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University of California • Berkeley

Regional Oral History Office University of California

The Bancroft Library Berkeley, California

Kaiser Permanente Medical Care Program Oral History Project

Cecil C. Cutting, M.D.

HISTORY OF THE KAISER PERMANENTE
MEDICAL CARE PROGRAM

An Interview Conducted by
Malca Chall
1985

All uses of this manuscript are covered by a legal
agreement between the University of California and Cecil C.
Cutting, M.D., dated July 30, 1985. 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 at 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 at Berkeley.

Requests for permission to quote for publication
should be addressed to the Regional Oral History Office,
486 Library, 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 Cecil C. Cutting, M.D., 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:

Cecil C. Cutting, M.D., "History of the Kaiser
Permanente Medical Care Program," an oral history
conducted in 1985 by Malca Chall, Regional Oral
History Office, The Bancroft Library, University
of California, Berkeley, 1986.

Copy No.

CECIL C. CUTTING, M.D.

Kaiser Permanente Medical Care Program
Interviews to be Completed in 1986

Cecil C. Cutting, M.D.
Frank C. Jones
Raymond M. Kay, M.D.
Clifford H. Keene, M.D.
George E. Link
Ernest W. Saward, M.D.
John G. Smillie, M.D.
Eugene E. Trefethen, Jr.
Avram Yedidia

TABLE OF CONTENTS — Cecil C. Cutting, M.D.

PREFACE i

INTERVIEW HISTORY vii

BRIEF BIOGRAPHY ix

I FAMILY BACKGROUND AND EDUCATION 1

II THE GRAND COULEE EXPERIENCE, 1938-1941 4

III WORLD WAR II: THE KAISER SHIPYARDS, THE RICHMOND AND OAKLAND

HOSPITALS 14

IV THE POSTWAR YEARS: THE PERMANENTE HEALTH PLAN MOVES INTO THE

COMMUNITY, 1945 24

The Opposition of the Medical Society 27

Dr. Sidney Gar field . 32

Selecting Physicians 34

The Kabat-Kaiser Institute: The Rehabilitation Centers 37
Establishing the Medical Group Partnership: Northern California,

1948 40

V THE KAISER FOUNDATION HEALTH PLAN/HOSPITALS AND THE PERMANENTE

MEDICAL GROUPS, 1951/1952 43
Building the Hospital in Walnut Creek and the Ramifications for

the Medical Care Program 44

The Concerns of the Physicians in Northern California 47

The Southern California Medical Group and the Health Plan 52

The Tahoe Conference: Preliminaries and Follow-up, 1955-1958 54
Dr. Clifford Keene

The Working Council 57

Lake Tahoe 58

The Trefethen Plan: The Contract 59
The Northern California Medical Group Selects Cecil Cutting

as its Executive Director, 1957-1975 62

Surgery and Administrative Duties 64

VI THE KAISER PERMANENTE MEDICAL CARE PROGRAM FINALLY BECOMES A

PARTNERSHIP, 1962 69

The Effects of the San Diego Crisis, 1961-1962 69

The Team Approach Begins to Work: Karl Steil, Frank Jones,

Felix Day 76

The Eden Medical Group 77'

Minorities and the Medical Staff 79

Expansion to Cleveland, Ohio, 1969 80

The Kaiser Permanente Committee, 1967 82

The Growth of the Central Office . 84

Research: Basic and Applied 85

Publications and Public Relations 89

Cost Effectiveness and Cost-Benefit Standards 90

The Doctors and Idealism in the Medical Care Program 93
Dr. Cutting's Post Retirement Activities in the Medical Care

Program 96
Medical Consultant, the Kaiser Permanente Advisory

Services, 1976 — 96

The Kaiser Foundation Research Institute, 1976-1980 97

Co-Director, Total Health Care Program, 1982 — 98

Dr. Cutting Reflects on the Kaiser Permanente Medical Care Program

and his Part in It 104

TAPE GUIDE 107

APPENDIX - Letter from E.E. Trefethen, Jr. to Dr. Sidney Garfield 108
outlining funding of special programs authorized by the
Permanente Foundation, November 1, 1943.

Biographical Date 112

INDEX 113

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 know and 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 Permanente1 s 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, fifty-three years ago, when young Dr. Sidney Garfield
entered f ee-f or-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
facility near the construction site.

The Kaisers learned of Dr. Garfield1 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.

A few years later, during World War II, 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 on an island in the Columbia River between
Vancouver, Washington and Portland, Oregon. They would also produce steel in
Fontana, California. Eventually, in hospitals and field stations in the Rich
mond/Oakland communities, in the Portland, Oregon/Vancouver, Washington areas,
and in Fontana, the prepaid health care program served some 200,000 shipyard
and steel plant employees and their dependents.

By the time the shipyards shut down in 1945, the medical program had
enough successful experience behind it to motivate Dr. Garfield, the Kaisers,
and a small group of physicians to carry the health plan beyond the employees
of the Kaiser companies and offer it to the community as a whole. The doctors
had concluded that this form of prepaid, integrated health care was the ideal
way to practice medicine. Experience had already proven the health plan's
value in offering quality health care at a reasonable cost in the organization's
own medical offices and hospitals. Many former shipyard employees and their
families also wanted to continue receiving the same type of health care they
had known during the war.

Also important were the zeal and commitment of Henry J. Kaiser and his
industry associates who agreed with th.e doctors about the program's values,
and despite the antagonism of f ee-for-service medicine, were eager for the
success of the venture. Indeed, they hoped it might ultimately be expanded
throughout the nation. In September, 1945, The Henry J. Kaiser Company
established the Permanente Health Plan, a nonprofit trust, and the medical
care program was on its way.

Between 1945 and the mid-1950s, even as membership expanded in California,
Oregon, and Washington, serious tensions developed between the doctors and the
Kaiser- industry dominated management of the hospitals and health plan. These
tensions threatened to tear the Program apart. Reduced to the simplest form,
the basic question was who would control the health plan — management or the
doctors. Each had a crucial role in the organization. The symbiotic relation
ship had to be understood and mutually accepted.

From roughly 1955 to 1958, a small group of men representing management
and the doctors, after many committee meetings and much heated debate, agreed
upon a medical program reorganization, including a management-medical group
contract, probably then unique in the history of medicine. Accord was reached
because the participants, despite strong disagreements, were dedicated to the
concept of prepaid group medical practice on a self-sustained, nonprofit basis.

After several more years of testing on both sides, a strong partnership

emerged among the health plan, hospitals, and physician organizations. Resting

on mutual trust and a sound fiscal formula, the Program has attained a strong
national identity.

iii

The Oral History Project

In August 1983, the office of Donald Duffy, Vice President, Public and
Community Relations for Kaiser Foundation Health Plan and Hospitals, contacted
Willa Baum, director of the Regional Oral History Office, about a possible
oral history project with twenty to twenty-four pioneers of the Program. A
year later the project was underway, funded by Kaiser Foundation Hospitals'
Board of Directors.

A project advisory committee, comprised of seven persons with an interest
in and knowledge of the organization's history, selected the interviewees and
assisted the oral history project as needed. Donald Duffy assumed overall
direction and Darlene Basmajian, his assistant, served as liaison with the
Regional Oral History Office. Committee members are John Capener, Dr. Cecil
Cutting, Donald Duffy, Robert J. Erickson, Scott Fleming, Dr. Paul Lairson, and
Walter Palmer.

By year's end, ten pioneers had been selected and had agreed to participate
in the project. They are Drs. Cecil Cutting, Sidney Garfield, Raymond Kay,
Clifford Keene, Ernest Saward, and John Smillie, and Messrs. Frank Jones, George
Link, Eugene Trefethen, Jr., and Avram Yedidia.

Plans to interview Dr. Garfield and Dr. Wallace Neighbor, who had been
at Grand Coulee with Dr. Garfield, were sadly disrupted by their deaths, a week
apart in late 1984. Fortunately, both men had been previously interviewed.
Their tapes and transcripts are on file in the Central Office of the medical
care program.

The advisory committee suggested 1970 as the cutoff date for research and
documentation, since by that time the pioneering aspects of the organization
had been completed. The Program was then expanding into other regions, and was
encountering a new set of challenges such as Medicare and competition from
other health maintenance organizations.

Research

Kaiser Permanente staff and the interviewees themselves provided excellent
biographical sources on each interviewee as well as published and unpublished
material on the history of the Program. The collected papers of Henry J. Kaiser
on deposit in The Bancroft Library were also consulted. The oral history project
staff collected other Kaiser Permanente publications, and started a file of
newspaper articles on current health care topics. Most of this material will
be deposited in The Bancroft Library with the oral history volumes. A bibliog
raphy is attached.

To gain additional background material for the interviews, the staff talked
to four Kaiser Permanente physicians, two of whom had left the program years
ago: Drs. Martin Abel, Richard Geist*, Emphraim Kahn*, and James Smith*.

*Tapes of these interviews have been deposited in the Microforms Division of
The Bancroft Library.

The staff also sought advice from the academic community. James Leiby,
a professor in the Department of Social Welfare at UC Berkeley and an advocate
of the oral history process, suggested lines of questioning related to his
special interest in the administration of and relationships within public and
and private social agencies. Dr. Philip R. Lee, professor of social medicine
and director of the Institute for Health Policy Studies at the University of
California Medical School, proposed questions concerning the impact of health
maintenance organizations on medical practice in the United States.

Organization of the Project

The Kaiser Permanente Oral History Project staff, comprised of Malca Chall,
Sally Hughes, and Ora Huth, met frequently throughout 1985 to assign the
interviews, plan the procedures and the time frame for research, interviewing,
and editing, and to set up a master index. Interviews of the first nine pioneers
took place between February and June, 1985. During the following months the
transcripts of the tapes were edited, reviewed by the interviewees, typed,
proofread, indexed, copied, and bound.

