Competition and collaboration between public and private sectors: the historical construction of the Spanish hospital system, 1942–86

Depósito de Investigación de la Universidad de Sevilla https://idus.us.es/ This is the peer reviewed version of the following article: Vilar-Rodríguez, M. and Pons- Pons, J. (2019), Competition and collaboration between public and private sectors: the historical construction of the Spanish hospital system, 1942–86†. The Economic History Review, 72: 1384-1408., which has been published in final form at https://doi.org/10.1111/ehr.12771. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited." 1 Competition and collaboration between public and private sectors: the historical construction of the Spanish hospital system (1942-1986) Margarita Vilar-Rodríguez University of A Coruña Facultad de Economía y Empresa Campus de Elviña, s/n 15071 A Coruña (Spain) [email protected] Jerònia Pons-Pons University of Seville Facultad de Ciencias Económicas y Empresariales C/Ramón y Cajal, 1 41018 Sevilla (Spain) [email protected] Acknowledgements: Both authors gratefully acknowledge financial support from Spain’s Ministry of Economy and Competitiveness for the project entitled Management and Construction of the Spanish hospital system from the perspective of economic history: between public and private sectors Ref. HAR2015-66063-R. 2 Abstract In general, healthcare, along with diet, has historically been an essential component of life and a country's welfare. In particular, a country’s hospital system is a key indicator for analysing the level of welfare achieved in health coverage. Its study from an economic history perspective is relevant since it stems from public and private investment and produces positive externalities by creating employment and stimulating other economic sectors such as construction and health. Spain provides a significant case study for determining the factors of backwardness in a country of the European periphery which, in the late twentieth century, attained a degree of quality confirmed by the current international hospital rankings and even by the phenomenon of health tourism. The study analyses the creation of the Spanish hospital system during the Franco dictatorship and the transition to democracy. It reveals how the maintenance of a regressive tax system, the use of health policy as political propaganda and disputes within the political elite of the dictatorship led to an inadequate and fragmented public hospital system, which needed to collaborate with the private hospital system and which was full of financial holes and tainted by corruption, while remaining at the service of privileged groups. 3 The hospital system has been a key factor in the development of the welfare state and public healthcare. Moreover, its study from an economic history perspective is essential, as it is one of the more expensive social programmes, and its development entails demanding infrastructure, technology and professional requirements. Despite its importance, and although there are many works available of in-depth studies on specific cases of long-established hospitals, there are very few studies that analyse the historical construction of hospital systems in major countries, their characteristics and their role in the development of different healthcare systems. Without a doubt, the greatest number of interesting works studying the development of the hospital system can be found in Europe. The British and French cases 1 are especially noteworthy here, and outside Europe there are classic studies from the United States 2 and more recent contributions on the hospital systems in Japan and China. 3 Spain provides an excellent case study in this field for three reasons. First, because it passed compulsory sickness insurance legislation and modernized its hospital system relatively late compared to other western European countries and under an autarkic dictatorship. Second, because it is an interesting example of the collaboration or competition, depending on the stage, between the public and private sectors in the 1 For the British case, see Cherry, 'Before the National Health Service'; Doyle, The politics; Gorsky, Mohan and Powell, 'The Financial Health'; Gorsky, Mohan and Willis, Mutualism contributory schemes. For their integration into the National Health Service (NHS), see Berridge, Health and Society; and some of the works included in Sturdy, Medicine, Health. For the French hospital system, see Domin, Une histoire économique; Chevandier, L’hôpital dans la France and Smith, ‘The Social transformation’. For a comparison of the British and French cases, see Doyle, ‘Healthcare before Welfare States’. 2 Rosenberg, The care of strangers; Stevens, In Sickness and in Wealth. 3 Outside Europe, see the case of Japan in Donzé, 'Hospital construction'; and the hospital model adopted by China in Xi, 'Conceptualizing balance'. 4 creation of a hospital model. Third, because after starting from considerable relative backwardness in this area,Spain achieved a highly-regarded level of hospital coverage that led to the country occupying a prominent position in the international healthcare rankings from the end of twentieth century. 4 Nowadays, there is still no consensus in the literature on the impact of the type of political regime on the development of social policy. 