Discuss some of the IRS regulations that govern profit status for organizations, including hospitals
International reporting standards are an internationally accepted model of reporting a financial operation in a business. It has the aim of providing an equal base of comparison among different companies despite them working in different places of the world. The invention of the IRS is because of international integration and corporation among countries; the integration has facilitated international investments. In the health services provision industry, there are growing concerns that they should adopt internationally recognized reporting standards. The industry takes the form of profit-making and nonprofit-making organizations.
In the case of profit-making hospitals, when calculating the incomes and reporting different parameters in the industry, the facilities are expected to follow internationally recognized standards (Weckwerth, 2006).
In Section 263.–Capital Expenditure, IRS requires that any capital expenditure that is incurred in the purchase and inflation of an asset should be capitalized but not expensed. For example, when a hospital facility has acquired a new X-ray machine, the costs incurred pertaining to the machine which includes the fees paid to experts to install, the special construction that has to be made on the building that it will be put should be capitalized and amortized with the asset value.
In section 882, the IRS regulation code discusses taxation of business in a foreign country, the code states that for a foreign business operating in the United States, the incomes that have been earned from the United States business should be taxed in the United States at the prevailing rate.
When calculating the profit that has been earned in a certain period, IRS has some regulations and guidelines that it uses to come up with the final figure. Some elements are not allowable while others are allowable; profit-oriented businesses including hospitals have to comply with the regulations asset.
When calculating the value of the stock to use when calculating profits, the IRS recommends that all provisions as adopted in ISA be respected and observed, the reason for the move should be to provide uniformity and comparability of performance among profit-making companies across the globe.
Section 501(c)(3); talks about the exemptions that a business is entitled to, this section cuts across and have to be applied in hospital as well as other profit-making organizations. IRS facilitates comparability of financial accounts since a uniform set of accounting policies will have been used to make the accounts. When this is facilitated, a company will be able to compare its national efficiency in different industries when compared with other countries (The Internal Revenue Service, 2007).
Using the approach given by IRS regulations, explain the differences between for-profit and not for profit hospitals
Non-profit making hospitals are those health facilities whose main role of operation is not to make gains from the operations however; they have the main aim of improving the health situations of the community they are operating. In most cases, they charge subsidized fees, so subsidized that the fees seem to cover the cost of delivery of the service only. When they are charging a certain fee, they consider the welfare of the patient other than the gain they are likely to get from the service. The approach and the shape of the organization are different; depending on the type of the organization. For example in the case of hospitals operating in a university or college setting, they may be classified as those hospitals that charge minimal fees but they support the university. On the other hand, there are other bodies that have been known to put in place non-profitable facilities such organizations include charitable institutions, often by religious orders or by cities (Piotrowski, 2002)
Other than the non-profit making hospitals, different entrepreneurs have used the hospital industry as a business for making profits; some business people have invested in multimillion and multibillion facilities with the aim of getting some income from the trade. In most cases, the facilities offer high-quality services and they still improve the health situation in their economy of operation. In most capitalist countries, hospitals are on the rise where individuals, associations among others, have implemented them. At the end of a trading period, the facilities are supposed to file income returns like the way other profit-making organization away from the medical industry does. They are subjected to corporation taxes like any other business (Koretz, 2002).
Discuss some of the challenges that not-for-profit hospitals in the U.S. are facing
The non-for-profit hospital facilities are facing numerous challenges in the United States; the challenges include:
A large number of patients than they can handle
The facilities cost is much lower than the one charged in private profit-making hospitals; this has made people have the facility as the option to their health conditions. The increased number of patients has compromised the quality and responsiveness of the services offered at these facilities.
Low technology adoption
Compared with the profit-making organizations, the technology adopted by these hospitals is much lower; this means that they operate at relatively high costs than their counterparts in the profit-making sector. When technology is low, the facilities lack the chance of competing with the profit-making firms and they are seen to be slow in improving the health situation of the people living in the United States.
Shortage of human resources
Generally, in the health care industry, human resources teams contain physicians, doctors, nurses, and administrative staff. The United States has been experiencing a shortage in human capital a factor that has hampered the delivery of efficiency and quality of service offered. Since the Second World War, the health sector in the United States has been experiencing a shortage of nurses. In the not-for-profit sector, the sector is suffering from loss of staff as they get better pay in the profit-making hospitals. Report y the same organization in 2008 gauged the shortage at 8.15 of the total required nurses in the country. It is further estimated that in 2025, the country nurse shortage would reach 260,000.
Ineffective management
Some of the not-for-profit hospitals are suffering from poor management; this is so because of their main developers who might have no medical backing. For example, a facility operated by a charitable organization is likely not to have the funds for highly qualified and highly effective managers. This leads to reduced services.
The management approach taken by private hospitals in the United States is different from the one adopted in not-for-profit hospitals; profit-making hospitals have the resources to employ highly qualified staff in different areas. They also have the tendency of “poaching” expatriates from the not-for-profit organizations, this leads to deficiency of human capital is not for profit-making organizations.
References
Koretz, G. (2002). HEALING BODIES, MAKING A BUCK Do for-profit hospitals lower costs? Business Week, 3802, 32.
Piotrowski, J. (2002). A difference of mission. Modern Healthcare,32(41), 12.
The Internal Revenue Service (2007). Exemption Requirements. Web.
Weckwerth, V. (2006). Is There a Future for the Not for Profit Hospital? Frontiers of Health Services Management, 22(4), 3.