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June 26, 1937

ORGANIZATION SECTION of the Journal of the American Medical AssociationDevoted to the Organizational, Business, Economic and Social Aspects of Medical Practice

JAMA. 1937;108(26):185B-192B. doi:10.1001/jama.1937.02780260227054

Group Hospitalization 

Note.—  This is the sixth of a series of articles on Group Hospitalization, prepared by the Bureau of Medical Economics of the Association, which is to be published weekly in the American Medical Association Organization Section. When completed, the series will be available in reprint form on request at the head-quarters of the Association.—Ed.Classification according to nonprofit and profit plans does not seem valid, because a nonprofit plan may include a contract with a sales agency which makes profit. Furthermore, it is essential for a plan to make profit if it is to remain solvent. The stigma attaches not to the making of profit but to the manner in which the surplus is used. A noncommercial plan is assumed to be operated not for profit but in addition avoids the excessive diversion of receipts from members to an intervening third party for services not directly resulting in benefits for the members. The classification "noncommercial" indicates a group hospitalization plan with the control of service provisions and membership funds in the hands of those responsible for the benefits, namely, the hospitals and physicians, or an association properly representative of them. The classification "commercial" includes nonprofit as well as profit plans which are organized by commercial sales agencies.

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