5 Even among authors who consider democracy to be a positive factor, some see it as a necessary but insufficient condition. In this respect, there is also no consensus on the role of democracy itself. Dictatorships, meanwhile, can also have incentives to make social concessions, win over the masses and legitimize their power. 6 Even in this case, however, redistribution in a dictatorship would be less than in a democracy, as the elite close to power is usually a minoritarian and relatively wealthy group opposed to redistribution. Rather than examining whether the Spanish dictatorship’s social spending was greater or less than that of European democracies, 7 our main focus is to analyse the different goal of social policy under the Franco dictatorship and the different form of financing this expenditure. The creation of the hospital system offers an excellent area of analysis, 4 See the Healthcare Access and Quality Index (HAQ), published in the UK journal The Lancet in 2017, where Spain scored 90 points out of a maximum 100, placing it eighth in the world rankings, above the healthcare systems of Italy (89), France (88), Greece (87), Germany (86), the UK (85) and Portugal (85). See http://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(17)30818-8.pdf 5 The main authors who have participated in these debates include Lindert, Growing Public; Haggard and Kaufma, Development; Mulligan, Gil and Sala-i-Martin, ‘Social Security’, Cutler and Johnson, ‘The birth’ and Congleton and Bose, ‘The rise’; and an excellent synthesis of this theoretical debate in Espuelas, ‘Political Regime’. 6 Cutler and Johnson, ‘The birth’; Acemoglu and Robinson, Economic origins. 7 This aspect has already been studied by Espuelas, ‘La evolución del gasto’ and Espuelas, ‘Are dictatorships’. 5 because it is one of the most expensive insurances, as well as one of the most desired, and thus entails a greater need for resources and is a key element in gaining social and political legitimation. Overall, the Spanish case may contribute to evidence that western Europe followed heterogeneous paths in the construction of welfare systems and in the development of state systems of healthcare provision after the Second World War. Focusing on this aspect, the literature usually establishes the model of financing as a basic criterion for classifying countries at this time. On this basis, G. Carrin and C. James highlight two basic models. 8 On the one hand, a health financing system under which general tax revenue is the main source of funding health services. These health services are usually provided by a network of public and contracted private providers, often referred to as a national health service. This would be the British case, for example. On the other hand, a health model financed by workers’ and employers’ contributions based on wages, where the government may provide contributions for those segments of the population that have no contributory capacity, such as the unemployed or low-income workers. This group would include Germany, Austria and Belgium, for example. These authors suggest that the key to the success of these historical processes, in terms of quality of healthcare and hospital provisions and coverage capacity, did not lie with the chosen financing model, that is, through taxation or contributions. In fact, the more developed western European countries achieved compulsory membership and universality in the 1950s and 1960s by both paths. Moreover, particularly in the case of countries with contributory models (such as Spain in the period under study), they point out that their final success lay more with the five factors that historically conditioned 8 Carrin and James, Reaching universal. 6 and determined their quality and universal health and hospital coverage. These are the functioning of the labour market (sufficient wages and sustainable payroll contributions); competent and efficient bodies to manage the system; a legal framework with clear rights and duties of insured members; availability of an adequate infrastructure to provide quality health services; and the existence of a broad consensus among society’s stakeholders (especially insured members and patients, healthcare providers and employers, and Parliament and Government) in order to guarantee the viability and smooth working of the system. Having indicated that Spain is interesting as a case study and having outlined the theoretical framework, this study focuses on three basic objectives. First, to demonstrate that compulsory sickness insurance, and within it, the hospital system, was used by the dictatorship as a key propaganda tool to legitimize its power and to try to gain popular acceptance. In relation to this, it is important to explain how the burden of financing fell mainly on the workers through employees’ contributions in a context of political and union repression, low wages and a nineteenth-century tax system, which led to serious obstacles that delayed universal health (and hospital) coverage. The differences between dictatorships and democracies are therefore analysed not only in terms of the level of social expenditure, but also with regard to the management and funding mechanisms of the system. Second, the Franco dictatorship further fragmented the inherited hospital system due to the internal struggles of the different political 'families' that comprised the upper echelons of the regime. This resulted in a waste of resources, opaque administrative and financial management and the creation of a parallel hospital