For profit structure like the hmo essay
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Non-profits function as tax-exempt charities and therefore are ethically guaranteed to serve people good. Almost all funds are diverted into the organization, to help its explained goals.
One particular obvious problem with using a non-for-profit structure is that it impinges upon the organization’s ability to sell stocks to raise income. On the other hand, donors are encouraged to contribute to nonprofits because their donations are tax exempt. A corporation, as opposed, is taxed as a fictional ‘person’ beneath the law. A not-for-profit enterprise has the independence to follow a larger range of desired goals, such as providing heath insurance to buyers who could be ‘high risk’ yet lack coverage. This isn’t always strictly lucrative, but may be part of the company charitable mission.
However , mainly because cost effectiveness rather than increasing the amounts of covered sufferers is the mentioned goal of this enterprise, productivity may be better served by a for-profit composition. According to one analyst, “investor-owned, for-profit insurersare more efficient. The truth is they may be more selective in the patients that they choose to guarantee, leaving out less healthier people who have higher needs intended for care. Essentially, out of the health-care dollar they will first take their income and their own administrative costs and duty obligations. In that case, the balance – they call it up the ‘medical loss ratio’ – is definitely what’s remaining to pay for medical. With some publicly traded HMOs, less than 75 mere cents on the buck is left over. By contrast, the nonprofit HMO pays no tax, earnings no profit to buyers and thus recieve more of the Medicare dollar to use to medical, generally between 85 and 90 mere cents. At least one non-profit HMO labels that piece its ‘medical cost rate, ‘ a significant symbol that their main interest is at what is available for health care rather than what is ‘lost’ from their profit” (Rabkin 1999).
Hayden, Eric. (2005, March). not for profit hospitals face structural and also financial difficulties:
Lessons coming from Massachusetts. Finance Forum. College or university of Supervision.
University of Massachusetts Boston. March june 2006. Working Paper 1003. Retrieved
November you, 2010 by http://www.management.umb.edu/faculty/workingpaper/hayden_eric/Hayden_Working_
Rabkin, Mitchell. (1999). “Squaring away. ” The Wall Street Journal. Recovered November 1, 2010