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Public Health Thenand Now Gaining Control: Reform, Reimbursement and Politics In New York's Community Hospitals, 1890-1915 DAVID ROSNER, MS, PHD

Abstract: This is an historical study of an early twentieth century political struggle regarding hospital reimbursement in New York City. During a period called the "Progressive Era" (1895-1915), administrators in the City's Comptroller's office sought to gain control over small, locally run community hospitals by dismantling the long-standing practice of flat-grant payments to institutions. Central office planners felt that these payments gave too much control to trustees. In its place, the Comptroller initiated a system of percapita, per-diem reimbursement. Inspectors now judged for the institutions which services and which clients were appropriate for municipal reimbursement. From

the perspective of the Comptroller's office, this change was an attempt to put rationality into the system of municipal support for charitable institutions. From the perspective of trustees and community representatives, however, this change was a political attack on the rights of institutions and local communities to control their own fate. Within the context of the larger Progressive Era "good government" movement to centralize decision-making in the hands of experts who believed strongly in the efficiency of larger institutions, it was generally the smallest, most financially troubled community institutions which felt the brunt of these changes. (Am J Public Health 70:533-542, 1980.)

In recent years health planning bodies in and out of government have called for a reduction in the number of hospital beds. In 1978, the National Guidelines for Health Planning claimed that the appropriate number of acute care, voluntary hospital beds should be lower than four per 1000 population, well below earlier Hill-Burton standards. I Significantly, reimbursement and planning policies have begun to implement this general goal. Hospitals, especially in New York, have closed and merged in response to pressures to reduce the number of beds. Policies have dictated that smaller community and public institutions close, while larger tertiary care and teaching institutions remain relatively unaffected. The recent annual report from the U.S. Department of Health, Education, and Welfare very clearly states that

"larger hospitals have been expanding, while many smaller hospitals have either closed or merged."2 Although the importance of subjective factors is widely recognized, professionals often present decisions to close beds as the end product of a rational and objective decisionmaking process.3 To lay members of particular communities, however, the closure of their hospital or the elimination of a particular service is an intensely political event. Local hospitals, considered unnecessary and inefficient by some policy makers, are an essential resource to local community groups.4 Hospital clinics serve as centers for primary care in poor neighborhoods which lack private doctors' offices; the emergency room is as much a refuge as a medical service for those displaced by a variety of social and personal tragedies; the hospital itself is a major local employer and serves as a source of stability, security, and pride to residents of poor neighborhoods.5 Although community groups often resent the inadequacy of various services, plans to close facilities are rarely applauded. From the perspective of the commu-

Address reprint requests to David Rosner, MS, PhD, Assistant Professor, Department of Health Care Administration, Baruch College/Mt. Sinai School of Medicine, CUNY, Box 313, 17 Lexington Avenue, New York, NY 10010.

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PUBLIC HEALTH THEN AND NOW

nity, the decisions made by professionals who advocate closings are highly political decisions which constitute a basic attack on community institutions and, therefore, on the community residents.6 Historically, New York City in particular has been plagued by a disjuncture between the professional rationalizer and more broadly defined community interests. Throughout this century, policy makers presented political decisions concerning the closure of small general hospitals as part of a "rational" plan. Administrators of these institutions and community members, however, saw such plans as part of an attack on their institutions. In this article, I will look at one of the earliest attempts to close small, locally based institutions through changes in the City's reimbursement strategies. I present this change in reimbursement as part of a much broader early 20th century movement to centralize and bureaucratize decision-making by undermining the legitimacy, authority, and political power of local institutions. At the end of the 19th century, in the wake of a serious and prolonged depression, there arose a widespread call for political, economic, and social reform commonly referred to as the Progressive Movement. Between the years 1895 and 1915, this movement affected nearly every aspect of American life. In New York City reformers moved into growing urban slums and set up settlement houses; a widespread school reform movement developed; Progressives, intent on limiting the long-standing power of Tammany Hall sought to gain control over municipal and state government through election, appointment and civil service reforms.6 7 The 1898 incorporation of the cities of New York and Brooklyn created the nation's largest municipal entity and one of the major foci of reformers' efforts. Generally, reform meant vesting power in central office experts, professionals, and administrators removed from the every day political pressure of elected office. The general thrust of reformers was to replace informal 19th century patterns of organization-political, social, and economic-with newer, more centralized forms. These reforms severely undermined the longstanding autonomy of local neighborhoods, their political organizations and institutions.8 l During the 19th century, the metropolitan area of New York was composed, for the most part, of a series of independent communities, isolated from each other by lack of transportation and non-existent communication. Greenpoint, Williamsburg, and Brooklyn, for instance, had until 1855 been entirely independent cities. Areas of the Bronx were summer vacation spots for wealthy New Yorkers and even areas on Manhattan island were cut off from regular communication with other neighborhoods. As different groups of immigrants settled in various sections of the city, these neighborhoods functioned as independent economic, ethnic, and political communities. Nineteenth century urban life was essentially isolated and defined by the physical parameters which made up one's neighborhood. Generally, people worked and lived within their neighborhoods. Furthermore, the social, economic, and political life of the community was centered upon local organizations: the church, the school and locally organized charity services. The ward 534