infrastructure. An attempt to reorganize the system in 1963 was not successful because by then the division was deeply entrenched in a complex bureaucratic structure. Finally, the role played by the private healthcare system and its hospitals in this process is 7 analysed; on occasions as collaborators of the public system and at other times as competitors. In order to address these objectives it is first necessary to define the concept of hospital that will provide the basis for this paper and explain (and justify) the hospital classification criterion used. During the period under study, Spain had already gone beyond the old nineteenth-century concept of hospital, whose prime objective consisted in providing shelter for the terminally ill, sustenance for the destitute and spiritual aid. The modern hospital was conceived as a therapeutic establishment, where each patient had an individualized space, modifiable according to the evolution of the illness, and where hospital organization was concentrated in the hands of doctors and their auxiliaries, replacing religious personnel. Moreover, these centres incorporated permanent files where the evolution of the patient was noted in a documentary record, an indispensable step for the advance of clinical science. 9 With respect to the hospital classification criterion, due to historical tradition and (not very abundant) available sources, the Spanish historiography has been based on the property ownership of public or private hospitals in order to analyse the long-term development of the hospital system. This method will be used in this paper: the basic division between hospitals of public or private ownership. In this case, hospitals built and financed by public institutions will be included in the public sector. The public sector will encompass hospitals linked to the state, provincial and municipal authorities, the National Welfare Institute (Instituto Nacional de Previsión; hereinafter INP) 10 , the 9 For the evolution of the concept of hospital, see Henderson, Horden and Pastore ‘Introduction’; Risse, Mending bodies; Rosenberg, The care of strangers. 10 The INP, founded in 1908, was responsible for the legislative development and implementation of the first social insurances in Spain. See Gaceta de Madrid, 26/12/1908, no. 361. 8 General Secretariat of the Movement (Secretaría General del Movimiento; SGM) 11 , the Directorate General for Health (Dirección General de Sanidad; here in after DGS), 12 the Ministry of Defence and the National Anti-Tuberculosis Trust (Patronato Nacional Antituberculoso; PNAT). 13 On the other hand, privately-owned hospitals included those of the Church, the Spanish Red Cross (Cruz Roja), private charitable institutions (similar to the British voluntary hospitals) and private profit-seeking hospitals. This classification according to the type of public or private ownership remained essentially unchanged until 1986. Although property ownership is quite clear, the type of funding and the groups of patients admitted by each type of hospital is much more confusing. In particular, it is difficult to distinguish between the charitable foundations of privately-owned hospitals, which in theory covered poor patients, and the private profit-oriented hospitals which were based on business and market criteria and treated paying patients. This difficulty lies in the fact that, over time, the private charity hospitals increased the number of beds dedicated to paying patients, while a similar process also occurred with the hospitals belonging to the Church and the Red Cross. Meanwhile, some private profit-seeking hospitals dedicated a few working hours a week to treating poor patients, on the grounds of Christian charity. Owing to these blurred distinctions, we feel that property ownership is a much clearer guideline for the Spanish case. 11 The 'Movimiento' was equivalent to the Falange, the single party of the dictatorship (Falange Española Tradicionalista y de las Juntas de Ofensiva Nacional Sindicalista FET y JONS), see Lanero, '¿La salud es lo que importa?'. 12 Created by the royal decree of 10 March 1847, see Marset, Sáez and Martínez, ‘La Salud Pública’. 13 This was an organization to combat tuberculosis, created by the insurgent camp in 1936 during the Spanish Civil War, see Molero, ‘Enfermedad’. 15 agreements with collaborating bodies. The agreements were signed for 10 years. 30 Simultaneously, the promoters of the SOE initiated studies and projects to equip the insurance with its own hospitals. 31 In 1944, the provision of 34,000 beds was initially envisaged. This figure came from an initial estimate made by the technical specialists of the INP, as part of 'an ideal Plan' 32 , assuming that the insurance would cover 60 per cent of the Spanish population (it was expected that 12 per cent of the population would remain as beneficiaries of charitable services and 28 per cent would be under private health insurance) and setting a ratio of 5.5 beds per 1,000 inhabitants as the objective. Consequently, with a population of 26 million, according to the census of 1940, around 40,000 hospital beds were considered necessary. The INP technicians estimated that the SOE could use around 13,200 hospital beds belonging to different entities through collaboration agreements. Nevertheless, after all these opaque calculations, it was finally concluded that the aforementioned figure of 34,000 beds would be needed to implement the insurance. This figure had to be immediately reduced in view of the government’s real financial and economic situation in a period of autarky, hunger and a lack of resources. Thus, a ministerial order of 19 January 1945 finally approved the PNIS with a more modest objective of 16,000 beds; although building work on the hospitals did not start 30 BOE (Official State Gazette) 19/3/1944, no. 79, pp. 2291-3; BOE 9/7/1944, no. 191, pp. 5309-10. Private providers were also initially established for health and hospital coverage in Germany. Compulsory insurance was channelled through friendly societies, other mutual funds and insurance companies that covered the hospital costs of the insured, see Hüntelmann, ‘The Birth of the Patient’ and Dross, Health Care Provision, p. 90. 