Management and Organization Behavior Health care in the US has been traditionall

Question

Management and Organization Behavior

Health care in the US has been traditionally a mixture of not-for-profit and for-profit organizations Do you think that markets where more for-profit firms exist would be inherently more competitive? Why or why not? No. The whole problem with introducing profit into the health care picture is that it assumes a free market where consumers are capable of being fully informed on the facts needed to make their purchasing decisions. This is impossible with health care. As a result, "competition" as such is not an effective regulator of either quality or price

Explanation / Answer

Health care in the United States consists of many separate legal entities. Current estimates put US healthcare spending at approximately 15% of GDP, which is the highest in the world. The United States spends the utmost percentage of health care costs on pharmaceuticals in the world. In the United States, around 85% of citizens have health insurance, either through their employer or purchased individually. However, the government does not promise universal health care to all its citizens, but assured publicly-funded health care programs help to provide for some of the elderly, disabled, and the poor Those without health insurance coverage are expected to pay privately for medical services. Health insurance is expensive and medical bills are overwhelmingly the most common reason for personal bankruptcy in the United States. The number of hospitals and clinics is increasing with the demand of health services. However data states that non profit organisations are giving neck to neck competition to for profit organisations in each dimension

Inherently it is not always that more the companies with for profit agenda will lead to a competitive scenario. However, Healthcare leaders say a hospital or health system’s nonprofits or for-profit status isn’t what leads it to profitability. Instead, it’s the health system’s location, size, ability to extent and contribute to the local market. Nonprofits are in numerous ways facing the same struggles that for-profits are. The most important differences between the two types of systems are how each accesses capital, which one pays taxes and which one must offer community benefits. Nonprofits must “serve the healthcare needs of the community.” In return, nonprofit hospitals don’t pay taxes. For-profit systems benefit from investors’ money and have more flexibility about which services they offer, often seeking more profitable ones.

Nonprofits need to prove a community benefit through their tax forms to maintain their status and exemption from federal, state and county taxes. Both nonprofits and for-profits must offer charity care.

So it is not always that only for profit companies lead to competition. With the mixture of profit and non profit firms both jointly possess the same threat to each other, keeping many factors in mind such as performance, profitability and service offerings.

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