Upstart Health Plans Vs. the Medical Establishment in the 1950s

posted on September 14, 2017

Lincoln Cushing
Heritage writer

 

Part 2 of 2: The Permanente Health Plan responds to legal charges by the medical establishment and the similar experiences of Group Health (originally called Group Health Cooperative of Puget Sound) in Washington state. In 2017, Kaiser Permanente acquired Group Health, making Kaiser Permanente Washington our newest region, the first in over 30 years.

During the late 1940s the medical establishment tried mightily to eliminate health plans that it saw as competition. As we saw in part 1 of this article, two of the biggest targets were the Permanente Health Plan (Kaiser Permanente) and Group Health.

Henry Kaiser speaking in New Orleans, 1957.

 

Henry J. Kaiser takes the high road

During these challenges with the medical establishment, Henry J. Kaiser consistently took the high road. When he spoke to a group of physicians in San Francisco on June 9, 1948, he let them know he was “… astounded and horrified to be informed by our attorneys that a group of Alameda County doctors have declared war on the Permanente health program.” He outlined his many legal options, but then offered a more cooperative path because “… we must be sobered at thinking what an all-out fight on the issue of more medical care for more people could mean.” He sought an amicable solution:

I want to believe that tonight is the beginning of a real conscientious effort on the part of everyone here to strive to fulfill the common objectives not only for group medicine, if it be lower in cost, but for that type of medicine which so many want, called private medicine, although it is higher in cost … until the earning power of the nation is greater, all the people cannot participate in private medicine.

His appeal to civility fell on deaf ears. Rather than accept the olive branch, fee-for-service practitioners rolled up their sleeves to knock out the competition.

A legendary event etched into Kaiser Permanente history was the 1953 competition for plan sign-up by 4,000 United Steel Workers of America members in Pittsburg, Calif. Local private practice physicians mounted an all-out campaign, which included provocative leaflets, newspaper ads, billboards, and even a sound truck. On September 3, 1953, the union members voted overwhelmingly for the Kaiser Foundation Health Plan.

Henry J. Kaiser defends Dr. Sidney Garfield, 10/26/1947.

That December, delegates at the annual California Medical Association meeting tried the carrot rather than the stick approach by announcing a pilot prepaid plan to compete with Kaiser Foundation Health Plan. They offered the 9,000 members of the International Association of Machinists at Santa Monica’s Douglas Aircraft plant “free choice of physician and hospital to its subscribers” through the California Physician’s Service. The CMA had established the CPS in 1939 as statewide prepaid medical care organization.

The proposed plan would cover hospitalization and surgical care for all workers earning below a certain salary threshold, charging more for those earning above it. (Newspaper coverage noted that the Kaiser plan had no income ceiling provision.)

Private practice physicians were on the ropes. Dr. Francis Rochex of San Francisco was quoted as saying “Organized medicine has lacked vision in anticipating the extent of penetration of political and socialized pressure groups.” But measures to develop a comprehensive alternative stumbled; CMA delegates were unable to agree on a plan which would cover both prepaid medical care and still observe “the doctors’ traditional independence and maintain professional standards.”

By 1960 the “Long Beach Physicians Health Plan” through CPS had been adopted for all Douglas aircraft workers throughout the world, and Long Beach city employees and school district employees came under the plan in 1959. On its own terms it was successful; the Long Beach Independent bragged that it was “the only plan that has had wide acceptance by so large a number of the people who are seeking a workable medical insurance plan under the free enterprise system.”

 

Group Health Cooperative wins ruling against local medical establishment, 11/16/1951.

The experiences of Group Health

A letter to editor in the Port Angeles Evening News April 16, 1965, presented the story from a proud member’s perspective:

As a member of the Group Health Cooperative of Puget Sound during the Forties, I well remember the efforts of the AMA to put Group Health out of business. Methods used included, denial of membership in local medical societies to Group Health doctors, denial of hospital privileges to Group Health doctors and their patients, and plenty of good old fashioned slander. Needless to say, as a true cooperative, the services of Group Health physicians were not being ‘sold at a substantial profit by a third party.’ Convicted of criminal conspiracy under the antitrust laws, the AMA fought the case to the U. S. Supreme Court — and lost.

The landmark legal decision in this fight was Washington Supreme Court case of Group Health Cooperative of Puget Sound et al., Appellants, v. King County Medical Society et al., November 15, 1951. Group Health fought back after it experienced “unfair and illegal fetters placed upon its service and growth.” In November 1949, it brought this suit asking for an injunction and damages.

