Group Health Cooperative -- Part 3: Growing Up and Out, 1952-1965

  • By Walt Crowley & The HistoryLink Staff
  • Posted 3/05/2006
  • HistoryLink.org Essay 7659

The health care visionaries who founded Group Health Cooperative in Seattle in 1945 were activists in the farmers' grange movement, the union movement, and the consumer cooperative movement. Their inspiration was Lebanese-American physician Dr. Michael Shadid (1882-1966), founder of the nation's first cooperatively owned and managed hospital (in Oklahoma). Dr. Shadid's crusade was to overthrow the traditional fee-for-service practice of medicine dominated by solo practitioners, expensive specialists, and private hospitals and clinics. Instead he advocated affordable, prepaid healthcare through the cooperative ownership of hospitals staffed by physicians -- practicing as a group -- who promoted the new idea of "preventive" medicine. Group Health Cooperative began providing health care after merging in 1946 with the Seattle-based Medical Security Clinic, a physician-owned group practice whose idealistic doctors also believed in preventive care. After years of struggle and despite virulent opposition by the medical establishment, Group Health became one of the nation's largest consumer-directed health-care organizations. This is Part 3 of a seven part history of Group Health Cooperative.

Growing Up and Out

Jubilation after the Supreme Court ruling was heartfelt but short-lived as Group Health faced the sobering responsibilities and challenges of running a complex and largely untested style of health-care organization. The Cooperative had added a wing with 30 beds to the old St. Luke’s Hospital in 1950, and the following year opened its Central Clinic nearby in the former Costa Vista apartments. As enrollment climbed towards 20,000, the Co-op also maintained clinics in downtown Seattle’s Securities Building and in Renton.

The pressure of growth aggravated inherent weaknesses within the Cooperative’s structure, particularly the ambiguous and tentative relationship between its Board and its medical staff left over from the purchase of the Medical Security Clinic. Group Health was really a two-headed creature, and its two minds did not fully comprehend each other’s aims and needs. 

The small and overworked medical staff objected to the Board of Trustees' habit of spending money on non-medical causes such as cooperative organizing and political campaigns and also objected to what it regarded as meddling in professional matters. The Board of Trustees pressed the medical staff to hire a "health educator" to augment the preventive medicine program, and to implement a "family doctor" program. At the time staff physicians opposed these ideas (although later both would be adopted).

For its part, the Board was impatient with the physicians’ seeming conservatism, and some trustees still harbored Dr. Shadid’s paranoia that the doctors would dominate the Cooperative if they as Board members did not assert themselves. At the same time, the Board reorganized under a district-representation system to strengthen member participation. Founding trustees were beginning to drop away, and able replacements such as Aubrey Davis Jr. and Hilde Birnbaum took their seats.

The simmering dispute came to a head when the medical staff, then headed by Dr. John Quinn, dismissed Chief of Surgery Dr. Allan Sachs. Dr. Sachs did not leave quietly. He appealed to the Board, where he had many friends. The medical staff correctly asserted its contractual right to hire and fire, but the Board reminded it that the entire contract for physician services would soon expire.

Some hinted darkly that Sachs had been terminated because he was Jewish, although his wife Bernice, a psychiatrist, would suffer no such prejudice in her long tenure at Group Health and the membership included many Jews. The more likely cause was Allan Sach’s haughty and abrasive manner with his colleagues.

Racial discrimination was also suspected when the staff rejected the application of Dr. Blanche Lavisso, an African American pediatrician. Yet another black physician, Dr. Bob Joyner, reported encountering no such discrimination when he applied for a position in 1950. Ultimately Joyner was not hired because he would only accept a part-time position in order to develop his own clinic in Seattle’s Central Area.

Still, the Lavisso incident prompted the Board to adopt a stronger anti-discrimination policy and Dr. Lavisso was offered the next vacancy. She declined and went on to become a major force at Children’s Orthopedic Hospital and co-founder of the Odessa Brown Clinic to serve Seattle’s inner city. Group Health hired its first black nurse, Gertrude Dawson, in 1956, but would not appoint a black physician until 1969. It was a rare instance in which Group Health trailed the pace of social progress.

After a long stalemate with the medical staff, the Board allowed Dr. Sachs to resign with three months' pay. The conflict then erupted anew when the trustees accused general manager Don Northrop, an ally of the medical staff, of incompetence. Northrop graciously resigned before tensions could escalate into full-scale warfare.

Sandy MacColl stepped in as Northrop’s replacement in late 1952 and slowly pacified the two sides with the aid of a new chief of staff, Dr. Alfred Magar. A special Joint Conference Committee consisting of trustees and physicians was formed to hammer out the most difficult issues before they were presented to trustees. Finally, the Board offered three of its seats to physicians. The medical staff enthusiastically accepted.

