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Who pays for hospitals?

Wooden alms box, Netherlands, 1601-1800

Wooden alms box, Netherlands, 1601-1800

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From their beginnings, hospitals have been associated with charity. In most parts of the world they were closely associated with a religious motivation to help the ill or house the poor. Benefactors would demonstrate their philanthropy by supporting a hospital. In Europe this tradition continued into the late 1500s. But hospitals were expected to use their money carefully - any lavish or magnificent gesture might cause suspicion among the benefactors. As a result, many institutions restricted admission to the carefully screened ‘deserving poor’, seen as respectable working-class individuals who would be suitably grateful for the care they received.

Who supported hospitals?

Who supported hospitals and why? Until the 1900s, subscribers were the main source of funding. Would-be founders of hospitals in the 1700s needed to identify hundreds or even thousands of subscribers, who on average promised an annual donation averaging £1, before they could begin establishing a hospital. In the 1700s a contribution of at least £40, the equivalent of a labourer’s annual income, allowed someone to become a governor of a London hospital. All subscribers, however, were entitled to visit the hospital and enquire into its management in order to ensure that their money was being well spent.

Why support hospitals?


Though charity was crucial to the foundation of hospitals, donors were not simply inspired by religious motives. In the early 1700s Bernard Mandeville, a Dutch-born physician and philosopher, was one of the first people to point out the importance of other motivations in supporting hospitals. For instance, in the 1700s and 1800s music festivals were a common way to raise money for hospitals. This provided an opportunity for the middle and upper classes to be entertained, while emphasising that their social activities had a charitable aim. Becoming a governor or subscriber was likewise an effective way to demonstrate wealth and social respectability.

Hospital staff


In Britain, until the foundation of a National Health Service in 1948, paid hospital staff were usually limited to nurses, a matron and an apothecary, often assisted by a porter. The entire institution was usually managed by a secretary, who was normally a businessman. Though women were usually restricted to marginal administrative roles, they were often active as fundraisers and hospital visitors. The most successful charity fundraisers involved literary celebrities, musicians and royalty. Money raised from literary works, such as Peter Pan, also contributed to the funds of the more fortunate English voluntary hospitals, in this case Great Ormond Street Children’s Hospital.

Complex hospital finances

By the 1800s hospital finances were becoming more complex. The introduction of Hospital Saturday and Sunday in England provided the model for church or congregational collections. Attempts to raise money included activities such as charity football matches and the Irish hospitals sweepstake. Though some businessmen, such as the American railway magnate Johns Hopkins, financed the construction of an entire hospital, ordinary workers also began to contribute greater sums to local medical charities. Workplace collections involved labourers donating pennies rather than pounds to medical charities, and were often most successful in industrial communities such as Manchester and Birmingham.

The start of prepaid medical care for the working class

In America ‘penny hospitals’ were those supported almost entirely by working-class subscriptions. These can also be regarded as the forerunners of prepayment schemes, or HMOs (health maintenance organisations), a form of prepaid health care that has become very influential in funding health care in America, among other countries.

New technology, new cost

By 1900 subscriptions at most voluntary hospitals were in decline. Costs, on the other hand, only climbed with the introduction of new technologies and procedures. By the early 1900s, at most London hospitals, subscriptions rarely amounted to much more than 10% of income. Many began to draw on investments, property and, eventually, patients to pay directly for their care. William Guy at King’s College implemented the first outpatients’ payment scheme in England in 1856. Often established and administered by medical practitioners, specialist hospitals charged most of their patients for the care they received.

The establishment of the National Health Service - coordinated medical care for all


An effort to coordinate the fundraising activities of London hospitals was first attempted in the late Victorian period, with the emergence of the King’s Fund in 1897. Nationally, funding was finally centralised and coordinated with the establishment of a National Health Service in 1948. The aim of the NHS was an ambitious one: to make health care available to all, based on need rather than the ability to pay. The scheme was financed almost completely through taxation, and care was free to all at the point of contact.

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External links:


R Stevens, In Sickness and in Wealth: American Hospitals in the Twentieth Century (New York: Basic Books, 1989)

K Waddington, Charity and the London Hospitals, 1850-1898 (Woodbridge: The Boydell Press, 2000)