Category: Policies

From the Encyclopedia of Cleveland History

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HOSPITALS & HEALTH PLANNING. In the U.S., the hospital attained its “modern” institutional form by 1900-10, having passed through 3 more or less distinct stages. During the 19th century, the hospital began as an agency of social control and welfare, gradually became the principal provider of minimal medical care for the indigent and unfortunates of society, and emerged, ultimately, as the medical center for all classes of society, as well as the locus of medical training, research, and innovation. The institutional care of the sick originated in the incidental medical facilities provided for inmates of almshouses, jails, or, as in Cleveland, military posts. Here the first “hospital” was little more than a temporary barracks at FORT HUNTINGTON, situated near the mouth of the CUYAHOGA RIVER on Lake Erie. A log structure built in 1813, it furnished sparse accommodations to treat sick or injured soldiers of the War of 1812. DAVID LONG† was then the sole physician in the village of Cleveland. After this makeshift hospital closed in 1815, no other institution aided the sick until 1826, when the township erected a poorhouse adjacent to the ERIE ST. CEMETERY. In 1837, following the incorporation of Cleveland as a city, the poorhouse became the City Hospital. Not a hospital in the modern sense of the word, it, like other “hospitals” of the time, functioned chiefly to relieve pauperism.

In the second phase of their 19th-century development, hospitals became specifically medical institutions but limited their services to persons who could not afford the cost of treatment and convalescence in their homes. The opening of the U.S. MARINE HOSPITAL and ST. JOSEPH HOSPITAL in 1852 marked the beginning of this period in Cleveland. The U.S. Marine Hospital, financed and managed by the federal government, cared for merchant sailors and their families and for civilian and military personnel of the government. St. Joseph, operated by the SISTERS OF CHARITY OF ST. AUGUSTINE, briefly served a growing community of Irish laborers in the city. During this period, the city and state governments also reorganized their medical facilities for the poor. The City of Cleveland tore down City Hospital in 1851 and erected a new building, the City Infirmary, in 1855. The same year, the State of Ohio opened the Northern Ohio Lunatic Asylum, later known as CLEVELAND STATE HOSPITAL, in nearby NEWBURGH. Despite these improvements, most people still viewed hospitals as refuges for the infirm poor. With prevailing low standards of medical care, the hospitals of mid-19th century Cleveland were little better than the dreaded “pesthouses” of the past.

During the last third of the 19th century, hospitals were transformed by a combination of scientific and technical advances that together amounted to a revolution in medical thought and practice. The discovery of ether, chloroform, and nitrous oxide for anesthesia in the 1840s opened new realms for the surgeon, while the germ theory introduced by Louis Pasteur and applied to medical practice by Joseph Lister in the 1860s gave a clearer understanding of disease communication and prevention. These innovations could be implemented most successfully in the controlled environment of the hospital, and medical practice shifted progressively from homes to hospitals. In Cleveland, this transfer accelerated in the closing years of the 19th century. At mid-century, there were only 3 hospitals in Cleveland. Two decades later, 1870-75, 7 were in operation: 3 under municipal, state, and federal management, 2 maintained by Catholic religious orders (see CATHOLICS, ROMAN), and 2 voluntary hospitals under the control of lay trustees. By 1890-96 this number had more than doubled, including 8 hospitals under the care of religious denominations, 5 voluntary institutions, and the 3 existing public facilities. In addition, the Cleveland medical scene was also populated by a growing assortment of dispensaries opened by medical colleges in the city, small private hospitals operated as business ventures by enterprising doctors, and several private sanatoriums for the care of patients with emotional or drug- and alcohol-related health problems.

