For-Profit and Not-For-Profit Health Organizations
Profit oriented health organization from the descriptive name is targeted toward profit-making and maximization from the sale of there services. Private entities mainly run the for-profit organization. Conversely, a not-for-profit healthcare organization, are health organizations that work towards the social well-being of individuals. The non- profit healthcare organizations are either run by state or federal government (Verulava, Jorbenadze & Dangadze, 2018). Statistically, when making a comparison in terms of the number of facilities that are either for-profit or not-for-profit in the U.S, the not-for-profit is more than for- profits. In the U.S, 57% of healthcare organizations are not-for-profit, while 26% are for profits or private (Verulava, Jorbenadze & Dangadze, 2018).
The matrix below highlights some of the significant disparity between these types of organization.
| Constraint | For-profit healthcare organization | Not-for-profit healthcare organization |
| Management format | The management approach for-profit healthcare organization is a decentralized approach. A decentralized system of management is characterized with proper management of resources, improved healthcare outcomes and better service delivery. Additionally, a decentralized system of governance ensures a decision-making process that is well thought and feedback related. All these mentioned attributes contribute to the maximized profits in these organizations. | These healthcare organizations use a centralized approach to management. Because both the federal and state government controls the not-for-profit organizations, the health policies implemented by these levels of government guides its operations. |
| Strategic goals | The fundamental strategy for these organization is profit maximization, thus increasing their net revenue. These organizations aim to gain a larger market share than their competitors within the health market. | The not-for-profit healthcare organization strategic goal is the provision of healthcare services at an affordable cost for societal well-being. |
| Accessibility to capital market | For-profit organizations have high accessibility to the capital market (David, 2009). Accessibility in terms of loaning and grants makes these organization’s access to funds possible and easy. This ease in financial access has facilitated these organizations services and facilities. | Conversely, the not-for-profit healthcare organization have limited access to the financial markets. However, they raise their finances through, donations, charity and both state and federal funding. |
| Strategic marketing | These for-profit healthcare organization, like any business that needs customers relies on the common medium of advertisements like Television, radio, social media and magazines. | Conversely, for-non-profit healthcare organizations they rely on well-wishers who are donors and charity organization to make recommendations or promote their services. |
| Quality attributes. | For for-profit healthcare, organizations quality is critical. This is partly because they are driven on big financial muscles and customers also spend much money at these facilities, they, therefore, give quality services to them. The best quality attribute of these facilities is on patients satisfaction and feedback. | On quality, even these facilities offer quality services to their patients, and they make emphasis on their feedback. However, the financial constraint limits their operation ultimately, compromising quality delivered. The limited funds in these facilities are the only factor that limits the dispensation of quality service. |
| Pricing and volume management | The management of these facilities decides the prices at the for-profit healthcare organization. The procedure of pricing includes the level of expertise, the equipment in the facilities and the services offered (Eiland, 2015). These organizations usually charge exorbitant prices that many individuals can’t afford. The high pricing in these facilities limits the volume of patients who visit these facilities. | The government controls the pricing at the non-profit healthcare organizations. The pricing is to cover the majority of individuals who cannot afford the high charges in profit-oriented organizations. In terms of volumes, because of the low costs, these facilities have higher volumes of patients compared to profit-oriented facilities. |
Reference
David, G. (2009). The Convergence Between For-Profit and Nonprofit Hospitals in the United States.International Journal of Healthcare Finance and Economics, 9(4), 403-428.http://dx.doi.org/10.1007/s10754-009-9068-0
Eiland, M. R. (2015). Differences Between For-Profit and Nonprofit Hospitals: Perceived Quality and Access. https://scholarworks.waldenu.edu/cgi/viewcontent.cgi?referer=https://scholar.google.com/&httpsredir=1&article=1748&context=dissertations
Verulava, T, Jorbenadze, R & Dangadze, B. (2018). The Role of Non-Profit Organizations in Health care System: World Practice and Georgia. Georgian medical news. 274. https://www.researchgate.net/publication/323317998_The_Role_of_Non-Profit_Organizations_in_Health_care_System_World_Practice_and_Georgia