31 Vilar and Pons, La construcción. 32 INP, Seguro de Enfermedad. This report does not provide details of the calculations made to obtain the final figures. 16 until 1948. The plan allowed five years for its implementation and envisaged the construction of 86 large hospitals with between 100 and 500 beds, 149 large outpatient clinics, 110 smaller ones and 73 maternity institutions. The project would require 1,000 million pesetas. The chosen model was based on US hospitals. 33 The choice of the United States was justified on three grounds: the awful hospital situation in the major European countries after the Second World War, the excellent hospital organization in the United States, and the availability of a substantial number of recently-constructed hospitals. Following this US model, it was decided to build monoblock hospitals, unlike the majority of European hospitals that had been built horizontally or as pavilions, such as the Beaujon Hospital in Paris or the Hospital Mayor in Milan. 34 How did the INP manage to finance the PNIS without reforming the obsolete tax system inherited from the nineteenth century and without receiving direct state funding? This is difficult to trace because only those items that were charged to the account of the PNIS amortization fund appear in the INP’s technical balance; other entries only appear in the INP’s internal accounts. In fact, special resources from three main sources were used to fund the plan. First, advance payments granted by the other social insurances made from the reserve funds. The transfer of funds between the different social insurance items with independent accounts was common practice during the Franco dictatorship. This mechanism led to opaque accounts within the INP (Table 2). 35 Second, the financial insufficiency of the above method eventually made it necessary for the INP to issue bonds in order to fund the PNIS (Table 3). The first loan 33 INP bosses were sent to the United States in 1945 to study their characteristics, see Garay, Los hospitales and Cámara, Fisonomía y vida. 34 INP, Seguro de Enfermedad. 35 Archivo INGESA, Estudio Estadístico del Seguro de Enfermedad de los años 1954, 1955, 1956 y 1957, Alberto Rull Sabaté, 1959, p. 60. 17 to the plan was authorized by a decree of 11 January 1952, which established the issue of bonds to the value of 965 million pesetas. 36 The main subscribers of these bonds were savings banks and mutualidades laborales. 37 In this respect, from 1947, the obra social (social action programme) of the savings banks had been 'kidnapped' by the Ministry of Labour, the authority they were dependent on, and above all by the financial requirements of its social policy within a framework of scant tax resources and a high budget deficit. 38 Finally, to complete the response to the high financial demands of the PNIS, the government also authorized the INP to open a credit account with the Bank of Spain. In a nutshell, the Franco dictatorship intended to construct its own hospital system, comprising large public hospitals known as residencias sanitarias. This term was intended to differentiate the new facilities from older hospitals, as the term 'hospital' had become tarnished by the old network of public charitable institutions. However, the public-owned hospital system lacked an organized and integrated network and had serious shortcomings in terms of the number of hospitals, technological advances and the professionalization of medical attention. Construction was on the basis of the award-winning models from the competition held in 1946. Almost all initial proposals were awarded in an opaque manner to four companies managed by businessmen who had good contacts in the upper echelons of the regime: Eguinoa Hermanos; Empresa Ramón Beamonte; Empresa Huarte y Cía S.L. and Empresa Agroman S.A. (Table 4). This process fits in with the standard practice of commissioning large building projects and the way of doing 36 BOE 16/2/1952, no. 47, p. 719. 37 For a definition of mutualidades laborales and their limited role in healthcare and hospital funding and coverage, see Pons and Vilar, El Seguro de Salud, p. 166. 38 Comín, Historia de la cooperación, p. 227. 18 business under the Franco dictatorship. In fact, the Spanish historiography has described Francoism as a network of common interests between Francoist politicians and entrepreneurs. 