Hospitals ceased to be merely dormitories for the destitute. The first hospital designed to serve medical needs and not just to perform custodial functions was St. Vincent de Paul Hospital (1865, see SAINT VINCENT CHARITY HOSPITAL AND HEALTH CENTER). Its central section housed offices, a chapel, a pharmacy, and staff apartments, with kitchen, dining, and storerooms in the basement. This section was flanked by 2 wings, each occupied by separate male and female wards for 56 charity cases on the ground floor, while the second floor of both wings was divided into private rooms for 24 paying patients. Absence of separate surgical facilities was remedied by construction in 1872 of an amphitheater–the first in any hospital in Cleveland. This general pattern prevailed in the design of other local hospitals until the end of the 19th century. The first major change in the design of Cleveland hospitals came with the construction of Lakeside Hospital (see UNIVERSITY HOSPITALS CASE MEDICAL CENTER). Like many hospitals in the city, Lakeside began its institutional life in a private residence converted to accommodate patient beds. Between 1876-96, Lakeside occupied the U.S. Marine Hospital; it was finally compelled to erect a new building upon expiration of its lease. In 1891 and 1895, trustees visited major hospitals in metropolitan centers east of the Mississippi and subsequently adopted a pavilion or “cottage” plan modeled on Johns Hopkins Hospital (1885) in Baltimore, then the most respected teaching hospital in America. The pavilion plan of the new Lakeside Hospital, located at E. 12th St. and Lakeside Ave., offered the ventilation and drainage deemed essential for proper SANITATION. Central administrative, kitchen, and laundry services were housed in separate buildings connected to wards, surgical buildings, and dispensary and nurses’ quarters by long corridors. The only structure that stood apart from the whole was the “autopsy building,” which accommodated pathology and clinical microscopy laboratories after 1901. The overall layout of the hospital was dictated by the new appreciation of the role that germs played in disease, with isolation and ventilation the most important features of any hospital plan.

Hospitals in Cleveland first became educational institutions, helping to train physicians, when Dr. GUSTAV WEBER† founded Charity Hospital Medical College in 1864. Weber, a prominent surgeon, launched the new school with the full cooperation of St. Vincent de Paul Hospital. Each party benefited: Weber enjoyed privileged access to cases for clinical instruction, while St. Vincent engaged a competent medical staff at little or no cost. Although the college closed in 1870, St. Vincent had set a local precedent for close cooperation between hospitals and medical schools. The first university hospital in Cleveland came into being in 1897-98 with the opening of Lakeside Hospital. Since 1869, Lakeside had given WRU teaching privileges, shared with the Wooster Univ. Medical Department (1870-84): each school held its clinical sessions at different seasons of the year. After 1884, WRU acquired exclusive control of teaching privileges at Lakeside. Beginning in 1898, the WRU Medical Department also nominated resident staff and furnished visiting physicians and surgeons. The first university hospital in Cleveland, Lakeside ranked among the first 10 such institutions in the U.S.

Hospitals constituted the sole training ground for NURSING in Cleveland from 1884, when HURON RD. HOSPITAL opened the first training school for nurses in Ohio, until the establishment of a nursing degree by WRU in 1921. In the interval, several Cleveland hospitals, most notably Cleveland General (now SAINT LUKE’S MEDICAL CENTER), Lakeside, and St. Vincent, created their own schools. In the early years of these programs, young women received in-service training in “practical nursing” and little formal instruction. Only at Lakeside, through the efforts of national expert ISABEL HAMPTON ROBB†, did nursing education emphasize instruction in the theoretical and scientific side of nursing as well as the practical. Scientific medicine, particularly the laboratory-based specialties of pathology, bacteriology, and physiology, entered the institutional setting of Cleveland hospitals after 1890. The most notable example of this influence was the establishment of a bacteriology laboratory at City Hospital. Dr. William Travis Howard, a young pathologist trained at Johns Hopkins and professor of pathology at WRU, headed the laboratory and initiated scientific postmortem examinations at City Hospital.

By the turn of the century, many hospitals in Cleveland attracted a more affluent class of patients. Some hospitals actively courted paying patients by offering comfortable, if not luxurious, accommodations. While no Cleveland hospitals abandoned their original charitable obligations, the poor increasingly patronized out-patient dispensaries operated by the medical departments of WRU, the Cleveland College of Physicians & Surgeons (Ohio Wesleyan Univ.), and the CLEVELAND HOMEOPATHIC HOSPITAL College. Following expansion and modernization in 1889, City Hospital undertook a greater role in providing medical care for the indigent throughout the city. Later, it also erected a tuberculosis sanatorium and a hospital for contagious diseases, allowing other local hospitals to present themselves as “safe” havens for sick persons of all social classes, free from dreaded communicable illnesses. In addition to improving the attractiveness and safety of private rooms for paying patients, some hospitals permitted nonstaff doctors to visit and treat patients in the hospital setting. Lakeside Hospital, for example, relaxed its rules to accommodate physicians who brought private paying patients, opened a specially designated operating room for use by physicians and surgeons not officially affiliated with the institution, and appointed a resident staff officer for patients of such physicians and surgeons.

