Not-For-Profit Vs Nonprofit

Nonprofit versus for-profit healthcare and organizations

For-profit and not-for-profit hospitals generate revenues through daily operations. For-profit hospitals are able to generate funds through issuing stocks while non-for-profit hospitals do not have this ability. Accordingly, non-for-profit hospitals can issue tax-exempt bonds and can accept tax-deductible contributions. Non-profits were created with the intention of servicing the needs of the poor. This subsequently led to non-for-profit hospitals being exempt from taxes, as they were providing certain social services. Today, approximately 85% of hospitals are non-for-profit and are expected to have a charitable mission. One of the arguments often cited
According to a study conducted by Guy David, the reason behind different ownership statuses is a different ability to benefit from said status, not a difference in objectives. Many health organizations, such as Blue Cross, have been trying to switch to for-profit status for reasons including economies of scale, ability to serve multistate employers, and diversification of risk. While opponents of for-profit health institutions often argue that for-profits have higher costs and lower quality, many studies contradict this view. In a study conducted on Blue Cross conversions, findings showed that there was no increase in costs due to the conversion and there was no negative effect on healthcare availability. A separate study showed that hospitals that choose to convert are usually in a poor financial situation, and their finances improve after the switch in
Additionally, nonprofits that retain their status have gradually come to resemble for-profits in numerous ways. For example, more nonprofits are now relying on revenues generated from services versus donations, more of them are depending on their economic performance in order to gain access to specific types of financing, more of them have less ties with the community and are functioning on a more national level, and more nonprofits are engaging in practices traditionally reserved for for-profits such as hybrid arrangements, joint ventures and alliances. Proponents of nonprofits claim that the two entities have different objectives; nonprofits want to better the community, while for-profits are mostly interested in maximizing profits for their shareholders. While some studies suggest that for-profits actually benefit the healthcare industry, either through introducing new sources of capital or by making more services available, the studies are not