The First Trustees: History Lessons

“I do not remember any of my political manoeuvres, the success of which gave me at the time more pleasure ...”

— Benjamin Franklin, on his role in founding the first hospital in the American colonies

In May 1751, Dr. Thomas Bond and Benjamin Franklin created the first hospital board in what is now the United States. 

Even though circumstances at the Pennsylvania Hospital in Philadelphia — the first chartered hospital in the American colonies — were quite different from those facing today’s institutions, smart practices were followed there that still are worth considering in hospital boardrooms more than 250 years later.

But before reviewing these practices, it is important to understand the social and economic landscape in 1751 and the main issues facing the first board of trustees. By reflecting on the initial intent and purposes of the Pennsylvania Hospital’s board, today’s trustees can observe the historical fundamentals of board work as we move into the future of population health management.

Forming the hospital

A 39-year-old physician originally from Maryland, Bond had been trained in England and recognized the value of an organization dedicated to the evolving science of medicine when he returned to Philadelphia.

In the mid-18th century, Philadelphia was growing, from a population of fewer than 10,000 to more than 25,000 people, surpassing Boston in size before later being overtaken by New York as the largest city in the American colonies.

The city was 100 miles up the Delaware River from the ocean but was one of the early seaports for the trans-Atlantic trade, which brought with it a fear of shipborne contagious diseases. As Simon Finger describes in The Contagious City: The Politics of Public Health in Early Philadelphia, the expanding population experienced communicable disease and mental health issues that threatened the stability of the overall community. With Quakers accounting for a large portion of Pennsylvania’s leadership, there was also a keen commitment to ensure all segments of the increasing population were afforded access to basic welfare services.

Early hospitals in America had their roots in institutions in England, Europe and the Middle East. As part of a growing movement, English hospitals embraced accountable governance and management. Having worked in hospitals in England, Bond wanted one in Pennsylvania. But he and other would-be founders of a provincial hospital needed official backing to establish an organization that would serve as a resource for the poor and destitute.

Frustrated that he could not secure the political support and money for what would be the first institution of its kind in the colony, Bond engaged his friend Benjamin Franklin in 1750 to help work through the politics and fundraising. Franklin acknowledged the need for a hospital and lobbied friends and officials for support. The Pennsylvania Assembly, however, conditioned its support on Franklin being able to deliver 2,000 pounds from community contributors (more than $500,000 in today’s money). Franklin exceeded the goal by securing 2,700 pounds in a matter of weeks, enabling the birth of the first general hospital in what would become the United States. Formal permission from London was obtained, four acres of land were donated in September 1751 by a wealthy German merchant, and the structure’s cornerstone was laid by Franklin on May 28, 1755.

As Franklin guided the project through the many political obstacles it faced during the long process of planning and financing, Finger details, he championed the hospital not only as a charity but also as an instrument of economic development that supported global trade and local employment.

The first board was clever in structuring a limited pool of funds to construct the hospital, along with funds that could be loaned at fair interest as a source of capital. The Pennsylvania Hospital became one of the city’s most important sources of credit, loaning out 35,000 pounds from the time of its creation through American independence in 1776.

Setting the standards

“Resolved to meet at the Hospital on the last Monday in every month at 5 o’clock in the afternoon till the end of the month called September, and at 3 o’clock during the remainder of the year. Each member is to pay 2 shillings for a total absence and one shilling for not coming on time, and for each hour’s absence after the fixed time six pence per hour, all of which fines to be disposed of as the majority direct. The Town Clock or when that does not strike, the watch of the oldest person present to be the standard to determine the time.”

— From a Pennsylvania Hospital Board of Managers meeting in 1756, in The History of the Pennsylvania Hospital, 1751-1895, by Thomas George Morton and Frank Woodbury

The first board, the Pennsylvania Hospital Board of Managers, consisted of 12 men who were prominent merchants and politicians, all about 36 to 49 years old and most with family links to England. All were hospital donors and were elected by the charitable entity’s contributors, or members (donations were relatively small and included amounts from 7 to 70 pounds, or about $1,900-$19,000 today).

