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?
In the competitive market of healthcare, of course a new facility being built within 10 miles
would be of concern to an existing facility, especially if the proposed organization and the existing
hospital were different in terms of for-profit or not-for profit. Both types of healthcare facilities offer
care to patients, whether they come in through the emergency room or come in for a scheduled
admission. How the two types of hospitals are funded varies, as well as where the profits go that
the organizations earn, and which pays taxes while the other does not.
Academic hospitals are affiliated with a medical school and are teaching facilities. They
provide clinical training to future healthcare providers as part of their education, but also employ
current healthcare providers. These facilities provide care for the urban underserved population as
well as care for complex patients. Because they are affiliated with a university, they can attract and
hire physicians or students still working to become a physician who have had access to the latest
training available. Students of medicine are actively learning and are exposed to new discoveries
and methods that other physicians might not have direct access to. These academic facilities offer
more specific units and areas of care than community hospitals as well.
Non-profit, community hospitals focus on meeting the essential health needs of their
community. Community hospitals serve their community through programs that give back. They
do not pay taxes, which prevents the community they are located within from benefitting from the
tax dollars that businesses generate. These are non-profit facilities that can focus on care instead
of focusing on how much money they are generating for their shareholders. Community hospitals
accept patients, regardless of their ability to pay. This results in more patients with Medicare and
Medicaid visiting nonprofit hospitals.
The differences between the two types of hospitals in terms of staffing primarily focuses on
students versus existing physicians and care providers. Academic hospitals are used to teach and
train providers before they officially begin to practice on their own in addition to employing
providers after they are done with school. Community hospitals are not used as teaching facilities
and will attract existing care providers only. For profit hospitals have the finances needed to buy
the newest and greatest of equipment, which could be appealing to some more than others. For
profit hospitals must consider their investors in decision making. Because of this, costs could be
higher. Higher costs could impact patients choosing a less expensive facility to seek care. If this
happened enough, there could be a loss of jobs or lay-offs due to the loss of income from fewer
patients.
For profit facilities can offer more specialized care options than nonprofit organizations. They
could have finances available to support additional centers and treatments. For example, the
American Hospital Association reported that more than half of all teaching hospitals have NICUs
and 57 have certified trauma centers. In the nonprofit facilities, only 13% have NICUs and 31%
have trauma centers. (Stephenson-Laws, 2017) This could in turn also impact staffing for providers
looking to work specifically in one of these specialized settings, they will have more opportunities
to do so if they work for for-profit facilities.
What financial impacts could result if a for-profit organization was built within your
community?
The financial impacts of having a for-profit organization built in the community could include the
new facility taking patients who are seeking care for any area that the new facility specializes in. If
the new facility offered an area of care that many of the patients needed, this could be a large
loss. A nonprofit hospital facing losses will then go back to the programs being offered to the
surrounding community. Less profit means less money to give back. The new facility could offer
newer technology, another reason that patients might transfer their care. This would have the
same negative impact on profit, then on the community. Academic facilities perform clinical
research, a third reason patients might transfer their care from the community facility, with the
same negative community impact. The new facility might be more appealing to providers, enticing
them to leave the community-based facility to work at the “new” hospital. Staff shortages could
result, which could lead to a lower quality of care the facility is able to provide if enough people
leave.
What are some of the financial benefits of being an academic facility rather than a not-for-
profit facility?
A financial benefit of being an academic facility is the attraction of patients seeking the latest
care. A new development in care at an academic facility could attract people from around the
world to the facility for care, which will increase profitability. Clinical trials are performed at
academic facilities, which could also attract new patients from around the world to be involved in
one of these trials. Another financial benefit of being an academic facility is donations that a
facility might receive from a wealthy patient or patient’s family that benefit from the newest
technology in medical care that has a positive impact on their personal health. Benefitting the
facility is the fact that a for profit facility can charge more money for services, increasing their
profits. One study showed that private insurance companies pay nearly double Medicare rates for
all hospital services. (Lopez & Neuman, 2020) Increased payments equals increased profits.
I live in an area that has 2 large hospital networks to choose from, with both being nonprofit
and both being ranked among the top hospitals in the world. I do not take this for granted as I see
many people traveling a far distance from their home just to find a hospital that they trust. In this
case, I cannot imagine a new facility coming in that was for profit and surviving.
Tiffany
References:
Lopez, T. E., & Neuman, T. (2020, May 1). How much more than Medicare do private insurers
pay? A review of the literature. KFF. Retrieved March 31, 2022,
from https://www.kff.org/medicare/issue-brief/how-much-more-than-medicare-do-private-insurers-
pay-a-review-of-the-literature/
Stephenson-Laws, J. (2017, June 8). Navigating hospitals: Teaching hospital vs. non-teaching,
does it matter? Proactive Health Labs. Retrieved March 31, 2022,
from https://phlabs.com/navigating-hospitals-teaching-hospital-vs-non-teaching-does-it-
matter