One important factor in restoring peace, a key administrator wrote, was the fact that "the medical staff, too, was composed of idealists, held together for its part by a joint commitment to a new pattern of medical care delivery." It helped, too, that Group Health’s chronic staffing shortage finally abated as it attracted new physicians no longer threatened with AMA sanctions. By 1955 a staff of 40 doctors served 36,000 members.

Preventive Care, Personal Responsibility

With the medical staff and the Board of Trustees pulling together, the next decade was replete with innovations in preventive care and in new approaches to health care. Group Health Cooperative already had in place a prenatal care program and a Well Child program that were yielding dramatic statistical improvements in pediatric health compared to national averages.  

In August 1955, Executive Director Dr. John A. Kahl began his 10-year shift. Dr. Kahl's philosophy emphasized that individual members should take care to eat a good diet and to avoid obesity. Rejecting the annual physical exam as a pointless and costly ritual, he outlined a substitute system of periodic health "inventories,” including a detailed questionnaire, chest X-ray, and blood and urine tests. Kahl proposed to better educate members to monitor their own health and promptly inform their assigned “personal physicians” of any major changes or problems. In time, Group Health implemented all these ideas.

Dr. MacColl returned to pediatrics, to his great satisfaction and relief. In this capacity, he cautioned against dispensing the first batches of the Salk polio vaccine out of concern over quality control. As he feared, some shipments were defective and actually gave children the disease — but not at Group Health. MacColl was then tapped to head the Cooperative’s first completely new facility, the Northgate Clinic, when it opened in 1958.

That same year, Group Health Cooperative inaugurated a cancer-screening program, including free Pap tests to detect cervical cancer. The tests, named for inventor Dr. George Papinicolaou, were then a new and controversial procedure, and Group Health Cooperative was one of the world’s first medical institutions to offer them as a routine service — for no extra charge.

The Cooperative turned its attention to its aging hospital, already a relic when it was acquired. Guided by the leadership of such Board members as Hilde Birnbaum and Aubrey Davis, the Co-op developed plans for a state-of-the-art facility able to accommodate 173 patients at a final cost of $3.5 million. More than 500 members at a 1955 meeting had approved a special $75 capital surcharge on membership dues to raise needed capital and to purchase the nearby Lou Anne Apartments for an expanded Central Clinic. Seattle Mayor Gordon Clinton and Rabbi Raphael Levine helped break ground for the new hospital on June 1, 1959. The doors opened on October 8 of the following year.

New Frontiers 

Veteran national cooperative leader and former California congressman Jerry Voorhis returned to Seattle in 1960 to address Group Health’s Annual Membership Meeting. He urged the membership to support Rhode Island Congressman Aimé J. Forand’s new bill to add health care to Social Security benefits, an idea later dubbed Medicare by then Vice President Richard Nixon. Surprisingly, the proposal divided the house: Many Group Health doctors feared that Medicare would be a step toward a European-style national health service wherein most physicians worked for the state; alternatively, many Group Health members welcomed a larger public role in financing and delivering health care.

As this debate continued in 1961, Group Health authorized a study of the cost of adding mental health care to its coverage. Staff members Dr. Bernice Sachs and Co-op president Dr. Charles Strother, both psychologists, strongly advocated this coverage. Psychiatrist Dr. Jack R. Brown was hired to set up the program, and it began serving patients in 1966. 

Group Health continued to expand, opening a new Burien Clinic in 1964 and an expanded Central Clinic in 1965. Total enrollment topped 85,000 that year. Due to illness, Dr. Kahl retired as executive director in the spring of 1965. He was succeeded by Dr. Frank Newman.

On July 30, 1965, President Lyndon Johnson signed Medicare and Medicaid into law at a special ceremony in Independence, Missouri. He was flanked by former President Harry Truman, who had tried to pass national health insurance in the late 1940s, and by the "father of Medicare," Representative Aimé Forand. It was the cornerstone of Johnson’s vision of a Great Society and the largest single advance in expanding access to health care yet taken in the United States.

The law took effect the following year. As Group Health began its third decade, it would prove to be a mixed blessing for the Cooperative and its members.

End of Part 3. To reach Part 4, click "Browse to Next Essay" below.


Sources: Walt Crowley, To Serve the Greatest Number: A History of Group Health Cooperative of Seattle (Seattle: GHC/University of Washington Press, 1995); Walt Crowley & the HistoryLink.org Staff, Group Health Timeline (Seattle: Group Health Coop/History Ink, 2007).

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