boss was the mainstay of the political system, and church and civic leaders closely controlled the organization and functions of the various social services.1' 12 During the last quarter of the 19th century, however, the United States experienced tremendous growth in its population, its industrial production, and the size of its urban centers. In the East coast cities, and in New York in particular, there arose severe housing, health, and economic problems. 13 Geographically, the metropolitan area grew dramatically, incorporating Brooklyn and the outlying boroughs; politically, immigrants and their candidates began to dominate local political machines and government; economically, the development of an industrial economy led to severe problems of unemployment and social unrest among large numbers of urban workers. '1' 12 It became clear to many that the problems of inadequate services in the expanding city could only be handled by more centralized government. It was necessary to plan mass transportation lines, to design a sewage system and pure water supply system for all, and to build a citywide system of roads, highways, and bridges. Because the existing political machines (built around the local ward boss) could not adequately plan for these new needs, many reformers attempted to consolidate the decision making process in central offices where independent experts and professionals worked.6'7' 10 But reformers also pushed for central office planning in areas of urban life that were less clearly essential to the realities of the new urban environment and for reasons less overtly technical in nature. Therefore, Irish and Jewish groups and their community representatives often perceived the reforms as part of a broader political attack. Reformers, by and large upper- and middle-class, sought to dismantle the immigrant neighborhoods' political machines through civil service reforms."1 They also sought to centralize educational, budgeting decisions and charity. Adopting as catchwords notions of efficiency, bureaucracy, and expertise, the reformers assumed power in the central offices of government, industry, and charity services and challenged the right of communities to make their own social and political decisions. Despite the rhetoric of efficiency, many reforms were designed to wrest political control from local ward bosses and their representatives in City Hall. Consequently, local ethnic communities lost the ability they once possessed to attend to their own particular needs as a community. In the process of centralizing government in downtown bureaucracies and in the hands of professionals, the reformers not only introduced efficiency and accountability into decision-making but also undermined the long-standing autonomy of local neighborhood-based decision-making.8' 1 1 One example of this attack on community institutions was the case of the charity hospital. Throughout the 19th century, small general and specialty hospitals served the specific needs of the ethnic, religious, and social groups located in the neighborhoods surrounding the hospital. In Brooklyn, for instance, Lutheran Hospital was organized for a growing Scandanavian community. Deutschen Hospital in the Williamsburg section, a series of Catholic institutions, a women's homeopathic hospital, and at least ten other institutions were all organized to serve the special needs of particuAJPH May 1980, Vol. 70, No. 5


lar geographic and ethnic populations as the city expanded. 14-18 The development of this diverse system of hospitals was very much a 19th century phenomenon. Just as the rapidly expanding city had developed local political organizations to cope with pressing neighborhood needs, so too were small hospitals organized around special local interests. Community leaders created institutions which would relate to diverse community needs. For instance, the trustees of Methodist Hospital in Brooklyn recognized that one of its special functions was to serve as a temporary home for disabled or sick servant girls displaced from the homes of wealthy merchants in the Park Slope district. The Women's Hospital often served as a refuge for unmarried pregnant women in the "factory district" of the city. 19-21 In addition to addressing specific medical needs, the hospital-organized and supported by lay persons and community leaders-served a variety of locally-defined, but important social functions.22-24 Before the Reform period, lay trustees, generally merchants, commercial and religious leaders within communities, planned, organized, and closely supervised these facilities. As the self-appointed patrons and protectors of poorer members of their communities, these individuals were solely responsible for judging needs and translating them into services. Unlike today, trustees of hospitals not only provided funding and legal assistance to their facilities, but also decided on admissions of patients, as well as planning and supervising of the daily hospital routine. Their perceptions of needs were highly selective and, from today's perspective, often arbitrary, haphazard, and inefficient. From the perspective of 19th-century America, however, such locally based decision-making and control allowed for the development of a diverse set of services which were otherwise

unavailable.24'

25

To reform administrators of the municipal government, however, locally based services were seen as a threat to their own authority and as a throwback to an earlier period-a period when government could not make charity services responsive to anything but narrowly defined local interests. Community-based services appeared inefficient, narrowly focused, and corrupt given the larger needs of the rapidly growing city. Reformers sought to coordinate the goals of diverse services and make institutions more accountable to City Hall. Such change required a concerted political attack on both the trustees and the local political organizations which controlled decision-making. At the same time the rationales for a new form of organization had to be convincing enough to defeat popular belief in local decision-making and small community based services. The power of reformers to change institutions rested largely on their ability to control the finances of local charitable institutions. During the course of the 19th century, charitable hospitals had received income through two sources: private philanthropic contributions and municipal grants-in-aid. Philanthropy had produced significant amounts of income throughout the century. But, towards the end of the century, it was proving to be inadequate. In the wake of the serious depression of 1890s, as the costs of hospital care began to rise dramatically, it became apparent that AJPH May 1980, Vol. 70, No. 5

only the most well-endowed and prestigious institutions could count on charitable bequests to maintain their operations. Trustees recognized that alternative means for financing the charitable institutions were necessary. Reformers saw that changing reimbursement practices could aid the central office in gaining control over the diverse system of hospitals.26 Municipal reformers recognized that many smaller institutions depended largely upon the flat grants which had traditionally been allocated through City Hall rather than on philanthropies. These flat grant allocations had first developed in the 1840s to aid those institutions which cared for the poor who would otherwise become the responsibility of the City. Each local charitable institution received a flat grant of $1,500 or more every year as payment for providing services to the dependent poor.27' 28 By the end of the century reformers were calling for a change in this long-standing practice of flat-grant payments. It was felt that such payment methods were outmoded and allowed local trustees and community institutions too much latitude in deciding their own goals. Reformers held that government should reimburse institutions only for work actually done and only for that work which could be measured. It was proposed that a system of case-by-case inspection be instituted to find out exactly whom the hospitals were serving and to judge whether or not hospitals should receive tax funds for these services. A system of per-capita, per-diem reimbursement was inaugurated in 1899 for the first time, and municipal inspection of the financial and moral character of the charity patient began. This system accelerated a decline in the control that trustees exerted over the services their institutions provided, and drew decision-making processes away from communities and into more centrally organized agencies.293 These changes were largely inaugurated by a newly elected Comptroller in 1899. Bird S. Coler, a Brooklyn-born son of a Wall Street broker, represented the growing belief in the new centralizing, bureaucratic and activist vision of government so crucial to Progressives during the period. In his book, Municipal Government, Coler set out his political philosophy. He observed that the last quarter of the 19th century witnessed the rapid growth of the American city and a corresponding growth in the complexity of the issues faced by government officials. No "'graver problems of government exist . .. than those developed during the last quarter of the nineteenth century in the management of (city) affairs," Coler maintained.31' 32 "'The time when city government was supposed to consist of a mayor and alderman elected to perform certain arbitrary and ornamental duties is past." The simpler government of an earlier time had to give way to a new form of government. The "proper government of cities has at last come to be recognized as a work of broader scope than maintaining streets and highways," he claimed. Now government was responsible for creating an organized whole out of the individual interests which made up the city's life. The professional administrator and expert had a new place in government. As Coler put it, there was "no more fertile field for the exercise of talent and originality than in the development of the great resources and enterprises that are the common property of the people of popu535


