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New York
Localism, Private-Public Boundaries, and the Transformation of the Health Care Sector
The 1960s were a peak time for books, across the ideological spectrum, that werenât just about policy but ended up making policy themselves, propelled by dazzling rhetoric and powerful narratives about radically changing the world: Walt Rostowâs Stage of Change (a future of robust growth and no communism); Rachel Carsonâs Silent Spring (an Earth cleansed of man-made poisons), Ralph Naderâs Unsafe at Any Speed (a business sector that didnât lie about how easily its products could kill you); Betty Friedanâs The Feminine Mystique (an America free from the ennui of conventional gender roles); and James Baldwinâs The Fire Next Time (an America without racism). You might say it was the era of the Vision Book.
If you picked up Prepayment for Hospital Care in New York State: A Report on the Eight Blue Cross Plans Serving New York Residents in 1961, when it was published, you probably wouldnât think of it as an epoch-defining title. Plodding, redundant, replete with awkward passive constructions, Prepayment instead bore all the imprints of dry technocracy. It was the kind of tome nobody read cover to cover and that inevitably spent more time accumulating dust on a library shelf than it did in many pairs of hands. And yet its lead author, Ray Trussell, had written more than a book. Trussellâs thinking would remake health care in the nationâs largest city.
Within a decadeâand not without a lot of resistanceâNew York Cityâs public hospitals would go from being run by the government to being run by the cityâs private medical centers, most of them big-monied, elite, and part of fancy universities. It amounted, in short, to the private control of public goods in order to save the latter from decline.
Itâd all begun with an obscure policy bookâand the man behind it.
The Fall of Public Hospitals and the Rise of Ray Trussell
For all its deficiencies of presentation, Prepayment contained a powerful yet simple idea: insurance premiumsâand health care costs, by extensionâwere rising because of poorly planned, ill-conceived hospital construction whose subsequent high sunk costs were passed on to consumers.1 More bloat, more premiums, more costs. What was needed was coordination, some edifice to trim the fat and inject rationality into a hospital landscape riven with infrastructural excess. Trussell spoke the language of regionalism: the growing notion that urban planning could use a lot more coordination, communication, and centralization among disparate and unwieldy parts.
It was an idea perfect, in Trussellâs mind, for a New York City public hospital system whose crisis of sustainability demanded more leanness and more organization to have any hope of surviving. And as it happened, the same year Prepayment appeared, Trussell got the chance to use the city as a laboratory. He promptly exited life as a professor at Columbia Universityâs School of Public Health and entered New York City politics as its commissioner of hospitals, called in to fix the public hospital system. Trussell proposed, then swiftly implemented, affiliation: essentially a subcontracting arrangement whereby the government would pay the cityâs most powerful academic medical centers to administer and staff public hospitals. Affiliation amounted to the city waving a white flag and declaring that it couldnât run its own hospitals by itself. The New York City media was enthusiastic about the plan, hailing Trussell as a polymathic savior, with the New York Post dubbing him âa medical dynamo dedicated to lifting health standards.â2
The path to being a medical dynamo first ran through a mayoral commission on hospitals, nominally headed by David Heyman, a businessman and philanthropist with a long-standing interest in the cityâs health services. Trussell dominated it. Formed in 1959, the Heyman Commission consisted of more than three dozen members: a mix of city officials, philanthropists, and, most represented, administrators from medical institutions. It had a simple two-prong charge. Step one: Figure out what problems afflicted New York Cityâs once vaunted system of eighteen public hospitals, more extensive than any in the country, all underpinned by the powerful principle that each was âexpected to take in every New Yorker who applied to them for help.â3 Step two: Figure out something to be done.
Step one wasnât hard. The biggest short-term ailment revolved around personnel. By the late 1950s, with few exceptions, most of the municipal hospitals were failing to attract permanent staff and interns and residents. By one estimate, the city now relied on 9,000 volunteer physicians to cover the permanent staffing shortfall.4 Shortages existed as well for nurses, dieticians, social workers, and occupational, physical, and speech and hearing therapists. To take just one example, in 1960, the city budget had allocated funds for 6,157 nurses, but only 1,756 positions had actually been filled. For dieticians, 252 positions had been allocated, but only 59 were filled, which necessitated the use of temporary employees.5 The state of the public hospitalsâ postgraduate programs proved even more dire and embarrassing. In the previous year, no American interns were placed in any unaffiliated municipal hospitalsâthat is, almost all of themâby the national intern-matching program.6 In their place was a stream of foreign medical graduates. Concern over their presence was tinged with a whiff of nativism, but there was no doubt that because of training under different standards and expectations, foreign medical graduates often floundered. âMunicipal hospitals without medical school affiliations have lost the continuing high level of professional supervision which would make them attractive to interns and residents,â Heyman declared at the commissionâs first meeting.7
There was a simple fiscal basis for the personnel problem. In the early 1950s, the Committee on Interns and Residents, the labor union representing just-minted doctors, noted that municipal hospitals had outpaced the national average wage for house staff. Yet by the end of the decade, the wage trend had reversed. On average, monthly pay for interns in city hospitals was $125, compared to a national average of $189 in all U.S. hospitals.8 Beyond material incentives, public hospitals lacked the equipment, adequate infrastructure, and strong teaching programs offered by private counterparts, mainly university-based medical centers.9 Talent was ditching the public medical sector: for better pay and for better training.