The principal institutional developments in Cleveland hospitals between 1910-50 included the emergence of the group-practice hospital, the move of several hospitals to the SUBURBS, and the advent of health insurance programs. The CLEVELAND CLINIC FOUNDATION, incorporated in 1921, was the first and by far the most successful group-practice hospital in Cleveland. Its founders, particularly Drs. GEORGE W. CRILE†, FRANK E. BUNTS†, andWILLIAM E. LOWER†, derived their inspiration from the example of the Mayo Clinic and from experience as members of the LAKESIDE UNIT, WORLD WAR I. They combined the practice of surgery and medicine with new diagnostic procedures and ongoing medical research. Organized as a not-for-profit foundation staffed by salaried physicians, the Cleveland Clinic overcame the onus heaped on group clinics by individualistic private practitioners who perceived a threat to the prevailing free-market economy in American medicine.

By 1920, as noted in the Cleveland Hospital and Health Survey, local hospitals could be categorized according to the strength of their community orientation. One group, comprising FAIRVIEW HOSPITAL, ST. JOHN HOSPITAL, Glenville Hospital, Lutheran Hospital (see LUTHERAN MEDICAL CENTER), Provident Hospital, Grace Hospital (see GRACE HOSPITAL ASSN.), St. Ann’s Hospital (see SAINT ANN FOUNDATION), and ST. ALEXIS HOSPITAL MEDICAL CENTER, drew the majority of their cases from their own vicinity. A second group, which included Huron Road, Lakeside, City, Mt. Sinai (see MT. SINAI MEDICAL CENTER), St. Luke’s, and St. Vincent’s, no longer served just their immediate neighborhoods but drew patients from all regions of Cleveland. Together these last 6 hospitals contained 60% (1,812 beds) of the total capacity (3,088 beds) of the 20 hospitals belonging to the Cleveland Hospital Council (see CLEVELAND HOSPITAL ASSN.) in 1920. Several hospitals in this second group led the move toward the suburbs between 1915-35. They were prompted by the need to renew aging physical plants and lured by locations closer to a middle-class clientele better able to pay for hospital care. Mt. Sinai initiated this relocation in 1916, moving to the present UNIVERSITY CIRCLE area. It was followed by WOMAN’S GENERAL HOSPITAL, Lakeside, Maternity (later MacDonald), and Rainbow hospitals, which had all opened new buildings adjacent to WRU by 1931. This first wave of urban flight culminated with the relocation of St. Luke’s on Shaker Boulevard (1927) and Huron Road in EAST CLEVELAND (1935).

During the Depression, Cleveland hospitals confronted economic uncertainties by turning to a group medical insurance plan now known as Blue Cross (seeBLUE CROSS OF NORTHEAST OHIO). Under early versions of Blue Cross, first instituted in Dallas, TX, in 1929, individual hospitals concluded contracts with subscribing groups to provide hospitalization in return for a set annual fee. In Cleveland, no single hospital plan took hold. Instead, in 1934 the Cleveland Hospital Council initiated a citywide plan in which cooperating hospitals agreed to provide service on a prepaid basis. By this arrangement, Blue Cross enabled voluntary hospitals in Cleveland to maintain a steady level of bed occupancy while also preventing competition for patients among member hospitals. In 1938 Cleveland’s Blue Cross became the first prepayment plan in the U.S. to reimburse hospitals on the basis of cost, a move made possible by the growth of its subscriber group to over 100,000. Over the following decades, Blue Cross emerged as the dominant form of hospitalization insurance in Greater Cleveland, covering 70% of Cuyahoga County hospital patients on the eve of Medicare in 1965.

