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Who pays for hospitals?

Published: 1 March 2019

Hospitals are places that care for sick people. But which sick people? And what sort of care? That depended on who was funding the hospital.

St Elizabeth visiting the sick in hospital, Oil painting by Adam Elsheimer, ca. 1598 Wellcome Collection, CC-BY

Most early hospitals were run by the Church in monasteries and alms houses.

One of the oldest hospitals in London, St Bartholomew’s Hospital, was part of a monastery in the 12th century CE and the Hotel Dieu in Paris was founded in the 9th century CE.

Christian charity lay at the heart of the medieval European hospital.

Monks and nuns cared for the sick and dying. Their main purpose was to ease the passage of the dying into heaven, rather than to seek a cure.


Image: St Elizabeth visiting the sick in hospital. Oil painting by Adam Elsheimer, ca. 1598.

Islamic hospitals

Religious motivations were also integral in the development of hospitals  in medieval Islam. Hospitals, known as bimaristan were established in many cities, including Cairo in 872 CE and Baghdad in 932 CE.

Two Islamic physicians seated, surrounded by a frame of medicinal jars

Unlike medieval Christian hospitals, they employed Christian and Jewish doctors as well as Muslim ones. And in addition to care, they offered medical and surgical treatments, as well as treament for the mentally ill and old.

By the 10th and 11th centuries several of the larger hospitals included outpatient clinics, pharmacies, and both male and female staff caring for patients.

Donors and the rise of the secular hospital

In 15th-century Europe, secular institutions began to emerge alongside monastic hospitals. Civic hospitals were established in city states, such as Florence, where the wealthy merchants provided funds to build new hospitals that attracted the best doctors.  

In England, hospital care was forced to become secular after the dissolution of the monasteries by King Henry VIII (1492-1547). Most of the 900 or so religious alms houses that offered lodging to pilgrims and the sick were disbanded.  

The City of London, petitioned the king to keep their monastic hospitals and he relented, endowing St Bartholomew’s, St Thomas’s and St Mary’s of Bethlehem as secular charitable institutions.

To fill the gap left by the alms houses, Henry's daughter Elizabeth I passed the 1601 Act for the Relief of the poor, which made local parishes responsible for the ‘impotent poor’—the old and the sick. Funding for their care came from local taxes on land owners in the parish.

Voluntary hospitals

There were no provincial hospitals in Britain in 1735, but by 1800 there were 28. A voluntary hospital movement saw a wave of new hospitals, as a result of industrialisation and growth of charitable contributions.

New hospitals were relatively easy to establish, all you needed was a group of supporters, a building, a doctor and some nurses. Supporters were a mix of wealthy businesses, and individual subscribers.

Westminster Hospital, 1830s Wellcome Collection, CC-BY
Westminster Hospital, London was established as a charitable society in 1719.

Hundreds or even thousands of subscribers could contribute an annual donation averaging £1. A contribution of at least £40, the equivalent of a labourer’s annual income, allowed someone to become a hospital governor.

The motivation for setting up a new hospital often reflected social concerns rather than medical need. Civic rivalry, a rise in local destitute population, a local business owner looking for respectability were all reasons for funding a local hospital.

Supporters often felt they had a duty to oversee where and how their money was being spent. They were entitled to make regular inspections and have a say in its management. 

Paid hospital staff usually consisted of a matron, nurses, porters and an apothecary. The hospital was usually managed by a voluntary secretary, who was often a local businessman.

Most doctors earned their living in private practice, working voluntarily at the hospital when they were able. Working for a charitable hospital increased the social standing of doctors as well as donors. It also brought doctors into contact with wealthy donors who might become private patients. Most hospital patients were low paid workers, as those that could afford it were treated in their own homes.

Staff and patients from Beverley cottage hospital, 1891 Wellcome Collection, CC-BY
Staff and patients from a cottage hospital in Beverley, Yorkshire, 1891.

Yet some of the top teaching and research hospitals in the country, such as the Edinburgh Royal Infirmary and Addenbrookes Hospital in Cambridge, were voluntary hospitals, as were many rural cottage hospitals.

Workhouse infirmaries

From the 19th century the state took increasing responsibility for the health of the nation. The poor state of recruits for the South African War heightened eugenic concerns about the deterioration of the 'British race'.

Parish workhouses, first established in the reign of Elizabeth I, carried the burden of medical care for those that could not afford to pay for it and had no family. By 1776 over 16,000 people were housed in London’s eight workhouses, around 1-2% of the city’s population.

An 82 year old with dimentia, resident of a workhouse, 1890
An 82 year old man with dementia, thought to be a resident of Craiglockhart Workhouse, 1890.

