When analyzing the structure of a country’s health care system it is critical to understand the evolution of the system over the years. A country’s health care system is a direct reflection of the county’s political, social, cultural, and economic factors. The United States health care system is made up of non-profit and profit making health care organizations. Although the structure and mode of operation of profit and not for profit organization differ slightly, ultimately their major objective is to provide health services to the society (Barton, 2009). This paper presents an in-depth discussion into the difference between non-profit and profit making health care organizations.
Non-profit health care organizations have one major objective, which is to benefit the society with subsidized or free health care services. Due to the nature of not for profit organization the government exempts them from paying corporate taxes. The government expects not for profit organizations to use the tax subsidy only for provision of health services to the public. According to Schlesinger and Gray (2006) not for profit health care services have been under scrutiny over the years because they do not provide health care benefits commensurate to the tax subsidy, which is reducing the effectiveness of the health care system. Non-profit health care organizations are only allowed to use the tax subsidies from the government for the benefit of the society (Schlesinger & Gray, 2006). A profit making health care organizations is established for the sole purpose of making profits and they pay taxes to the government.
Another difference between non-profit and profit making organizations is ownership structure. In the case of profit making organizations health care organizations the investors have the legal ownership of the business. However, in non-profit organization the investors do not have legal ownership of the business and therefore can lose control of the organization at any point.
According to Schlesinger and Gray (2006) both non-profit and profit making organizations are entitled to make returns on investment, however the difference between the two forms of organization is based in the manner profits are used. After making reserves for retained earning profit making organizations distribute the surplus to the shareholders of the business. Non-profit organizations are limited in the amount they can retain for investment a considerably large portion of their profits is expected to be channeled to benefit the society.
Another inherent difference between profit making and non-profit making health care organizations is voting powers of the shareholders. In profit making organization shareholders have voting powers while in non-profit organizations investors do not have voting powers.
There are factors, which influence the operations of non-profit and for profit organizations. These factors include the objective of the organization. The goal of profit making organization is to create wealth for the owners. The operations of profit making are tailored in such a manner that they maximize patient’s value so that they can make profits for the owner. The objective of non-profit health acre organization is to provide health services to the society or a vulnerable population for the greater good of the society (Barton, 2009). The objective of the two organizations influences how efficiently they implement their objectives.
Over the years, profits making health care organizations have been accused of showing disregard for the community by focusing on their profit motive. The poor in the society are left to the peril of Medicaid from the government because without a health cover profit making organizations refuse to offer their services to an unprofitable patient even if the patient is on the verge of death (Schlesinger & Gray, 2006). Profit making health care organizations has also been accused of providing sub standard services in order to increase their profits at the expense of the patients.
Barton, P. L. (2009).Understanding the U.S. Health Services System. USA: Health Administration Press.
Schlesinger, M., & Gray, B. H. (2006). How nonprofits matter in American medicine, and what to do about it. Health Affairs, (02782715), W287-W287-W303. Retrieved from http://search.proquest.com/docview/204503696?accountid=45049
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