39 It seems obvious that the PNIS was not set up to give profits to a handful of entrepreneurs; but once it was decided to build facilities the modus operandi was basically as described above. However, limited funding prevented the proposed objectives from being achieved. As from 1958, triennial plans for healthcare facilities were approved, which effectively replaced the unfinished original PNIS. II Privately-owned hospitals also have a long history in Spain, linked, to a large extent, to individual benefactors and the Church. As well as this historical inheritance related to private charity, in the late nineteenth and early twentieth centuries new hospitals emerged in response to the demand created by new social regulations on work and the workplace. Labour legislation, first on industrial accidents and later on sickness insurance, directly or indirectly obliged companies and employers to build clinics and hospitals to attend to their employees. 40 This was the start of company hospitals and clinics and employers’ industrial accident mutuals. In these cases, they specialized in orthopaedics and occupational illnesses such as hernias, a common disorder in mining. The availability of this infrastructure eventually led to these hospitals accepting other groups of clients and extending their medical care to all types of illnesses. Furthermore, in the first quarter of the twentieth century, a significant number of private healthcare centres were founded thanks to the initiatives of professional doctors. During the 1920s, 39 'Interests' understood here as advantages that are not always legitimate obtained in exchange for other favours, Sánchez, ‘El franquismo’ and Sánchez and Tascón, Los empresarios de Franco. 40 Pons, 'La gestión patronal'; Menéndez-Navarro, 'Hospitales de empresa'; Menéndez-Navarro and Rodríguez Ocaña, 'Aproximación al estudio'; Cohen and Fleta, 'El 'desgaste' en el trabajo'; Pérez Castroviejo, 'Salud laboral'; Martínez Soto, Pérez de Perceval and Sánchez Picón, 'Entre miseria y dolor'. 19 in the larger provincial capitals, specialist doctors founded small clinics equipped with new diagnostic and surgical technology to attend to the better off. In 1944, privately-owned hospitals were very interested in the possibility of collaborating with the state when compulsory sickness insurance was approved and there was a lack of appropriate hospital infrastructure. All firms, insurance companies, mutual societies, montepíos (similar to friendly societies), and igualatorios (doctors’ associations) that signed agreements with the INP to manage the SOE were considered to be collaborating bodies. The decree of 2 March 1944 established the implementing provisions of these agreements. The first agreements were for 10 years. In most cases there was total managerial control: the collaborating body took charge of collecting premiums and also took responsibility for providing economic benefits and healthcare (including hospital treatment). From 1945 to 1957, these entities accounted for more than 70 per cent of premiums of the SOE. The INP required collaborating bodies to pay a deposit and in return for their management they received a percentage of the premiums to cover administration costs. These entities were excluded from the management of the SOE after the Basic Law of Social Security was passed in 1963. 41 This collaboration was profitable both economically and politically, and led to an increase in the number of private hospitals and clinics, supported by public demand. Simultaneously, it prompted improvements in terms of management, costs and the coverage provided by these infrastructures, while the collaborators also benefited by assuming control of the management of the premiums collected. In 1945, the collaborating bodies covered 55 per cent of the companies affiliated to the SOE, 77 per cent of the insured and 74 per cent of the beneficiaries of the insurance. In 1955, this coverage was still 40, 64 and 61 per cent respectively. These private entities attended to 41 Pons, ‘El seguro obligatorio’ and Pons and Vilar, El seguro de salud, p. 118. 20 those covered by the insurance with their own hospital network. These collaborating bodies retained a percentage of the premiums paid by workers and employers, which was set at 20 per cent in 1947 for companies operating on a national scale. However, this percentage was gradually reduced, reaching 11 per cent by 1958. With these percentages, collaborating bodies were able to build new hospital infrastructures. 42 Most of these collaborators had already covered industrial accident insurance since 1900; in other words, they were large companies, employers’ mutuals and private insurance companies. Thanks to this collaboration, the number of privately-owned hospitals increased significantly from 885 to 1,037 between 1949 and 1963, and the availability of beds rose from 38,264 to 52,036 (Table 1). This growth was largely due to the converging interests of the government and the private sector. In 1963, the group of private hospitals accounted for almost 66 per cent of the major health centres in Spain. The total of 1,037 centres included in privately-owned categories for this year included clinics and hospitals belonging to the Church (93), the Red Cross (38), private benefactors (105) and two more that are difficult to categorize. Private hospitals and clinics were registered with the branch of healthcare during the period under study. 43 The Church, through its own funding or by means of private charity institutionalized in foundations, maintained an important number of rural and urban hospitals run and staffed by religious communities, especially the order of San Juan de Dios, or by lay personnel. This network linked to the ancien régime survived despite the sale of Church lands and prolonged its activity, at times in precarious conditions, until the twentieth century. In 1949, there were still 113 hospitals that were the property of 42 Pons and Vilar, El seguro de salud, pp. 121-4. 