For many, the choice to work in health care is an easy one. You’re probably passionate about the wellness and wholeness of others. Maybe you love the ins and outs of the human body, the complexities of the machines we live our lives inside of. Whatever your reasons for moving into healthcare, you may be unaware that you also need to make some decisions about where you want to work.
For some professionals, the decision of working for a non-profit or for-profit hospital will be yours to make. There’s a good chance you’ve never looked into these differences or considered what these determinations may mean, both for your salary, your work culture, or your career. If that’s you, it’s probably worth knowing a little bit more before you make your decision.
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Non-Profit and For-Profit Hospitals: What’s the Difference?
Before discussing the differences between non-profit and for-profit hospitals, it’s important to briefly discuss the similarities between profit and non-profit hospitals. Fundamentally, all hospitals function in the same ways. They employ physicians, nurses, imaging staff, lab workers, etc., working to serve patients inside of federally mandated frameworks and guidelines. All hospitals are intended to serve the communities they are in; they do this via emergency care and routine care. All hospitals are also required to ensure that all patients are out of danger before asking for any compensation.
There are many distinctions between for-profit and non-profit hospitals. A few of the more commonly understood differences are tax status, financial obligations, operational focus, scale, equipment, and accessibility.
Tax Status/Financial Obligations: This is the most obvious difference. Non-profit hospitals are tax-exempt, for-profit hospitals are not. For profit hospitals are required to pay both property and income taxes. For profit corporations are also able to continually invest their funds to raise new capital.
Operational Focus: Because of their financial obligations to their shareholders, for-profit hospitals usually have a business driven culture with a lot of accountability. Performance goals have to be met and positive financial results are extremely important. Alternatively, non-profit facilities are more service driven.
Scale: For-profit hospital organizations are typically larger than non-profit organizations.
Equipment: Typically, for-profit hospitals have better equipment and are better equipped for more involved surgical and diagnostic procedures.
Cost: Traditionally, many believe that for-profit hospitals charge more for services than non-profit facilities.
Accessibility: All hospitals are required to provide stabilizing care for all patients, regardless of ability to pay. However, once stable, for-profits can release patients without the ability to pay, while non-profits are required to treat all of the patients’ conditions, whether or not they can afford their care.
Pros and Cons of Facility Status
It’s easy to read about some of these distinctions and still find yourself asking, “What does it all mean?” Without question, there are pros and cons of for-profits hospitals and pros and cons of non-profit hospitals. These pros and cons are briefly discussed below.
For-Profit Organizations
For a for-profit facility, there is no denying that they are ultimately responsible to their shareholders and investors. This approach can lead to money-first approach, where the patients (or staff) are lost in pursuit of greater financial gains. At times, shareholders may not have the same interests as the community; this clash of interests often leads to a decrease in the pursuit of charitable causes.
Despite the intricacies of their financial environment, there are many pros of for-profit organizations. Though they have significant financial obligations, they are also free to limitlessly invest their monies. These investments can then be used to buy the best technology, the newest equipment, and update their facilities.
For-profit organizations are also often large. Their size means that the hospitals in these networks can make use of in-house resources, like legal teams, consultants, and IT teams, rather then hiring outside professionals. They also are able to seamlessly share data and best practices with each other.
Lastly, for-profit organizations can typically access their capital quicker. This means that they can make decisions more rapidly and/or make investments more rapidly. It is not uncommon for a patient to need what a for profit hospital offers, simply because these organizations have resources quicker and sooner than other non-profit facilities.
Non-profit Organizations
It was discussed briefly above that for-profit hospitals often have better resources for certain patient needs. But what about a standard patient with “normal” needs? Are there benefits of non-profit hospitals worth considering here as well? Yes, absolutely.
As mentioned, cost of services is an area where non-profit facilities typically win out. Most patients are typically going to see lower rates for their treatments, procedures, and surgeries. Research shows that the lower cost care has no bearing on quality of care. Because they have to fully treat before discharge, non-profit facilities have greater obligation to their patients as well, regardless of the patient’s financial means. This focus often leads to a more holistic and complete treatment.
Because non-profits don’t have quick and/or excessive access to capital, they can be slower to respond to new government mandates. Additionally, any excess capital they do have is often put back into existing facilities and they may lag behind in possessing or cultivating newer technologies.
Non-profit facilities are often more community minded. To maintain their tax-exempt status, they are required to give away a certain amount of services. The IRS, as proof that the hospital exists to benefit their community and the people they serve, tracks these uncompensated services.
Deciding Where to Work
It may seem that the status of the facility you work at will have a direct bearing on your salary or your career growth. However, you may be surprised to find that there is little to prove that for-profit hospitals (who typically have greater financial resources) pay their employees and staff more. This article from the U.S. Bureau of Labor Statistics concludes that those who work for non-profits make more (but it’s a negligible difference) or that there is no difference between the two.
As you dig into the differences among facilities, you may find that you want to make a decision focused more on culture. For-profit facilities are businesses first and employees will likely be performance reviewed via a numbers based system, related to results, productivity, and accountability. You may also find that a for-profit is more likely to make cutbacks to survive a bad fiscal period; staff may feel these cutbacks intimately. Alternatively, non-profits are expected to be a community service first, focused (somewhat) less on the numbers and more on their contribution to the greater good. Employees in tune with this community-first vision often feel greater personal satisfaction and growth.
Culture, pay, career growth opportunities – they all matter when you are making your decisions about where to work. But, ultimately, a hospital is meant to serve those who need them. Pay attention to the right things when you make your decision about where to work, while also not losing sight of what you’ve loved all along – helping others get back to the wellness and wholeness they deserve.
Laura Mansfield
Master’s of Science in Nursing (MSN) | Sacred Heart University
Associate’s Degree of Nursing (ADN) | North Seattle Community College
Bachelor of Business Administration (B.B.A.), Marketing, Sales | University of Washington (Seattle)
October 2019
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