Regional Oral History Office the Bancroft Library University Of

Regional Oral History Office University of California The Bancroft Library Berkeley, California Kaiser Permanente Medical Care Oral History Project Scott Fleming HISTORY OF THE KAISER PERMANENTE MEDICAL CARE PROGRAM An Interview Conducted by Sally Smith Hughes in 1990 and 1991 Copyright 0 1997 by the Regents of the University of California 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 indexed, bound with photographs and illustrative materials, and placed in The Bancroft Library at the University of California, Berkeley, and 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, and irreplaceable. All uses of this manuscript are covered by a legal agreement between The Regents of the University of California and Scott Fleming dated June 20, 1991. 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, 486 Library, University of California, Berkeley 94720, and should include identification of the specific passages to be quoted, anticipated use of the passages, and identification of the user. The legal agreement with Scott Fleming requires that he be notified of the request and allowed thirty days in which to respond. It is recommended that this oral history be cited as follows: Scott Fleming, "History of the Kaiser Permanente Medical Care Program," an oral history conducted in 1990 and 1991 by Sally Smith Hughes, Regional Oral History Office, The Bancroft Library, University of California, Berkeley, 1997. Copy no. ! Cataloging Information FLEMING, Scott (b. 1923) Kaiser Permanente Lawyer The History of the Kaiser Permanente Medical Care Program, 1997, xii, 222 pp. Family background, childhood in Nevada; UC-Berkeley, World War 11, law school at Chicago and Berkeley; Kaiser Company Legal Department, 1949- 1980s; Kaiser Permanente Medical Care Program: Tahoe Conference, expansion to Cleveland, Denver, Washington, D.C., and Hawaii, governmental relations; reflections on Medicare, HMOs, Sidney Garfield, Ernest Saward, Clifford Keene and other physicians; work for U.S. Department of Health, Education and Welfare, 1971-1973; comments on Kaiser executives Henry J. Kaiser, Eugene Trefethen, and James Vohs. Interviewed 1990-1991 by Sally Smith Hughes for the Kaiser Permanente Medical Care Program Oral History Series. The Regional Oral History Office, The Bancroft Library, University of California, Berkeley. TABLE OF CONTENTS--Scott Fleming PREFACE INTERVIEW HISTORY viii PERSONAL RESUME CHILDHOOD AND BACKGROUND UNTIL KAISER EMPLOYMENT Maternal and Paternal Grandparents Parents Religion Financial Status Intellectual Interest Social Occasions Discipline World War I1 Law School, 1945-1949 Re-marriage and Home Building I1 KAISER PERMANENTE MEDICAL CARE PROGRAM--GENERAL Kaiser Legal Department Functions and Key Personalities Tensions within the Medical Program The Tahoe Conference and its Aftermath Northern California Adopts the Plan The Physicians' Retirement Plan Post-Tahoe Restructuring The Central Office Henry J. Kaiser's Role More on Post-Tahoe Restructuring More on the Central Office The San Diego Venture DEVELOPMENT OF THE KAISER PERMANENTE COMMITTEE The Physician-Administrator Forums The United Auto Workers' Medical Plan, Detroit Origin of the Kaiser Permanente Committee Expansion Fund Henry J. Kaiser Family Foundation Opposition to Expansion Support of Expans ion Expansion to Cleveland and Denver, 1969 Expansion to Texas, 1979 Expansion to Washington, D.C., 1980 Rejection of Expansion to Chicago The Program Policy Committee Kaiser Foundation International IV KAISER PERMANENTE AND PUBLIC POLICY The Legal and Governmental Relations Department Representation in Sacramento Program Relationships with Medical Societies Developments in Public Policy The Federal Employees Health Benefits Program, 1959 The Dual Choice Concept Medicare Origins Kaiser Permanente's Medicare Goals Medicare Amendments, 1972 The Health, Education, and Welfare Secretary's Report, 1968 Conclusions Fleming's Dissent The EiMO Act Paul Ellwood's Plan Origin of the Term Health Maintenance Organization Group Health Association of America History Member, Board of Directors, GHAA, 1974-1981 Deputy Assistant Secretary for Policy