Jun 21

Written by: Matt M
6/21/2008 8:20 AM

I just read that 77% of Non Profit hospitals are in the black (i.e. profitable) versus only 61% of For Profit hospitals. If you look at the data provided by this site, you will see that generally the Non Profit hospitals are doing better. How can this be? It seems as though a For Profit hospital (i.e. a Corporation) should be "better" at actually making money, doesn't it? Is it because of tax exemptions?

How a nonprofit uses any money left over after covering the costs of operation is also important. A for-profit might distribute extra earnings to its shareholders, or invest in something that would generate greater profits going forward: valet parking, for example, might attract more well-insured patients. But to qualify as a non-profit a hospital must: “retain its net earnings and use them to promote the purposes for which the nonprofit was created. “ In other words, a non-profit must plough any surplus back into its “mission.”  Yet in today’s fiercely competitive market, non-profit hospitals sometimes spend their capital in ways that seem to have little to do with mission—and much to do with struggling to take market share away from neighboring hospitals.

Your thoughts? Please post your comments below.

 

 

 

 

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