For Profit vs. Not For Profit 

There are several reasons why a healthcare organization could prefer not-for-profit (NFP) status to for-profit (FP) status. NFP healthcare organizations are exempt from federal income taxes and state and local property taxes and have lower administrative costs (Kondilis et al., 2011), but they must conduct a community health needs assessments at least once every three years (Carlton & Singh, 2018; De Andrade Costa, 2014; Fischer, 2018; Wiley & Matthews, 2017), which must include implementation strategies to address those needs (Carlton & Singh) (Cho & Hong, 2018).

According to statistics, NFP facilities offer higher-quality care than private facilities, including lower death rates, better health outcomes, reduced costs, and more compassionate care (Almeida, 2017). (Kondilis et al., 2011). These elements have the potential to improve organizational efficiency and occupancy, which correlates to greater profitability (Cho & Hong, 2018). The need for special board votes for many decisions (Becker, 2014; Carlton & Singh, 2018) and higher patient prices as a result of overhead expenditures (Cheney, 2017), advertising (GWU, 2019), and taxes are a few difficulties faced by FP organizations (Becker, 2014). These justifications favor NFP over FP status.

How money is raised, spent, or divested typically determines whether an organization is for-profit or not-for-profit. Focusing on these two topics, debates soon turn to questions of whose pockets are being lined with money made by the healthcare sector. Every section upholds the mandate and main objective of healthcare, namely the treatment of people. According to Madden (2013), money invested back into the community through programs and services, such as free medical care, does promote greater good and impact.

While investments provide a significant portion of the for-profit sector’s funding, these sectors also experience some of the same challenges that not-for-profit organizations do in terms of lower reimbursements, higher expectations for the services to be provided, and rising costs for patient care technology (Materson,2017). The pros and cons must be evaluated in order to decide on an organization’s proper tax status. Many detractors argue that not-for-profit organizations have the edge over for-profit ones because they can reinvest money more easily into human capital and the company itself.

The not-for-profit sector has the best healthcare system overall. Most people’s right to healthcare, which is necessary for maintaining a minimum level of quality of life, is secured through a nonprofit healthcare supply. People without access to healthcare and for-profit healthcare insurance would be forced to live a life of hardship and constant fear of dying. In terms of economics, the not-for-profit healthcare industry is not a corporation that maximizes profits. Medical practitioners are motivated by the desire to provide excellent patient care rather than by financial incentives to perform well. Financial managers for not-for-profit organizations have a strong sense of discipline when it comes to sticking to a budget and distributing resources where they are most needed (Magill, 2016). The problem with for-profit healthcare is that people who are likely to get sick will be strongly urged to get health insurance. This causes health insurance prices to rise, which deters young, healthy people from getting pricey coverage and ultimately leaves insurers with a high number of sick people (Morgan, Ensor, & Waters,2016). Healthcare is a huge accomplishment, and as humans, we should never undervalue its significance in the grand scheme of things.

Academic institutions that offer public education and promote healthcare innovation through the most recent research are typically considered nonprofit organizations (Verulava, Jorbenadze & Dangadze, 2018). Such institutions are not subject to taxation, which relieves them of all federal and state tax obligations and burdens. This enables the healthcare facility to use the income to fund research initiatives, acquire new tools, and improve patient care. Because nonprofit organizations do not have shareholders or investors, there is no profit distribution (Nation, 2010).

The organization relies on grants and donations from the government and contributors, who also profit financially from their contributions. Nonprofit businesses are run for the benefit of the public and are not restricted to care triage. Such organizations treat patients regardless of their ability to pay for their services (Verulava, Jorbenadze, & Dangadze, 2018). Since they are exempt from state, local, and federal taxes, organizations may apply for nonprofit status (Verulava, Jorbenadze & Dangadze, 2018). According to federal regulations, these groups are regarded as dedicating themselves to humanitarian activities and focusing on a particular neighborhood.