Other pioneers who, at the time of this writing, have agreed to participate
in the project are: Drs. Morris Collen, Wallace Cook, Alice Friedman, Benjamin
Lewis, Sam Packer, Bill Reimers, Harry Shragg, and David Adelson, Lambreth
(Handy) Hancock, Berniece Oswald.

The entire series will be completed during 1987.

Summary

This oral history project traces, from various individual perspectives,
the evolution of the Kaiser Permanente Medical Care Program from 1938 to 1970.
Each interview begins with a discussion of the individual's family background
and education — those tangible and intangible forces that shaped his or her
life. The conversation then shifts to the interviewee's actual participation
in and observation of the significant events in the development of the health
plan. Thus, the reader is treated not only to facts on the history of the
Program, but to opinions about the personal qualities of the men and women —
doctors, other health care professionals, lawyers, accountants, and businessmen —
who, often against great odds, dedicated themselves to the development of a
health care system which, without their commitment and skills, might not have
resulted in the human and organizational achievement that the Kaiser Permanente
Medical Care Program represents today.

The Regional Oral History Office was established to tape record auto
biographical interviews with persons who have contributed significantly to
recent California history. The office is headed by Willa K. Baum and is
under the administrative supervision of James D. Hart, the director of The
Bancroft Library.

Malca Chall, Director

Kaiser Permanente Medical Care Program
Oral History Project

14 January 1986

Regional Oral History Office

Berkeley, California

BIBLIOGRAPHY

Advisory Council. Minutes , 1955-1956. Kaiser Permanente Medical Care Program.*

Cutting, Cecil C. Interview by Daniella Thompson, October 16, 1974. Audio-
Visual Department, Kaiser Foundation Health Plan.*

De Kruif , Paul. Kaiser Wakes the Doctors. New York: Harcourt, Brace and
Company, 1949.

. Life Among the Doctors. New York: Harcourt, Brace and Company, 1949.

(chapters XIII and XIV)*

Fleming, Scott. "Evolution of the Kaiser-Permanente Medical Care Program:
Historical Overview." Oakland: Kaiser Foundation Health Plan, Inc.,
1983.*

. "Conceptual Framework for Bancroft Library Oral History Project." Inter
office memorandum, 1984.*

. Health Care Costs and Cost Control; A Perspective from an Organized

System. A monograph initially prepared for the HOPE Committee on Health
Policy, Project HOPE, the People-to-People Foundation, Inc., December
1977.*

Fleming, Scott, and Douglas Gentry. A Perspective on Kaiser-Permanente Type
Health Care Programs: The Performance Record, Criticisms and Responses.
Oakland: Kaiser Foundation Health Plan, Inc., January 1979.

Garfield, Sidney R. Interviews by Daniella Thompson, September 5, 6, 9, 10,
1974. Transcripts, Audio- Visual Department, Kaiser Foundation Health
Plan.*

. Interviews by Miriam Stein, February 17, 1982 and June 7, 1984. Tran
scripts, Audio-Visual Department, Kaiser Foundation Health Plan.

. "The Coulee Dream: A Fond Remembrance of Edgar Kaiser." Kaiser

Permanente Reporter, January 1982, pp. 3-4.

Garfield, Sidney R. , M.F. Collen and C.C. Cutting. "Permanente Medical Group:
'Historical1 Remarks." Presented at a meeting of Physicians-in-Chief and
Medical Directors of all six regions of the Kaiser Permanente Medical
Care Program, April 24, 1974.*

Glasser, Susan, et al. Cultural Resources Catalogue. Middle Management

Development Program II, Group III, Kaiser Permanente Medical Care Program,
Southern California, March 31, 1985.*

*
Copies will be deposited in The Bancroft Library.

Kaiser Foundation Medical Care Program, Annual reports, 1960-1978. Oakland:
Kaiser Foundation Health Plan, Inc.*

Kaiser-Permanente Medical Care Program Annual Report, 1979-1985. Oakland:
Kaiser Foundation Health Plan, Inc.

Kaiser Permanente Mission Objectives. Report of the Kaiser Pennanente Committee,
February 2, 1985. Oakland: Kaiser Foundation Health Plan, Inc.

Kay, Raymond M. Historical Review of the Southern California Permanente
Medical Group: Its Role in the Development of the Kaiser Permanente
Medical Care Program in Southern California. Los Angeles: Southern
California Permanente Medical Group, 1979.*

. "Kaiser Permanente Medical Care Program: Its Origin, Development, and

their Effects on its Future." An unpublished paper presented before the
regional conference, January 28, 1985.*

Neighbor, Wallace J. Interview by Daniella Thompson, September 20, 1974.
Transcript, Audio-Visual Department, Kaiser Foundation Health Plan.*

Planning for Health, Winter 1984-1985. Oakland: Kaiser Foundation Health
Plan, Inc., Northern California Region.

Records of the Working Council, 1955. Kaiser Permanente Medical Care Program.*

Saward, Ernest W. , and Scott Fleming. "Health Maintenance Organizations."
Scientific American 243 (1980): 47-53.

Smillie, John S. "A History of the Permanente Medical Care Group and the

Kaiser Foundation Health Plan." An unfinished manuscript in draft form.*

Somers, Anne R. , ed. The Kaiser-Permanente Medical Care Program. New York:
The Commonwealth Fund, 1971.

Trefethen, Eugene E., Jr. Interview by Miriam Stein, February 16, 1982.
Transcript, Audio- Visual Department, Kaiser Foundation Health Plan.*

. Interview by Sheila O'Brien, February 19,1982. Transcript, Audio-
Visual Department, Kaiser Foundation Health Plan.*

Williams, Greer. Kaiser-Permanente Health Plan: Why It Works. Oakland:
The Henry J. Kaiser Foundation, 1971.

vii

INTERVIEW HISTORY

Dr. Cecil C. Cutting is a beloved and respected pioneer M.D. of the
Kaiser Permanente Medical Care Program. His interest in prepaid medical
care began in 1938 when Dr. Sidney Garfield came to San Francisco seeking
recruits for his medical staff at Mason City, the construction site of the
Grand Coulee Dam in eastern Washington, where the Kaiser company was part
of a consortium completing the dam.

Cutting, a graduate of the Stanford University Medical School, was,
at the time, completing a residency in surgery at the San Francisco County
Hospital. Despite a warning from the dean of the medical school that
joining a prepayment program was inadvisable, young Dr. Cutting, eager
for broad practice in surgery, accepted the challenge offered by Dr. Garfield
to become chief of surgery at Mason City Hospital.

In 1941, the Coulee Dam nearly completed, Dr. Cutting joined the
staff of the Virginia Mason Hospital in Seattle. A year later, at the
request of Sidney Garfield, he moved to Oakland, California, to help
Garfield establish another prepaid medical plan for the Kaiser company, this
time for the men and 'women building Liberty Ships in nearby Richmond. After
the war, he, Garfield and about a dozen doctors decided to take the medical
program to the public at large.

Medicine came naturally to Cecil Cutting. He was born and educated in
Campbell, California, a small rural community in the Santa Clara Valley.
His father, a Stanford graduate, taught mathematics in the high school.
His mother, prior to marriage, had been a nurse at Stanford's Cooper Lane
Hospital in San Francisco. His maternal grandfather and an uncle were
also doctors. Although there were clergymen in the family, neither Cutting
nor his brother thought about any career except medicine.

From 1957 to 1976, as executive director of the Northern California
Permanente Medical Group, Cutting helped promote the stable growth of the
medical program. Frequently, especially during the 1950s, he helped
maintain peaceful relationships within the medical group and between it and
management, a task requiring a combination of patience, mediation skills,
and foresight few physicians are called upon to exert. In addition, he
continued to practice surgery, often at the forefront of the new surgical
technology. Since retirement in 1976, he has served as medical consultant
to the Kaiser Permanente Advisory Services Program, advisor to the Kaiser
Foundation Research Institute, and co-director of the Total Health Care
Program.

viii

• His small booklined office in the Ordway Building in Oakland was the
setting for four two-hour interview sessions on February 26, March 6, 19,
and 21, 1985. Prior to the first session we met to consider the general
scope of the interviews. Three outlines were sent at intervals to alert
him to the topics to be covered at upcoming sessions. He was always pre
pared. Sitting straight and tall behind his desk he spoke fluently, quietly,
candidly, and with touches of humor, of the events and people responsible
for the evolution of the medical care program. He reviewed the lightly
edited transcript of his interviews carefully checking names, dates, and
places for accuracy, and adding whatever information seemed important to
insure a complete record.

Summarizing his experiences with the health plan he said:

It's been a very satisfying, fulfilling life. I think it's been
very interesting to go through the cycle of being questioned,
and ostracized, and criticized, to being respected, and emulated,
and challenged by competition.

Malca Chall
Interviewer-Editor

18 December 1985

Regional Oral History Office

University of California at Berkeley

Regional Oral History Office
Room 486 The Bancroft Library -

University of California
Berkeley,' California 94720

Your full

BIOGRAPHICAL INFORMATION
(Please print or write clearly)

0 T T I M.

Mother's fun name

Where did you grow up ?

Present community

Education

Occupation (s)

1 Q •* *QSA .p.

Special interests or activities

I FAMILY BACKGROUND AND EDUCATION
[Interview 1: February 26, 1985 ]##

Chall:
Cutting:

Chall:
Cutting:
Chall:
Cutting:

The questions that I have at first relate to your family background.
Where were you born, and when?

I was born in Campbell, California, down in the Santa Clara Valley,
on October 31, 1910.

What were your parents doing in Campbell?

