Non-Profit vs. for-Profit

Topics: Tax, Charitable organization, Fundraising, Health care / Pages: 3 (727 words) / Published: Dec 10th, 2013
Non-Profit vs. For-Profit

The main difference between non-profit and for profit healthcare organizations are; Non-profit hospitals don’t need to pay property, sales or income taxes and receive grants from the government and through donations. They were designed to provide discounted fees for service or no fee to those in the surrounding communities with limited to no funds for healthcare, basically the poor or those who fall within the guidelines of those below poverty level. The tax exemptions that they receive also reduce the contribution to the community benefits. There has been a widely known study and some controversy that “20-80% of non-profit hospitals are failing to make the necessary societal contributions equal to the amount of taxes they are exempted from”. In Texas a law has passes that requires non-profit hospitals offer charity care that equals in value to their tax exemptions. For profit hospitals income is provided through their daily operations, (i.e. billing patients). There are stockholders and investors which the hospitals share or distribute a portion of the profits. Since the for-profit hospitals are not tax exempt one tax in specific; property tax, is filtered back into the community and contributes to their benefit as a whole.

All hospitals for-profit, non-profit and government have to acquire a significant amount of funds to operate at full capacity. Some of the factors that impact operations are, non-profit hospitals are the intermediate choice for healthcare and government hospitals the least as they provide mediocre or basic service for the poor, for profit hospitals are the primary hospitals of choice because they have a pre-conceived reputation of providing quality care. A few ways to improve the financial and operational performance of non-profit hospitals would be to improve fund raising, not using the same ‘boring’ methods year after year. Think outside the box for non-traditional ways to market the organization and generate



References: David, Guy. The convergence between for-profit and nonprofit hospitals in the United States. International journal of health care finance and economics 9.4 01 Dec 2009: 403-428. Springer. 14 Apr 2011. Duggan, Mark. Hospital market structure and the behavior of not-for-profit hospitals. The Rand journal of economics 33.3 01 Jan 2002: 433-446. Rand Corporation. 14 Apr 2011. Nesvisky, Matt. “The Value of Tax-breaks for Not-For-Profits”. National Bureau of Economic Research. Accessed on December 5, 2007. Bradford H. Cray, ed., For-Profit Enterprise in Health Care (Washington D.C.: National Academy Press, 1986). Bradford H. Cray, ed., For-Profit Enterprise in Health Care (Washington D.C.: National Academy Press, 1986).

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