References:

Almeida, A. S. (2017). The role of private non-profit healthcare organizations in NHS systems: Implications for the Portuguese hospital devolution program. Health Policy, 121(6), 699-707. doi:10.1016/j.healthpol.2017.03.016 Becker, A. L. (2014, April 25). How different are for-profit and nonprofit hospitals? Retrieved from https://ctmirror.org/2014/04/25/how-different-are-for-profit-and-nonprofit-hospitals/

Carlton, E. L. & Singh, S. R. (2018). Joint community health needs assessments as a path for coordinating community-wide health improvement efforts between hospitals and local health departments. American Journal of Public Health, 108(5), 676-682. doi:10.2105/AJPH.2018.304339

Cheney, C. (2017, June 20). Top 5 differences between NFPs and for-profit hospitals. Retrieved from https://www.healthleadersmedia.com/finance/top-5-differences-between-nfps-and-profit-hospitals   Cho, N.-E. & Hong, K. (2018). A kitchen with too many cooks: Factors associated with hospital profitability. Sustainability, 10(2), 323-337. doi:10.3390/su10020323

De Andrade Costa, L. (2014). The effect of physician board membership on uncompensated care provision. Applied Economics, 46(19), 2290–2300. doi:10.1080/00036846.2014.899671

Fischer, K. R., Schwimmer, H., Purtle, J., Roman, D., Cosgrove, S., Current, J. J., & Greene, M. B. (2018). A content analysis of hospitals’ community health needs assessments in the most violent U.S. cities. Journal of Community Health, 43(2), 259–262. doi:10.1007/s10900-017-0413-9

George Washington University (GWU). (2019). Profit vs. nonprofit hospital administration. Retrieved from https://healthcaremba.gwu.edu/blog/profit-vs-nonprofit-hospital-administration/

Horwitz, J. R. (2005). Making profits and providing care: comparing nonprofit, for-profit, and government hospitals. Health Affairs, 24(3), 790–801. doi:10.1377/hlthaff.24.3.790

Kondilis, E., Gavana, M., Giannakopoulos, S., Smyrnakis, E., Dombros, N., & Benos, A. (2011). Payments and quality of care in private for-profit and public hospitals in Greece. BMC Health Services Research, 11(1), 234-245. https://doi.org/10.1186/1472-6963-11-234

Wiley, L. F., & Matthews, G. W. (2017). Health care system transformation and integration: A call to action for public health. Journal of Law, Medicine & Ethics, 45 S1, 94-97. https://doi.org/10.1177/1073110517703335

Madden, S. (2013). Did You Know: For-Profit Versus Nonprofit Hospitals. Retrieved from http://healthnetpulse.com/broker/2013/10/11/did-you-know-for-profit-versus-nonprofit-hospitals/ Materson, L. (2017). Nonprofit, for-profit hospitals play different roles but see similar financial struggles. Retrieved from https://www.healthcaredive.com/news/nonprofit-for-profit-hospitals-play- different-roles-but-see-similar-financ/442425/

Nation III, G. A. (2010). Non-profit charitable tax-exempt hospitals–Wolves in sheep’s clothing: To increase fairness and enhance competition in health care all hospitals should be for-profit and taxable. Rutgers Law Journal, 42(1), 141-211.

Verulava, T., Jorbenadze, R., & Dangadze, B. (2018). The role of non-profit organizations in health care system: World practice and Georgia (review).

Magill, G. (2016). Universal Health Care as a Human Right: The Argument of Dietrich Bonhoeffer. Journal of Church and State, 58(3), 564–566. https://doi- org.lopes.idm.oclc.org/10.1093/jcs/csw044

Morgan, R., Ensor, T., & Waters, H. (2016). Performance of private sector health care: implications for universal health coverage. The Lancet, (10044), 606. https://doi- org.lopes.idm.oclc.org/10.1016/S0140-6736(16)00343-3

Nation III, G. A. (2010). Non-profit charitable tax-exempt hospitals–Wolves in sheep’s clothing: To increase fairness and enhance competition in health care all hospitals should be for-profit and taxable. Rutgers Law Journal, 42(1), 141-211.

Verulava, T., Jorbenadze, R., & Dangadze, B. (2018). The role of non-profit organizations in health care system: World practice and Georgia (review).

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Private, nongovernmental healthcare organizations may be either for profit (FP) or not for profit (NFP).

• Discuss the difference between not-for-profit and for-profit organizations.
• What happens if an NFP organization makes a profit?
• What are the advantages and disadvantages of each type of organization?
• Describe two specific examples of how risk management has influenced nursing documentation.

Submission Instructions:

• Your initial post should be at least 500 words, formatted and cited in current APA style with support from at least 2 academic sources. Your initial post is worth 8 points.
• You should respond to at least two of your peers by extending, refuting/correcting, or adding additional nuance to their posts. Your reply posts are worth 2 points (1 point per response.)
• All replies must be constructive and use literature where possible.

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