Distinctions Between Profit and Nonprofit Health Care Organizations

Discussion -
For-profit vs. Non-profit Healthcare Organizations
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April 6, 2022
Like any other organizations, profit and non-profit healthcare organizations are fundamentally different. Whether legally, structurally, or functionally these organizations differ in more ways than one. I believe that knowing these differences is essential not only for healthcare providers but for all other stakeholders such as healthcare professionals, patients, and policy-makers alike.
First, profit and nonprofit health organizations differ based on their very nature. On the one hand, for-profit health organizations have the primary purpose of deriving and improving revenues to satisfy their investors' goals. They are primarily owned and governed by private investors who expect to receive dividends and equities in return for their investment (Institute of Medicine, 1986). Thus, even though the provision of care is still one of the fundamental tenets that it upholds, derivation of profits is closely related to its primary functions.
On the other hand, non-profit healthcare organizations are primarily designed for a cause. In contrast to a for-profit organization, revenue is only secondary (or even not included) in its primary purpose, such as helping alleviate social conditions or providing free treatment for a specific sector of society. For example, some non-profit healthcare organizations might cater primarily to helping impoverished children access mental healthcare treatment, while others might focus on providing palliative care for immigrant cancer patients, among others. These organizations could also be for the furtherance and implementation of various rules and regulations, such as the American Medical Association (AMA), People in Need, and American Hospital Association, to name a few.
Another essential difference between these two was their legal structure and obligations. Non-profit healthcare organizations are usually not subjected to tax, whether federal, state, or local property taxes. This extends to the income it derives and its property, among others (Skerrett, 2021). This exemption is based on both the express provision of the law and the practical and ethical consideration of exempting acts of charity from being taxed by the State. In contrast to this...