The Barnes Foundation: Comments on the Economics of Art (2)

In 1951, Albert C. Barnes' legacy included

Jerome's Epistle to Paulinus from the Gutenberg Bible

a novel institution for art education, centered on a notable collection of illustrative art works, housed in a museum of his own general design for the purpose. He left a multi-million dollar endowment to support his rather detailed and, in the opinion of many, somewhat eccentric intentions. It was his money, however, so his word was final. The institution was fairly mature, having previously been in operation under his direct control for twenty-five years.

Since the Foundation trustees are now before the Orphans Court pleading for permission to modify Dr. Barnes' instructions in order to avoid financial collapse, skepticism is inevitable. Obviously, the successor trustees must explain their expenses. But quite a plausible case can be made that the true cause of this disaster is inherent in the huge windfall growth in value of the paintings. In short, growth in value of the fine art may have outstripped growth of the resources set aside for maintenance.

Johann Gutenberg, creator of mass produced books, died in poverty

Let's make a benchmark of the Gutenberg Bible, where incomplete copies are currently selling for $100,000 a page, and complete copies are estimated to be worth $100 million apiece. Dealers maintain the Gutenberg is increasing in value at 20% a year, but growth seems closer to 9% a year if you go back to 1951. What's really relevant here is the growth in cost to insure, protect, dehumidify, display and make it available to scholars, if not the public. It seems safe to guess these maintenance costs have grown more rapidly than the investment growth of the endowment, which is surely closer to 4% than 20%. The imbalance is even greater if you remember that some investment income is spent every year, while the worth of the fine art just grows and grows. Regardless of the true numbers, if the cost of maintaining the art does grow even slightly faster than the endowment, the dilemma the Barnes is now facing will eventually face any museum. New sources of revenue, either from the government or from public admissions, eventually becomes necessary if the priceless art remains on display. It is displaying these things that costs money; burying them under an Aztec mound or a German salt mine shelters them from the problem. In the case of Alfred Barnes, it is not completely certain that he wanted them displayed.

There is also the issue of quirky fluctuations in the market for fine art. The 22 known perfect copies of Gutenberg Bibles have been around for almost five hundred years, and it is safe to say their value is enduring. The 180 paintings by Renoir now owned by the Barnes may prove to be Gutenberg Bibles or they may prove to be a passing fad, but it is pretty hard to believe that one of them will always be worth two Gutenbergs. Since there is a pretty fair chance that we are currently seeing a value bubble in French Impressionist painting, it is questionably prudent to shipwreck the whole Barnes Foundation, the School, or Albert C. Barnes basic intent, by resisting the sale of even one of the more overpriced examples in the collection at the top of the market.

That's one side of it. Another consideration is that Barnes himself did considerable merger negotiation with other museums, and may have been unexpectedly killed in an auto accident before he turned over all his cards in that particular poker game. It's asking a lot of the poor judge to overturn the clear and largely unmistakable language of Barnes will in favor of theories about what Barnes was really really thinking when he wrote it. If the judge is feeling adventurous, it's probably more satisfying to all parties if he sets forth a new legal doctrine, reflecting the inevitable disparity between the cost of displaying fine art to the public, and providing a perpetual endowment to do so.

Albert C. Barnes

A private investor has the general goal of accumulating enough wealth so, come what may, there will be a little left when he dies. If he has dependents or heirs, he needs somewhat more. Either way, he is not planning for perpetuity, or thinking in astronomical time periods. Albert C. Barnes (1872-1951) had to switch his investment goals, in the 1920s, from investing for a comfortable retirement to investing for a perpetual art foundation. Perpetual.

A bottle of Argyrol

Having graduated from medical school (University of Pennsylvania) in 1902, and then writing a doctoral thesis in chemistry and pharmacology at the Universities of Berlin and Heidelberg, Barnes invented a patent medicine that quickly made him rich. Argyrol was a mildly effective silver-containing antiseptic with the unfortunate tendency to turn its users permanently slate-gray. The advent of antibiotics has since made Argyrol almost sound like quackery, but it was effective enough at the time to require factories in America, Europe and Australia, and Barnes became immensely rich with it. The American Medical Association strongly disapproves of physicians who patent remedies, so Barnes was never held in high regard by his colleagues; but it could well be argued that he had as much training as a chemist as a physician, and spent his entire professional life as a chemist, manufacturer, and investor.

The Barnes Gallery

Barnes was eccentric, all right, but on Wall Street the saying goes, "What everyone knows, isn't worth knowing." Guided by that principle, in 1929 he sold his company at the very peak of market euphoria, getting out of common stocks at the top of the market. It is small wonder that he soon instructed his Foundation to invest its endowment entirely in bonds. During the 1930s, commodities were extremely cheap because no one had any money. Barnes of course had a potful of money, and bought hundreds, even thousands, of art works very cheaply. He also bought 137 acres of Chester County, PA, real estate, and a 12-acre arboretum in Merion Township on the Main Line. Although he is famous for acquiring hundreds of French Impressionist paintings with the advice of Gertrude Stein and her brother Leo, he also bought great quantities of Greek and Roman classical art, African art, and the art of the Pennsylvania German community. He picked up a notable collection of metallic art objects. Most of these "losers" are down in the basement, because he had so many Renoirs, Matisse, and Picasso (some of them maybe worth $200 million apiece) that the upstairs galleries were pretty well stuffed with them. Viewed from the perspective of an investor with a goal of perpetuity, of course, the things in the basement just happen to be temporarily out of fashionn, just like those bonds in the portfolio.

A view inside the Barnes gallery

Since the Foundation is currently strapped for ready cash, Judge Stanley Ott of the Montgomery County Orphans Court is now being urged to allow the Foundation to break Barnes' will in some way or other. Move the museum to downtown Philadelphia where it can attract more paying visitors. Sell some of that land. Sell some of those paintings in the cellar. Fire some of those employees. But all of these suggestions are short-term solutions, which may injure the long term. Everybody has an idea of what Barnes the rich eccentric would have done if he were alive to do it, but I suspect he would have rejected the whole lot. Barnes the shrewd investor would have taken the most expensive painting off the wall, and sold it to the highest bidder. Buy low, sell high, and the niceties of non-profit professionals be damned. Barnes wasn't in love with one single painting, or one particular school of painterly interpretation, he was in love with Art.

Investment theory has improved in the past fifty years; there have even been some Nobel prizes awarded for new insights. But it still isn't possible to put an investment portfolio on auto pilot for perpetuity. Every museum, university and foundation has the same problem, with the result that the landscape is littered with the bones of perpetual organizations destroyed by following a fixed formula. With the singular success that Barnes displayed, it isn't surprising that he went a little too far with instructing his successor trustees in what to invest in. Never sell the paintings or the real estate, avoid common stock, were ideas that worked brilliantly, and may even work most of the time. But sooner or later, the institution will be endangered by following them too literally. Somebody has to have some flexibility. But there is something else that is inevitable, too. Sooner or later, whether it takes fifty years or five hundred years, sooner or later someone will be given the responsibility and the necessary flexibility -- but will try to run off with the boodle, for himself. The balance between necessary prudence and necessary flexibility is impossible to maintain forever, and the Judge will surely have a hard time deciding what Barnes would have decided.

Kenneth Gordon, MD, Hero of Valley Forge

Valley Forge

There's no statue of Ken Gordon at Valley Forge National Park, although it would be appropriate. No building is named after him; it's probable he isn't even eligible to be buried there. But there would be no park to visit at Valley Forge without his strenuous exertions.

Governor Milton Shapp

One day, Ken's seventh grade daughter came home from school with the news that the father of one of her classmates said that Valley Forge Park was going to be turned into a high-rise development. That's known as hearsay, and lots of things you hear in seventh grade are best ignored. But this happened to be substantially true. At that time, the Park was owned by the Commonwealth of Pennsylvania, and Governor Shappwas finding the upkeep on the Park was an expense he needed to reduce. The historic area had two components, the headquarters area, and the encampment area. One part would become high-rise development and the other would become a Veteran's Administration cemetery. Although any form of rezoning has the familiar sound of politics to it, Dr. Gordon (a child psychiatrist) had the impression that Shapp was mostly interested in reducing state expenses, and had no particular objection to some better use of the historic area. At any rate, when Gordon went to see him, he said that he would agree to a historic park if Gordon could raise the money somehow.