The economic stability provided by Blue Cross, combined with advances in surgery and diagnostic technologies, encouraged considerable expansion of hospitals in Cleveland following World War II. The number of beds in general medical-surgical and maternity hospitals in Cuyahoga County grew 20% between 1952-60 (from 5,197 to 6,636) and 30% between 1960-75 (from 6,636 to 9,666). The enlargement of existing facilities and the creation of new hospitals (PARMA COMMUNITY GENERAL HOSPITAL, BRENTWOOD HOSPITAL, FOREST CITY HOSPITAL, and SUBURBAN COMMUNITY HOSPITAL) were financed by bond issues in the case of publicly supported hospitals and by individual, corporate, and foundation contributions and reserve funds for depreciation in the case of voluntary hospitals. Federal grants, available chiefly through the provisions of the Hospital Survey & Construction Act (1946, known as the Hill-Burton Act in honor of its legislative sponsors, Senator Harold Burton of Ohio and Senator Lister Hill of Alabama) [PL 79-725, Title VI of the Public Health Service Act], played only a supplementary role in hospital growth in Cleveland and Cuyahoga County before the mid-1960s. However, federal assistance in the form of Medicare and Medicaid did become an important source of general revenue for Cleveland hospitals after 1965; by 1980 Medicare and Medicaid constituted 41% of hospital patient revenues in Cleveland and 38% in the suburban sections of the county. At the same time that hospitals underwent physical expansion, population growth slowed and then declined in Cleveland and the vicinity. Between 1960-70, population in Cuyahoga County grew only 4% (from 1,647,895 to 1,721,300), then declined 7% between 1970-80 (from 1,721,300 to 1,499,167). The net result was that the county, and especially the City of Cleveland, had a surplus of hospital beds, which often fell below the 85% occupancy rate considered optimal for voluntary hospitals. Low occupancy, together with the financial burden of construction or renovation and the cost of maintaining specialized services, led to a steady increase in per diem hospital costs to patients or their insurers. The average cost per patient day in Cleveland hospitals rose from $28.40 in 1957 to $268 in 1980. The hospitals of Cleveland and related agencies confronted spiraling health costs in a number of ways, especially with regional hospital and health planning, the imposition of cost ceilings by third-party insurers (Blue Cross and others), and the creation of health maintenance organizations (HMOs).

Regional hospital planning in Cleveland began with the formation of the Cleveland Hospital Council in 1916. This organization engaged Haven Emerson, health commissioner of New York City, to investigate and report on the institutional network responsible for health care in Cleveland. His findings were presented in the Cleveland Hospital and Health Survey (1920), a landmark study in the field. However, this publication did not result in any coherent program of health care planning; area hospitals continued to pursue separate institutional goals without coordination. The next major attempt to institute regional planning came in 1941, when HAROLD BURTON†, mayor of Cleveland, appointed the Joint Hospital Committee. Created to consider the anticipated resurgence of hospital construction following World War II, the committee included representatives of the city of Cleveland, the Cleveland Welfare Federation, and the Cleveland Hospital Council. The role of this local body was soon effectively eclipsed by state agencies, which were given principal health-planning responsibilities under the Hospital Construction & Survey Act in 1946. The concept of regional planning was not revived until 1966, when the Comprehensive Health Planning Act returned planning responsibilities to local agencies. In northeast Ohio this role was assumed by the Comprehensive Health Planning Agency (CHPA), which served Cuyahoga, Lake, Geauga, and Medina counties. The CHPA, later known as theMETROPOLITAN HEALTH PLANNING CORP., commissioned studies of existing health-care facilities, determined the strengths and weaknesses of the region’s hospital system, and assessed the validity of requests by area hospitals for expansion of facilities, particularly regarding state and federal funding for new construction. Although the MHPC initially acted in a consultative capacity, its designation by the federal government as a Health Systems Agency increased its influence and power in regional health planning.

