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Legal Structures of Health Care Organizations (HCOs)

During the first pilot test of your first training session, a new worker asks you to:

*Explain the difference between public, for-profit, and private non-profit health care organizations.
*Discuss the major differences among these three legal structures, as well as the benefits and drawbacks from a legal and regulatory perspective.

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RESPONSE:

During the first pilot test of your first training session, a new worker asks you to

1. Explain the difference between public, for-profit, and private non-profit health care organizations (HCO).

A. Public HCO

About 15% of United States population does not formally have either private or public insurance, in fact they have quasi-insurance through an informal, and haphazard, publicly-subsidised safety net with several components. Public hospitals are required to operate as providers of last resort and public clinics provide outpatient services. Private not-for-profit hospitals are under pressure to provide some free care in order to retain their tax-favored status (exemption from corporate profit tax and entitlement to issue tax-exempt bonds). The 'near poor' whose income is normally above the level that would entitle them to Medicaid can 'spend down' to become eligible for Medicaid if they incur large medical expenses. http://www.nzbr.org.nz/documents/publications/misc-publications/us-health.doc.htm

Public HCO are considered the safety net of healthcare, the decision not to buy insurance may be a rational decision for many without employment-based coverage. Granted this safety net quasi-insurance may entail lower quality care, long waits in public hospitals, and the embarrassment of relying on charity or being a bad debt. But the alternative for those without employment-based coverage is to pay a high price for an individual policy, with no tax subsidy, mandated benefits that may be of relatively low value, and a high administrative load. http://www.nzbr.org.nz/documents/publications/misc-publications/us-health.doc.htm

Public hospital organizations are similar to private not-for-profits in several respects. They too are not taxpaying, and they have about the same access to tax-exempt bonds. However, any dividends are paid through the sponsoring governmental entity. The entity monitors output and appoints the board of directors of the enterprise. Often, public hospitals have less autonomy than their private counterparts, in particular regarding compensation and employment practices. Also, in contrast to even private not-for-profits, public hospitals are generally not in a position to refuse to care for patients, unless they do not have ...

Solution Summary

This solution explains the difference between public, for-profit, and private non-profit health care organizations. It also discusses the major differences among these three legal structures, as well as the benefits and drawbacks from a legal and regulatory perspective. This solution is approximately 1300 words with online references.

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