43 For more details, see Pons and Vilar, El seguro de salud, pp. 269-70. 21 the Catholic Church and which offered 13,030 beds. 44 By 1963, the number of hospitals had fallen to 93, although the number of beds provided had actually increased to 16,978 (Table 1). Following tradition, many of the Church’s centres maintained an important function as asylums and psychiatric hospitals. Specifically, of the 93 Church-owned centres, 13 were asylums and 15 psychiatric hospitals. Most of them, however, maintained the category of general or surgical hospital. As regards the Red Cross, its healthcare work in Spain was initiated in 1870, although the number of hospitals increased from 1918 as a result of war in Morocco, and especially during the Spanish Civil War from 1936 to 1939. 45 The number of Red Cross hospitals remained more or less constant from 1949 to 1963. Its network of medical attention was made up of 32 centres with 1,466 beds in 1949, numbers that had risen to 38 with 1,988 beds by 1963. It must be borne in mind that the hospitals of both the Church and the Spanish Red Cross had virtually no connection with the collaboration agreements of the SOE, and this put a brake on expansion during this period. The hospitals that were classified as voluntary hospitals (dependent on private charity) are more difficult to detect. In the 1963 catalogue, 105 hospitals were included in this category. Most of them had historically enjoyed the patronage of industrialists and merchants, including individuals who had returned from the American continent with fortunes and contributed substantial sums to fund their construction and maintenance. In some cases, these new private foundations allowed modernization, in 44 The Church maintained significant weight in the hospital system in Catholic countries. See the case of Ireland in Lucey, The End of the Irish, p. 3. 45 http://www.cruzroja.es/principal/web/cruz-roja/inicio (accessed on 26 April 2017). 22 contrast to the obsolete hospital model that was maintained in the case of public charity. 46 However, the most heterogeneous group of privately-owned hospitals in Spain in 1963 comprised those classified as profit-making hospitals, and which amounted to a total of 541 centres. The most outstanding case was the province of Barcelona with 97 private clinics and hospitals, followed by Madrid with 58, A Coruña with 44 and Biscay with 42. Most of them were private clinics, promoted by doctors and especially specialists who, especially from the 1920s onwards, had created diagnostic centres or centres for recently-developed medical specialties, and which were favoured by a growing demand in the larger cities. However, another two types of private centres can be distinguished within this group with different origins: hospitals and clinics created by industrial companies, especially mining companies, and those founded by mutual societies and insurance companies. 47 The Dato Law of 1900 obliged employers to provide medical attention and to compensate injured workers in the industrial sector, but it also allowed them to take out insurance. This insurance was made compulsory for the first time in 1932-33. 48 Large companies, especially mining companies, built hospitals to treatsick or injured workers. However, most employers resorted to insurance companies or they joined employers’ 46 Barceló and Comelles, 'La economía política'. 47 To compare the role of friendly societies, insurance mutuals and insurance companies in the private provision of health insurance in Spain and France, see Faure, 'Health Care Provision', p. 318. 48 Pons, 'La gestión patronal', p. 115. As coverage of the risk of industrial accidents was considered from the outset to be the responsibility of the employer. Workers’ societies were only created in order to address one of its consequences: disability. From 1915 to 1925, 12% of the friendly societies accounted for in Spain were specifically concerned with worker disability, Vilar and Pons, ‘The Introduction’ p. 76 and Menéndez-Navarro, 'Hospitales de empresa', p. 331. 23 industrial accident mutuals. Mining company hospitals were especially important in the area of Huelva, and in the provinces of Murcia, Córdoba, León and Biscay. 49 By 1963, many of the mining hospitals had already closed, as mining activity in the area came to an end. However, there were also mining hospitals that remained active. 50 As a result of this process, the group of private hospitals catalogued in 1963 included 25 hospitals and clinics throughout Spain identified as being the property of an insurance company or mutual. 51 On the other hand, there were very few cases of friendly societies with their own hospitals, or at least that were still maintained in 1963. Most friendly societies, after a period of success and growth from 1880 to 1940, had gone into decline in the face of competition from the SOE and difficulties in integrating into the public system. 