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?
b 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.
b 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.
b 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. b 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.
b 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. b If this happened enough, there could be a loss of jobs or lay-offs due to
the loss of income from fewer patients.
b 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.
b
What financial impacts could result if a for-profit organization was built within your
community?
b 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?
b 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. b One study showed that private insurance companies pay nearly double Medicare rates
for all hospital services. (Lopez & Neuman, 2020) Increased payments equals increased profits.
b 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
