For-Profit vs. Non-Profit – What is the Difference?

[Photo credit: EKG Technician Salary]

Should a retirement community’s for-profit or non-profit status affect my decision? This is a question that has been asked of me many times during my years in long-term care work, and being the clear and unequivocal about things person I am, the answer is “maybe.” This may sound strange as I choose to work in a non-profit environment. Reedley is fortunate to have a choice with its two non-profit and one for-profit facilities.

For-Profit

For-profit corporations are owned privately. An individual, a group of investors, or a corporation that owns a chain of skilled nursing care centers can hold ownership. For-profit centers may have a much higher overhead since the owners want a return on their investment. The owners set the standards and interpret the regulations. They hire an administrator who will follow their direction, guide the staff to maintain quality care of the residents and will keep the center running with a good profit margin. The administrator must work within the budget set for him/her. Maintaining high standards of care can be very challenging.

Non-Profit

Non-profit corporations do not have a private owner and therefore do not pay dividends to anyone. A volunteer board of directors hires an administrator to interpret the rules and regulations and guides the skilled nursing center. The administrator has the same issues that a for-profit administrator has, but a big difference is the non-profit administrator has more financial liberty to get the job done. He/she is able to increase staffing as needed, increase spending on needed supplies and repairs, and has more freedom to get higher quality of food. If revenue is higher than expenses, it is put back into the community. Since a non-profit is a community benefit corporation, excess revenue is used to enhance the community. The government does not charge these non-profits property tax so the extra funds can be invested in the community. All other fees and taxes are paid in like fashion

Is One Better? Research Says Yes.

In 2012, the Center for Medicare Advocacy looked at the non-profit and the for-profit skilled nursing centers to see if there was a difference in care. The answer they came up with was yes, there is a difference. They found that the non-profit centers were better able to adequately staff with qualified people, provide the necessary supplies and have better Department of Health inspection reports. Non-profit centers across the country tend to have lower prevalence of pressure ulcers, fewer residents on psychotropic medications and have been able to decrease the need to be hospitalized. The study showed that the centers who did not have to pay dividends to the owners had better overall outcomes. The report also states that even though their findings were greatly in favor of the non-profit side of the industry there are for-profit centers that perform very well and there are some non-profits that perform very poorly.

Sierra View Homes Retirement Community and Palm Village are non-profit and strive to put their excess revenue back into the community. Both retirement communities were founded and sponsored by individual churches. Members of the churches put up funds and sweat equity to get the retirement communities started. Although church members are involved, the Board of Directors of each non-profit tries to provide care by its mission or ministry that the founders started with.

It is hard to understand all the differences in the non-profit and for-profit senior living facilities. We are truly lucky to have three quality facilities in our community. Be it the non-profit Board of Directors or the for-profit Owner Investors directing the retirement community, the quality starts with the leadership and the mission to care for the elderly. I have met many for-profit and non-profit leaders who have strong ethics and provide excellent services. So is there a difference between the two?  My answer is still “maybe,” but I have chosen to work in a non-profit community because I appreciate the ability to work with a board of directors who is committed to a mission of caring for seniors.