Nonprofit versus For-Profit Healthcare and Organizations

Nonprofit versus For-Profit Healthcare and Organizations

Introduction

The healthcare industry comprises for-profit and nonprofit healthcare organizations. Some of the organizational changes in the industry over the past years include the rise of several types of nonprofit or for-profit hybrid organizations, the development of vital for-profit components among healthcare providers, the increase in the number of vertically integrated organizations and organizations involved in both healthcare provision and financing, the increase in investor-owned for-profit healthcare organizations where owners focus on profit generation, the emergence of physician entrepreneurship and the growth and prevalence of multi-institutional arrangements among nonprofit and for-profit healthcare organizations. On-profit healthcare organizations operate as charities, while for-profit healthcare organizations focus on profit maximization.

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Characteristics of Nonprofit and for-profit healthcare organizations

Investors own for-profit healthcare organizations. Therefore, they are accountable to investors who receive profits through increased equity or dividends. Another characteristic is that they must pay taxes because they are classified under income-generating business entities. Therefore, for-profit healthcare organizations promote healthcare services with high net profit, such as surgery, to generate more revenue. They also downplay healthcare services that do not generate profit, such as substance abuse treatment and psychiatric care, to reduce expenses. Consequently, nonprofit healthcare organizations are more service-driven because they operate as charities. They focus on reinvesting any revenue into purchasing medical equipment, maintaining healthcare facilities, updating technology, and making necessary medical improvements.

Options to improve the financial and operational performance

One of the strategies that can be used to improve operational performance is benchmarking. According to Alosani et al. (2016), benchmarking includes gathering and analyzing data to determine how well the business policy, process, or program is performing and whether any modifications are needed based on similar businesses’ experiences to improve business outcomes. Healthcare organizations can benchmark operational aspects such as customer service and employee retention to improve performance by adopting retention policies, salary structure, and performance management strategies used by successful organizations. Healthcare organizations may also benchmark programs that can improve service delivery, such as patient-physician programs, patient data management, and telehealth. However, it is vital to consider the fact that achieving high operational performance is a continuous process, including minor improvements based on specific performance goals and objectives.

Organizational performance can also be enhanced through staff training and modern technology. The current healthcare industry has been influenced by technology, which is mainly used to improve patient care quality and enhance efficiency in the delivery of various healthcare services. Technology needs to be updated regularly to meet healthcare needs, hence the need for staff training to equip staff with the knowledge and skills required to use technology. Staff training should also focus on providing staff with other competencies that may be necessary to improve service delivery, such as electronic storage and retrieval of patient data and telehealth. The training program may be designed based on identified training needs and improvement areas.

Financial performance can be enhanced by improving the quality of care in healthcare organizations. According to Pavel et al. (2015), patients are willing to pay for quality care despite the costs they may incur as long as they are assured they are getting the highest quality. Therefore, healthcare organizations should invest in quality by ensuring that the healthcare providers have the required knowledge, skills, and competencies, providing a patient-friendly environment that fosters collaboration between the patients and healthcare providers, and investing in new technology and modern medical equipment. Healthcare quality can also be improved by using patient feedback to identify improvement areas and factors affecting client satisfaction, such as the professionalism and availability of healthcare providers.

Healthcare organizations can also enhance financial performance by reducing overall spending. One of the strategies that can help to reduce overall expenditure is optimizing scheduling and eliminating any excess staff to reduce costs incurred in salaries. Patients can be encouraged to use telehealth services before scheduling physical doctor visits. Healthcare organizations should also consider optimizing patient flow to decrease wait times and delays. Another strategy that can be used to reduce overall spending is outsourcing staff whose services are not in high demand in healthcare facilities to reduce the staff on the organization’s payroll. However, it is crucial to ensure that the reduction in spending does not affect the quality of services offered.

Criticism of for-profit healthcare organizations

For-profit healthcare organizations have been criticized for advertising healthcare services (Gunawardane, 2020). Advertising healthcare raises ethical concerns based on the argument that the funds used in advertising can be used to improve the patient experience or the quality of healthcare. For-profit healthcare organizations have also been criticized for prioritizing profits over human health. For example, there have been concerns about the unavailability of healthcare services for patients who cannot afford them and the high cost of healthcare services such as elective surgery. In some instances, for-profit healthcare organizations have been criticized for unfair payment policies that hinder patients using government healthcare insurance, such as Medicare, from using the insurance to pay for healthcare services.

Conclusion

The healthcare industry has transformed over the years due to the rapid increase of for-profit healthcare organizations. The existence of nonprofit healthcare organizations increases access to healthcare services by eliminating the barriers created by for-profit organizations, such as the unavailability of healthcare services for patients who do not have money to meet the required healthcare costs. However, it is important to monitor the organizational performance of nonprofit healthcare organizations to ensure that they offer quality healthcare services and use revenue generated from their operations to serve patients by investing in medical equipment and maintenance of operations within the healthcare facility.

References

Alosani, M. S., Al-Dhaafri, H. S., & Yusoff, R. Z. (2016). Mechanism of benchmarking and its impact on organizational performance. International Journal of Business and Management, 11(10), 172. https://doi.org/10.5539/ijbm.v11n10p172

Gunawardane, G. (2020). Legal and ethical issues affecting health care marketing. Modern Health Care Marketing, 359–407. https://doi.org/10.1142/9789813279520_0013

Pavel, M. S., Chakrabarty, S., & Gow, J. (2015). Assessing willingness to pay for health care quality improvements. BMC Health Services Research, 15(1). https://doi.org/10.1186/s12913-015-0678-6

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Nonprofit versus For-Profit Healthcare and Organizations

Use Google search or one of the approved websites posted in the Web Resources section of the Course Resources page to find a research article(s) (no older than 2001) related to a nonprofit versus for-profit healthcare and organizations. Analyze the characteristics of each type of organization and the factors that impact operations. Discuss options to improve the financial and rational performance of nonprofit organizations and the criticisms leveled at for-profit healthcare organizations. Your resultant written paper should be 3-4 pages, double-spaced, and in APA format/style. Your primary text and the journal/website research article must be used as references to support your analysis/summary paper. Use at least three references.

Paper Organization:

Cover Page
Introduction
Selected Article: must be related to nonprofit versus for-profit healthcare and organizations
Analysis: Analyze the characteristics of each type of organization and the factors that impact operations.
Discussion: options to improve the financial and operational performance
Criticisms: leveled at for-profit healthcare organizations
Conclusion
Reference Page