Dick Schulze

Well, the sympathetic civil servants at the Natioanal Park Service told him how it was. You get the consent of the local Congressman (Dick Shulze) and it will happen. If you don't get his consent, it won't happen. It seemed a simple thing to visit the Congressman, persuade him of the value of the idea, and it was all done; who could refuse? After the manner of politicians,Schulze never did refuse, but he somehow never got around to agreeing, either. It takes a little time to learn the political game, but after a reasonable time the National Park employees told Gordon he was licked. Too bad, give up.

Ronald Regan

He didn't give up, he went to see his Senators, at that time Scott and Clark. They thought it was a splendid idea, and instead of going pleasantly limp, they sent Citizen Gordon over to see Senator Johnson of Louisiana, the chairman of a relevant committee. Johnson really thought it was a great idea, and called out, "Get me a bill writer!" A bill writer is usually a government lawyer, with the task of listening to some citizen's idea and translating it into that strange language of laws -- section 8(34), sub-chapter X is hereby changed to, etcetera. Bill writers have to be pretty good at it, or otherwise they will misunderstand the intent of the original idea, the personal spin of the committee chairman, the comments of the authorizing committee, and the bargains struck in the House-Senate conference committee. Having negotiated all those hurdles, the bill has to be written in such a prescribed manner that it won't be found to have multiple loopholes when it later reaches the courts in a dispute. A good deal of the time of our courts is taken up with making sense of some careless wording by bill writers. That's what is known as the "Intent of Congress", an ingredient that may or may not survive the whole process.

Ken Gordon had to go through this process, including testimony at hearings, for three separate congressional committees. To get everybody's attention, he organized several hundred supporters to write letters and get petitions signed by several thousand voters. These supporters in turn influenced the media, and started a lot of what is known as buzz. All of this is an awful lot of work, but there is one thing about this case that can make us all proud. Not once did a politician suggest a campaign contribution was essential in this matter.

In time, ownership of the Park did in fact migrate from the Commonwealth to the U.S. Departmentof the Interior, hence to the National Parks Service. Everyone agrees that it has been well managed, and increasing droves of visitors come there every year. It is now clearly a national treasure. Unfortunately, the encampment area got away, and has been commercially developed, although not nearly as high-rise as originally contemplated. Along the way, many discouraging words were spoken about the futility of fighting against such odds. The outcome, however, is the embodiment of two slogans, the first by Ronald Reagan. "It's amazing what can be accomplished, if you don't care who gets the credit for it." And the other slogan is older, and Quaker. All you need, to accomplish anything, is leadership. And leadership -- is one person.

One day Ken Gordon, the very busy doctor, was asked how much of his time was taken by this effort. His answer was, ten hours a week, every week for five years.

Victor Rambo, Indian Eye Surgeon

Rambo

There have been at least twelve documented generations of the Rambo family in Philadelphia. Historical justification can be found for the idea that this was the first family to settle within what are now the city limits. Victor Clough Rambo MD was an unpaid Internet at the Pennsylvania Hospital in 1927; you will find his nameplate on the wall.

Victor early made up his mind that he was going to go where he could do the most good. Considerable thought led him to learn how to extract cataracts, and go to India to extract as many as he could. From time to time, he would return to America to visit family, and to give some speeches to raise money for his project.

The builders of our enormously costly hospital castles might give some thought to the fact that Victor did most of his surgery in tents. His system was to send out teams to the next two villages, wherever he was, with the news, "Bring in your blind people, the eye doctor is coming." When he then arrived, he set about operating on cataracts from dawn to dusk, in a country where the supply of cataracts was essentially unlimited. There was no time to operate on the comparatively minor visual disturbances so commonly treated in America today; he had to concentrate on people who were really blind, and in both eyes.

He wrote a book about his experiences, Apostle of Sight: The Story of Victor Rambo, Surgeon to India's Blind" and perhaps there you could find the data to calculate the number of people who were restored to a useful existence by his efforts. Surely, it was thousands. He just kept going at it, and when he died he was a very old man.

A Toast To J. William White, MD

JWilliam White left a legacy to the Franklin Inn, the income from which was to pay for an annual dinner, with all the trimmings. Good as its word, the Inn holds the J. William White dinner every year on Benjamin Franklin's birthday, although inflation and fluctuations of the stock market require it to make a modest charge for attendance. White also created the J. William White Professorship in Surgery at the University of Pennsylvania, a chair which was once occupied by Jonathan Rhoads.

William J White MD

These trust-fund memorials do little to convey the wild and glamorous image of Bill White. White was a member of the First City Troop, and fought the last known honest-to-goodness duel on Philadelphia's field of honor (the center of Rittenhouse Square). The right and wrong of the argument are in dispute, but the details boiled down to White at the critical moment raising his gun to the sky and firing at the stars. That it was not a meaningless gesture was then brought out by his opponent taking slow and deadly aim -- but missing him.

White was an academic in the sense that he was the first, unpaid, Professor of Physical Culture at the University of Pennsylvania. Active in the Mask and Wig Club, he was chief surgeon at Philadelphia General Hospital, chief surgeon to the Philadelphia Police, and chief surgeon to the Pennsylvania Rail Road. He was Chairman of the Fairmount Park Commission, and numerous other positions where political contact was more important than surgical skill. When World War I came along, he was off to France with the University of Pennsylvania Hospital Unit, writing two books with Theodore Roosevelt. Although his friendship with Henry James suggests greater literary talent, Roosevelt published more than thirty books. What emerges from the history of Bill White is flamboyance and lots and lots of unfettered energy. He might feel a little out of place at one of his endowed dinners today, but he was probably always a little out of place in any company -- and didn't care a whit.

A Toast To Silas Weir Mitchell, MD

Silas Weir Mitchell

Silas Weir Mitchell lived to be an old man during the Nineteenth Century, when it was unusual to get very old. He was an important part of both the Philadelphia medical scene, and the literary one. He became known as the Father of American Neurology as a published studies of nerve injuries caused by the Civil War. He published about 150 scientific papers, including famous investigations of the neurological effects of rattlesnake venom. His most famous medical treatment was the "rest cure" for hysteria, while his most enduring scientific discovery was the phenomenon of causalgia. He despised Freud, and psychonanalysis. No doubt the feeling was mutual, but the passage of time has tended to favor Mitchell more than Freud. The central role of sex is the essence of Freud's viewpoint, while Mitchell's is summarized in the remark that, "those who do not know sick women, do not know women."Struggling medical students can take heart from the well-documented fact that Mitchell applied to the Pennsylvania Hospital for an internship, and was rejected. Upset by the experience, he toured Europe for a year and applied again. He was again rejected. He later applied for the faculty at Jefferson, and was rejected, but his reaction to that was one of rage and vengeance. Just what these two episodes out of Philadelphia medical politics really mean, remains to be clarified by Mitchell's biographers.

Franklin Inn

Mitchell's second career was literary, publishing 12 novels and 5 books of poetry. He is honored as the founder of the Franklin Inn Club, for a century home to every important literary figure in Philadelphia. It is striking that he selected Benjamin Franklin as the guiding star of the Inn, since Franklin similarly was eminent in both science and culture, and an ornament to conversation and society. In a pacifist Quaker City, both men approved of combat, and his novel about Hugh Wynne stresses that his hero was a "Free Quaker, meaning one who fought in the Revolution. Because of his strong Republican views, he was never made a professor at the local medical school.

College of Physicians

Mitchell's patient Andrew Carnegie donated the funds to build a new building for the College of Physicians when Mitchell was its President. When Mitchell was president of the Franklin Inn, Carnegie wrote him, asking for suggestions about donating a small sum, say five or ten million, and asking where it should go. That was the Inn's big chance, all right, but somehow it failed the test. Mitchell suggested that the money be given to raise the salaries of college professors, thus perhaps suggesting that this veteran of many academic revolts did eventually soften his views.

