What's inside the Black Box: A Case Study of Allocative Politics in the Hill-Burton Program

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Abstract
This paper explores the political and bureaucratic determinants of grant allocations within the Hospital Survey and Construction Act of 1946 (the Hill-Burton Act), which established the major hospital construction subsidy program in the United States. Resource allocation within the Hill-Burton Program was neither purely a function of external political forces impinging on the state nor purely a result of internal organizational factors. Instead, as shown in the analysis which follows, external political forces shaped program structure, operating routines, and rules and regulations at the time of the Program's formation. Rules and regulations depoliticized the grant allocation process while institutionalizing the interests of hospitals and other producers into the program structure. Consumer interests and influence are excluded from program decision making. Once established, the rules and regulations and a set of bureaucratic behaviors play a critical role in determining resource allocation. Rules and regulations facilitate distributing divisible benefits to producer interests in a politically predictable way. Yet rules and regulations must also regulate the supply of hospital beds in accordance with local and national market conditions. The mode of operations required for distributing benefits in a politically predictable way limited the Program's ability to regulate hospital bed supply. This was a critical factor which led the Hill-Burton Program to subsidize excess capacity in the U.S. hospital system and is a useful way of explaining many similar dysfunctions within allocative programs such as Hill-Burton.

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