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The Business of Health and Health Care Nonprofits

November 21, 2017

Male medical staff uses stethoscope to listen to the lungs of a young, smiling boy.

Health care occupies more than one-sixth of the U.S. economy, according to a report by the Centers for Medicare and Medicaid Services (CMS) from the end of 2016. Health care’s share of gross domestic product reached a historic rate of 17.8 percent, and this trend is expected to continue. CMS cited the aging population, changing economic conditions and the accelerating growth of medical costs for increasing health care’s share of the economy.

Health care nonprofits make up a large part of the industry. The following sections explore some statistics and organizations within nonprofit health care.

What Is a Health Care Nonprofit?

In the United States, nonprofit organizations play a major role in the financing and delivery of health care services. A common identifying factor is that their governing bodies are composed of leaders from the communities they serve. These organizations are primarily responsible for and accountable to the communities and populations they serve.

“They are legally and ethically bound to ‘do good’ for the benefit of their communities,” according to the Alliance for Advancing Nonprofit Health Care. “Rather than inuring to the benefit of private owners, the earnings and reserves of nonprofit health care organizations are reinvested to benefit the community.” Nonprofit health care organizations don’t pay federal income taxes or state and local property taxes.

Health care nonprofit organizations make up a considerable portion of the nation’s health care services. The Alliance for Advancing Nonprofit Health Care estimates that the following have nonprofit status:

  • All community health centers
  • Roughly 60 percent of community hospitals
  • Nearly 30 percent of nursing homes
  • About 17 percent of home health care agencies

In addition, nonprofit health plans are estimated to serve more than 40 percent of all private health insurance enrollees.

State and Regional Health Care Nonprofits

The size and scope of health care nonprofits are considerable. This is especially true when discussing hospital ownership, the Kaiser Family Foundation reports. In 2015, 58.5 percent of all hospitals were nonprofit, with 20.2 percent of hospitals controlled by state or local government and 21.3 percent of hospitals by for-profit owners.

Employment opportunities also demonstrate the impact that nonprofit health care organizations have. With a majority of hospitals being nonprofit, doctors, nurses and other health care practitioners can work for a nonprofit. In addition to professionals who provide care, there are many professionals at the state and regional levels who work in an administrative capacity, helping nonprofit organizations advance their cause. These professionals can include specialists (such as finance or marketing) or managers who are able to fundraise, advocate for the cause and make other strategic plans to help the nonprofit “do good.”

Health care and social assistance accounted for 68 percent of all nonprofit employment in 2012, according to the Bureau of Labor Statistics (BLS). Hospitals made up more than 35 percent of all nonprofit employment. The number of jobs by sector was:

  • 4 million in hospitals
  • 4 million in social assistance
  • 2 million in nursing and residential care
  • 1 million employees in ambulatory services

In Indiana, 71.8 percent of nonprofit employment was allocated to health care.

There is also a wage gap in favor of nonprofit employment in the education and health services industry group, according to separate research from the BLS. Nonprofit workers earn, on average, $6.45 per hour more than those in for-profits. The total compensation gap is $11.28 per hour.

International Health Care Nonprofits

Here are two examples of international health care nonprofit organizations.

World Health Organization (WHO)

WHO’s goal is to build a better, healthier future for people all over the world. In more than 150 countries, the organization supports countries as they coordinate the efforts of multiple sectors of the government and partners to attain their health objectives and support their national health policies and strategies.

WHO primarily works within the United Nations’ system, in the following areas.

  • Health systems
  • Promoting health through the life-course
  • Noncommunicable diseases
  • Communicable diseases
  • Corporate services
  • Preparedness, surveillance and response

Established in 1948, WHO initially focused on controlling the spread of malaria, tuberculosis and sexually transmitted infections, and it later played a leading role in eradicating smallpox. WHO provides leadership on global health matters, including the health research agenda.

The organization’s current strategy focuses on strategic objectives including a commitment to action on Healthy Ageing in every country (promoting well-being as people grow older), developing age-friendly environments, aligning health systems to the needs of older populations, developing sustainable and equitable systems for providing long-term care and improving measurement, monitoring and research on Healthy Ageing.

The American Red Cross

The American Red Cross was formed in 1881 as a humanitarian organization. In the United States, there are more than 600 locally supported American Red Cross chapters. More than 500,000 volunteers and approximately 35,000 employees provide assistance to the victims of more than 60,000 disasters each year.

The American Red Cross is part of the International Red Cross and Red Crescent Movement, which is supported by more than 97 million volunteers. There are 186 Red Cross or Red Crescent national societies. One in 25 people around the world is helped by the Red Cross and Red Crescent each year.

In addition to international services, the American Red Cross works in the following service areas.

  • Disaster Relief: Responding to emergencies every eight minutes, the Red Cross helps people in all types of disasters, such as fires, earthquakes and hurricanes. The organization provides shelter, food and water, health and mental health support and more for all types of emergencies.
  • Lifesaving Blood: The Red Cross supplies about 40 percent of the U.S. blood supply.
  • Training and Certification: First responders and the general public can receive training in first aid, CPR and other types of emergency care.
  • Military Families: The Red Cross helps members of the military, veterans and their families prepare for, cope with and respond to the challenges of military service.

Pursuing a Career in Nonprofit Health

Grace College’s online nonprofit management degree equips students with the knowledge and skills to succeed in marketing communication, applying technology, creating and training staff, raising funds and improving efficiency within an organization. Rooted in Christian servant leadership, the program helps graduates apply faith to careers in nonprofit management.

This accelerated program can be completed in two years. It takes place in a fully online learning environment, allowing students the flexibility to complete coursework alongside personal and work responsibilities.