52 One exception was La Quinta de Salut L’Aliança which, unlike other friendly societies whose members had to undergo operations in associated centres, had its own clinics (1963: 8) (Table 5). The exceptional nature of the hospital network created by La Quinta de Salut friendly society was probably due to two main factors. First, it attracted a growing number of members in provincial capitals in Catalonia through the creation 49 See Cohen, 'Los registros hospitalarios'; Fleta, 'Los riesgos del trabajo'. The creation of hospitals in other European mining regions is recorded in the works compiled by Rainhorn, Santé et travail, in different countries including Belgium, Germany, France and Spain. 50 Martínez Soto and Pérez de Perceval, 'Asistencia sanitaria'. 51 Most of these hospitals were surgical and treated the insured of the insurance companies and mutuals that owned them. What provisions were available depended on the clauses included in the policy. Apart from these patients, the management boards of these hospitals could enter into contracts with other companies or provide care for private patients in order to maximize hospital bed occupancy, see Pons and Vilar, ‘The genesis’. 52 One exception worthy of note is the case of the Federación de Mutualidades de Cataluña which included La Quinta de Salut L’Aliança, Pons and Vilar, 'Friendly Societies'. 24 of clinics. This strategy differentiated this society from other local mutuals, whose members had to go to Barcelona when surgery was required. Second, from very early on it offered free childbirth care whereas other friendly societies only covered hospitalization in cases of difficult births. These features, and others, led to an increase in the number of members, and the scale of its operations enabled this hospital network to be maintained. 53 The other private hospitals belonged to companies created by specialists and surgeons. These were concentrated in the larger provincial capitals. One of the more paradigmatic cases is that of Barcelona. Many medical specialists, some linked to university teaching and with experience at international level, opened private clinics in this city in the 1920s, taking advantage of the demand from the social classes with greater purchasing power and the incapacity of the public sector to provide adequate surgery, new treatments and diagnostic tests. Examples include Clínica Corachán, founded in 1921, and Clínica Platón, Clínica San Jorge and Clínica Bretón, opened in 1925, all three being linked to important medical figures of the time. 54 From 1942 to 1963, these clinics grew not only due to the demand of the better off in urban areas, but also thanks to collaboration with the public sickness insurance, through agreements with insurance companies and mutuals that did not have their own clinics and facilities. Thus they did not just rely on cash payments but could tap into state and mutual insurance. As a result of these different factors, and converging interests with the public health system, private hospitals increased between 1949 and 1963. The 740 hospitals with 23,768 beds in 1949 rose to 906 with 33,070 beds during this period. However, as 53 www.diaridegirona.cat/opinio/2012/03/18/historia-clinica-lalianca/552732.html (accessed on 10 Oct. 2016). 54 Casares and De Fuentes, Història de la Clínica Plató, p. 41. 31 state’s weak financial commitment hindered the progress of the healthcare system in general and the hospital system in particular. The structure of the hospital system continued to be very fragmented. Many hospitals remained underused after they had been built due to a lack of resources, there by failing to live up to the population’s expectations. In an attempt to overcome the lack of a coordinated hospital network, the decree-law of December 1972 was passed. Its only effect was the reorganization of hospitals under the control of the DGS through a new body called Administración Institucional de la Sanidad Nacional (AISNA). 67 The hospitals related to the PNIS were excluded from this process. The inertia resulting from the dualism of the institutions controlled by different families of the regime, and the bureaucratization that was rife in the INP and the DGS, along with management issues and problems of corruption, thwarted the objective of fully coordinating the public hospital network in the hands of the central government. IV Therefore, as indicated in the initial thesis, the factors established by G. Carrin and C. James, crucial to explaining the success of the countries that financed their health and hospital models through workers’ and employers’ contributions, were not satisfied in Spain. 68 This country introduced its state health coverage relatively late and without any historical precedent, except the limited maternity insurance passed in 1929. The state’s lack of legislative and financial commitment in this area led to an obsolete public hospital structure based on charity. Through its ideological wing, the Falange, the dictatorship used social policy to legitimize its power, increase its acceptance by the masses and improve social cohesion after the Civil War. Paradoxically, the burden of 67 Decree-law 13/1972, of 29 December, BOE 10/1/1973, no. 9, pp. 488-90. 68 Carrin and James, Reaching universal. 32 financing this system fell on the workers who were considered the losers of the Civil War and subject to harsh social and labour repression. 