Private, nongovernmental healthcare organizations may be either for profit (FP) or not for profit (NFP).
- Discuss the difference between not-for-profit and for-profit organizations.
- What happens if an NFP organization makes a profit?
- What are the advantages and disadvantages of each type of organization?
- Describe two specific examples of how risk management has influenced nursing documentation
1. Difference Between Not-for-Profit (NFP) and For-Profit (FP) Healthcare Organizations
For-Profit (FP) Healthcare Organizations:
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Ownership & Purpose: Owned by private investors or shareholders with the primary goal of generating profit.
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Taxation: Subject to state and federal taxes.
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Profit Distribution: Profits are distributed to owners/shareholders.
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Funding Sources: Revenue mainly from patient services, private insurance, and investments.
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Decision-Making: Business-focused; decisions often driven by return on investment (ROI).
Not-for-Profit (NFP) Healthcare Organizations:
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Ownership & Purpose: Owned by communities, religious groups, or charitable foundations. Their primary mission is to serve the public good.
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Taxation: Exempt from paying federal income tax and some state/local taxes.
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Profit Distribution: Profits (or surplus) are reinvested into the organization to improve services, upgrade facilities, or expand access.
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Funding Sources: Revenue from patient care, donations, grants, and government funding.
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Decision-Making: Mission-driven; decisions focus on community health needs.
2. What Happens if an NFP Organization Makes a Profit?
If a not-for-profit (NFP) organization makes a profit, it does not distribute that profit to owners or shareholders (since it has none). Instead, it reinvests the surplus into:
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Improving patient care services
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Expanding access to underserved populations
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Upgrading medical equipment and infrastructure
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Supporting community health programs
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Offering staff training and development
This reinvestment aligns with the NFP’s mission to enhance community health and maintain sustainability.
3. Advantages and Disadvantages of Each Type
Not-for-Profit (NFP):
Advantages:
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Tax exemptions allow more resources to be allocated to services.
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Often more trusted by the public due to community-focused mission.
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Likely to provide care regardless of a patient’s ability to pay.
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Eligible for grants and donations.
Disadvantages:
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Limited access to capital for growth.
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Heavy reliance on donations and public funding.
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May face scrutiny over how surplus is used.
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Must comply with strict regulations to maintain tax-exempt status.
For-Profit (FP):
Advantages:
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Easier access to investment capital.
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Potential for faster growth and technological advancement.
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Business-driven model may lead to more efficient operations.
Disadvantages:
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May prioritize profit over patient care.
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Less likely to serve low-income or uninsured populations.
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May face public criticism over high costs or limited access.
4. Two Specific Examples of How Risk Management Has Influenced Nursing Documentation
Example 1: Accurate Medication Administration Documentation
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Risk Management Influence: Medication errors are a major liability risk. To reduce this, nursing documentation now includes:
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Electronic medication administration records (eMAR)
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Barcode scanning before administration
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Time-stamped entries with nurse identifiers
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Purpose: Ensures proper tracking, reduces errors, and provides legal protection in case of adverse events.
Example 2: Pressure Ulcer Risk Assessment and Documentation
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Risk Management Influence: Pressure ulcers are considered preventable, and facilities can be penalized for them. Nurses must document:
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Braden scale scores regularly
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Skin assessments every shift
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Turning schedules and interventions used
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Purpose: Proves that preventive measures were taken and helps protect the facility against litigation or reimbursement denial.
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