Profit and Non-Profit US Healthcare - Essay Example

Business: Comparison Essay on U.S. Healthcare-Profit and Non Profit Healthcare Your Name: Course Title: Instructors Name: Date of submission: Business: Comparison Essay on U.S. Healthcare-Profit and Non Profit Healthcare Healthcare is a basic kind of care given to people whether sick or not to ensure that their health condition is well taken care of for a better life. Health care may encompass preventive care and curative care. Preventive care is given to people to protect them from being infected by diseases and may include vaccination and immunization. Curative care is given to the people who are already infect or are suffering from a disease and it involves prescription of various kinds of medication. It’s usually done by qualified personnel’s who are trained to perform specific duties. Usually it’s done in a centralized place or centres equipped with tools and machines for effective working environment (Frank, 2000). Profit health care is the type of health care that requires payment. In most cases it is practiced in private hospitals. Mostly this type of health care is practiced with objectives to accomplish for example the shareholders looking forward to earn profit in there investments. On the other hand non-profit health care is the type of health care which is provided by the government to its people. It is usually referred as public. In these organizations the funds are usually divided between the consumers and the government. Mostly the costs of services are fair to the patients. Frank (2000) further asserts that this kind of health care can also be provided by community organizations and Non Governmental organizations. According to my understanding in profit health care a patient have to depend on there own source to pay for the services offered to them by the health care centre. It’s usually administered in private health care centre while on the other hand non-profit health care are considered public because the funds are always covered by the government health care services are free. In non profit healthcare the quality of services offered is poor because many people opt for them. Due to the large numbers of patients in these institutions there is tendency of cutting costs to cater for services (Health Care and Financing Organization, 2006). In addition to this they also perform better measured in terms of transactions cost. For one with the profit incentive attenuated, profits may be distributed to managers, physicians, and hospital personnel rather than to the poor and to provision of unprofitable outputs. On distribution of accounting profit they enjoy some government-conferred advantages, including exemption from corporate income and property taxes, somewhat better access to tax-exempt bond financing, and eligibility for private donations. Also on election of boards of directors of these organizations there is alternative mechanism for selecting members because they don’t have shareholders. Typically, such boards are self perpetuating, even though charters may limit their latitude in appointing members. Either this is an important difference in practice is debatable. Hansmann (1998) speculated that managers of non-profit firms may not be that different from those in large publicly traded investor-owned firms in which individual shareholders exercise no meaningful control. Due to lack of precise definition of organizational goals and of identity of owners open the doors to personal gain. Charters of non-profit health organizations generally contain clauses expressly forbidding private increment on the part of management and board of directors. They are also not tax paying and they have about the same access to tax-exempt bonds. The dividends are paid through the sponsoring governmental entity which monitors output and appoints the board of directors of the enterprise. The organizations have less autonomy than there private counterparts, in particular regarding compensation and employment and employment practices. Furthermore, not for profit health care centres are generally not in a position to refuse to care for patients, unless they do not have the facilities to care for them. In transactions costs and assignment of ownership rights the individuals who control the firm do not have the right to those firms’ earnings. In this sense, such have no owners, although, increasingly, the legal interpretation is that the community, however this is to be defined, is the owner. Due to dominance of these organizations there is uncertainty and incomplete markets for risks in market for medical care. Because such organizations are not pure profit seekers, they would not fully exploit their market power vis-à-vis a patient who experienced a major health shock. In terms of the above framework, the Arrow argument suggests that public hospitals dominate because of lower costs of contracting with consumers. They are also less prone to dupe consumers. A category of these organizations are donatives charity because individuals donate to such organizations with the intent that the health care makes a positive impact on the needy or deserving individuals. In effect, the donors purchase services from charities that in turn are given to third parties, the ultimate recipients of the gifts. Here, the rationale involves both costs of contracting and ownership, and the solution is to eliminate property rights to the organization residual (Hansmann 1998). In conclusion, the non-profit health care centres are those that are helpful to the needy people in the society. Furthermore, it is helpful to the government since it facilitates the collection of tax which is a source of revenue. In addition, the government benefits through securing employment for its, t trained physicians, doctors and the subordinate staff. This way, the benefits trickles down the whole society through salaries which increase people’s income. Profit health care is provided in privately owned health care centre where the patients are charged or meet their own expenses on the services offered to them by the organization. Here, nursing home care does not generally involve complex technology, but given the physical and mental condition of most patients, the potential for exploitation of patients exits. Profit maximizing quality level may be lower than the level that consumers would demand if they were fully informed. However, again, physicians typically monitor hospital care, and mostly work for a profit. A pure profit-seeking organization determines outputs where marginal revenue equals marginal costs. For some outputs of benefit to communities, private marginal revenue may fall short of marginal cost at the private firm’s optimum. An organization that is not fully motivated by profit may provide such socially beneficial services anyway. These health care organizations benefit from access to exempt bonds in the form of industrial revenue bonds. In this type of for profit health care there is efficiency in offering services to the consumers because physicians are well paid. Again, there is sufficient supply of implements to facilitate them in performing their duties thus good services to the patients. The consumers who pay for services came to these organizations expecting good services because of presence of qualified staff ready to attend to them. Because of class and prestige of different people in the society especially rich consumers go for this kind of medication. On the other hand the staff works to perfect there duties with the intention of creating a good reputation improve the profit earnings for the organization. The owners or shareholders may also affect the system of operation either in a positive way or vise versa depending on the part they are involved in. For example, in terms financial allocations the owners may invest unwisely leading to incompetence in the organization and subsequent collapse of the firm. Like non profit health care centers, profit heat care centers also receive donations, though in limited ratios, from private donors and non-governmental organizations. The donations are well incorporated to the health care centres thus helping them to run effectively creating more profit to the organization. The charity companies also came in hand for support of these profit oriented firms making them to develop tremendously. Due to little numbers of patients experienced in daily basis assurance of enough space for effective attendance. Just like non-profit healthcare provides revenue to the government, private healthcare also acts as source of revenue through taxes. In this health care there is investment in improving quality of service’s or reducing cost than government which provides the services it has. In these organizations, additional income is generated by either by extracting more money from third-part (government and insurance company) payers or from direct payments from patients. They take advantage of the fact that not all sick people are equally sick. For-profit companies are good at attracting low-risk patients that their strategies have earned a vivid term:” cream-skimming.” Furthermore, they save money by cutting back on their quality of care, and patients suffer. Even if there were tax advantages for donating to for profit enterprises, few donors would probably want to do this since they would not want to take the chance of enriching the firm’s shareholders. Overall, there is a great need to streamline the average cost incurred in the use either of the forms of healthcare. The quality provided should also be regulated to ensure that the patients get what they require. On the management of organizations there should be proper bodies of qualified members to take care of its interests and the workers. They should also protect and ensure that the organization runs smoothly by accounting for all financial transactions and peaceful relations maintained between the staff, patients and management board .This will improve the working conditions thus better services from the health care centres. References Frank, A. L. (2000). Not for profit ownership and hospital behavior. Retrieved on 16 February 2009 from http://www.econ.duke.edu/~fsloan/156/articles/Sloan_Article.html Hansmann, B. (1998). The ownership enterprise. Cambridge London: Belknap press Health Care and Financing Organization. (2006).Non-Profit Hospital community benefits under review. Retrieved 17 February 2009 from http://www.hcfo.net/hottopics Read More