She

My father was a high school teacher, my mother was a housewife,
had been a nurse at the Cooper Lane Hospital of Stanford, in
San Francisco. Her father, Dr. Charles Noah Cooper, was a country
doctor in Campbell; moved there soon after the Civil War. A
beautiful, white whiskered, bright eyed, old man; good country
doctor.

Where had he been trained?
He'd been trained in Grenell.
In Iowa.

Midwest, Iowa. And had been in the Civil War, and then practiced
in Tennessee for a short time after that. Came out here in the
late 1800s. My father, as I said, was a schoolteacher. His
background was ranching; his father was an Iowa rancher. My dad was
born in in Riceville, Iowa, went to Stanford, got a B.A. in English,
never had a chance to teach English. They didn't need English; they
made him teach mathematics and so on. He was very interested also
in science.

////This symbol indicates that a tape or a segment of a tape has
begun or ended. For a guide to the tapes see page 107.

Chall:

Cutting :

Chall:
Cutting:

Chall:
Cutting:
Chall :

Cutting:

Chall:

Cutting;

Chall:
Cutting:

Where did he start teaching?
Campbell?

How did he happen to end up in

He started teaching in a number of small towns around California.
Danville, Santa Rosa, Sebastapol, Soledad, Ceres; he was just
bounced ar'ound for a while until he finally landed the job in a
high school in Los Gatos. He was there for some six years, I think.
I went to first grade, actually, in Los Gatos. And then we moved
to Campbell.

I see, so he, somewhere along the way had married your mother.
In Iowa?

No, out here. That was after he graduated from Stanford,
had finished nursing school, and they got together.

So his college was in Stanford.
Yes.

And she

They were both pretty well educated people,
and sisters?

Did you have brothers

I had one brother only. He was a doctor. He was dean of Stanford
Medical School for a number of years, including the period when they
moved from San Francisco to Palo Alto, and then he moved over to
Hawaii, and was the first dean of the new medical school they
started in Honolulu until his retirement, at age sixty-five, when
he died. He was three years older than I.

Now, were there expectations on the part of your parents that you
would go into medicine, or what? How did it happen you were both
doctors?

We just never thought of anything else, somehow. I think my
mother's father, my maternal grandfather, had a lot of influence.
I remember him well. He lived until I was in the middle of high
school, anyway. My father had a brother who was a doctor. He was
head of psychiatry at Agnew Hospital for a number of years.

My brother, I guess, he made the decision for himself to go
in, and I never had any other ideas, other thoughts.

Did you like science in school?

Liked science, liked math. Science particularly, yes.

Chall:

Cutting:

Was there a feeling about the need for helping people?
part of your interests as medical people?

Was that

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:

It seemed to be the only satisfying kind of profession. To help
people, yes. Again, I think my grandfather had a lot to do with
it — watching him take a sack of potatoes for payment for his
care, and that sort of thing. We used to help him fill Calumel
capsules — about his only medicine.

The ministers sort of wanted me to go into ministry, and I
probably thought a little bit about acting, just in passing.

What was the religious background in your family? Was it practiced
much?

My mother's mother was a Windsor, Lydia Windsor, and she came from
a long l-ine of Windsors that were ministers, Episcopal. We were
Congregationalists, lived next door to the Congregational church.
I was janitor since I could push a broom. I attended Sunday school
and church regularly.

My dad had a little trouble buying religion, buying the
miracles, but he believed in the philosophy of right living, and so
on. Very, very staunch Iowa religious people.

Oh, yes. You had your first taste of grammar school in Los Gatos,
and then what about high school?

Went through the first grade only in Los Gatos, the rest of grammar
school and high school was in Campbell, in that high school
district. The first of college was in San Jose State College, then
I transferred to Stanford as a junior. Got my A.B. in '31, and I
entered medicine that year. Got my M. D. from Stanford in 1935. A
straight internship in surgery at Stanford Hospital in San Francisco,
and first year residency in surgery there.

Then I transferred to the San Francisco County Hospital, on
the Stanford service, as a junior, and then senior, house officer.
So I completed my surgical training at the San Francisco County
Hospital.

You went into surgery. Is that something that you thought you'd
like better than general practice which your grandfather had?

It seemed more satisfying. I was interested in what little surgery
we got through medical school; it always seemed to be most satisfying.
My brother was in general medicine, or really in research pharmacology,
He never practiced.

Surgery seemed more satisfying; somehow you do something.

II THE GRAND COULEE EXPERIENCE, 1938-1941

Chall: You were still a resident, as I understand it, completing your
residency when Dr. Garfield carce down and met you? 1938?

Cutting: Yes. This brought us to 1938, that residency. Dr. Garfield came
by one day — I didn't see him that time — he talked to the resident
in Ob-Gyn, who was a classmate of mine, a good friend.

Chall: What was his name?
Cutting: It was —
Chall: Dr. Moore?

Cutting: No, Dr. [Richard] Moore also was a classmate of mine, and he was

at the San Francisco County Hospital. He had a general internship,
an internship in pathology, and then two years in surgery.

Chall: Was it Dr. Gillett?

Cutting: Gillett. Ray Gillett, yes. Gillett was born in Washington, so,
for him, going home to Washington was a pretty good idea. He
actually was born on the Olympic Peninsula, though, which is a
far cry from the desert at Mason City.

Chall: I should say.

Cutting: But he sort of thought it might be a good idea, if I would go.

Dr. Garfield called on the phone a few days later, after I'd had
a chance to think it over. I asked him to come up and talk to
Dr. Chandler, dean of the medical school, to get his opinion of
this concept of prepayment. They didn't get along too well.

Cutting: Dr. Chandler thought it would be inadvisable for me to take that

kind of a job; it was not accepted in medical practice, in medical
organizations. Dr. Garfield went on home, expecting probably I
wouldn't join. But I got to thinking about it, and my alternative
was to — I already had a job in San Francisco with a prominent
industrial surgeon. It seemed to me that I would always be a
small boy going in with another doctor, the senior doctor in
San Francisco.

To go as chief surgeon to a new hospital — active, lots of work
in a big, industrial project — would at least give me a lot more
experience the first few years. I was young and eager, active,
anxious to work, so I called Dr. Garfield and told him that in
spite of Dr. Chandler's recommendation, I'd go up and take a look
at it.

Chall: Had you met Garfield? You said first he came down and talked to
Dr. Gillette in person, and then did you have an opportunity to
meet him?

Cutting: I met him only when he came to see Dr. Chandler.
Chall: Oh. So otherwise it had been by phone, is that it?

Cutting: Yes. The invitation to come. But I met him at the Stanford Medical
School. He'd just gotten off the plane — in those days a plane
trip was kind of rugged, with a single propeller, probably all the
way up from Los Angeles — he had a headache and didn't feel very well,
I got him some aspirin, got him in to see Dr. Chandler; that didn't
help him too much.

I did meet him. I was impressed with his quiet , sincere
manner. He talked quite a little bit about the — then it was really
only the industrial side of it, or the portion of the industrial
premium that would be prepaid to the medical group, and then a
combined payroll, voluntary payroll deduction for the workers' care,
the non- industrial. The family wasn't considered at the interim
stage.

Chall: Besides the opportunity to practice your skill, really get in and

do it, were you put off at all by the possibility that this was

not acceptable practice in the medical profession, or the organized
medical groups?

Cutting: It didn't seem to bother me too much. The idea that took hold was
of the experience, and a lot of work, and for a short time four-
year project. It seemed as if I would have a lot of experience, and
could come to San Francisco then with a lot of experience under my
belt, rather than having been a small boy all my life.

Chall :

Cutting:

Chall:

Cutting:

Chall :

Cutting:

Chall:

Cutting:

Chall:
Cutting;
Chall:
Cutting:

You were married at the time, weren't you?

Married in 1935, during my internship year.

And your wife, I think, was a nurse.

She was a nurse at Stanford, yes.

What did she think about going up from San Francisco to the desert?

Oh, she was willing to go along; she had a lot of spirit and
enthusiasm. I think with a little reluctance, perhaps, of the
unknown. We didn't have any money. She had worked during my
residency as a nurse, to keep us in food. I got no pay as an
intern, $50 a month as a house officer, and $300 as a resident at
Stanford.

I started at $300 at Grand Coulee Dam.

Now, you went up there first to take a look at it. What did you
see?

Alone; saw the little hospital. Dr. Garfield explained that there
were plans to enlarge it , to improve it — put in air conditioning
and so on. I met Dr. [Wallace] Neighbor then, at that meeting. He
had just come from his Arrowhead experience,
internist, but very affable, and I liked him.

He was a pretty suave
I was very impressed,

again, by Dr. Garfield 's quiet sincerity, and, it seemed to me,
honest enthusiasm about the program.

We actually had a little San Francisco Hospital group up
there, with Dr. Gillett, and Dr. Moore, and I, all from the
San Francisco Hospital. Soon after I went up, I asked to have
the nurse anesthetist, Gerry Searcy —

Was she a doctor?

No.

Her name was probably Geraldine?

Geraldine Searcy. She was a nurse anesthetist in San Francisco
County Hospital, and seemed to be very capable; I worked with her
there two years. She brought three other nurses out, so we had
quite a contingent. One of them, Winifred Wetherall, later married
Dr. Neighbor. So we had a good crew there; many of us knew each
other beforehand.

Mason City Hospital, Grand Coulee Dam

Dr. Cecil and Millie Cutting, 1982

Dr. Cecil and Millie Cutting began their long association with Dr. Garfield and the
Kaiser Permanente Medical Care Program at Grand Coulee in 1938.

Chall:
Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Yes, let's see — Dr. [Eugene] Wiley came from Iowa, I understand.

From Iowa. He, I think, had met Dr. Gar field some time when
Dr. Garfield had — he had medical school in Iowa, and I think he
had met Dr. Wiley then. He was a general surgeon.

