For-Profit vs. Not-for-Profit: Two Paths, Same Outcome

by Rick Blizzard, D.B.A.
Healthcare Editor

Gallup studies of employees at for-profit and not-for-profit hospitals reveal an important and somewhat surprising finding: overall employee engagement does not differ among the employees in these sectors (see "Employee Engagement: For-Profit vs. Not-for-Profit Hospitals" in Related Items). Gallup calculates employee engagement using a weighted average of responses to 12 predictive questions -- though their overall engagement scores don't look very different, significant variations do exist between responses to individual items.

How Do For-Profit Hospital Employees Differ From Not-for-Profit Employees?

The largest difference between the for-profit and not-for-profit sectors turns up in responses to the item: "My supervisor, or someone at work, seems to care about me as a person." For-profit employees tend to give significantly lower scores than not-for-profit employees do.

These results lend credence to the idea that not-for-profit hospitals do a better job of focusing on their people. Because for-profit hospitals tend to be more business-oriented, they place greater emphasis on cost and operating efficiency than not-for-profit hospitals do. Thus, they may focus more on "hard number" performance outcomes, potentially leading staff members to view themselves more as cogs in a production wheel than as caregivers.

"The mission or purpose of my organization makes me feel my job is important." The second-biggest difference between the two sectors occurs between scores on this item. Financial pressures have forced all hospitals to focus on costs and operating efficiency, blurring the line between money and mission. Still, not-for-profit employees believe more strongly that their organization's mission makes them feel that their jobs are important. It seems that the mission of care delivery tends to be more prominent in not-for-profit hospitals. As with the previous item, these results suggest that not-for-profit hospitals do a better job than for-profit hospitals of making their staff feel that their contributions are valued and meaningful.

"In the last seven days, I have received recognition or praise for doing good work." This is a low-scoring item for most hospitals regardless of their for-profit/not-for-profit status, but scores are particularly low among for-profit hospitals. For-profit hospitals have great opportunity for improvement in this area, both in terms of improving financial rewards for outstanding performance and providing personal recognition of good work.

"I have the materials and equipment I need to do my work right." Not-for-profit hospitals also score higher on this item than for-profit hospitals do. With a focus on operating efficiency, for-profit hospitals frequently operate with lower staffing ratios. These lower ratios often lead to higher staff member productivity, which may explain the lack of difference between patient satisfaction scores between for-profit and not-for-profit hospitals (see "Are For-Profit Hospitals Different?" in Related Items). But staffing shortages don't go unnoticed by the staff members themselves, and may be a factor in lower scores on this item among for-profit hospitals.

"My associates or fellow employees are committed to doing quality work." This is the only item on which for-profit hospitals score marginally higher than not-for-profit hospitals. The pattern of responses suggests that greater accountability among for-profit staff on hard outcomes and less reliance on subjective indicators of performance may help explain this.

What Do These Differences Mean?

A common criticism of for-profit hospitals has been that they focus on operating efficiency at the expense of quality of care. And in fact, the responses to individual employee engagement questions create the impression that for-profit hospitals are less focused on staff needs than not-for-profit hospitals.

However, despite the varying scores on individual items between hospitals in the two sectors, the result is the same -- nearly identical scores on overall employee engagement and patient satisfaction.

Employees of for-profit and not-for-profit hospitals are equally engaged and produce equal outcomes. So which environment is best for a prospective hospital employee? The best answer is that it's a matter of the best fit for the individual employee. If the person is drawn to an outcomes-focused culture that emphasizes productivity and efficiency while maintaining high levels of quality, then a for-profit hospital may be a better choice. If the individual requires a greater focus on relationships and service, then a non-profit hospital may be the best fit.

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