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What Is a Non-Profit Organization in Healthcare

Many hospitals are run as charitable, non-profit organizations.

The health care industry has a large non-profit contingent within it. From the outside, and even the inside, of a hospital, you might not notice the difference but many hospitals are run as non-profit organizations which are either charitable, educational or both. Beyond hospitals, there are a number of other non-profit medical and public health programs which serve communities and medical specialties, and strive to bring health care to those who cannot afford it.

Charitable Hospitals

Numerous hospitals were founded by and continue to operate under charitable organizations. A large number of these organizations have a religious affiliation. Many community hospitals are non-profits, as are some of the United States' very best research and teaching facilities. Even many local community hospitals without religious affiliations operate as non-profits to bring health care to their communities.

Educational Hospitals

Some of the best hospitals in America are educational non-profits. They are usually university-affiliated hospitals, and are dedicated to student education and research. By virtue of their university affiliations and purposes, they qualify under IRS guidelines for non-profit status, as do their parent schools. Many of these organizations use new and sometimes experimental techniques and treatments as appropriate.

Research Institutions

In some rare cases, educational hospitals perform research only and have no university affiliation, such as the City of Hope in Duarte, California, which conducts advanced cancer research and can sometimes offer experimental treatments to patients who are not responding to traditional methods. Other similar noteworthy institutions in this category include the Mayo Clinic and the Scripps Institute; both institutions are hospital facilities which operate as teaching and research hospitals without university affiliation or ownership.

Public Health Programs

Most public health programs are run as non-profit organizations. These include a wide variety of services, including free clinics, immunization clinics, needle exchanges, hospice care for the indigent, AIDS prevention programs and more. All of these organizations share a common thread in that they are operated for charitable and educational purposes, often with little or no cost to their beneficiaries.

Tax Breaks

The biggest advantage a health care organization receives from its non-profit status is that it is free from tax burden under IRS code 501(c)(3). The lack of governmental taxation allows these health care organizations to reinvest their revenues back into their programs so that they can help more people. While many non-profit hospitals still charge going market rates for their services, any profit margins from their work do not result in net profits distributed to owners. This is because all non-profits are entities unto themselves and have no investors or owners.

Fundraising

Like all non-profit organizations, health care-oriented non-profits have the ability to seek and receive donations as well as government grants. The federal government is a major supporter of clinical research projects, meaning that non-profit hospitals that perform research often receive an advantage when they apply for federal funding. Non-profit hospitals of all sizes and goals are able to seek funds to open new wings, fund indigent patients, invest in new equipment, research new specialties, and improve programs and services. In addition to the knowledge that they have helped those less fortunate, individual donors also receive tax deductions for their charitable donations or gifts.


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Article Written By Eric Feigenbaum

Eric Feigenbaum started his career in print journalism, becoming editor-in-chief of "The Daily" of the University of Washington during college and afterward working at two major newspapers. He later did many print and Web projects including re-brandings for major companies and catalog production.