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 DETAILED CONTENTS

List of Cases...............................................................................................xv
Preface to the Fourth Edition....................................................................xvii

Chapter 1. Why Health Economics?....................................................1

1.1 Why Health Economics?..............................................1
1.2 Economics as a Map for Decision Making....................2
1.3 Special Challenges for Healthcare Managers.................3
1.3.1 Risk and Uncertainty.............................................4
1.3.2 Insurance...............................................................4
1.3.3 Information Asymmetries.......................................5
1.3.4 Not-for-Profit Organizations..................................5
1.3.5 Technological and Institutional Change.................6
1.4 Turmoil in the Healthcare System................................6
1.4.1 The Pressure to Reduce Costs................................7
1.4.2 The Fragmentation of Healthcare Payments...........8
1.5 What Does Economics Study?......................................9
1.6 Conclusion.................................................................13
Exercises..........................................................................13
References........................................................................15

Chapter 2. An Overview of the US Healthcare System......................17

2.1 Input and Output Views of Healthcare......................17
2.1.1 The Input View...................................................18
2.1.2 The Output View.................................................20
2.2 Health Outcomes.......................................................20
2.3 Outputs of the Healthcare System..............................22
2.3.1 Why Is How Much We Spend on Healthcare
Interesting?..............................................................22
2.3.2 Why Is Healthcare Spending Rising More Slowly
Than Anticipated?.....................................................22
2.4 The Shifting Pattern of Healthcare Spending.............25
2.5 Disruptive Change in the Healthcare System..............27
2.5.1 Rapid Technological Change................................28

vii

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 viii Det a iled C o n te n ts

2.5.2 Major Features of the Affordable Care Act...........30

2.5.3 The Transformation of the Health Insurance
Industry...................................................................31
2.6 Conclusion.................................................................32
Exercises..........................................................................32
References........................................................................34

Chapter 3. An Overview of the Healthcare Financing System............37

3.1 Introduction..............................................................37
3.1.1 Paying for Medical Care.......................................37
3.1.2 Direct Spending...................................................38
3.1.3 Sources of Insurance............................................39
3.1.4 The Uninsured....................................................39
3.2 What Is Insurance, and Why Is It So Prevalent?.........40
3.2.1 What Insurance Does...........................................40
3.2.2 Adverse Selection and Moral Hazard....................41
3.2.3 Medicare as an Example of Complexity................42
3.3 The Changing Nature of Health Insurance................44
3.4 Payment Systems........................................................48
3.5 Conclusion.................................................................51
Exercises..........................................................................51
References........................................................................52

Chapter 4. Describing, Evaluating, and Managing Risk......................55

4.1 Introduction..............................................................55
4.2 Describing Potential Outcomes..................................56
4.3 Evaluating Outcomes.................................................58
4.3.1 Expected Values...................................................58
4.3.2 Outcome Variation...............................................60
4.3.3 Risk Preferences...................................................62
4.3.4 Decision Analysis.................................................63
4.3.5 Sensitivity Analysis...............................................63
4.3.6 Scenario Analysis..................................................64
4.4 Managing Risk...........................................................64
4.4.1 Risk Sharing.........................................................64
4.4.2 Diversification......................................................65
4.5 Conclusion.................................................................67
Exercises..........................................................................68
References........................................................................71

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 D etailed C ontents ix

Chapter 5. Understanding Costs........................................................73

5.1 Understanding Costs..................................................73
5.2 Cost Perspectives.......................................................74
5.3 Vocabulary.................................................................77
5.4 Factors That Influence Costs......................................79
5.4.1 Outputs...............................................................79
5.4.2 Input Costs..........................................................81
5.4.3 Technology..........................................................81
5.4.4 Efficiency.............................................................81
5.5 Variable and Fixed Costs............................................82
5.6 Conclusion.................................................................85
Exercises..........................................................................85
References........................................................................87

Chapter 6. Realizing the Triple Aim..................................................89

6.1 What Is the Triple Aim?.............................................89
6.1.1 Accountable Care Organizations..........................90
6.1.2 Bundled Payments...............................................91
6.1.3 Patient-Centered Medical Homes........................91
6.1.4 Value-Based Insurance Designs............................93
6.2 Improving the Experience of Care ............................96
6.3 Improving Population Health....................................97
6.3.1 What Is Population Health?.................................97
6.3.2 What Are Modifiable Social Determinants of
Health?.....................................................................98
6.4 Reducing Cost per Capita..........................................98
6.5 Conclusion...............................................................101
Exercises........................................................................102
References......................................................................103

Chapter 7. The Demand for Healthcare Products............................109

7.1 Introduction............................................................109
7.1.1 Rationing...........................................................110
7.1.2 Indirect Payments and Insurance........................111
7.2 Why Demand for Healthcare Is Complex.................111
7.3 Demand Without Insurance and Healthcare
Professionals..............................................................112
7.3.1 Changes in Price................................................112
7.3.2 Factors Other Than Price...................................114
7.4 Demand with Insurance...........................................115

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 x Det a iled C o n te n ts

7.5 Demand with Advice from Providers........................118

7.6 Conclusion...............................................................120
Exercises........................................................................121
References......................................................................123

Chapter 8. Elasticities......................................................................125
8.1 Introduction............................................................125
8.2 Elasticities................................................................126
8.3 Income Elasticities...................................................127
8.4 Price Elasticities of Demand.....................................127
8.5 Other Elasticities......................................................130
8.6 Using Elasticities......................................................130
8.7 Conclusion...............................................................132
Exercises........................................................................133
References......................................................................134

Chapter 9. Forecasting....................................................................137
9.1 Introduction............................................................137
9.2 What Is a Sales Forecast?..........................................138
9.3 Forecasting..............................................................140
9.4 What Matters?..........................................................145
9.5 Conclusion...............................................................148
Exercises .......................................................................149
References......................................................................152

Chapter 10. Supply and Demand Analysis..........................................153

10.1 Introduction..........................................................153
10.1.1 Supply Curves..................................................154
10.1.2 Demand Curves...............................................155
10.1.3 Equilibrium.....................................................155
10.1.4 Professional Advice and Imperfect
Competition...........................................................155
10.2 Demand and Supply Shifts.....................................156
10.2.1 A Shift in Demand...........................................158
10.2.2 A Shift in Supply..............................................159
10.3 Shortage and Surplus.............................................160
10.4 Analyses of Multiple Markets..................................162
10.5 Conclusion.............................................................163
Exercises........................................................................163
References......................................................................167

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 D etailed C ontents xi

Chapter 11. Maximizing Profits.........................................................169

11.1 Introduction..........................................................169
11.2 Cutting Costs to Increase Profits............................170
11.2.1 Cost Reduction Through Improved Clinical
Management..........................................................171
11.2.2 Reengineering..................................................173
11.3 Maximizing Profits.................................................173
11.4 Return on Investment............................................175
11.5 Producing to Stock or to Order.............................176
11.6 Not-for-Profit Organizations..................................177
11.6.1 Agency Problems.............................................177
11.6.2 Differences in Goals.........................................177
11.6.3 Differences in Costs.........................................178
11.7 Conclusion.............................................................180
Exercises........................................................................181
References......................................................................183

Chapter 12. Pricing...........................................................................185

12.1 Introduction..........................................................185
12.2 The Economic Model of Pricing............................186
12.3 Pricing and Profits.................................................187
12.4 Price Discrimination...............................................189
12.5 Multipart Pricing...................................................192
12.6 Pricing and Managed Care.....................................194
12.7 Conclusion.............................................................195
Exercises........................................................................196
References......................................................................198

