The long struggle over health care in the United States has been based on a misunderstanding: the idea that the aim of the American health care system is to provide medical services. It does this, of course, but since World War II, it also has become something much more. It is now an industry that occupies a massive segment of American economic life, one on which entire communities depend for their very survival, material as well as medical. Hospitals in particular have become crucial sources of jobs and economic viability for communities around the country. Increasingly, they also have taken on responsibility for addressing their communities’ most pressing social problems, even as their own actions and practices have sometimes exacerbated those very problems.

Hospitals in particular have become crucial sources of jobs and economic viability for communities around the country

It is this centrality of hospitals—and of the health care industry more generally—across multiple facets of community life that constitutes what this book characterizes as the “hospital city.” This importance extends beyond cities alone. Hospitals and health care are dominant forces in suburban and rural communities as well.

It is this centrality of hospitals—and of the health care industry more generally—across multiple facets of community life that constitutes what this book characterizes as the “hospital city”

In all such areas, the social and economic functions of health care have become particularly important as older sources of community viability have disappeared. Yet cities, especially those that have experienced massive deindustrialization alongside the intentional concentration of racialized poverty, offer especially incisive insights into this phenomenon and its significance. The role and significance of the hospital city constitutes the first of three core concerns of this book.

Simultaneously, these same hospitals are also a key source of the U.S. health system’s excessive costs relative to other countries. It is those very costs that underwrite hospitals’ vital economic, social, and medical functions. Yet those costs have made the system immensely difficult to reform in a comprehensive manner. This is because of the top-line expense that they impose on all proposals for expanded coverage of Americans lacking health insurance and because such spending creates a range of influential interests that would be directly harmed by cost reduction. Quite simply, reformers have been unable to overcome the reality that most members of Congress not only have a hospital in their district but also constituents who depend on it for both medical care and jobs. This relationship between the hospital city and the struggle for reform represents the book’s second core concern: the broader political, economic, and social framework that constitutes—and limits—the “health care nation.”

Quite simply, reformers have been unable to overcome the reality that most members of Congress not only have a hospital in their district but also constituents who depend on it for both medical care and jobs

The third focus of Hospital City, Health Care Nation lies in how the hospital city has contributed to serious problems of racially unequal access to health care. This issue is tied most obviously to lack of universal health insurance, but this story is incomplete. Racial inequity in the hospital city reflects not only inequalities in access to insurance coverage but also in housing, income, and education. Where a person lives and how much they earn affects where they are treated and the quality of care they receive. In the United States, such determinants have been profoundly shaped by both systemic and institutional discrimination. This has produced deep racial disparities in health outcomes. These disparities have been exacerbated by a history of unequal and discriminatory treatment, beginning in slavery and extending through the rise of scientific medicine, by medical professionals and—especially—hospitals.

Where a person lives and how much they earn affects where they are treated and the quality of care they receive

How has this happened? What forces, choices, and policies created the hospital city, with all its consequences? The answer lies in the dysfunctional system through which the United States finances the health care of its citizens. Readers who have followed the debates, now many decades old, over how best to provide health insurance will not be shocked by that general observation. The specific nature and underlying cause of that dysfunction, though, is less familiar but critical to understanding the crisis facing American health care. The problem lies not merely in the malfeasance of private insurance companies but in the way that the system, in both its public and private components, pays hospitals and funds their capital needs. That payment system, rooted in larger financing structures, has forced hospitals to engage in competitive profit-seeking behavior simply to survive. When combined with pervasive dysfunction in the “market” for hospital services, this has driven costs higher, constrained reform, limited access, generated inequalities—and made possible the emergence of the hospital city as the economic backbone of American communities.

That payment system, rooted in larger financing structures, has forced hospitals to engage in competitive profit-seeking behavior simply to survive

The problem, then, is much worse than most Americans understand. It is not simply a matter of replacing private insurance with a public system. It is a matter of fundamentally restructuring the provider payment system, embedded as it is within existing models of health care finance, even as coverage and equity questions are addressed. Such a solution requires altering how hospitals are reimbursed for their legitimate operating expenses and how their capital costs are funded. A single-payer system would make such steps easier, but its success would also depend on their implementation. The conundrum is that the opposition generated by the requisite changes to the payment system would make achieving a shift to single-payer much harder.

It is not simply a matter of replacing private insurance with a public system

In addition, such a transformation must be accomplished without devastating the communities that now depend on the health care economy for survival. A simplistic approach of “cutting hospital costs” would do exactly that, along with hurting those who rely on these institutions for care—even as they experience disparate health outcomes. We must, in other words, devise viable and sustainable modes of community economic development that include health care jobs but avoid overreliance on them. Simultaneously, we must develop a more rational structure for funding and paying hospitals.

Excerpted from Hospital City, Health Care Nation, published by University of Pennsylvania Press ©2023