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Financial Environment:

Financial Environment
Financial environment of an organization refers to the factors (both internal and external) that affect its financial position as well as financial decisions made. These include: taxes, profits of competitors, government financial policies.

Evendale Medical Center
Triumph Hospital Lima
Affinity Medical Center (Ohio Hospital Association, n.d)


Bellevue Hospital Center
Coney Island Hospital
Lincoln Medical Center


One similarity of the three categories is that all of the institutions pay taxes, though the amounts they pay vary.
Each of the three institutions has to set price strategies that meet their core objectives, be it maximizing profit or others like research.
No matter their different objectives, all the three types strive not to have deficit or losses in their financial records


For profit organization’s pricing decisions are to a larger extent determined by the profit factor. There management always strive to provide the shareholders with the greatest benefit Therefore they will charge prices that will enable them to achieve the greatest amount of profit possible. As a result, most for profit health care organizations tend to char higher prices compared to the rest. (Hatch, 1997)
As far as costs incurred by these type of organization, most research findings have shown that for-profit institutions incurred higher costs per day of 3% to 10% compared to institutions that have no profit objective. This is mostly attributed to higher taxes that they pay and also large capital outlays.(Gray, 1993)
Most for-profit healthcare institutions pay a lot of taxes compared to non-profit and government counterparts. Due to their profit objective, they are always left with a higher taxable income, hence leading to higher tax paid.(Cutler, 2000)


Most the not-for-profit are less likely to be driven by profit objective. In most cases provision of healthcare by the organization may just be means of achieving other objectives. These may include: research mostly medical, promoting a given religious faith or empowering a given community through health education. Based on these objectives such health care institutions tend to price there services at the lowest possible levels. This therefore means that there pricing strategies are less aggressive but mostly are designed to attain these underlying objectives. (Hatch, 1997)
This type of healthcare organization is associated with low operation costs compared to for-profit organizations. This is largely attributed to less ancillary services offered, higher occupancy rates, low taxes that they pay due exemptions and reimbursements that they are entitled to (Gray 1993).
Most non-profit organizations benefit from tax exemptions due to their charitable contributions. This is attributed to the fact that most their projects not profit motivated but focus on helping the community (Cutler, 2000).


Mostly government healthcare institutions receive a lot of funding from the government. Therefore the main objective of these institutions is to provide affordable medical services to the public. As a result prices are very low in such organizations and at times they provide free services to patients. This is because most of its costs are subsidized and hence they are financially cushioned. (Hatch, 1997)
Most government institution are not faced with the cost burden as compared to other institutions, because shares most of their capital expenses (Gray, 1993)
Government institutions are exempted from most taxes and are also entitled to a lot reimbursement (Cutler, 2000).

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