Kupat Holim and the Israeli health care system underwent a five-stage process that forged their character in the course of the first ten years of Jewish statehood, following the outbreak of the War of Independence in late November 1947 and establishment of the State of Israel in May 1948.

Stage One

The first stage was the initiative of the Beilinson Hospital doctors to break the institutional framework of working conditions and remuneration based solely on salaried physicians. The struggle led to the secession of the sick fund's most senior doctors and their absorption within a parallel system taking shape at the same time—the Military Medical Service. The proximity of these two events, the resignation of the doctors from Beilinson and the initiative to establish the Military Medical Service—shaped the first stage and made possible the second stage: establishment of a medical service parallel to and in competition with Kupat Holim.

Stage Two

In the second stage, the Military Medical Service (MS) was created primarily in order to meet the needs of the Yishuv in wartime, but it also was fueled by the vision of health services for the army and the State's citizenry at the end of the war.