Imposition of cost ceilings upon Cleveland-area hospitals has come from 2 principal sources since the advent of Medicare in 1965. At first, Blue Cross reimbursed hospitals on the basis of cost instead of a schedule of negotiated rates. This arrangement was altered by state legislation in 1972 and 1976 that prohibited hospitals from controlling the boards of Ohio Blue Cross plans and that admonished such plans to eliminate waste and unnecessary services. In 1987 Blue Cross and Blue Shield of Ohio, along with other state health insurers, won further leverage in their efforts to contain costs with passage of the state Hospital Insurance Reform Act, which gave them the right to negotiate rates with hospitals. A second, more far-reaching challenge to hospital-determined costs for medical care came in Oct. 1983, when Medicare began the transition to a payment schedule based on diagnosis-related groups (DRGs), instead of actual costs incurred for hospital care. The intent of the DRG program was to curb inflationary trends by basing payment on the characteristics of the patient’s illness, rather than on the demands of hospitals.

It is still too soon to assess all the consequences of these changes in hospital administration and finance, but one trend is already apparent: the shift to health maintenance organizations (HMOs) as a means for hospitals to introduce or cooperate with a prepaid group plan for payment of medical costs. HMOs were preceded by the prepaid group practice, with origins in the health-care programs of INDUSTRY and RAILROADS. These employers engaged profit-making firms of physicians and surgeons to provide medical services at clinics and small hospitals financed by industrialists’ subscriptions and workers’ salary deductions. Corporate sponsorship of such prepaid programs began in America ca. 1910 in the Pacific Northwest and did not spread to other regions until 1930. In Cleveland, employers did not have to resort to this form of “welfare capitalism,” since many hospitals readily accommodated the industrial workforce under Blue Cross plans. Organized labor, however, saw the desirability of a prepaid group plan for workers, and in 1964 labor unions in Cleveland formed the Community Health Foundation. This HMO provided routine medical care in the offices of several private physicians and hospital care in cooperating local institutions. In 1969 the Community Health Foundation joined with the KAISER PERMANENTE MEDICAL CARE PROGRAM to form the Kaiser Community Health Foundation. By 1974 Kaiser Permanente comprised 3 separate hospital facilities in Cleveland, and by 1985 the system had become the largest HMO in the U.S., encompassing some 4.6 million members in 9 geographic regions.

In 1970 there were only 33 HMOs nationwide; by 1977 the number had grown to 183, with 6.85 million persons enrolled; by 1985 there were 323 HMOs in the U.S., with a total enrollment of 15 million. In Cleveland and the immediate vicinity of Cuyahoga County, the number of HMOs increased from 1 in 1970 (Kaiser-Permanente) to 8 in 1985.

In the 1990s, continued competition for patients and the debate over national and state health care reform gave further impetus to the shift to HMOs and set off a wave of mergers, acquisitions and affiliations. The trend in this activity was toward the vertical integration of the region’s health care industry into large, self-contained units consisting of insurers, physicians, hospitals and out-patient facilities that could offer a complete health care package to employers or groups of employers. By 1995, three prominent groups had emerged: Blue Cross and Blue Shield of Ohio, which, in addition to its health insurance and Super Blue HMO, had controlling interest in a joint venture with the four hospitals in the MERIDIA HEALTH SYSTEM, and affiliations with St. Luke’s Medical Center and Riverside Hospital in Toledo, OH; the University Hospitals Health System, which had affiliations with four hospitals and offered a broad range of outpatient services as well as the Qualchoice health insurance plan; and the Health Cleveland Network, consisting of 11 hospitals, including the Cleveland Clinic and the MetroHealth Medical Center.

By 1995, however, the Clinton administration’s plan for managed care was dead, leaving prospects for national reform uncertain at best, and Governor Voinovich’s proposal to move 1.4 million poor Ohioans into a network of HMOs paid for by Medicaid faced critical funding problems as the U.S. Congress considered turning Medicaid into a block grant program. Moreover, despite the frenzy of mergers, acquisitions and affiliations, the area’s health care providers had not yet dealt with the underlying problem of the over-capacity of hospital facilities. Given the uncertainty of governmental health care reform, it was not clear whether the vertical integration of the region’s health care system represented a step toward a managed care system, or protection of the traditional fee-for-service payment structure under the shelter of a privately operated system of prepayment.

James Edmonson

Dittrick Museum of Medical History