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For-Profit or Not-for-Profit Hospital

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Herman Medical System is looking at buying a rural hospital that is located 60 miles away from the main hospital. The hospital is a not-for-profit hospital, and Herman is determining whether or not it should keep the not-for-profit statues or make it a for-profit hospital.

Primary Task Response: Within the Discussion Board area, write 400-600 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas:

What factors influence the performance of for-profit systems, compared to the performance of not-for-profit systems in health care organizations?

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Solution Summary

For-profit or not-for-profit hospitals are examined. The factors which might influence the performance of for-profit systems are determined.

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The majority of hospitals in the United States are organized as charitable, not-for- profit corporations. The public does not own them. Instead, they are private corporations that are organized to pursue a community health care mission. While many aspects of their organization and regulation distinguish them from for-profit corporations, the main or significant distinction is their purpose to further charitable hospital goals rather than to maximize owners' wealth (Cutler & Horowitz, n.d.). Two principal factors driving hospital conversions are usually:

- Financial considerations. While profits are certainly important, financial considerations are not limited to concerns about profitability. Carrying heavy debt load and gaining access to cheaper sources of capital can steer the conversion decisions as well.
- The second is the culture of the not-for-profit hospital does influence the conversion decision. Stakeholders etc., tend to be more tolerant of the for-profit ownership form than people with a more religious or not-for-profit orientation.

That said, Herman needs to be aware of the following, and to make certain his plans fall within their jurisdiction.

- State law stipulates which of many ...

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