Profit maximization vs. shareholder wealth maximization Even though profit maximization and shareholder wealth maximization are typical goals of a firm, there are differences between them. Profit maximization relates to a single period and is a short-term goal that is achievable within a period of one year. Most businesses interpret profit maximization to denote an increase in earnings over a given period of time. On the other hand, maximizing the wealth of shareholders is a long-term goal because stockholders of the firm are not only concerned with the current profits but with the future profits as well. Shareholder wealth maximization considers: return of shareholders, timing of returns, wealth in the long run, and uncertainty or risk. Those firms that operate with the objective of maximizing the wealth of shareholders plan their activities in a way that allows them to give stockholders the highest combination of dividends and capital gains accrued from the increased market value of shares (Shim & Siegel, 2008). Prospective payment vs. retrospective payment A retrospective payment is a payment received after the delivery of a service or good. A good example is the traditional fee-for-service medicine. A prospective payment allows for the calculation of fee schedules depending on the type of treatment and illness, and is paid in advance irrespective of actual costs incurred. A good example is a case-based payment. The primary distinction between a prospective payment and retrospective payment is that in a prospective payment system the provider retains a portion of the difference between actual costs and revenues established, while in a retrospective payment system the provider fully compensates actual costs and adds a component that represents the small profit amount (Zelman, McCue, & Glick, 2009). In a prospective payment system, the risk shifts from the payer to the provider as the latter is required to pay a given predetermined amount before the admission of inpatients. However, in a retrospective payment system, the providers are able to pass all their costs irrespective of inefficiency in production of services. In a retrospective payment system, providers lack the incentive to look for more efficient production methods while patients lack the incentive to search for providers who provide services at subsidized costs. This is quite different from the prospective payment system where providers have the incentive to provide effective and efficient services since they understand that the more efficient and effective care is delivered by the provider, the more the operating margins are (Casto & Layman, 2006). Reasons why the unreimbursed cost of Medicare is often not included as an element of community benefit Unreimbursed cost of Medicare is the actual unpaid cost associated with the provision of care to Medicare patients. It is often excluded as an element of community benefit because of the historical relationship between payment of costs and Medicare. Traditionally, Medicare established payments to those health care facilities that matched expected costs. Even though Medicare is still a substantial amount more than Medicaid, most of the