Non-Profit to For-Profit Organization Describe

Non-Profit to for-Profit Organization

Describe the external and internal factors that influence the executive team's decision-making and specify which might be most instrumental in making the decision to become a for-profit entity. Why do you think so?

Two important business trends have proliferated in healthcare organizations, which could have influenced the executive team's decision to develop the healthcare organization from a non-profit to a for-profit entity. These trends are internally and externally determined, respectively, through sustainable and in-demand patient mix and new public management of healthcare organizations through a "non-profit -- for-profit' divide."

The first trend, patient mix, means providing more, in-demand services to patients for profit, compared to providing fewer and lesser in demand services to specific group of patients only. This is, in fact, the difference between non-profit and for-profit organizations: the former, because of limited budget, provide limited in-demand patient services, thereby servicing only a specific group of patients in a locality or community, while the latter, because it is supported by a business model that encourages profitability, has more funds and is able to provide more services, both in-demand and rare patient services, to service its target locality/community (Horwitz, 2005:790). Changing the business model of the healthcare organization to for-profit is a practical and civically responsible move for the executive team. By providing increased in-demand patient services, the organization gives more opportunity for profitability, while at the same time, providing service to more people in the community.

Another important trend in healthcare management is the promotion of a "new public management" system wherein healthcare organizations are now promoting a hybrid type of a for-profit organization -- one that is divided between non-profit and for-profit (Bode, 2006:552). This type of structure, however, does not mean that it is equally divided into these two organization types; instead, this means that there is a part of the for-profit organization that has a non-profit component through its corporate social responsibility (CSR) programs. What this new public management system provides is the "potential for efficiency": management and staff maintain quality healthcare practices and services in a highly competitive industry and also to justify the relatively higher cost of patient services (compare to free or relatively lower priced patient services in non-profit organizations).

Thus, the internal factor that prompted the executive team's decision to go for-profit as an organization is the delivery of more, in-demand and high quality patient services to a wider scope of potential patients. Externally, the executive team is also influenced by an increasing trend within healthcare organizations, wherein they can continue promoting their goals and non-profit programs through their CSR programs, while maintaining profitability as a for-profit healthcare organization. Indeed, combining these two factors, it can be said that the best route for the healthcare organization is to transition from non-profit to for-profit. The transition is a "win-win" move: patients are provided with more, in-demand quality patient services, and the organization is able to maintain its viability as a business and sustainability as an organization through a for-profit business model.

2. Data needs to be collected in order to make informed decisions. Create an overview of the marketing data that needs to be collected and how you will collect it.

One of the critical aspects of transitioning from non-profit to for-profit organization is to create both extensive and intensive patient records system that will help the organization's management/administration make informed decisions about critical business decisions, such as determining the service and patient mix that will be provided by the organization. The best asset that the organization can have is an organized and updated patient record database management system that makes access to patient and services records faster, easier, and can be used for further analyses.

However, another important aspect of the database management system is to also provide a feedback mechanism in which the organization's management can quantitatively and objectively determine the quality of service provided to the patient by the healthcare staff, as reported from the patient's point-of-view. Thus, in order to maintain organizational effectiveness, a regular patient feedback system must be developed, regularly conducted, and duly recorded for ease of access and analyses of the management whenever information is needed, this time about the quality of service provided by the organization through its healthcare staff/personnel. To implement this feedback system, patients/relatives of patients will be surveyed and given self-accomplished feedback forms, to be returned sealed and thru a drop box in the organization to ensure the confidentiality of the patients who answered and authenticity of the answers provided in the survey.

3. In terms of market segmentation, determine the effects of the transition upon the following audiences: (i) senior citizens, (ii) entry workers (twenty-somethings), (iii) adolescent populations, and (iv) families.

The key to effectively implementing the transition process from being a non-profit to a for-profit organization is to gradually expose its target patient groups/clientele to new services that the organization will have as a result of this transition to becoming a for-profit entity. However, there must also be a conscious effort to make it known to the organization's patients that services previously offered will be retained, and cheaper or lower priced services will still be available through the organization's CSR programs. Inevitably, the organization's services will be segmented to address the needs of its patients with different demographic characteristics.

Understandably, senior citizens and families will subsist to cheaper and in-demand patient services, and the organization must exert effort to project the image that despite subsisting to "charity" type of patient services in the hospital/healthcare institution, clients/patients are not getting lower or mediocre care quality. Similarly, the organization must project another image, an image that is patient-friendly, very convenient, and "not boring" to entry workers and adolescent groups, who visit hospitals less frequently but usually spend more on patient services when they do so. Thus, depending on the market being dealt with, the organization must adapt and project different positioning types to maintain its profitability and viability as a for-profit business entity.