Skip to main content

The Business of Healthcare

You may not think of healthcare as a business, but it is. Whether they are for-profit, non-profit or government-run, hospitals are attuned to financial practicalities and the need to carefully manage the facility in order to maintain a sustainable business. An unsustainable hospital eventually will be forced to cut services or even shut down.

Saving lives while containing costs

Due to a variety of factors such as insurance payouts and the resources required, some procedures are more profitable to hospitals than others. Though every hospital will react to changes in profitability, for-profits are more likely to react quicker than non-profits or government hospitals. For instance, open-heart surgery is a profitable procedure and more than 40 percent of all for-profit hospitals offer the service, whereas a little over a third of non-profits offer it. Market pressures from for-profits hamper the ability for some non-profit hospitals to enter or stay in the arena.

Making the big decisions

Thinking of healthcare as a business requires business savviness, financial acumen and top-notch management skills. Earning a Master of Business Administration (MBA) in Healthcare Management is one way to move up in a career as a hospital administrator. A hospital administrator is responsible for studying the facility’s finances and determining whether or not, for example, the hospital can afford to keep the emergency department (ED) open. EDs are relatively unprofitable for most hospitals, but are an essential safety net for many Americans. Hospitals dealing with low profit margins or those that were for-profit were more likely to close the ED than the non-profit counterparts. A hospital administrator must evaluate a variety of factors in making the difficult decision about which services to offer and which facilities to close.

Defying trends

Hospital administrators with an MBA in Healthcare Management working in a non-profit facility are trained to defy trends. Non-profits are often obligated to offer certain services to their patients, forcing the hospital to work around various constraints, such as cost. In these cases, hospital administrators have to balance thinking of healthcare as a business with the hospital’s mission. In these cases, the analytical, technical and problem-solving skills obtained through a higher education comes into play. Solutions could involve making modifications to schedules, introducing cost-effective electronic management systems, or elevating nurses to management positions to help shape policies that can reduce cost while maintain high standards for patient care.

While it is important to think of healthcare as a business, considering the financial management and administrative needs of each facility, human lives and community needs sometimes supersede what can and cannot be done. It is up to trained hospital administrators to find that balance. Earning an MBA in Healthcare Management is one way to gain the skills and knowledge necessary to make the tough calls.


Related Articles

Have a question or concern about this article? Please contact us.

Our Commitment to Content Publishing Accuracy

Articles that appear on this website are for information purposes only. The nature of the information in all of the articles is intended to provide accurate and authoritative information in regard to the subject matter covered.

The information contained within this site has been sourced and presented with reasonable care. If there are errors, please contact us by completing the form below.

Timeliness: Note that most articles published on this website remain on the website indefinitely. Only those articles that have been published within the most recent months may be considered timely. We do not remove articles regardless of the date of publication, as many, but not all, of our earlier articles may still have important relevance to some of our visitors. Use appropriate caution in acting on the information of any article.

Report inaccurate article content:

Need More Information?

Submit this form, and an Enrollment Specialist will contact you to answer your questions.

Or call 877-588-3286

Ready to Begin?

Start your application today!

or call 877-588-3286 877-588-3286
for help with any questions you may have.