Chapter 13. Asymmetric Information and Incentives.........................199

13.1 Asymmetric Information........................................199
13.2 Opportunism.........................................................200
13.2.1 Remedies for Asymmetric Information.............201
13.2.2 The Special Challenges for Healthcare.............201
13.2.3 Signaling..........................................................202
13.3 Incentive Design for Providers...............................202
13.4 Insurance and Incentives........................................205
13.5 Limits on Incentive-Based Payments......................208
13.5.1 Risk.................................................................208
13.5.2 Complexity......................................................208
13.5.3 Opportunistic Responses..................................208

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 xii Det a iled C o n te n ts

13.5.4 Team Production.............................................209

13.6 Incentive Design for Managers...............................209
13.7 Conclusion.............................................................213
Exercises........................................................................213
References......................................................................216

Chapter 14. Economic Analysis of Clinical and Managerial

Interventions..............................................................219
14.1 Introduction..........................................................219
14.2 Cost Analysis..........................................................221
14.2.1 Identifying a Cost Perspective..........................221
14.2.2 Identifying Resources and Opportunity Costs....222
14.2.3 Direct and Indirect Costs.................................223
14.3 Types of Analysis....................................................223
14.4 Cost-Minimization Analysis....................................224
14.5 Cost-Effectiveness Analysis.....................................225
14.6 Cost–Benefit Analysis.............................................226
14.7 Cost–Utility Analysis..............................................228
14.8 Conclusion.............................................................233
Exercises........................................................................234
References......................................................................235

Chapter 15. Profits, Market Structure, and Market Power.................237

15.1 Introduction..........................................................237
15.2 Rivalry Among Existing Firms................................239
15.3 Defining Market Structures....................................240
15.4 Customers’ Bargaining Power................................241
15.5 The Bargaining Power of Suppliers........................243
15.6 Entry by Potential Rivals........................................244
15.7 Market Structure and Markups...............................245
15.7.1 Markups...........................................................246
15.7.2 The Impact of Market Structure on Prices.......247
15.8 Market Power and Profits.......................................248
15.8.1 Collusion.........................................................248
15.8.2 Product Differentiation and Advertising...........249
15.9 Conclusion.............................................................253
Exercises........................................................................254
References......................................................................256

Chapter 16. Government Intervention in Healthcare Markets...........257

16.1 Government Intervention in Healthcare.................258

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 D etailed C ontents xiii

16.1.1 On the Virtues of Markets...............................258

16.1.2 Information Processing....................................258
16.1.3 Static Resource Allocation................................260
16.1.4 Dynamic Resource Allocation..........................261
16.2 Market Failure.......................................................261
16.2.1 Externalities.....................................................262
16.2.2 Public Goods...................................................264
16.2.3 Imperfect Competition....................................267
16.2.4 Imperfect Information and Incomplete
Markets..................................................................267
16.2.5 Natural Monopoly...........................................269
16.2.6 Income Redistribution.....................................269
16.3 Remedies...............................................................269
16.3.1 Assignment of Property Rights.........................270
16.3.2 Taxes and Subsidies..........................................271
16.3.3 Public Production............................................272
16.3.4 Regulation.......................................................272
16.4 Conclusion.............................................................272
Exercises........................................................................273
References......................................................................276

Chapter 17. Regulation.....................................................................277

17.1 Introduction..........................................................277
17.2 Market Imperfections.............................................278
17.2.1 Insurance.........................................................279
17.2.2 Market Power..................................................279
17.2.3 Externalities.....................................................279
17.3 Rational Consumer Ignorance................................280
17.4 The Interest Group Model of Regulation...............281
17.4.1 Limiting Competition......................................282
17.4.2 Licensure.........................................................282
17.4.3 Regulation as a Competitive Strategy...............283
17.5 Regulatory Imperfections.......................................283
17.6 Market Responses to Market Imperfections............285
17.6.1 Tort Law and Contract Law.............................286
17.6.2 Information Dissemination..............................286
17.6.3 Contracts.........................................................287
17.7 Conclusion.............................................................288
Exercises........................................................................289
References......................................................................291

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 xiv Det a iled C o n te n ts

Chapter 18. Behavioral Economics....................................................293

18.1 Introduction..........................................................293
18.2 Inconsistent Preferences.........................................294
18.3 Risk Preferences ....................................................296
18.4 Incorrect Beliefs.....................................................297
18.5 Representativeness and the Law of Small
Numbers...................................................................299
18.6 Inconsistent Decision Making: Framing ................300
18.7 Conclusion.............................................................303
Exercises........................................................................304
Note..............................................................................306
References......................................................................306

Answers to Select Chapter Exercises...........................................................309

Glossary..................................................................................................313
Index......................................................................................................323
About the Author....................................................................................341

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 LIST OF CASES

Case 1.1 Why Is the Pressure to Reduce Healthcare Costs

So Strong?...............................................................................7
Case 1.2 Why Does the United States Spend So Much More?.............11
Case 2.1 Comparing Health Outcomes in Adjoining Counties.............23
Case 3.1 Oregon’s Coordinated Care Organizations............................45
Case 3.2 Geisinger’s Transformation....................................................48
Case 4.1 Managing Risk in Medicare Advantage Plans.........................57
Case 4.2 Diversification by Joint Venture and Acquisition....................66
Case 5.1 Cost Reductions at Baptist Health System.............................76
Case 5.2 Improving Performance in Primary Care...............................80
Case 5.3 Costs of Care in the Emergency Department.........................83
Case 6.1 Can Patient-Centered Medical Homes Help Realize
the Triple Aim?......................................................................92
Case 6.2 Centers of Excellence............................................................95
Case 6.3 Would Medicare for All Reduce Costs?................................100
Case 7.1 MinuteClinic.......................................................................117
Case 8.1 The Curious Case of Daraprim............................................128
Case 8.2 Should Sodas Be Taxed?......................................................131
Case 9.1 Forecasting Supply Use........................................................139
Case 9.2 Mistakes to Avoid When Making Forecasts..........................147
Case 10.1 Worrying About Demand Shifts...........................................157
Case 10.2 How Large Will the Shortage of Primary Care
Physicians Be?......................................................................161
Case 11.1 Profiting from Clinical Improvement...................................172
Case 11.2 Tax Exemptions for Not-for-Profit Hospitals.......................178
Case 12.1 Price Discrimination in Practice...........................................190

xv

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 xvi L is t o f Ca s e s

Case 12.2 What Should You Charge?...................................................192

Case 12.3 Should My Firm Accept This Contract?...............................194
Case 13.1 Incentives in Accountable Care Organizations.....................206
Case 13.2 The Total Care and Cost Improvement Program.................211
Case 14.1 Teledermatology..................................................................231
Case 15.1 Should Governments Participate in Price Negotiations?.......242
Case 15.2 Deregulating Pharmaceutical Advertising.............................252
Case 16.1 Setting Prices for Walkers....................................................259
Case 16.2 To Vaccinate or Not............................................................265
Case 17.1 Monks, Caskets, and the Supreme Court.............................284
Case 17.2 Changing Consumer Information........................................287
Case 18.1 Encouraging Employees and Patients to Be Active...............295
Case 18.2 Children’s Health Insurance................................................301

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 PREFACE TO THE FOURTH EDITION

A fourth edition of Economics for Healthcare Managers was needed for

three main reasons. The principal reason is the dramatic changes underway.
Health insurance and healthcare have already changed, partly because of the
implementation of the Affordable Care Act of 2010 and partly because of
the increasing ability of insurers and sponsors to identify efficient and inef-
ficient providers of care. Providers have begun to respond to these changes
in insurance; the full extent of provider responses is impossible to forecast.
Nonetheless, change is in the wind, and everyone in healthcare must be pre-
pared. The radical idea that success requires offering customers exceptional
value is becoming more common in healthcare. While challenging, this classic
prescription for managing turbulent times is one of the most useful ideas that
economics has to offer.
Second, the purview of healthcare managers has expanded signifi-
cantly. Improving a population’s health, not just its healthcare, has become
a challenge for managers. A population health approach adds genetics, indi-
vidual behavior, public health interventions, and social determinants of health
to the concerns of working managers.
Third, the fourth edition expands opportunities for active learning.
The number of cases has been expanded, and the instructor resources offer
multiple activities that allow students to engage with the thorny economic
issues that healthcare managers must address. With study questions and at
least one case for discussion in each chapter, this text and its online instructor
resources are designed to facilitate discussion and learning.
The fourth edition remains firmly focused on the economics that
healthcare managers must understand to be effective, but it updates the ref-
erences and offers students a glimpse into contemporary research. Although
many classic citations remain vital, research has exploded in the last five years.
The fourth edition shares some of this new work with students in an acces-
sible way.

