A for-profit hospital operates on its revenue with enough leftover for capital improvements and profit.
I just got a letter asking for a donation to my local non-profit hospital. If a for-profit hospital works, why can’t they just do the same thing, but without the profit and use that money to either reduce costs or make improvements?
A non-profit charitable organization is in the business of giving their services away, but a hospital is a fee-for-services business. Why do they need donations?
(I worked for Mitre, which is a non-profit, but it’s a consulting firm and I never heard of anybody making a donation and they certainly didn’t solicit them, even though donations would have been tax-deductible.)
I’m not sure that a for-profit hospital works, in the sense that you might think it. They might also be subsisting in part on donations, tax breaks, and the like.
Many hospitals make up for non-payment by emergency room customers, people without insurance, etc. by charging more to those who can afford it. If you’re a charitable hospital, you’re more likely to have customers who do not pay which means both that you’re charging even more for regular services and that you’re probably located in a region where people with money are unlikely to ever come. You’re probably not going to be making that money back.
I question the whole underlying premise. Recent reporting from the NYTimes shows many non-profit hospitals are the most profitable medical institutions in their territories.
Paywalled, unfortunately, but there’s a fair bit of meta-reporting and other activity following from these stories.
There’s a difference between “non-profit” and “charity”. Non-profit just means there aren’t any owners to divide the profits and any excess revenue over expenses stays in the business. Hospitals can be both, but a charity is not required to provide all services for free- they can bill insurance and/or charge on a sliding scale for most people and still be a charity.
Most U.S. hospitals are organized as non-profits. There are very few charitable hospitals, by which I mean they don’t charge patients.
(ETA: ninja’d!)
Even among the charitable hospitals, whether they need your donations to provide hospital care is a matter of opinion. St. Jude Children’s Hospital in Memphis is probably the most famous. See their most recent budget figures from the horse’s mouth, here.
$1.786 billion in donations
$518 million in patient care services
Of course they do research ($478m) and they spend a ton on advertising ($288m), and there’s other sources of income and expenditures. But at the end of the year they’re banking half a billion dollars.
I’m not saying St. Jude is evil, far from it I think they’re doing great things. But before you donate you should really educate yourself as to where the money is going. Understand that 50¢ on the dollar goes to actual medical treatment or research.
St Jude may be a charity hospital that doesn’t charge patients, but apparently that doesn’t mean they won’t go after insurance money if their patients are insured. That annual report says they obtained almost $126 million in “insurance recoveries” and about $119 million in research grants. ProPublica ran a series of articles on how they hoard billions of dollars.
The Cleveland Clinic has solicited me twice this year for donations. They have more money than God, or at least more real estate than God. I know they know I’m not a rich person, they’ve been following me since I was born there over 40 years ago. I have given more than my fair share of very expensive business to CC. I was appalled.
Yeah, when I wrote “at the end of the year they’re banking half a billion dollars” I meant that literally. At the end of the year half a billion dollars goes unspent, and sits in a growing bank account.
Very few for-profit hospitals ever show a profit. They also ask for and accept donations. In some cases a corporation owns the hospital facility, the grounds, buildings, even the equipment, but still post a loss every year. Hospitals also make a lot of side deals that profit companies, which can turn a profit for people with existing relationships with the hospital. You can find that the chief of surgery is an owner of a parking lot operation for the hospital.
I understand the difference quite well. As I said, I worked for a non-profit company that does federal consulting. My question was why does a non-profit hospital need donations? They are charging me for services just as a for-profit hospital does; I’ve got the bills to prove it. Yet they solicit me for donations.
They charge you , possibly as much as a for-profit hospital would charge you. But that doesn’t mean they don’t provide services on a sliding scale to others , or write off the charges entirely for some people.
Just because they charge for services, doesn’t mean they are not a non-profit. Think of all the colleges and universities in the US that charge tuition, but they are still non-profits. Similar to what doreen said, schools also underwrite some or all of the costs for many students.