The For-Profit question - an analogy

We've gotten into a for-profit/non-profit discussion in another thread - so I'm going to try and focus the discussion here.

Consider this analogy - some hospitals in the US are for-profit and others are non-profit. What if there were no non-profit hospitals? Would the US health care system function any better than it does now? Would our otherwise disastrous allocation of care improve? (One ranking list put the US 36th in the world in health care, not because we don't have high quality care in places, but rather because of poor distribution).

A couple of years ago I spent some time talking with a manger in the Broward County (Florida) county hospital system. He pointed out where for-profits located themselves (near paying patients) and where the county hospitals are (where poor folks are). Bottom line - for-profits hospitals largely don't meet society's needs for health care for the poor, reasearch, or medical education (residencies, etc.).

The US would suffer without non-profit hospitals. The market does a poor job of meeting society needs in health cares by iteslf. While there are many economic issues in health care - turning over operation of all health care institutions to for-profit firms isn't likely to help solve the problems.

Back to education. What if there were no non-profit schools? Where would our society be? Would the for-profits meet society's need for:

1. Research - today for-profits simply add virtually nothing to our storehouse of knowledge. With noted authors like Friedman pointing out the need for leadership in research if the US is to remain competitive in the world, what will the for-profits offer to help? I'd suggest nothing - they aren't serving society needs, they are working to maximize shareholder wealth (which is their job). Non-profits not only conduct research, but they generate the next cast of researchers.

2. Breadth - for-profits cherry pick the education market offering popular and profitable programs like MBAs. But what about society's need for education in the arts, engineering, sciences and the like? Where are the for-profits? They're cherry picking and making a fast buck. Our economy needs more of what the for-profits don't do (especially SMET - science, math, engineeering and technology).

3. Service - non-profit schools do provide a number of service to the community, especially in health care. Again, where are the for-profits?

A world with only for-profit educational institutions would be a much poorer one - society would suffer. Non-profits have their place in this world and for-profits fail to meet a number of society needs.

I agree that both non-profits and for-profits have to be held accountable for effetivenes of their instutitons. Market forces appear in my estimation, however, to be imperfect at this. Accreditors and strong boards are more likely to lead to this.

Regards - Andy

 

Research: All non profit research universities are large. No for profit has a single campus that even approaches the necessary size. Also, non profits sponsor research because the best faculty go to universities with strong research programs, and those faculty and the research they generate increase the schools reputation. For profits are far from having a good reputation for many reasons that are mostly beyond their control. So why bother with something that would be impractical and have no benefit?

Breadth: For profit schools market themselves toward working adults and part time students. Now, lets not get in an argument about this, but I think we all know business is much, much easier than engineering or science. A part time program in those subjects for people also working full time would either have to sacrifice quality or take an immense amount of time. If your a working adult, are you going to career change into business in two or three years, or wait six or seven until you can get an engineering degree? There just isn't a market. As for art, there are plenty of for profits with art programs.

Service: Services non profits provide are either health care or to the community. For profits have no part in the community - what physical campuses exist are too small. Also, full time students and faculty have time for outreach - not working adult learners and part time faculty with a day job. Non profits provide health care through their medical schools. I'm sure for profits would love to run medical schools, but that's just beyond their reach at this time.

I don't see this as a for profit or non profit kind of problem - it's just the type of school each is. For profits are much closer in operation to a four year community college than any traditional research university. And you don't see community colleges doing research either.

 

Hi,

Not all for-profits are the same in purpose, look at Walden: They have a very good reputation for producing competent and successful doctoral graduates, and do conduct research in the areas they teach.

http://www.waldenu.edu/c/About/About_242.htm

http://www.waldenu.edu/c/Students/CurrentStudents_733.htm


Large non-profit schools (be it private or public) will always have a place and serve their purpose, as they always have. They provide a service to the public and society as a whole, as for profit schools do to the markets they serve (largely mid-career, working adults)

 

I usually defend the for-profits, pointing out that non-profits act like for-profits in many ways.

But Andy makes some very good points. I certainly would not like an educational world where all schools acted like the for-profits.