xvii

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 xviii Prefa c e t o th e Fo u r th E d i ti o n

Instructor Resources

This book’s instructor resources include answers to the study ques-

tions, guides to the cases, a PowerPoint presentation for each chapter,
a lesson plan for each chapter, and a test bank.
For the most up-to-date information about this book and its
instructor resources, go to ache.org/HAP and search for the book’s
order code (2380).
This book’s instructor resources are available to instructors who
adopt this book for use in their course. For access information, please
e-mail [email protected].

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 CHAPTER

WHY HEALTH ECONOMICS? 1

Learning Objectives

After reading this chapter, students will be able to

• describe the value of economics for managers,

• identify major challenges for healthcare managers,
• find current information about health outcomes, and
• distinguish between positive and normative economics.

Key Concepts

• Economics helps managers focus on key issues.

• Economics helps managers understand goal-oriented decision making.
• Economics helps managers understand strategic decision making.
• Economics gives managers a framework for understanding costs.
• Economics gives managers a framework for understanding market
demand.
• Economics gives managers a framework for assessing profitability.
• Economics helps managers understand risk and uncertainty.
• Economics helps managers understand insurance.
• Economics helps managers understand information asymmetries.
• Economics helps managers deal with rapid change.

1.1 Why Health Economics?

Why should working healthcare managers study economics? This simple

question is really two questions. Why is economics valuable for managers?
What special challenges do healthcare managers face? These questions moti-
vate this book.
Why is economics valuable for managers? There are six reasons. We
will briefly touch on each of them to highlight the themes we will develop
in later chapters.

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 2 Ec o n o m ic s f o r H e a l th c a re M a n a g e r s

1. Economics helps managers focus on key issues. Economics helps

managers wade through the deluge of information they confront and
identify the data they need.
2. Economics outlines strategies for realizing goals given the available
resources. A primary task of economics is to explore carefully the
implications of rational decision making.
3. Economics gives managers ground rules for strategic decision making.
When rivals are not only competing against them but watching what
they do, managers must be prepared to think strategically.
cost 4. Economics gives managers a framework for making sense of costs.
The value of a Managers need to understand costs because good decisions are unlikely
resource in its next
best use.
to be made without this understanding.
5. Economics gives managers a framework for thinking about value.
The benefits of the goods and services that successful organizations
provide to customers exceed the costs of producing those goods and
services. Good management decisions require an understanding of how
customers perceive value.
6. Most importantly, economics sensitizes managers to fundamental ideas
that affect the operations of every organization. Effective management
begins with the recognition that consumers are sensitive to price
differences, that organizations compete to advance the interests of
their stakeholders, and that success comes from providing value to
customers.

1.2 Economics as a Map for Decision Making

Economics provides a map for decision making. Maps do two things. They
highlight key features and suppress unimportant features. To drive from Des
Moines, Iowa, to Dallas, Texas, you need to know how the major highways
connect. You do not want to know the name and location of each street in
each town you pass through. Of course, what is important and what is unim-
portant depend on the task at hand. If you want to drive from West 116th
Street and Ridgeview Road in Olathe, Kansas, to the Truman homestead in
Independence, Missouri, a map that describes only the interstate highway
system will be of limited value to you. You need to know which map is the
right tool for your situation.
Using a map takes knowledge and skill. You need to know what infor-
mation you need, or you may choose the wrong map and be swamped in
extraneous data or lost without key facts. Having the right map is no guar-
antee that you can use it, however. You need to practice to be able to use a
map quickly and effectively.

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 C hap ter 1: Why H ealth Ec onom ic s? 3

Like a map, economics highlights some issues and suppresses others.

For example, it tells managers to focus on marginal or incremental costs, marginal or
which makes understanding and managing costs much simpler, but econom- incremental cost
The cost of
ics has little to say about the belief systems that motivate consumer behavior. producing an
If you are seeking to make therapeutic regimens easier to adhere to by mak- additional unit of
ing them more consistent with consumers’ belief systems, economics is not output.
a helpful map. If, on the other hand, you want to decide whether setting up
an urgent care clinic is financially feasible, economics helps you focus on how
your project will change revenues and costs.
Economics also gives managers a framework for understanding rational
decision making. Rational decision making involves making choices that rational decision
further one’s goals given the resources available. Whether those goals include making
Choosing the
maximizing profits, securing the health of the indigent, or other objectives, the course of action
framework is much the same. It entails looking at benefits and costs to realize that offers the best
the largest net benefit. (We will explore this question further in section 1.5.) outcomes, given
Managers must understand costs and be able to explain costs to others. the constraints
one faces.
Confusion about costs is common, so confusion in decision making is also
common. Confusion about benefits is even more widespread than confu-
sion about costs. As a result, management decisions in healthcare often leave
much to be desired.
Economists typically speak about economics at a theoretical level,
using “perfectly competitive markets” (which are, for the most part, mythi-
cal social structures) as a model; as a result, application of economics can be
difficult for managers competing in real-world markets. Yet, economics offers
concrete guidance about pricing, contracting, and other quandaries that
managers face. Economics also offers a framework for evaluating the strategic
choices managers must make. Many healthcare organizations have rivals, so
good decisions must take into account what the competition is doing. Will
being the first to enter a market give your organization an advantage, or
will it give your rivals a low-cost way of seeing what works and what does
not? Will buying primary care practices bring you increased market share or
buyer’s remorse? Knowing economics will not make these choices easy, but it
can give managers a plan for sorting through the issues.

1.3 Special Challenges for Healthcare Managers

What special challenges do healthcare managers face? Healthcare managers
face five issues more than other managers do:

1. The central roles of risk and uncertainty

2. The complexities created by insurance
3. The perils produced by information asymmetries

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 4 Ec o n o m ic s f o r H e a l th c a re M a n a g e r s

4. The problems posed by not-for-profit organizations

5. The rapid and confusing course of technical and institutional change

Let us look at each of these challenges in more depth.

1.3.1 Risk and Uncertainty

Risk and uncertainty are defining features of healthcare markets and health-
care organizations. Both the incidence of illness and the effectiveness of
medical care should be described in terms of probabilities. For example, the
right therapy, provided the right way, usually carries some risk of failure. A
proportion of patients will experience harmful side effects, and a proportion
of patients will not benefit. As a result, management of costs and quality pres-
ents difficult challenges. Has a provider produced bad outcomes because he
was unlucky and had to treat an extremely sick panel of patients, or because
he encountered a panel of patients for whom standard therapies were inef-
fective? Did his colleagues let him down? Or was he incompetent, sloppy, or
lazy? The reason is not always evident.

