The Rise of the Modern Hospital

By the early 20th century, the hospital as we now know it had become an im- portant American institution and a major site for medical education and research. Between 1873 and 1923, the number of hospitals increased from 178 to almost 5000 (Rosenberg, 1987:341). These new hospitals also included public hospitals. Such hospitals were established to provide services to those groups—people with mental illnesses, people with chronic illnesses, and the “undeserving poor”—that voluntary hospitals considered to be unworthy and for-profit hospitals considered to be money losers. However, African Americans still could obtain care only in a few segregated, poorly staffed, and poorly funded wards and hospitals; in municipal hospitals where medical students and residents could learn skills by practicing on African American patients; and sometimes in other hospitals for emergency care.

By this time, surgical admissions to hospitals far surpassed medical admissions. Most patients went to a hospital to have their tonsils, adenoids, or appendixes removed; their babies delivered; or their injuries treated. The emphasis on technology as a defining aspect of mod- ern hospitals further reinforced hospitals’ tendency to focus on the care of acute illness rather than chronic illness.

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The next major change in hospital care in the United States came in 1965 when the federal government implemented Medicaid and Medicare. These health insurance plans dramatically increased the profits available to hospitals. This in turn led to both a rise in for-profit hospitals and increasing mergers of hospitals into ever-larger for-profit and voluntary hospital chains (such as Humana and Sisters of Charity, respectively).

As hospital profits grew, so did costs to the federal government via Medicaid and Medicare. As a result, the government for the first time developed a vested in- terest in controlling hospital costs. Ironically, the resulting price-control programs such as diagnosis-related groups (DRGs) pressured voluntary hospitals (which remain the core of the hospital system) to focus more on the bottom line and thus to act more like for-profit hospitals.


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