What’s the Difference Between Nonprofit and For-Profit Hospitals?

Hospitals in the U.S. are categorized as nonprofit, for-profit, or government-owned. (49% are nonprofit, 36% are for-profit, and 15% are government-owned.) Nonprofit hospitals often include university medical centers, religiously-affiliated hospitals, and community hospitals. For-profit hospitals are typically part of large healthcare corporations. Government-owned hospitals are usually funded and operated by local, state, or federal governments.

How do nonprofit and for-profit hospitals differ?

Nonprofit hospitals reinvest earnings into patient care and community programs, while for-profit hospitals generate revenue for investors. 

• Nonprofit hospitals: Operated by charitable organizations or government entities.  They pay no federal income taxes and reinvest profits into patient care, research, and community programs. They often offer charity care and financial assistance programs.
• For-profit hospitals: Privately owned and run like businesses, they generate revenue for investors and shareholders. They may have more financial resources for technology and infrastructure but are not required to provide charity care.

If you're unsure whether a hospital is nonprofit or for-profit, you can check its tax-exempt status, research its ownership, or ask about financial assistance policies.

Why does this matter for patients?

• Billing and financial assistance: Nonprofit hospitals are required to offer financial assistance programs for qualifying patients, while for-profit hospitals are not.
• Cost differences: Studies suggest that for-profit hospitals may charge higher prices for services, but outcomes and quality of care can vary by facility rather than ownership type.
• Community benefits: Nonprofit hospitals invest in community programs, such as free health screenings, medical research, and patient education, while for-profit hospitals focus on revenue growth.

How Solace can help

A Solace advocate can help you determine if a hospital offers financial assistance, explore charity care options, and navigate medical billing issues. If you’re choosing a hospital, an advocate can also research nonprofit and for-profit facilities to find the best fit for your needs.

What to do next

Struggling with hospital bills or need help applying for financial assistance? Find an advocate today.