FOR-PROFIT VERSUS NOT-FOR-PROFIT

For-Profit Versus Not-For-Profit

For-Profit Versus Not-For-Profit

Introduction

There has been a debate over the efficiencies of for-profit versus not-for-profit businesses. The debate covers not only general industries but also healthcare industry. The discussion is concerned with the worth of competition as well.

The Studies

Robert James Cimasi MHA, ASA, AVA, CMP™ of Health Capital Consultants in St Louis, states that many studies have been conducted recently, a number of which were controversial, have studied the impact of tax level on the costs and quality of services provided by the various forms of hospitals.

According to a report provided by Cimasi in www.HealthcareFinancials.com, investigations, published in the New England Journal of Medicine (NEJM), made a comparison between spending of Medical care (after adjustment in local costs, demographics of patients, and the various kinds of domestic healthcare providers and centers) in markets with hospitals operating as not-for-profit, for-profit, and hospitals operating in both ways.

According to the results, in 1989, 1992, and 1995, expenditures made by the government were greater on various services which were investigated (such as hospital, practitioner, home care, etc.) incorporating only for-profit hospitals. As far as not-for-profit hospitals are concerned, they incurred the lowest costs, while those hospitals which operate in both ways, their spending in the market fell in between the range.

The adjusted mean per capita spending for hospitals was also taken into account in the study, which reflected varied tax status.

Furthermore, the study which was conducted for the period of 1989 to 1995 also revealed that, cost increase for hospitals which remained operational as not-for-profit was $866 as compared to increment of $1,295 for those hospitals which were initially non-profits, and later converted to for-profit. As far as those hospitals are concerned, which remained as for-profit hospitals, showed an increment of $1,166 in cost, from 1989-1995. ...