Corporate Profile

Hospitals, like all other businesses, depend on income to stay productive. Hospitals may receive their income from:

  • patients themselves along with the funds paid by insurance carriers for the patients who use the hospital including the government programs Medicare and Medicaid
  • special funding from religious or other organizations or from persons who provide private monetary donations usually made through charitable trusts
  • the fund-raising efforts of volunteers and other auxiliary staff and
  • from various federal, state and community sources in the form of grants and general funding

Most hospitals have an administrative body that reports to a board. The head of independent hospitals, the CEO (chief executive officer), may also be called an administrator or president. If the hospital is owned by a corporation, there may also be a CEO of the corporation. Hospitals, like other businesses, have traditional departments responsible for operating the business side of things - building maintenance, finance and supplies for example. Hospitals can operate as either for profit (proprietary) or as nonprofit (not-for-profit) corporations.

Proprietary Hospitals

Around 25% of Virginia hospitals are owned by corporations that have investors called shareholders. Shareholders invest in the corporation and expect a return on their investment. Some of the profits of these hospitals are distributed to shareholders as dividends. Corporately-owned proprietary hospitals pay federal and state corporate income tax.

Not-for-Profit Hospitals

Most Virginia hospitals are owned by the public at large or by special groups through religious affiliations or by other private or community organizations. These hospitals do not share their profits with shareholders but rather use their profits to further the mission of the organization. Nonprofit hospitals do not pay a corporate income tax to the federal government.

Another form of nonprofit hospital, the public hospital, is operated by a public entity — for example, the federal government, a military hospital or national research center. State and local governments also operate hospitals designed to serve a specific community area or a statewide area. Many state-operated hospitals provide highly specialized acute care, have medical research departments and provide certified medical training to physicians and other medical professionals.