lous urban communities." It was the administrator, the expert, and the bureaucrat whom Coler saw to be responsible for the organic life of a complex and heterogeneous metropolis. The ideals of business efficiency and order were the hallmarks of the day.31' 32 The hospital reimbursement reforms Coler initiated reflected his commitment to a larger role for government in the life of the city. Coler objected to the informal and personalized mechanisms by which city funds were distributed prior to his assumption of office. When he entered the Comptroller's office in 1898, he "found that the city officers were practically powerless" and that there "had been no attempt at regulation or reform (of the system of disbursement) for thirty years." Specifically, an investigation of the charity system in New York City convinced him "that the city should have absolute control over all appropriations to private societies and institutions." He maintained that the old charity system had made the institutions the judges of their own needs and that this promoted waste, inefficiency and, at times, corruption. The personalized relationships between city officials and local charity administrators had led to "'gross inequalities" in the funds dispersed to different institutions providing similar services. With few formalized mechanisms to account for the city's expenditures, injustice resulted for both the public and many institutions.33 Coler was particularly concerned about inefficiency. "The whole subsidy system was characterized by an entire lack of system," he observed. "Year after year the promoters and officers of these small organizations appear before the city authorities when the annual budget is to be passed," Coler explained, "and attempting to excuse the poor showing they make, say, in pleading for larger appropriations, 'We hope to do better next year.' " Small agencies, he noted, were notoriously inefficient. Small medical charities were worse. These tiny facilities, sometimes purposefully and sometimes not, were the biggest villains of the charity system.34 Coler preferred a model of funding in which "'large charitable . . . institutions of established reputation," would be provided "city funds on a business basis." His new vision demanded the impersonal efficiency of a large bureaucratized institution.35 36 Because some charity institutions expanded in the 1890s, their informal and small-scale means of subsidizing were scrutinized. "When the city authorities first took up the question of caring for homeless and destitute persons ... some of the private charitable institutions were already in existence and came forward with offers to share the burden," Coler observed in 1901. "At the time it was considered a good business arrangement for the city to use private societies," Coler continued, but "by giving money to private persons . . . they invited the creation of new societies and a steadily increasing demand for new funds." By the end of the century, this informal and growing relationship between the public and private agencies was seen as a major problem for city officials. "Year after year the promoters and officers of . . . small organizations appear before the city authorities when the annual budget is to be passed," Coler observed. He objected to the large number of small organizations seeking public money, as well as to the lack of control of the 536

central office over these funds.37 From Coler's perspective, the problem with the old flatgrant system was that there were few mechanisms to keep track of the expanding array of services in distant sections of the growing city. The amount of reimbursement, therefore, seemed arbitrary. By 1897, the year before the incorporation of Greater New York, the city of Brooklyn provided partial support for 62 charitable institutions and societies. Of these, 24 were general and specialty hospitals which received subsidies ranging from $2,000 to $5,000; 21 others were dispensaries which received a standard payment of $1,500 directly from the City. As Coler argued, there were few criteria regulating the distribution of funds. Small temporary dispensaries like the "Twenty-sixth Ward Homeopathic Dispensary" received the same $1,500 grant as did the larger well-established facilities like the Long Island College Dispensary. One small hospital was awarded a $4,000 stipend although the aldermen were not sure of its real name. A wide range of medical services, missionary societies, and soup kitchens received the same appropriations as did large hospitals and established dispensaries. For example, Brooklyn Diet Dispensary, Brooklyn Eclectic Dispensary, the Gates Avenue Homeopathic Dispensary, and Saint Phoebe's Mission were reimbursed at the same rate as the larger Long Island College Hospital, Brooklyn City Hospital, and Methodist Episcopal Hospital. For the smaller institutions, this city stipend was crucial.38 41 The arbitrary nature by which funds were disbursed to the mid-19th century hospitals reflected real problems in the organization and lines of communication in the growing city. There were few methods by which government could keep track of the needs of its population. Flat grant payments to local charities were therefore an effective way to distribute services in areas far from city hall. City government benefitted from the fact that private agencies provide services which the city was unable to provide in any rational way. Services such as emergency room care, ambulance service, and housing for the poor or displaced were essential to the city's smooth functioning. Charity equally benefitted from the reimbursements by the city for providing these services.40 For many years the informal mechanisms which municipal authorities developed to supplement the income of institutions serving the poor had worked smoothly. By the end of the century, however, social and political considerations limited the appeal of the older flat grant system. First, the reorganization and development of the 20th century city altered the former relationship between the private and public sectors. In the early 19th century city, public officials lacked the technology to gather information concerning particular independent services. Because communication was hampered by the lack of a rapid transit system, decent roadbed, and any telephone system, city officials were dependent upon information provided to them by ward bosses and other representatives of localities, not by city inspectors or impersonal central agencies. Yearly flat grants were provided to diverse services because it seemed impossible to differentiate and supervise these services.42 But by the end of the century the physical conditions of AJPH May 1980, Vol. 70, No. 5


