Hill-Burton Act Stimulates Licensing of Healthcare

Brooklyn Jewish Home for Convalescents, Far Rockaway, NY, 1948
Built as nursing home around 1948. Library of Congress: Architecture and Interior Design for 20th Century America Photographs by Samuel Gottscho and William Schleisner, 1935-1955 

World War II halted construction and development of every kind, and by the end of the war, many buildings were badly in need of replacement or modernization. The national health insurance program that was being discussed highlighted the poor quality of the nation's healthcare infrastructure, which could only be improved by devoting significant funds to the construction and modernization of hospitals. During the high-profile controversy over national health insurance, Senators Joseph Lister Hill of Alabama and Harold Burton of Ohio quietly carved out hospital construction financing into a separate bill, and introduced the Hospital Survey and Construction Act of 1946 (commonly called the Hill-Burton Act). Compared to the high cost of national healthcare insurance, the Hill-Burton Act seemed relatively risk-free and inexpensive, and it passed with little fanfare.

Hill-Burton created a system to provide federal financing for construction of new hospitals in rural and poor areas that did not already have them, and to modernize hospitals in metropolitan areas. The sponsors did not want to create an uncontrolled explosion of buildings that weren't needed, so the bill called for each state to develop an agency to organize and coordinate health planning for the state, and to determine where in the state hospitals ought to be built. These agencies were also charged with pre-approving the design of the buildings before they were built, a level of oversight and consistency in healthcare construction design that had never existed. The sponsors felt that wealthier areas would be able to build their own hospitals without federal assistance, so funding was to be directed primarily to areas that were poor or rural. One controversy that arose before the final text of the bill was approved was whether or not federal funding could be provided to hospitals that were not publicly owned. The concern was that it might not be appropriate to gift taxpayer money to non-public entities. There was never any consideration of including proprietary hospitals in the program, but ultimately a decision was made to allow funding for non-profit hospitals, not as gifts, but as loans which would be repaid by providing a certain amount of free care to people who otherwise would have ended up as the responsibility of the government.  (Perlstadt, 1995)

Hill-Burton financing lead to an explosion in public and non-profit hospital construction, and provided a model for federal and state standards for the design, regulation, and financing of healthcare institutions that was later used for nursing homes.