There are several 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. Large academic medical centers are actively involved in training physicians,
nurses, and other health professionals, such as therapists and dietitians. This gives academic
medical centers unique access to talented healthcare professionals who they can choose to
permanently hire and add to their medical staff. Community not-for-profit hospitals would not have
this advantage unless they were a teaching hospital and may have a more difficult time filling key
roles within their medical staff. A large academic medical center may also have a more complicated
organizational structure in comparison to community not-for-profit hospitals which may present
staffing and decision-making challenges.
c c c Large academic medical centers may also be able to offer a wider variety of treatments and
programs then a community not-for-profit hospital. Community not-for-profit hospitals must
develop and publicize written financial assistance policies and limit billing and collection actions
against patients who are eligible for assistance. This may limit the scope of programs that they can
offer as they balance finances with the goal of any hospital which is to always provide the highest
quality care possible. Policies and procedures of large academic medical centers may also differ
from community not-for-profit hospitals as patients receiving care at a large academic medical
center may be receiving care from a healthcare professional in training. This expands the need of
policies and procedures to be able to speak to healthcare professionals in training providing care to
patients under supervision. This could potentially present privacy and ethical issues that must be
considered when forming the policies and procedures at a large academic medical center.
c c c If a for-profit organization was built within my community it could result in significant financial
impact. For example, if the for-profit organization specializes in a particular specialty, it could
attract customers seeking that specialty and treatment away from community not-for-profit
hospitals. This loss in patients could cause the community not-for-profit hospital to need to
discontinue certain treatments and reduce the number of hospital beds available. A trickledown
effect this could cause is reduced charitable donations by the community not-for-profit hospital
which many communities and community programs rely on for financial support. The increased
competition of a for-profit organization entering the market could also cause the cost of certain
treatments to be reduced which would benefit patients.
Some of the financial benefits of being an academic facility in comparison to a not-for-profit facility
include access to the latest technology. Academic facilities also benefit from having the unique
combination of patient care, research, and education that gives them a distinct financial benefit
over not-for-profit facilities. Academic facilities may also perform clinical research which could lead
to new treatment options and grant opportunities. Academic facilities also typically will offer a wide
variety of specialties and treatments that may be more attractive to patients.
To move forward in this discussion, it is critical that we grasp the distinction between a community
nonprofit and a big academic medical institution. The distinctions between for-profit and non-profit
hospitals set the basis for a philosophical debate regarding the advantages and ethics of each
method. The first decade of the twenty-first century shows a focus on improving the management
of nonprofit organizations, and in the past decade, there has been a diversification in the strategies
adopted by these organizations (Laurett & Ferreira, 2018). There are also practical variations in the
operation and administration of these various types of hospitals for hospital administrators. Some
significant differences are Nonprofit hospitals are considered charities by the IRS (provided they
follow criteria governing nonprofits, such as delivering specific community services) and do not pay
federal income or state and local property taxes. While for-profit hospitals have typically been
situated in southern states, the early 2000s economic crisis accelerated the acquisition of nonprofit
hospitals by for-profit corporations. Nonprofits must demonstrate a community benefit on their tax
returns in order to preserve their status and exemption from federal, state, and county taxes. Both
NGOs and for-profits must provide charitable care. For example, with more Medicaid patients and
fewer on private insurance, health systems receive less funding for services. Another important
challenge for community hospitals is how healthcare has evolved over the last 20 or 30 years
(Masterson, 2017). c An example would be patients who were once admitted to the hospital for four
or five days following a hernia or gallbladder procedure. Furthermore, patient volumes are
decreasing. As a not-for-profit hospital, you will provide everything possible. As a for-profit hospital,
you may make more judgments about which services you will give and which you will not supply. A
for-profit organization must focus on profitable services as much as feasible. The prospect of profit
is perhaps the most evident advantage of a for-profit firm. The revenue earned above and beyond
expenditures is up to the owner to do with as he pleases. This might entail personal satisfaction as
well as investments in the business. The higher the company's success, the larger the cash benefit.
For-profit systems benefit from investor funds and have greater freedom in terms of the services
they provide, frequently focusing on the most profitable ones (Profit vs. Nonprofit Hospital
Administration - The George Washington University Online Degrees, 2019). Furthermore, a for-
profit company may return returns to investors while still investing in the healthcare system. Profits
must be reinvested in the organization by a nonprofit. Even with tax breaks, most non-profit
hospitals struggle financially. They make less money than their for-profit competitors, and the
majority of them have massive debts. As a result, for-profit hospitals are more equipped and offer
better surgical treatments and diagnostic techniques than charity hospitals.
Laurett, R., & Ferreira, J. J. (2018). Strategy in Nonprofit Organisations: A Systematic Literature
Review and Agenda for Future Research. VOLUNTAS: International Journal of Voluntary and
Nonprofit Organizations, 29(5), 881–897. https://doi.org/10.1007/s11266-017-9933-2
Masterson, L. (2017, May 25). Nonprofit, for-profit hospitals play different roles but see similar
financial struggles. Healthcare Dive. https://www.healthcaredive.com/news/nonprofit-for-profit-
hospitals-play-different-roles-but-see-similar-financ/442425/
Profit vs. Nonprofit Hospital Administration - The George Washington University Online Degrees.
(2019, March 7). The George Washington University Online Degrees.
https://healthcaremba.gwu.edu/blog/profit-vs-nonprofit-hospital-administration/
Shi, L. (2018). Essentials of the U.S. Health Care System (5th Edition). Jones & Bartlett Learning.
https://mbsdirect.vitalsource.com/books/9781284174144
DeCamp, M., Pomerantz, D., Cotts, K., Dzeng, E., Farber, N., Lehmann, L., Reynolds, P. P., Sulmasy, L.
S., & Tilburt, J. (2018, March). Ethical issues in the design and implementation of population health
programs. Journal of general internal medicine. Retrieved March 31, 2022, from
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5834965
