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of Medicine, Bradford H. Gray, ed., For-Profit Enterprise in Health Care
(Washington, D.C.: National Academy Press, 1986), 145.

51. Catherine Hawes and Charles D. Phillips, "The Changing Structure of the
Nursing Home Industry and the Impact of Ownership on Quality, Cost and
Access," in Gray, ed., For-Profit Enterprise, 492-541.

52. Ibid., 492.

53. American Health Care Association, Issue and Data Book for Long Term Care
(Washington, D.C.: American Health Care Association, 1993), 49.

54. "Aid for Chronic Illness and Other Long-Term Care," New York Times, 21 Feb.
1993, L25.

55. Wesley Wiley Rogers, General Administration in the Nursing Home (Boston: CBI,
1980), 166.

56. American Health Care Association, Issues and Data Book, 49.

57. From the Code of Federal Regulations as quoted in Bruce C. Vladek, Unloving
Care: The Nursing Home Tragedy (New York: Basic Books, 1980), 135.

58. Idem.

59. Federal Register, 39, no. 12, pt. Ill (Thursday, 17 Jan. 1974): 2238-49.

60. National Hospice Organization, Standards of a Hospice Program of Care, 6th rev.
(McLean, Va.: National Hospice Organization, 1979).

61. Paul R. Torrens, ed.. Hospice Programs and Public Policy (Chicago: American
Hospital Association, 1985), 7, 37.

62. Telephone conversation with Glenn Gillen, Communications Manager for the
National Hospice Organization, 28 June 1993.

63. Idem.

64. Jack M. Zimmerman, Hospice: Complete Care for the Terminally III (Baltimore:
Urban and Schwarzenberg, 1986), 46.

65. A case could be made that pharmacies and health food stores, where
pharmacists and employees advise customers on over-the-counter
medications, vitamin therapy, and homeopathic remedies, are also settings
for ambulatory care.

66. Williams and Torrens, Health Services, 139, 156.


67. CoWe, The New Medicine, 240.

68. Steven Jonas, Health Care Delivery in the United States (New York: Springer
Publishing Company, 1981), 146.

69. Milton I. Roemer, An Introduction to the U.S. Health Care System (New York:
Springer Publishing Company, 1986), 21-22.

70. Roemer, Ambulatory Health Services, 29.

7 1 . Home care is defined by the Joint Commission on Accreditation of Healthcare
Organizations as providing professional nursing and at least one other
therapeutic service. See JCAHO, Accreditation Manual for Hospitals, 1988
(Chicago: JCAHO, 1987), 53.

72. The bulk of the records documenting home care resides with the provider of
care and not in patients' homes.

73. This guide was produced by the Science, Technology and Health Care Round
Table of the Society of American Archivists in 1988.


Three outstanding books on the history of hospitals in the United States are

Charles E. Rosenberg, The Care of Strangers: The Rise of America 's Hospital System
(New York: Basic Books, 1987), which discusses hospitals in their social
context from 1800 to 1920; Rosemary Stevens, In Sickness and Wealth: Ameri-
can Hospitals in the Twentieth Century (New York: Basic Books, 1989), an
excellent book that picks up where Rosenberg left off; and Morris J. Vogel,
The Invention of the Modern Hospital: Boston, 1870-1930 (Chicago: University of
Chicago Press, 1980), an important study that outlines the development of
the modern hospital by focusing on the multitude of Boston hospitals.

Histories of specific types of hospitals include: Harry F. Dowling, City Hospitals: The
Undercare of the Underpriviledged (Cambridge: Harvard University Press, 1982),
a history of hospitals owned by cities, counties, regional authorities, or less
frequently states, from the founding of the almshouse hospital in Philadel-
phia in 1731 to the mid-1970s; Vanessa Northington Gamble, The Black
Community Hospital: A Historical Perspective (New York: Garland, 1987); Janet
Golden, ed.. Infant Asylums and Children's Hospitals: Medical Dilemmas and
Developments, 1850-1920 (New York: Garland, 1987); Diana Elizabeth Long
and Janet Golden, eds.. The American General Hospital: Communities and Social
Contexts (Ithaca: Cornell University Press, 1989); and Kenneth M. Ludmerer,
"The Rise of the Teaching Hospital in America," Journal of the History of
Medicine and Allied Sciences 38, no. 4 (1983): 389-414.

Many histories of specific hospitals exist, some scholarly and some not. The

American Hospital Association's Resource Center publishes a list of hospital
histories in its collection. The list is available free of charge by writing to the
American Hospital Association, Center for Hospital and Healthcare Adminis-
tration History, 840 North Lake Shore Drive, Chicago, IL, 6061 1.


