"I can't afford to spend any more time here. I don't have the money," said a survivor of a California mass shooting in Half Moon Bay last January, prompting concerns about his financial ability to meet medical expenses.
In the realm of health economics, the escalating cost of medical services that continues to strain individuals and families has made it imperative for organizations and healthcare providers to examine their cost structures. The option between for-profit and not-for-profit (NFP) models assumes center stage as healthcare organizations grapple with the economic challenges of providing high-quality treatment while still managing expenses. Not-for-profit healthcare providers are exempt from federal income taxes as well as state and municipal property taxes. On the contrary, for-profit healthcare providers are under ownership of investors and are obligated to fulfill tax liabilities associated with operating as a business.
For-profit and not-for-profit healthcare providers have come to play a prominent role in the American health system for over the years. Their presence has grown significantly, influencing various aspects of the healthcare landscape. Many studies have attempted to compare the performance of these two types, but none have shown conclusive results. While economic theory foresaw that for-profit health care providers would exhibit superior cost-efficiency and management compared to not-for-profit ones due to market-generated incentives; and that nonprofit enterprises are occasionally perceived as inherently inefficient and unable to compete effectively, some noteworthy questions are provoked; truthfully, do for-profit and not-for-profit hospitals remain essentially distinctive in today's practice, or are they converging as "physician-cartels" that operate in a similar economic and competitive environment? Amidst the complexities of the U.S. healthcare landscape, does a for-profit model guarantee superior performance?
Profitability vs. Philanthropy: Are the For-Profit and NFP Hospitals Converging?
 The clash between professionalism and market control is long-standing and inescapable. Historically, medicine and other professions have distinguished themselves from business and commerce by asserting a higher purpose beyond mere commercialism. Despite our predominantly capitalistic society, there has always been apprehension regarding the possible adverse effects of profit-driven motives in health care.
Since 1913, the federal government has distinguished between NFP and for-profit hospitals by exempting NFP hospitals from most revenue and property taxes. NFP hospitals are obligated to provide free or below-cost medical services and are prohibited from distributing any profits but reinvest them to the hospital in exchange for the tax exemption. In contrast, for-profit hospitals can distribute their profits to their owners or share-holders, leading stockholders to prioritize profitable financial statements rather than how well the hospitals meet community needs.
Subsequently, the implications of the dissolving distinction between for-profit and NFP hospitals have  been a headline of debate by researchers. Policy analysts, social scientists, and advocates for the poor are apprehensive about the possibility of diminishing safety nets for the poor, uninsured, and underinsured provided by some NFP hospitals if they become indistinguishable from their for-profit counterparts. NFP hospitals have been delivering services that were not conventionally perceived as revenue-generating, such as  burn units, neo-natal intensive care, and emergency departments. But the distinction between for-profit and not-for-profit healthcare providers is becoming less clear due to various factors.
First, capital sources for NFP hospitals have shifted, as donations and governmental grants decline. Revenues have come from billing for services; the increasing capital intensity in healthcare, the reduced reliance on charitable contributions, and the significant inflation in the 1960s and 1970s have resulted in capital needs primarily being fulfilled through retained earnings and debt, just like for-profit institutions.
Second, while the persistent economic pressure imposed by investor-equity capital on the managers of investor-owned enterprises is unique to the for-profit sector, economic pressure is not exclusive to the for-profit sector which drives various strategies in both for-profit and NFP hospitals. To improve the bottom line, they develop multi-institutional agreements to gain economies of scale and greater access to capital, integrate vertically to  increase control of patient flow and market share, emphasize cost control, and restrict uncompensated treatment.
Third, not-for-profit organizations can and do generate profits, as shown by U.S. hospitals in 1984, most of which are not-for-profit, with an average total net margin of 6.2% (American Hospital Association, 1985). In any case, survival of an organization clearly requires revenues exceeding operating expenses as equipment and renovations needed to keep an institution acceptable to doctors and patients necessitate new capital infusions.
Fourth, various forms of not-for-profit/for-profit hybrids have become prevalent in hospitals in recent years. These include (a) for-profit subsidiaries established by not-for-profit institutions; (b) contracts with for-profit companies for management or specific services, (b) joint ventures between for-profit and NFP multihospital systems; and (d) for-profit alliances (such as Voluntary Hospitals of America, American Healthcare Systems, SunHealth) serving NFP hospitals.