1.3.2 Insurance
Because risk and uncertainty are inherent in healthcare, most consumers
have health insurance, and healthcare organizations have to contend with
the management problems insurance presents. First, insurance creates confu-
sion about who the customer is. Customers use the products, but insurance
plans often pay most of the bill. Moreover, most people with private medi-
cal insurance receive coverage through their employer (in large part because
the tax system makes this arrangement advantageous). Although economists
generally agree that employees ultimately pay for insurance via wage reduc-
tions, most employees do not know the costs of their insurance alternatives
(and unless they are changing jobs, they have limited interest in finding out).
As a result of this situation, employees remain unaware of the true costs of
care and are not eager to balance cost and value. If insurance is footing the
bill, most patients choose the best, most expensive treatment—a choice they
might not make if they were paying the full cost.
In addition, insurance makes even simple transactions complex. Most
transactions involve at least three parties (the patient, the insurer, and the
provider), and many involve more. To add to the confusion, most providers
deal with a wide array of insurance plans and face blizzards of disparate claim
forms and payment systems. Increasing numbers of insurance plans have
negotiated individual payment systems and rates, so many healthcare provid-
ers look wistfully at industries that simply bill customers to obtain revenues.
The complexity of insurance transactions also increases opportunity for error
and fraud. In fact, both are fairly common.

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 C hap ter 1: Why H ealth Ec onom ic s? 5

Despite this bewildering array of insurance plans, many providers

still rely on a few plans for their revenue (a circumstance most managers
seek to avoid). For example, most hospitals receive at least a third of their
revenue from Medicare. As a result, changes in Medicare regulations or pay-
ment methods can profoundly alter a healthcare organization’s prospects.
Overnight, changes to reimbursement terms may transform a market that
is profitable for everyone to one in which only the strongest, best-led, best-
positioned organizations can survive.

1.3.3 Information Asymmetries

Information asymmetries are common in healthcare markets and create a
number of problems. An information asymmetry occurs when one party information
in a transaction has less information than the other party. In this situation, asymmetry
When one party in
the party with more information has an opportunity to take advantage of the a transaction has
party with less information. Recognizing a disadvantage, the party with less less information
information may become skeptical of the other party’s motivation and decline than the other
a recommendation that would have been beneficial. For example, physicians party.

and other healthcare providers usually understand patients’ medical options

better than patients do. Unaware of their choices, patients may accept rec-
ommendations for therapies that are not cost-effective or, recognizing their
vulnerability to physicians’ self-serving advice, may resist recommendations
made in their best interest.
From a manager’s perspective, asymmetric information means that
providers have a great deal of autonomy in recommending therapies. Because
providers’ recommendations largely define the operations of insurance plans,
hospitals, and group practices, managers need to ensure that providers do
not have incentives to use their superior information to their advantage.
Conversely, in certain situations, patients have the upper hand and are likely adverse selection
to forecast their healthcare use more accurately than insurers. Patients know A situation that
whether they want to start a family, whether they seek medical attention occurs when
buyers have
whenever they feel ill, or whether they have symptoms that indicate a poten- better information
tial condition. As a result, health plans are vulnerable to adverse selection, than sellers. For
meaning that high-risk consumers are more likely to seek insurance whereas example, high-
healthier individuals are more likely to go without. risk consumers
are willing to pay
more for insurance
1.3.4 Not-for-Profit Organizations than low-risk
Most not-for-profit organizations have worthy goals that their managers take consumers are.
(Organizations
seriously, but these organizations can create problems for healthcare manag-
that have difficulty
ers as well. For example, not-for-profit organizations usually have multiple distinguishing
stakeholders. Multiple stakeholders mean multiple goals, so organizations high-risk from low-
become much harder to manage, and managers’ performance becomes risk consumers
are unlikely to be
harder to assess. The potential for managers to put their own needs before profitable.)

Lee.indd 5 1/2/19 3:15 PM

 6 Ec o n o m ic s f o r H e a l th c a re M a n a g e r s

their stakeholders’ needs exists in all organizations but is more difficult to

detect in not-for-profit organizations because they do not have a simple bot-
tom line. In addition, not-for-profit organizations may be harder to run well.
They operate amid a web of regulations designed to prevent them from being
used as tax avoidance schemes. These regulations make setting up incentive-
based compensation systems for managers, employees, and contractors (the
most important of whom are physicians) more difficult. Further, when a
project is not successful, not-for-profit organizations have greater difficulty
putting the resources invested in the failed idea to other uses. For example,
the trustees of a not-for-profit organization may have to get approval from
a court to sell or repurpose its assets. Because of these special circumstances,
managers of not-for-profit organizations can always claim that substandard
performance reflects their more complex environment.

1.3.5 Technological and Institutional Change

This fifth challenge makes the others pale in comparison. The healthcare
system is in a state of flux. Virtually every part of the healthcare sector is
reinventing itself, and no one seems to know where the healthcare system is
headed. Leadership is difficult to provide if you do not know where you are
going. Because change presents a pervasive test for healthcare managers, we
will examine it in greater detail.

1.4 Turmoil in the Healthcare System

Why is the healthcare system of the United States in such turmoil? One expla-
nation is common to the entire developed world: rapid technical change. The
pace of medical research and development is breathtaking, and the public’s
desire for better therapies is manifest. These demands challenge healthcare
managers to regularly lead their organizations into unmapped territory. To
make matters worse, changes in technology or changes in insurance can
quickly affect healthcare markets. In healthcare, as in every other sector of
the economy, new technologies can create winners and losers. For example,
between 2000 and 2007, Medicare payments to ambulatory surgery centers
more than doubled. Medicare changed its policy, and growth slowed down
(Medicare Payment Advisory Commission 2018). What appears profitable
today may not be profitable tomorrow if technology, competition, rates, or
regulations change significantly.
The Affordable Care Act (ACA) has resulted in a wave of innovations
by providers, insurers, employers, and governments. (See chapter 6 for more
detail.) Which of these innovations will succeed is not clear. In addition,
some healthcare organizations will thrive in the environment of the ACA,

