For Profit and Non-Profit

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For Profit and Non-Profit

For Profit and Non-Profit
For Profit and Non-Profit

A. Financial Differentiation

As the names suggest, for-profit healthcare organizations, apart from offering healthcare services, are also established to make financial gains. On the contrary, non-profit healthcare organizations are majorly established for public and social benefit. They do not intend to make profits for their owners. For-profit organizations sell their services at a cost that enables the organization to earn a profit. The proceeds are used to finance the operations of the facility (Rice & Unruh, 2015). On the other hand, non-profit healthcare organizations usually offer free services or charge a subsidized fee. Their operations and services are funded by donors and well-wishers. As much as the two types of organizations might offer similar services, they are established for different reasons.

 

B. Economic Differentiation

As aforementioned, for-profit and non-profit organizations are established for different reasons even if they might be operating in the same industry. As far as economic differentiation is concerned, for-profit organizations utilize economic principles that focus on buying goods at a lower price or manufacturing them and then reselling them at a higher price (Bender, 2020). The economic model for for-profit organizations focuses on minimizing losses and maximizing profits. On the other hand, non-profit organizations only utilize economic models that focus on sustainability; as long as the organization can sustain itself, that is what matters. Such organizations pay a lot of attention to employee accountability and responsibility to make sure everyone works responsibly to keep the organization functional. Non-profit organizations focus on best practices that revolve around client satisfaction rather than maximizing profits.