Discipline for the Disciple

I.S.Ravdin was President Eisenhower's surgeon; Chick Koop was President Reagan's Surgeon General. Both of them were overshadowed by Jonathan Rhoads. Even in a physical sense, this was true. Rhoads was a foot taller than almost anyone. Big bones, too.

During the Second World War, Ravdin led almost every doctor in the University of Pennsylvania off to some military hospital unit or other, and in fact the 900 bed hospital in Philadelphia was left with only two surgeons, Koop and Rhoads, ineligible for military service because of previous tuberculosis. Koop was a first year resident in training, so for practical purposes Rhoads was the only surgeon. Even after eliminating purely elective or optional surgery, the work load was staggering, and the number of operations was prodigious.

Rhoads devised a system. The young trainee, Koop, would do the time-consuming work of opening the belly wall and Rhoads would then do the internal surgery, following which Koop would close the wound while Rhoads was operating on another patient. As Koop told the story at Rhoads' 90th birthday celebration, one day a patient was to have his gall bladder removed. Rhoads told him to open the wound, first the skin, then the fascial layer, then the peritoneum, while he was finishing up with another patient in another room. At that point, Rhoads felt he would be able to come in and remove the gall bladder. Most gall blabbers are firmly attached to the nearby liver, and must be shaved loose before it is possible to put a clamp around the base to remove them.

On this day, two things were different. Rhoads was delayed in the other room because of some complication, and Koop was just standing around waiting. The other thing that was different was that this particular gall bladder was not attached to the liver at all, but was just flopping around in the belly. When Rhoads continued to be delayed, Koop just went ahead and clipped off the gall bladder; more time elapsed. So he carefully sewed up the peritoneal layer, then the fascial layer, then the skin, stitch by stitch. He was standing there pretty pleased with himself when the doors finally banged open and Rhoads came charging into the operating room.

Koop offered some explanation in a faltering way, but Rhoads did not say a word. A large elbow on a huge arm silently but forcefully brushed Koop off to one side in a single movement. Rhoads then took out each stitch in the skin, then the stitches in the fascia, then the stitches in the peritoneum. He peered into the cavity, inspected the former bed of the gall bladder. Finding things in good order, he then resutured the peritoneum, then the fascia, then the skin. Without a word, he then strode from the room, leaving the future Surgeon General never to forget the lesson he had been taught.

Nobel Prize: Michael Brown, MD

Michael Brown

The College of Physicians of Philadelphia annually sponsors a lecture by a winner of the Nobel Prize in Medicine or Physiology. There is never any question of the high quality of the lecture, but it does add an element of local pride whenever the Nobel Laureate comes from Philadelphia, as he did this year. Michael S. Brown, MD graduated from Cheltenham high school in 1958, received a B.A. from the University of Pennsylvania in 1962, and his M.D. degree in 1966. Nineteen years later, he was awarded the Nobel Prize in Medicine for his work in describing the cholesterol pathways, and the human defects in it which lead to heart attacks, strokes and other consequences of atherosclerosis. Almost immediately, Japanese investigators found the so-called stain drugs being produced by relatives of the penicillin mold for no particularly obvious purpose. The patents have not yet expired on most of these drugs, but many millions of people have already been spared death or disability from hardening of the arteries, the commonest killer in modern life.

The speaker, now a gastroenterologist practicing in Texas, chose to organize his talk around the manner in which biochemical discoveries are currently being made. Physicians in medical research endure news media presentations, usually in silence, of scientific research performed by basic scientists with PhD degrees, with physicians then merely dispensing the drugs. It sometimes happens that way, but in general the basic scientist is too highly focused on the techniques of the scientific cutting edge to be well positioned to see the direction that should be taken next. The physician scientist, on the other hand, is aching to find a solution to current problems, but often lacks the necessary technical skills to perform the experiment. James Shannon, one of the early directors of the National Institutes of Health, recognized this mutual deficiency was impairing progress and set about establishing training programs for cross-fertilization between the scientific approaches. Dr. Brown was one of the early trainees of that program, and now describes its glories, going from the patient bedside to the scientific laboratory bench, and then back to bedside to test the results. Competition has morphed into collaboration.

Some day, someone will conduct a study of Nobel Laureates, seeking out the traits which characterize them. The next step after that would probably be cloning them, although public opinion will first have to catch up with that thought. From an observers point of view, they all seem gifted with the ability to give a logical, entertaining and succinct description of a complicated matter. Almost all of them are located in very large research environments, where news of small scientific discoveries in obscure scientific journals is quickly picked up by a hundred eyeballs, filtered for the benefit of the local enthusiast of the topic, and fitted together with something that enthusiast has discovered but not published, or published too recently to be well known. Research is not just expert marksmanship, it is marksmanship within a boiling cauldron of undigested facts. One other thing about Nobel Laureates: as a group, they tend to drive over the speed limit, even when going to the local supermarket.

Anyway, it's real nice to take the statin drug and watch your cholesterol go down, secure in the knowledge that invisibly your longevity is improved. There's just nothing more attractive than having more longevity. At least, it's hard to imagine what could replace it in attractiveness.

Contemporary Germantown

The Strittmatter Award is the most prestigious honor given by the Philadelphia County Medical Society, and is named after a famous and revered physician who was President of the society in the 1920s. There is usually a dinner given before the award ceremony, where all of the prior recipients of the award show up to welcome to this year's new honoree.

Bockus

This is the reason that Henry Bockus and Jonathan Rhoads were sitting at the same table, some time around 1975. Bockus had written a famous multi-volume textbook of gastroenterology which had an unusually long run because it was published before World War II and had no competition during the War or for several years afterward; to a generation of physicians, his name was almost synonymous with gastro-enterology. In addition, he was a gifted speaker, quite capable of keeping an audience on the edge of their chairs, even though after the speech it might be difficult to recall just what he had said. On this particular evening, the silver-haired oracle might have been just a wee bit tipsy.

Jonathan Rhoads had likewise written a textbook, about Surgery, and had similarly been president of dozens of national and international surgical societies. He devised a technique of feeding patients intravenously which has been the standard for many decades, and in his spare time had been a member of the Philadelphia School Board, a dominant trustee of Bryn Mawr and Haverford Colleges, and the provost of the University of Pennsylvania. Not the medical school, the whole university, and is said to have been one of the best provost of the University of Pennsylvania ever had. When he was President of of the American Philosophical Society, he engineered its endowment from three million to ten times that amount. For all these accomplishments, he was a man of few words, unusual courtesy -- and a huge appetite in keeping with his rather huge farmboy physical stature. On the evening in question, he was busy shovelling food.

"Hey, Rhoads, wherrseriland?". Jonathan's eyes rose to the questioner, but he kept his head bowed over his plate.

"HeyRhoads, werssiland?" The surgeon put down his fork and asked,"What are you talking about?"

"Well," said Bockus, "Every famous surgeon I know, has a house on an island, somewhere. Where's your island?

"Germantown," replied Rhoads, and returned attention to his dinner.

A Toast to Doctor Franklin

Benjamin Franklin

Benjamin Franklin's formal education ended with the second grade, but he must now be acknowledged as one of the most erudite men of his age. He liked to be called Doctor Franklin, although he had no medical training. He was given an honorary degree of Master of Arts by Harvard and Yale, and honorary doctorates by St.Andrew and Oxford. It is unfortunate that in our day, an honorary degree has degraded to something colleges give to wealthy alumni, or visiting politicians, or some celebrity who will fill the seats at an otherwise boring commencement ceremony. In Franklin's day, an honorary degree was awarded for significant achievements. So in that sense, it was more prestigious than an earned degree, which merely signified eligibility for later achievement.

