In healthcare, there are two general types of healthcare institutions: For-Profit and Non-Profit. Read on to learn the difference between the two.
Like many other corporations, for-profit healthcare facilities are backed by investors. In most cases, the goal of the investor is to make a profit off of healthcare services provided to patients in the community. Profits from these institutions can be used in any way the investors want: they can reinvest it in the hospital or, take it for themselves.
Although the term “For-Profit” carries somewhat of a negative connotation, many facilities of this type are some of the best in the world. For example, the Kessler Institute of Rehabilitation, is owned by Select Medical- which is a major for-profit entity. Many smaller, clinician-owned practices are also for-profit facilities.
One key difference between for and non-profit institutions is that profits made by non-profit facilities cannot be taken by investors, but must instead be re-invested in the facility. The main benefit of being a non-profit facility is being exempt from several taxes.
Some of the tax exemptions of being a non-profit healthcare system include:
- Federal income tax
- State income tax
- Property tax
- School taxes
Non-profit healthcare institutions are required to provide charity services to the community. Every so often, non-profits have to report their charitable contributions to state and federal governments to maintain their non-profit status. Most larger hospital systems are non-profits.
Hope that helps!