So you started in this little hospital that Dr. Garfield then
remodeled. He was quite interested in developing hospitals
according to the way he felt they should be. Did he discuss this
with members of the staff in any way, or was it a one-man design?

Oh, the design there was pretty much as it was. It was simply
adding a few more beds and improving the outpatient emergency
area. The air conditioning was Dr. Garfield. He had put it in
his hospitals in the desert, and he was insistent on having that.
The Kaiser people weren't interested particularly in putting in
the air conditioning, so Dr. Garfield did that on his own, and
Edgar said, "You should never do that. Never do that." But he
did give him the money to pay for it.

So, from the very early days, Dr. Garfield went his own way if he
thought it was necessary. What were the relationships between
Garfield and the Kaiser people generally, up there?

Excellent. It was a big happy family. Dr. Garfield actually didn't
spend too much time at Coulee. He did for the first couple of
months, and then later he kept his activity in Los Angeles, and
came up really only every sixth weekend for most of the four years.

Is that so? And just for a weekend, he would come up?
long flight from Los Angeles.

That's a

I was on duty twenty-four hours a day, except for every sixth
weekend I got off.

Is that right! Twenty-four hours a day. Were the crews working
day and night —

Yes.

So that you could have accidents during the night?

Oh, yes. It was a twenty-four hour job. Many a night we'd get
out on the job at two o'clock in the morning, or so. A fellow had
fallen off the dam, and smashed up, so we had to get him in. Our
relationships with the Kaiser people were excellent.

Cutting: We used to open the gymnasium at midnight, and Edgar, and

Dr. Neighbor, and I played badminton a lot. Also Todd Waddell,
whom you mentioned the other day, he was head of the safety
department and insurance. We had parties at Kaiser's home and
at our home. They moved an old schoolhouse for us, Mrs. Cutting
and me, moved it right into the center circle of Mason City, and
that was our home. Because it was a big school room, we had
a great area to use as a sitting room.

Chall: One room school type of thing?

Cutting: Yes. We had progressive parties; it was a fun group to have a

social event with. The Edgar Kaisers and Joe Reis were up there.

Chall: Was he up there permanently during those four years?

Cutting: Yes. Mike Miller, the estimating engineer for the Kaiser Company,
was a very good friend. We spent much time with him. Hal Babbitt
ran the hotel, and sort of personnel relations with the medical
staff. Got our home equipment, and so on, furniture.

Chall-: Was that hotel a Kaiser project, or was it part of the town?

Cutting: It was part of the engineer town. You see, the dam had been under
construction for four years — getting the bedrock ready for the
foundation for the dam. The arrangement as far as medical care was
concerned was typical for that time. The company, the contractor,
paid a doctor a small stipend to take care of the industrial
work, and he expected to make his income on the red carpet: front
door, non- industrial, family practice.

So the industrial workers had really gotten kind of second
class care, in the back end of the hospital. It was Dr. Garfield's
and my feeling that they were our reason for being there, and we
wanted to give them first class service. But the unions were pretty
skeptical about any arrangement that the company developed, because
of their past experience.

Mr. Kaiser, Edgar Kaiser, talked them into giving this young
Dr. Garfield a chance with his idea. Mr. [A.B.] Ordway was there,
of course, and he was very influential, too. So, rather reluctantly,
they agreed to set up, again, an arrangement where the insurance
companies paid a portion of the industrial fee, insurance premium,
to Dr. Garfield, and the company arranged a payroll deduction,
voluntary, for non-industrial injuries for the workers.

Cutting: Within a year, the unions were so satisfied with the care, that
they wanted their families included — in fact, they threatened to
strike if we didn't include their families. We had no idea, really,
of what to charge families. Dr. Garfield's judgment prevailed.
We charged 50c a week for the family, and 25c for the spouse, and
25c for each child.

Chall: Was that 25c a week, too, for the children?

Cutting: Yes.

Chall: At that point did you have to bring up a pediatrician?

Cutting: We brought in a pediatrician the second year and about the same
time we added another internist.

Chall: Do you remember the name of the pediatrician?
Cutting: Oh, dear.

Chall: Nobody seems to be able to remember his name, but I'm sure we'll
find it.

Cutting: I can't pull it out right at the moment. I'm sure Mrs. Cutting can
remember. [Yes — Dr. George Agnew]

Chall: And the other internist, I don't have his name.

Cutting: Chuck, Charles Olson.

Chall: Where did each one of them come from?

Cutting: He was from Michigan. Young, and very smart, active, enthusiastic —
internist interested in diabetes and special endocrine medicine,
really. Sharp young fellow. He married one of the nurses — Evelyn
Sanger. I'm not sure where the pediatrician came from; it was in
the Middle West somewhere.

Chall: You already had Dr. Gillette up there, and he was an Ob-Gyn

specialist, so he must have done something else before you had the
families — the wives and children.

Cutting: We took care of the wives and children on a fee-for-service the
first year.

Chall: It just got too expensive for them.
Cutting: Yes.

Chall: I understand too you had an osteopath who practiced physiotherapy
up there for a time.

Cutting: Yes, he was a very nice young fellow, good physiotherapist, and

he did not practice his osteopathy, other than the general physical
therapy.

Chall: I think you must have needed a physiotherapist there if you were
taking care of injuries.

Cutting: He was very active in industrial injury; orthopedics.

Chall: Were all of you medical people close to each other? Or were some
of you closer than others?

Cutting: I think we were all very close, we were really very close.

Dr. Neighbor and Dr. Olson were especially close. They both loved
hunting, of course — duck hunting, pheasant hunting, and so on.
We were all really very close.

Chall: Did you establish relationships with the townspeople, or any of

them, or was it the medical people and the Kaiser staff, primarily?

Cutting: It was pretty much the Kaiser engineer staff and the medical side.
We had sotne good friends with the Bureau of Reclamation.

Chall: Yes. They were in charge of the dam.

Cutting: They had a government town across the river. They had a little

fancier homes, and lawns around them, but they were very nice people,
and we had relationships with them. Of course, there were six
companies, contractors. The Kaisers got the major contract, but
there were representatives of the other contractors there, too.
Got to know them.

The townspeople were patients, and we got to know them quite
well. Mrs. Cutting started a well-baby clinic, and got her best
donations when she was soliciting the houses of ill repute up
there on the hill. The madames were very friendly. The community
church provided the space, and the houses of ill repute the money —
a very compatible community.

Chall: Isn't that funny. She remained, then, working, your wife, in
nursing.

Cutting: Voluntary only, there. She didn't work up there.

Chall: Let's see what else we could talk about that time? Dr. Neighbor

considered it the happiest years of his life, actually, up there. *

Cutting: Yes.

Chall: And I wondered whether you felt somewhat the same — that experience,
during the same period.

Cutting: I think it was an extraordinary experience — certainly one of the

happiest in my life — lots of work, lots of play and the development
of many life-long friends.

Chall: Was there any talk at that time among you of having a somewhat

similar kind of medical practice, if you could get something going,
in other parts of the United States? Someplace else? Were you
interested in that?

Cutting: We didn't talk very much about the future beyond the dam. We knew
we liked the way the practice of medicine was carried out there.
The prepayment made so much sense. We didn't have to worry about
putting claims to the insurance company for every visit, and
billing the people for every service that we gave them. It was
sort of a continuation of the same sort of practice that you had
as a house officer in medical school. We were all enthusiastic
about that — the advantages of working together with a group of
specialists, and prepayment method budgeting and forecasting our
expenses, meeting our payroll, and so on.

Chall: I understand you set up your own AMA chapter up there, too.
Cutting: That was sort of theoretical.
Chall: Just to get it done? [laughs]

Cutting: [chuckles] Yes. We were far enough away from any other county
medical society that it wasn't practical for us to belong to any
other, so we wrote a letter and said we'd like to sort of be part
of medicine, inside our own little medical society. I don't think
we ever got any actual papers as a county medical society from the
AMA, or anything.

Chall: Did you do that just because you wanted to have your foot in the
door, because you thought that perhaps you would be frowned upon
in later life for having done this kind of medicine?

*Interview of Wallace Neighbor with Daniella Thompson, transcript,
Tape 5, side 2, 20 September 1974 (Audio-Visual Department, Kaiser
Foundation Health Plan) , 4 (hereafter cited as Neighbor interview) ,

Cutting: No, I think we did it for maintaining professional education

relationships with organized medicine. We were not antagonistic,
nor were they with us, at that time. There wasn't anybody else
there.

Chall: Yes, although Dr. Chandler had warned you —

Cutting: He had warned, although — I think his warning kind of went over my
head at that time.

Chall: [laughs] Young, brash doctor.

Cutting: Brash young doctor. [laughs] As the dam job was ending, obviously
you could see ahead about when it was going to be finished, and we
knew that the staff would have to be cut down. Dr. Moore was the
first one to leave; he went over to the Western Medical Clinic, so
called, in Seattle. It didn't have a very good reputation; it
was run by a lay organization; it was an industrial clinic. But
he did join that for a year before I left.

I had an invitation, I didn't have to ask for it, but I got
an invitation from the Virginia Mason Clinic in Seattle, which was
the top clinic, very high class. Wonderful people. And they
needed an orthopedist, and asked me if I would come over. I
hadn't thought of leaving, but it was obvious that either I would
leave, or some of the others; Dr. Wiley would have to leave, and
since I had this excellent opportunity, I accepted it. Reluctant
to leave — I wasn't enthusiastic about leaving, though I was
enthusiastic about the opportunity.

Chall: What time was this, about 1941?

Cutting: 1941.

Chall: Did the Virginia Mason people come to you? Did they find you?