Concerns about the rising cost of workhouse care raised questions about whether the system was being abused by people who didn't want to work. In 1834 a New Poor Law made conditions in workhouses so harsh that only the most desperate would endure them.

Workhouse inhabitants had to wear uniforms and have their heads shaved. Orphans were housed alongside the elderly, pregnant women and the mentally and physically ill in dirty, overcrowded conditions. 

Some workhouses had a separate annex for the sick, who were often nursed by other inmates. Conditions for the sick were intolerable. Matilda Beeton, a nurse at Rotherhithe workhouse recalled dirty patients crawling with vermin and sleeping in maggot infested beds.

Workhouses were required to appoint a medical officer, who was often poorly paid and worked part-time. Joseph Rogers, a workhouse doctor, complained that he had no qualified nurses to help him care for over 500 patients. And the cost of any medication he needed had to come out of his £50 salary.

In the 1860s Florence Nightingale drew attention to the condition of workhouse infirmaries noting that they were as bad as if not worse than the military hospitals she had seen in the Crimean War. Further reports prompted the government to carry out its own investigation resulting in the Metropolitan Poor Act, authorising separate workhouse infirmaries, with trained medical staff.

The beginnings of state funded healthcare

Over the course of the 19th century, the state began to take responsibility for the provision of health care. In addition to workhouse infirmaries for the destitute, local authorities set up new metropolitan hospitals for the general public, including fever hospitals and asylums.

And medical and nursing staff rather than charitable donors began to play a more prominent role in hospital administration and admissions.

Advertisment appealing for funds for Guy's Hospital London, 1936 Wellcome Collection, CC-BY
Newspaper advert appealing for funds for Guy's Hospital, London, 1936.

In the 1890s Britain had a plural system of voluntary hospitals, poor law hospitals and municipal hospitals. The better funded voluntary hospitals  only accounted for 26% of hospital provision.  By the end of the century, industry, urban migration and overcrowding impacted put even more pressure on hospital services. 

In industrial cities such as Manchester and Birmingham, workers contributed to local medical charities as a kind of health insurance. Workplace donations were in pennies rather than pounds.The majority of unemployed, chronically sick or seriously ill patients who could not afford the voluntary hospital fees ended up with second rate medical care, 

The number of hospital beds tripled between 1861-1911. But subscriptions at most voluntary hospitals were in decline and costs climbed with the proliferation of new treatments and technologies such as anaesthesia and improved surgery.

By the 1920s such was the demand for hospital care that the old workhouse infirmaries had to be expanded. In 1926 local government took over administration of poor law infirmaries, metropolitan hospitals and asylums forming the basis of state medicine in the UK.

It wasn’t until the Second World War, that a coordinated emergency response to bombing raids demonstrated how a universal healthcare system could work, with all hospitals sharing staff and resources according to need.

A national health service for Britain

A National Health Service was established in the United Kingdom in 1948. The aim of the NHS was to make health care available to all, based on need rather than the ability to pay. The scheme was financed almost completely through taxation, and care was free at the point of need.

Aneurin Bevan visiting an NHS hospital ward in 1948.
Daily Herald Archive/Science Museum Group/SSPL More information about Aneurin Bevan visiting an NHS hospital ward in 1948.

The government Health Secretary Aneurin Bevan was the chief architect and steered the National Health Service Act of 1946 into law. The original model was a three-tier service comprised of:

  • Nationalised hospitals
  • Self-employed GPs, dentists, pharmacists and opticians contracted to work for the NHS
  • Local government funded community health visitors, social care and school medical services.

The charitable mission of most hospitals survived into the 20th century and continues to this day.  But much of their finance now comes directly from state funding.

1948 public information film explaining the new National Health Service

The future of healthcare

As a populations change so do  healthcare needs. Improvements in nutrition and the health of the nation and developments in medical science meant that many of the health issues of the 1940s and 1950s were largely resolved. 

Infant mortality in 1948 was 34 in a thousand, in 2018 it was four in a thousand.

In 21st century Britain acute infectious diseases have largely been replaced by chronic conditions associated with an ageing population. In 1948 life expectancy of an average woman in Britain was 71 years, and a  for a man it was 66 years. By 2018 it was 81 years for women and 79 for men.

And as treatments and equipment become more complex and expensive, healthcare providers in the public and private sectors still have to make difficult decisions about what treatments to fund and who receives them. 

Suggestions for further research

  • K Waddington, Charity and the London Hospitals, 1850-1898 (Woodbridge: The Boydell Press, 2000)
  • G Risse, Mending Bodies, Saving Souls: A History of Hospitals (Oxford: Oxford University Press, 1999)
  • C Rosenberg, The Care of Strangers: The Rise of America’s Hospital System (New York: Basic Books, 1987)