Financing - Hospital as Social Organization

Financing:

Because hospitals may serve specific populations and because they may be not‐for‐profit or for‐ profit, there exist a variety of mechanisms for hospital financing. Almost universally, hospital‐ construction costs are met at least in some part by governmental contributions. Operating costs, however, are taken care of in different ways. For example, funds may come from private endowments or gifts, general funds of some unit of government, funds collected by insurance carriers from subscribers, or some combination thereof. In some countries, operating costs may be supplemented in part by public or private sources that pay charges on uninsured or inadequately insured patients or by out‐of‐pocket payment by these individuals. Hospitals are usually funded by the public sector, by health organizations (for profit or nonprofit), health insurance companies, or charities, including direct charitable donations. Historically, hospitals were often founded and funded by religious orders or charitable individuals and leaders. Today, hospitals are largely staffed by professional physicians, surgeons, and nurses, whereas in the past, this work was usually performed by the founding religious orders or by volunteers.

In many countries and in Europe in particular, the financial support of services in hospitals tends to be collectivized, with funding provided through public revenues, social insurance, or a combination of the two. Thus, the costs of hospital operation are covered infrequently by payments made directly by patients. Details vary somewhat from country to country. In Sweden, for example, most hospital operating costs are financed by public revenues collected by regional governments. Many other European countries follow a similar model, with operating costs for hospitals paid out of national insurance funds; such is the case in the Netherlands, Finland, Norway, and elsewhere. In contrast, other countries, such as the United States, rely heavily on private insurance funds.

Private health insurance corporations or agencies exist in many countries. These entities may offer different or more services relative to national health insurance, although generally at additional cost as well. Private insurance funds offer an alternative mechanism of hospital financing.