Cutting: By letter. I don't for sure know how they found me. They needed
another orthopedist in the department and knew the dam was nearing
completion so they invited me to join the clinic. They are a warm,
delightful group, Virginia people, and most hospitable. They gave
us a beautiful welcome. We had a very, very lovely year with
them. It was just a year. We were there on December 7, when Pearl
Harbor blew up, and it was soon after that — actually, immediately
after that, I was contacted from the San Francisco County Hospital
group. The former senior residents there were making a corps
contingent to go to the army, actually a MASH unit. They were going
to Northern Africa and Italy. So I was lined up to join them when
Dr. Garfield asked me to come down to Richmond to help in the
shipyards.

Chall: Did the Virginia Mason Clinic specialize in orthopedics?

Cutting: It was a general clinic.

Chall: General clinic. Attached to their hospital?

Cutting: Yes, they had their own hospital. They had three or four internists,
three or four surgeons, Ob-Gyn, and a neurosurgeon. It was a
multi-specialty clinic.

Chall: Private? It was fee-for-service?

•

Cutting: Yes.

III WORLD WAR II: THE KAISER SHIPYARDS, THE RICHMOND AND
OAKLAND HOSPITALS

Chall: When you got your call from Dr. Garfield, did he come up to see
you, or call you on the telephone?

Cutting: A call on the telephone. Arid I came down to Richmond some time

in January, I think, '42, to meet him. Actually we moved out on
• March 1, 1942.

Chall: You moved into Oakland?

Cutting: Moved into the Claremont Hotel for a couple of months until
Mrs. Cutting found us a house in Oakland, yes.

Chall: Were you, at that time, planning to be chief-of-staf f of the
Fabiola Hospital that they were taking over?

Cutting: Yes. He asked me to be chief-of-staf f , chief of surgery, at both
the Richmond Field Hospital, and the Oakland Hospital.

Chall: Is chief-of-staf f different from chief of surgery? Were there two
positions, in a sense?

Cutting: Two positions, yes, the department of surgery would have a chief,
and the overall medical group, the hospital, would have a chief.
It was a title, it wasn't anything else. But we did keep busy
during the wartime, running between Richmond Hospital and the
Fabiola Hospital.

The Richmond Hospital started as a glorified first aid
station, actually.

Chall: That's why it's called the field station?

The War Years

Richmond Field Station
Ambulance Dock.

Mrs . Eleanor Roosevelt
visits Portland/Vancouver
clinic. Edgar Kaiser is
in doorway.

Drs. Garfield, Cutting,
Neighbor, Gillett, and
Wiley. Vancouver, 1943.

Chall:

Cutting:

Cutting: It rapidly increased to 185 beds. We had five first aid stations
surrounding the shipyards, feeding into the field hospital there.
The field hospital fed into the Oakland Hospital as the mother
hospital, sort of. We rented office space on Pill Hill in March of
1942. I was the first doctor down here. I had that office and
operating privileges at Merritt Hospital; we hospitalized patients
there. I made house calls, and was the only doctor for two months.

We got another doctor in with us, and the first of July, we
began to add to our staff. Dr. [Morris] Collen became chief of
medicine. Dr. [La Mont] Baritell, Dr. [Norman] Haugen, and Dr.
[Donald] Grant, were surgeons that came. They came as residents,
actually, and completed their residency training while they were
here.

And you were all practicing for a while, and using Merritt
Hospital?

They didn't come until the Fabiola was open. I was the only one,

I, and one other, by the name of Jerry Gill, was with us for a

few months. He did not stay very long. But the group really didn't
form until July of 1942.

Chall: That's pretty fast work.

Cutting: Yes. I'm sure you have the story of first going through the old
Fabiola Hospital. It had been a maternity hospital for the old
wooden Fabiola Hospital, before it burned down. It was the only
structure that remained. It had been unused for some seven years,
and had been completely dismantled. The War Manpower Board had
been planning to make dormitories or something out of it; that
didn't come through. So it was gutted.

It must have been a mess.

Dr. Garfield and I went through it with Mr. Henry Kaiser. Dr. Garfield
was pretty apologetic, not wanting to buy it, because it was pretty
well torn up. Mr. Kaiser said, "What's the matter, young man, don't
you think I have any imagination?"

Chall: [laughs] Really?

Cutting: Garfield arranged to have a loan of $250,000 to remodel it, from the
insurance company, the same insurance company that had carried the
insurance for Coulee Dam in the desert, and was carrying it for the

Chall:
Cutting:

Cutting: shipyards. Mr. Kaiser didn't want him to do that, wanted to go
to the bank, for some reason or another. The bank said they
wouldn't loan any money unless Mr. Kaiser guaranteed it, so he
guaranteed it.

Dr. Garfield always felt that he didn't really need the
guarantee, because he could have gotten it, but it was easier to
have it.

Chall: Oh, surely. Did he want, as much as possible, not to be beholden

to the Kaisers, or the Kaiser industries, even though he was really
attached to them, in this kind of project?

Cutting: Oh, I think at that stage, there wasn't very much thought or worry
about attachment. His primary interest was setting up the
Pennanente Foundation, a non-profit foundation.

Chall: At that time? Even during the war.

Cutting: The beginning of it, yes. To hold the monies that could be generated
through the contract with the insurance company. Any extra monies
Dr. Garfield was anxious to have put into that foundation for future
use. By this time we were beginning to look to the future. And of
course, we paid off the Fabiola mortgage in seven months, I believe.
I thought it was two years; Dr. Garfield corrected me a while back.
In either seven or nine months, he paid it off.

Chall: That's pretty fast.

Cutting: I remember the evening we burnt the mortgage. [chuckles]

Chall: [laughs] What was the evening like?

Cutting: Oh, we just celebrated.

Chall: Where did you burn it? In your fireplace —

Cutting: Yes.

Chall: Did you have a party for the other doctors?

Cutting: No, Dr. Garfield and — we burnt that at our home.

Chall: Was he living with you at the time? Did he live with you during
the war years?

Cutting: Most of the time during the war years, he maintained a suite at the

Sir Francis Drake Hotel in San Francisco. His girl friend, Virginia-

The Permanente Foundation Hospital
The first Kaiser Foundation Hospital. Oakland, mid 1940s.

The hospital (above)
incorporated the most modern
design features of the time.
Forty-five persons could be
accommodated, and in an
emergency fifteen to twenty
more could be handled.

At left — As it was. This
view shows the hospital before
construction was started on
April 8, 1942. It was a unit
of the old Fabiola Hospital,
an institution founded in
1887 and which continued to
serve humanity until 1932 —
a total of fifty-five years.

Chall: I think I can get that name, I saw it in Dr. de Kruif s book..
[Virginia Jackson]*

Cutting: She came up and was working as a nurse at the Fabiola Hospital. She
was staying with us for several years. Then in 1946, Mrs. Cutting
and I moved to Orinda from Oakland, and Dr. Garfield bought a house in
Orinda, and married, at that time.

Chall: Married Virginia?

Cutting: Virginia. That marriage — it must have been a little sooner than
that, because he was living with us in 1947, after that marriage
broke up. So they were only married, I guess, a couple years. Then
he lived with us .

Chall: They were married in about '46, and then that broke up in what, '47,
or so?

Cutting: Actually, he was living with us in "48, because we adopted our two
children then. And he was living with us; he was responsible for
us adopting our children. He talked us into it.

Chall: How long did he live with you, then?

Cutting: He lived with us until he was married to Helen Chester Peterson
(because she was married before), and that must have been '55 or
'56.

Chall: So he really was a member of your family, in fact.
Cutting: For a long time, yes.

Chall: He must have preferred the sort of family relationship to living
again in a hotel or an apartment. That meant that you were quite
close; you were really living together during some of those very
critical times.

Cutting: I've forgotten just offhand the date that he married Helen.

Chall: We can probably find that someplace. Was Helen Chester related

to the Kaisers? I read, I think it was in Dr. Garfield 's obituary,
that she was Mrs. Kaiser's sister-in-law.

Cutting: She was Ale [Alyce] Kaiser's sister. [pronounced like alley]
Chall: I just wondered how that had come about.

"Paul de Kruif, Life Among the Doctors (New York: Harcourt, Brace
and Company, 1949), 389.

Cutting:

Chall:
Cutting:

Chall :

Cutting:

Chall:

Cutting:
Chall:
Cutting:
Chall:

Mr. Kaiser married Ale Chester, of course, soon after Bess died.
Dr. Garfield was living with us when we got the call — Mrs. Cutting
and I, and the Neighbors had been salmon fishing that day. We got
home wet and tired and dirty, just getting to bed, when the phone
rang. "Mr. Kaiser wants you down at the airport right away. Sid's
getting married." Sid then got on the phone and said would we
bring his suit and a clean shirt to the airport. We flew to Reno
and Sid got married, and flew back.

But had you been aware that there was some interest between them?

Not particularly. She had been married to Mr. Peterson, who was a
paraplegic, a polio paraplegic.

Back to the war years and the building up of the plan. At least
as it was going along, Dr. Garfield was in fact in charge. The
organization was Dr. Sidney Garfield and Associates during
that period of time. Did he, in fact, have total control? That
is, to what extent did he confer with any of you when he was hiring
other physicians or other members of the staff, or making other
kinds of administrative decisions?

Oh, administrative decisions, he made. He was the boss. He had
the responsibility, and he ran the show. As far as employing the
physicians and other staff members, we all did that. Dr. [Paul]
Fitzgibbon joined us, I would guess, in 1944. Fitzgibbon was a
very unusual fellow; very likable neurologist. He'd been quarterback
for the Green Bay Packers, and then went into medicine. He sort of
took charge, under Dr. Garfield, as hospital administrator, and
maybe chairman of the medical group. We had meetings, but
Dr. Garfield was the boss, there was no question about that.

But Mrs. Cutting actually employed most of the nurses and
the lay help. Fitzgibbon, I think, did most of the employment of
physicians and staff.