I tend to view the for-profits as the last resort for those of us seeking an education. NCU has certainly met my needs for an MBA program. But it wasn't my first choice. If I had more available time and a fixed work schedule I would have attended Nova Southeastern's MBA with concentration in Entrepreneurship attending classes every other weekend. I think the experience would have been much better than anything NCU could offer.

 

I agree that if all schools were for-profits, we would have problems, but they do serve their purpose.

I have degrees from non-profit and for-profit schools, and enjoyed my experience at both types of schools. I loved my on campus college years, and I wouldn't change that for the world, but I also loved the real-world applicable business concepts I learned at UOP and what I am hoping to get out of my MBA here at Strayer.

 

When you look at the endowments and administrative salaries of the "non-profits", you really have to wonder if that's an accurate description.

As mentioned already, there is a niche for both types of schools. The for-profits are obviously filling a void, because they are turning a profit.

 

I would venture to say that most large, research based universities are just as focused on revenue generation as for profits.

 

Are they filling a void because they are turning a profit or because they are providing more accommodating access? I think it’s the latter. I think it’s also important to acknowledge that as much as some might like to believe that market forces are a panacea for all that ails our society, there are some societal problems that can't be solved by our inherent greediness. Andy's examples of health care and research are good ones. It seems clear to me that if for-profit institutions ever start seriously diminishing the success of non-profits then we will have a very large problem on our hands.

 

Perhaps, but the "for-profits" are ultimately held accountable to stockholders who expect profits or increases in valuation either in the short term or long term, so the motivations behind the models to educate the student for the greater good of society cleave at that point. Society is the primary customer of education in the non-profit model, while the student is the primary customer of education in the for-profit model.

Dave

 

The reason for this is that good research is expensive. If public uni's don't generate the revenue to cover those costs the research opportunities are pursued elsewhere.

The worst case for research would be a world in which *all* research is conducted by private, for-profit entitites who don't publish results, or worse, lock them up behind a wall of patents and copyrights.

While the doctrinaire laissez faire types might believe this is desirable, don't think for a minute that it could actually happen. If America attempts to go this way the research centers of gravity will simply shift to publicly-funded research institutes elsewhere in the world, societies where this quasi-religious laissez faire ideology holds less influence (i.e. Europe, Canada, India, China).

 

In many ways they do, but I see your point. Then again, what about having an educational world filled with 4th tier universities? After all, many of these do serve a purpose. Would having an educational world with only the admission requirements of Princeton or Harvard be better instead? Chances would be that only the rich, powerful or super-smart would be getting an education. Or how about an education system filled of private schools only? Heck, private schools top the rankings at USNews, but there are many that don't and suck eggs.

My point is that a little of all serves a purpose, but nothing in excess. Their are advantages and disadvantages in each group. and they all provide benefits and also disadvantages.
Regardless of all the criticism about private tax-paying schools, they have pressured the rest of academia to pay more attention towards student placement, changes in market demands and time efficiency. Now, schools that require almost no work or target a nitch of students with poor motivation do not have a place, and something has to be done about them, tax-paying or not. Unfortunately, I see a lot of this at the cheapest tax-exempt community colleges and private tax-paying schools like FMU, Remington, etc.

For profit or not, I think that DL degrees are seldom one's first choice. DL provides convenience. My first choice if I had the time and flexibility would be to attend a public traditional b&m doctoral program. In terms of cost and marketability, you can do more with them than a doctorate from private schools like Argosy or Nova. However, I do believe that programs from these two schools tend to be real-world oriented and specialized than many of the more old fashioned academic AACSB programs. Nevertheless, an AACSB degree still opens many more doors.

If you had the time, why Nova?
I would've recommended the MBA from the University of Miami instead for about the same tuition. I also believe that they are AACSB accredited. They offer classes on the weekends and have an excellent reputation. If you are looking for something specifically in entrepreneurship, then I think that there are some other very good choices as well.
And as far as face to face interaction goes, I think that students *can* get a lot out of doing some residency.


-S

 

University of Miami MBA costs about $1,280/credit. I think Nova Southeastern's MBA costs lot less. I may be wrong.

