HSA 500 Assignment 3
1. Describe the differences between nonprofit and for-profit hospitals The Non-profit hospitals were established for charitable purposes and tend to be larger, and are more likely to be teaching hospitals. They also are responsible and accountable to the communities they serve. They are governed by leaders of the communities they serve. Earnings received from the non-profit hospitals are reinvested to improve quality and care provided at the hospitals, and also invested in community programs, such as providing no fee or discounted fees to the uninsured and low income for health care services. Non-Profit healthcare organizations mission is to serve communities by providing healthcare without regard for a patient’s ability to pay. Because non-profit hospitals are a tax exempt organizations they must follow specific tax codes to obtain financing. They do have access to tax-exempt bond financing and can offer a tax-deduction for charitable gifts. (Barton, 2010). Other external sources of financing available would be FHA loans, which are federally insured. These loans could be used for construction financing, remodeling and expansion For-profit hospitals are legally responsible to their owners and stockholders and performance is based on profitability and the return on equity to its shareholders. Profits from earnings can be distributed to owners and stockholders. There are also tax treatment differences for the for-profit and non-profit hospitals. (CBO, 2006) The non-profit hospitals are exempt from federal and state corporate income taxes, as well as local sales and property taxes. The for-profit hospitals are required by law to pay federal and state corporate taxes. For-profit Hospitals do not receive tax exemptions and are not required to meet community-benefit standards
Rising healthcare costs have created financing issues for all hospitals, non-profit and for-profit. Both will have to seek funds and increased technology to reduce...
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