the city had changed. An extensive electric trolley system was developed, a subway was planned, telephone services were introduced, and the Brooklyn Bridge was completed. Gradually, the barriers between the far-distant communities of the city began to break down. Greenpoint and South Brooklyn became accessible to City Hall-whether City Hall was in downtown Brooklyn or in lower Manhattan. Centralized government could begin to extend its authority directly. 43 44 A second impetus for closer municipal inspection resulted from the growing financial burden that charity services represented to the city. The depression of the 1890s had stimulated the creation of many charitable services which all turned to the city for needed support. While the city, with its then rapidly expanding tax base, was not severely affected by this drain on city funds, the dependence of these institutions on the city gave reform officials an important source of power and leverage.45 Growing costs of government support in the various boroughs of the city lent credence to the cries of some reformers that "radical reform is necessary in order to prevent the application of public funds to the payment of subsidies to societies and institutions." "More than fifty years ago the city began to pay money to private institutions for the support of public charges," Coler observed. "The system has grown without check," he declared. In 1898, the first year of incorporation, the City of New York paid $3,131,580 to private charity services in the five boroughs and Coler decided to reform a "system that was fast approaching the condition of grave scandal."46 Coler's reform of the mechanism for hospital reimbursement was largely a response to these charges. According to Coler's system, hospitals were to be reimbursed at a standard rate of 60 cents per day for medical cases and 80 cents per day for surgical cases accepted by city inspectors. A lump sum of $18 was paid for maternity cases. The mechanism was simple but required that institutions develop new administrative and organizational structures: now the hospital's administrator or physician would submit the names of patients thought to be appropriate "city cases" to the Department of Public Charities, or, in Brooklyn to the Bureau of Charities. The Department's eight investigators then examined social, economic, and residency characteristics of the patients and determined their appropriateness as public charges.47 As a result of the new system, trustees often lost the ability to care for charity patients as they saw fit. "Owing to change in the Department of Charities, we realized early in this year that we were not to receive our usual city appropriations," lamented Brooklyn's Nursery and Infants' Hospital in June of 1900. "This had not been foreseen, so no effort to make good the deficit had been made. Our Treasury being depleted, we were obliged to borrow money to meet our expenses. "48 At Brooklyn Hospital, as well, the trustees lamented the change in city reimbursement. "The most important incident of the year, affecting the financial part of our work," declared John Leech, president of the hospital, "was the promulgation by the Comptroller of the City of New York of new, elaborate, and somewhat complex rules reA.JPH May 1980, Vol. 70, No. 5

garding the distribution of the appropriations made to charitable institutions by the city." Hospital administrators accelerated their drive to rid their institutions of potentially unreimbursable poorer patients. Leech feared that the income from the city would diminish at the very time that the costs of the facility were rising. "The cost of caring for our charity patients during 1899 was more than three times the amount received from the city for that period," he declared. "If, in the future, the income from the city is to be reduced, the Trustees must seek for still larger benefactions from the already overtaxed charitable citizens of Brooklyn.... "49' 50 At Brooklyn Eye and Ear Hospital, "the new method put in vogue . . . for the distribution of the city funds ... diminished the revenues of the hospital $1,577," declared the chairman of the Board of Trustees. While acknowledging that Coler might have reason to complain, he still protested that the reality injured clients and institutions alike. "'In the abstract, the principle of distribution according to the number of days a poor patient is boarding in a hospital may be just and wise, but the concrete application of it has caused not a little embarrassment to some of the beneficiaries of the city."51' 52 Similarly, at Methodist Episcopal Hospital, the change in payment also brought immediate concern. "Our revenue for the year has not been adequate," observed the Superintendent. "There are various explanations (one of which is that payments) by the City of New York for the work which we have done for the sick poor have not been as liberal as heretofore."535-56 While all institutional trustees complained, the smaller hospitals suffered most. When the Williamsburg Hospital made a last-ditch appeal for charitable bequests in January of 1903, its President, D. M. Munger, said the "reasons for the (poor) financial condition of the institution (were the) increased cost of maintenance and cut in city appropriations." Three days later, the Williamsburg Hospital "closed its doors . . . for lack of funds"57' 58 Similarly, many of the smaller institutions had earlier voiced their fears that the reforms in city practices would seriously cripple their operations. D. C. Potter, the chief examiner of accounts in the City's finance department, reported to the Board of Estimate that many charitable institutions were "bordering on financial panic.' He recommended that the "per capita appropriation by the city for patients in such places be increased. Managers of hospitals . . . had stated . . . that they were confronting the necessity of closing their doors and turning their patients and wards back to the mercies of the city. "58, 59 While trustees at many institutions expressed chagrin at the catastrophic financial effects of the reforms, some trustees also recognized the implicit changes in the relationship between themselves and the city. Methodist Hospital's president was particularly perplexed about these changes. "A certain amount of work is done in every hospital which is properly chargeable to the city," he observed. The consolidation of Brooklyn and Manhattan had disrupted the older pattem of flat grant payment in which his hospital had "more than earned its appropriation." Under the new plan, a city inspector "from the commissioner visits the Hospital and interviews (our) patient." Then the investigator decides pay537


ment. Then, "if the cases are approved by the inspector they may be rejected by the commissioner. And the result is that though a larger quantity of work is done for the city's poor than under the old plan . .. the Hospital receives less money than before."60 This objection to the new city regulations contains the primary fears of trustees: that city income would be reduced, that a new, unnecessary bureaucracy would be developed, and that this new city bureaucracy might, for the first time, involve itself in the administration and decision-making of the city's charity hospitals, thereby challenging the authority of trustees in these institutions. Under the older system of flat-grant payments, the city's involvement in the charity hospital was nonexistent or limited to annual review when appropriations were disbursed. Now, with the city's new emphasis on accountability and per-diem, per-capita payments, city inspectors were involved in the day-to-day routine of the hospital-interviewing patients, reviewing the hospital's accounting system, and, most importantly, evaluating the hospitals' administrative and professional staff. "I am out of sympathy with the present city method," objected Methodist Hospital's President. "In the first place our Hospital is not similar to the city hospitals," he observed.60-62 Rather, a newer version of the flat-grant system was preferable. "I am convinced that the thing to do is for the city to make contracts with certain hospitals . . . and pay them according to contract." For hospital authorities, a reversion to the older system of flat-grant payments would maintain the proper distance and relationship between the trustees of the independent hospitals and the city.60 The Charity Organization Society, the city's largest charity organization, was also concerned about the city's actions, and feared increasing government role in the internal workings of the institutions. While impressed by the city's efforts to introduce "system and uniformity" into hospital record-keeping, there was concern about the long-term effects of the changes in reimbursement practices. "Several institutions which received only very small appropriations and were chiefly supported by private donations (would) now receive public pay for a large part of the work which they do," reported an editorial in the Organization's Annual Report of June 1900. The Charity Organization Society feared that unlimited per-capita, per-diem payments could eventually lead to a city subsidy system which would supplant and replace private charity and therefore undermine the Charity Organization's own authority as leaders of the system. "The question arises whether the amount dispersed prior to the adoption of the present rules should not (be) regarded as a maximum," noted the authors. "Otherwise it will be only a very few years until public subsidies have entirely supplanted private charity in the field of medical relief.. .". Unlike many of the smaller institutions themselves, organized charity aimed to place limits on public benevolence fearing that such a subsidy system would undermine private sector donations, and charitable control over the smaller facilities.63-67 The transition to the new system created immediate tension within the hospitals of New York and Brooklyn as well as within the departments of the city government itself. "It 538