Personnel shortages werenât the only problem. Relations between the city and private institutions had reached an impasse, with the private organizations thrust into charity roles without adequate compensation from the city. In the late 1950s, Mayor Robert F. Wagner had promised to raise, by four dollars, the per diem amount that the city paid to private so-called voluntary institutions for its patients, though the city admitted that such increases still likely wouldnât outpace inflationary pressures facing the entire medical sector. Something more than ad hoc payments for public patients was necessary.10
Then there was bureaucracy. Heyman Commission members regularly criticized the âunnecessary and expensive duplication of services,â which contributed to escalating costs and poor coordination.11 One source of that problem was indiscriminateâand possibly unnecessaryâhospital construction, the sort criticized by Trussell in his tome on insurance premiums. Howâand ifâto build was especially pressing, since the city planned to build several new facilities over the next decade. For Trussell, it was an opening to introduce his principles of rationalization and test his proposal for enmeshing hospitals with private facilities. He raised them during a discussion of criteria to be considered when locating public hospitals. When one commissioner argued that they ought to be placed near where patients actually lived, âfor the people will not leave their own community to go to other areas for medical care,â Trussell countered. He argued that institutional resources, particularly proximity to private academic medical centers, were far more important in choosing where to build a public hospital than geographic closeness to patients. And he ended his remarks in one meeting by decrying municipal hospitals that were âisolated[,] poorly staffed[,] and poorly equippedâ and pushing for eventual systemwide rationalization, even downsizing.12
But by âisolated,â Trussell really meant âunaffiliated.â And for him, the problems that the Heyman Commission had identified all led to one solution: a systemwide set of affiliations overseen by the city. The position was reinforced by the success of an existing pilot affiliation, that between Morrisania Hospital (a public facility in the Bronx) and Montefiore Medical Center, a voluntary institution with ties to Einstein Medical College and Yeshiva University. The affiliation had begun informally in 1955, when a Morrisania administrator had approached Montefioreâs chief executive, Martin Cherkasky, and proposed sharing of house staffâhospital residentsâbetween the two institutions. Implemented in 1959, the agreement had Montefiore lending personnel to Morrisania, loaning technological resources, such as X-ray and laboratory facilities, and providing more Montefiore-level training for Morrisania interns, who might otherwise have sought residencies at private institutions.13 In a meeting devoted to reviewing the pilot affiliation, Cherkasky backed up Trussellâs view that the geographic closeness of the two institutions, coupled with the willingness of Montefiore to share its resources, were the key reasons for success.
If scaled up and replicated, affiliations like Montefiore-Morrisania would come with many perks and fixes for the sustainability crisis. Public hospitals could leverage the private facilitiesâ recruiting power and prestige to solve the staffing problem. And they could benefit from private infrastructural resourcesâfor example, the sharing of supplies. Private institutions would receive guaranteed, contractually backed compensation, rather than impromptu payments, for services rendered, whether taking in patients, providing training, or assisting with administration. A system of affiliations at first seemed like a potentially onerous commitment of public funds. But if the city was serious about solving its sustainability crisis, the benefits would far outweigh the costs, the commission argued. It concluded that the city âshould vigorously implement the established policy of affiliating as many municipal hospitals as possible with medical schools or with voluntary hospitals having strong teaching programsâ and urged âdynamic follow-through.â14 An affiliation was what would ultimately distinguish inadequate facilities, which the city ought to abandon, from ones that the city ought to support.
If the Heyman Commissionâs vision was a tight network of public hospitalsâlocked into orderly relationships with private institutionsâit raised a thorny political question: What would happen to those that didnât get affiliated? Trussellâs answer was simple: those hospitals were pork, and they ought to close. In its final report, the commission wrote that the city ought not override closure if a hospital âcannot be maintained or the facilities are no longer required.â And in one particularly biting passage, it cast long-standing local attachments to otherwise faltering health institutions as sappy communitarian sentimentalism that ought to be divorced from dispassionate analysis on how to âprovide optimum medical care.â âGood medicine,â it stated pithily, âis not practiced by bricks and mortar.â15 Planned closures werenât just idle talk. At one meeting, the commission reviewed a list of a dozen hospitals, naming three of themâFordham in the Bronx, Sydenham in Harlem, and Gouverneur on the Lower East Sideâas good candidates for closure.16 Sparse evidence was frequently offered to justify these choices. When providing a rationale for why Fordham Hospital ought to close, for example, the commission wrote simply âthat there was no need for an out-patient service in this locationâ while providing little evidence on why that was the case. For Gouverneur, âthere was little discussion . . . beyond the fact that it should be closed and not rebuilt.â17 These declarations discounted hospitalsâ immense political symbolism in neighborhoods, a myopia that spurred much of the later backlash around the affiliation plan.
One reason for that tunnel vision was the composition of the commission. Physician-administrators dominated all major committees where consequential deliberations occurred, giving the proceedings an unmistakably rarefied and undemocratic air.18 The case for affiliation, unsurprisingly, was shot through with a paternalist streak. While framed as mutually beneficial, institutionalized affiliations would permanently increase dependence of municipal hospitals on private voluntary institutionsâand at a monetary cost to the city. The surface reciprocity of the relationship masked the two partiesâ unequal degrees of desperation. Municipal hospitals, with their personnel shortages and infrastructural deficiencies, needed voluntary affiliates much more than the private institutions needed reliable revenue for their charity role, which, at worst, they could simply stop fulfilling altogether. But the Heyman Commission barely discussed mechanisms to ensure that both sides in the proposed private-public partnerships held up their end of the bargain. Except for a brief discussion of whether municipal hospitals would still decide on their own chiefs of staff, potential for conflicts in affiliation went undiscussed. So did the human element. Commission members repeatedly referred to affiliation as a means to acquire more potential âclinical material,â in the cold and impersonal parlance of the time. Such phrasingâand the parochialism behind itâwould come under attack later in the decade, after several high-profile revelations around unethical experimentation rocked the medical establishment.19 B...