Lee.indd 6 1/2/19 3:15 PM

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and sent his overseer's boys to school as he had proposed. He said
he had received the letters, but gave some excuse or reason for not
having sent them as yet. He ordered them dressed and called into
the parlor for my inspection, that I might judge of their capacity for an
education. This I afterward learned caused a great commotion in the
"negro quarters," as they all thought I must be a "nigger-trader," and
this examination was in reference to the price I would pay for them.
As my duties were very pressing, I spent but two nights with my host,
and left him the next morning, with many thanks for his hospitality,
and with earnest expressions of regret on his part—never to see him
again.
A few months later I read a notice of his death in the papers,
accompanied with this statement:
"He has left a very large estate. By his will he has freed a part of his
slaves, and given his plantation and nearly all his property, including
his slaves, to those he has freed."
On my next visit to the county-seat, I hitched my horse to a post, and
before entering any other house went directly to the county clerk's
office and asked him if he would do me the favor to allow me to read
Mr. ——'s will. He at once produced the volume in which it was
recorded, and I was about to read it, when he said:
"I have the original will here, if you would prefer to see that."
I thanked him, and he handed it to me. It was in his own handwriting.
The spelling was very bad; as, for instance, I remember that "be"
was spelt "bea," and a good many other words were as badly
spelled. I have often been similarly astonished to find that men who
had a great deal of general intelligence, and were most interesting
talkers, were unable to spell the simplest sentence correctly. But the
clerk told me that he recorded the will exactly as it was written, and
that bad spelling did not vitiate any legal document. The will was
very brief, and I remember its principal provisions as follows:
"I give and bequeath to ——" (the mother of his children) "her liberty
from the hour of my death."
"I give and bequeath to her children" (here followed the names of her
five children) "their liberty from the hour of my death."
"I give to ——" (another woman) "her liberty from the hour of my
death."
"I give to my brother —— my fiddle."
"I give to my brother —— my kitchen furniture."
These brothers, when visiting him, had in joke asked him to make
these legacies, saying that was all they wanted of his property, and
he had in earnest told them he would give them what they asked. He
also gave a little niece, the daughter of a sister, a valuable gold
watch and chain, which he had promised her. He then gave a very
small legacy—I think only three hundred dollars—to the mother of
his children. Of her five children, only four were his. To these he
gave all the remainder of his property, including plantation, blooded
stock, slaves, money, etc., and directed that "they be sent to the
State of New York," and placed in the best schools and thoroughly
educated.[3]
Some ten days subsequent to the date of his will he had added a
codicil. In this he gave the name and date of birth of each of the four
children, in the order of their birth, and added, "These are my own
children," and something like an appeal that they might be permitted
to receive what he had left for them, and a hope that they might
enjoy all that wealth and education could procure for them.
But the saddest, strangest thing about the will was its exceeding
cruelty to the rest of his slaves. He directed that they all be sold for
the benefit of his children that he had freed; and, that they might
bring the greatest possible price, he ordered that they all be sent to
New Orleans and sold upon the block at auction—not in families, but
each one alone. His will directed his executor to advertise the "sale"
for three months in the principal cities of the Southwest and South,
so as to secure as large an attendance as possible of negro-traders
and planters wishing to buy slaves. This horrified even his pro-
slavery neighbors; for, had they been sold at home, many of them
would have been bought by those who owned husbands and wives
that were intermarried, or had "taken up" with them, and others
would have been bought in the region, so that fewer families would
have been separated. His own relatives, who would otherwise have
inherited this large estate, were very wealthy, and he knew that they
would spare no money in contesting his will. Hence he took
precautions such as I have never heard of before to prevent its being
broken. After he had got it written to suit himself—and I was told that
he said he was inspired to write it—he made a large dinner-party,
and among others invited the prominent physicians of the
neighborhood. After the usual pleasures and excitements of such a
party, as his guests were about leaving, he called the physicians to
his room, and said:
"Gentlemen, you all know me well, and I wish to know if, from all that
you have seen to-day, you think that I am competent to make my
will?"
They all answered him in the affirmative. He then said, "I wish to
know if this is your professional opinion, and that if called upon you
will make oath to it?"
They again gave an affirmative response. He then took his will from
his pocket, and said:
"Gentlemen, here is my will, written by myself, exactly as I want to
dispose of my property, and I wish to sign it in your presence, and
have you sign it as witnesses," which was done. Notwithstanding
these precautions, I heard of the will as before the court, of the
disagreement of the jury, and of the inability of the contestants to
either establish or break it. I suppose the emancipation proclamation
freed all the slaves before the case was settled by the courts.
Fortunately for his children, I was told that he became so alarmed
about them before he died, that he sent them to Ohio, and deposited
money there for their support. Otherwise they would have remained
slaves during the controversy in regard to the will. I have inquired
after these children at Oberlin, at Xenia, and in many of the towns
and cities of Ohio, but I have never been able to hear of them. I do
not know whether or not they ever received the rest of the large
estate which properly belonged to them.
I have written out these facts in all this detail, thinking that they
would answer in part the query whether "anything strange or
interesting did ever happen to a missionary," and also to reveal a
type of character and civilization with which I have very often been
brought in contact. I knew a free colored woman, and she was at the
time a very liberal contributor to the American Bible Society, who told
me that her own daughter had been educated at a fashionable
school by her white father, and was the wife of an officer in the
United States Army. She visited her daughter frequently near one of
the largest Northern cities, not as her mother, but as her old nurse or
"mammy." Her husband supposed that her own brunette mother had
died in her infancy, and that she had been "raised" by this "mammy,"
as such nurses were called, and hence their great affection for each
other.
Within a few miles of the home of my host, in an adjoining county, I
knew two colored girls whose mother was "as black as the hinges of
midnight," whose white father and master had left them and a legacy
for them in the care of a sister, to whom he had willed a large
number of slaves; and those two girls were trained to call their
mother "Margaret," and always to treat her as their "mammy." This
was in anticipation of their going North to a fashionable boarding-
school, and that their mother might gratify her maternal instincts by
accompanying them or visiting them without detriment to their social
standing or prospects. It was well known in the Southwest and South
for many years before the war that, notwithstanding the intense
prejudice on account of color so universal in the North, many of the
most expensive and fashionable boarding-schools received pupils
from Cuba, South America, and other tropical countries, even if their
skins were decidedly dark. As colored children were so rigidly
excluded from nearly all the best schools in the country, many
availed themselves of the exception thus made in behalf of those of
foreign birth by placing pupils in these schools whose tropical
lineage was only "asserted" by those who paid their bills. A few
Northern schools, as is well known, have always received colored
pupils. Bishop Payne, of the African Methodist Episcopal Church,
President of Wilberforce University, Xenia, Ohio, told me during the
war that before the war most of his students were those who had
been born slaves and were educated by their white fathers. The
stories that they have communicated to him of the sufferings they
have endured as they have thought of the life to which their children
were exposed if left in slavery—and as they have traveled with them
up the river, and been compelled to witness the indignities to which
they were exposed, as they were obliged to leave them on deck with
the rough crowds of passengers, liable at all times to the basest
insults, while they, as they valued their lives, dared not offer them a
father's protection—would alone make a volume of painfully thrilling
interest. Alas, that there were many thousands of such parents
whose natures were so blunted that they cared as little for their
offspring as the dumb beasts around them!
But I have said all and more than I had intended, though very far
from all that I could say upon this subject, and will betake myself to
more pleasant and congenial narrations of my labors in the Brush.
SUPPLEMENTARY FACTS.
In writing the foregoing chapter, I, of deliberate purpose, suppressed
the name and place of residence of the person whose remarkable
history I have given in so much detail. I wished to make the case
less personal than representative of a state of society now happily
passed away. I gave the facts as far as I had received them.
But, since reaching New York, and while reading the proof-sheets of
this volume, I have received additional facts from the highest
authority; and, as the case has become so celebrated, there is now
no reason why I should withhold any of them.
In the year 1859, one year after my election to the presidency of
Cumberland College, I one day made a very long horseback-ride in
order to reach the residence and spend the night with the Hon.
Francis M. Bristow, at Elkton, Todd County, Kentucky. Mr. Bristow
was at the time serving his second term as a member of Congress
from the third district. I was anxious to see him, from the fact that, in
accordance with instructions from the maker of the above-named
will, the executor had employed him and his son, a young lawyer
who had recently opened an office in Hopkinsville, Kentucky, to
defend the will in a suit that had already been instituted in the Circuit
Court. I did not find the distinguished Congressman at home, but
was so fortunate as to meet and spend the night with his son.
I have called several times, since reaching the city, upon the "junior
counsel for the will," now the Hon. Benjamin H. Bristow, late
Secretary of the United States Treasury, Washington, D.C.
The maker of the will was Mr. Lycurgus B. Leavell, of Trenton, Todd
County, Kentucky. General Bristow informs me that the case was
tried before Hon. Thomas E. Dabney, at a term of the Circuit Court,
held at Elkton, Kentucky. The senior counsel for the will was Hon.
Francis M. Bristow; the junior counsel, Benjamin H. Bristow and H.G.
Petrie. The senior counsel for the contestants was the Hon.
Gustavus Henry, the "eagle orator" of Tennessee; the junior counsel
was James E. Bailey, late United States Senator for Tennessee. As
the case was so very important, the jury was selected from the most
prominent and honorable slaveholders in the county. Young Bristow
and Bailey opened the case. It was ably contested, and of most
extraordinary interest, but this is not the place to describe it. The jury
were eleven for and one against sustaining the will.
The war soon came on; the slaves, including several who had
recently been imported from Africa in the Wanderer, were freed by
the emancipation proclamation; the contest was withdrawn, and the
will established. The executor and his bondsmen were financially
ruined by the war, and only a small part of the estate, some forty
thousand dollars, reached the two surviving children to whom it was
devised. One of them, a young lady, has recently graduated with
distinguished honor, and the president and professors of the college
speak of her in terms of the very highest praise.

