December 31, 2010

Permanente embraces its partnership with labor

Henry J. Kaiser and Sidney R. Garfield, MD, survey the site for the Walnut Creek Medical Center, completed in 1953


Throughout its history, Kaiser Permanente has relied on the “can-do spirit” of its dedicated workers and on the support of organized labor to keep the prepaid health plan strong.

Coming out of World War II, the medical plan had proven its viability in caring for a large shipyard workforce, but with the end of shipbuilding contracts, Henry Kaiser and Permanente founder and medical director Dr. Sidney Garfield had a big problem. Where were the large numbers of new members going to come from?

Kaiser, a friend of labor, attracted workers’ unions whose leaders understood the power of prepaid health care and wanted it for the welfare of their workers. Bay Area workers — from Oakland city employees, who were the first to sign up, to union typographers, street car drivers and carpenters — embraced the Permanente Health Plan with its emphasis on preventive medicine.

In 1950, Harry Bridges brought the 6,000-member International Longshoremen and Warehousemen Union (ILWU) into Kaiser Permanente, bringing the total West Coast membership, including Los Angeles, to almost 160,000. In 1951, the Retail Clerks union added 30,000 to the membership rolls in Los Angeles.

Opposition tries to squelch Kaiser Permanente

Despite this success, Kaiser and Garfield often faced rear guard actions from private practice doctors who felt threatened by group practice medicine. In 1953 when KP opened a new hospital in Walnut Creek and sought the health plan contract with workers in the U.S. Steel plant in Pittsburg, California, all hell broke loose in that small town along the Carquinez Strait.

family walking along concrete path toward building surrounded by grass and trees

A family visits the new Kaiser Permanente Walnut Creek facility completed in 1953.

Before Kaiser Permanente came along, the steelworkers union had both a national hospitalization plan and a local supplementary health plan with local private practice doctors. The workers were not satisfied with the current health plan and were complaining that providers charged too much and were lackadaisical about responding to emergencies and requests for house calls.

For their part, the Pittsburg area doctors argued that inflation required rates to rise and disputed the idea that service to members was lax.

Kaiser Permanente already provided care to steelworkers at the South San Francisco Bethlehem Steel plant and was prepared to expand services to the Pittsburg area. The beginning of KP’s negotiations with the Steelworkers Local 1440 in Pittsburg raised the hackles of the 41 private practice doctors already established in the area.

These doctors, all members of the East Contra Costa branch of the Alameda-Contra Costa Medical Association, quickly devised a new and better plan to offer the union, including 24-hour emergency service and a cap on fees.

Offer steelworkers couldn’t refuse

Joseph Garbarino, in his 1960 study of the Pittsburg conflict for the University of California, reported that the union bargainers welcomed Kaiser Permanente because of its offer to provide comprehensive care for a specific price for a specified period of time. This arrangement was attractive to the local union whose leadership had never before been able to negotiate such a favorable deal with their private practice providers.