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In this post we briefly cover how and when health care became an industry, both in terms of the growth of specialized health care service and products, as well as the emergence of a market in which these products and services could be consumed. We also compare the health care industry to other consumer service industries both to show similarities, as well as important differences.

Health care in the U.S. began to organize itself as an industry during the latter half of the nineteenth century, a period when other major industrial sectors also began to emerge.  This was largely the result of the gradual shift from an agricultural to a manufacturing society, which began after the Civil War, but was much more noticeable by the 1890s, otherwise known as the Gilded Age.

According to Paul Starr, modern health care was marked by the shift from the family to the professional physician as the primary caregiver.  This resulted in the relocation of health care services from the home to the hospital and the consumption (i.e., purchase) of these services.  These changes reflected the urbanization of society and the elimination of the home and family as the focus of all economic and social activities.  It also reflected how modernization was creating a commercial society in which virtually every task and function of pre-industrial society was being transformed into a consumable commodity or service.

But the emergence of health care into the marketplace was not just a reflection of socio-economic change.  It was also due to the fact that physicians, as compared to family members, could deliver products and services that improved health outcomes.  It was not a coincidence that the 1890s saw both the introduction of immunizations and the first and only time that the average life expectancy increased by more than 10 percent in a single decade.  So changes in American society created a new class known as consumers, but scientific advances made them want to consume health care products and services because when they purchased products and services from the health care industry, it made them feel better.  It cured their colds, set their broken bones, excised their tumors, kept them from losing time on or off the job and let them live longer.

In this respect, the impetus for the growth of health care as an industry was no different than the growth of other industries that primarily sold services as consumable commodities.  For example, the leisure and hospitality industry employs roughly the same number of people as health care and between lodging, eating, gambling and cruising, probably generates the same annual revenue.  Restaurants and hotels have existed in the U.S. since colonial times, but they were small, family-owned and family-run affairs.  And with the exception of urban neighborhoods that attracted business and commercial traffic (ports, train stations, etc.,) this industry remained fragmented and non-standardized in terms of quality and delivery of goods and services.

This changed dramatically in the 1950s, when major franchises like Holiday Inn and McDonald's first recognized the existence of a whole new population of consumers; i.e., individuals and families who slept out or ate out because it was "fun."  But what distinguished the modern leisure and hospitality industry from its predecessors was not only the delivery and pricing of goods and services, but the standardization of what was being sold and consumed, as exemplified through the brand.  Wherever the consumer saw those golden arches, he could get the a Big Mac.

In the case of the health care industry, however, the brand wasn't a logo.  It was the letters M and D.  What distinguishes the health care industry from all other consumer industries is the belief on the part of consumers that what they are purchasing is the scientific expertise of the physician.  And even though, as Paul Starr demonstrates (in his brilliant books, The Social Transformation of American Medicine and Remedy and Reaction) physicians took pains to professionalize themselves by limiting competition through education and licensing, there were and there remain many health care options available to consumers.  Steve Jobs might be alive today, for example, had he trusted the scientific expertise of a physicians when his cancer was initially diagnosed.

So understanding the role of the health care industry requires an understanding of health care consumers; their identities, their expectations, the reasons why they choose to consume or not to consume the products and services of this industry.

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Comment Preferences

  •  I found this interesting and informative. (0+ / 0-)

    It would be better if you add some links to your sources.  As you continue the series, please be sure to add links.

    The spirit of liberty is the spirit which is not too sure that it is right. -- Judge Learned Hand, May 21, 1944

    by ybruti on Sun Oct 07, 2012 at 03:38:36 AM PDT

  •  One change (0+ / 0-)

    "modern health care was marked by the shift from the family to the professional physician as the primary caregiver"

    The primary caregiver was and is and will always remain the family.  The physician became the primary decision maker on the timeline you suggest.  That's the big change.  It's still the family that carries out the doctor's orders.  A very small percentage of time is spent with professionals.  Getting decision-making back to the family is a big challenge because the family lacks objectivity and information.  Professionals also lack objectivity (more procedures equals more profits) but they (we hope) have information.

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