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). %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.
References
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/
