HSA 3111: Evolution of US Health Services
Topics
• Prelude
• Preindustrial Era
• Postindustrial Era
– National Healthcare Efforts
– Early Managed Care Efforts
• Corporate Era
“…anyone who had the inclination to set himself up as a physician could
do so, the exigencies of the market alone determining who would prove
successful in the field and who would not”
R. Hamoway (1979)
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Prelude
• The chapter offers tremendous insights into the
history of the US health care system and the
events, attitudes, market forces, and political
pressures that resulted in our current system.
• These insights also help to explain current
debates surrounding healthcare reform.
• The chapter is weak (almost silent) on explaining
the implications for health care professionals
who are not physicians.
– We will need to make inferences on our own
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Prelude (cont.)
• What is it about the United States and its attitude
toward government that causes us to be the only
developed country without a centralized
healthcare system?
• Hint: Name the four largest countries that have
had successful revolutions (total replacement of
government) since 1776.
– What were the results of the other three?
– How did our results differ?
– What does the 10th Amendment to the Constitution
say?
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Prelude (cont.)
• Given the absence of a single-payer (government)
healthcare provider in the U.S.:
– What market forces have influenced the structure
of the healthcare system?
– How have technological advances affected the
structure?
– What political forces also influenced healthcare
delivery?
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Three Historical Phases
• Preindustrial era: Mid 1700s – Late 1800s
• Postindustrial era: Late 1800s – Late 1900s
• Corporate era: Late 1900s – beyond
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Preindustrial Era
• What did it take to be a physician in the 1800s?
– “Anyone who had the inclination to set himself up
as a physician could do so, the exigencies of the
market along determining who would prove
successful in the field and who would not.” (p. 85)
• How many hospitals were there?
• How many medical schools were there?
• What were the graduation requirements?
• What were the licensing requirements?
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Preindustrial Era (cont.)
• Medical Practice characterized by
– Very primitive diagnostic capabilities
– Very limited surgeries (the faster the better)
– Medicine considered a trade rather than a
profession
• Lower end of the middle class
– Physicians competing with home remedies and
traditional healers
– Travel cost a large part of medical cost
– Physicians saw 4-5 patients a day
– Low confidence in the medical profession
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Preindustrial Era (cont.)
• Hospitals
– No widespread development before 1880s
• Europe developed hospitals before 1800
– Not closely allied with medical practice
– Often staffed by unpaid junior physicians and
students looking for experience
– Other institutions had healthcare functions
• Almshouse
• Pesthouse
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Preindustrial Era (cont.)
• Unstable Demand
– Many physicians not much better than local
practitioners
– Little science behind medical practice
– Costly travel component
– Doctors concentrated in urban areas but much of
the population was rural
– No insurance or other support for payments
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
9
HSA 3111: Evolution of US Health Services
Preindustrial Era (cont.)
• Medical Education
– Primarily apprenticeship (if that)
– Only 4 medical schools in 1800, 42 in 1850
• Direct admission from secondary school
• Two-year curricula
– Later schools were income generating for
teachers
– Unrestricted entry
– Little science-based education
– No standards for curricula
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Postindustrial Era
• Saw the current shape of the U.S. healthcare
system develop
• More urbanized population
• Increased technology
• Rising costs
• Rising professionalism
• Resistance to national healthcare
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Postindustrial Era (cont.)
• Urbanization
– Separated people from families and many
alternative sources of healthcare
– Physicians became less expensive to consult
• Travel cost reduced
– Physicians moved to cities to follow the business
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Postindustrial Era (cont.)
• Science and Technology: What were the impacts
of increasing scientific knowledge on the
healthcare professions?
– Increased capabilities Increased confidence
– Shifting from “trade” to “profession”
– Increased “cultural authority”
– Increased practical authority
– Need for increased specialized training
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Postindustrial Era (cont.)