Development, Office of the Assistant Secretary of Health, HEW, September 1971- June 1973 Appointment Health Policy Issues National Health Insurance V HAWAII STARTUP Litttle Public Need Legal Groundwork "Fast Track'' Construction Establishing the Medical Group Equipment and Staffing Open for Business Decline and Fall of Pacific Medical Associates Terminating Relations with PMA: Birth of Hawaii Permanente Mr dical Group The Battle of the Press Releases Preparing for Litigation Postscript VI THE OREGON REGION Comments on Ernest Saward's Oral History Financial Aspects of the Medical Program Program Expansion Dealing with the Multnomah County Medical Society Organizational Structure of the Oregon Region Saward's Departure from the Oregon Region Deterioration of the Oregon Region Fleming's Appointment as Regional Manager Personnel in the Region Buying Real Estate The Region in the Mid-1970s The OEO and Dental Programs The Center for Health Research The Service Employees International Union Strike, 1974 VII RETURN TO THE CENTRAL OFFICE AND MISCELLANEOUS Return to the Central Office Miscellaneous APPENDIX Articles and Reports Authored by Fleming Health, Education and Welfare Press Release, September 13, 1971 Kaiser Permanente Biographical Summary, May 1, 1987 Tahoe Agreement, July 14, 1955 Statement of Expansion Policy of the Kaiser Permanente Medical Care Program Health Affairs Supplement excerpt, 1993, "History & Principles of Managed Competition" by Alain C. Enthoven Highlights of Scott Fleming's Career, 1989 Kaiser Permanente Management News Notes, June 1989 Spectrum, Fall 1989 INDEX PREFACE Background of the Oral History Project The Kaiser Permanente Medical Care Program recently observed its fortieth anniversary. Today, it is the largest, one of the oldest, and certainly the most influential group practice prepayment health plan in the nation. But in 1938, when Henry J. and Edgar F. Kaiser first collaborated with Dr. Sidney Garfield to provide medical care for the construction workers on the Grand Coulee Dam project in eastern Washington, they could scarcely have envisioned that it would attain the size and have the impact on medical care in the United States that it has today. In an effort to document and preserve the story of Kaiser Permanente's evolution through the recollections of some of its surviving pioneers, men and women who remember vividly the plan's origins and formative years, the Board of Directors of Kaiser Foundation Hospitals sponsored this oral history project. In combination with already available records, the interviews serve to enrich Kaiser Permanentels history for its physicians, employees, and members, and to offer a major resource for research into the history of health care financing and delivery, and some of the forces behind the rapid and sweeping changes now underway in the health care field. A Synopsis of Kaiser Permanente History There have been several milestones in the history of Kaiser Permanente. One could begin in 1933, when young Dr. Sidney Garfield entered fee-for-service practice in the southern California desert and prepared to care for workers building the Metropolitan Water District aqueduct from the Colorado River to Los Angeles. Circumstances soon caused him to develop a prepaid approach to providing quality care in a small, well-designed hospital near the construction site. The Kaisers learned of Dr. Garfield's experience in health care financing and delivery through A. B. Ordway, Henry Kaiser's first employee. When they undertook the Grand Coulee project, the Kaisers persuaded Dr. Garfield to come in 1938 to eastern Washington State, where they were managing a consortium constructing the Grand Coulee Dam. Dr. Garfield and a handful of young doctors, whom he persuaded to join him, established a prepaid health plan at the damsite, one which later included the wives and children of workers as well as the workers themselves. During World War 11, Dr. Garfield and his associates--some of whom had followed him from the Coulee Dam project--continued the health plan, again at the request of the Kaisers, who were now building Liberty Ships in Richmond, California, and

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