FOOTNOTES:
[2] This was, alas! too true—and true of a very large portion of
country that I have visited, where the great majority of the
preachers were uneducated.
[3] At the time of his death this property would have sold for
nearly or quite a quarter of a million dollars. The plantation alone
was sold under the hammer for ninety-five thousand dollars.
 CHAPTER XIV.
OLD-TIME ILLITERATE PREACHERS IN THE BRUSH.
I have very often thought that the best work that could possibly be
prepared in favor of an educated ministry, would be to send
stenographers through those States where the census reveals the
greatest amount of ignorance, to make verbatim reports of sermons
that are actually preached, and publish them in a volume. Such a
book would be the most remarkable exhibition of ignorance ever
printed. Any one who has not traveled extensively will be astonished
to learn of the great number of altogether unlearned and ignorant
preachers who minister regularly to large congregations. I have
found that the deeper I got into the Brush, and the denser the
ignorance of the people, the greater was the number of preachers. I
have seen a surprisingly large number of people who knew very little
of the world, and a great deal less of books, to whom the honors of a
preacher were very attractive. I say "honors," for the emoluments
were so small that they had very little weight in the matter. I have
known them to urge their own claims, and "electioneer" with others
for years, and with the greatest pertinacity, in order to secure
licensure and ordination. Some of them could not read at all, and
many could read a verse or chapter only with the greatest difficulty,
and miscalled a large number of the longer words.
I penetrated a wild region among the hills, and my own observations
and the explorations that I caused to be made secured for it the
undoubted and undesirable preëminence of being the banner county
for ignorance and destitution of the Bible of all those that I visited. In
some manner that I do not now remember, on my first visit I was
directed to call upon one of the preachers of the county, who would
coöperate with me in making arrangements to have it canvassed and
supplied with the Bible. I found his house among the hills in the midst
of a vast, dense forest, surrounded by a small clearing or
"dead'ning," which was planted with corn and tobacco. He was rather
a short, thick-set man, with a powerful, muscular frame, and very
quick and active in his movements. On riding up and introducing
myself, he gave me a very cordial welcome to his home. It was a log-
house, rather larger and higher than was usual in the region; but it
was without chambers, and from floor to roof all was a single room.
His family, including wife, mother-in-law, and children, numbered an
even dozen. I spent the night with them, partaking of such food,
using such knife, fork, and dishes, and occupying, with others, such
a bed as I can not well describe, and I am sure my readers will not
be able to imagine. But I had by this time become so accustomed to
this kind of life in the Brush, that, if not pleasant and agreeable to
me, it was at least not strange. Not long before, in a similarly wild
region, in an adjoining county, I had slept in a much smaller cabin
with one room, where the man and his wife and mother-in-law and
four children, with another visitor besides myself, occupied three
beds. I shared one of them, upon a very narrow bedstead, with the
visitor, a neighbor who had called in for a social visit, as rough and
tough-looking a long-haired backwoodsman as one often meets,
dressed in butternut; and a "chunk of a boy," as his father called him,
about a dozen years old, who was placed in the bed between us,
with his head at our feet, and ex necessitate his feet not far from my
head. It is a kind of lodging that can be endured for a night, as I
know from positive experience. But I am not prepared to recommend
it.
When I arrived at this house, which was about dinner-time, I found
the children parching corn in a spider. The father was absent, and it
was necessary for me to remain until he returned. The mother made
no movements toward getting dinner, and said nothing about it,
which was a very unusual thing in my experience. At length the
children brought to me some of the corn, which was parched brown,
but not popped. I had by this time become satisfied that this was to
be their only dinner, and ate some of it with them. The father
returned in a few hours, and urged me to spend the night with them,
which in the circumstances I was glad to do; I could easily have gone
farther and fared worse. He soon took a bag and went through the
woods a mile or two to a neighbor's, and returned with some corn-
meal and a piece of bacon. The entirely empty larder being thus
replenished, a meal was soon cooked, and I sat down to what was to
me both a dinner and supper of corn-dodger and fried bacon. I called
upon some of the families in this neighborhood, and some months
after met one of the young ladies at the county-seat. In talking with
her in regard to this visit, I said:
"I was told that a number of the young women in your neighborhood
can not read."
"Oh!" said she, "there are but two there that can read."
And yet I was told that there were two or three resident preachers
there, but I had not time to call upon them. As the kind of food and
lodging that I have described were so common to me, the chief
"variety" that was the "spice" of my itinerant "life" was in the varied
characters that I met. And I rarely found this "spice" of intenser flavor
than in my own profession, among some of the preachers that I
found in the Brush. The one that I had sought out, and with whose
family I had spent the night, was one of the most remarkable of his
type with whom I became acquainted.
In the morning he mounted his horse and rode with me to visit and
confer with several of the leading citizens of the county in regard to
its exploration, and to spend the following day, which was the
Sabbath, in visiting two different and distant congregations, for the
purpose of presenting the matter to them, and "lifting collections" in
its aid. We rode several miles through the woods, only occasionally
passing a small cabin and clearing, and made our first call at a log-
house, where my clerical friend and guide was evidently a very great
favorite. Here we were urged to have our horses put in the stable,
and remain to dinner. We assented to this, and arrangements were
at once made for convening a Bible committee, at a house in the
neighborhood, that afternoon, and for religious services in the house
at which we had stopped to dine that night. The husband and
children at once started out to circulate these notices, and the wife
began her preparations for our dinner. She was apparently about
thirty years old, above the medium size, in a region of country where
the most of the women were very large, with a bright, pleasant face,
a cheerful, happy disposition, and very cordial and enthusiastic
manners. The log-house, though not of the best, was decidedly of
the better class; and our dinner, both in its quality and the manner in
which it was served, was a great improvement upon my breakfast,
and the supper the night before. It was a happy group. Conversation
was cheerful and animated, and geniality and joy glowed in all faces
and pervaded all hearts. Some time after dinner I started with my
clerical friend on foot through the woods to meet the Bible
committee. After a pleasant interchange of views, we appointed a
colporteur to canvass the county, and adjourned. At once we
received earnest invitations from different ones to go home with
them to supper. They were unwilling that the family upon which we
had first called should monopolize the pleasure and honor of
entertaining us. I left my clerical friend to settle this matter, and we
went a mile or two in another direction, where we were hospitably
entertained at supper. We then returned to the house where we had
dined, and it was soon filled with people, who had assembled upon
this brief notice. It was arranged that instead of a sermon a chapter
should be read, and each of us should occupy a portion of the time
in brief addresses. My friend read the chapter. I was astonished. I
had never heard the like at any public religious service. Many of the
words were mispronounced and entirely miscalled, and it would have
been difficult to understand what was meant, from his reading of the
passage. But both his reading and remarks were very well received,
and I saw no one who seemed to notice that there was anything out
of the way with either. I followed him with some remarks, and the
meeting seemed to be greatly enjoyed by all. Then began a very
spirited contest as to where we should go and spend the night.
There were many claimants for the honor.
"You must go home with me," said one.
"No," said another, "you had Brother A—— when he was here, and
you can't have these preachers. They must go with me."
"No," said still another, "you've had the preachers a heap of times
since I have. I hain't had nary one in a long time, and they must go
hum and stay with me."
For myself, wearied as I was with the varied labors of the day, I
should have greatly preferred remaining with the family where I was.
But I left the matter for them to decide, and we soon started out, and
taking a footpath through the underbrush, among the large forest-
trees, we went in the darkness a mile or two, to an entirely new
cabin. The logs had been peeled, and it looked very clean and nice.
A large fire was soon blazing upon a hearth made of fresh earth, and
roaring up a chimney made of split sticks covered with mud. It was
the home of a young couple, who had but recently married and
