History and Evolution of Medical Care
Institutions
Professor Edward P. Richards
LSU Law Center
http://biotech.law.lsu.edu/
Key Issues
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Scientific medicine is about 120 years old
 Technology based medicine is less than 60 years old
 Doctors are not scientists and many do not practice
scientific medicine.
 Modern medicine is shaped by its history
Health care finance shapes medical care
 Special interests undermine cost-effective care
 Financial tinkering destabilized primary health care
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Critical Dates in Medicine
1400s
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Birth of Hospitals
Places where nuns took care of the dying
No medical care – against the Church’s teachings
No sanitation – assured you would die
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Early 16th Century
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Paracelsus
Transition From Alchemy
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Mid 16th Century
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Andreas Vesalius
Accurate Anatomy
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Early 17th Century
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William Harvey
Blood Circulation – the body is dynamic, not
static
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1800
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Edward Jenner
Smallpox and the notion of vaccination
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1846
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William Morton - Ether Anesthesia
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1849
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Semmelweis
Childbed Fever and sanitation
Scientific Method
Controlled Studies
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1854
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John Snow
Proved Cholera Is Waterborne
Basis of the public sanitation movement
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1860-1880s - Development of the Germ
Theory
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Louis Pasteur
 Simple Germ Theory
 Vaccination For Rabies
 Pasteurization to kill bacteria in milk
Joseph Lister
 Antisepsis – surgeons should wash their hands and
everything else, then use disinfectants
Koch
 Modern Germ Theory
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Sanitation Movement - Modern Public
Health: 1850s - 1900s
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Lead by the Shattuck Report on Sanitation in
Boston - 1850
 Waste water disposal
 Drinking water treatment
 Pasteurization of milk
Food sanitation
 The Jungle - 1905
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The Business of Medicine in the 1800s
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Physicians are Solo Practitioners
 Most Make Little Money
 Have Limited Respect
No bar to entry to profession
 Most medical schools are diploma mills
 Limited or no licensing requirements
Cannot make capital investments
 Training
 Medical equipment and staff
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Transition to Modern Medicine and
Surgery
Surgery Starts to Work in the 1880s
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Surgery Can Be Precise - Anesthesia
Patients Do Not Get Infected - Antisepsis
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Effect on Licensing and Education
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Once there are objective differences (people live)
between qualified and unqualified docs, people care
 You can make more money with better training
 You can make more money with better equipment and
facilities
Effective Medicine Drives Licensing
 Licensing Limits Competition
 Physicians Start to Make Money
Allows capital expenditures
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The Tipping Point - 1910
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About 1910, going to the doctor, and particularly
the hospital, shifted from being more dangerous
than avoiding them to increasing your chance of
survival.
Flexner Report - standardized medical education
and shaped the modern training system
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Legal Limits on Physician Practice
Organization - 1920s
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Corporate practice of medicine
 Physicians working for non-physicians
 Concerns about professional judgment
 Real Concern Was Laymen Making Money off
Physicians
Banned in most states
 Docs pushed the bans
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Traditional Impact of Corporate Bans
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Physicians Do Not Work for Non-Governmental Hospitals
 Contracts Governed by Medical Staff Bylaws
 Sham of “Buying” Practices
Physicians Contract With Most Institutions
Charade of Captive Physician Groups
 Managed Care Companies Contact With Group
 Group Enforces Managed Care Company’s Rules
 Physicians Can Be As Ruthless As Anyone
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Impact on Physician Practices
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Corporate practice bans limited competitors to
physician practices
Physicians had no incentive to form their own
large integrated practices
 Sole Proprietorships and Partnerships
 A few exceptions - Kaiser
The legal impact is that these small groups were
subject to the antitrust laws, making it difficult to
negotiate with health insurers in the 1980s
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From L'Hotel-Dieu to High Tech
The Evolution of Hospitals
From Nuns to MBAs
Reformation of Hospitals
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Paralleled Changes in the Medical Profession
Began in the 1880s
Shift From Religious to Secular
 Began in the Midwest and West
 Not As Many Established Religious Hospitals
Today, Religious Orders Still Control A Majority of
Hospitals
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Technology in Hospitals - The Advantage
of Hospital Care over Home Care
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Driven by antisepsis - homes were safer before
antisepsis
Started With Surgery
Medical Laboratories
 Bacteriology
 Microanatomy
Radiology
Services and Sanitation Attract Patients
 Internal Medicine
 Obstetrics Patients
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Post WW II Technology
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Ventilators (Polio)
Electronic Monitors
Intensive Care
Hospitals Shift From Hotel Services to Technology
Oriented Nursing
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Post World War II Medicine
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Conquering Microbial Diseases
 Vaccines
 Antibiotics
Chronic Diseases
 Better Drugs
 Better Studies
 Childhood Leukemia
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Effect of Medical Science on Hospital Care
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1930s
 Few effective treatments means no cures other than
surgery
 Long stays, hospitals act as nursing homes
 Care is nursing and palliative
Post-1960s
 Many effective treatments
 Much shorter stays - expansion of nursing homes
 Most care is technological
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Joint Commission on Accreditation of
Hospitals
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1950s
 American College of Surgeons and American Hospital
Association
 Now Joint Commission (on Accreditation of Anything
that Makes Money in Health Care)
Split The Power In Hospitals
 Medical Staff Controls Medical Staff
 Administrators Control Everything Else
Enforced By Accreditation
 Depends on Medicare/Medicare waiver
 Seldom pulls accreditation
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Changes in Hospital Financial Models
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Pre-1970s
 Mostly Charitable
 Built on donations, not debt or bonds
 Reduced operating costs and pressure on occupancy
Post 1970s
 Debt
 Stock market - pressure for performance
 Huge pressure on occupancy and profitability
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EMTALA and the Duty to Treat - 1986
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Traditionally hospitals could, in theory, refuse to treat
patients without money
 Actually limited to patients with no legal relationship
to the hospitals
Emergency Medical Treatment and Active Labor Act of
1986
 Must evaluate all patients seeking treatment
 Must treat or properly transfer all needing treatment to
save life or limb or in active labor
 Can charge, but no government funding for unpaid
care
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Contemporary Hospital Organization
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Classic Corporate Organizations
 CEO
 Board of Trustees Has Final Authority
 Part of Conglomerate
Medical Staff Committees
 Tied To Corporation by Bylaws
 Headed by Medical Director
Raises Conflict of Interest/Antitrust Issues
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Medical Staff Bylaws
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Contract Between Physicians and Hospital
 Not Like the Bylaws of a Business
 Selection Criteria
 Contractual Due Process For Termination
Negotiated Between Medical Staff and Hospital
Board
Limits corporate control as compared to
employee models
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Specialty Hospitals
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Traditional hospitals were general care
 Children's and maternity hospitals
Broadened to areas such as hearts, orthopedics,
etc.
 Complex care is safer when regionalized into
high volume centers
 Better care at lower prices
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The Real Specialty Hospital Business
Model
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Do not do money losing services
Do not take uninsured patients
Shift the most valuable patients from community hospitals, dump
the rest back to the community hospital
No EMTALA requirements if no ER
Doc owners control admissions
 Huge conflict of interest
No regulation in LA, limited elsewhere
 One on every corner, no regionalization
 Increase unnecessary surgery
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