And then, there is another subtlety of academic jostling. Physicians generally want to be addressed as Doctor, as a way of emphasizing that theirs is the older of the two learned professions. A good many PhDs respond by rejecting the title, as a way of implying they have no need to be impostors. In England, moreover, surgeons deliberately renounce the title, for reasons they will have to explain themselves. Franklin turned this foolishness on its head. He invented bifocal glasses. He invented the rubber catheter. He founded the first hospital in the country, the Pennsylvania Hospital, and he donated the books for it to create the first medical library in the country. Until the Civil war, that particular library was the largest medical library in America. Franklin wrote extensively about the gout, the causes of lead poisoning and the origins of the common cold. By inventing bar soap, it could be claimed he saved more lives from infectious disease than antibiotics have. It would be hard to find anyone with either an M.D. degree or a PhD. degree, then or now, who displayed such impressive scientific medical credentials, without earning -- any credentials at all.

Dr. Cadwalader's Hat

Dr. Thomas Cadwalader

The early Quakers disapproved of displaying your own picture, even refusing to have their names on their tombstones. Consequently, relatively few portraits of early Quakers can be found, and it is therefore surprising to see a picture of Dr. Thomas Cadwalader hanging on the wall at the Pennsylvania Hospital. A plaque relates that it was donated by a descendant in 1895. Dr. Cadwalader is still famous for his unvarying courtesy.

Pennsylvania Hospital

In one of the editions of Some Account of the Pennsylvania Hospital, I believe the one by Morton, there is a story about him. It seems there was a sailor in a bar on Eighth Street, who announced to the assemblage that he was going to go out the swinging doors of the taproom, and shoot the first man he met. So out he went, and the first man he met was Dr. Cadwalader. The kindly old gentleman smiled, took off his hat, and said, "Good Morning, Sir". And so, as the story goes, the sailor proceeded to shoot the second man he met.

I was standing at the foot of the staircase of the Pennsylvania Hospital, chatting to a young woman who from her tailored suit was obviously an administrator. I pointed out the Amity Button, and told her its story, along with the story of Jack Gallagher, whom I knew well, bouncing an empty beer keg all the way down to the Great Court from the top floor, which was then being used as housing for the resident physicians. Since the young woman administrator was obviously beginning to regard me like the Ancient Mariner, I thought one last story about courtesy was in order. So I told her about Dr. Cadwalader and the sailor.

"Well," she said, "The moral of that story obviously is that you should always wear a hat." There then being no point to further conversation, I left.

Emperor's Doctor

Kitamura Katsutoshi

As told by one of his fellow interns who is now a very old man, Kitimura was one of the best interns the Pennsylvania Hospital ever had; diligent, dependable, intelligent and infinitely polite. He married one of the hospital's nurses, and they tended to keep to themselves, especially in 1941, as war clouds began to gather. About two months before Pearl Harbor, both of them mysteriously disappeared. Kitimura's wife later wrote one of her friends that they were in Japan. After the war, it was learned that she had been placed in a concentration camp as an enemy alien, and when released, had divorced him.

Still later, it was learned that Kitimura had a distinguished medical career in Japan. He kept up a minimal sort of correspondence with his old intern pals, inviting them to visit if they were ever in Japan.

In 1985 one of them did so, going to the largest hospital in Tokyo to inquire. Great silence ensued; unfortunately, the revered and distinguished physician had recently died. You knew, of course, that he was the Emperor's personal physician.

House that Love Built: Ronald McDonald of Philadelphia

Kim Hill had the misfortune to develop leukemia, but the great luck to have Fred Hill of the Philadelphia Eagles football team for a father. Driven by gratitude for the treatment at St. Christopher's Hospital for Children

Audrey Evans

Fred demanded to be told what he could do, and was referred to Dr. Audrey Evans. This world-famous pediatric oncologist was well known for her philanthropic activities, and had frequently expressed the need for a temporary residence for families of children needing protracted medical treatments. Young children have young parents, whose savings are soon exhausted by travel, hotel and other non-insured costs related to a seriously sick child. The Hills had just been through such an experience and grasped the problem immediately, adding to it the discomfort and loneliness of families in such a situation. Fred Hill quickly enlisted the enthusiastic support of the whole professional football organization, and Jim Murray the Eagles' general manager recruited Don Tuckerman from their advertising agency, who got to Ed Rensi, the regional manager of McDonald's. Together, they got the project financed and started with a seven-bed facility near Children's Hospital of Philadelphia.

Fred Hall

In 25 years, the Philadelphia Ronald McDonald House has grown to a capacity of 44 families, in a century-old mansion at 39th and Chestnut Streets filled with Mercer tiles and the like. The operation uses eighteen volunteers at all times, runs two jitney buses, and is one huge teeming family home for people confronting a common issue, supporting each other through a wrenching emotional experience. Although it actually costs about $65 a day per family, the charge is $15 and over half of the clients cannot afford even that. Although an effort is made to have family cooking, the McDonald's restaurant chain supplies 20% of the budget along with generous help with exigencies and in-kind assistance with such things as clowns for the entertainment program, birthdays and the like. Although McDonalds's is probably the world's premier franchising corporation, every one of the 300 world-wide Ronald McDonald Houses is an independent local organization, run without a central headquarters or any sort of standards-setting and the like. Every one of the other 299 Houses got the idea from Philadelphia but proceeds in its own way. Philadelphia created it, but Philadelphia does not own the idea.

In this connection, it is probably worth reflecting on the history of this topic. When Benjamin Franklin and Dr. Thomas Bond started the Pennsylvania Hospital in 1751 at Eighth and Spruce Streets, it was the custom to be diagnosed, treated, be born and to die in your own house. The unique perception behind the nation's first hospital was that poor people generally did not have home facilities that were adequate to support home care. In Franklin's own handwriting the purpose of the Pennsylvania Hospital was stated to be "for the sick poor, and if there is room, for those who can pay." It was understood that poor sick people needed a place to take care of them, not merely for their surgery and overwhelming illness,

Philadelphia Ronald Mc Donald's House

but for convalescence and rehabilitation as well. Two centuries later, in the first thrill of founding the Medicare and Medicaid programs, it was imagined that things would remain exactly the same, only paid for by the Government. But after four or five years, it became abundantly clear that it was far too expensive to use hospitals in that way. The very act of federally paying for the program undermined its volunteer spirit, raised its mandated standards, and made it financially unsustainable. And so, although the 1965 Amendments to the Social Security Act insisted, and still pretend, that no change was to be made to the delivery of care, the delivery of care simply had to be changed. Not only was domiciliary and custodial care to be excluded, but heroic efforts were to be made to reduce the length of stay in the hospital to what would once have been regarded as special intensive care. In effect, if a type of service could normally be handled at home by non-indigent people, it was to be prohibited. Since the cost of care in hospital has continued to escalate far in excess of the cost of living, it seems unlikely we will ever go back to the days of rest and in-hospital recuperation.

So, just as Dr. Bond recognized the problem and went to Ben Franklin to handle the philanthropy, Dr. Evans had the idea and Fred Hill made it work. Around the Ronald McDonald house the idea is frequently heard expressed that every hospital needs such a place nearby, for people of all ages. Perhaps that is workable, but it offhand seems more likely that Retirement Villages, so-called CCRC, will be called on to supply this badly needed service. And that hospitals will evolve into the "focused factories" so popular in the minds at the Harvard Business School.

Eakins and Doctors

Gross Clinic

A Christmas visitor from New York announced he had read in the New York newspapers that Philadelphia's mayor had just saved a painting called The Gross Clinic, for the city of Philadelphia. The Philadelphia physicians who heard this version of events from an outsider reacted frostily, grumpily, and in stone silence. To them, the mayor was just grandstanding again, and whatever the New York newspaper reporters thought they were doing was anybody's conjecture.

Mayor John Street

Thomas Eakins is known to have painted the portraits of eighteen Philadelphia physicians. Several of these portraits have been highly praised and richly appraised, seen in the art world as part of a larger depiction of Philadelphia itself in the days of its Nineteenth century eminence. That's quite different from its colonial eminence, with George Washington, Ben Franklin, the Declaration and all that. And of course entirely different from its present overshadowed status, compared with that overpriced Disneyland eighty miles to the North. Eakins depicted the rowers on the Schuylkill, and the respectable folks of the professions, every scene reeking with Victorian reminders. It's a little hard to imagine any big-city mayor of the present century in that environment. Indeed, it is hard to imagine most contemporary Americans in a Victorian environment -- except in Philadelphia, Boston, and perhaps Baltimore. So, Mayor Street can be forgiven for not knowing exactly what stance to take, and was not alone in that position.