Many of these community leaders were Quakers, and from detailed meeting minutes, their desire and struggles to balance services for the sick, poor and mentally ill with prudent stewardship of scarce donated resources are clear. Their situation was not unlike that of today’s trustees, with a common focus on population health. The first trustees hoped to create an urban organization that could address the problems created by population growth and provide health benefits for the community.

Embracing the practical and prudent tenets of their Protestant religious outlook, the board established clear position descriptions for its members and for the small medical staff and hospital staff (managers, matrons and pharmacists/apothecaries). The Board of Managers agreed to meet monthly with an agenda that appears to have balanced these pressing issues:

1. Who should we allow to seek care (with the understanding that there would be no charge for patient services)?
2. How can we expand and improve facilities?
3. How can we ensure good quality?

As the Revolutionary War swept through the colonies in the 1770s and '80s, the hospital’s board was not immune from tensions between Loyalists and Patriots. Almost half of the board’s members, who were Quaker pacifists, were sent to a prison in Stoughton, Virginia, because of their unwillingness to use the hospital for revolutionary soldiers.

Now, that is really interboard disagreement!

Reminders for today’s trustees

The work of these early trustees reminds us that fulfilling fiduciary duties today builds on a long history of responsibility and disciplined decision-making. An in-depth review of accounts of the first board suggests five insights that are particularly relevant to today’s trustees as they navigate the challenges of population health management and accountable care for their communities:

1. Board work remains centered on how governance decisions can create the conditions within which those who deliver and manage health services for the vulnerable are more likely to be successful — by removing political and economic barriers to innovative service delivery and assembling resources for continuous process improvements.
2. Community leaders cannot rely on government alone to anticipate or fund innovative responses to the changing health and welfare needs of the people they exist to serve.
3. The focus of board work is not just health care but health gain, which is recognized to be dependent on addressing the social determinants of health outlined by the World Health Organization. Poverty, poor sanitation, polluted water and food along the wharves of the Delaware River could not be ignored by the Pennsylvania Hospital board members.
4. Board decision-making must be anchored within the unique political and economic context of each community as well as reflect the standards of care for the nation as a whole. The first board members sought the most recent standards of scientific inquiry and the continuous improvement of their processes through their overlapping memberships in the Library Company of Philadelphia and the American Philosophical Society, the first subscription library and first learned society in the New World.
5. Board work effectiveness and efficiency is dependent on how the board organizes and uses its time within agendas that balance these varied topics:
   • Criteria of who can and how best they can access our services and resources.
   • How to ensure and support the quality of work of physician colleagues and allied health personnel working in the health system.
   • Investing in and making the best use of modern technologies for the beneficiaries of our services.
   • The ongoing pursuit of capital to fuel our pursuit of excellent health processes and outcomes.
   • The challenge of attracting, engaging and developing community leaders to serve with us in our board work.

Then, as today, one of the most important factors in the success of a health system is its board. Like the first trustees, today’s board members face internal challenges and external scrutiny regarding the quality, effectiveness and efficiency of the execution of their fiduciary duties.

As ever-increasing regulations and scrutiny require more time, oversight and accountability from board members, board work is becoming more complex. And with population health management and the influence of consumerism increasingly becoming the drivers of health care, understanding and acknowledging the commonalities of trusteeship in 1751 and today can guide board decision-making. 

Jim Rice, Ph.D., FACHE, is the managing director and practice leader of the governance & leadership practice of Integrated Healthcare Strategies, a division of Gallagher Benefit Services Inc. He holds master’s degrees and doctorates in management and health policy, along with several faculty positions, and has received numerous awards and fellowships. Rice is a fellow in the American College of Healthcare Executives and serves on the boards of directors for Children’s HeartLink and Crescent Cove.