Editor's Note: Welcome to Medical Economics' blog section which features contributions from members of the medical community. These blogs are an opportunity for bloggers to engage with readers about a topic that is top of mind, whether it is practice management, experiences with patients, the industry, medicine in general, or healthcare reform. The opinions expressed here are that of the authors and not UBM / Medical Economics.
Prior to the founding of the United States in 1776, the first hospital in the 13 colonies was founded in Philadelphia in 1751. Pennsylvania hospital, which became part of University of Pennsylvania Health System, was founded by Thomas Bond, MD, and Benjamin Franklin, "to care for the sick-poor and insane who were wandering the streets of Philadelphia."
The inscription "Take care of him and I will repay thee" was chosen and the image of the good Samaritan was affixed as the hospital seal. Little did anyone know how many second, third, and fourth parties would rise to take advantage of this new government and private-entity partnership.
As taxation increased throughout U.S. history, conferring a tax exemption on hospitals caring for the poor seemed compassionate and just. And there was historical precedent: according to Andrea Castro, writing in the Pace Law Review: "the policies that initially conferred tax-exempt status on hospitals can trace their roots to the Elizabethan Statute of Charitable Uses of 1601" which "bestowed exemptions upon hospitals and other 'charitable'" organizations which promoted the common general welfare." Hospitals took all comers as a “community benefit” to “earn” their tax exempt status by government.
But this tax-favored status has been compounded with a nexus of government subsidies and privilege and thus modern hospital operations can seem more like patronage pits instead of volunteer houses of healing.
The transformation didn't occur overnight. One of the lesser known policies that opened the taxpayer spigots was the Hill-Burton Act. Passed in 1946, the legislation provided government subsidies to hospital construction, laying groundwork to decades of other government-granted special favors for these institutions, to the detriment of less expensive, independent office-based care.
Initially a “one grant” emergency measure, Hill-Burton was "perpetuated by successive Congresses renewing the program and expanding it, even to providing for diagnostic and treatment centers," reported the newsletter of the Association of American Physicians and Surgeons (AAPS) in 1955. The doctors at AAPS warned, “[a]mong other valid reasons for rejecting the Act ... the proposal to establish hospital diagnostic-treatment clinics is but another form of socialized medicine whereby the hospital financed by the government will assume the dominant role in diagnosing and treating illnesses."