Money on Health Care

The invention of health care

Gregory Warner Nov 20, 2010
Money on Health Care

The invention of health care

Gregory Warner Nov 20, 2010


Tess Vigeland: Pennsylvania Hospital used to sell tickets for the public to watch those surgeries in the amphitheater we visited. Those ticket sales paid the surgery costs for poor patients.

Ticket-for-ticket, the biggest crowd pleaser was the so-called Father of Surgery, Philip Physick. Gregory Warner is back for the latest edition in Philadelphia’s Lesser Known Historical Contributions to the Business of Health Care.

Gregory Warner: So Del, maybe you could start if you give me a list of all the firsts associated with Dr. Physick.

J Del Conner: I will give an attempt; I’m not sure if I can get all of them. He does the first cataract operations in America, the first stomach pump in America…

Warner: This is J Del Conner. Great-great-great-grandson of Dr. Philip Syng Physick.

Conner: …He does the first human blood transfusion, in the world! Which is quite a big one.

Conner used to get beat up in elementary school for talking too much about his ancestor.

Conner: Ha, I was thought to be a bit of a boaster!

Now Conner gives tours of Dr. Physick’s house here in Philadelphia. He shows me the dozens of instruments that Physick invented.

Conner: Instruments still used today for removing cataracts, gall stones. He would have done double masectomies on women who had breast cancer. In one operation on his aunt, it talks about her being led into the room blindfolded so she would not see those instruments laid on the table that would be used on her momentarily without anesthesia or antiseptics. So it’s just incredible.

But Dr. Physick might never have become the innovator in medicine we know today if he hadn’t invented something else first: a business model.

Flash back to the 1780s, young Physick sails to London to study with the brightest surgeons in England. He rises in his class, despite being from a place they thought should still be a colony. In 1792, he returns to Philadelphia, medical degree in hand. He’s 24 years old. America’s in a recession. To make things worse, his father cuts him off, saying he’d paid for med school, now get a job.

Conner: He would walk the streets looking for work, so much that his shoes were worn out.

Making a living as a surgeon wasn’t so simple. This wasn’t Europe, where medical doctors enjoyed the esteem of their profession. When Dr. Physick looked around Philadelphia, what he saw were traveling herbalists, bonesetters and sellers of elixirs. If someone needed surgery, the first place they’d probably go was a barber.

Conner: A barber would do a lot of blood-letting and minor surgeries.

Physick had to find a way to elevate his services above the remedies of these other peddlers. And so he decided to offer his patients a deal. Pay him just $20 up front, and he’d treat your whole family for a year.

Conner: He is the first. To offer this package deal, of payment in advance, for future services.

Warner: It’s a new way of paying doctors.

Conner: Yes. An early form of health insurance.

And apparently the first HMO. In this way, Dr. Physick not only locked in his customer base, he ensureed that when his patients needed medical advice, they come to him first.

Conner: And so he was able to get a little bit of cash flow going and a new pair of shoes, as legend has it.

As his cash flow grows, so does his catalog of inventions. He becomes the Father of Surgery and the richest doctor in Philadelphia.

Vigeland: You can see a re-enactment of one of Physick’s surgeries in that theater.

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