Non-Profit Healthcare Organizations

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Nonprofit Versus For-Profit Healthcare Organizations and Options to Improve Both of Their Images

Hospitals in the United States first came into existence as “institutions of social welfare,” to provide for the sick, the poor, and to treat diseases. These facilities were mainly run and supported by charities. (Barton, 2009, p.252). Over time, with America’s capitalistic society, the emergence of for-profit hospitals began to compete with non-profit hospitals. Similarities between the two include utilizing the same commodities, i.e. healthcare workers, technology to perform tests, and equipment such as hospital beds. They also both receive payments from Medicare, Medicaid,
Too much advertising of their services can call into question their accounting practices, “how can they be nonprofit if they have that kind of money for advertising.” The nonprofit healthcare provider must have “transparency,” the public wants to know what you are doing with any excess monies.” (Advertising by Nonprofit Health Care Organizations, Fall 2008, p.261).
Nonprofits can be exempt from local, state and federal taxes, bringing with it many regulations to abide. However, by following these regulations in order to keep their exempt status, they can lose much of any profit they may generate, i.e. having to accept patients who cannot pay for services rendered or receiving reduced payments from Medicare and/or Medicaid. Any actual profit is reinvested in their organization. (Barton,
They can pick and choose their patients, sometimes called “cherry-picking,” choosing patients who have less complications and referring others to nonprofits in order to save money.” (The Healthcare Manager, p.298). These types of hospitals are also more likely to provide what are considered “more profitable services,” such as open heart surgery and other cardiac services including angioplasty because insurers usually pay more for these services.” (Making Profits and Providing Care, p.1 and p.3). These providers do not have to provide free services or programs to the community because they are not considered a nonprofit and some regulations for operating this type of hospital can be less stringent than a nonprofit. For-profit organizations share their profits as dividends to their shareholders. (Barton, p.265).
For-profit organizations can improve their negative image by more involvement in the community in which they operate and showcase their efficiencies and state of the art facilities through advertising to the public. For example, Comfort Dental offices are each “independently owned,” but each franchise participates in their community by providing “Care Day on Christmas Eve” each year where they provide dental care free of charge on that day to