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Discussion Response-Are Hospitals in Business to Make Profits

Discussion Response-Are Hospitals in Business to Make Profits


Thank you for sharing your post. I agree with you; hospitals, like any other business, are in it to make a profit. This may be a conflict, especially when ethical principles of justice and maleficence are put into consideration. When a healthcare facility places profits over patients, it is bound to sacrifice these two ethical principles. Despite the COVID-19 pandemic, the for-profit hospitals in the US are said to be stable, with many expected to recover from the previous year’s levels while Medicare rates, positive commercial rates, and government aid increases continued to spur growth (Lagasse, 2020). The pandemic notwithstanding, the 2021 financial outlook regarding the global healthcare sector is primarily positive. There is a strong demand for services and products, including those that are linked to COVID-19, which will eventually offset the pressures lingering in the public health emergency. The demand for healthcare services in for-profit hospitals will remain strong mainly because of the aging population, improved access, and the introduction of innovative and new products. However, there is one caveat: the rising healthcare expenditures which will cause the payers to continue to lower prices through restricted utilization (Lagasse, 2020).

Discussion Response-Are Hospitals in Business to Make Profits

Discussion Response-Are Hospitals in Business to Make Profits

I, too, believed that hospitals were inflating the number of COVID-19 patients for financial benefits. According to the estimates made by the Kaiser Family Foundation for the uninsured, the average payment made by Medicare is $13,297 for less severe hospitalization, while a person who is treated on a ventilator for a number of days is $40,218 (KFF, 2020). Medicare will also compensate hospitals an add-on of 20% for COVID-19 patients as per the CARES Act because of hospitals’ losses (AHA, n.d). Hence, the hefty compensation that hospitals received was to cover the losses they made from having to push back services such as elective surgeries, which would otherwise bring profit during the normal running of the hospital services.


American Hospital Association (n.d). Corona Virus Update: CMS Releases Guidance Implementing CARES Act Provisions. AHA.

KFF (2020). Estimated Cost of Treating the Uninsured Hospitalized with COVID-19. KFF.

Lagasse, J. (2020, December 17). For-profit hospitals’ financial outlook is stable heading into 2021 despite COVID-19, Moody’s says. Healthcare Finance.


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Discussion Response-Are Hospitals in Business to Make Profits


The cost structure of an organization is stated in terms of variable and fixed expenses. A good understanding of unit costs is important because it helps in understanding the variation of expenses with sales volume. To determine the most profitable departments in an organization, a variable and fixed cost structure analysis is done. Classification of expenses as either variable or fixed and the proper understanding of the relationship between revenue and expenses is the key to knowing an organization’s profitability. The universal measure of success for most businesses is profit. Profitability is usually the most valuable search criterion for marketing issues. For a business to be profitable, it is important to understand the kind of costs that will be encountered to keep track of them. Fixed costs are those that do not change in spite of the output produced by the business. Variable costs are those that vary with the volume of production. Measuring costs as variable or fixed is mostly used for planning and budgeting purposes. The net profit is the difference between costs and sales, therefore knowing the behavior of variable and fixed costs relative to sales is vital.

There are several mechanisms that I would apply as a healthcare manager to promote profitability in my organization. One of them is by managing the costs. Closely managing the costs can promote profitability. There will always be some wastage to be reduced but not at the expense of the organization’s quality of services. For example; the supply costs can be reduced by better-managing vendors. The second mechanism of improving the organization’s profitability is by reviewing what the organization offers. It is important to look keenly at what services the healthcare organization offers, who they offer it to, and at what prices in order to see if any improvements can be made. The above two mechanisms are definitely likely to promote profitability if implemented well.

I do believe hospitals were inflating the numbers of covid 19 related deaths. I heard this too when it was at its worst as well and it makes sense. Every other day a new symptom came out that indicated you had covid so to a medical professional they were probably saying everyone had covid. Also, if they are getting a lot more money for saying covid instead of something else, of course, they’re going to say covid. Hospitals are business at the end of the day and that’s how a majority of higher-ups think.


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