Health Care In Seattle

First in a series on cooperatives that work

The New Republic, December 18, 1971

NOT EVERY CRANNY of the American economy is occu­pied by profit-hunters.  Here and there, over the past hundred years, nonprofit cooperatives have sprung up, providing their member-owners with almost every kind of service or product: credit, housing, electricity, telephones, consumer goods, farm supplies, funerals, health care, schooling.  Many of these cooperatives have foundered or been squeezed out of business; others have endured and grown.  One notable success has been the Group Health Cooperative of Puget Sound, a one-time black sheep of the American med­ical world that has lately become a model for health maintenance organizations.

GHC was organized in 1944 by about 200 members of the Grange, the Aero-Mechanics union and other Seattle residents disenchanted with both the cost and methodology of fee-for-service medicine.  They decided to organize around four basic principles: control of the co-op would rest with members rather than doctors; election of trustees and major policy decisions would be made on a one-member, one-vote basis; so far as possible a single monthly payment would cover all the health care costs of member families; emphasis would be put on health education and preventive medicine.

With these principles incorporated into a set of by­laws the organizers approached an existing group practice clinic in Seattle with an offer to buy its facilities and contract for medical services.  Capital was raised by having each member invest $100, and ulti­mately an agreement with the clinic was reached.

There were many early hurdles, on any one of which the co-op could have tripped up.  Organized medicine in Washington state branded the co-op’s form of prac­tice unethical and barred GHC doctors from member­ship in local medical societies, positions on hospital staffs and certification in numerous specialties.  Even­tually a court suit brought an end to these exclusions.  There was scant actuarial data on which to anticipate costs for the kind of total coverage the co-op pro­vided.  A tendency to use co-op jobs as political patron­age became a source of some friction, and in 1953 the entire undertaking almost came unhinged when the consumer trustees reinstated a doctor whom the medi­cal staff had fired.  Out of that bitter dispute emerged a new joint conference committee, consisting of three doctors and three trustees, to which all potential con­flicts between consumers and medical staff have since been referred.  No question leaves the joint committee until a consensus among its members has been reached, an arrangement that has contributed to har­mony between lay and professional elements.

New members brought in new capital; additional facilities were constructed or pur­chased.  By mid-1971 GHC was providing health care to 145,000 persons, making it the largest consumer-owned group-health practice in the United States.  In addition to the original small clinic the cooperative now owns a 300-bed hos­pital and six neighborhood health centers.  A seventh is under construction in Olympia, 60 miles south of Seattle, and more are on the drawing boards.

GHC is often compared with non-cooperative health plans, and by almost any measure of comparison it comes off well.  Under many prepaid insurance schemes, benefits are obtainable only when a patient is hospitalized; the incentive is thus to hospitalize and to keep patients in hospitals longer.  GHC provides outpatient as well as hospital care, with a decided emphasis on the former.  This, plus GHC’s reliance on salaried doctors rather than fee-for-service, accounts for some startling differences in costs.  While the national per capita cost of health care was $226 in 1970, for GHC members it was $143.  The biggest savings were in hospital expenses, which averaged $37 per GHC member compared to $112 nationally.

GHC coverage is far broader than that provided by other plans.  In keeping with its founders’ desire for the maximum possible coverage, GHC service includes medical, surgical and hospital care without time or dollar limits, doctor home calls and visiting nurse calls, all prescribed drugs except tranquilizers, birth control pills and dietary supplements the co-op keeps drug costs down by buying generically and in bulk), x-rays and laboratory services, physical therapy, worldwide emergency insurance, psychiatric consultations (no charge for up to ten visits per year, $5 for each addi­tional visit) and eye examinations (glasses provided at cost).  In order to discourage in-and-out memberships there is a $150 fee for maternity care and abortions.  The monthly payment for all this is $44 for a family of four.  Kaiser-Permanente, the largest non-cooperative group health plan in the country, costs slightly less but does not include full coverage for drugs, x-rays, lab fees, house calls or psychiatric care.  Blue Cross and private insurance plans are more expensive and full of loopholes.

CONSUMERS aren’t the only ones well-served by GHC; doctors seem quite satisfied.  Whereas most physicians are appalled at the thought of lay control of a hospital or health center, GHC doctors are not only accustomed to the idea but seem to find it stimu­lating.  They are, by and large, disdainful of the busi­ness side of private medi­pcine and are not underpaid (salaries range from $22,000 to about $48,000 a year, depending on specialty and length of service).  They find attractive the interchange of information and advice that group practice facilitates, as well as the continuing review by peers.

What most distinguishes GHC from Kaiser-Perma­nente and other prepaid health plans is direct consu­mer control over policy.  Kaiser clinics are often factory-like, with colored lines on the floor directing patients from one station to the next; GHC health centers are smaller and less regimented.  The doctor-patient ratio at GHC is kept at 1:1,050; at Kaiser the ratio is lower and doctors often seem overworked and harried.  GHC neighborhood centers hold frequent sessions for mem­bers on preventive health-care techniques.

Consumer-owners influence policy in two ways at GHC: collectively through the board of trustees and re­lated committees, and individually through the member-relations department that handles grievances.  Board members (there are 11) are elected to staggered three-year terms and serve without compensation.  Most have turned out to be professionals of one sort or another and have enjoyed long tenure in office; the leadership of the co-op is thus highly knowledgeable in matters of health care and neither overly awed by doctors nor overly_. antagonistic.  Trustees meet once a month to re­view operations, set policy and act upon the recommen­dations of the working committees (made up of doc­tors, management and laymen); they hire the medical director and hospital administrator, and approve the appointment of each doctor.  Once a year there is a membership meeting at which new trustees are elected and major policy questions, such as extent of coverage and level of dues, are decided.  “Each time the mem­bers have been given the choice of raising dues or cur­tailing services,” notes one of the original staff phy­sicians, Dr.  William MacColl, “they have voted overwhelmingly to raise dues.”

Perhaps the single greatest problem confronting the co-op today is growth.  Many members don’t want growth; they say that doctor-patient relationships are no longer as personal as they once were, that waiting time for appointments has increased, that member participation at annual meetings has decreased.  Co-op officials answer that growth is necessary to preserve a balanced membership (without new members the pres­ent patient population would get statistically older and less healthy) and to achieve economics of scale.  The pro-growth position has prevailed without much difficulty, but the co-op is careful to grow in as de-centralized a manner as possible.

The success of the Puget Sound co-op can probably be attributed to several factors — a relatively middle-class membership, a highly educated group of trus­tees, and a staff of doctors willing to tread off the beaten path.  Whether GHC’s success can be repeated elsewhere hinges partly upon the likelihood of bringing these ingredients together again, and partly upon govern­ment policies.  There are still 16 states that prohibit the practice of GHC-style group medicine.  The fed­eral government has lately taken a liking to health maintenance organizations, but most of its funding for HMOs has gone to providers — i.e., doctors and hospitals — rather than to con­su­mers or community groups.  My guess is that there will be few other health-care co-ops like GHC unless middle-class con­sumer groups become a lot more effective locally and nationally than they now are.