You were chief-of-staff . That meant you were responsible for the
way the medical practice was going, is that it? Rather than
administration?

Yes, that's right.

Before Dr. Fitzgibbon came in, was Dr. Garfield doing all of it?

Yes.

How did he happen to bring in Dr. Fitzgibbon?
the administration, or was he asked to do it?

Expecially to help in
How did that come about'

Cutting: I'm not sure. I think they had known each other somewhere in
the past. I really don't think I ever really knew how Paul
Fitzgibbon arrived. He was welcome, was very dynamic, full of
stories. Quite an operator.

Chall: What do you mean by that? That's a good word. [laughs]
Cutting: [laughs] Oh, enthusiastic. [laughs] We'll let it go at that.

Chall: I assume that he and Dr. Gar field got along during that year or
so.

Cutting: Very well. Dr. Fitzgibbon got worried, and left us about 1953.

Chall: That's well after you'd started to go out into the public with
the program.

Cutting: He got worried that Mr. Kaiser was going to take over. I remember
walking clear around the block with him, one noon, talking about
it, deciding to leave. He said he didn't think much good could
come out of it if Mr. Kaiser was going to get involved and take
over.

Chall: Yes, at the critical time that led up to the Tahoe Conference.

That's interesting that some of you stayed on and fought it through
but he was unwilling to do that.

Cutting: Right.

Chall: Did you try to persuade him to stay on and see it through? Did
you think the problems could be resolved?

Cutting: He pretty much made up his own mind, I think. See, most of the
staff that was with us during the war, left. We had a chief of
surgery that came in 1943, until '45. As soon as the war ended he
left. Our ENT man left, our orthopedist left, our x-ray man left.
This was as soon as the war was over. They were with us during
the duration, primarily.

Chall: Were they with you because they needed to practice medicine, but

weren't interested in the possibility of going on with the plan as
some of you were thinking about it?

Cutting: Yes, they were less interested in the plan than they were interested
in the army deferment during wartime. Immediately afterwards, when
we began to get flack from organized medicine — county medical society
and so on — they decided they didn't want any part of that.

Chall:
Cutting:

Chall:

Cutting:
Chall :

Cutting:

Chall:
Cutting:
Chall :
Cutting:

Chall:
Cutting ;

Chall:

How many of you remained because you were interested in this type
of medicine?

There were sixteen of us in 1948. Let me see, Dr. Bob King came
after the war, so we probably dropped down closer to ten right
after the war.

Right, from the original wartime group?
or fifty?

Yes.

From about what , forty

All that had been set up at that time was the hospital foundation.
There really wasn't a health plan, as such?

Yes, there was. The Permanente Health Plan had started, oh, at
the beginning of the war; the voluntary payroll deduction for the
non- industrial injuries and illness for the workers. Then the
families came in about two years later, after our first major
expansion on the hospital. We had room for families, then we
opened it up to the families.

Of- the workers?
Workers, right.
So it was really the industrial family, then, that participated.

There were ninety thousand shipyard workers, plus their families.
It was good size. Permanente Health Plan and Permanente Hospital —
we added to the old Fabiola in stages, in steps. Each year we
were adding some portion. First thirty beds, and then surgery,
and a dining room, kitchen, and so on, another sixty bed addition,
and another sixty.

Some of that addition came from the War Manpower Commission.

That's right. Though Dr. Garfield purchased it all after the war.
But he got a good deal. War Manpower /Federal Works Agency. They
had no use for it afterwards, so we bought it.

Were you involved in any way with the battles that went on over a
year or so, just to get the government to provide the funds, at
one point, to add onto the hospital, between about '43 and '44?
Mr. [Eugene] Trefethen was really involved in getting that money.

Cutting:

Chall:

Cutting:

Chall:

Cutting:
Cutting:

Chall:
Cutting:

We were aware that we were having trouble. We were aware that
other hospitals in the area, Merritt, and so on, Peralta, wanted
to expand. They didn't want us to expand
back in Washington against our expansion,
memory there would be better. *

So they were lobbying
Probably Mr. Trefethen's

Were you aware of Mr. Trefethen's involvement?
Sure.

He was the one that helped push

And of course Garfield's as well,
it.

Sure.
II

Plus the war effort itself diverted so many things to the military,
that it was always a battle to get equipment, furniture, and all
the little things we needed to build a hospital.

What was your surgery like in those days?- Were the injuries
different from what they were at Grand Coulee? How was your
practice?

Oh, we had the whole gamut of illnesses and injuries. Dr. Collen,
if you're going to talk to him, will tell you about the lobar
pneumonias. Actually these men, workers, recruited from the midwest,
were all 4Fs, for the most part; they were the dregs. They'd come,
and a trainload, a carfull, of pneumonias would arrive. It was
not unusual to admit ten or twelve acutely sick lobar pneumonia
patients in an evening, without penicillin — no antibiotics — so
you'd line the corridors with these pneumonia patients. Dr. Collen
became a national expert in lobar pneumonia. You can get that
story from him.

We had some thirteen thousand fractures the first couple of
years. Had lots of Achille's heel — calcaneous bone fractures,
which were a little unusual.

Is that because of what they were doing?

Yes. Falling, or compressions from the steel underneath them. That
would fracture the heel bone. We had a series of half a dozen
leprosy cases. We had polio, of course; that was dreaded in those
days. Lots of compound fractures. One day during the launching
of their ship, about fifty people climbed on to their shed roof
to watch the launching, and the roof collapsed. We got most of the
fifty people at once with a variety of broken legs, broken ribs, and
so on.

*See interview with Eugene E. Trefethen, Jr.. The History of the Kaiser
Permanente Medical Care Program, an oral history interview conducted
1985, Regional Oral History Office, The Bancroft Library,
University of California, Berkeley, 1986.

Cutting: The Richmond Field Hospital was a full operating facility: surgery,
OB, so on, the usual run of serious industrial injuries. Actually,
at Richmond we were cited as having the least time loss for sickness
and injuries of any of the shipyards in California.

Chall: Is that because you took them immediately and cared 'for them?

Cutting: Yes. Certainly for the time loss of illnesses and so on. They
could come to us without waiting to get really sick. They had a
lot of surgery — hernias and so on — getting these people in shape
to go to work. There was no pre-employment examination, no age
limit for shipyard workers.

Chall: You also had many women there who were working for the first time,
and rather special kinds of work. Which may have created
accidents, I don't know.

Cutting: Rosie the —
Chall: Rosie the Riveter.

Cutting: Rosie the Riveter, yes. Do you know that book that one of the
fellows wrote about the wartime workers?

Chall: No.

Cutting: It was an interesting novel based on the actual working experience,
the women's role, etcetera. We always tell the stories about the
unusual number of pregnancies that developed in the shipyard, in
the crawl space between the bottom deck and ship hull.

Chall: Now, at the time you had the Permanente Foundation and the Permanente
Health Plan.

Cutting: Both were non-profit.

Chall: But did Dr. Garfield have authority over the health plan?

Cutting: It was all under his management. The foundation needed a board,
and the Kaiser people were on the board. Trefethen, and Henry
Kaiser, Edgar, and so on.

Chall: And the Permanente Health Plan, did that have a board?

Cutting: The Permanente Health Plan was a non-profit organization and had
the same board.

Chall: They had to have a board?

Cutting: Mainly to save the property taxes, rather than to receive any
contributions and charity.

Chall: But the doctors, at that time, were not organized in any way.

You hadn't set up your medical groups; they were under the control
of Dr. Garfield.

Cutting: We set up the partnership in 1948.

IV THE POSTWAR YEARS: THE PERMANENTE HEALTH PLAN MOVES
INTO THE COMMUNITY, 1945

Chall: If any of you during the Grand Coulee days had any idea of wanting
this kind of plan to succeed in a regular urban setting, this was
the opportunity. Dr. Garfield, I am assuming, was interested in
developing this further, after the war. Was he looking forward to
the postwar period, and carrying this on in some way?

Cutting: Yes. Dr. Garfield and Dr. Raymond Kay, an internist at the L.A.

County Hospital with Dr. Garfield, had talked about setting up some
sort of a plan after the war. Dr. Garfield was to have joined the
military unit with Dr. Kay, and Dr. Kay was pretty mad at him for
not going, and made him promise that if he didn't go into the
military, if he did this job, they would look forward to setting up
such a program after the war.

Mr. Kaiser, of course, wasn't interested in expanding to
Los Angeles after the war. That's another story.

Chall: Yes. He just had his field hospital down there in Fontana. But
up here, where you really had the bulk of your activity, were any
of the rest of you interested in the continuation of this form of
medicine?

Cutting: Oh. Sure, from the time we got into the operation here in Richmond
and Oakland, we hoped it would continue to grow after the war.

Chall: That was ten or more of you, perhaps?

Cutting: Yes.

Chall: Who were they? That would be you and Garfield, that's two.

Cutting: Fitzgibbon. Dr. Collen, Dr. Baritell, Dr. Grant, Dr. Haugen ,
Dr. [Melvin] Friedman, a pathologist. How many do we have?

Chall: [counting] Eight.

Cutting: Dr. [Richard] Moore. Drs. Alex King, Donald Ash, Beatrice Lei,
Clifford Kuh.*

Chall:

Cutting;
Chall :

Cutting:

Chall:

Cutting;

Chall:

Cutting;

Probably that's about enough, I'.m sure. Dr. Neighbor came down
after the war. He didn't come down until about 1948. He was here
at the beginning of the partnership, but he ran the Vancouver
Hospital during the war. Came down, in I imagine 1948, right
after the war.

So you probably wouldn't call him one of the thirteen you've
mentioned?

Nope, nope. People who were here who stayed.

So you did discuss this among yourselves? What did you have in
mind? How did you think it would work out?

