In responding to at least two of your classmates' posts, assess the impact of an organization's nonprofit or for-profit status on healthcare costs for the consumer. Do you think the status of the organization impacts the quality of care?
Robert Discussion:
Hi Everyone!
The distinction between for-profit and nonprofit healthcare organizations plays a significant role in shaping their financial and economic policies. While for-profit organizations prioritize generating profits for shareholders, nonprofit organizations focus on fulfilling their mission to serve the community. For-profit healthcare organizations operate with the primary objective of generating profits for their shareholders (GWU, 2021). Their financial policies revolve around maximizing revenue, controlling costs, and delivering returns to investors. Profit-driven decision-making often emphasizes cost-efficiency, revenue growth, and profitability. Marfia (2023) discussed last week how there are some positive impacts of the application of economic principles to the healthcare industry including cost-effectiveness. Nonprofit healthcare organizations, on the other hand, are mission-driven and aim to provide services to the community (GWU, 2021). Their financial policies focus on balancing their budget, reinvesting revenue into their mission, and ensuring sustainability. Nonprofits prioritize delivering quality care and community benefits rather than maximizing profits.
Tax regulations for for-profit and nonprofit healthcare organizations differ due to their distinct purposes and structures. Nonprofit organizations enjoy tax-exempt status, meaning they are exempt from federal income taxes and may receive additional tax benefits (GWU, 2021). This tax exemption is granted based on the organization's commitment to fulfilling a defined mission and providing community benefits. For-profit organizations, however, are subject to federal income taxes on their profits. They do not receive the same tax benefits as nonprofits, as their primary purpose is profit generation rather than community service. Profit-driven organizations are responsible for paying taxes on their earnings, which can affect their financial resources and bottom line.
The question of whether the tax distinction between for-profit and nonprofit healthcare organizations is fair is subjective and open to debate. Supporters of the tax distinction argue that nonprofits provide valuable community services, and tax exemptions incentivize them to prioritize community benefits over profits. These exemptions allow nonprofits to reinvest resources into improving healthcare services and expanding access for underserved populations. Critics of the tax distinction argue that for-profit organizations shoulder a heavier tax burden, potentially limiting their financial resources for investment, expansion, and innovation. They question whether the tax benefits provided to nonprofits adequately reflect the value of the community benefits they deliver. The fairness of this tax distinction remains a topic of discussion, with arguments on both sides. Ultimately, finding a balance between financial sustainability, community benefit, and fairness in taxation is essential for a well-functioning healthcare system.
References
GWU School of Business. (2021). Profit vs. Nonprofit Hospital Administration. Healthcaremba.gwu.edu. https://healthcaremba.gwu.edu/blog/profit-vs-nonprofit-hospital-administration/
Marfia, R. (2023). 1-1 Discussion [Discussion post]. SNHU Brightspace. https://learn.snhu.edu/d2l/le/content/1339838/viewContent/25595938/View
Chantell Discussion:
Hi class,
For-Profit; The primary distinction between for-profit and non-profit organizations/firms is that the former has the intention of making money as their ultimate objective. For-profit businesses, on the other hand, aim to make money for their owners and staff. For-profit businesses are judged on their ability to make profits from the sale of their goods and services, and these profits can be distributed to their staff, shareholders, and owners. Both privately held and publicly traded entities that are for-profit are permitted. For-profit businesses can issue shares and adhere to particular regulations to safeguard shareholders (Scalesse, 2013). For-profit hospitals, Facebook, General Motors, and several more businesses are examples of for-profit institutions. Taxes on income are anticipated to be paid by for-profit businesses and organizations. The information above includes a list of each's tax regulations.
Nonprofit: According to Henderson (2018), the term nonprofit causes a great deal of misunderstanding about the work that philanthropic organizations accomplish and their place in society. It is not a matter of making or losing money. A nonprofit organization or company must meet three key criteria: ownership, public support, and a mission. Typically, charitable nonprofits have a mission that prioritizes socially beneficial initiatives and doesn't prioritize financial gain. No one owns shares of the company or interests in its assets under public ownership, and profits from the nonprofit corporation must never be paid to owners instead of reinvested in its public benefit goals and endeavors (Ben-Ner & Ren, 2015). For the money, nonprofits are not required. The distribution of non-profits funds to various recipients is regulated, however, this process is closely scrutinized. Since non-profit organizations and businesses do not pay taxes on their income, the method funds are distributed is strictly monitored to guarantee that they reach the right recipients. Although salaries are paid to employees, all additional income must either be invested for future growth or distributed outside of the company. Public hospitals are an example of a non-profit organization or business. Even in cases where a patient is unable to pay for medical care, non-profit institutions are willing to accept them (Henderson, 2018).
Altruism is a further distinction between for-profit and nonprofit organizations. According to Psychology Today (2021), altruism is the concept of being unselfish or concerned with the needs of the community rather than one's own. My personal belief is that the main quality of a tax write-off is this notion of altruism. The amount of one's adjusted gross income (AGI) that can be deducted through a tax write-off can reach 60%, which can provide many donors with a sizable financial break (IRS.gov, 2021). Numerous people wouldn't have access to healthcare or legal counsel, such as a volunteer guardian at litem, without tax write-offs. At the no-cost legal clinics, many retired law professors volunteer. Some non-profit businesses/organizations aid individuals in starting their own businesses.
Reference
Ben-Ner, A., & Ren, T. (2015). Comparing Workplace Organization Design Based on Form of Ownership: Nonprofit, For-Profit, and Local Government. Nonprofit and Voluntary Sector Quarterly, 44(2), 340–359. https://doi.org/10.1177/0899764013512422
Charitable contribution deductions. Internal Revenue Service. (n.d.). https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions
Johnston, D.(2018 June). Pepperdine| Caruso school of Law. To Whom Much is Given, Much is Expected (pepperdine.edu)
Scalesse M. The great healthcare debate: for-profit vs. not-for-profit. Nurs Manage. 2013 Nov;44(11):38-43. doi: 10.1097/01.NUMA.0000432220.71510.72. PMID: 24157804.