was my misfortune to be placed in charge of this (new) system, in the Boroughs of Brooklyn and Queens on January 1, 1900," remarked Jesse T. Duryea, superintendent of the Kings County Hospital and Brooklyn's director of charity operations. Commissioner Simis, of Brooklyn's Bureau of Charities, was verbally attacked by members of the city's new accounting department. Some city accountants said that "the absolute lack of system (in Simis' Office was) so bad that it took two men two weeks to locate . . . orders and requisitions.' '68 But not everyone was upset by the change in reimbursement procedure. Those charged with the responsibility for protecting the public's purse saw the new accounting and administrative organization of the Department of Public Charity and the Comptroller's office as a necessary and important reform. The "ease of obtaining city funds without an accounting led some hospitals into the habit of caring for public patients that the city was not called upon to care for," observed Jesse T. Duryea in his critique of the city reforms. It "also encouraged a lack of effort on the part of some hospitals to force a payment from those patients who were able to pay a minimum hospital rate." The reforms, in the view of this official, promoted accountability both within the hospital and within the governmental offices.697' Some hospitals also recognized certain positive longterm effects of the changed administrative arrangements. The Brooklyn Eye and Ear Hospital, which originally questioned the wisdom of the changed arrangements, soon began to thank the city officials for the help they gave in regularizing accounting procedure and differentiating among patients who could and could not pay for hospital care. In 1901, it was reported that there was a "a falling off in attendance" at the hospital's clinics of about ten per cent when compared with the previous years. The hospital accounted for this by acknowledging the effect of the dispensary law and the changed city requirements for reimbursements. "Seven hundred and thirty-two have been refused treatment by the Registrar as unworthy objects of charity," noted the Superintendent of the Eye and Ear Hospital. Furthermore, he noted, the new regulations pertaining to charity patients had "become so widely disseminated that, doubtless, very many more have been deterred from applying for treatment." The new city regulations were seen not only to regularize the workings of the institution but also to make the facility more efficient in serving the ends for which it had been built-the treatment of truly indigent clients. Similarly, over the next few years the superintendent of this facility repeated his thanks for the help given by the Bureau of Charities. He reported that "'due diligence has been given to the sifting, so far as practicable, the unworthy from the worthy (recipients of charity care). Grateful recognition is again made of the cooperation of the Bureau of Charities in the attainment of the above end. As the result of this discrimination 666 applicants for special treatment were rejected as not proper objects of charity." Similar thanks were annually offered to the city for aid in regularizing the workings of the hospital in the application of "scientific charity." Some institutions viewed the city, not as overseer, but as a rationalizer and a service 72-74 AJPH May 1980, Vol. 70, No. 5


Physicians also approved of the changes initiated by Comptroller Coler, for his reforms were seen in the context of the then current movement to keep wealthy patients away from dispensaries and hospitals and to use private practitioners. "Comptroller Coler . . . is to be heartily thanked for his efforts to minimize the abuse by which private charities are supported out of the public treasury," noted the lead editorial in the Brooklyn Medical Journal for November of 1899. "Coming into direct antagonism with some of the most powerful organizations of our large cities he needs not only plenty of pluck and courage . . . but the hearty cooperation of all who agree with him and who have in their efforts hitherto been unsuccessful." Arthur Jacobsen, another Brooklyn physician, wrote the lead article in the April, 1900 edition of the Brooklyn Medical Journal. In this paper he reminded doctors that they owed this reform to a businessman, not a physician. "Medical men should not forget . . . that this one great practical reform has not come through them. It has remained for practical business men of the types of Comptroller Coler . . . to institute it. 75-77 The change in payment mechanism reflected a major change in the relationship between the responsibilities of city and private charity for care of the city's poor and ill. Coler and other city officials saw the independent hospitals as an appendage of the city almshouses and public charities system. Historically, as Coler often pointed out, the independent facilities had received public funds because of the city's own inability to provide adequate services. Coler observed that in the smaller and more homogeneous society of the 1840s this relationship worked well. To Coler, both independent and public institutions served the same population so their interests were more or less the same. From the point of view of city officials, public funds could only be given to private charities if these charities were serving the populations for whom the city would otherwise be respon-

sible.78' 79 Trustees and superintendents of the independent institutions saw the role of these facilities differently. The private facilities provided services to prevent public dependence. When Methodist Hospital's president maintained that his facility was "not similar to the city hospital," he reflected the vision of private philanthropy and the need for lay trustee control, not the narrow self-interest of a private facility threatened by a cut-off of city funds. The conflict between the city and independent hospitals reflected their diverging interests and visions. Traditionally, the government provided funds to hospitals to maintain services which promoted social order within the city. Funds were provided for industrial or street car accidents, for ambulances in case of fire or other natural catastrophe, and for emergency room services to provide shelter and aid to victims of crime, to vagrants, alcoholics, and others who interfered with the city's life. During the winter months or during economic downswings they constituted a set of emergency services which helped hold together the social fabric of the community. These services were essential to the city.79-81 But, by 1900, hospital trustees no longer defined their facilities as welfare institutions. Rather, they saw the plight of the urban and industrial poor as an almost intractable AJPH May 1980, Vol. 70, No. 5