I think we were naive enough to think that we could just go along,
cut down the size of the group as the shipyard workers dropped
off, and as it became postwar time, we could pick up enough
members to survive.

Under Dr. Sidney Garfield and Associates?
arrangement still?

In that kind of

Yes. We hadn't really thought of the structure, I think, until
'48. Then is when we decided for sure that we thought the medical
group should be a partnership, rather than continue as salaried
physicians. We thought the hospital and health plan should be
non-profit to save the property tax money, and so on, and as time
went on, probably the health plan and the hospitals should be tax
exempt also; charity purposes. But that was —

As far as you got in '48. What about Henry Kaiser and Mr. Trefethen
and the others, who really were backing you up? What did they
think about the expansion of the plan, right here in northern
California?

They had no problems with that. They were supportive of expansion
here. In fact, around 1950, Mr. Kaiser wanted to build a Walnut
Creek hospital. But this again is getting into another time period.

*See also page 35.

Chall:

Cutting;

Chall:
Cutting:

Chall:

Yes, it is. I guess, when I used the term expansion, that's the
wrong term. I mean moving into the community after the war to
take in people beyond the shipyards.

We were in Richmond. We were in Oakland, of course, and during
the war we went to Vallejo. We started a little two-man clinic
there, and expanded; took over again some old housing dormitories,
and so on. It was a military hospital. We had a little clinic in
Napa, one -or two-man clinic there.

Were these all of your industrial employees, and their families?

These were largely federal civil service employees — merchant
marine and maritime workers. They all stayed after the war. In
San Francisco we had accumulated quite a membership during the
war, and immediately after the war, we had probably our largest
single group, the longshoremen in San Francisco. In 1946, soon
after the war, the Industrial Indemnity Insurance Company — that's
the same insurance company that had been carrying our industrial
insurance all the way through the desert, Coulee, shipyard days —
had a medical director there who had a heart attack, Dr. Moore
(not the same Dr. Moore). He had a little clinic going, industrial
wotk, on 515 Market Street, and they asked me to take over that
clinic for them. So I worked as medical director of the insurance
company for about a year.

We didn't get along too well with the insurance company. I was
too generous with their claims, I guess. I think he came back to
work on the claims side, but not taking care of patients. But we
used that nucleus as a start for a clinic in San Francisco.

So the Permanente Health Plan took it over.

The Permanente Health Plan took it over. And I went over there as
medical chief. We had gradually developed five doctors. After a
couple of years, when Dr. Neighbor came down from Vancouver, he
took over the San Francisco clinic. I came back to Oakland —
although at that time, 1948, we bought an old hospital, an old
derelict of a hospital in south San Francisco, Harbor Hospital.
And I operated there as well as in Oakland. By this time, Dr. Baritell
had finished his residency and was chief of surgery at Oakland.

So you were continuing all this time to practice medicine, you
weren't just administering?

Cutting: No, I was nearly 100 percent practicing surgery. Then, as the
hospital in San Francisco was planned and built — in 1954 —
Dr. Neighbor came back into the medical department in Oakland.
Dr. Collen took over his position as chief in San Francisco. The
clinic became a part of that hospital medical center.

Chall: Those were the mid-years when it was growing. The early years,
1945-1948, right after the war, then, I guess, presented the
challenge of getting your membership established. So, if the
unions wanted you to continue, that was a good start.

Cutting: There was a drop down from the ninety thousand odd shipyard

workers, plus their families and so on, to about a ten thousand
membership, right after the end of the war. By 1948, we'd built
up to about fifty thousand. So we were growing then. Snowball.
We had to grow as the former shipyard workers, now scattered
around industries around the area, felt the pain of medical bills.
They wanted the kind of care that they had gotten during the war,
so they began coming in.

There were a number of other helps during those days. The
union-management freeze, the wage and salary freeze, allowed medical
benefits to be still negotiated between unions and management. And
it seemed to be an advantage to both of them to encourage us, so
that that was a real help to our membership growth. The unions
played a strong part in our growth immediately following the war.

The Opposition of the Medical Society

Chall: That was all part of the economic picture in the United States
that aided you. Organized medicine, in about 1948, certainly,
"46 to '48, was then opposing you quite strongly.

Cutting: They were strongly against us from '46 to '48.
Chall: They saw you growing.

Cutting: Group practice was fairly uncommon at that time, itself, let alone
prepayment. They were adamant. No, the new physicians we could
attract were not admitted to the county medical society.
Orthopedists were told that they would not get their certification
for orthopedists.

Chall: Is that so?

Cutting: The board certification if they stayed with us. The orthopedists
always had a pretty tight hold on certification. Neurosurgeons
who'd come into town would be anxious to work with us to start a
practice on either a fee— for-service or a retention arrangement;
they were quickly told they shouldn't work with us, or they wouldn't
get any referrals outside.

Chall: Would any of them take the chance, or were you having a difficult
time getting your physicians?

Cutting: Pretty difficult time. We usually could farm out the neurosurgery ,
of brain tumors, and elective, remunerative kinds of neurosurgery,
but the traumatic kind, the injuries, and so on, we had to take
care of. By this time, I was sort of footloose. The Richmond Hospital
was decreasing, and we had a chief of surgery.

They were pretty purist surgeons, actually, and I was always
a mixture of orthopedics, industrial, and general surgery. But with
my priority, the respect that they somehow or other had to give
me [chuckles]* I could do most anything. So I did the neurosurgery.
We did the first intravertebral disc surgeries, until we got a
neurosurgeon in. We did a good job. Actually, we had an orthopedist
that thought he could do a good job, and I helped him with his
first one with us.

It was not very well handled, and I- said, "Wait a minute, from
now on I'm going to do this." So I did all of them for four or
five years until we got a neurosurgeon in.

Chall: Was that a neurosurgeon who had decided to come in despite the
opposition of the medical profession?

Cutting: That time we got — yes. A Chinese, Dr. Lu. Very fine, excellent
physician. He dropped off after four or five years with us; went
into private practice out in Walnut Creek. Then we were able to
get a neurosurgeon, and an orthopedist, but they were a problem
always .

Chall: It was at that time that Dr. Paul de Kruif came, almost riding
on his white horse, to prove that you [the health plan] were of
value, and wrote quite a bit about Dr. Garfield, and the plan. Can
you tell me something about Dr. de Kruif and his mission?

Cutting: As I remember it, I associate his mission out here, sort of

associate it with the beginning of the Rehabilitation Center.

See, Mr. Kaiser's youngest son, Hank, Henry Kaiser, Jr., developed

multiple sclerosis. Incidentally, I was the one that made the

Cutting: first diagnosis, and had to explain to Mr. Kaiser what I thought
the future held, which wasn't very acceptable to Mr. Kaiser. He
said that he would do something, and this got started with the
Rehabilitation Center.

Henry Kabat, back in Washington, D.C., was interviewed and
our Dr. Moore went back with him for six months or so, and then
they both came back out here to Vallejo and started the Kabat -Kaiser
Rehab Institute in 1948.

Chall: I wondered how that got started. But the one in Vallejo, was that
just taken from the little hospital, or was it built especially
for this?

Cutting: It was a section of the old military hospital there. And as I
remember, it was about that time that Dr. de Kruif came out.
Dr. de Kruif 's son, David de Kruif, joined us in medicine soon
after the war. He joined a small group of [John] Mott, [George]
Ekhart, David de Kruif, and one other doctor that had been with us.
Dr. Mott was the leader of that, wanting a little more entrepeneurial-
ship, wanting to get out from under what seemed like a bureaucratic
kind of administration. So we let them start a clinic in San Leandro.

Chall: Really? How separate was it from the umbrella — the overall medical
group, or health plan?

Cutting: They were members of the medical group before they went there. They
were closely related with us; we paid them so much per office
visit. And they learned how to do a very good job of good medical
care on an economical basis, out of a couple of old houses that
they rented and built. That went along for several years until
they began to want more money, and at that stage, we said, "Look,
this is not really compatible with our prepayment concept. You
fellows have got to come on in."

This was after '57, because I was then executive director.
So they then gave up their entrepreneurship; they became partners,
members of the medical group.

Chall: But their patients came from the health plan members, didn't they?

Cutting: Yes, and we got the health plan membership dues, and paid them on
a per member visit basis. We did their referrals, the patients to
the doctor. Mott and I operated in surgery; their referrals, and
so on. They were members of our hospital staff. That's another
story.

Chall:

Cutting:

Chall:

That was a unique arrangement .
before.

I hadn't heard about that one

Paul was interested in coming out to see what David was doing.
David was enthusiastic, and so this got Paul de Kruif interested,
plus he was interested in the Rehab Center.

Let's see. He wrote a book in about — this is Paul de Kruif — about
1943, or so, about the health plan. I think it was taking shape
then.

Cutting: Kaiser Wakes the Doctors?*

Chall: That was Kaiser Wakes the Doctors, yes. Then he wrote one in 1949
called Life Among the Doctors, in which he had two long chapters
about Dr. Garfield. During the beginning of one of those, he said
that Dr. Garfield had called him out in 1948 because organized
medicine was beginning to make life difficult.

I think he came out then to watch what was happening, to
follow him around, to help prepare statistics —

Cutting: Make life miserable for them. [laughs] With his Reader's Digest
clout, he carried quite a bit of weight. Okay, Dr. Garfield
invited him, but David, his son, was with us, and he was also
interested in the Rehab, I think. Paul was a very unusual
character. We spent quite a bit of time with him, and this was
the time when Dr. Garfield was living with us in Orinda. So Paul
would come out and Dr. Garfield and I would be sitting around the
house talking.

