The Evolution of Hospitals in the Twentieth Century and their Impact on Public Health

National Bureau Of Economic Research Inc, Cambridge MA

Investigators

Abstract

Hospitals stand at the center of the U.S. health care system, with hospital spending comprising 4.6 percent of total GDP. Hospital services are provided by all levels of government, as well as by for-profit and nonprofit organizations. Despite their importance, there has been little quantitative research done that examines the historical development of the U.S. hospital industry and its impact on public health. This study bridges this gap in our knowledge by focusing on two primary lines of inquiry: What factors have influenced the historical diffusion of hospitals in the United States, and to what extent has access to hospital care improved the well being of Americans over the course of the twentieth century? Understanding these issues is critical in understanding the effect of modern policy changes on the health care system. To make informed policy decisions now, policy makers must have a solid sense of what factors led to the current system. This study identifies the forces that determined the relative diffusion of for-profit and nonprofit hospitals in the U.S. and examines how these forces have changed over time. Identifying these factors is important because of the possible relationship between hospital quality and ownership, as well as because of the tax advantages of the nonprofit form. The study also measures the effect hospital care had on public health over the course of the twentieth century, and examines the extent to which access to medical care influenced morbidity and infant mortality. An important part of this analysis is to examine the extent to which access to health care differed for black Americans and how racial differences in the provision of health care affected the health of blacks relative to whites. To investigate these issues, the study relies on several newly identified data sets, including a panel of hospital level data from 1927-1970. The hospital data provide information on hospital size, ownership and location, as well as several other detailed statistics. To shed light on how the hospital industry developed, these data are combined with data on state and local taxes and other variables to identify the factors that influenced hospital diffusion. By linking the hospital level data with county-level data on black and white infant mortality, as well as morbidity data from the state of New York, the study measures the effect of hospitals on public health. Of particular importance in both studies is how government spending on hospital construction has affected the industry. A key factor in determining the distribution and ownership of hospitals is the 1946 Hospital Survey and Construction Act, commonly known as the Hill-Burton program. This program provided money to states to build public and nonprofit hospitals in underserved areas. How did Hill-Burton affect hospital provision? Since the law provided funds only to public and nonprofit institutions, what was its effect on for-profit hospitals? This study provides a first-time analysis of Hill-Burton at a disaggregated level to fully explore the answers to these questions. The Hill-Burton program is also important because from 1946-1963 it contained a clause that enabled hospitals to build segregated facilities as long as there was equal provision of facilities for all population groups. Was "separate" really "equal" under this provision, which was struck down by the U.S. Supreme Court in 1963? By combining data on Hill-Burton funding with infant mortality data and other public health variables, the study examines the extent to which equal access to publicly funded health care existed for all Americans.