and teaching facilities. Which mean more
students and more staff to treat patients, even though they ae not licensed physicians and
in their residency term they can treat patient with their consents.“These new graduates
have the latest knowledge in healthcare and medical research, and they may spot things or
identify new problems that older healthcare providers miss.” (Healthcare Management
Degree Guide. 2021.)
It’s not all a bed of roses for the non for profit hospitals. They fall short when
dealing with polices on medical billing, records and administrative issues. AMCs
consolidate and streamline these services across all departments within all their locations
while non-profit fail miserably to do the same because of cost. “The lack of clear policies
may confuse patients, especially those who have a low education level and who don’t
understand the complicated paperwork and billing processes.” (Healthcare Management
Degree Guide. 2021.)
What financial impacts could result if a for-profit organization was built within your
community?
When a profit hospital is built within your community they can attract investors.
“Investor-owned companies have powerful motives for expansion.” (Institute of Medicine.
1986.)Investors can take away capital from the community and potential patients from the
nonprofit hospitals. For-profit hospitals can return profits to stockholders, as well as
finance in the healthcare system. This can cause a loss for non for profit hospitals. “Thus,
not-for-profit organizations share with for-profit organizations the need to generate
operating surpluses for building reserves that can be used as working capital and for future
renovation, equipment purchases, and new services.” (Institute of Medicine. 1986). The
market share for hospitals can move not for profit out of the running and impede the
growth for them. Now more than ever the profit hospitals are taking over the new markets
than before.
References
Institute of Medicine (US) Committee on Implications of For-Profit Enterprise in
HealthCare. (1986, January 1).Summary and conclusions. For-Profit Enterprise in
Health Care. Retrieved March 30, 2022, from
https://www.ncbi.nlm.nih.gov/books/NBK217912/
Are non-profit or for-profit hospitals better?Healthcare Management Degree Guide.
(2021, August 4). Retrieved March 30, 2022, from https://www.healthcare-
management-degree.net/faq/are-non-profit-or-for-profit-hospitals-better/
Carevoyance Data & Insights Blog. Carevoyance. (n.d.). Retrieved March 30, 2022, from
https://www.carevoyance.com/blog
