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Non Profit to Profit Making

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Non-Profit to Profit Making •
Tasha Garrison

HSA 505: Health Care Planning and Marketing

Dr. Wendy Whitner

October 30, 2011

Describe the external and internal factors that influence the executive team’s decision making and specify which might be most instrumental in making the decision to become a for-profit entity. Why do you think so?

In communities around the nation, many not-for-profit hospitals are struggling to stay afloat. Rising costs, a heavy patient load and outdated equipment make some simply not economically viable. For-profit medical groups are often stepping in and buying these hospitals. While some community leaders are relieved that the hospitals are being saved, others worry that it will be at a cost to the economically disadvantaged in the community. With more hospitals on the auction block every day, the effect of this change is likely to become clear in the coming months and years. There are several factors that contribute to an executive team deciding to become a for profit organization. The most common reason is financial. Both internal and external factors can also influence an executive team’s decision to become a for profit entity. Some of the internal factors are employee turnover or employee relations issues, dated or obsolete facilities, and healthcare services that may be out of line with market demand. The external factors that contribute to executive team’s deciding to become a for profit include the increased competition from other hospitals in the area, the decline in the patient population, decline in third party payer rates, and the decline in patient income levels.

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