Introduction
There is a common perception in the society to the effect that non-profit or not-for-profit health care corporations in the United States of America are motivated by their desire to sate the health care needs of the public. This is regardless of the ability of the patients to pay for these services. Further, it is assumed that these organizations do not make profit. But these are just that; perceptions and assumptions. The fact remains that every corporation operating within the contemporary competitive environment needs to have an excess in revenues if it is to survive. This applies to all organizations, whether for-profit or not-for-profit. It is illogical to assume that any organization can survive by spending more than it brings in.
Small Stones Health Center: For-Profit or Not-for-Profit?
Sanders (2007, p, 2) is of the view that hospital and medical clinics are now looking for new ways to make money now more than ever. This is given the fact that reimbursement from insurers, government hand-outs and donations from well wishers are drying out. Being health care providers, these organizations need to survive so that they can cater for the needs of their clients.
Small Stones Health Center, located in Wauwatosa, Milwaukee, is such one organization. Trewyn (2002, para, 1) holds that the centre needs to support its yearly operations, despite the shrink in reimbursements and hand-outs. One way that it had adopted to achieve this is what Landsberg (2004, p, 212) refers to as “medical retailing”. This is the process where the hospital opens a business operation, for example a gift shop that acts as a source of extra revenue.
According to Landsberg (2004 p, 2), organizations that make more than five thousand dollars annually are required to register with IRS. Since Small Stones makes more than that, it is registered with this tax body. Under section 501(c)(3) of the 1986 tax code, this organization can be described as a charitable organization providing health care services to the public (Fischer, Wilsker & Young 2007, p4). It can thus be defined as a not-for-profit organization.
But technically looking at the operations of Small Stones will prove even to the most cynical of observers that this is nothing less of a for-profit organization. How else can you define an organization that has a constant source of revenue that is in excess of what it uses?
Sanders (2007 p, 7) and Snebold (2009 p, 3) are of the view that medical service organizations engage in retail medicine to supplement their income. They sell coffee to the patients, flowers to the visitors and such other activities that are likely to bring an extra dollar. Small Stones has not been left behind.
Trewyn holds that the organization acts as a source of information for the patients and other members of the public interested in finding information on topics revolving around health care (2002 para, 3). To this end, it has a library and a bookstore. This is in addition to retailing of other products such as pedometers and recipe books for healthy meals (Sanders 2007, p, 8). It also rents out breast pumps to new mothers at a fee.
But perhaps, out of all these sources of revenue, the library is the biggest earner. It is open to members of the public, with a twenty dollars membership fee for singles (Trewyn 2009, para, 5). The library has more than 2,000 members since it opened its doors in February 2009 (Trewyn 2009, para, 4). This is a considerable source of income for one year.
Conclusion
From the above discourse, it is obvious that Small Stones has an excess in revenue. But how does it spend this? According to Trewyn (2002 para, 7), excess revenue is reinvested in the business, expanding the library and the gift shop. It is also invested in Froedtert Hospital, which is a partner in the business venture. Reinvestment and expansion of business with extra revenue are indicators of a business oriented firm, and as such, Small Stones is more of a for-profit than not-for profit firm.
References
Fischer, R. B., Wilsker, A. L. & Young, D. (2007). Exploring the revenue mix of nonprofit organizations-Does it relate to publicness? Andrew Young School of Policy Studies.
Landsberg, B. E. (2004). The nonprofit paradox: For-profit business models in the third. The International Journal of Not-for-Profit Law, 6(2).
Sanders, E. (2007). A new source of revenue for hospitals, clinics: Gift shops selling more than flowers.
Snebold, L. (2009). Facts and figures about charitable organizations. Independent Sector Media.
Trewyn, P. (2002). Small Stones gathers interest for Froedtert, Medical College. The Business Journal of Milwaukee. Web.