Can nonprofit organizations own long-term care facilities? (2023)

With thegrowing number of seniors in the United States,advances in health technology, and theincrease in chronic diseases, demand for long-term care facilities and services is at an all-time high. And maintenance is expensive. Still, it's worth asking: Can nonprofit organizations own long-term care facilities? If so, what are the benefits and potential challenges they might face?

In this blog, we will examine the potential benefits and challenges of nonprofit ownership of long-term care facilities. But first, let's better understand non-profit organizations, which, simply put, are typically mission-based dive organizations with strong community ties and the potential to foster collaboration and innovation in the field of long-term care.

A basic understanding of nonprofit organizations.

Non-Profit OrganizationsThey are non-profit groups and do not distribute income to members, directors or officers as a for-profit organization does. Instead, nonprofit organizations are an entity established to serve society.

All income generated in a nonprofit organization is reinvested into the organization to advance its founding mission, which is often focused on meeting social, environmental, educational, or health-related needs. As a result of their efforts, and to encourage the growth of other nonprofits, nonprofits enjoy the tax-exempt status afforded by theInternal Revenue Service (IRS).

the most importantTypes of Nonprofit Organizationscontain:

• 501(c)(1) - non-profit organizations organized by an act of Congress, e.g. B. Federal credit unions
• 501(c)(2) – Corporations with Exempt Organizations
• 501(c)(3) - Charities, public charities, foundations
• 501(c)(4) – civic association, charitable organization, social advocacy group, or local workers' organization
• 501(c)(5) - Labor, agricultural and horticultural organizations
• 501(c)(6) - Trade or professional organizations
• 501(c)(7) Social or Recreational Clubs
• 501(c)(8) Brotherhoods
• 501(c)(9) - Beneficiary Workers' Organizations
• 501(c)(10) - Fraternities and National Associations
• 501(c)(11) - Teachers' Pension Fund Associations
• 501(c)(13) Cemetery Company
• 501(c)(14) - federally authorized credit unions and reserve funds
• 501(c)(15) - Mutuals or associations
• 501(c)(16) - Co-operative farm financing organizations
• 501(c)(17) - Supplemental Unemployment Benefits Trust
• 501(c)(18) – Employee-Funded Pension Plans
• 501(c)(19) - Veterans Organization
• 501(c)(21) - Black Lung Benefit Trusts
• 501(c)(22) - Withdrawal of Liability Funds
• 501(c)(23) - Veterans organizations formed before 1880
• 501(c)(26) - Government-sponsored organizations that provide health insurance to high-risk individuals
• 501(c)(27) - federally sponsored workers' compensation reinsurance organizations
• 501(d) - Religious and Apostolic Associations
• 501(e) - Cooperative Hospital Service Organizations

Having listed the legally recognized types of nonprofit organizations, we can now answer the question: can nonprofit organizations own long-term care facilities? The answer is:And.Non-profit organizations can participate in long-term care and in their own facilities.and for-profit organizations.

In fact, nonprofit organizations are subject to the same regulatory requirements as theHealth Insurance Portability and Accountability Act (HIPAA), IsCenters for Medicare & Medicaid Services (CMS) requirements.and country-specific licensing regulations as for-profit entities.

Financial considerations for non-profit organizations

While nonprofits have unique benefits, such as: B. tax exemption, they still need funding, not only to fund their mission, but alsoset up a nursing home. Therefore, nonprofit organizations attack on a wide spectrumFunding Sourcesto support their operations. Some of the most popular are:

