Hospitals and Long-term Care Facilities
Health Services Organization
Professor David Tataw
November 13, 2011
Describe the differences between nonprofit and for-profit hospitals.
A non-profit hospital is a hospital which is organized as a non-profit corporation. Non-profit are the largest grouping of hospitals in the nation, although they have declined over time. These hospitals are self-established and self-supported. They are administered by a board of directors or trustees in which the community selects and non-profit hospitals functions as a tax exempt entity. Non-profit hospitals raise money through donations, reserved earnings, and debt obligations. Additional incomes generated by the hospital’s activities are invested in the improvement and upgrading of the hospital and its services. Most nonprofit hospitals operate in a manner similar to other types of hospitals by employing modern management techniques, sophisticated information systems, and other principles of twenty-first century management (Williams/Torrens p.186) For profit hospitals are owned and operated on a for profit basis. They are also referred to as an investor owned hospital. These hospitals make up a smaller percentage of the nation’s hospitals. For profit entities have owners and issue stock to those owners to reflect their equity position (Williams/Torrens p.186). These for profit hospitals may be public or private. Public nonprofit hospitals have stock that is available to be purchased by anyone, through the nation’s stock exchanges. Private nonprofit hospitals issue stock as well, but the purchasing of the stock isn’t available for purchase from the general public. Jill Horwitz, a business and law professor at the University of Michigan who studies the hospital market, says the biggest difference between the two types of hospitals is in the services they offer. For-profit hospitals, she says, are more likely to offer lucrative services, such as cardiac...
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