An Associated Press news item in the Walla Walla (Washington) Union-Bulletin, November 16, 1951, “Court Ruling Hailed”:

Group Health Cooperative of Puget Sound Friday hailed as a “victory for free enterprise” a state Supreme Court ruling that King County Medical society policies toward the co-op violated the anti-monopoly law. The Washington Supreme Court ordered the King County Medical Society to stop boycotting Group Health Cooperative. Organized medicine was indicted for violating the Sherman Antitrust Act in its efforts to suppress Group Health.

Eventually, both plans established a more collegial relationship with their private practice peers. One of the founding Permanente physicians, Dr. Cecil Cutting, explained:

… the American Medical Association set up a committee to study provision of medicine in the country. They came out and examined us and gave a report that we were providing as good or better medical care as in the community. That sort of set them back a ways and now, we are fully accepted and I think in many times envied because of the practice, the coherence, the fundamentals of our group practice pre-payment that has tested the time and I think proved an excellent way of practicing medicine.

Dialogue about the “best” form of health care remains a vibrant topic of national conversation. Physicians, staff, and resources of the now-joined pioneering health care organizations Kaiser Permanente and Group Health are leading the conversation.

 

Part 1 of this article
Short link to this article: http://k-p.li/2y1SWZj

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Lights, Camera, Action: Kaiser Shipyards Play a Starring Role

posted on September 6, 2017

Lincoln Cushing
Heritage writer

 

“Man from Frisco” movie poster, 11×14″, 1944.

“Action!”

When Hollywood descended on the sprawling, bustling Kaiser Richmond shipyards during World War II it was sure to cause a buzz. Beside the standard patriotic Home Front promotion films of shipbuilding, such as the classic documentary “We Build Tankers,” the entertainment industry also tapped into the natural energy of the yards for two major motion pictures.

The first was “Man from Frisco.” It was based on the script “Man from Brooklyn,” written by George Carleton Brown and directed by Robert Florey (1900-1979). Brown would later write screenplays for the 1960s TV comedy series McHale’s Navy.

The second major wartime film shot in the Kaiser shipyards was “Since You Went Away,” released June 1944. It was written and directed by David O. Selznick and starred Jennifer Jones, Claudette Colbert, Joseph Cotton, Shirley Temple, and Lionel Barrymore.

Stills from “Man from Frisco” in Fore ‘n’ Aft, 5/19/1944.

“Man from Frisco” was a fictional story based on the iconic industrialist Henry J. Kaiser, named Matt Braddock in the film and played by actor Michael O’Shea. Other leading roles were played by Gene Lockhart, Dan Duryea, and Anne Shirley.

The plot involved upstart Kaiser and his innovative shipbuilding practices locking horns with a veteran local competitor. The first clues of the film surfaced December 7, 1942, when Republic Studios announced their most ambitious motion picture, initially titled “Victory Fleet.” News accounts noted that “It is with ships, and more ships, that Uncle Sam will avenge the Japanese sneak on our fleet at Pearl Harbor. Certainly, no man stands out in our defense effort more colorfully than Kaiser, who believes in getting ships out first and talking about it later.”

Alas, the film did not do well with many critics. The New York Times reviewer Bosley Crowther sniffed “…Some of the shipyard scenes are vibrant, and the documentation of building is good. But you can’t expect much from a picture that is so obviously propped up on clichés.” The Hollywood Reporter reviewer termed the picture “disappointing” due to its “melodramatic Hollywood treatment,” despite it containing “numerous absorbing shots of the great shipyards at Richmond, Calif., and along the line a fund of extremely interesting information is given concerning the high-speed operation and how they evolved.”

Photos of filming of “Man from Frisco” in Fore’n’Aft, 11/19/1943.

Some reviews were more positive, focusing on the patriotic message of home front workers:

There are thousands of “extras” in Republic’s dramatic new picture who receive no screen credit. These “extras” are the Americans who are employees of a shipyard in Richmond, where much of the background material for the screen plays was filmed. Those men and women are the people about whom the story is concerned. Working twenty-four hours each day, they keep American ships sliding down the ways to the sea to take food, men, and equipment to the battlefronts of the war.

Filming in the Richmond shipyards (and nearby Point Richmond) caused quite a buzz. The weekly Kaiser shipyard newspaper Fore ‘n’ Aft wrote about it November 19, 1943, with photos [above, right]:

Republic’s Director Robert Florey points the camera at a bit of Yard One. The film -“Man from Frisco” – is about the guy who brings prefabrication to shipbuilding. Naturally, you’ll want to see it. Paramount gets Yard One’s main drag and home-bound workers. So, you’re in pictures!

