Nonprofit Business Model

According to Charities & Organizations, non-profit hospitals provide greater proportions of uncompensated care than for-profit hospitals. Uncompensated care is not carried by all nonprofit hospitals. Nonprofit and for profit hospitals are different and offer different types of services .Services like high-level trauma or intensive care burn wards are

More specifically, cash flow for example; for-profit organization stake holders would expect a steady cash flow and even mirror that flow as a sign of success. On the other hand, in a non-profit cash flow may not be as steady so financial management expectations would differ.

Nonprofit hospitals have become a common characteristic of the hospital sector because they can be found across the country because of their presence in almost every corner, they never decline to provide treatment, and offer several community-based health programs. On the contrary, the for-profit health facilities are regarded as the corporate model of health care services as they seek to make profit first. They enjoy huge capital that enables them to develop state-of-the-art facilities and purchase the latest clinical technologies.

According to our text, “Not-for-profit organizations lack a residual ownership claim and the organization’s purpose is something other than to provide goods and services at a profit.” “Because significant resources are provided to governments and not-for-profit organizations, financial reporting by these organizations is important.” (Page 2).

This paper will discuss about organizational structure, philosophies and business practices of for-profit healthcare organizations and non-profit organizations. The most essential dissimilarity between nonprofit and for-profit organizations is the reason they exist. As for-profit organization in healthcare, they are generally found to generate income for entrepreneurs and their employees. However, nonprofits are generally found to serve a humanitarian or environmental need. Furthermore, nonprofits an organization does not pay property taxes due to a consideration of a charity and they establish a certain community in agreement with state and federal

The following questions relate to the statement of operations of not for-profit health care organizations.

For profit providers look at health care as a business, with a financial bottom line producing profits that can be distributed to shareholders. Supporters of for-profit health care say that increased competition can produce a more efficient, effective, less expensive health care system. Since the 1980s, for-profit health care facilities have proliferated, including national hospital chains, health plans,

The difference between for-profit and non-profit hospital has been debated for a long time. The established of the two differentiates institutions of health has also had controversial twists concerning their societal role. For-profit hospitals are said to be after money more than service delivery, while non -profit are not. Both hospitals use their market power in a similar way that it is sometimes hard to differentiate their behavioral characteristics. From research, it has shown that knowing the differences is relevant.

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).

Whereas a not-for-profit healthcare provider, cannot share their profits with any shareholders since they receive a tax-exempt status as long as their services are towards the members of the surrounding communities and are following a stricter set of rules and regulations. Non-for-profit healthcare providers are also seen as a voluntary healthcare organization and are known for providing charity care, especially to those that are uninsured.

Not for profit organisations consist of organisations that are not run for the profit or personal gain of individual/s. They are often referred to as charities and provide benefit services to society, often encouraging people to band together by sharing resources to achieve a common goal. Profits can be obtained by these organisations but must applied for the organisations purposes. These organisations include Surf life-saving, Churches, and Salvation Army etc. (Sessoms, 2014).

The major objectives of healthcare financial management include: generating income (which is the most important) because it is the financial status of the organization. It is important to ensure that revenues are exceeding expenses. After assets are invested in, they are meant to be used. They must respond to regulations and be accredited to qualify for loans, reimbursements, etc. Facilitate relationships with third-party payers because they are the ones helping with the bills. The health organizations must also influence method and amount of payment to avoid overpaying, when faced with capitated prices or prospective payments. Monitoring physicians is important because they are at the forefront of everything, so management must make sure that physicians’ orders are consistent with patient needs. Lastly, protecting tax status involves for-profit organizations trying to reduce tax liabilities, while not-for-profit organizations try to protect their tax-exempt

A non-profit organization cannot be effectively managed if it is not effectively planned. One of the challenges facing non-profit organizations has been long range, strategic planning. Long range, strategic planning in the non-profit sector is essential to the success of an organization. Long range, strategic planning encompasses broad policy and direction setting, internal and external assessments, attention to key stakeholders, the identification of key issues, development of strategies to deal with each issue, decision making, action and the continuous monitoring of results. (Herman, The Jossey-Bass Handbook of Nonprofit Leadership and Management, 154) While it is important to deal with the short term planning and activities of non-profits, managers or directors must consider the future of their organizations. Successful planning should be comprehensive, integrating all areas of responsibility of an organization.

Non-profit organizations do not belong to the commercial sector or the public sector, but occupy an intermediate position. It gives

A not for profit organization is a corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive (Legal, 2013).” There are immense community benefits as a not-for-profit generally accepts everyone regardless of ability to pay. Nonprofit organizations are granted tax-exempt status which helps them to provide services to the public and are expected to be effective managers of their finances as well as being efficient (Financial Management, 2010). In doing so, they can gain exemptions from federal and state incomes taxes and have the ability to solicit tax-deductible contributions (Financial Management, 2010). Organization must follow legal financial