The Business of Private Medical Practice: Doctors, Specialization, and Urban Change in Philadelphia, 1900-1940

Chapter 2: The Doctor as Business Owner

39 As American doctors aspired to new professional status, an internal debate raged about the proper role of the commercialism in medicine, and Philadelphia doctors were no exception. For example, in a contentious paper read before the Philadelphia County Medical Society in 1901, Dr. John B. Roberts distinguished “proper and just enterprise and thrift in one’s professional work and what is an improper commercial spirit.” As a surgeon, Dr. Roberts had witnessed the most deplorable billing practices of his time: price gouging, upselling expensive prosthetics over affordable alternatives, referring patients to private hospitals in which one had part ownership, demanding payment from patients on the operating table, fee-splitting with GPs who referred patients, and taking kickbacks from pharmacists, medical supply companies, and life insurance companies in exchange for referrals, endorsements, and confidential patient records. According to Dr. Roberts, these practices should distress anyone “who believes that the medical man belongs to a liberal profession and not to that portion of the body economic, whose sole object is the accumulation of money.”1 In stark contrast to loathsome figure of the avaricious specialist conjured up in debates about ethical standards stood the nostalgic figure of the selfsacrificing old-time doctor, who cared little about timely remittance or who knew nothing of efficient bookkeeping. The pages of medical journals were littered with tributes to the imaginary old-time doctor, who also made appearances in popular magazines such as the Ladies’ Home Journal and Harper’s.2 For some, the old-time doctor aroused pity, and many county medical societies, including Philadelphia’s, collected funds to support old-age homes for poor The Doctor as Business Owner Chapter 2 40 Part One: 1900–1920 but pure old-time doctors lest they should have to see out their days in a poorhouse . As the organizers of one such home in upstate New York explained, “It is a real home for physicians and surgeons who have been honorable in their conduct and yet have fallen victims to the common foes, poverty or broken health.”3 For others, though, the plight of the old-time doctor demonstrated the need to adopt modern accounting methods in private practice. As Dr. Daniel Cathell, author of the most popular advice book series, The Physician Himself, opined, “To fight the battles of life successfully it is as necessary for even the most scientific physician to possess a certain amount of professional tact and business sagacity as it is for a ship to have a rudder.”4 For Dr. Roberts and his ilk, the dilemma was how to reconcile the business of private practice and the emerging profession of medicine. To assert that private practices functioned as small businesses at this time is hardly controversial. Historians of medicine have long used the metaphor of the “medical marketplace” to describe the economies of exchange between healers and patients before the emergence of the modern regulatory state.5 Market demand originated with patients, who bought medical goods and services; market supply came from healers, who sold their goods and services. In the relatively free market of early modern Europe and America, patient-buyer-consumers had innumerable options, and freely mixed and matched good and services based on their preferences and budgets. The openness of the early modern marketplace fostered competition and generated market niches that were filled by a vast array of healer-producer-providers. In mid-nineteenth-century America, for example, orthodox doctors competed with Thomsonians, homeopaths, hydropaths, sundry itinerant healers, and patent medicine vendors, to name just a few.6 Despite the explanatory power of the term “medical marketplace,” more work is needed to identify local market variations and to explain the effects of regulation.7 The conditions of the medical marketplace in the United States, for example, had changed dramatically by the early twentieth century as an emerging orthodox medical profession gained legitimacy and status and acquired state-sanctioned power to regulate supply.8 As has been well studied, orthodox doctors profited from new regulation.9 Other changes to the business of private practice, however, remain poorly understood. For example, how did individual doctors integrate the financial goals of private practice with new career opportunities in medical institutions, especially hospitals, which were expanding in American cities?10 Besides needing to account for the effects of regulatory and economic change, analysis of the urban medical marketplace in the early twentieth The Doctor as Business Owner 41 century...