Healthcare is forever changing right before our eyes. With the Supreme Court's ruling earlier this summer, the landscape has forever been changed. The debate can go on and on whether the decision was right or wrong. This article is not here to discuss the new healthcare law, but to analyze the facilities that provide the healthcare (ie not-for-profit vs. for profit). Some would argue that there are not many differences between the two types. It appears that more and more not-for-profit, community owned healthcare entities are disappearing and being replaced by greater for-profit, corporate owned entities. Is this a criticism of our current healthcare situation, or a glimpsed into what the future landscape will look like? Does a patient receive better treatment and care from a for-profit or is care independent from facility to facility? Is there still a place in healthcare for the community owned facility? Is there really any difference between the two types?
I have fifteen years of healthcare experience, with the last five serving as a manager in the ambulatory setting. Within the fifteen years I have been employed by both for-profit and not-for-profit. From own experiences the only major differences between the two was that the for-profit are more in-tune and swiftly to steer towards a positive profit margins, than that of the not-for-profit. When employed by the for-profit, if it was a slow day or the census was down, staff was cutting hours. The same can be said for a not-for-profit, but the-profits react quicker and broader. A major factor in the ability to cut and focus on the positive margin was that of the CEOs pay structure. The pay structure would be in direct relationship to the profitability of their healthcare facility. The greater the profit margin, the larger the CEO paycheck. In a for-profit it is a must for the facility to be nimble and quick with the ability to react to current market conditions. Big business is structured the same way. We have witnessed CEOs big bonus based off the fact that the company performed well. Does this have a place in healthcare? Is the profit margin the same for Toshiba computers as it would be for your open heart surgery? It has often been cited that for-profits will limit services based on profitability. I personally have not witnessed this. The for-profits I was employed by offered the same services as their not-for-profit competitors.
A major fear when a for-profit incomes a market (by buy out or merger) is the charitable giving that community based facilities are noted for. It has been noted that both types of facilities have in the same manner (ie not-for-profits acting more and more like for-profits). “Whether nonprofit organizations have differently different ownership types, particularly in the hospital industry, has raised reasonable liability.” In 2004 more than fifty lawsuits alleging that nonprofit hospitals have violated their charitably obligations were filed in federal district courts alone. overhaul of the nonprofit sector's regulatory period to increase accountability. Any discussion of the value of nonprofit hospital ownership must account for the significant differences in service offerings some hospital types and how those offerings vary according to profitability “(Horwitz 2005).
“In recent years some have argued that changes in the health care arena have forced not-for-profit hospitals to become indistinguishable from their for-profit counterparts. If this is true, we should expect not-for-profit hospitals to cut their costs by reducing expenses and cutting hospital staffing ratios. “(Potter). It seems that healthcare is becoming a blended concoction of not-for-profit and for-profit.
In retrospect, defining and maintaining a positive bottom line has become the driving force in healthcare. It seems that patient care has taken a back seat to the driver, which is profitability. Do not say this in a negative manner. I was employed for a healthcare system that had a religious affiliation. They prided themselves on the charitable care that they “wave way.” The first thing mentioned in business meeting was this, “we have to make money in order to give money away.” What a substantial statement, you can not give away what you do not have. Imagine you are the new CEO of your local community facility. Your pay structure is based on the facilities profit margin. What do you do? I feel this is more on the management spectrum than the ethical side. With the new healthcare law, shrinking reimbursements, more and more uninsured and skyrocketing cost the ability to create and sustain profit becomes a daunting task. Finding creative ways to manipulate the market and thinking outside the box to create revenues, becomes a way of life for the CEO.
Horwitz, Jill R. Making Profits and Providing Care: Comparing Nonprofit, For-Profit, And
Government Hospitals. Health Affairs. Vol 24, (May 2005), pp. 790-801
Potter, J. Sharyn. A Longitudinal Analysis of the Distinction between For-Profit and Not-for-Profit Hospitals in America Journal of Health and Social Behavior Vol. 42, No. 1 (Mar., 2001), pp. 17-44 Published by: American Sociological Association Stable URL: http://www.jstor.org/stable/3090225