Health Agencies and Foundations


Of the various types of nonprofit corporate bodies composing the U.S.
health care system, two have historically performed the same broad range
of functions: governmental health care agencies and private foundations.
Both have played and, in the case of government agencies, continue to
play significant roles in patient care, health care promotion, biomedical
research, the education of health care professionals, and policy formula-
tion. (Governmental agencies are also involved with the regulation of the
health care system.) In addition to engaging in these functions directly,
health care agencies and foundations also provide financial support for
other corporate institutions (such as hospitals, universities, and research
institutions) and individuals who carry out these functions. In their roles
as a funding source for patient care or, in the case of health care agencies,
as a provider of patient care, agencies and foundations are an important
component of the U.S. health care system. ^ Their contributions to that
system are considered in this chapter in two major sections: federal, state,
and local agencies with their broader responsibilities are addressed first,
followed by an analysis of foundations.^


The United States, unlike most other industrial nations, lacks a centralized
national health system. The absence of such a system in the United States,
however, does not mean that health care is unimportant to the govern-
ment. Federal agencies are active in every function of the U.S. health care
system (see Table 3-1). Furthermore, the level of government involve-


















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ment with health care is significant. American governments (federal,
state, and local) are the single largest source of funds spent each year on
health care: in 1990 $282.6 billion, or 42.4 percent of the total expendi-
ture on health in the United States, came from public funds. ^ Federal and
local governments were the most important source of funding for health
services and supplies expenditures, which include outlays for goods and
services relating directly to patient care and public health plus expenses
for administering the programs, providing 33.1 percent of such funding.*
In addition to funding certain activities of other entities, governmen-
tal agencies in the United States employ over 1.6 million people in direct
patient care.' They also regulate private providers and health-related
industries, and recently they have taken an increased role in establishing
standards for care and judging compliance with them, and in planning for
the general delivery of health services. Some governmental agencies are
active in health promotion, while others support biomedical research and
education. Despite the lack of a centralized national health care system,
governmental health care agencies play an important role in defining the
nature and activities of the health care system in the United States.


Governmental agencies address almost all the functions of the U.S.
health care system. The only exception is that they do not generally
provide goods and services (other than insurance services). In the rare
instances in which governmental agencies do provide products to the
health care system, it is usually because the commercial market for the
products is so small that the private sector cannot effectively address the
need. Of the remaining functions of the health care system in which
governmental health care agencies are actively involved, the importance
of their role varies. Health care agencies play a dominant role in regulation
and policy formulation, in health promotion, and biomedical research.
Their activities in support of patient care and the education of health care
professionals, while significant, complement similar activities in the pri-
vate sector.

Almost as important as the direct involvement of governmental agen-
cies with the functions of the U.S. health care system is their role in
financing activity carried out by other groups. The amount of money
spent by the federal government on direct patient care in federal facilities,
for example, is dwarfed by the amount paid by the government through
the Medicare program to other health care providers. Similarly, much
more is spent on funding research outside of the federal government



(extramural programs) than on the federal government's internal (intra-
mural) research programs. Although funding by governmental agencies
of health care activities does not constitute a separate function in the
analysis followed in this book, funding does have serious implications for
the kinds of record generated by those agencies, and will be considered in
this chapter where appropriate.

The involvement of governmental agencies with health care takes
place on three levels: federal, state, and local. The functions of health care
agencies at each level are not distinct; governmental health care agencies
at each of the three levels may provide patient care, fund or conduct
biomedical research, promote health, formulate policy, regulate health
care, or educate health care professionals. As a consequence, governmen-
tal agencies occasionally duplicate each other's efforts, while other activi-
ties may fall between the cracks and be left unaddressed. Furthermore,
identical functions are often performed by different agencies in different
states or even within a state. ^

FIGURE 3-1 A Public Health Service physician inspecting Chinese immigrants in
1924. Medical inspection of aliens was one of the important early activities of this
federal health agency. Source: National Library of Medicine, Bethesda, Md.


