How Are For-Profit and Nonprofit Businesses Different?

The discussion of profit and not-for- profit organizations has been analyzed and discussed in essays and research papers for years. When you include government funded organizations into the mix this tends to bring about some very interesting discussions. There are similarities and differences among the three different environments. Some key identifiers that shed light into the similarities and differences include where the organizations get their money from, who makes financial decisions among such organizations, as well as who the key stakeholders are for each.

Each entity has a purpose and aka a true imprint in the healthcare environment. Not-for-profit organizations are typically organizations or entities that do not pay taxes and work for their communities and/or the public. Many organizations are formed based on a religion or even a particular charity. Not-for- profit healthcare organization reported that around of hospitals in the United States are not-for-profit. (Alliance for Advancing Non Profit Health Care, n. D. ) For-profit facilities are usually owned by private investors, or they are publicly owned by shareholders.

Government hospitals or government funded hospitals are owned by the government. Services provided by these types of entities are usually free of charge and are covered by funding the facility receives. Examples of for-profit hospitals are Methodist Hospital in San Antonio, Park Plaza Hospital in Houston, and McAllen Medical Center also located in Texas. Three examples of not-for-profit hospitals include Baylor Health Care System in Dallas, Christ Health located in Irving, and Memorial Hermann Healthcare System in Houston.

The University of Texas MD Anderson Cancer Center in Houston, University of California Davis Medical Center in Sacramento, and Memorial Regional Hospital located in Florida are al government funded facilities. “Around the world, not-for-profit organizations (Knops) or non-governmental organizations (Nags) are making an increasingly important contribution to national economies” (Keller, 2011). Not-for-profit, for-profit, and government entities differ from each other in their mission and in their approach in doing business.

Nonprofit or not-for- profit healthcare organizations are held accountable to the communities that they service. They have a legal and moral obligation to serve their communities for the greater good. Leaders from such communities are the ones who govern their operations. Not-for-profit entities differ from for- profit because they have no shareholders. Not-for-profits are generally exempt from taxes and can issue tax exempt debt. The earnings of such organizations are reinvested to the benefit of the communities.

Most not-for- profit profit organizations have a charitable purpose. These entities must remain organized and operate for the public rather than private interests. (Finnier & Ward, 2006) Some additional differences among for profit, not for profit, and government entities are organization goals, financing and investment decisions. “Unlike the shareholders of for-profit entities, those who supply queuey’ capital to the nonprofit sector do not expect a monetary return for their voluntary or involuntary “investments” in that sector” (Reinhardt, 2000).

Not-for-profit stakeholders can include a board of trustees, employees, managers, and even patients/potential patients. For-profit hospitals can have the same set of stakeholders in addition to stockholders. Government entities are like not-for-profits in that they also are tax exempt. The most important similarity between all three is that they are all required to roved quality healthcare to patients. They each serve patients with a variation of needs and share contracts with many of the same insurers. Many of the same health regulations apply to each type of entity.

Many researchers believe that for – profit hospitals admit a smaller number of uninsured patients than not-for-profit hospitals. Each of the three financial environments are required to staff employees with the same type of training and they should all have the same ethical obligations regarding healthcare. Some researchers also report that more for – profit hospitals are located in leather areas than government or not -for-profit hospitals. An additional characteristic of not-for-profit hospital is an effective revenue management cycle which allows the facility the ability to grow their equity capital.

Sings, Wheeler, & Rodeo, 2012) This paper has clearly identified some similarities and differences among for-profit organizations, not-for-profit, and government financial environments in the health care industry. Specifically, the paper points out the different aspects of each entity in relation to hospitals. The most apparent and important is the fact that all three must provide quality latherer to patients, and this must be performed by a qualified healthcare personnel who meet set guidelines for their profession.

Each entity is needed and their purpose and mission should be clearly defined. Healthcare is one of the most important industries and continues to evolve for the better of the communities and those that rely on such care.

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