Healthcare Case Study

All the money raised by the not-for-profit healthcare organization will stay in the organization. Funds raised by a not-for-profit healthcare organization can be used to pay salaries to employees and to pay for any administrative needs. Not-for-profit healthcare organizations can qualify for tax exemption status. Donations made to a not-for-profit healthcare organization are tax deductible for the donor; however, donations made to a for-profit healthcare organization are not tax deductible. A for-profit healthcare organization is required to pay taxes as a cost of doing business. The assets of a not-for-profit healthcare organization belong to the organization; however, the assets of a for-profit organization belong to the investors of the company. When a not-for-profit organization fails, the assets of the organization will be distributed to another not-for-profit organization. When a for-profit organization fails, the assets of the company are liquidated, and the resultant revenue is distributed to the investors based on their percentage of

In 2012, the ACA found an excessive amount of readmissions of patients that were hospitalized within 30 days for the same medical conditions. This factor viewed under the ACA as a quality issue and CMS implemented value-based incentive payments based on performance in a set of quality measures. The plan is to implement a pay for performance (P4P) in formulas used by Medicare to reimbursement providers. “The objective is to link reimbursement to quality and efficiency as an incentive to improve the quality of health care, as well as reduce system-wide costs” (Shi and Singh, 2015). In addition to the P4P, nonprofit hospitals also focus on continual improvement, data and cost containment throughout the organization (Adamopoulos,

The purpose of this paper is to conduct a comparative analysis between for-profit hospitals and not-for-profit hospital. It will discuss the characteristics of each as well as factors affecting the operations of both systems. Additionally, it discusses potential areas of improvement and some of the challenges associated with each relative to finance and operations.

They are similar to for profit facilities because they are considered private corporations and are not subject to the rules and regulations that govern public facilities (public and or governmental controls and oversight, public employment laws etc.). They are given tax exempt status and, therefore, fall under 501(c) (3) of the Internal Revenue Code, which obligates them to provide a benefit to the community such as charity care (Harris, 2014). Not for profit hospitals are governed by a body of trustees which are beholden to the fiduciary duties of the not for profit corporation. Not for profit hospitals are allowed to make a profit, but are required to use the funds for charitable

The debate over non-profit versus for-profit healthcare organization has been ongoing, does one provide better care than the other? Do the operations of for profit perform better than the non-profit organizations? Are the criticisms about for-profit organization validated and is there proof? The goal is to examine those questions as well as offer options to improve the financial and operational performance of non-profit and for-profit organizations criticisms.

In recent years, emphasis has been placed on improving the quality of health care services and the overall patient experience. Innovative measures are needed to meet these expectations, while also containing the rising costs of health care. The government has enacted new laws in attempts to provide incentives that base Medicare payments in part on quality. In fact, the Patient Protection and Affordable Care Act of 2010, requires the implementation of value-based purchasing (VBP), which bases Medicare reimbursement rates on the quality of care (Kennedy, Wetzel & Wright, 2013). Hospitals may experience a decrease in revenue initially, however, it is theorized that the increase of transparency and accountability will serve as an incentive for improvements in the overall quality of care provided in the United States.

In 1986 for-profit hospitals had a higher market power but non profit hospitals increased after 1986. In nonprofit hospitals, there is a higher frequency of treatment of patients who are uninsured so the care given is mostly uncompensated. This is also similar in forprofit hospitals although with a bit lower frequency. Nonprofit hospitals are associated with government institutions, which provide quality care than demanded. They are almost similar in providing quality healthcare although there is a slight higher quality in non-profit hospital. Non profit hospitals are required to report on the benefits provided to the community (to the tax department) but, for for-profit, it is not a requisite. If Non profit hospitals seek permission they will be exempted from paying taxes. The organizationgrants the permission if the hospital is operating for non profit purposes.

In the health care world finances play a significant role in the quality of care rendered to the consumer. There is no health care facility that is the same when it comes to their financial management because it is needed both internally and externally to ensure that it runs properly. Today’s health care field consist of either not-for-profit organizations, for-profit organizations and governmental, (Gapenski, 2008).

Guidance for financial statements for nonprofit organizations is provided by FASB Statement of Financial Accounting Standard 117 (FASB117). The goal of FASB117 was to “enhance the relevance, understandability, and comparability of financial statements” and “requires that those financial statements provide certain basic information that focuses on the entity as a whole and meets the common needs of external users of those statements” (FASB, 1993). FASB117 is considered important because it mandates functional reporting of expenses by nonprofit organizations. FASB117 requires a nonprofit organization to prepare 3 financial statements: a Statement of Financial Position, a Statements of Activities, and a Statement of Cash Flows. In the Statement of Financial Position, the nonprofit must categorize net assets as unrestricted, temporarily restricted

There are millions of healthcare organizations all throughout our country. Some of these organizations have a significantly greater financial background than others, but that depends on the size, location, and demand of the patient population. The organization that is going to be discussed is Yale New Haven, which is a large hospital in southeast Connecticut. Their most recent data dates back to the fiscal year of 2014 when the hospital saw a total of 1.2 million patients, bringing in revenue close to 3.5 billion dollars. In fact, Yale New Haven has made close to a billion dollars more in revenue compared to the year of 2012. Without the help of the 6,000 medical personnel and the 20,000 members of the staff, this large hospital would never be as successful as it is today (Yale New Haven Health, n.d.). As one can see, the hospital is growing each and every year supplying the overall demand of the patient population.

Chang, T. & Jacobson, M. (2010). What is the Mission of a Not-For-Profit Hospital? Retrieved

1. Prepare a brief situational analysis of LMF for Dr. Townsend, identifying at least 3 internal issues and 3 external issue/competitive issues that are affecting LMF.

Though they are not entirely comprehensive tools, a great deal can be learned about a hospital or other healthcare organization for-profit or not-for-profit from an examination of their annual financial documents (Finkler & Ward, 2006). The balance sheet and statement of revenue and expense can both yield valuable clues even in the absence of other evidence about changes that might be occurring in the organization, a definition of the type and degree of certain problems that it might be facing, and potential opportunities for improvement in performance that might exist (Finkler & Ward, 2006). Comparing two or more years' worth of financial information yields even more valuable insights, tracking movement in the hospital or other organization's ability to finance its activities and thus continue providing services at the same level, quantity, and scope as current operation.

Hospitals in the United State and Canada are the largest health care organization. Private hospitals may either be classified as non-profit or for-profit institutions. The main difference between non-profit and for-profit hospitals is the regulatory rules. Non-profit hospitals are not required to pay property, sales, or income tax. The reason that non-profit hospitals and other organizations were established was with the intention of servicing the needs of the poor. This is the reason that not-for-profit health care and hospitals are exempt from taxes, it was due to the fact that they were providing specific social services. Currently in the United States, 85% of hospitals are non-for-profit and are expected to have a charitable mission while in Canada 95% of hospitals functions on a non-profit basis, voluntary organizations. The core focus of this paper is to identify and discuss the aspects which make the for-profit hospitals more efficient than the non-profit hospitals.

Hospitals and health systems in the U.S. are experiencing a remarkable transformation in their business models directed from numerous influences that are projected to ultimately turn the industry around. Pressures include providers troubled with the quantity of services they are responsible for, to providers who concentrate on presenting high-cost services that give emphasis to sustaining healthy populations (Dunn & Becker, 2013).