How health-based non-profit organisations use financial reports to show they are non-profit

What is it about?

This paper analyses the New Zealand health reform that required primary health care umbrella organisations to be non-profit organisations. The research showed that the experiment requiring the entities charged with improving their communities’ health to be non-profit organisations has had mixed success. Those with strong community involvement meet the ‘no-profit’ and the ‘efficiency gains’ goals of the Government. Structure mattered, as did the prior formation of the entity. Where they came from for-profit practices, they had less community involvement and less-developed social capital. Where PHOs have little community involvement and are underpinned by the predecessor profit-oriented entities ithey were less able to identify the health needs of their local community and were less able to target their health care services to meet those needs. It is conjectured that, together, under-developed social capital and less well-targeted health care services have resulted in these entities achieving fewer efficiency gains.

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Why is it important?

Health reforms are rife, but this study shows that specifically seeking 'non-profit' entities without structural reforms and monitoring is likely to result in lower levels of success than is desirable.

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