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-trade company. However, for-profit hospitals have
traditionally been located 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/
