Edited by John L. Campbell
Edited by J. Rogers Hollingsworth
Edited by Leon N. Lindberg
Publisher: Cambridge University Press
Print Publication Year: 1991
Online Publication Date:March 2010
Chapter DOI: http://dx.doi.org/10.1017/CBO9780511664083.011
The concepts of hospitals as a business enterprise and healthcare as an investment opportunity are relatively new and distinctively U.S. phenomena. As recently as 1960, the image of the community hospital operated as a voluntary service organization, rather than a business, to serve local physician and community needs, was fairly realistic. Today, healthcare in the United States can aptly be described as a commercial venture in which the hospital industry is an integral subsector. The community hospital has changed character. It is more likely to be either a member of a nonprofit multihospital system or managed by one of the large for-profit hospital conglomerates such as Hospital Corporation of America, Humana, Inc., or American Medical International. Whereas the majority of hospitals remain nonprofit institutions, most have undergone corporate reorganizations, spun off for-profit subsidiaries, integrated vertically through affiliations and joint ventures with physician groups or health maintenance organizations, or diversified into new markets and services to increase market share, obtain access to capital, and improve their competitive position in an increasingly market-oriented industry.
This case study examines the dynamics of change in the institutional structure of the hospital industry. A study of the pharmaceutical industry, the health insurance industry, or the medical profession could provide an equally interesting picture of governance within the U.S. health sector. The emphasis on the hospital industry will undoubtedly fail to highlight certain important aspects of the institutional arrangements governing economic activity in this sector, such as the development of health maintenance organizations in the insurance industry, or the role of state-sponsored research in the development of medical technology.