To understand how a system so irrational in structure and inefficient
in its use of resources developed, we must understand the factors that
brought it into existence. The nature of governmental involvement with
health care is shaped by a combination of legal and historical factors.
Because the U.S. Constitution does not clearly mandate responsibility for
health care, all health care activities performed by the federal government
must be performed under the general stipulation that instructs the federal
government to provide for the general welfare and to regulate interstate
commerce. The Constitution establishes for the nation a tripartite federal
government, with responsibility for health care divided among the execu-
tive, legislative, and judicial branches. Although the laws and appropria-
tions passed by the U.S. Congress, and the judiciary's interpretation of
those laws, are important to the health care system, the agencies that are
usually charged with implementing the laws are located in the executive

Since powers not vested in the federal government are specifically
reserved to the states, state governments have played an important role in
the U.S. health care system. Many states have further delegated responsi-
bilities to local governments, establishing the third layer of government
involvement with health care. Historically, state and local governments
have limited their health responsibilities to protecting citizens against the
dangers of community life through public sanitation and communicable
disease control. Individuals, unless they are indigent, are responsible for
their own health. In the absence of total governmental responsibility for
health care, and in the spirit of America's belief in voluntary and private
activities in support of the government, many activities that in other
countries might be assumed by the government have in the United States
been undertaken by voluntary organizations or private foundations.

The U.S. health care system, therefore, has developed in a decentral-
ized, haphazard fashion. But while federal, state, and local governments
may not have assumed absolute responsibility for different functions
within the system, the general focus of health care agencies at the federal,
state, and local levels does differ.


Several key activities dominate federal involvement in the U.S. health
care system. The federal government provides patient care for selected
populations, formulates much of the U.S. health care policy through
regulation or reimbursement criteria, engages in biomedical research and
health promotion, and is a major educator. Underlying each of these


functions is the federal government's role as the source of much of the
U.S. health care system's basic financial support.


Providing patient care is one of the oldest of the federal government's
health care functions and at the same time one of the least established;
there is still little consensus on the extent to which the federal govern-
ment should care for patients. The first federal action on health care
outside of the army and navy was the establishment in 1798 of the Marine
Hospital Service, now known as the Public Health Service. For most of its
first century of existence, the mandate of the new organization was
constrained, limited only to providing medical services to merchant sea-
man and funded through a mandatory employment tax on their wages. ^
Providing health care to individuals was generally considered to be a state
or local responsibility; seamen were deemed a federal responsibility be-
cause they were transients who could make no fair claim to the generosity
of the local community.

During the past century the federal government gradually accepted
the responsibility to provide patient care to other specific groups, such as
native Americans, veterans, and federal prisoners, even as the Public
Health Service's original function of caring for seamen was abolished. The
general delivery of patient care to the population as a whole, however,
remains outside the scope of the federal government's sphere of activity.

The Department of Health and Human Services (DHHS) is the federal
agency most actively involved in the health care system in general and
patient care in particular. As befits a department in a government that
historically has not had a clear mandate to deliver health care to its people,
the agency is relatively new. It is rooted in the Federal Security Agency,
which was created in 1939 to bring together into one agency all of the
federal programs in the fields of health, education, and social security. The
Federal Security Agency was raised to cabinet-level rank and renamed the
Department of Health, Education, and Welfare in 1953; with the creation
of a separate Department of Education in 1979, the DHHS was estab-

The DHHS is divided into four major operating divisions: the Social
Security Administration, the Health Care Financing Administration, the
Administration for Children and Families, and the Public Health Service.
As the principlal sources for funding, the Social Security Administration
and the Health Care Financing Administration have an indirect impact on
the U.S. health care system. The Public Health Service and its component
agencies have the greatest direct impact on health care.


The Health Resources and Services Administration (HRSA), one of the
component agencies of the Public Health Service, is the primary focus for
patient care programs within the federal government. In addition to
providing support for efforts to improve the education of health profes-
sionals, HRSA provides services to specific groups through demonstration
grants and direct patient care programs. Among the activities supported
by HRSA are the Community Health Centers program, the Bureau of
Prisons medical programs, and the Gillis W. Long Hansen's Disease Center
in Carville, Louisiana. The Indian Health Service, formerly a part of HRSA,
is now an independent agency within the Public Health Service. Its
function is to provide patient care to native American and Alaskan natives
through a network of hospitals, health centers, and clinics. The Substance
Abuse and Mental Health Services Administration, another agency within
the Public Health Service, supports demonstration programs in the treat-
ment of substance abusors and people with mental or emotional difficul-

Patient care is provided by agencies outside the DHHS as well. The
Department of Defense is an important provider of patient care, operating
an extensive system of medical facilities that provide treatment to active
duty and retired military officers. In addition, the military funds the
Civilian Health and Medical Program of the Uniformed Services, the
system that supports patient care for entitled beneficiaries in nonmilitary
hospitals. The Veterans Administration, an independent cabinet-level
agency, operates the largest centrally run hospital system in the United
States. It is intended to meet the medical needs of veterans who have
service-related disabilities, are aged 65 and over, or are medically indi-

Despite a historical reluctance on the part of federal governmental
agencies to be involved in direct patient care and the limits on eligibility
for treatment in federal facilities, delivery of medical services to individu-
als has become an important federal activity.