Pennsylvania Hospital

Philadelphia had the first hospital and the first medical school in America, but its greatest medical fame was a result of the Civil War. Anesthesia had been invented in 1840, the railroads made Philadelphia the nearest medical center to the Civil War battlefields, and the battlefields dumped hideously large numbers of devastating injuries on the city. Using temporary additions, Philadelphia General Hospital alone housed seven thousand patients. Enabled by ether anesthesia, there was nothing for it but to have the surgeons improvise new techniques. The death toll was appalling, but there was nothing unusual about that in the medical environment up until that time; those boys were surely going to die anyway, unless the surgeons invented something to help them. It was not merely surgeons, of course.

S. Weir Mitchell

S. Weir Mitchell, for example, became known as the father of neurology as a result of his studies and descriptions of wartime nerve injuries. But the repair of injuries is a surgical art, and many novel procedures were invented and even perfected, many textbooks were written. Amphitheaters were constructed around the operating tables, for students and medical visitors to watch the famous masters at work.

In The Gross Clinic, we see the flamboyant surgeon in the pit of his amphitheater at Jefferson Hospital, in the background we see anesthesia being administered. Up until the invention of anesthesia, the most prized quality in a surgeon was speed. With whiskey for the patient and several attendants to hold him down, the surgeon had one or two minutes to do his job; no patient could stand much more than that. After the introduction of anesthesia, it might overwhelm newcomers to observe leisurely nonchalance, but in truth the patient felt nothing, so the surgeon could safely pause and lecture to his nauseated admirers.

Operating Amphitheater

What made an operation dangerous was not its duration, but the subsequent complications of wound infection. By 1876, Eakins could have had no idea that Pasteur and Lister were going to address that issue in four or five years, making operations safe as well as painless. But his depiction of a surgeon with bloody bare hands, standing in Victorian formal street clothes, gives the most dramatic possible emphasis in the painting to the two most important scientific advances of the century. Modern medical students spend days or weeks learning the ceremonial of the five-minute scrubbing of hands with a stiff and somewhat painful brush, the elaborate robing of the high priest in a sterile gown by a nurse attendant, hands held high. The rubber gloves, the mystery of a face mask and cap. In some schools, the drill is to cover the hands of the neophyte with charcoal dust, blindfold him, and insist that he scrub off every speck of dirt that he cannot see, before he is admitted to the operating theater for the first time. If he brushes some object in passing, he is banished to the scrub room to start over. So the Gross Clinic has an impact on everyone who sees the surgeon in street cloths, but it is trivial compared with the impact that painting has on every medical student who has been forced to learn the stern modern ritual. For at least fifty years, that painting hung on the wall facing the main entrance to the medical school, where every student had to pass it every day. To every graduate, the lack of clean surgical technique by the famous man was a wrenching sermon on every doctor's risk of trying his utmost to do his best, but doing the wrong thing.

That painting, hanging quite high, was rather cleverly displayed to the public through a large window above the door. With clever lighting, every layman who walked along busy Walnut Street could see it, too, and it became a part of Philadelphia. That was a feature the medical community barely noticed, but it was probably the main reason for public uproar when a billionaire heiress offered the school $68 million to take the painting to Arkansas. The painting was not just an icon for the medical profession, it had become a central part of Philadelphia. Philadelphia wanted to keep that painting for a variety of reasons, and one of the main ones was probably a sense of shame that we were so poor we had to sell our family heirlooms.

The doctors didn't pay much attention to that. They were mad, plenty mad, that a Philadelphia board of trustees would appoint a president from elsewhere who would give any consideration at all to such an impertinent offer.

Mind Your Manners

Hoeffel

In 1948 I was an intern at the old Pennsylvania Hospital, assigned for a while to the accident room. One of the accident-room duties of an intern is to sew up cuts and lacerations that arrive unexpectedly, but some lacerations can be out of your pay-grade and you have to call for help. On the evening in question, the victim had been so thoroughly slashed up that I had to call the chief surgical resident, Dr. Joseph Hoeffel. Hoeffel was big, tall, loud and self-assured, and swept majestically into the accident room with a little fellow trailing him. This follower seemed less than four feet tall, but very quick and shifty. He didn't walk so much as he scuttled. Hoeffel bellowed, "Get out here!" and the gnome vanished.

While Joe was examining the laceration problem, the little fellow slipped through a different door to see what was going on. Most of us had the impression this guy might well be the one who inflicted the cuts, but in any event he didn't belong where he was. "I told you to get out of here, and stay out," bellowed our surgeon. Again the scuttler scuttled away, while Hoeffel put on a sterile gown, sterile rubber gloves, mask, cap and the whole ceremonial costume. He prepared to do his work, stamping out disease among the sick and injured, when a fist started at the floor. The little guy had slipped into the operating area once more, and soon the fist on the floor quickly flew in a wide arc, ending up on Hoeffel's jaw.

Hoeffel tumbled head over heels across the room, ending up in a corner. I don't think he was knocked out, but he was certainly dazed. The nurses called the police, who made a tumult of their own arriving to do battle. But the little fellow was gone, never to be seen again.

Fifty years later, I had occasion to preside over a meeting of the Right Angle Club, where

Hoeffel's son, the former congressman and current deputy member of the Pennsylvania Governor's cabinet, was the featured speaker. He looked remarkably like his father. I had to wonder if his father's lesson in diplomacy had made any notable effect on his progeny.

Community Volunteers in Medicine

Comm Volu In Medicine

Mary Wirshup has a very different medical background from mine, but she's my kind of doctor. I couldn't help wishing, as she addressed our urban luncheon club, there could be thousands more like her, even while understanding more fully than she seems to, the reasons why doctors are driven from her behavior model. As we parted, it felt like saying a last goodbye to the Spartans marching to Thermopylae.

As 46,000 medically uninsured persons in Chester County get sickness and injuries, they know that a Federal Law prohibits a hospital accident room from refusing to see them, so ways are found to shunt patients to the CVIM free clinic, run by volunteers. This law is in turn a response to a government-created situation where a hospital which "accepts" patients must keep them. Any economics teacher can tell you that supply/demand issues are best addressed by price adjustment, so price controls in whatever guise lead to shortages. I must say I have little sympathy with the devious strategies which hospitals often employ to disguise their rejection of uninsured patients. At the same time, I know a lifeboat will sink if too many climb aboard. Nevertheless, the semantic switch from lack of insurance to lack of care implies that only more insurance can surmount the barriers to care, which is absurd. For one thing, I know too many hospital administrators who are paid a million dollars a year, and one who is paid two million. And at least two health insurance executives are in the newspapers with net worth over a billion -- yes, that's billion with a b. We have reached a point where reducing all physician income to zero would only reduce "healthcare" costs by 10%. As I look at Dr. Wirshup's modest clothing I can only surmise she plans to continue her modest living until she is 80 years old, after which her savings might see her out. Squeezing physician reimbursement is not intended to save significant money, nor intended to restore physician incomes to more equitable levels. It is intended to address the oversupply of physicians without confronting either the universities or the foreign trained lobby.

The elite tranche of medical schools do their part to relieve physician oversupply without reducing class size, through the encouragement of their students to go into research. I was well along at the National Institutes of Health before I finally decided I had not gone into medical school with that goal, and returned to teaching and patient care in a more satisfying model not too different from CVIM's obviously Pennsylvania Dutch spirit. The Amish at the far western end of Chester County reject the whole idea of insurance; their most characteristic statement is "Don't send me no bills." That attitude is rather a contrast with the shiny housing and automobiles in the Silicon Valley developments of Southern Chester County, or even with some rather bewildered Quaker farm families scattered over the rest of the county next to the horsey set. Chester County is America.

