Certified in Public Health (CPH) Practice Exam

What obligation do executive managers in a not-for-profit health care organization have?

1. Maximize return for their stockholders

2. Increase revenues annually

3. Be prudent stewards of the community's assets

4. Avoid earning any net income

The correct answer is: Be prudent stewards of the community's assets

Executive managers in a not-for-profit health care organization have the obligation to be prudent stewards of the community's assets. This responsibility reflects the mission-driven nature of not-for-profits, which focuses on serving the community rather than generating profits for shareholders. In this context, being a prudent steward means managing the organization's resources effectively and ethically to provide high-quality health care services. These managers are tasked with ensuring that the organization meets community health needs while responsibly utilizing funds, facilities, and staff. Their decisions must prioritize the well-being of patients and the community, balancing fiscal responsibility with the organization’s mission, rather than focusing solely on profitability or revenue growth. The other factors related to this question—such as maximizing returns for stockholders or avoiding net income—are not applicable to not-for-profit organizations, as they do not operate for profit and do not have shareholders in the same way a for-profit entity does. The expectation to increase revenues annually, while important for sustainability, is secondary to the overarching obligation to serve the community's health needs effectively and responsibly.