Financial History Issue 116 (Winter 2016) | Page 33
Taking Healthcare Public
Investor Ownership in Healthcare Service Companies
By Michael A. Martorelli
Delivering Healthcare Services
From the last quarter of the 19th century to the middle of the 20th century,
providing medical care in a hospital or
other treatment facility was thought to be
largely the province of not-for-profit institutions and their managers. Ironically,
sketchy records about hospital formation
from 1875 to 1910 suggest that many of
those institutions were organized as proprietary (for-profit) enterprises. They were
usually owned by physicians and surgeons
addressing the needs of their patients, not
by investors seeking to build a company.
Especially in the sparsely populated areas
of the Southwest, many physicians viewed
the establishment of proprietary hospitals
as perfectly appropriate, since many communities lacked the resources to establish
the type of public hospital that cities and
counties began launching in the East.
© Bettmann/CORBIS
Institutions providing various types
of healthcare treatment services have historically been organized as not-for-profit
entities and controlled by municipalities,
religious orders and other charitable organizations. Treating patients was thought
to be a noble cause, and the province of
specially-trained professionals dedicated
to improving patients’ lives. The prime
motivation of the people and the institutions providing healthcare to others was
altruism, not profit-making. Until the
mid-1960s, investors interested in participating in the growth of the healthcare