History of Kaiser Permanente

HISTORY

In 1933, Dr.Sidney Garfield secured a contract with Industrial Indemnity (i.e. Insurance Consortium) to care for 5,000 construction workers building the Colorado River Aqueduct in the Mojave Desert. Due to Garfield's desire to treat all patients regardless of ability to pay, he won over two Industrial Indemnity executives, Harold Hatch and Alonzo B. Ordway, Hatch suggested that the insurance companies pay Dr. Garfield a fixed amount per day, per covered worker, up front. This would solve the hospital’s immediate money troubles and, at the same time, would enable Dr. Garfield to emphasize maintaining health and safety rather than merely treating illness and injury. Thus, “prepayment” was born. For the princely sum of five cents per day, workers were provided this new form of health coverage. For an additional five cents per day, workers could also receive coverage for non-job related medical problems. Thousands of workers enrolled, and Dr. Garfield’s hospital became a financial success.

In 1938, Dr. Garfield again recruited a team of doctors to work in a “prepaid group practice” for 6500 workers on largest construction site — The Grand Coulee Dam being built by Henry J. Kaiser.

In 1940, America’s entry into World War II brought tens of thousands of workers of Kaiser Company in poor health - pouring into the Kaiser Shipyards in Richmond, Calif., Portland, Ore., and Vancouver, Wash., to meet the nation’s demand for big Liberty Ships, aircraft carriers

So, in 1942, at Kaiser’s request, President Franklin D. Roosevelt released Dr. Garfield from his military obligation specifically so he could run a prepaid group practice for the workers.

At the end of the war, Dr. Garfield wanted to keep practicing his new form of health care delivery, and Kaiser wanted the plan to continue as well. Therefore, on July 21, 1945, the Permanente Health Plan officially opened to the public.

In 1955, Tahoe Agreement was taken to resolve all the conflicts between the Permanente...