• Growth of Institutions
– More complex treatments and technologies
required more resources than the GP’s office
– Bundling of equipment, physician, nursing, support
staff, and facilities needed
– Hospital developed as the hub around which other
resources/participants centered
– Hospitals and physicians developed a symbiotic
relationship
• Bilateral power base
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Postindustrial Era (cont.)
• Patient Dependency
– Physicians developed a gatekeeping role with
respect to patients through cultural and legal paths
• Physician validation of illness for absence
• Ditto for treatment
• Prescription authority
• Health insurance payments
– Commensurate roles not granted to alternative
healthcare providers
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Postindustrial Era (cont.)
• Cohesiveness and Organization
– Common training curricula increased
cohesiveness
– Specialization resulted in referrals and local
relationships among physicians
– AMA resisted control of physician employment
– Physicians remained largely independent of other
institutions
• Hospitals
• Insurance companies
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Postindustrial Era (cont.)
• Licensing & Educational Reform
– Medical licenses were (and still are) regulated by
states
– Significant variance among medical school quality
– AMA pushed for licensing only their accredited
school graduates
– Quality improvements in school curricula and
exams had positive effects…
– …but practical effect was also to give physicians a
monopoly position with respect to medical practice
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Postindustrial Era (cont.)
• Specialization
– 17% of physicians specialists in 1931
– 60% are specialists today
– Similar diversification in allied healthcare
professions
– U.S. healthcare system fell into a state where
access to specialists was often unregulated
• Increased costs for insurance companies
• Uncoordinated care for patients
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Postindustrial Era (cont.)
• Other Trends
– Increased development of public health functions
– Increased incidence of chronic conditions
• Why do you think this was?
• Healthcare system still oriented at acute
conditions
– Veterans healthcare system
– Workers’ Comp
• Role as a trial balloon for universal healthcare
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Postindustrial Era (cont.)
• Private Health Insurance
– Development of need for alternative funding
– What were the motivations for the Baylor Plan and
subsequent development of Blue Cross and Blue
Shield plans?
– What motivated the development of employerbased health insurance during WW II?
• And why has it persisted today?
• And what is happening to it today?
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
National Health Care Efforts
• Compulsory sickness insurance spread
throughout Europe from 1883 to 1912
• Every effort to create universal health insurance
in the US failed until 2010
– And that still isn’t ‘universal’
• Revisit the questions on slide #4
– Market forces
– Technology developments
– Political forces
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
National Health Care Efforts (cont.)
• Look at the huge array of forces aligned against
national health insurance from 1946 to the
present.
– AMA
– Taxpayers (who already had insurance)
– Politicians
– Pharmacists
• So how did Medicare and Medicaid sneak through
in 1965?
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
Early Managed Care Efforts
• What is managed care and why was it developed?
• Variations on a theme
– Contract practice—physicians under contract to
provide services at a set rate plus other controls
– Group practice—grouping multiple providers under
one business
– Prepaid group plans
• Capitalized on group practice efficiencies for a
set fee per time period to subscribers
• Precursors to HMOs
• Required alternative in 1973 HMO Act
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
23
HSA 3111: Evolution of US Health Services
The Corporate Era
• Look at the ebb and flow of market power
described on p. 110.
– Physicians and hospitals dominated the market
place as suppliers until mid-1980s
– Managed care contracting with providers became
dominate next
• Controlled supply of customers (patients)
– Providers began to consolidate to create
countervailing market power
• Two types of corporations deal with each other
• Where do the patients fit in?
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
The Corporate Era (cont.)
• Information Revolution
– How is healthcare similar to banking?
– What are the information management limitations
of healthcare in the modern age?
– How can information technologies overcome these
limitations?
– How have technologies empowered patients?
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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HSA 3111: Evolution of US Health Services
The Corporate Era (cont.)
• We know about globalization of many businesses
• Identify ways in which healthcare has become
global
– Access to providers
– Knowledge
– Investment
– Disease spread
Dr. Lawrence West, Health Management and Informatics Department, University of Central Florida
http://systems.cohpa.ucf.edu/lwest
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