When it opened May 18, 1944, in Oakland, Richmond, and San Francisco, Fore ‘n’ Aft carried this commentary:

If this is the way we look to Hollywood – and it apparently is, since Stephanie Bachelor ploys a woman shipbuilder in Republic Pictures’ “Man from Frisco” – then all we can say is, “Gosh!” Background shots for this movie of the life and loves of a shipbuilding executive were obtained in our own yards. That dazed look in Stephanie’s eyes is the result of not wearing flash goggles.

“Man from Frisco” got a rousing revival in the summer of 2010 when it was shown at the recently refurbished S.S. Red Oak Victory ship at Kaiser Richmond shipyard #3 with historical context provided by Kaiser Permanente Heritage Resources consultant Steve Gilford.

Film stars Jennifer Jones and Anita Colby in the Kaiser Richmond shipyard, in Fore ‘n’ Aft, 8/9/1944

In ”Since You Went Away,” the shipyards were merely a backdrop to the poignant home front story about a housewife who struggles to care for their two daughters and a pair of lodgers while her husband is off in the war. NYT’s critic Crowther bemoaned its almost 3-hour length and thin plot. But at the 1945 Oscars it won Best Music, Scoring of a Dramatic or Comedy Picture.

Again, Hollywood stars in the shipyards were a welcome bonus during the grueling frenzy of war production. Fore ‘n’ Aft, September 8, 1944, published a photo [right] with the caption:

Wearing a becoming backdrop of 5,000 Yard Three workers, movie star Jennifer Jones visited Richmond last week. Inset, Anita Colby of Selznick Studios, who caused the Big Wind of 1944 hereabouts when she appeared with Jennifer. You know, whistles.

Whistles, indeed!

 

Short link to this article: http://k-p.li/2xbLlLo

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A More Perfect Union: How Labor Paved Way for Employer-Sponsored Health Care

posted on August 30, 2017

Lincoln Cushing
Heritage writer

 

The factory’s got a good medical plan
And, cousin, I’m a union man.
-Warren Zevon, “The Factory,” 1987

 

“Permanente’s First and Largest Coastwise Group,” Planning for Health, Fall 1951.

For more than 60 years, millions of Americans have gotten health care insurance through their work. Despite employment changes in the American economy, that sort of coverage is still enjoyed by more than half of the non-elderly population. But it wasn’t always that way. The hard work of organized labor was instrumental in making employer-sponsored health coverage a cornerstone of the human services safety net.

Henry J. Kaiser’s workers at the Grand Coulee Dam (1938-1941) enjoyed a well-run prepaid health plan as part of the job, and after the unions insisted, their families were able to join. The same benefits later applied to Kaiser’s 190,000 defense workers during World War II.

But this was an anomaly. Most American workers had nothing remotely close to a nonindustrial health care plan, even in the booming years after the war. That would change in 1948 and 1949 with two key labor law rulings, W. W. Cross & Company, Inc. v. United Steelworkers of America, CIO and Inland Steel Co. v. National Labor Relations Board, which established a precedent for union contracts regarding hospital and surgical benefits for employees and their dependents.

The first case involved the union at Pacific Coast Steel Co., Local 1069, in the San Francisco Bay Area, which selected the Permanente Health Plan (now called Kaiser Permanente) for its members and requested that employers provide payroll deductions for health care. Bethlehem Steel Company (which acquired Pacific Coast Steel in 1930) disputed their right to make such a decision. The union brought the issue to court, and won.

Permanente pediatric clinic at 515 Market St, San Francisco – nurse giving Patricia Nisby, daughter of ILWU Local 10 member Wiley Nisby, a shot. ILWU Dispatcher, 10/13/1950.

With the Inland Steel case, trial examiners from the National Labor Relations Board ruled that the employers were guilty of unfair labor practices in not consulting the Steelworkers Union when they put insurance and pension plans into effect. The examiners in both cases directed the companies to bargain with the union on the type and extent of these plans.

Inland Steel appealed, but on September 23, 1948, a higher court affirmed the NLRB position and ordered Inland Steel to bargain with the CIO union concerning retirement pension plans. This ruling applied to all unionized companies engaged in interstate commerce.

The door to employer-sponsored health care plans had been opened, and hundreds of thousands of working people benefitted. This was a major step forward in building public expectations that medical care be affordable and accessible. The two rulings fundamentally shifted organized labor’s role in defending and expanding workers’ rights.

In a key example of the ruling’s impact, the International Longshore and Warehouse Union approached the Permanente Health Plan in 1949 about covering their membership. Permanente was attractive to the ILWU for its racially integrated facilities and labor-friendly record during the war. The January 6, 1950, ILWU newspaper The Dispatcher announced the new health plan, and by year’s end, 90 percent of eligible members had signed up.

