The “Corporatization” of U.S. Hospitals: What Can We Learn from the Nineteenth Century Industrial Experience?

Abstract

While broad parallels have been noted between the current “corporatization” of health care and developments in U.S. manufacturing in the late 19th century, there has been little in-depth analysis of these parallels. This article explores trends in the industrial organization of the hospital industry from the perspective of the manufacturing experience. Efforts to use corporate managerial techniques to rationalize hospitals have played an important role in the development of the modern structure of the hospital industry since the 1920s. But the emergence of multihospital systems is a new phenomenon. Some significant similarities exist between current conditions in the hospital industry and conditions in manufacturing at the time of the great industrial merger boom at the turn of the century. The subsequent experience of multiplant manufacturing firms created during the great industrial merger boom varied considerably. The characteristics of successful industrial consolidations arc not present in the hospital industry; but motives for consolidation exist that were not present in manufacturing, while changes in the organization of production loom in the future.