The two main types of hospitals in the United States are nonprofit and for-profit hospitals. According to the American Hospital Association, 23.9% of community hospitals are for-profit, and 76% are nonprofit.
Nonprofit hospitals are exempt from paying federal income or state and local property taxes. Typically they are owned and affiliated with religious institutions, and the government considers them charities.
On the other hand, for-profit hospitals are owned by investors and do have to pay taxes affiliated with owning a business.
Beyond their tax status, there are other differences between these two types of hospitals that influence decision-making processes and policies of the hospital.
In this article, we will explore the differences in:
- Patients served
- Variety of services
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On average, for-profit hospitals cost more than nonprofit hospitals by about 19%. The reasons for this are varied. However, one of the contributing factors is the difference in technology. For-profit hospitals invest much more in medical technology than nonprofit hospitals. This likely accounts for some of the higher prices.
Contrary to what one might think, for-profit hospitals are mainly located in areas with under or uninsured patients, while nonprofit hospitals tend to be situated in wealthier regions. This may be because nonprofit hospitals have to provide uncompensated care. That is, nonprofit hospitals have to write off large debts owed by patients and take on any patient regardless of their ability to pay.
Variety of services
Another difference between nonprofit and for-profit facilities is the range of services offered. Nonprofit hospitals often have to provide drug treatment programs along with psychiatric care. Alternatively, for-profit hospitals tend to invest in facilities that treat expensive conditions such as cardiac issues.
The purpose of this article is not to persuade you in any way regarding the best hospital for you to work at or receive care from. There are good nonprofit hospitals and bad nonprofit hospitals, and the same holds true with for-profit hospitals. Although there are differences between nonprofit and for-profit hospitals, the quality of care and the general environment offered by these hospitals are often very similar.