Hospitalists are a predictable response to Medicare’s DRG payment scheme. Pay hospitals a fixed amount per admission, and the whole system will favor physicians optimized for throughput, length-of-stay control, and inpatient standardization. The real responsibility lies upstream with the technocratic coalition that built and nationalized DRGs: Yale’s Fetter and Thompson; New Jersey’s health commissioner Dr. Joanne Finley, early champion; HCFA and HHS officials such as Richard Schweiker and Carolyne Davis; AHA advocates such as Jack Owen; and congressional operatives such as Sheila Burke and John Salmon, who helped carry the policy through Capitol Hill. This was a bipartisan technocratic project, championed by Sen. Dole and Rep. Rostenkowski and later signed into law by Pres. Reagan. It was a classic Hayekian fatal conceit: the belief that a small class of planners, armed with abstractions and administrative power, could redesign the hospital order from above without unleashing distortions they neither foresaw nor could later control. The current MAGA political class suffers from the same conceit today; witness RFK/Oz, convinced the system they do not understand is not too broken to fix, assembling a group of “experts” that this time will finally give us the right top down solutions.