On Second Street in Society Hill, next to the park where William Penn's house stood and a few feet from Bookbinders, is the house of Dr. Thomas Bond. Bond conceived the idea of building the first hospital in America and with Franklin's publicity machine succeeded in getting it built, to care for the "sick poor". Dr. Bond started a second enduring tradition as well. When the Legislature expressed doubt that the institution was sustainable, he pledged to convince the local medical profession to serve the poor without charge. Some of the legislators who voted for the measure did so in the belief that charity care would never appear, so the gesture would be without cost. The physicians did indeed come forward, in sufficient numbers to run many institutions for two hundred years. In 1965 health insurance made its national appearance, and has regarded the benchmark low costs of charity care as a threat, ever since.

Avian Footnote

Waldo E. Nelson was a much revered professor of Pediatrics at Temple University School of Medicine for several decades. He was the original source of fame for St. Christopher's Hospital for Children, a powerful and revered teacher, and has recently been mentioned as the "Father of Pediatrics." He died in 1997 at the age of 98.

Saint Christopher Hospital

Everyone admitted he was a demanding task-master, to the point of eccentricity. That's a quality almost essential in any editor of a multi-author textbook, because authors regularly procrastinate in submitting their contributions, while publishers have rigid deadlines and no patience at all with editors who ask to extend them. The central element in Nelson's fame was his 1600-page textbook of Pediatrics, with more authors than it is reasonable to count in the decades it was published and re-published, eventually establishing itself as the standard work in the field. Nelson applied discipline to his resident physicians, too. One former resident recently recalled his forbidding a husband and wife resident pair to eat lunch together in the hospital cafeteria. Not in my hospital, you won't.

What his family life was like is not reported, but it can easily be imagined that he had rebellious children. One day he instructed his daughter to prepare a complete index of the textbook for the next edition. Apparently there was some resistance, eventually quashed. And to emphasize how unlikely it was that anyone would read an index very carefully, the book went through editing and proof-reading, and was in the bookstores for several months before anyone noticed the entry tucked away under "Birds".

BIRDS, For the. page 1-1650.

Baruch Blumberg, Renaissance Man

College of Physicians

Baruch Blumberg may be an octogenarian, but he radiates vigor and good health; his current intellectual interests are invariably on the cutting edge. He currently serves as the president of the American Philosophical Society, was for five years the Master of Balliol College at Oxford, was the Director of Astrobiology at NASA -- all of them after he had won the Nobel Prize in Medicine, and retired from his laboratory. He likes to run and bicycle, with a long history of disconcerting the populace of China, India and Africa with early morning forays. His undergraduate major was physics, with graduate work in mathematics. He went to medical school at his father's suggestion.

Hepatitis B

The Nobel Prize was awarded for the discovery of the Hepatitis B virus, for which he developed a highly successful vaccine. It has been estimated that there are 375 million people in the world infected with this virus, and it leads in time to liver cancer, the most common form of cancer in Asia. If you set about to stamp out disease and save lives, it's advantageous to do it with an extremely prevalent disease. And then there are some surprising side-benefits. For some reason, women who are infected with Hepatitis B produce a disproportionately large number of male offspring, so that vast immunization programs in Asia are now starting to result in a larger proportion of females in the population. The lack of female children in Asian families has long been attributed to selective abortion, so it's satisfying to see an abatement of that particular slander.

Baruch Blumberg

Blumberg has twice been invited to deliver a lecture to the College of Physicians of Philadelphia. The first was a description of the problems of space travel. The second was a discussion of current trends in medical genetics. It seems that gene mutations only occasionally cause disease directly. The much more important genetic factor in disease affects the ability of some people to resist particular diseases, and makes others more likely to be a victim. Hepatitis B? Well, that's so yesterday.

Picking Up the Usual Suspects

The federal government directly controls about half of health care spending, and makes rules affecting most of the rest.

Claude Rain

Every group or business which receives some of this money is alert not to lose it. Many other groups are alert for openings to get more of it. All employ sentries in Washington. False alarms are frequent, stealth attacks are a constant threat, constituents paying the bills demand immediate reassurances. Members of Congress seldom initiate a disturbance unless someone from inside an industry brings it to them. Consequently, when proposals do surface, and seem to be serious, the question to be immediately answered is -- who's behind this? If you know who starts something, you can readily imagine the motive, assess the political strength, decide how to respond. With what little was generally known about the Clinton Health Care Plan of 1993, it was easy to imagine a host of people with some motive, but very hard to say who was actually pushing one. Must be a Democrat, obviously, but not immediately obvious which of several possibilities was the real agitator.

Health insurance companies would always seem likely to have proposals about national health insurance. Blue Cross dominates the market in large geographical markets, mainly East Coast, and would seem fearful to lose that dominance in a major upheaval. But other market areas of the country are dominated by commercial insurance companies who might seek to upend the Blue Cross monopoly, but whose form of business would be even more seriously threatened by health insurance innovations. Most commercial health insurance was written by large life insurance companies who regard health insurance as a small sideline for the convenience of their industrial customers. Blue Cross was somewhat more comfortable with government work, particularly since the 1965 Medicare and Medicaid programs were patterned after them. However, Blue Cross was non-profit, thus lacking in incentives, and historically controlled by health care providers. That is, Blue Cross was formed by and dominated by the hospital associations, and Blue Shield was formed by and dominated by medical societies. Since doctors and hospitals were very prompt in announcing their deep concerns and uncertainties about the Clinton Plan, Blue Organizations seemed unlikely to make daring proposals so likely to provoke trouble at home.

Not that some doctors and some hospitals didn't try to see what might be made of this opportunity. At the American Medical Association, certain leaders known to have Blue Shield involvement offered conciliatory remarks about waiting for further details before taking a stance, but were abruptly halted by a general opinion that things had apparently already gone too far for substantive negotiation. Much the same thing occurred at the Hospital Association; the winners had too much to lose, the losers had too little influence to matter, and nobody stepped up to claim an inside track. Hospital trustees didn't know what was going on, strongly suspected something was going on, and didn't like either situation. If the doctors got mad enough at a hospital, they could ruin it, and if hospitals got mad enough at Blue Cross, it too was ruined. The main strength behind the Blue Cross monopoly position was the secret discount provided to them by hospitals, which was refused to competitor insurance companies, but could easily be extended in the interest of fairness. If need be. The commercial competitors wanted that discount much more than they wanted new insurance models.

There is one subset of doctors and hospitals that might be suspected of generating a sweeping revision of the medical system -- academia. Medical schools think of themselves as the appropriate source of vision about the profession they are training, and they run large prestigious hospitals. Their heavy dependence on government research grants, teaching subsidies, and tuition support programs puts them in constant contact with Washington bureaucracy and politics; propinquity is a great match-maker. Their style of salaried faculty creates estrangement from making a living by being paid fees for specified services, and they are reasonably comfortable with the flaws and techniques of professional promotion within a large organization. So, a slogan which has been attributed to Wilbur Cohen himself does not greatly jar on their ears. The author of the Medicare Act is said to have announced that the entire medical system of America could be accommodated by thirty or forty Mayo Clinics. Twist that just a little, and you are imagining he said forty or fifty medical school teaching hospitals. The briefest contemplation and rebuttal will knock down that proposal, such as pointing out that we have several times that many teaching hospitals at present without achieving anything like the nation-wide coverage envisioned. After absorbing the administrative chaos of readjusting to that model, you would confront the old repeated history of grossly overestimating, and then grossly underestimating, the future manpower needs of a medical system in the process of constant scientific turmoil. Supppose you built the fifty Mayo Clinics and found you needed two hundred? Suppose you built two hundred and found you needed seventy? And then, finally, remember that each big city could expect to contain one of these organizations, but the fewer of them there are, the longer the distance everyone else would have to travel to get to them. No one has even ventured to speculate how you could go about doing such a thing, let alone doing it three or four times to get it right. But, but. The infeasibility of academia at the center of medical care delivery does not eliminate the possibility that the idea underlying the Clinton Health Plan may have originated in academia, or that academia might support some similar proposal with something else at its center.