problem which demanded the attention and resources of the state. The limited resources of private benevolence were perceived as inadequate, given the ever-growing dimensions of urban poverty. Also, as hospitals faced chronic financial pressures, service to the poor and working class became an increasingly burdensome addendum to hospital care. Hospital trustees, therefore, felt that the city should assume either direct responsibility for servicing the poor or full responsibility for financing charity hospitals to do the city's job.82 The hospitals' change in orientation had important ramifications on the ease with which city funds could be distributed. It was now necessary for the city to clearly delineate those services for which it was or was not willing to pay. The city felt that hospitals had an obligation to service the community's poor since that was a traditional function of charity services. While the city could provide funds for essential services such as ambulance and other emergency service, it would not pay all as the hospitals wished. While the hospitals were willing to service the poor in their wards, they expected government to foot the bill. The conflict between the trustees' right to define their hospitals' patient population and the city's desire to exert greater control over these charities was reflected in the struggle over reimbursement paid to private institutions during the early years of the 20th century. Hospital trustees sought reimbursement for all poor whom the trustees saw fit to serve. The city, however, rejected claims trustees made for poor persons who were not admitted for an emergency or other crises. From 1902 to 1912, about 20 per cent of cases submitted to the city for reimbursement were rejected (see Table 1). Of those cases rejected, between 67 and 80 per cent were rejected because they were non-emergency referrals. Furthermore, hospitals rarely presented cases which were financially inappropriate for city reimbursement further indicating that they were submitting cases on the basis of economic class. Between 1902 and 1912 no more than 11 per cent of rejections were a result of the patients' economic status (see Table 2). By September 1901 it became clear that the effects of the reductions were to be felt mostly by the smaller, precariously financed hospitals, and temporarily by the larger, stable institutions less directly dependent on public funds. "The results of the first year's work," noted Jesse Duryea, (were that) "seven hospitals (in Brooklyn and Queens) received more money than under the old system, while 18 received less...." Duryea further noted that there was only a drop of $50,535 in the amount of public money distributed by the city government to the independent hospitals. Significantly, the larger institutions were least affected by the drop in funds. While the effects of the change could not be discounted, Duryea maintained that "the apprehension generally felt by hospital authorities that their funds were being cut off by the city was erroneous." Rather than the change being directed against hospitals doing "necessary" work, Duryea noted that the reforms only accentuated the fact "that there is a greater necessity for the existence of certain hospitals." Hospitals were now reimbursed for the work they did, he observed, and large, strong, useful institutions had little to fear from the reforms. He recognized, however, that smaller 539


TABLE 1-Disposition of Hospital Cases and Nursing Mothers Submitted to Department of Public Charities by Independent Hospitals for Reimbursement, 1902-1912 Rejected as Proper Charges

Accepted as Proper Charges

1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912

Total

No.

%

No.

%

No.

%

5,998 7,017 8,375 9,106 9,415 9,897 11,579 11,954 11,873 11,743 13,167

77.5 81 83 83 82 84 85 84 83 78 81

1,740 1,624 1,678 1,815 2,067 1,863 2,052 2,319 2,498 3,307 3,135

22.5 19 17 17 18 16

7,738 8,641 10,053 10,921 11,760 11,760 13,631 14,273 14,371 15,050 16,302

100 100 100 100 100 100 100 100

15 16 17 22 19

100 100 100

Source: Annual Reports, NYC Department of Public Charities, 1902-1912

hospitals or those without proper endowment might be adversely affected. "It is regrettable that some of the institutions most adversely affected by the new system are also the hospitals which were in the greatest financial embarrassment when the change was made," he sadly noted. Some community hospitals went out of existence, five others stopped accepting city patients, but most quickly adapted to the changing accounting system and standardized certain reporting procedures .83-85 Over the years, municipal funding for patients in independent facilities gradually increased. While the city consistently rejected about 20 per cent of all cases the number of

submitted cases rose steadily so that the city paid for over 13,000 cases in 1912 as compared to less than one-half as many a decade earlier (Table 2). This constituted a significant increase in reimbursement for a number of institutions. In spite of Coler's rhetoric of retrenchment, it became clear that the role of municipal government in funding health services was expanding rather than collapsing. However, this expansion was done at the expense of the local trustee who lost autonomy and control over reimbursement and admission procedure. The change in payment mechanism accelerated the growing tendency on the part of trustees to push their administrators to pay close attention to the pay-

TABLE 2-Reasons for Rejection of Hospital Cases Inspected in Brooklyn by Department of

Public Charities

1902 % 1903 %

1904 %

1905 %

1906 % 1907 % 1908 % 1909 % 1910 % 1911 % 1912 %

NonEmergency

Able to

Pay

Discharged Same Day

PreArranged

Other*

Total

1,162 67 1,325 82 1,415 84 1,347 74 1,552 75 1,289 69 1,434 70 1,536 66 1,593 64 2,056 62 2,039 65

100 6 86 5 82 5 128 7 173 8 201 11 173 8 201 9 251 10 264 8 204 7

66 4 48 3 40 2 237 13 161 8 148 8 155 8 196 8 169 7 285 9 242 8

158 9 136 8 130 8 93 5 181 9 225 12 290 14 386 17 485 19 696 21 643 21

254 15 29 2 11 1 10 1 0 0 0 0 0 0 0 0 0 0 6 0 7 0

1,740

1,624 1,678

1,815 2,067

1,863

2,052 2,319 2,498

3,307 3,135

*Non-resident, unknown at residence, referred to KCH, Immigrants. Source: NYC Dept. of Public Charities, Annual Reports, 1902-1912.

540



ment capabilities of patients, to initiate means-tests, and to differentiate services according to class. It forced trustees to give up whatever control of patient admissions they still maintained and to allow non-trustees to exert greater and greater control over the running of the institution. Generally, it commenced an ongoing process which forced small institutions to relate less to local community needs and more to the defined interests of central agencies far removed from local community pressures.

