Healthcare system

Healthcare system

Healthcare system





During the late twentieth century so many for-profit hospitals have come up all over the world. I choose to make for-profit hospitals the basis for this paper because of their increase in number. There is the need to find out why these hospitals have become so many and if they are effective. It is crucial to establish what these hospitals entail and how they are run. It is also important to note how these healthcare systems differ from other systems.

For-profit hospitals are chains of hospitals that are owned and managed by private investors. They have become a predominant means of medical services delivery all over the world. Unlike other healthcare systems, for-profit hospitals are established in order for the shareholders to make profits. Though all hospitals earn some sufficient profits for their operation, for-profit hospitals have a high likelihood of responding to their profitability as compared to other types when it comes to making decisions on supply (Silverman, & Skinner, 2001). For-profit hospitals place themselves in the medical marketplace in a way that they offer mainly care services that are profitable for individuals who are affluent and insured. These for-profit hospitals are not located in areas that will not be profitable to the organizations. This means that patients who seek services of for-profit hospitals are those who are wealthy hence can be able to afford the services. Since these hospitals are costly, patients who seek the services often pay through insurance. It would be difficult for individuals who are not insured to seek services from for-profit hospitals since they might not be able to pay (Silverman, & Skinner, 2001).

For-profit hospitals mostly specialize in medical fields that are highly lucrative like elective or plastic surgery, medical rehabilitation, cardiology among others. At the same time, they usually avoid providing services which they term as loss-making such as emergency medicine which is mainly provided to the indigent. The critics of for-profit hospitals argue that these hospitals insure healthy people disproportionately at the same time eschewing patients who are chronically ill. These people have no option but rely on services from non-profit providers and public insurance schemes. This is referred to as dumping of patients who they do not desire. The advocates of for-profit hospitals argue that these hospitals can be able to offer better care to patients at lower costs due to their high efficiency. It is also claimed that in a free market such as the healthcare market, hospitals have the incentive to perform better because of the existing competition.

We can compare for-profit hospitals and not-for profit hospitals using different factors. Not-for-profit hospitals are facilities that do not pay taxes to the government since they are considered to be charity and provides benefit to the community according to the guidelines that have been set. On the other hand, for-profit hospitals are facilities owned by private investors. For the not-for profit hospitals the assets remain within the community while assets in the for-profit hospitals remain to be the property of the owners or investors.

In the not-for profit hospitals, there are a local board of trustees who serve without being paid and create a balance between financial decisions and the concerns of the members of the community (Gentry, & Penrod, 2008). In for-profit hospitals, critical decisions are made by people outside the community who focus mainly on making profits for the stockholders. The not-for profit hospitals are not meant for making private profit but for-profit hospitals can have physicians practicing at the hospital as stockholders but members of the community are not allowed to buy stocks. For the not-for profit hospitals, all the income realized after expenses have been catered for is used in the improvement of healthcare in the entire community. On the other hand, the profits in for-profit hospitals leave the community and are only enjoyed by the stockholders involved.

When it comes to service delivery, not-for profit hospitals provide a complete spectrum of care that entails education, prevention and treatment which are of great benefit to the community (Gentry, & Penrod, 2008). For-profit hospitals offer a full range of care that is aimed at benefiting the community but their main focus is how best to serve the investors. The for-profit hospitals mainly target wealthy and insured people while not for profit hospitals provide healthcare services to the poor and insured members of the community. Both the for-profit and not-for profit hospitals provide healthcare services to members of the community where they are located.

In conclusion, we can say that not-for-profit hospitals are more effective in their service delivery compared to for-profit hospitals. This is because the for-profit hospitals focus on making profits so as to please their stockholders. Their priority is profit making and not delivering quality services to patients. The not-for profit hospitals always put the health of their patients first and they hold themselves accountable for the patients they serve in the hospitals.


Gentry, W.,& Penrod, J. (2008). The tax benefits of not-for-profit hospitals. Cambridge, MA: National Bureau of Economic Research.

Bottom of Form

Silverman, E., & Skinner, J. (2001). Are for-profit hospitals really different? Medicare upcoding and market structure. Cambridge, MA: National Bureau of Economic Research.