commenced housekeeping. There were two beds in the room. We
sat before the bright fire and talked for some time, until I told them
how weary I was, and they pointed out the bed which the preacher
and I were to occupy. The room was new and bright, and the sense
of cleanliness was most grateful to my feelings. I thought that in that
new house I should enjoy that rare luxury in the cabins in the Brush,
a nice, untenanted bed and a pleasant sleep. As I turned down the
blankets and moved my pillow to adjust it, I saw what I at first
thought was a drop of molasses dried on the sheet. I impulsively
moved my finger toward the spot to ascertain what it was, and it ran!
My pleasant dreams were all banished, and I plunged in, in
desperation, to share my bed with such company as for months and
years I had found in so many of the log-houses in the Brush. The
mild climate and the habits of the people conspired to make the beds
quite too populous and repulsive to be described.
Though my meals were often such that only necessity compelled me
to partake of them, yet the want of beds fit to be occupied by a
human being, after my long, hard days' rides, was by far the greatest
of all my privations and trials in the Brush. If I were to describe all
that I have seen and endured in this matter, it would not only be very
unpleasant and repulsive reading, but would surpass belief with all
those not personally familiar with the country and the people
described.
After breakfast the next morning we walked back to the house where
we had first called and left our horses, and sat with the family until it
was time to leave for church. As we sat together, my clerical friend,
who was of an inquiring mind, turned to me and said, "How do you
preach the first seven verses of the twelfth chapter of Ecclesiastes?"
I must here say that, in common with the great majority of his class,
he used the word "preach" in the sense of "explain." My friend the
Rev. Dr. S.H. Tyng, of New York, once told me that while preaching
in a Southern State, in the early part of his ministry, a preacher of
this class made him a visit. Seeing a pile of manuscripts upon his
study-table, he inquired what they were, and was told that they were
sermons.
"Why!" said he, in astonishment, "how many texts can you preach?"
These men were accustomed to "study" a passage in their manner,
and form some opinions in regard to its meaning, and then they
"preached" (explained) it on all occasions, with the most positive
assurance in regard to the correctness of their views. Hence, when
my friend asked me how I "preached" the passage alluded to, he
wished from me a full exposition. Taking a Bible from the mantel-
piece above the large fireplace, he turned to the chapter and read
the first verse, as he had read the night before, and said to me, "How
do you preach that?"
I gave my views of the passage in as few words as possible, and
then he proceeded at much greater length to tell how he "preached"
it.
As he concluded, the good sister, who had listened with face all
aglow with delight, exclaimed: "Ah! Brother P—— has studied that!"
In this manner he read, and we gave our views of each of the seven
verses.
His "preach" was in each case much longer than mine, and
invariably drew from the attentively listening sister the fervent
expression of rapt admiration and delight: "Ah! Brother P—— has
studied that!"
I am sorry that I can not tell my readers how he "preached" the entire
passage; but it was so utterly strange, and so entirely unlike anything
I had ever conceived of as possible to be said in explanation of this
or any other passage of Scripture, that I confess I was obliged to
exert myself to the utmost to maintain the gravity becoming my
position. If I had smiled, I should have given great offense to the
delighted sister, for no enthusiastic lady that I ever saw was more
proud of her pastor than she was of her preacher at that moment. So
earnest were my efforts to maintain my dignity, and not dishonor my
exalted position as an agent of the American Bible Society, that I
could not afterward recall his explanations but of two of the
passages. I will give but one of them: "'Or ever the silver cord be
loosed.' The doctors say that there is a cord that runs from the nape
of the neck, down the backbone, through the small of the back, into
the heart, right thar; and that when a man dies that cord always
snaps: that is the silver cord loosed."(!)
"Ah!" said the sister, her face radiant with delight, "Brother P—— has
studied that!"
I will only add that this is a fair illustration of his explanations of all
the other verses. If I might moralize upon this subject, I would repeat
the opening sentence of this chapter: "I have very often thought that
the best work that could possibly be prepared in favor of an
educated ministry, would be to send stenographers throughout the
Brush, to make verbatim reports of sermons that are actually
preached, and publish them in a volume." Soon after this exposition,
we mounted our horses and attended services at two different
appointments, Brother P—— preaching at one of them. About a year
after this I saw him regularly ordained to the full work of a minister of
the gospel.
There are books containing "plans" or "skeletons" of sermons, and
some clergymen are said to make free use of them in the
preparation of their sermons. I will give one which may aid some
limping preacher who needs such helps, and hereby offer it as a
contribution to the next volume of skeleton sermons that may be
compiled. The sermon was preached to quite a large congregation in
a grove, where I was present and occupied the "stand" with the
preacher. His text was Job xxvi, 14: "Lo, these are parts of his ways:
but how little a portion is heard of him? but the thunder of his power
who can understand?" After an introduction that was quite as
appropriate to any other verse in the Bible as to this, the preacher
said:
"In further discoursing upon this passage, I shall, in the first place,
review the chapter, and show what is meant by the word 'these.' I
shall, in the second place, mention some of the works of God. I shall,
in the third place, conclude, according to circumstances, light and
liberty being given."
I must say to my readers, in explanation of his "third place," that the
"plan" and effort in sermons, addresses to juries, political and all
other speeches in the Southwest, was to wind up with as grand and
stirring a conclusion as possible. Here the congregation was to be
deeply moved, the jury to be melted, and the crowd to demonstrate
by their applause how they would vote. These perorations often
reminded me of the manner in which the stage-coaches of the olden
time used to drive into my native village, in the days of my boyhood;
when the driver cracked his long whip, blew stirring blasts from his
tin horn, and his four horses rushed up to the village tavern on the
jump, his noisy demonstrations startling all the villagers. It was so
with these sermons and speeches. However lame and limping in
their progress, there was always, if possible, a rousing conclusion, a
demonstrative drive into town. Hence, my clerical friend did not wish
to embarrass himself by announcing definitely what he would say in
his conclusion; but left himself free to soar and roar "according to
circumstances, light and liberty being given." He went through with
his sermon according to his "plan," but his conclusion did not arouse
and move his audience like many that I have heard.
I have already spoken of the genial friend to whom I sold my faithful
horse, and of the accounts that he gave me of the preachers he had
known and the preaching he had heard. He told me that upon one
occasion he heard the funeral sermon of a child preached from the
text, "Write, Blessed are the dead," etc. The preacher was so
ignorant in regard to spelling that he supposed the "write" in the text
was "right," not wrong, and he endeavored to comfort the parents by
showing them that it was "right" that people should suffer affliction,
"right" that their children should sicken and die, and that all the
Lord's dealings with his people were "right."
On another occasion he attended a meeting where a number of
ministers were present, and the opening sermon was preached by
an old acquaintance and friend, who owned a good plantation, a
number of slaves, and for many years preached regularly on
alternate Sabbaths to two quite large congregations. There are many
thousands of people who rarely, if ever, hear a sermon from an
educated minister. These people have strong and well-defined
notions as to the kind of preaching that suits them. If the preacher
ranges extensively over the Bible, and quotes a great deal of
Scripture without any regard to its appropriateness or connection
with the text, they say of him approvingly: "He's a Scripter preacher.
He's not a larnt man, but he's a real Scripter preacher." Hence, many
of these preachers range over both the Old and New Testaments in
every sermon, and quote as much as they can, with as little
connection as a page in the dictionary.
The preacher on this occasion took for his text the words: "The name
of the Lord is a strong tower; the righteous runneth into it, and is
safe." He described these towers as places of safety, ranged through
the Old Testament, and, coming down to the New, said: "The world
was then in an awful condition; there were no towers, no places of
safety! The whole generation was without a tower! You may say:
'How do you know this is so? You haven't much learning. You haven't
read many histories.' Ah! but I've got Scripter for it. I don't want any
histories when I've got the Bible for it. Here it is. Peter, preaching to
them on the day of Pentecost, said, 'Save yourselves from this