ACKNOWLEDGMENTS This research was supported in part by a grant from the National Center for Health Services Research, HS-02345, and by a fellowship from the Josiah Macy Foundation. The author would like to thank Dr. Barbara Rosenkrantz of Harvard University, Dr. Kathyln Conway and Ms. Susan Reverby for their helpful comments and critiques of earlier'drafts.

REFERENCES 1. National Guidelines for Health Planning. U.S. Department of Health, Education, and Welfare, 1978. 2. Health in the United States. U.S. Department of Health, Education, and Welfare, 1978, pp. 349-356. 3. Mott BJ: The myth of planning without politics. Am J Public Health 59:797-802, 1969. 4. Metropolitan. New York Times Sept. 18, 1979, Section Al. 5. Sullivan R: Amid Prayers for Its Survival A Brooklyn Hospital Goes On. New York Times Oct. 14, 1979. Section 1, p. 38. 6. Hofstadter R: The Age of Reform, NY: Vintage, 1960. 7. Wilson WH: Coming of Age: Urban America 1915-1945. NY: John Wiley and Sons, 1974, pp. 58-69. 8. Weinstein J: The Corporate Ideal and The Liberal State. Boston: Beacon Press, 1968. 9. Kolko G: The Triumph of Conservatism. NY: Free Press of Glencoe, 1963. 10. Hays S: Conservation and the Gospel of Efficiency. Cambridge: Harvard University Press, 1959. 11. Riordan WL, (Ed.): Plunkitt of Tammany Hall. NY: E. P. Dutton and Co., 1963. 12. Mandelbaum SJ: Boss Tweed's New York. NY: John Wiley, 1965. 13. Duffy J: A History of Public Health in New York City, 18661966. NY: Russell Sage Foundation, 1974. 14. See Lutheran Hospital Association of Brooklyn. Annual Report, 1914. 15. Deutschen Hospital of Brooklyn. Annual Reports, 1891-1906. 16. Church Charity Foundation. Annual Reports, 1890-1915. 17. Brooklyn Homeopathic Maternity. Annual Reports, 1889-1899. 18. Brooklyn Women's Homeopathic Hospital. Annual Reports, 1888-1899. 19. Methodist Hospital. 9th Annual Report, Nov. 1895-Oct. 18%, pp. 23-25, (which describes a poor servant girl who is admitted to the hospital because "her room is required. She is in the way. She is a burden (in the home she works in) and knows it.") 20. Brooklyn Women's Homeopathic Hospital and Dispensary. Annual Report, 1890. 21. Chinese Hospital Association. Annual Report, 1890-92. 22. Vogel M: Boston's Hospitals. Book in press, Chicago: University of Chicago, 1980. 23. Rosenberg C: And Heal the Sick: The Hospital and Patient in Nineteenth Century America. Journal of Social History 10: June, 1977. 24. Rosner D: A Once Charitable Enterprise: Health Care in Brooklyn, 1890-1915. Unpublished PhD dissertation, Cambridge: Harvard University, 1978. 25. See Rosner D: Business at the Bedside: Health Care in Brooklyn, 1890-1915, in Reverby S and Rosner D (Eds.): Health Care in America: Essays in Social History. Philadelphia: Temple University Press, 1979. AJPH May 1980, Vol. 70, No. 5

26. State of New York. Journal of the Senate, 122nd Session, Jan. 1899, p. 433. 27. Coler BS: Reform of Public Charity. Popular Science, 55:752754, 1899. 28. Brooklyn City Dispensary, Minutes. 1899-1900. (For vehement objections to the change and last minute appeals to the Mayor and Comptroller.) 29. Coler BS: Municipal Government. New York: D. Appleton and Co., 1901, v-vi. 30. Coler BS: Reform of Public Charity. Popular Science 55:752, 1899. 31. op. cit. Coler BS: Municipal Government. pp. iv-viii. 32. Coler BS: Mistakes of Professional Reformers. The Independent 53:1406, 1901. (For a description of the differences between the progressive reformer and reformers of earlier times.) 33. op. cit. Coler BS: Municipal Government. pp. 50-52; also, pp. 27-28. ("The System is open to many abuses when the public officers are powerless.") 34. Coler BS: The Subsidy Problem in New York City. The Independent 53:2162, 1901. 35. op. cit. Coler BS: Municipal Government. pp. 39; 81-82 ("The subsidy system probably finds its greatest abuse in the case of medical charities . . .") 36. Coler BS: Reform of Public Charities. Popular Science 55:751, 1899. 37. op. cit. Coler BS: Municipal Government. pp. 34-36; 27-28. 38. City of Brooklyn. Proceedings of the Board of Alderman, Documents, v.4. Document Number 71, pp. 20-21, 1897, (for an itemized list of funds distributed). 39. op. cit. Proceedings. p. 20, (an asterisk over the name of The Bedford Hospital refers to a note which states that a facility in question is "probably Brooklyn Throat Hospital.") 40. Pilcher L: Public Hospitals of Brooklyn. Brooklyn Medical Journal (BMJ). 4:541, 1890, ("The amount . .. paid is fixed arbitrarily and bears no relation to the amount of work done.") 41. Welles JT: Bedford Dispensary and Hospital. Annual Report, 1898, p. 9. 42. Mandelbaum SJ: Boss Tweed's New York. NY: John Wiley and Sons, 1965. 43. Syrett HC: The City of Brooklyn, 1865-1898. NY: Columbia University Press, 1944. 44. Weibe R: The Search for Order (p. 30 in which he describes some of the effects of technological change on the politics of east coast cities. "Then, in the eightees, two interrelated factors hastened the first full blown city machines.... Improvements in urban transit spreading a common malaise and wiping out pockets of political resistance, practically assured control of the city to an organization that could overcome enough local rivalries. Just as this reward dangled, the very scope of the . .. expanding city had so increased the difficulty of providing services that only a central agency could handle them." While centralization of power aided the bosses, it also aided reformers who controlled important city positions.) 45. Coler BS: Reform of Public Charity. Popular Science, 55:750752, 1899. 46. Coler BS: Reform of Public Charity, pp. 750-53, 1899. 47. Private Hospitals. Charities 6:56, 1901. 48. Brooklyn Nursery and Infant's Hospital. 29th Annual Report, June 1900, p. 15. 49. Brooklyn Hospital. Annual Report, 1899, p. 8. 50. Brooklyn Hospital. Annual Report, 1900, p. 8, ("The discussion of the city's action . .. has been widespread.") 51. Brooklyn Eye and Ear Hospital. Annual Report, 1900. 52. Brooklyn Maternity. Annual Report, 1899, pp. 9-10, (". . . it is needless to explain that great anxiety has been felt in regard to the future of charitable institutions . .. and what way the distribution of funds for their support may be made or blocked." 53. Methodist Episcopal Hospital. Annual Report, 1900, p. 15. 54. Home for Consumptives. 35th Annual Report, "Report of the Children's Ward," Oct. 1916, p. 28 (for a description of the effects of policy change on the number of children in the hospital.) 55. Methodist Episcopal Hospital. Annual Report, 1901, ("I regret 541


