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Regional Oral History Office University of California The Bancroft Library Berkeley, California DANIEL WAGSTER KAISER PERMANENTE MEDICAL CARE ORAL HISTORY PROJECT II YEAR 2 THEME: KAISER PERMANENTE “CORE VALUES” Interview conducted by Martin Meeker In 2007 Copyright © 2008 by The Regents of the University of California ii Since 1954 the Regional Oral History Office has been interviewing leading participants in or well-placed witnesses to major events in the development of Northern California, the West, and the nation. Oral History is a method of collecting historical information through tape-recorded interviews between a narrator with firsthand knowledge of historically significant events and a well-informed interviewer, with the goal of preserving substantive additions to the historical record. The tape recording is transcribed, lightly edited for continuity and clarity, and reviewed by the interviewee. The corrected manuscript is bound with photographs Illustrative materials and placed in The Bancroft Library at the University of California, Berkeley, In other research collections for scholarly use. Because it is primary material, oral history is not intended to present the final, verified, or complete narrative of events. It is a spoken account, offered by the interviewee in response to questioning, and as such it is reflective, partisan, deeply involved, Irreplaceable. ********************************* All uses of this manuscript are covered by a legal agreement between The Regents of the University of California and Daniel Wagster, dated September 16, 2008. The manuscript is thereby made available for research purposes. All literary rights in the manuscript, including the right to publish, are reserved to The Bancroft Library of the University of California, Berkeley. No part of the manuscript may be quoted for publication without the written permission of the Director of The Bancroft Library of the University of California, Berkeley. Requests for permission to quote for publication should be addressed to the Regional Oral History Office, The Bancroft Library, Mail Code 6000, University of California, Berkeley, 94720-6000, and should include identification of the specific passages to be quoted, anticipated use of the passages, Identification of the user. It is recommended that this oral history be cited as follows: Daniel Wagster, “Kaiser Permanente Medical Care Oral History Project II—Year 2. Theme: Kaiser Permanente ‘Core Values’” conducted by Martin Meeker, 2008, Regional Oral History Office, The Bancroft Library, University of California, Berkeley, 2008. Copy No. ____ iii Discursive Table of Contents—Daniel Wagster Interview #1: 05/10/2007 Audio File 1 1 Personal background and upbringing in Kelso, Washington—Raised by foster parents—Drafted into the army during the Korean War—Playing football for the army—Admission to Yale and attending the college as an undergraduate—Post-graduate years in New York City—Hired into industrial relations in Kaiser Industries—Overlap between Kaiser Industries and Kaiser Health Plan and Hospitals—Transfer to Southern California, new position as health plan manager— Scope of work for health plan manager: seeking qualified physicians, conflicts with the local medical society, hospital construction—Industrial relations and the health plan—Marketing and customer relations—Professional liability—More on marketing to employers Audio File 2 17 Health plan manager as Wagster’s favorite job—Competition and price advantage of the Kaiser Health Plan—Kaiser’s ability to maintain lower hospital utilization than other plans, and other systematic advantages in a group practice, prepayment program—How and why Kaiser Health Plan began to lose systematic advantages: changes in government regulation and the health care marketplace—Impact of Medicare on the health care marketplace—Beginning to develop member utilization statistics vis-a-vis Medicare reporting and payment Audio File 3 33 Negotiating a capitation agreement with the Social Security Administration—Passage of the 1972 HMO Act—Medicare and the emergence of “cost finding” in the organization—Southern California expansion into San Diego—Establishing the geographic divide between northern and southern California—Expanding established regions vs. establishing expansion regions— Troubles integrating computer services—Becoming an Assistant Regional Manager in northern California—Leadership transitions, elevation of Jim Vohs—Changing leadership in the medical groups Audio File 4 49 Reputation of Kaiser, including the health plan—Transfer to southern California in 1971 to become Regional Manager of Health Plan and Hospitals—Medical economics and the construction of new facilities—Relationship between the health plan and medical group in southern California, and leadership problems within the medical group—National healthcare and public policy—Community benefit and outreach to local service agencies iv