Since it was soon clear that the traditional "players" in the health policy arena were unlikely to be sponsoring some self-serving policy that might masquerade as the Clinton Health Plan, the search went on. There were a number of professional groups within the medical community who had traditionally chafed at domination of the hierarchy by physician leadership. Nurses, hospital administrators, pharmaceutical companies, druggists, corporate human resources officers, public health officials, social workers, biology teachers all represented groups who derived status with the public by displaying inside knowledge of medicine. But all of them fell silent when a physician entered the room, and tended to shift their emphasis to faults of the "system" or the "industry". Their Washington representatives placed their emphasis on changes in the existing system which might elevate the prestige and income of the members, and were particularly vigilant for system modifications intended for other purposes which might nevertheless create advantageous loopholes for the members. All of this is normal striving in the good ole' American way, a polite variant of the mixture of bellicosity and restraint usually seen in the Union movement. These people wanted to improve their income and working conditions, but were ultimately quite hesitant about radical proposals that might sink the ship. A quick survey showed they were not supporting any particular reform project, even though they could be counted on to support any reform project. Furthermore, they consistently injured their political strength by extending beyond economic goals to issues like radical feminism in the case of nurses, or direct advertising to the public as in the case of the drug companies, or practicing medicine without a license in the case of limited-license practitioners. These people had votes, influence and lobbyists, but they did not have a national project for health care reform of their own devising, and they surely were not the people behind the Clinton Plan.

During the six months before The Plan was presented to Congress and the Public, a White House task force said to consist of five hundred secret members was meeting under the direction of President Clinton's wife Hillary. No doubt part of their purpose was to give Hillary a public platform on which to show her stuff, with the idea of someday succeeding her husband as President sort of in the back of her mind. But most of it was also quite practical; somebody had to figure out what this proposal was going to be, and newly elected Bill had to spend most of his time learning how to run the rest of the country. Buried in here was an efficiency principle too; the staff members of every important congressman and senator were involved in the process, making the deals and surfacing the political angles before things had to come down to votes and filibusters. Meanwhile, the rest of the country had to wait outside closed doors, fed by rumors and spin.

How well I remember one public seminar on the subject during this period of suspense. The audience was filled with people thought to be influential with the public, the usual suspects in that sense, too. Representatives of various interest groups were seated up front at a table, and for some reason I had been picked to represent doctors. Next to me was a druggist who had made a billion dollars starting an HMO; it was intriguing to watch how many well-dressed women with no interest in health care paraded up to the table to show their stuff to the billionaire, while we waited for the meeting to begin. All of the usual suspects of Philadelphia medical care were at the table, each of us wondering what the other was going to say. When some last Very Important Person had wandered in and taken a seat, it was time to begin. The moderator told a funny story or two, and then asked each one of us what we thought of the Clinton Health Plan. One by one, to the utter amazement of us all, we each explained how we were opposed to it.

So obviously this proposal was not coming from the usual agitators. But, remember, somebody was surely behind it. Before we take a stab at that mystery, let's humanize the usual suspects by describing a few of them.

Equal Pay for Equal Work

American Medical Assocation

The House of Delegates of the American Medical Association holds a five day convention twice a year. The meetings last from 7 in the morning until midnight, although the main sessions in the auditorium only last eight hours a day during three days. The rest of the time is consumed with meals, committee meetings, geographical caucuses, and even cocktail parties. Newcomers often object to the numerous parties until they come to see that these are merely committee meetings in a different form, with different subsets of the organization picking up the necessary costs. This group of workaholics has to vote on several hundred issues each session, and most Delegates have no idea about the current of opinion about most of them when they enter the headquarters hotel on the first day. But after meeting with members of their specialty in one committee, and members of their geographical region in another, and members of their medical school alumni association in another, and issue oriented groups, political allies, generation-pleasing entertainments, and other layers of an overlapping matrix day after day -- by the time the vote is actually called for, most Delegates could safely predict the correct outcome with very few exceptions. The AMA works at its similar job with far greater intensity than Congress does, because Congress has all year to do it, while the doctors have to go home to make a living. Don't worry about the parties, they are really work sessions for everyone except rank newcomers, outsiders, visitors, and wives.

There are usually fifteen or so parties every night, hosted by large state delegations, large specialty assemblies, and coalitions of smaller groups. Fifteen drinks a night would be quite a bit for most folks, and some newcomers are duped into trying to be polite about it. The rest of us take the proffered drink, walk over to a nearby plant stand and dump it. I hate to think how many potted palms I have fried that way. Each delegation has its own system of organizing these minuets, and I'll try to describe the Pennsylania system.

Nobody will come to your party if you don't go to theirs, so we make a list and divide the group into those who "travel" to the parties of other states, and those who remain to host our own party, "at the door". Everyone is expected to wear a name tag, containing your name in large type underneath which is your caucus designation, in my case "Pennsylvania". The older members instruct the newer ones to put the name tag just under their right shoulder. That way, you can seem to be looking at the hand you are shaking, while freshening your recollection of who in the world you are meeting. You can of course do anything you please, but time is short for a the transaction of a lot of business, and it's just easier to do routine things the regulation way, and get on with it.

On the evening in question, I was "at the door". The formula, repeated many times, was to extend a hand of greeting and recite, "Welcome to Pennsylvania. Are you looking for some friend in particular? Let me see that you have a drink. Come on in and meet my fellow delegate, Scotty Donaldson." You can shepherd a lot of people more or less gracefully if you reduce the formalities to a routine. After several people had been brought in under the tent, a man with highly polished shoes came up, wearing a name tag that said, "Blue Cross of America". He was greeted, his hand pumped, a drink procured, and was introduced to Scotty, our most famous extrovert. I quickly turned to the next person at the door.

Well, this lady was six inches taller than I am, and fifty pounds lighter. She wore a name tag, identifying her as President of some Nurses Association, "Welcome to Pennsylvania! Is there someone from Pennsylvania you know or would like to meet? Can I......" The apparition didn't even look at me as she brushed past through the door. Heading straight for the gentleman from Blue Cross, she poked her index finger into his chest, stopped him in mid-sentence as he talked to Scotty.

"What I want to know, " she announced to this startled man, "Is when are you people in Blue Cross going to pay nurses as much as you pay doctors?" And here I must admit I have to give this guy credit for unperturbability.

"Well, maam," he said cheerfully, "I think that's going to be quite some time."

Health Maintenance Organizations (HMO)

HMO

It's an ancient wrangle whether a manufacturer should actually own its suppliers, or the reverse; or instead whether it's healthier for industry components to stand at arms length from each other. At issue is not only what is best, but what is fair. If industry mergers seem sufficiently unfair, it will be proposed they should be illegal. That's the main substance of a lot of antitrust argument. Unfortunately, what is valid in good times may be reversed in a downturn. A prosperous supplier of materials often acts as a "cash cow", saving a merged enterprise from bankruptcy. Unfortunately, within a different economic climate one badly failing supplier can bring down the whole merged enterprise. There's also organizational friction; a temporarily prosperous unit may get to thinking it should boss the less prosperous units around. At the very least, the cash cow resists use of its cash reserves to help "losers". Several centuries of experience have thus left a minefield of old laws, traditions, and ingrained prejudice to undermine any broad standards for what is best. In no field is this more true than the Medical Industry.

Eighty years ago in Houston, the first Blue Cross health insurance company was started for a single group of school teachers to pay for service in a single hospital. That expanded to other subscribers and other hospitals, soon making it more workable for insurance, subscribers and hospitals to stand at arms length, allowing for a variety of local combinations. During World War II, combat in the Pacific led shipyards to be built on the West Coast, but westward migration of steel workers was hampered by lack of local medical facilities for them and their families. Taking advantage of the loophole provided in the wartime wage and price controls, Kaiser Industries attracted medical personnel by building hospitals, paying salaries, and offering physicians ready-made medical practices. Because of various licensing laws, Kaiser's medical enterprise was divided into two corporation, Kaiser and Permanente, so a specialized corporation within the Kaiser-Permanente Foundation could accommodate the licensed practitioners. The salaried nature of the physician organization immediately caused trouble with local fee-for-service practitioners, who were thus excluded from a large population in their neighborhood when they could not readily adjust to varying mixtures of the two payment methods. Their reaction, led by an obstetrician in Stockton, California, was also to organize dual-corporation structures which were exclusively fee-for service. Because Kaiser had a Foundation, they also called their organizations Foundations for Medical Care. Then, as now, it proved difficult to run a practice with two different reimbursement philosophies in the same waiting room; in time, friction between the two styles tended to increase as doctors who were more comfortable with each style tended to segregate themselves. Since offers of salaries are more immediately attractive to newly-trained physicians, they flocked to California to serve the steelworkers who were in need of doctors. Fee for service, on the other hand, allowed the gradual assembly of a more durable practice composed of patients who could test what they liked before making a permanent allegiance. Essentially, the transients went to Kaiser, more permanent settlers used fee-for-service.