 

All of this is very interesting and to a degree true. However, the primary reason that there is even a market for the FP's is because the NFP's were not meeting the demands of the market. Had they done so in the past then the FP's would have failed. Now that the FP's are flourishing and taking market share the NFP's are scurring about trying to follow suit.

 

This argument assumes that the for-profits and non-profits have the same product. Your statement implies that the products are not equivalent.

 

Maybe you should reread what I wrote.

 

Is it possible that some "market demands" are simply not consistent with societal needs? Most of us would agree that degrees from degree mills are sub-standard and offer little value. No one wants to go to a doctor with such a degree, for example. Is it possible that students "market demands" are simply inconsistent with sound education?

There are many educators that believe (and I tend to agree) that in a student-teacher relationship, the teacher knows something that students don't know. So the idea of students flocking to attractive MBA programs, for example, for reasons like "Good! there are no proctored exams or quantitative courses!" really flies in the face of this idea.

I agree that there is a middle ground in all of this. All MBA programs don't have to be Harvard or Stanford to be creditable. And many of the top non-profits could learn a lot of lessons about being more student centered in their service. But on the acdemic front if all MBA programs dropped to the quality level of weak for-profits (or agressive non-profits) where would we be?

Regards - Andy

 

PaulC - I agree that revenue is essential to all schools - for-profit and non-profit. But what about the expense side of the equation? As I've pointed out - for-profits spend only about 50% on programs - while profit, tax and selling/admin burn the other half. Non-profits, even agressive ones like Nova Southeastern, spend some 85% or so on programs.

Regards - Andy

 

Not true. According to several reports actually published by USNews, for-profit hospitals have been doing a better job at providing better treatment and services to people than not-for-profit hospitals. In fact, not-for-profit hospitals were accused of charging the poor without insurance the FULL price of their treatments that would usually be lower under HMO plans.
For-profit hospitals instead have shown more likely to charge a sliding fee scale to uninsured patients and provide them with better treatment than not-for-profit hospitals, at least according to the USNews report. Another thing, for-profit staff have been shown to be more caring & attentive to patient's needs and concerns.
Often with not-for-profit hospitals is that patients are treated like they are a burden by underpaid & overworked staff. You would think that not-profits would have more money to treat their staff better because, well, they supposedly do not make a profit (at least in theory) and do not pay taxes.

While I'm not saying that the for-profits here should replace every hospital in the country, if they are doing a good job then we certainly can't ignore it, which is what you are doing, Andy. So far, at the for-profits nurses, doctors, and the rest of the staff is better paid and have better equipment and do a better job at helping the poor.

I would pay more attention to your concerns if you were able to comment the good and the bad from both sides, rather than just looking for errors from one side and ignoring the negative from the other.

-S

 

Re: Re: The For-Profit question - an analogy

Ok - I have been and remain concerned about for-profits. I note that for-profits in the K-12 realm haven't been a stellar success in solving basic educational problems. For-profits in general have been a commercial success, but hardly an answer to society's broader needs.

On the positive side for-profits have provided accessible programs in select areas and it has taken some non-profits a while to catch-on to providing the same. Without the for-profit (and agressive non-profits) we wouldn't see DL as it is today. The established non-profits would never have gotten the idea without competition. Student service wouldn't be as high on anyone's radar, either.

This having been said - my concerns as noted in this thread remain. A world of all for-profits would be bleak one. Without the for-profits, however, change would come much more slowly.

Regards - Andy

 

Re: Re: Re: The For-Profit question - an analogy

Which institutions pioneered DL? It's been available for as long as I can remember in the form of correspondence courses, the vast majority of which are offered by state universities.

If we take DL to mean courses delivered with via the web, who gets to take credit for being the firstest with the mostest? I don't know the answer to this, but I don't see any reason to reflexively assume it was the FPs.

I would hypothesize that the success of the FPs was not in curriculum development or delivery, but in *marketing*, to which the NFPs have belatedly responded. Banner ads and aggressive branding ensures everyone knows about Phoenix/AIU/Colorado Tech/Capella, but people are only now becoming aware of Fort Hays State.