69 In this respect, the paper demonstrates the importance of analysing which segment of the population financed the social system, as this is a key element in differentiating the dictatorship’s modus operandi from that of democracies of this period, from a redistributive point of view. Moreover, payroll contributions based on very low wages were not sufficient to fund an expensive insurance, with considerable infrastructure requirements. The cost of infrastructures mushroomed due to the overambitious hospital-building projects of the Falange (through the INP) and unnecessary duplication, resulting from a lack of coordination between (recently-constructed or already existing) facilities and institutions and the exclusion from the system of the hospitals under the DGS, the Falangists’ rival political faction in the inner circles of the regime. The INP, the leading manager of the system, was not a good administrator and remained under the shadow of corruption, opaque accounting and political interests throughout the dictatorship, which did not contribute to the smooth functioning of the system. 70 Finally, G. Carrin and C. James highlighted the need for social and political consensus between stakeholders. This did not exist in Spain, as workers did not have any bargaining or decision-making capacity and the dictatorship continuously catered to the interests of economically powerful groups (including those linked to the private hospital system), which guaranteed the continuance of the regime until the end. As a result, the hospital model that accompanied the development of health coverage was built slowly, following political criteria and serving propaganda purposes rather than concentrating on harnessing and coordinating new and existing resources. When construction of the so-called residencias sanitarias was completed, they 69 Pons and Vilar, 'Labour repression'. 70 Vilar and Pons, 'El debate en torno al seguro de salud'. 33 remained underused (with floors closed and limited provision of services) and poorly managed (with directors handpicked by the political powers and disregarding medical professionals). In sum, to what extent did the social provisions of the Spanish dictatorship offer protection compared with western European democracies? In 1970, social provisions (economic and in kind) as a percentage of national income accounted for 19.4 in Belgium; 18.3 in Germany; 18.8 in France; 17.3 in Italy; 18.9 in the Netherlands and only 8.2 in Spain. 71 During the transition to democracy, in 1977, Fernández Ordoñez’s eagerlyawaited tax reform was approved, which modernized the Spanish fiscal system. In the same year, it was agreed that the state contribution to financing the Social Security would be increased to 20 per cent of its budget. Meanwhile, also in 1977, the INP (plagued by corruption and blighted by the opacity of its accounts) disappeared and a new institution was created for the administration and management of healthcare services, the INSALUD (Instituto Nacional de Salud; National Health Institute). In parallel, during the first legislature of the democracy, the Ministry of Health was created (1977), which integrated all competencies in health matters, managed up to this point by the Ministry of the Interior, and the competencies of the Under-Secretariat for Social Security. The foundations for change had been laid, but Spain still lacked a general health law establishing a healthcare and hospital system. The first governments of the democracy, from 1977 to 1985, were incapable of successfully implementing the project due to the lack of political consensus. Something similar occurred with the private healthcare sector, which during the years of the transition to democracy was awaiting necessary reforms to modernize both its regulatory framework and its business structure. 71 Data obtained from Pons and Vilar, El Seguro de Salud, Table 3.8. 34 Thus, by the beginning of the 1980s, the following were still pending in Spain: a general health law (finally passed in 1986); public funding of the healthcare system through taxation (historically hampered by the failure to implement fiscal reform), universal coverage (limited by the lack of sufficient resources) 72 and the integration of the hospital system (a victim of the historical political bipolarity that existed under the dictatorship between the INP and the DGS with respect to healthcare). 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Evolution of publicly-owned and privately-owned hospitals in Spain 1949-81. 1949 1963 1981 1 2 1 2 1 2 PUBLICLY-OWNED Military 67 18,245 48 14,367 37 10,299 State (P.N.A. y E.T., DGS, others) 128 18,196 164 26,368 206 74,601 INP 36 1,356 56 11,985 SGM 41 2,321 45 2,230 Provincial Council 140 37,021 120 40,256 108 40,896 Municipal Council 325 11,940 156 7,044 58 4,502 Total public 737 89,079 589 102,250 409 130,298 PRIVATELY-OWNED Church 113 13,030 93 16,978 65 13,820 Spanish Red Cross 32 1,466 38 1,988 33 3,482 Private (profit-making and charitable) 740 23,768 906 33,070 547 46,296 Total private 885 38,264 1,037 52,036 645 63,598 TOTAL 1622 127,343 1,626 154,268 1,054 193,896 1: Number of establishments. 2: Number of beds. Source 1949: Anuario Estadístico de España, 1951, p. 684; Source 1963: Boletín Oficial del Estado (Official State Gazette) 13/6/1966, no. 140, pp. 7389-427. In the 1963 catalogue hospital infrastructure in the colonies is also recorded: (Fernando Po (4), Río Muni (11) and Spanish Sahara (5); all under the presidency of the Government).This source also includes the hospitals of the Secretaría General del Movimiento (S.G.M.) and the Patronato Nacional Antituberculoso y de las Enfermedades del Tórax (P.N.A. y E.T.); Source 1981: Anuario Estadístico de España, 1985, p. 709.