APA Sample Paper-Template 7th Edition
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Finance
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Jan 9, 2024
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Investing and Borrowing Paper
John Rodriguez
Brookline College
HA207/healthcare finance
Professor Compreca Martin
November 8th, 2023
2
Creating Success: APA Sample
Investing and borrowing funds can have a huge impact on the operations of a for-profit and non-profit healthcare facility. There are many different factors that come into play depending on which type of facility we are talking about and we will go over both for-profit and
not-for-profit facilities and which type is more likely to borrow and which is more likely to invest more and why. The main difference between the two is how they access their capital. Lets first take a look at For-profit facilities how they impact the operations.
Investing funds and borrowing funds while in a for-profit health care facility first begins with how this type of facility accesses their capital. For-profit companies have the ability to raise capital through investors and bonds all depending on their facility size, ability to scale, and
share of the local market. (Contributor, 2017)
. The capital gained from investors can be used to invest in the health care system, as well as profits from it can be returned to investors. For-
Profit companies benefit by having flexibility in which services they can offer with this capital, usually seeking more profitable choices, which makes them lean towards investing more rather than borrowing funds via bonds. For profit companies must also pay taxes on this capital and must offer charity care as well. All of these options have a significant impact on day to day operations and no matter how the capital is gained its important to weigh in on all the options before proceeding. Contrast to for-profits, Not-for-profit companies are limited to how capital may be gained, but that doesn’t mean in anyway that it is an inferior way to operate a health care facility. Capital in these types of facilities are limited to two sources of funding, Either revenue earned through day to day operations, and also investments/borrowing via bond markets and
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bank credits, for small facilities. Unlike with for-profit facilities, Not-for-profit companies must also serve the healthcare needs of the community and must prove the benefit to the community through tax forms, in doing this, they are exempt from federal,state and county taxes, providing charity care is also required. Any investments made, or profits gained must also
be invested within the organization rather than choosing more profitable options (
The Essential Role of Financial Reserves in Not-for-Profit Healthcare | AHA
, 2023).
It is common to also see not-for-
profit facilities carry significant financial reserves on their books, this is usually due to the limited options to borrow/invest, because of this these types of facilities are often seen borrowing funds to maintain the reserves and ensure these needs are met even in financial distress like the pandemic we are coming out of.
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References
Contributor, L. M. (2017, May 25). Nonprofit, for-profit hospitals play different roles but see similar financial struggles
. Healthcare Dive. https://www.healthcaredive.com/news/nonprofit-for-profit-hospitals-play-different-roles-
but-see-similar-financ/442425/
The Essential role of Financial Reserves in Not-for-Profit Healthcare | AHA
. (2023, April 19). American Hospital Association. https://www.aha.org/guidesreports/2023-04-19-essential-
role-financial-reserves-not-profit-healthcare
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