Health Finance
Abstract
In the various developed and developing countries, there are several forms of the healthcare organization in terms of ownership. The health care sector is different from the others in a country’s economy, and so is the operations of the healthcare providers. For instance, a market characterized by maximization of profits has some useful features in terms of the medical service. The diversity of these ownership forms of healthcare depend on the pharmaceutical market particularities. Healthcare organizations can either be nonprofit, for-profit, owned by the state or by private-public ownership. Each type of healthcare organization has its advantages and disadvantages depending on the nature of the service provided.
Nonprofit healthcare organizations
These are organizations which are granted tax-free statussince they offer services for the benefit of the people other than making profits. Nonprofit healthcare organizations usually source capital and other resources from donations. Because they don’t have the primary goal as making profits, they have limited investment options not to compromise the nonprofit status of the organization (H Hendrikx, 2016). However, they usually invest in the maintenance of the equipment, maintaining the medical facilities, purchase of new medical equipment, making updates on the facility’s medical technology, among other necessary improvements. They usually help to promote the service-driven cultural aspects other than business based characters. In the process of approaching managed care contracts, nonprofitorganizations tend to be aggressive negotiators due to the service-driven entity of the organizations.
Also, their service-driven status limits them from lobbying and advocacy in the healthcare reforms. They either based on religion, charity, science, and public safety or educational. They can be hospitals, based in universities, churches, foundations or national charities. Sourcing resources from donors grant them the mandate to make operating and financial information on how funds or contributions from donors have been used (JC Robinson, 2017).
Advantages
Nonprofithealthorganizations usually offer lower service fees to patients. Some of them are entirely free, making it possible for the less fortunate to seek medical care. They are also able to spend less on both advertising and administration expenses. Moreover, they are involved in safety net programs sponsored by the government.
Disadvantages
It is usually challenging for theseorganizationsto raise funds uniquely when situated in counties with a weak economy. They typically face harder marketing conditions since they must motivate people to donate and volunteer. They must also make annual reports on how they utilize their funds.
For-profit healthcare organizations
In this form of a healthcare organization, they maintain a business-driven culture. Their significant distinctions from the nonprofitorganizations are that their main goal is to make profits. Despite that, they must serve the community; they must also satisfy the investors or the shareholders (JC Robinson, 2017). They are typically owned by private investors who contribute to its start and growth. Most of the for-profit health organizations are situated in Europe, North America and the United States of America. Most of the hospitals in the United States are for-profit concerning a journalpublished in 2015 on healthcare. The organizations can utilize most of their resources, such as individual consultants other than outsourcing professionals. They usually employ professionals in lobbying to enhance their objectives and agendas. The investors get the profits to inform of dividends or increased equity. Also, for-profit healthcare organizations operate on relatively narrow economic situations. The benefits so made are shared among the shareholders or used in other various types of businesses.
Advantages
The main advantage of for-profit healthcare facilities is that it earns money to investors if it is successful. Also, they have a more comprehensive array of sources for generating income, such as selling the various types of goods and services. The managers and other staff leaders for theseorganizationshave more control over the business and the decisions used in investment.
Disadvantages
All profit making organization in all industries must be taxed on their earnings. With this disadvantage, the organizations try to benefit from all tax deductions. It is also challenging for-profit health organizations to decide whether to reinvest the profits or distribute the earnings among the shareholders by paying dividends. They must also invest in ways to enhance social and environmental responsibility as an organization.
Private owned healthcare organizations.
These are healthcare organizations owned by individuals and are notdirectlycontrolled by the government. They usually get funding from individual contribution towards his or her business. Similarly to a profit-based organization, making profits is their primary objective. However, their service provision charges are significantly higher than those of other forms of ownership. Due to this, they are highly taxed by the government, depending on the profits they make (WR Scott, 2017). Privately owned organizations are known for their quality services and an unlimited budget. With this, there are no limits to expensive treatments as compared to government organizations.
Advantages
There is a quick treatment in private owned organizations, and the patient can receive services by a phone call. Registering with a privately held company is beneficial due to timely service, unlike other forms which have queues to be followed. There is also a high level of confidentiality for patient’s personal information which results in proper care. They usually have highly qualified professionals which indirectly eases the process.
Disadvantages
They are expensive to establish and maintain due to the equipment and technology required. Despite the quality services, they are costly in terms of charges for various treatments. The more the flexibility of the treatment option, the more the costs. It is hard to choose between private-owned organizationsdue to the similar services offered.
State-owned or government healthcare organizations.
Government healthcare organizations are mainly funded by the government and offer services to all people within the country. The services are mostly provided on minimal charges or completely free. They can also be owned by the local government to benefit the local communities that they serve. In most cases, they are reoffered to as voluntary welfare and health organizations and are similar to nonprofitorganizations (WR Scott, 2017). The main difference between nonprofit health organizations and government organizations is that for no profit, funding comes from the donors and well-wishers while the later comes from specifically the government. They are also tax-free and may receive funding from public donations.
Advantages
Patients in government healthcare organizations don’t have to pay for the provision of services. Theyensure that the less fortunate people can seek medical attention when health issues arise. Generally, this form of ownership ensures that every person is insured the moment he or she is born. Also, they do not suffer bankruptcies since they get funded continuously by the government(BH Gray, 2016). They help to reduce the mortality rate within a country by ensuring that there are no deaths due to lack of insurance. Benefitingfrom the task free operations save the organizations billions of money used in compensation and administrative expenses.
Disadvantages
They usually offer limited types of medical services and drugs. Therefore, there is low flexibility of patients to choosesurgical procedures and treatment options. Maintaining a centralized government may dilute the standards of confidentiality for patients. Government health organizations are usually associated with poor services despite them getting funded continuously. They also associated with fewer opportunities for highly compensated professions.
References
BH Gray, 2016, Ownership matters: Health reform and the future of nonprofit health care.
H Hendrikx, 2016, Expectations and attitudes in Health: A survey among patients of Dutch private healthcare organizations.
JC Robinson, 2017, Capital Finance and Ownership Conversions in Health Care: A primer on the economics of for-profit and nonprofit conversions in the health care industry.
WR Scott, 2017, Institutional change and healthcare organizations: From professional dominance to managed care.