For-Profit and Non-Profit healthcare? What is the difference?

Primarily, it is in the way they operate their business. State and Federal regulations, as well as various health care accreditations, do not differentiate between the two. For hospice providers, this means the patient is entitled to and receives the same level of care regardless of the profit status of the provider.

Both organizations are reimbursed the same. This ensures the standard of care remains consistent regardless of the provider.

Both the non-profit and for-profit provider generates revenue through their daily operations. The two types differ mainly in business regulatory rules: non-profits can issue tax-exempt bonds and can accept tax-deductible contributions while for-profits are able to generate funds. Non-profits do not need to pay property, sales, or income taxes whereas for-profits do pay them.

Non-profit healthcare organizations were established for charitable purposes, often by religious orders. As tax-exempt organizations, non-profit healthcare providers have a mission of serving communities and providing care without regard to the patient’s ability to pay.

For-profit healthcare organizations were established under a traditional business structure and must pay taxes. Frequently, they have a charitable organization within their business that also provides care regardless of the patient’s ability to pay. For-profit organizations also serve the communities in which they are located.

Despite these differences, the two types of ownerships have become more and more alike. With the dramatic rise in healthcare costs, healthcare providers have increasingly become for-profit businesses. There is often debate whether non-profit or for-profit healthcare providers as a whole are better than the other. Both provide services in increasingly similar ways as each strive to provide quality healthcare while managing rising healthcare costs to stay in operation. From an outsider looking in, they would see that both for-profit hospice companies and non-profit hospice companies follow the same set of Federal and State Rules & Regulations.

Janet Hessenflow
Executive Director, Kansas City