Medical Staff Pulse Newsletter

President's Perspective: Myth of Nonprofits

By Thomas M. Priselac, President and CEO

Beware the "Nonprofit" Myth

As a nonprofit organization, Cedars-Sinai exists to serve the public. And as a nonprofit healthcare organization in a growing region, Cedars-Sinai has a responsibility to fund new facilities, technologies and equipment to enable our staff to provide high-quality healthcare to all our patients. 

Because we are a nonprofit, I am occasionally asked why Cedars-Sinai needs to have a financial gain at the end of each year. There is a lot of misunderstanding about what it means to be a nonprofit, and why a financial gain is crucial to our ability to serve the public.  The misunderstanding often comes from two myths, which I’ll explain below:

A nonprofit organization should never have a financial gain at the end of the year, as that would be a "profit."

The main difference between nonprofit and for-profit organizations is that a nonprofit organization's main goal is to provide a public service for the community, while a for-profit's main goal is to make money for its shareholders or owners. A nonprofit does not have shareholders or owners; it exists solely for the public. As a result, if a nonprofit has a financial gain at the end of the year, it must be reinvested back into the organization so that it can serve the public.  (A for-profit’s financial gain, on the other hand, can be distributed to its individual shareholders or owners.)

As a nonprofit healthcare organization, Cedars-Sinai doesn’t need to have a financial gain. It only needs to be able to "break even" each year by meeting its current expenses.

Without a financial gain, Cedars-Sinai would not be able to update the facilities, equipment and technology needed to provide quality care for its patients. 

A financial gain each year provides the resources needed for the major renovation projects throughout our 6.8 million square feet of facilities, new technology and other equipment needed to give our staff the best environment to provide leading healthcare for the community. 

A few examples of the key projects that would not be possible without our financial gain: additional advanced technology operating rooms in the Pavilion; renovation of the main pharmacy; new facilities for the Oschin Cancer Center; primary-care and specialty facilities throughout the community; renovation of the Central Processing facility, GI Lab and Materials Receiving area; rebuild of Cedars-Sinai Marina del Rey Hospital; and ongoing renovations at the medical center. 

Cedars-Sinai's financial gain is a key element of our shared commitment to ensuring that we continue to provide the optimal environment for high-quality care.  As always, the most important element of our quality is each of you.  Thank you for sharing your dedication and expertise on behalf of our patients.