George Bugbee, the AHA’s executive director and the main Washington lobbyist for the nonprofit hospital sector, worked closely with Surgeon General Thomas Parran to flesh out details of what in 1946 would become the Hill-Burton Act. The bill provided nearly $4 billion for nonprofit hospital construction during the 1950s and 1960s. This money ensured that communities would have hospitals—but it offered no legal commitment to providing Americans with health or hospital care.
While the Hill-Burton Act generated strong bipartisan support, there was fierce disagreement as to whether it would be a starting point or an end point. Conservatives like Sen. Robert Taft (R-Ohio) strongly believed that the bill, along with legislation that subsidized employer-based health insurance and provided grants to states to care for the medically indigent, would solve the problem of access to medical care. Liberals, by contrast, worried that Hill-Burton would result in taxpayers subsidizing a health care system with no promises that Americans could afford care.
These fears proved founded. Hill-Burton catalyzed a hospital building boom that included 40% of the counties that lacked a hospital in 1945. Yet, hospital prices continued to increase, and many patients at nonprofit hospitals could not—or would not, according to hospital administrators—pay their bills.
Hill-Burton required nonprofit hospitals that received construction funding to provide a “reasonable volume” of free care to residents who could not afford to pay. But no regulation stipulated what constituted a reasonable volume.
That freed the AHA and state hospital associations to encourage member hospitals to aggressively pursue the increasing number of patients who couldn’t afford their bills. The association prodded hospitals to make every effort to collect payment at the time of admission for uninsured and under-insured patients. In 1950, for example, one administrator in Warsaw, N.Y., wrote that the hospital’s follow-up cards have “given us excellent results in securing payment from delinquent accounts, [and] the follow-up procedure starts the moment of the patient’s admission.”
Recognizing, however, that hounding patients to pay bills could create backlash, the AHA and state associations taught nonprofit hospitals how to conduct public relations campaigns to spin such efforts.
Throughout the 1950s, AHA’s monthly journal Hospitals counseled members on how to explain why costs kept increasing and why patient bills were necessary. One such article by Hiram Sibley, the executive director of the Connecticut Hospital Association, advised hospital executives to tout “new equipment” and “hospital expansion,” and explain how they’d benefit patients and the community. That would enable executives to show “how medical developments must be reflected in the patients’ bills.” As Bugbee put it, hospitals needed to “Exploit these exciting and dramatic” advancements instead of apologizing for their bills.