What is the Difference Between For-Profit and Nonprofit Hospitals?


The lights are always on. No matter what time of the day people need medical help, they can go to the hospital. Traditionally, the community or community organizations, like churches, fund hospitals because they provide a public service. Some are teaching hospitals, some target a specific specialty, like burn centers, and others provide general services. However, a major difference between hospitals that often goes unnoticed to the general public is whether they operate as for-profit or not-for-profit. As you’re looking for physician jobs, you’re thinking about what specialty you want to work in, where you want to be located and so on. However, while you’re looking at different location options, are you considering the hospital’s for-profit or not-for-profit status and how that may affect you? For National Hospital Week, let’s delve into the question, what is the difference between for-profit and nonprofit hospitals?

What is the Difference Between For-Profit and Nonprofit Hospitals? | Four Things

the difference between for-profit and nonprofit hospitals

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So, what is the difference between for-profit and nonprofit hospitals? Many will tell you that there is only one main difference between them, and that is taxes. However, that’s not necessarily true. There are a few differences between for-profit and not-for-profit hospitals, such as how many of each there are in the country, the financial opportunities available to them and culture.

1. Taxes

We’ll start with taxes since that’s the difference between for-profit and nonprofit hospitals that most people think of. Nonprofit hospitals don’t have to pay state and local taxes, including property tax. This is because they are considered a community service. For-profit hospitals, on the other hand, aren’t qualified to benefit from the same tax breaks. They have to pay taxes and operate more so as a business than an organization.

2. Scale

The second difference between for-profit and nonprofit hospitals is the fact that there are more nonprofits throughout the country. According to the American Hospital Association, there are 4,862 community hospitals in the country. Nonprofit hospitals make up 2,845 of them. There are 1,034 for-profit hospitals and 983 state and local government hospitals. With that said, you probably have a higher chance of landing a job at a not-for-profit organization.

3. Financial opportunity

The third difference is the financial opportunities for each hospital. This point wraps back around to taxes – for-profits can’t get out of paying state and local fees. But also, for-profit hospitals have a little more control of overhead cost and patients who can’t pay than nonprofit hospitals do. Somehow, it balances out despite the differences. Each type of hospital faces its own financial challenges that trickle down to the cost of care.

4. Culture

The last difference we’ll discuss is culture. Although culture is last on our list, it’s probably the number one difference between for-profit and nonprofit hospitals that will affect your career search. As you can imagine, for-profit hospitals have a more business-driven culture whereas nonprofit hospitals tend to be more service-driven. This isn’t to say that it affects the quality of care provided. All hospitals have the same goal, which is to heal people. Whether or not patients are served better at a for-profit or nonprofit is hard to determine. For example, a Harvard University study that compared for-profit and nonprofit hospitals found no difference in how patients fared. At the end of the day, whether you find a job at a for-profit or nonprofit hospital, the big picture remains the same. The lights will stay on, patients will receive the care that they need and hospitals will remain top contributors to the U.S. economy.

Do you work for a for-profit or nonprofit hospital? What are some similarities or differences you notice? Share with us in the comments below!

Author: Lenay Ruhl

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