To begin a discussion about the practical difference in managing the needs of a not-for-profit
hospital versus a for profit hospital, it’s important to understand the context of hospitals in the US. c
Physician-staffed and nursing staffed hospitals came into the public consciousness right at the end
of the civil war (America’s Essential Hospitals, n.d.). c Prior to 1920, most hospitals operated with
little income, most physicians donated their time, and staffing costs tended to be low. c However,
many hospitals began to aim to cater to middle class and upper middle-class clientele,
improvements in available treatments, and the professionalization of the medical field drive
operating costs for hospitals up. c Some hospitals recast themselves as academic institutions or
affiliated to prestigious academic institutions (America’s Essential Hospitals, n.d.). c
The 1930’s were a time of high utilization for many public hospitals. c The idea of a “safety net” was
not well known or in practice yet. c Fiscal stresses pushed many patients to public hospitals, however
funding for these institutions was not keeping up with demand. c Not-for-profit hospitals could limit
their available bed for indigent care, while still receiving funding; public hospitals could not limit
indigent care (America’s Essential Hospitals, n.d.).
Post WW2, demographics shifted from urban to suburban and so did medical need. c Suburban
medical needs began to be met by private insurers. c Public hospitals did not far well with the
shifting of demographics as the suburban population sought out not-for-profit academically
affiliated institutions (America’s Essential Hospitals, n.d.). c The shift in demographics also moved tax
bases from urban to suburban centers. This left a poor and indigent tax base to fund public
hospitals in urban areas. Public hospitals in urban areas suffered from a chronic lack of funding for
most of the mid-20th century (America’s Essential Hospitals, n.d.).
c c c c c c c c c c c Medicaid and Medicare completely changed the funding scenario for hospitals in the 1960s. c
Because of the shifting demographics after WW2, public hospitals in urban center were exposed as
woefully inadequate. c The richest nation in the world was offering antiquated care in deteriorating
facilities in its cities (America’s Essential Hospitals, n.d.). c Medicaid and Medicare enabled patients
to take their medical care to facilities of their choice. c Public hospitals now needed a huge
administrative and operational overhaul to stay afloat (America’s Essential Hospitals, n.d.). “A
variety of proposals floated in the early 1970s involved severing, partially or wholly, the public
hospital from direct control by local governments and municipalities,” (America’s Essential
Hospitals, n.d.). NYC, for example, merged its public hospitals into a “public benefit corporation”. c
Denver, however, chose to merge its public hospitals with its municipal public health program. Full
divestiture was the option of choice for most public hospitals (America’s Essential Hospitals, n.d.). c
“While the consumer price index rose 300 percent between 1960 and 1980, the per diem cost of
hospital beds rose by 900 percent,” (America’s Essential Hospitals, n.d.). c
c c c c c c c c c c c With this context in mind, and while the public hospitals and not-for-profit hospitals were
morphing throughout the 20th century, Catholic health organizations began to slowly gobble up
hospital affiliations (Growing Number of Catholic-Run Hospitals Raises Concerns : AJN The American
Journal of Nursing, 2019). c This greatly affect the type of care a facility can offer. c Catholic health
systems required all affiliate facilities, secular or not, to follow the catholic medical directives from
the Pope (U.S.C.C.B., 2013). c
c c c c c c c c c c c Catholic affiliated facilities do not allow for end-of-life care or for reproductive care. c I make
this statement because in both cases, the church arbitrarily limits medical treatment based on their
religious beliefs NOT that of the patient. c In the case of reproductive care, Catholic Hospitals actively
cause harm to female patients needing care. c This occurs because USCCB does not allow for proper
modern care for spontaneous abortions. c That is the medical term for a miscarriage. c In terms of
medical coding, there is no difference between a colloquial miscarriage and an abortion. c The term
spontaneous abortion is the term for any lost pregnancy before it’s term. c USCCB also do not allow
for any sterilization treatment for women (Growing Number of Catholic-Run Hospitals Raises
Concerns: AJN The American Journal of Nursing, 2019). c
c c c c c c c c c c c In communities without non-Catholic hospitals, women are left with having to carry
nonviable fetuses to term, waiting until their bodies naturally pass all parts of a nonviable fetus
without medical intervention and prohibit tubal ligations even when the mother’s life is at stake. c
All of this results harm to female patients (Growing Number of Catholic-Run Hospitals Raises
Concerns: AJN The American Journal of Nursing, 2019). c For profit hospitals can choose to have
arbitrary restrictions on abortive care. c
Assuming they comply with guidelines, nonprofit hospitals do not pay federal income or state and
local property taxes. Non-profit hospitals are supposed to keep their charitable purpose and
community focus by affiliating with a particular religious denomination. For-profit hospitals are
owned either by investors or by shareholders of a publicly-traded company. However, for-profit
hospitals have traditionally been in southern states, the economic collapse of the early 2000s
catalyzed the acquisition of nonprofit hospitals by for-profit companies. Some nonprofit hospitals
are finding other ways to improve their finances like the joint venture launched in 2011 between
Ascension, the United States’ largest network of Catholic hospitals, and the private equity firm Oak
Hill Capital Partners.
One notable difference between nonprofit and for-profit hospitals is that for-profits allocate more
resources to advertising and marketing. Some argue, however, that investments in new
technologies might be just as wasteful for hospitals that serve low-income communities, as patients
likely would not be able to afford the more advanced (and more expensive) treatment they offer.
Furthermore, some nonprofit hospitals also spend money on marketing, because they recognize
that they have to compete in the marketplace, regardless of their nonprofit status.
It’s important for patients and administrators alike to understand that there is no indication of any
difference in the environment, operational efficiency, or standard of care between nonprofit and
for-profit hospitals. Both exist on lists of the best hospitals in the country, and among the worst.
There is no reason to believe that the quality and management of a hospital correlate to its tax
status. Whether a hospital is nonprofit or for-profit should be of interest to its staff and to the
community it serves, so that they can understand how the hospital operates and allocates
resources. Patients, on the other hand, can rest easy knowing that they don’t have to concern
themselves with such matters when they’re in need of medical care.
Reference:
Profit vs. Nonprofit Hospital administration: GW University. George Washington University. (2021,
July 15). Retrieved March 31, 2022, from https://healthcaremba.gwu.edu/blog/profit-vs-nonprofit-
hospital-administration/
America’s Essential Hospitals. (n.d.). History of Public Hospitals in the United States. Retrieved April
11, 2022, from https://essentialhospitals.org/about/history-of-public-hospitals-in-the-united-states/
George Washington University’s Online Healthcare MBA. (2021, July 15). For Profit vs. Nonprofit
Hospital Administration. George Washington University. Retrieved April 11, 2022, from
https://healthcaremba.gwu.edu/blog/profit-vs-nonprofit-hospital-administration/
Growing Number of Catholic-Run Hospitals Raises Concerns : AJN The American Journal of Nursing.
(2019). LWW. Retrieved April 11, 2022, from
https://journals.lww.com/ajnonline/Fulltext/2019/12000/Growing_Number_of_Catholic_Run_Hospi
tals_Raises.12.aspx
U.S.C.C.B. (2013). Incorporating the Ethical and Religious Directives for Catholic Health Care Services
into a Nursing Curriculum. Catholic Social Science Review, 18, 249–255.
https://doi.org/10.5840/cssr20131827