untowered generation.'"
After the meeting "broke," and they mounted their horses to ride to
dinner, my old friend said to the preacher:
"Why, Brother Mansfield, you made a great mistake in your sermon
this morning."
"Mistake!" said he, "what was it, Brother Roach?"
"Why, that about the 'untowered generation.' It is not untowered,"
said he; "it is untoward. It is, 'Save yourselves from this untoward
generation.'"
The preacher dropped his head, thought a moment, and then said:
"There can't be any mistake about that. Why, I've preached it that
way more than a dozen times."
When they reached the house where they were to dine, they found a
dictionary, and that was appealed to to settle the matter. Alas, that
the verdict spoiled a favorite sermon!
I was about as much astonished at the facts I heard in regard to the
salaries that were paid to these preachers, with all the formalities of
a regular contract, as at anything I ever learned in regard to their
preaching. I once occupied the pulpit with one of them, in a church
which was a large, barn-like brick structure, having four doors, one
near each corner, for the ingress and egress of the congregation.
This preacher was a great favorite in the region, with both the white
and colored people, and was familiarly known as "Jimmy B——." He
had stentorian lungs, was wonderfully voluble, and his sing-song
"holy tone" was most delightful to his audience. It was a warm
summer day, and the house was packed with whites dressed in
butternut jeans, and groups of colored people were standing outside
near each open window. It was a monthly service, and all seemed to
enjoy it greatly.
In the afternoon, after the custom of the Southwest, he preached to
the "servants," and I again occupied a seat in the pulpit with him. His
colored audience was moved by his stentorian voice and avalanche
of words to the extremest excitement and joy. At the conclusion of
his sermon they could not separate without singing some of their
"breaking" songs, and all marching by the pulpit and shaking hands
with the preachers. This hand-shaking was one of the most marked
features of their religious services, and these "breaking" or parting
exercises have afforded me the opportunity of hearing the grandest,
wildest, most beautiful and genuine African melodies to which I have
ever listened. As I was a "visiting brother," I was entitled to as warm
and cordial a greeting as the one who had preached. The leader
commenced a hymn familiar to the large audience, and they began
to sing and move in procession by the low pulpit where we were
standing, shaking hands with each of us as they passed. As the long
procession filed by, their dark faces shining with delight, the music
arose louder, wilder, and more exciting, until they seemed entirely
unconscious of the strength of the grip they gave my poor, suffering
hand. I was unwilling to mar their joy by withdrawing it altogether,
and, to save it from being utterly crushed, I resorted to the expedient
of suddenly clutching the end of the fingers of each hand that was
extended to me by the excited and happy singers, and so they were
unable to give me their vise-like squeeze, and I escaped
comparatively unharmed. The hand-shaking ended, the meeting
"broke," and they all dispersed, masters and slaves highly delighted
with the preacher and all the services of the day.
My host upon this occasion was the hotel-keeper of the place. In
talking with him about the great popularity of this preacher, he said
that, if equally extended notice should be given that he would preach
there on one Sabbath, and the Rev. Dr. Young, the learned and
eloquent President of the college at Danville, would preach there on
another, Jimmy B—— would call together the largest audience. At
another place, when quite a number of persons were present,
reference was made to the salary that was received by this popular
favorite. I made particular inquiries upon this subject, and learned
that the church negotiated with him to preach for them one Sabbath
each month during the year, for one dollar a Sabbath. Hence, they
paid him twelve dollars a year for one fourth of his time. Some of
them thought that as neither he nor any other good hand could at
that time get more than fifty cents a day for mauling rails, hoeing
corn, or any other labor, this salary was rather excessive; but in
consideration of the fact that he had to leave home on Saturday
evening in order to meet his appointment, and furnish his own riding-
nag, they magnanimously voted him the full dollar a Sunday, "for one
fourth of his time." I was informed that he preached to other
churches, but did not learn that any of them paid him a larger salary.
In another place that I visited, the Rev. James L—— had preached
to the same church twenty-one years, and he said the largest sum
he had ever received for preaching in any one year was twenty
dollars, and he had often received less than ten dollars! Very many
of these churches were entirely satisfied if they had regular
preaching once a month. In riding through the Brush, I used often to
gratify my curiosity by making inquiries in regard to the salaries
received by those who preached in the churches that I passed.
Once, in riding late in the evening, I overtook—or, in the vernacular
of the region, "met up with"—a boy some twelve or fourteen years
old, who was riding a mule. After exchanging "howd'ys," I found him
very loquacious, and disposed to enlighten me in regard to
everything in the neighborhood. I asked him what salary they paid
their preacher. "Oh!" said he, "they pay the one they have got now
right smart. They give him a dollar and a half a Sunday."
We passed a church where the members washed one another's feet
at each communion. I made some inquiries in regard to the
ceremony, and he told me the brethren washed only the brethren's
feet, and the sisters the sisters' feet. I told him that I supposed they
only sprinkled water upon their feet—they did not wash much. "Oh!"
said he, "sometimes they gets happy, and washes right hard." I had
spent a Sabbath at a meeting in the woods with the poet of this
denomination, and purchased of him a hymn-book that he had been
duly authorized to compile and publish for them, containing some
hymns that he had written to be sung at these feet-washing services.
He was one of the most illiterate men I ever met. I regret to say that I
have lost the book, and can not transcribe some of these original
hymns for the benefit of my readers. I had a good deal of
conversation with this "poet," and he told me he was at the time
engaged in teaching school. I afterward met the school
commissioner, a lawyer, at the county-seat, who had examined him
and given him his license to teach, and rallied him jocosely for giving
a man that was so ignorant, authority to teach a public school.
"Oh!" said he, "I only certified that he was competent to teach in that
neighborhood."
For years I was accustomed to avail myself of every opportunity of
hearing these illiterate preachers, both white and colored, consistent
with my other duties. It was a new and interesting study to me.
Sometimes I got rare kernels of wheat in the midst of a great deal of
chaff, rich nuggets of gold among a great deal of sand and rubbish;
and I always felt more than repaid for the time thus expended. It was
interesting to observe the workings of minds, often of superior
natural powers, in their attempts to elucidate the Scriptures. It was
especially strange to hear them render any Scripture narrative,
entirely in their own Brush vernacular. I have often regretted that I
did not take down many of these narratives of Bible facts at the time
I heard them. But the unusual sight of a person thus employed in a
congregation would attract more attention than the preacher himself,
and I was therefore unwilling to do it. But I can give my readers a
very correct idea of these narratives.
In riding through a very rough, wild region, I fell in company with a
gentleman on horseback, and rode some distance with him. He told
me that a preacher, who was so illiterate that it was with the greatest
difficulty that he could study out a chapter in the Bible, sometimes
preached in a log school-house in his neighborhood, and he had
heard him the Sabbath before. It was in a region where a rough-and-
tumble fight would attract more attention than anything else. The
preacher had a theme of the deepest interest to himself and the
most of his congregation. This gentleman gave me quite a full outline
of the discourse, and I write it out from his description, and fill it up
as my extended acquaintance with these people, and knowledge of
their vernacular, derived from years of constant mingling with them,
enable me to do.
"Last week, my breethrin, as I was a-readin' my Bible, I found a story
of a big fight (1 Samuel, xvii). It was powerful interestin', and I
studied it 'most all the week. There was two armies campin' on two
mountains right fornenst each other; and a holler and, I reckon,
some good bottom-land and a medder-lot lying between 'em. In one
of the armies there was a big feller—a whoppin', great, big feller—
and every day he went down into the medder-lot and looked up the
hill to t'other camp, and jest dared 'em! He told 'em to pick their best
man and send him down, and he'd fight him. And he jest strutted
around there in his soger-close, and waited for 'em to send on their
man. And such soger-close I never heerd tell on afore. He had a
brass cap and brass trousers, and a coat made like mail-bags where
they are all ironed and riveted together. But the fellers in t'other
camp just clean flunked. They darn't fight the big feller, nary one of
'em. They jest all sneaked away, and the big feller he went back to