Thank you, organized labor — you not only brought the weekend to our regular work week, you brought us the employer-sponsored health plan. And on this particular Labor Day weekend, let’s remember and honor the gains made by unions.

 

Special thanks to ILWU archivist Robin Walker, who has put their newspapers from 1932 to present online.

A longer version of this article appears in The Stansbury Forum.

Short link to this article: http://k-p.li/2xyBU5r

 

 

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Mid-Century Struggle for Health Care: Standing Up to the Medical Establishment

posted on August 25, 2017

Lincoln Cushing
Heritage writer

 

Part 1 of 2

Kaiser Foundation Health Plan brochure, 1945

Health care was a hot-button topic in the years after World War II. And two of the biggest targets were the then Permanente Health Plan (now called Kaiser Permanente) and Group Health Cooperative of Puget Sound.

Henry J. Kaiser and Sidney Garfield, MD, had paired up to provide health care for Kaiser’s 190,000 West Coast home front workers in 1942, and the plan opened to the public in 1945. Group Health began in 1947 and, as of 2017, is now part of Kaiser Permanente. Both were models of care, featuring the common-sense principles of prepayment, prevention, and group practice.

The traditional private practice fee-for-service medical establishment wasn’t too keen on competition, especially when it became clear that these new affordable plans were popular. Professional groups such as local medical societies and the American Medical Association, tried to shut down these upstarts. Physicians were frequently shunned and denied access to practice in local hospitals.

Access denied

Kaiser Permanente medical economist Avram Yedidia recalled that in San Francisco in 1948, when about 1,000 city employee family members joined the plan, the Permanente Foundation had to rent a building at 515 Market Street and purchased a small hospital because “…we couldn’t get hospital privileges for our doctors in any San Francisco hospital.” Yedidia further explained:

“One of the major obstacles that programs such as ours faced at that time was the unavailability of hospital privileges for their physicians. This remained a national problem for years to come. One of the most effective tools for stifling the growth of group practice prepayment plans was to withhold hospital privileges from physicians associated with them.”

515 Market St (at First St ) – Permanente’s first San Francisco clinic site 1948-1955

Until 1954, San Diego County Medical Society bylaws stated that physicians engaged in prepay medical practice were unethical and therefore were ineligible for membership, and hospital bylaws required physicians be members of the county medical society to secure privileges to hospitalize patients. In Oregon, Kaiser Permanente lawyer Robert Ridgely described having to threaten an antitrust lawsuit against the Marion County Medical Society for conspiring to refuse privileges to the Permanente doctors. And Scott Fleming, Senior Vice President of the Kaiser Permanente Central Office, noted in an oral history that as late as 1969, when Kaiser Permanente expanded to Colorado, physicians were only allowed to use two of the four hospitals in Denver.

It was ironic that Henry J. Kaiser, a fervent anti-communist and one of America’s preeminent capitalist industrialists, found himself defending his health plan from charges that it was “socialistic.” He genuinely believed that his plan was simply the best.

Fending off legal challenges

For Permanente, things came to a head in October 1947 with a legal battle started by the Alameda-Contra Costa Medical Society. After a two-day hearing the California Board of Medical Examiners found Dr. Garfield, at the time the sole proprietor of the medical group, guilty of “employing unlicensed physicians and unregistered interns.” The Board placed Dr. Garfield on probation for five years and suspended his license for one year, but withheld the suspension provided he abided by state law.

Five of the six charges against Dr. Garfield involved hiring doctors at the Oakland Permanente hospital who were not licensed to practice in California. The sixth charged him with keeping a doctor on the staff until 1946, although his license had been revoked in 1943. The charge of not registering interns arose when Garfield explained that the five doctors were undergoing training.

Dr. Garfield wins fight with medical board, 11/11/1948.

Dr. Garfield defended his actions, saying “The procedure which we followed over a period of years in our training program was the same as that followed in other teaching institutions in this state, such as Stanford University and the University of California.” Of the approved hospitals in the state, only Permanente has been singled out and charged with technical violations, Dr. Garfield added.

Dr. Garfield appealed the decision. At the same time, one of the targeted physicians, Clifford Keene, MD, was issued his license after a two-day grilling by the Board of Medical Examiners and departed to run the employee medical program at Kaiser’s Willow Run, Mich., automobile plant.

Dr. Garfield’s case was eventually dropped, and his right to practice restored in 1948, but the blows had landed.


Part 2
, where we learn more about the response by the Permanente Health Plan and the similar experiences of Group Health Cooperative.

Short link to this article: http://k-p.li/2vd5Oi5

 

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