For profit vs. not for profit organizations
Professor Michael Schmitt
September 16, 2012
Non-Profit healthcare organization vs. for-profit healthcare organization “Hospitals can be non-profit, for-profit, and government-owned and/or operated” (Baker & Baker, 2006). There are different terms for each classification in how to report and handle the finances but the basics are the same for any type of business. Business finances require the following basic fundamentals: creating “budgets, understanding capital expenditure, loan acquisition, and financial fees” (Baker & Baker, 2006). Government owned and operated hospitals offer unprofitable services; which positions nonprofit hospitals somewhere between the government and for-profit healthcare providers.
The definition for not-for-profit healthcare providers is being able to provide care without regard to a patient's ability to pay for their service. These organizations are tax-exempt such as, nonprofit hospitals, nursing homes, and clinics. They do not look at profit the same as other for-profit organizations. Their profit comes by charging patients who can pay healthcare bills, donations, and other government funding to cover those who cannot pay their bill (ehow, n.d.). Nonprofit healthcare organizations are legally and ethically bound to do their best for each patient and are held responsible and accountable to the communities and populations they serve. The board of directors is comprised of leaders from the communities. Another name for the nonprofit sector is known as “society’s safety net” (nonprofit, n.d.).
The below non-profit SWOT analysis explains some of the strengths, weaknesses, opportunities, and threats: (Hirsch, Gandolf, 2012) |Strengths |Weaknesses | |a new and/or innovative service |absence of marketing plan | |capabilities or cost advantages |damaged reputation | |cultural connections |gaps in capabilities or service areas | |extraordinary reputation |lagging in technology | |special expertise and/or experience |management or staff problems | |superior location or geographic advantage |poor location or geographic barriers | |Opportunities |Threats | |availability of new technology |a competitor has an innovative service | |changes in population profile or need |adverse changes in reimbursement or regulations | |competitor vulnerabilities |change of insurance plans and/or contracts for major area employers | |lack of dominant competition |economic shifts | |new market segment that offer improve profit |loss of key staff or associates | |new found charities or foundations |new or increased competition | | |shifts in market demand or referral sources | |...
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