Assignment Instructions
Create a matrix that contrasts the differences between marketing in for-profit and not-for-profit health care organizations.Include the following in your matrix:
- Centralized versus decentralized format of management
- Strategic goals of the organizations
- Variation in the access to the capital market
- Strategic marketing differences between these two types of organizations
- Quality attributes of the two types of organizations
- The management of pricing and volume
A Matrix That Contrasts The Differences Between Marketing In For-Profit And Not-For-Profit Health Care Organizations
Format of Management
For-profit health care organizations adhere to a centralized system of management which aims to maximize the productivity of individual employees while standardizing processes. The idea behind this system stems from an inherent need to cut costs within a facility without sacrificing quality (Finkler, Ward, & Baker, 2013, p.355). Centralizing day-to-day responsibility results in an efficient system leading to customer satisfaction as a result of the proactive identification of patient requirements.
Not-for-profit healthcare organizations apply the decentralized system of management when running their affairs. They are, thus, more agile and transparent in comparison to complex organizations. A reduction in bureaucracy results in improved inputs and health outcomes, which eventually benefit those responsible for managerial arrangements.
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Strategic Goals
The primary strategic objective of for-profit healthcare organizations is to make turnovers and return dividends to shareholders. It is for this very reason that they tend to be less tolerant when hospitals under their management struggle financially. Investors often dispose of any asset that fails to generate projected returns. The strategic goal here is to expand operations through cumulative investments.
Not-for-profit healthcare organizations make it their life’s work to further their mission through operating within their means. Typically, the preservation and welfare of local communities are central to their mission while still ensuring that they act in their best interest. Not-for-profit healthcare organizations apply a measured approach when reviewing struggling hospitals by focusing on their long-term organizational vitality and service provision.
Access to Capital Market
For-profit healthcare organizations are renowned for their application of scale when seeking access to capital markets. The “for-profit” agenda attracts a wide range of investors who focus on the organization’s financial capabilities. These organizations enjoy unlimited access to capital, which is then invested in expansionist policies. A steady stream of money, therefore, allows for-profit healthcare organizations to expand at a faster rate and dominate their counterparts.
The general assumption is that not-for-profit healthcare organizations serve the community’s interest and are, thus, exempted from paying taxes. Access to the capital market is set into motion by increasing margins within acute hospital services. Actions such as energy-saving habits, management of materials, and improvements to hospital operations result in cost control for the revenue available.
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Strategic Management
For-profit healthcare organizations are meticulous in strategic management. They commonly use a SWOT analysis tool to assess potential gains from the investments made by the entity to make sure that they make a decent return. Here, management is a step by step process that aids stakeholders in evaluating operations and in implementing long-term goals.
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As a rule of thumb, not-for-profit healthcare organizations implement systematic management routines to avoid the possibility of a future failure. They capitalize on capabilities that provide opportunities as a novel technique aimed at reducing any unforeseen organizational risks (“Overview of Not-For-Profit Organizations,” 2016). An analytical approach during the planning stage allows these organizations to become creative and make conclusions based on systematic strategies.
Quality Attributes
So far, the quality of care provided by for-profit healthcare organizations has been above board. Detractors of this system had earlier expressed speculations that investor-owned firms would cut corners on quality, but these concerns were unfounded. Stakeholders at for-profit healthcare organizations are keen on their reputations and cannot, therefore, risk their capital by convincing upper management to compromise on quality.
Not-for-profit healthcare organizations are also compatible with the quality of care. Although they differ significantly from investor-owned facilities, they provide a similar variety of care. The federal government ensures that it gives not-for-profit organizations resources required to serve the community and for posterity. Quality assurance systems also ensure that the reputation of these facilities is protected and eminence assured.
Management of Pricing and Volume
For-profit healthcare organizations are more likely to increase their prices and volume as compared to public facilities. A hike in prices is standard during mergers, indicating a renewed zeal to transform the pricing behavior while seeking to increase the profit margin (Agich & Begley, 2012, p. 253). An increase in revenue also predicts the expansion of facilities into new localities while partnering with local affiliates.
Over the years, not-for-profit healthcare organizations have prioritized their goal of providing quality medical service over seeking profits. Not-for-profit healthcare organizations are, thus, less likely to respond to profitability and volume when making crucial supply decisions. They aim to provide unprofitable services to persons with low socio-economic backgrounds and the last resort for underinsured patients.
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