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?
c c c c 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. c Both types of healthcare facilities
offer care to patients, whether they come in through the emergency room or come in for a
scheduled admission. c 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. c
c c c c Academic hospitals are affiliated with a medical school and are teaching facilities. c 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. c 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.
c c c c Non-profit, community hospitals focus on meeting the essential health needs of their
community. Community hospitals serve their community through programs that give back. c They do
not pay taxes, which prevents the community they are located within from benefitting from the tax
dollars that businesses generate. c 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. c
c c c c The differences between the two types of hospitals in terms of staffing primarily focuses on
students versus existing physicians and care providers. c 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. c For profit hospitals have the finances needed to buy
the newest and greatest of equipment, which could be appealing to some more than others. c For
profit hospitals must consider their investors in decision making. Because of this, costs could be
higher. c Higher costs could impact patients choosing a less expensive facility to seek care. c If this
happened enough, there could be a loss of jobs or lay-offs due to the loss of income from fewer
patients. c
c c c c For profit facilities can offer more specialized care options than nonprofit organizations. c They
could have finances available to support additional centers and treatments. c For example, the
American Hospital Association reported that more than half of all teaching hospitals have NICUs and
57 have certified trauma centers. c 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. c If
the new facility offered an area of care that many of the patients needed, this could be a large loss. c
A nonprofit hospital facing losses will then go back to the programs being offered to the
surrounding community. c Less profit means less money to give back. c The new facility could offer
newer technology, another reason that patients might transfer their care. c This would have the
same negative impact on profit, then on the community. c Academic facilities perform clinical
research, a third reason patients might transfer their care from the community facility, with the
same negative community impact. c The new facility might be more appealing to providers, enticing
them to leave the community-based facility to work at the “new” hospital. c Staff shortages could
result, which could lead to a lower quality of care the facility is able to provide if enough people
leave. c c
What are some of the financial benefits of being an academic facility rather than a not-for-profit
facility?
c c c c A financial benefit of being an academic facility is the attraction of patients seeking the latest
care. c 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. c 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. c Benefitting the facility is the fact
that a for profit facility can charge more money for services, increasing their profits. c One study
showed that private insurance companies pay nearly double Medicare rates for all hospital services.
(Lopez & Neuman, 2020) Increased payments equals increased profits.
c c c c 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. c 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. c In this
case, I cannot imagine a new facility coming in that was for profit and surviving.
Tiffany
Academic medical centers are very important to the healthcare system as they provide a wide
variety of basic and specialized services for their patients and the communities they serve. AMCs
are also the main cite for graduate medical student and research they work hand in hand with
medical schools. “AMCs have a small operational footprint. According to data from the American
Association of Medical Colleges (AAMC), AAMC-affiliated teaching hospitals accounted for only 5
percent of all hospitals in 2014” (George Washington University’s Online Healthcare MBA, 2021).
Often AMCs do not face staffing issues because of their partnership with medical schools but do
have a limited reach on what services they can offer. They are constantly working with residents
and recent graduates. They also rely on public funding which can be both a good thing and a bad
thing because funding becomes limited. This can cause the medical center to be limited on what
they can and cannot do. Also, a lot of AMCs patients rely on public health insurance like Medicaid
and Medicare. This can translate to health insurance not paying for every medical procedure and
patients having overdue balances. Which can affect the financial stance of the organization and
cause issues in the future.
When we look at not-for-profit organizations, they have a broader area to deal with. There
organization can deal with a variety of specializations in the same building and hire different types
of medical professionals. This will contribute to the employees since they are able to hire for
different positions, they can offer their patients the best care possible. This can also translate to the
types of patients they deal with; their patients can vary between those that deal with government
insurance and those that have private insurance. Having this balance can help with the financial
standpoint of the organization and help them grow as a medical facility. “About 60 percent of
community hospitals are nonprofit, all community health centers are nonprofit, almost 30 percent
of nursing homes are nonprofit, and about 17 percent of home health care agencies are estimated
to be nonprofit” (UCF, 2021). Not-for-profits organizations play a pivotal role in communities
because of what they provide for the community in which they serve. They look more into the
quality of care they provide, the customer service, and the opportunities they offer rather than the
revenue they bring in. They use the profit they gain and reinvest it to better the health, well-being,
and service they provide to the public.
If a for-profit was built within my community it would cause a disruption in the finances of the
community. The cost for treatment and medical services will most likely go up since they are looking
to gain revenue off the services they are providing. Patients will start to be denied service based on
their financial and insurance status which will cause a ripple effect on the population in that
community. We can start to see the spread of illnesses and diseases, as well as the increase of
patients facing medical financial burdens
George Washington University’s Online Healthcare MBA. (2021, July 7). The Differences Between
Academic and Community Medical Centers. George Washington University.
https://healthcaremba.gwu.edu/blog/the-differences-between-community-and-academic-medical-
centers/
UCF. (2021, April 28). Nonprofit Health Organizations and Career Opportunities. UCF Online.
https://www.ucf.edu/online/healthcare/news/the-role-of-nonprofit-health-organizations/
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
