Describe Legal Structure Of Healthcare Organizations (Case Study Sample)
A small county in middle America has never had a hospital. Residents have always traveled to neighboring counties for care. The county commissioners have decided that it is time for a local hospital. The county commission has $30 million in cash but needs another $70 million to build and operate the hospital. Several proposals have been presented:
A public hospital to be owned and operated by the county. The $30 million would be used as a down payment and the remaining $70 million would be financed by tax-exempt bonds.
A private hospital operated by a non-profit corporation. The $30 million will be a grant to the corporation with the $70 million being financed by bonds. If the corporation ever dissolves, the county commission receives the $30 million back.
A private hospital owned and operated by a for-profit corporation. The $100 million needed for the hospital will be raised through sale of shares in the corporation. The county commission will purchase $30 million in corporate stock and become a minority shareholder.
You have been asked to research and present to the commission the advantages and disadvantages of the proposals presented. Your presentation should include discussion of (but not limited to) the following:
1-Income and property tax exemption
2-Ability to use tax-exempt bond financing
3-Subject to public employment laws and public oversight
4-Subject to IRS rules for 501(c)(3) corporations
Source paper: Legal structures of health organizations
Management encompasses creating a homogeneous working environment while effectively making use of the available resources to realize set goals (McMahon et al., 1992).
The county requires a local hospital and the three available options for financing the project include government-owned or a not for private profit hospital or a for-profit privately owned hospital. It is good to understand that hospitals and other service providers in the health sector are legal entities because they are legally mandated by government to operate and have both legal and management structures. There are six types of legal entities and choice of any of the legal structures depends on the related policy framework. These types include health organizations which are government owned, those that are not for profit, for profit, partnerships, limited liability companies and those that are sole proprietorships. Not considering the type of entity, there must be clear structures with a governing body, usually referred to as a management board and an executive officer, who oversees its operations.
A well-managed healthcare system is desirable to effectively and safely dispense services within hospitals, dispensaries, and other health service providers. The divergent proposal, in this case, has to take consideration of the existing situation in the county and the expectations of the commissioners such that once a choice is made, it should be a mitigating factor to the beneficiaries. Governance structures of corporations are anchored in law and set regulations spells out their mandates and limitations.
They can further be categorized in two clusters; as those that are incorporated or as those that run on a statute. Most county run institutions are constituted using statutes and ordinance for the sole reason that their liability is limited to the extent of their resources.
It is important to consider the fact that corporations exist in perpetuity. This implies that their directorship and ownership can be transferred easily in case of death or resignation.
Public Hospital Operated by the County
A public hospital is a government-owned entity whose establishment is anchored in the county's statutes and local ordinances. These statutes spell the mandate of its management as well as its limitations. The hospital is allowed to enter a joint venture or even guarantee to finance for desired projects.
According to Steiner, Jr. Esq., in his publication, the ‘Organization of the healthcare delivery system', some statues give guidelines on provision of services as in some instances they cannot enter contractual obligations with external organizations. In some other occasions, the institutions' management is barred from involving themselves in insider trading. This is commonly referred to as ‘conflict of interest.'
Other laws governing the management of public entities
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