56. 57. 58. 59. 60. 61. 62. 63.

64.

65.

66.

67. 68.

69. 70. 71.

to report that The City of New York is less liberal with our hospital than during the previous year.") Maxwell HW: Discussion, BMJ 15:512, 1901, ("We, of course, suffer more or less in the curtailment of public support given to the hospitals and dispensaries in this borough.") Williamsburg: Appeal for Aid. New York Tribune Jan. 13, 1903, p. 7. Williamsburg Hospital Closes. New York Tribune Jan. 16, 1903, p. 7. Hospitals in Need of Aid. New York Tribune Oct. 17, 1902, p. 4. Methodist Episcopal Hospital. Annual Report, 1900, p. 15. Brooklyn Maternity. Annual Report, 1899, p. 9-10. Brooklyn Hospital. Annual Report, 1900, p. 8. Charity Organization Society of New York, 18th Annual Report, "City Subsidies to Private Institutions," July 1899 to June 1900, p. 18-21. Lubove R: The Professional Altruist: The Emergence of Social Work. Cambridge: Harvard University Press, 1964. Bremner R: From the Depths: The Discovery of Poverty in the United States. New York: New York University Press, 1956, (for discussion of the Charity Organization Society of New York.) Coler BS: Abuse of Public Charity. Popular Science 55-157, 1899, (in which he also maintains that excessive public contributions would undermine private giving. He hypothesized, however, that public support would tend to decrease in later years and there would therefore be a growing need for private giving: ". . . in many cases it happens that when a society begins to receive money from the city private contributions fall off.) Boyer P: Urban Masses and Moral Order in America, 18201920. Cambridge: Harvard University Press, 1978, 143-161. Duryea JT: City Versus Independent Hospitals. BMJ 15:497, 1901. Duryea JT: City Versus Independent Hospitals. BMJ 15:497, 1901. Mr. Simis Under Fire. New York Times, May 16, 1899, p. 3. Scope and Support of City Hospitals. B. D. Eagle, March 20,

I

72. 73. 74.

75. 76.

77.

78. 79.

80. 81. 82. 83. 84.

85.

1901 (in which Duryea says: "A large number of cases inspected by our examiners were found able to pay . . ." Brooklyn Eye and Ear Hospital. Annual Report, 1901, "Superintendent's Report" and Annual Report, 1902. Brooklyn Eye and Ear. 38th Annual Report, 1906, ("WIthout such valuable assistance the Hospital would be imposed upon oftener than it is.") Brooklyn Eye and Ear Hospital. 42nd Annual Report, 1910, p. 11, ("As in previous years grateful acknowledgement is due them ... Bureau of Charities for its willing assistance... Editorial: Public Money for Charities. BMJ 13:698, 1899. Editorial: Practical Reform of One Hospital Evil. BMJ 14:28182, 1900, ("The authority to fix the rate of payment to institutions ... should be a most important help to the city authorities in determining what the city's future policy will be in reference to the maintenance of its sick poor.") Jacobson AC: Practical Reform of One Hospital Evil-The System of Inspection Recently Adopted by the Department of Public Charities. BMJ 15:240, 1901, (he continues: "When it comes to medical men attempting to accomplish anything in the way of reform of existing medical evils there is nearly always presented the spectable of a body wandering in the desert of disorganization.") Pilcher L: Public Hospitals of Brooklyn. BMJ 4:539, 1890. Coler BS: Abuse of Public Charity. Popular Science 55:157, 1899. op. cit. Coler BS: Municipal Governments pp. 27-28. Methodist Episcopal Hospital. Annual Report, 1900, p. 15. See the various Annual Reports for statements of the hospitals' position. Duryea JT: City Versus Independent Hospitals. BMJ 15:498, 1901; (In 1899 the City distributed $175,264 in Brooklyn and Queens. In 1900, $124,729 was disbursed.) Scope and Support of City Hospitals. B. D. Eagle, March 20, 1901. Duryea JT: City Versus Independent Hospitals. BMJ 15:498, 1901, (". . . five private hospitals ... discontinued taking public patients.")

Let the Profession Purge Itself

hat we have fallen upon evil times seems to be the settled conviction of some of our medical brethren.... We think, indeed, that many a one is led, at times, to believe that our age is about the most trying upon which he could have fallen. He sighs involuntarily for a return of that period when the good physician was held in equal veneration with the gods.... "We have mentioned cupidity as one of the sins of medical men, which tends to abase medicine. We believe it is the most damning evil of the profession of our times. . The remedy like the evil is in the profession itself. . . . Let (the profession) purge itself of these unworthy members, these perpetual croakers, whose instincts lead them to quackery, and who are witheld from its full embrace only by the desire to maintain a certain degree of respectability." Stephen Smith -Past and Present, from Doctor in Medicine and Other Papers on Professional Subjects New York, William Wood & Co., 1892 (reprinted by Arno Press & The New York Times, 1972). T

542
