For-Profit vs. Non-Profit Healthcare

23 Aug

In healthcare, there are two general types of healthcare institutions: For-Profit and Non-Profit. Read on to learn the difference between the two.

For-Profit

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.

Non-Profit

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!