In contrast to patient care, the general promotion of public health has long
been viewed as a federal function. Beginning with quarantine restrictions
in the nineteenth century, the federal government has developed a
number of ways to foster the general public health while leaving most
patient care activities to the states or to individuals themselves. Health
promotion activities occur in many federal agencies and take a variety of

The Centers for Disease Control and Prevention (CDC), headquar-


tered in Atlanta, Georgia, is the national agency primarily responsible for
disease prevention, with a focus on infectious disease. The CDC directs
quarantine programs, investigates outbreaks of previously unrecorded
diseases, develops health education programs, sets standards for clinical
laboratories, provides grants to states for local preventive campaigns, and
conducts active research programs at home and abroad. CDC scientists, for
example, were the first to identify Legionnaires' disease. The CDC led the
campaign to eliminate smallpox from the world, and the first published
notice of infection with the human immunodeficiency virus (HIV), the
retrovirus associated with autoimmune deficiency syndrome, appeared in
a CDC epidemiological report.

Outside of the DHHS, the U.S. Department of Agriculture (USDA) is
involved with human as well as animal and plant health. Nutrition in
particular has been a concern of the USDA, which administers the Women
and Infant Care and Food Stamp programs. Both programs were estab-
lished to combat the harmful effects of malnutrition. In addition, in the
interest of public health, the USDA inspects meat and dairy products and
promotes proper nutrition. The Department of Labor administers the
Occupational Safety and Health Administration (OSHA), which seeks to
develop and enforce workplace safety and health standards.


Perhaps in no area has federal involvement with health care been as
productive as in the area of biomedical research. Federal scientists identi-
fied the causes and treatment of diseases such as pellagra, hookworm,
tularemia, and Legionnaires' disease; dentists working in the Public
Health Service were among the first to note the beneficial effects of
fluoride on teeth and to push for the general fluoridation of water; and
federal scientists led in developing an understanding of and treatment for
HIV infection. Furthermore, as was noted earlier, the federal government
is a major source of the funding for research carried on by others in
universities, hospitals, and research institutes.

The most important agency in the federal government devoted to
biomedical research is the National Institutes of Health (NIH). The primary
function of the NIH is basic biomedical research, which is conducted in
seventeen research institutes, one hospital, and numerous supporting
centers and divisions.^ Through its extensive extramural grant program,
the NIH supports most fundamental clinical research in this country and,
through its visiting scientist programs, serves as an important center for
diffusing biomedical knowledge worldwide. The intramural and extramu-


ral research programs of the NIH together account for almost two thirds of
all federal investment in biomedical research.

Biomedical research is also carried on in a number of different agen-
cies both within and outside of the DHHS. Within the DHHS, the CDC
maintains a large intramural research structure dedicated to investigating
the source of disease outbreaks, and the newest Public Health Service
agency, the Agency for Health Care Policy and Research, funds projects to
ensure the most cost-effective use of health resources. Outside the DHHS,
the Department of Defense maintains several important research insti-
tutes focusing on medical fields of particular concern to the military, such
as tropical and arctic medicine. The Environmental Protection Agency
(EPA) conducts research on the harmful effects of air, water, and ground
pollution and seeks to implement the results of its studies through legisla-
tion and regulation. The Department of Energy has established laborato-
ries investigating the effect of radiation on humans and, in support of its
research efforts, is playing a key role in the current project to map the
human genome. GENBANK, for example, one of the first molecular
sequence data banks, began at a national laboratory run by the Depart-
ment of Energy in New Mexico. ^°


Almost every federal agency concerned with health care is also involved
in regulation and policy formulation. In some agencies, regulation is the
primary function. Most notable in this regard is the Food and Drug
Administration (FDA), one of the agencies that compose the Public Health
Service. The FDA is charged with protecting the public from the dangers of
poorly manufactured or ineffective pharmaceuticals, medical devices,
radiological equipment, foods, and food additives. The FDA evaluates new
products before they are marketed to ensure their safety and efficacy;
periodic inspection after marketing helps ensure the continued safety of
the products. To support its work, the FDA maintains an extensive set of
laboratories and a criminal investigations unit, but it also relies heavily on

Online LibraryJoan D KrizackDocumentation planning for the U.S. health care system → online text (page 6 of 26)