Ownership forms of Health Care Organizations



Ownership forms of health care organizations.

Nonprofit Business Oriented Organization

Nonprofit organization works continuously to meet the healthcare needs of our community, regardless of the patient's ability to pay. As a nonprofit organization, any net income earned is reinvested in the replacement and expansion services for the community they serve, unlike for profit organizations that distribute the proceeds among the owners and individual shareholders. As nonprofit HCO, renowned health is their primary purpose to make a real difference to the many people it serves and to optimize the healthcare experience for its patients (Brecht, 1991).

Advantages

Non Profit HCOs have exemptions from most income and sales taxes, and some property taxes and ability to receive charitable donations and government subsidies. As nonprofit HCO, renowned health is their primary purpose to make a real difference to the many people it serves and to optimize the healthcare experience for its patients. The advantages include finding better ways of working and increase the interest to provide our patients, employees and communities. Nonprofit organizations work for the community irrespective of the greed for profit.

Disadvantages

The main challenge is the difficulty of raising adequate capital to finance infrastructure and keep up with technological advances. Non Profit HCOs cannot accept private investment or sell shares. And the most important responsibility is to take care of the costs to enhance and improve and quality and as well enable healthcare for the poor, uninsured and elders.

For Profit Health Care Organizations

Profit oriented entities are companies or organizations whose objectives are aligned with the achievement of profit as part of their activities. The prime motive for the existence of the nonprofit entities is to earn and increase their revenue base. Profit oriented health care organizations strive on providing quality health services so that they can maximize their profits. There are different ownership structures with respect to the profit oriented organizations.

Investor Owned Firms

Investor owned firms can be classified into two main categories; publicly traded companies and privately held companies.

Publicly Traded Company is a company that issues shares that are traded on the open market, stock exchange or OTC market. Private and institutional shareholders are the owners of publicly traded companies, and their share in the equity ratio is determined by the number of shares they own all the outstanding shares. Publicly traded companies have greater access to financing than other companies because they have the ability to attract capital by issuing additional shares. 

Privately held on the other hand refers to the shares held by comparatively fewer investors and are inaccessible to the general public. They also have fewer regulations from the Securities and Exchange Commission in terms of reporting and others.

Both of these categories fall under the umbrella of investor owned organizations. These types of firms are owned by investors holding risk based equity who expect returns in the form of shareholders' wealth (Jenkins, 1990). Investor owned firm has favorable advantage in terms of financing; they can raise debt through share capital in addition to ...