Ownership Forms of Health Care Organizations Essay

1227 Words 5 Pages
Title: Ownership Forms of Health Care Organizations
Class: MHA612: Financial & Managerial Accounting

There are many common ownership forms that are available to form a health care organization. So when asked to advise fifty doctors on what common ownerships forms there are you must first think of what organization of health care you plan to open. Working on the capacity as an external consultant in the field is common to give guidance and provide feedback to any ideas that can help improve the way to do things. To have a better outlook on how things can be done 50 doctors have gathered together to come up with ideas on developing ownership form for their organization. The job is to oversee the ideas and ensure them that the ideas
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A not for profit, business oriented organizations are owned by the entire community rather than by the investor owners. Unlike the kits for profit counterpart, the primary goal of not for profit organization is not to maximize profits but to serve the community in which it operates through the healthcare services it provides. When it comes to not for profit organizations usually are exempt from federal income taxes and property taxes. In return for this favorable tax treatment, a non for profit organizations are expected to provide community benefit, which often comes in the form of providing more uncompensated care. (J., 2006)
There are advantages and disadvantages when it comes to each form of ownership, for instance if you pick not for profit business oriented the primary advantage is that it has tax advantages. Which also means it can sometime enjoy having a lower cost of equity compared to the for profit firms. However, the disadvantage of this form is that not for profits are very limited to the access they have to the capital.
For profit healthcare entities the main of objective is to earn profits that are distributed to the investor owners of the firms or reinvested in the firm for the long term benefit of the owners. For profit hospitals management must strike a balance between their fiduciary responsibilities to the owners of the company with their other mission of providing acceptable quality healthcare services to the community. The advantages and

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