Interview #2: May 11, 2007 Audio File 5 63 Conflict between health plan and medical groups, and between Jim Vohs and Bruce Sams— Sams as a candidate for health plan president—Gaining recognition as a federally-qualified HMO in 1977—HMO vis-à-vis “managed care”—Reasons Kaiser Permanente became a qualified HMO—Kaiser and Permanente names—Differentiating KP among other HMOs— More on marketing and public relations—Transfer to Northwest region to be regional manager, then transfer to Central Office in Oakland—Marketing and limiting new members—Overturning ban on advertising within the organization—Advertising, marketing, national reputation, and regional autonomy Audio File 6 80 Dealing with medical inflation—Costs and emergence of new medical technology—Cost controls and national health care policy—Relative roles of “love” and “expense” in medical decision-making—Perverse incentive among fee-for-service physicians—Regional autonomy versus centralization and problems with maintaining national accounts—Insulation of the medical groups from rates and the marketplace—Physician compensation in relation to the marketplace—Employer groups and the extent of services and benefits provided—Reflections on the multiphasic exam and preventive medicine Audio File 7 93 Work in the Mid-Atlantic region, with a focus on integrating Georgetown University Community Health Plan into the program—Problems with other regions, including Ohio—Electronic medical records and other new technologies—Story about Mitch Greenlick and Edgar Kaiser—More on national accounts and regional autonomy Audio File 8 112 Transfer to Hawaii as regional manager—The Wagster-Sams report on expansion regions 1 Dan Wagster Interview 1: May 10, 2007 [NOTE: This transcript has been substantially edited by the narrator and does not closely match the original recording] [Begin Audio File 1 wagster_dan1_05-10-2007.mp3] 01-00:00:32 Meeker: Today is the 10th of May, 2007, and I'm at the home of Daniel Wagster in Bend, Oregon. This is the Kaiser Permanente Oral History Project. Let's just get started. I want to get a little personal background. I know that you were born in Port Angeles, Washington. 01-00:01:01 Wagster: Right 01-00:01:02 Meeker: So, maybe you can tell me when, and the kind of circumstances into which you were born. Maybe the kind of work that your family did, and so forth. 01-00:01:12 Wagster: Okay. My birth date is 11/27/27, which has always been an advantage, to have those two 27's. Therefore, I'm 79 as we speak. I'm beginning more and more to think I'm a survivor. As I look around, I lose friends. I was born in Port Angeles, but I think of my hometown as Kelso, WA; Port Angeles is on the top of the Olympic Peninsula; Kelso is in Southwest Washington, just north of Portland, about 40 miles on the way to Seattle. My folks moved around a lot. My dad was mostly a mill worker. He had been in the Navy as a young man. Ran away from home, very little education, all those things. Met my mother by chance on an assignment with the Navy. They got married, I had an older sister—she's deceased. We had a very simple, modest, family life. It might even be called humble background, or environment that I grew up in. Some of the houses that we lived in didn't have indoor plumbing, for instance. Our family was also a product of the time because of the Depression. In the late 1930s my parents separated and later divorced. My sister and I went with Mom to Port Angeles and lived with Mom’s folks–my grandparents. Mom was working but not doing well financially, so it was my decision to go live with my dad in Kelso and start high school. After a year he moved to Vancouver, Washington. I wanted to finish high school in Kelso. The football coach helped me to find a family to board with–Roy and Pat Mohr. After two months my dad stopped paying for my room and board (twenty dollars per month). The Mohrs literally took me in. Roy Mohr was a county engineer and became a great influence in my life. Helped me in all kinds of respects, including philosophical outlook on life itself. But specifically he had a hand in my ending up with a scholarship to Yale, which really changed my expectations and changed my life. The Mohrs later became the grandparents to my kids. I have two youngsters, Dan and Wende. Wende's the older. 2 01-00:03:35 Meeker: You said that Mr. Mohr influenced your philosophical outlook. What do you mean by that? 01-00:03:41 Wagster: He was an honest, strong—but kind—and positive man. Would not let problems be problems. He would simply think of them as things we could work out. And it was his belief you can do almost anything, or, really, anything that you choose to do. Inspiring kind of guy, a diamond in the rough. They did have a very comfortable home. Roy was extremely well respected in the community, and he was a lot of fun. He was a rugged Westerner. He had virtually raised himself, gone to Kelso High and put himself through college.

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