Not-for-profit+providers+-&nbsp;What+is+the+difference+in+incentives+between+not++for+profit+and+for+profit+providers?+What+happens+if+not-for-profits+don’t+make++a+profit?

Not-for-profit provider does not mean that they are not out to make profits. It simply means that the profit they do make is used to better their company. For a not-for-profit health care provider the incentives are to get better technology, better facilities, and better employees with the intent to provide a better service. If a not-for-profit provider does not make a profit they will do as every other business that does not make a profit, they will flat line and die. A for profit company allocates their profits back into the company however they also have to take care of their stockholders.

When for profit firms are established, they attain primary capital by exchanging funds for ownership with private sectors. Ownership allows the private sector to claim these profits. Not-for-profit firms rely on donations for the primary capital. They are not privately owned, and the community supports them. A major difference between the two is that for-profit providers are able to distribute cash dividends to their owners and can earn accouting profits. Not-for-profit firms face a non-distribution constraint and are not allowed to allocate profits. Not-for-profit firms are difficult to sell, where as a for-profit firm can easily be sold for compensation by the owners. They are excused from certain types of taxes and are suitable to receive subsidies from the goverment. Examples of not-for-profit organizations would be the American Cancer Society, American Heart Assocation, and Smoke-Free America. A hospital or an organization may use donations to lower patient prices or medical equipment. The community through donations supports these organizations.
 * What is the differenece in incentives between not-for-profit and for profit providers?**

If not-for-profit organizations do not make a profit then they would not be able to support their organization. Not-for-profit relies on donations and they use those resources to help others. There is a multitude of not-for-profit health care providers such as nursing and hospital homes. Each can be modified to fit the needs of the individual's demands. If they did not make profits, it would be hard for the organization to support itself.
 * What happens if not-for-profits don't make a profit?**

1. What is a not-for-profit organization? A. An organization that is restricted from distributing profits B. An organization that exchanges funds for owership C. St. Vincent's Hospital D. Is not restricted by law in the types of goods and services it can provide. (answer is A)
 * Questions:**

2. True or False? A disadvantage not-for-profits have against for-profits is they are difficult to sell. (anser is true)

3. True or False? Not-for-profit firms face a non-distribution constraint. They are restricted from distributing profits? (answer is true)

4. True or False? A for-profit organization is required by law to use any profits for charitable, scientific, or educational purposes. (answer is false)


 * References**

Santerre, Rexford E. and Neun, Steven P. __Health Economics: Theories, Insights, and Industry Studies.__ Thompson South-Western, 2007. Pg 82-84.