How to fund a hospital

How to fund their institution was an important question facing hospital governors before 1914. A simple answer would be from charity in the form of subscriptions and donations. As nineteenth-century hospitals were essentially charitable institutions, their supporters gave money in the form of an annual subscription or a donation, with a few leaving money in their wills. Donations and legacies could range from a few pence to thousands of pounds. While legacies were unpredictable, hospitals worked hard to raise subscriptions and donations, which were considered more reliable forms of income: if you look at any Victorian newspaper, you will find many column inches devoted to their appeals. Through their appeals, hospitals manipulated the public to donate using every means possible from pulling on the heartstrings - an approach children's hospitals excelled at - to appealing to more selfish motives by emphasising how supporting a hospital would advance medicine to the benefit of rich and poor alike. As hospitals could not afford to wait for the charitable to favour them, they developed new, dynamic ways of fundraising. Some of these, like the charity concert, the street collection or the bazaar (much like a jumble sale), are still used. More entrepreneurial schemes were developed. For example, following the Hospital for Sick Children's lead, hospitals encouraged supporters to endow beds with their name on them. Other initiatives were designed to support more than one hospital, as seen in the work of the Hospital Saturday Fund and the Hospital Sunday Fund. Such was the volume of appeals that complaints were made as some contemporaries feared that the public were being worn out by hospitals' constant fundraising.

Although giving to charity was very much part-and-parcel of Victorian society - many middle-class families gave roughly 10 per cent of their annual income to charity - and the public generously supported hospitals, income from subscriptions and donations was insufficient to meet their needs. No matter how charitable the public, there was a limit that even the most vigorous fundraising could not overcome. The explanation can be found in hospital expenditure. This rose much faster than income as hospitals invested in new medical technology, better-trained nurses or new buildings. As hospitals expanded, their appetite for funds grew beyond the charitable resources available. Consequently, hospitals actively sought new sources of income. The most controversial was setting aside a ward or a number of beds for more well-to-do patients who would be charged for care, a source of funding that sat uneasily with hospitals' charitable nature. More commonly, hospitals invested in land, bought property for rental income, and speculated on the stock market. When times were hard they sold their investments. They borrowed money when they needed to build or when in debt. Those with nursing schools hired out their nurses to middle class families, while teaching hospitals made money from student fees. By the 1890s, hospital finance had become a complicated business as the proportion of income from non-charitable sources represented over 50 per cent of their funding.

The relative decline in charitable income as a source of funding was causing alarm by the end of the nineteenth century as it became obvious that charity was unable to meet the ever-increasing cost of institutional medical care. People started to talk of a crisis. However, few suggested that the state should intervene. Instead, the principle of charitable funding was upheld, but as the hospital developed as a medical institution and costs rose in the first half of the twentieth century the need for state support increasingly became the only realistic option.

Author: Dr Keir Waddington, Head of History, Cardiff University