1. Individual donations:According to a recent study,69% of Americansreport that they have individually contributed to a good cause or charity. Such contributions may be one-time or recurring donations.
2. Subsidies:These are financial donations from governments, foundations or other organizations to a non-profit organization. Grant applications can be extremely competitive, but the successful receipt of an application can be extremely beneficial to a nonprofit organization.
3. Company sponsorships:Here, a for-profit company partners with a not-for-profit organization, with the former providing the necessary financial support and resources. Company sponsorships in 2021amounted to 21.08 billion US dollars. Of course, that was dwarfed by the total of $484.85 billion in individual donations that same year.
4. Membership Fees:Assuming the nonprofit organization is a professional association, museum, or association, they may charge individuals or organizations membership fees to gain access to exclusive benefits, resources, or events. This funding source has the benefit of consistency, allowing the nonprofit to plan future projects accordingly.
5. Sale of goods and services:Goods and services can be a lucrative way for nonprofit organizations to generate the finance they need. Examples would be thrift stores operated by charities, ticket sales for cultural events, or fees for educational programs and training.
6. Donations in kind:These are non-monetary donations to charitable organizations by individuals or organizations. They include goods, services or know-how. Examples include donated office space, equipment, professional services, or volunteer work.

Are Nursing Homes Non-Profit or For-Profit in Most United States?

In this section, we answer the question: Are nursing homes nonprofit or for-profit in most of the United States? We previously answered the questionCan non-profit organizations own long-term care facilities?and discovers that they can.

In terms of the share of for-profit and non-profit nursing homes,65% of nursing homes are for-profit, with nonprofit nursing homes accounting for 28% of America's nursing homes. The remaining 7% is owned by city or county government agencies and publicly funded with support from local governments.

Contact usHereif you would like to demonstrate our nursing home EHR for your nursing facility.

Non-profit nursing home versus for-profit nursing home: comparisons of quality of care

Before I wrap up this blog, it's worth taking a look at the quality of care in a nonprofit nursing home versus a for-profit nursing home. Now that we can answer the question nonprofits can own long-term care facilities and understand how nonprofit nursing homes make money (through Medicaid donations and reimbursements), is it worth considering the differences between the two?

Nurses, families and potential residents should be aware of thisdifferences in carebetween non-profit nursing homes and for-profit nursing homes:

• Headcount and turnover rates:according to studiesNon-profit nursing homes tend to have a significantly higher staffing levelcompared to for-profit nursing homes. For residents, this means better care outcomes and greater satisfaction with care in the care facility. The study also finds that nonprofit nursing homes have lower turnover rates, indicating they offer a better work environment for nurses. Unfortunately, this is something most seniors don't get to enjoy. As we found when answering the question,They are non-profit nursing homes.or for-profit In the United States, most nursing homes are for-profit.

• Measures for the quality of care:Research shows that on averageNon-profit nursing homes provide higher quality carefor residents compared to for-profit nursing homes. These quality of care measures are based on indicators such as health inspection results, staffing and clinical outcomes.
• Resource Allocation:In private care homes and chain care facilities, there is always pressure to make as much profit as possible. Unfortunately, in an effort to do this, these facilities can sometimes allocate fewer resources to direct resident care, resulting in lower quality of care.
• Financial surplus:All profits made in a for-profit nursing home go to the owners and shareholders of the company. This does not apply to non-profit organizations as theyNon-profit organizations are required by law to retain or reinvest fundsany excess. This is great for residents as their care environment and services are enhanced and staff can enjoy working in an environment they love.

From the above, it is clear that nonprofit facilities provide higher quality care, better staffing, and higher resident satisfaction than for-profit nursing homes. So when families are considering a nursing home for their loved ones and caregivers are looking for a facility where they can be passionate about caring for the elderly, nonprofit nursing homes should be their top priority.

Bottom Line: Can Nonprofits Own Long-Term Care Facilities?

So, can nonprofit organizations own long-term care facilities? If you can. Nonprofit organizations can transform the lives of America's seniors as more people age.

Those who intend to start a nonprofit nursing home should be aware of the many challenges they may face such as: B. limited resources, financial constraints and complex regulatory requirements. However, by carefully navigating the process and implementingNursing home softwarein your facility have the potential to drive positive change and improve the quality of care for residents.

To learn more about current trends in long-term care, read ourThe blogand subscribeLTC Hero Podcast.