Thus, it came about that several models for health care reform were tested in a few smallish towns of central California. These demonstration experiments may perhaps not meet everyone's standard for scientific purity, but at least they were public examples with the dumber features knocked away. They certainly provided a laboratory where ideas could develop about topics that otherwise were merely opinions and unsupported conjecture. The Foundations demonstrated that physician-dominated organizations could contain costs and maintain quality in a satisfactory way; there had previously been doubt about their ability to contain cost. The Kaiser organization showed that salaried practice performed acceptably as well, both to most staff physicians and to a majority of the patients; there had been doubt about the willingness of the public to limit choices to a panel of assigned physicians, mostly young and usually from elsewhere. Finally, the two systems seemed to be able to live together more or less peacefully; indeed, the California public seemed reassured that two systems apparently kept each other in check.

The first main difference rested on the system of quality control. The local Foundations developed review systems based on peer review and peer pressure; these worked remarkably well, particularly in constraining non-physician costs like pharmacy, tests, and hospitalizations. Cost and quality control in the Kaiser system was more rule-bound and quicker to apply discipline, kept within bounds however by the ability of both patients and staff to jump ship for the other system. Aside from professional peer review, the Kaiser system experimented with owning hospitals, laboratories, pharmacies. Here, the experience directly paralleled the experience of manufacturing industry with its suppliers; when reimbursement was generous suppliers generated welcome revenue. When reimbursement was constrained and substandard, ancillary service losses were unwelcome. Taken overall, the Houston experience was repeated, that ownership of such facilities was mostly a headache. Indeed, subsequent experience has shown the two systems usually co-exist nicely within independent ancillary facilities.

The Stockton, or Foundation for Medical Care, approach grew popular in the West. The variant which grew up in Utah was locally popular, and attracted the attention of Senator Wallace Bennett. The Bennett Amendment to the Medicare Act then picked out the peer review system as the secret of success, and set up a nationwide system of Professional Standards Review Organizations (PSRO) to conduct peer review of Medicare and Medicaid patients. The drawing of boundaries around these organizations was the most difficult part, and sometimes the boundaries were inept. Rural districts were adamant that the standards of big-city medical schools were not to be applied to their scattered resources, and urban areas saw themselves as ancient Rome surrounded by hostile tribes. Although these difficulties were foreseen, it is not always possible to draw a line that will separate the cultures, particularly where the outward migration of suburban housing was more rapid than the construction of suburban medical facilities, leaving the medical culture unstable. The PSRO system was quite successful in many areas, but caused trouble in others that was not adequately addressed. The central concept of the review system was that the doctors who worked together could quite readily identify the outliers, and better than anyone else could judge whether the local situation was justified. True, some practitioner might try to abuse the system to the disadvantage of his competitor, so no adverse decision was final until there had been an opportunity for outside appeal. There might even be a few circumstances requiring still higher appeal. The system was new and untried, but it produced eminently satisfactory results from the point of view of the Federal Government paying the bills. As former President of one of the largest PSROs in the country, I will assert that there was remarkably little friction or resistance in the medical community. My very good friend, the President of the New York City PSRO says much the same, and most people would say that if you can carry off a new system in New York without a lot of argument, it must work pretty smoothly. The Government wanted to eliminate unnecessary Medicare costs, particularly in hospitals, and it wanted to maintain peace with the medical profession. Hospital costs are obscured by the wide gap between posted charges and true underlying costs, compounded by disagreement about the proper assignment of overhead charges. Charges were not the assignment of the PSRO, utilization was. Days of hospitalization per thousand enrollees fell from roughly 1000 days per thousand to roughly 200 days per thousand, and that satisfies me at least that we were doing our job; physician peer review was doable.

It is likely, however, that peer review was much more apt to produce friction in rural districts. Philadelphia has had more than a hundred hospitals for more than a century. Birds of a feather tend to flock, so the sorting-out process was already far advanced by the application of constrained referrals to practitioners who failed local standards. Mixing members of different hospital staffs on appeals committees was easy in the big cities, and the naturally censorious tendencies of many physicians could be safely counted on to produce adversary balance. Most committees seemed visibly pleased, even relieved, to discover generally good quality in their competitors' practices. However, in the much smaller and more scattered institutions in the nation's regions with low population density, these informal arrangements cannot stretch as well. When there is only one specialist in a field, for example, it is sometimes hard to know whether he is a good one or not, but always easy to say whether you like him or not. Where the population thins out, much greater wisdom is required to make judgments, the number of close cases is greater, and the limited supply of judicious reviewers is similarly stretched. At least that is my surmise, based on knowing the background of most of the AMA delegates who eventually voted 105-96 to condemn the program in a standing vote. The result was the Dornenberger Amendment, which much weakened the system, when instead it should have triggered a more profound analysis and reconsideration.

Perhaps we spend too much time here describing a technical process. It is, however, at the heart of what makes the Foundation approach (sometimes called IPA or Independent Practice Association) superior to the HMO. It is now perfectly clear that both doctors and patients vastly prefer the IPA approach to the HMO, and any reasonable politician would jump at it. But there is one fear, summarized by the slogan that the Fox is guarding the Henhouse. In both systems, an attempt is made to combine the insurance with the delivery of health care. In the IPA, the physicians are taking the financial risk that aggregate income will exceed aggregate costs; it's a risk contract. In the case of an HMO, the employer or the government is taking the financial risk and therefore wants to control it. If revenue is good, the doctors will prosper in an IPA; the insurance company intermediary will prosper in an HMO. Doctors will care about that little difference, but why should the rest of the country care?

Because the prospect is overwhelmingly likely that future revenues will be constricted until something hurts, and when you starve with a tiger, the tiger starves last. In the case of an HMO, the insurance middlemen will starve last, and the quality of health care will starve fairly early. That's an unwise design. When we get to the point where Congress cuts the budget and watches to see what happens, Congress will cut it some more if nothing bad happens; it will back off only if something bad happens, so something bad is certain to happen. In designing the system, you need to design the internal review authority so it will cut the waste, inefficiency and luxury first. The reviewer, no matter who it is, will cut himself last, so you need to arrange the incentives for waste to be cut before the reviewer suffers, and quality of care only after the reviewer has suffered. If you wonder why a whole lot of special interests hate physician-dominated review systems, a short answer will be found in this synopsis. A special exception must be devised for rural health systems, which do have a unique problem.

To return to the well worn slogan about foxes and henhouses, we have overlooked the central question. Who's the fox, and who is the hen?

National Business Coalition on Health

NCOH

In 1992 the National Business Coalition for Health was just forming at a convention in Chicago. Before I really understood what it was all about, I agreed to their flattering invitation to be the keynote speaker at the kick-off luncheon. Who suggested my name was and is a mystery to me, and I arrived in Chicago with very little idea what they wanted to hear. However, it followed the familiar pattern of inviting the speakers to stay overnight at the hotel on the evening before the meeting began, and to meet for drinks at the bar with the organizing leaders. I had enough experience with public speaking to know I could learn the general slant of the thing at such an informal party, and adjust the speech to the audience to whatever degree seemed needed. Among the people scattered around at tables was Harry Schwartz, who was also there to give them a speech. Harry had been on the editorial board of the New York Times for many years, and was known to be generally quite favorable to physicians. We had both written books abou