July 16, 2020
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Are Non-Profit or For-Profit Hospitals Better?

According to Bizfluent, the majority of U.S. hospitals are nonprofit. Their tax-exempt status requires them to provide more community-based health programs and to attend to all patients irrespective of financial status. On the other hand, for-profit hospitals have the ability to stock the latest medical technologies and are well-suited for advanced care. Here is a comparison of both types of hospitals to determine which is better.


This is where nonprofit hospitals shine. They traditionally charge lower rates than for-profit hospitals for almost all medical procedures. The icing on the cake is that the lower-cost care does not come with a corresponding drop in quality level. Statistics show that despite charging more, for-profit hospitals perform worse than nonprofit hospitals when it comes to treating common illnesses, and, consequentially, have higher death rates. That is because the quality of care depends on the ability of employees and the institution’s general policies.


The federal government requires all hospitals to administer free stabilizing care to all patients who seek help. They are all supposed to save lives and ensure that all patients are out of danger before asking for compensation. For-profit hospitals can lawfully release patients who lack the ability to pay for further treatment after they establish that they are out of danger. Nonprofit hospitals are obligated to treat all conditions, whether life-threatening or not, regardless of the patients’ financial or health insurance status.


Even with tax exemption, most nonprofit hospitals are struggling financially. They bring in less money than their for-profit counterparts and most have huge debts. On the other hand, for-profit hospitals enjoy financial stability and most are not only debt-free but also able to purchase the needed advanced medical technologies. For-profit hospitals, therefore, are better equipped and provide better surgical services and diagnostic procedures than nonprofit hospitals.

Community Support

Nonprofit hospitals have an obligation to the community. They have a responsibility to provide and promote smaller community health organizations such as free acute-care centers and community health clinics. For-profit hospitals’ responsibility is the investors. They have to accrue enough profit to pay dividends to the shareholders while still taking the enterprise in the approved direction. Their pressure to maximize profits limit their support to the community.

Uncompensated Services

The tax-exempt status comes with a condition: all nonprofit hospitals are to give away a certain amount of their services to the community. These services are known as uncompensated services are a measure of a hospital’s benefit to the community. They include the writing off of bad debts and the provision of charity care. Although the IRS is not very strict on the percentages of uncompensated services, nonprofit hospitals still give away a greater proportion of their services compared to similarly situated for-profit hospitals.


Nonprofit hospitals offer expensive yet financially-nonviable facilities such as intensive care burn and high-level trauma wards. They also provide services that benefit the community at the expense of the hospitals’ income such as drug treatment programs and psychiatric care. For-profit hospitals invest in facilities for treating expensive conditions including state-of-the-art tech for cardiac or complicated diagnostic services.


Counterintuitively, richer neighborhoods boast more nonprofit hospitals, while high-poverty areas are home to more for-profits. That means that there are more nonprofit hospitals in Northeastern and Midwestern states compared to Southern states. The result is that people who can afford insurance enjoy cheaper services than those who cannot.

Apart from the ability to purchase, equip, and maintain expensive machinery, for-profit hospitals lose to nonprofit hospitals in most frontiers. Nonprofit hospitals are ideal for most illnesses and injuries, but the lack of advanced technology may force some patients to seek specialized care from the more-expensive for-profit facilities.

Another useful resource:

Top 20 Master’s in Healthcare Online/Online MBA in Healthcare Administration