Financial History Issue 116 (Winter 2016) | Page 35

on the NYSE in order to raise even more capital for growth. In 1968, Richard K. Eamer was a Los Angeles, California lawyer and financial consultant specializing in the development, financing and operation of hospitals. He saw the advantages that economies of scale and sound business practices could bring to the industry. The following year he joined classmate John Bedrosian and partner Leonard Cohen in the formation of National Medical Enterprises. Those ambitious entrepreneurs raised $23 million in an IPO and used the proceeds to purchase four general hospitals, three convalescent hospitals and a medical office building. By the end of the decade, it too became a leader in applying classic management techniques to the traditionbound hospital industry. By 1970, these four publicly-owned hospital management companies owned about 250 of the nation’s 1,000 proprietary hospitals. Meanwhile, entrepreneurs had established other for-profit healthcare service businesses to take advantage of Medicare’s generous reimbursement policies. For example, Community Psychiatric Services owned several psychiatric hospitals. And in addition to the previously mentioned Extendicare, publicly-owned firms Hillhaven Corporation and Manor Care also operated nursing homes. During the next decade, groups of entrepreneurs and investors would establish companies providing physical rehabilitation, kidney dialysis, respiratory therapy, ambulatory surgery, diagnostic radiology, home healthcare, etc. And they would fund most of them by selling stock to the public. The idea of making a profit from providing such services would become one of the most controversial topics in the health care world. But the genie was out of the bottle. The Medicare rules were rewritten, business conditions changed and some companies floundered while others succeeded. Yet investors were no longer deprived of the opportunity to participate in the growth of companies providing a variety of healthcare services.  Michael A. Martorelli, CFA is a Director at Fairmount Partners in West Conshohocken, Pennsylvania, and a frequent contributor to Financial History. He earned his MA in History from American Military University. Sources Brock, Dan W. and Allen E. Buchanan. “The Profit Motive in Medicine.” The Journal of Medicine and Philosophy, Vol. 12. 1987. Gray, Bradford H. Ed. The New Health Care for Profit. Washington, DC: National Academy Press. 1983. Steinwald, Bruce and Duncan Neuhauser. “The Role of the Proprietary Hospital.” Law and Contemporary Problems, Vol. 35. October 1970. Stevens, Rosemary. In Sickness and in Wealth: American Hospitals in the Twentieth Century. New York: Basic Books. 1989. Twight, Charlotte. “Medicare’s Origin: The Economics and Politics of Dependency.” Cato Journal, Vol. 16, No. 3. Winter 1997. “The definitive account of the history of Bitcoin”* From New York Times reporter NATHANIEL POPPER Shortlisted for the 2015 Financial Times Business Book of the Year “A riveting tale filled with colorful innovators that is crucial reading for anyone who wants to understand the future.” —Walter Isaacson, author of The Innovators “Necessary reading.” —New York Times Book Review “Finally, the book so many of us have been waiting for: A riveting and smart account of the strange history of Bitcoin.” —Adam Davidson, co-founder of NPR’s Planet Money * Felix Salmon, Fusion  |  Winter 2016  |  FINANCIAL HISTORY  33