He and his son David both had very short tempers. They got
into a fight one night at our place; they really got into an
argument, so mad they started fist fighting. Paul, I think,
suggested, "Let's go jump in the pool and cool off." We had a big
swimming pool, unheated. So they stripped off most of their
clothes and jumped in the pool, and came out arm in arm, and
friendly again. They were dynamic, Paul particularly. Terrifically
dynamic. Kind of overshot the goal sometimes.

Chall: The books that he wrote, especially those that dealt with the
Kaiser plan and Dr. Garfield, were they accurate?

*Paul de Kruif, Kaiser Wakes the Doctors (New York: Harcourt ,
Brace and Company, 1943).

Cutting: They were accurate enough. I think it was just before serious
differences of opinions came out. You said 1948?

Chall: About 1948-1949 is I think when he was here and when his book was
coming out. There were a couple of trials going on: Dr. Gar field
vs. the County of Alameda, California.*

Cutting: He was taken before the Board of Medical Examiners. We'd taken

on Dr. Keene, who was a board certified' surgeon, and a colonel in
the army, in surgery. He came through on his way really to be
evaluated by us for the job in Detroit, the Willow Run job.
So we put him on as a resident, so-called, but it didn't fly with
the medical society. They said we were employing doctors without
a license.

He did not have a California license. There was another
doctor, Dr. Thomas Flint, who had been in trouble with the medical
examiners, narcotics charge, that had been cleared for a long
time. We took him in as part-time, to observe, and he was off the
drugs. But he had a history, and they picked that up, too; hiring
doctors on drugs.

Chall: All of that is not discussed in de Kruif exactly that way, so you
just get sort of a broad picture of hostility. But Dr. Garfield
was cleared of that. I think there was the other charge of
unethical practice, which had nothing to do with Keene or Flint,
later.

Cutting: They didn't find any problems. They sent committees, several times,
to look us over, but one thing they never could find was poor
quality. They couldn't get us on quality. They would come and look
over our emergency log and see if we kept non-member patients who
had come in emergency, of if we would refer them to their own
doctor on the outside. They found that we did call him up, and if
the doctor wanted to see him, fine. If the doctor didn't want to
come out that night, why, we'd take care of it, and keep him.

So they were looking for every angle to nip at us some way.
Chall: How did Dr. Garfield take this nipping?

Cutting: Oh, it bothered him. He basically believed in organized medicine
and the ethics of the American Medical Association. I'm sure it
bothered him to be ostracized, but he was ready to fight for his

*de Kruif, Life Among the Doctors, 407-423.

Cutting: own ethics, and so was I. They repeatedly told us that we should

open our staff, so that any doctor could treat health plan members.
In other words, if a health plan member could go to any of them,
if we'd pay them, then there 'd be no problem. So there's no sense
in arguing that; we're staffed to take care of them.

We forecast our expenses in order to take care of them. We
can't do that and still pay an outside doctor a f eeTfor-service
for taking care of them.

Chall: That's what bothered them, that it wasn't fee-for-service, it was a
panel of doctors.

Cutting: Freedom of choice, that's all. It took them quite a while to

accept the fact that the voluntary enrollment period did give a member
a freedom of choice in the manner in which they wanted to pay tor
medical care.

Chall: That came in later, as a very important part of your set principles,
didn't it?

Cutting: So to conclude Paul de Kruif ' s era, it was really, before Mr. Kaiser
remarried, before the fifties.

Chall: He certainly publicized the Permanente Health Plan and he also

brought out the hostility, and the conservative organization of the
doctors which was really at the core of the difficulty.

Dr. Sidney Garfield

Chall: Dr. de Kruif also described Sidney Garfield in ways that I

wonder about. You knew him quite well, so I'd like to find out
more about him. In various pages in Life Among the Doctors de Kruif
said that Garfield was a cool businessman; he also called him
inscrutable; enigmatic; a young man of mystery. He described him
as elegant, wearing finely tailored clothes, that he moved gracefully.
He wrote, "In repose, around his mouth were deep lines that had
been made, I guessed, by some kind of pain not physical."* How
do you see Dr. Garfield when you think of him?

Cutting: Well, there was a thread of truth in all of those descriptions.

Dr. Garfield was really a very shy man. He did not like publicity,
he didn't like to make speeches, he didn't like to be out in front.

* de Kruif, Life Among the Doctors, 379.

Cutting:' He was very quiet, but he was enthusiastic, bubbling with friends.
When he was living with us, when he'd come out in the morning, he'd
had a dream, or an idea last night, a new way of doing something.
So he was really outgoing in his own realm.

But he did have a shell around him. Walking through the
hospital, he didn't say hello to other people, and so on, so they
thought he was kind of stuck up. But he was thinking about something
else more important, and he didn't mean to be unfriendly, but he
was shy. He was fastidious in his dress. To go in the service,
actually just before the shipyards, he had a custom made lieutenant's
uniform — [laughs] So he always liked to dress nicely, and was
conscious of manners and looks.

Chall: How did he handle criticism as it came up? We'll get into more of
this next week, but how did he handle criticism as it came, from,
let's say, Henry Kaiser if they didn't get along on some point? How
did they get along, generally?

Cutting: They got along. They'd argue, and they disagreed on a few very

fundamental principles. But Dr. Garfield was able to come at it —
most objections he'd come at from a different angle, he'd come
around the corner and disarm the objector. He was a past master
at a new approach. Suddenly, a new idea: that if what you do is
no good, why don't you try it this way? If you think we ought to
do it this way, let's look at it from a different viewpoint.

Chall: Is that a creative and an innovative kind of mind?

Cutting: Very.

Chall: Was he generally right?

Cutting: Yes. I think generally right, although he'd get conned into ideas
that were not very reasonable sometimes. He was so anxious to help
people, so anxious to get the right answers, so anxious for a
quick cure, that he would buy lots of quack things, and you'd have
to say, "Look, this is no possible opportunity."

Chall: What kind? Are you thinking that he might read something in a
journal, not a medical journal, but somewhere else —

Cutting: Yes, or—
Chall: A cure?

Cutting: Or hear about a doctor in New York that had a cure for cancer. I
went back in response to that one time and looked at the fellow's
greenhouse where he was growing some test tubes full of stuff.
Of course, it really didn't amount to anything. Another one was
a fellow down in Los Angeles who discovered the virus that caused
cancer, under a microscope. What it was was the oil bubbles, I
think, of the mounting. But, he made a tremendous presentation.
Dr. Garfield, very enthusiastic about that. We said, "Wait a
minute, let's take a look at this," then he'd back off.

He was so anxious to cure people, to get a quick answer, and
so reluctant to give up. He would never give up on a patient. Some
of the Kaiser people, their little youngsters had leukemia, and
he worked night and day. In those days there was no cure, long
before chemotherapy, or x-ray.

Chall: Was it you who practically lived with Mrs. Kaiser at the time that
she was terminally ill? I understand that you just moved into the
Kaiser home.

Cutting: Yes. Lived there off and on but pretty much continually. A couple
of months, anyway.

Selecting Physicians

Chall: So the two of you, at least, have that outlook of truly helping
people. When it came, actually, to building up your staff, even
though it was difficult to get physicians, let's say, between 1945
and 1948-1949, were you picky about the people that you would bring
into the medical group? Were you looking for people who had specific
medical and social qualifications? Social outlook.

Cutting: Oh, sure. We were trying to be very selective. We would review
their medical school — some schools have better reputations than
others. We would review their postmedical school training,
residency training, where it was, and so on. And their recommenda
tions, we followed up on. You can't really tell about a fellow
until you work with him for a while though.

Chall: Whether he's a good doctor?

Cutting: Yes. You can tell pretty much his qualifications as a physician,
as a doctor. You couldn't tell his group suitability, or his
patient relationships. We tried to be as selective as we could.
We never had as much trouble here in northern California as we did

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

in southern California. I think because of the two medical
schools UC [University of California] and Stanford. One year
we took the top ten or so of the UC medical graduates; they came
with us. This scared the medical school in San Francisco, so much
so that they revamped their residency training program. But we got
their top men as residents, training with us.

That's for resident training,
would stay with you or not?

But you weren't sure whether they

It gave us an opportunity to select those we had a pretty good feel
for. They were with us several years, two in medicine, and three
in surgery, and we knew them pretty well.

It would take a certain interest at that time, in the kind of
medicine that was being practiced, the group practice, team
approach, integrated medicine, and all of that, to have them want
to come and fly in the face of the opposition of the medical society.

A good percentage of them came because I guess we were a little
freer in helping, and they could do more with us, perhaps, where
we spent more time teaching, but not quite as academic an
atmosphere as medical school. A good percentage of them wanted to
stay with us. We selected those that wanted to stay with us after
they were finished.

I think that ' s about all we need

The team approach appealed to them,
to do today.

[Interview 2: March 6, 1985 ]##

Since I talked to you a couple of weeks ago I have had an
opportunity to read Dr. Smillie's manuscript.* I wanted to review
some background with you. When the war ended, according to Dr.
Smillie, the doctors who stayed on after the shipyards closed in
1945, and became a part of the beginning of the health plan among
others, were: Drs. Garfield, Cutting, Moore, Baritell, Collen,
Haugen — you had given me their names last week — Ash,
[Thurman] Dannenberg, Lei, and Kuh .

Cutting: And Grant. You didn't get Dr. Grant.

*John Smillie, M.D. , "A History of the Permanente Medical Care
Group and the Kaiser Foundation Health Plan," (unfinished manuscript
in draft form) , 21.

Chall: That's right. He was on your list. But not on Dr. Smillie's.

These are the shipyard — the wartime doctors. Would you add Grant
and Fitzgibbon to the shipyard people?

Cutting: Grant definitely. He came the same year that Haugen did, 1943.
Fitzgibbon came in 1944.*

Chall: Only one among you was a woman. Who was Beatrice Lei?

Cutting: Beatrice Lei, M.D. was born in China in 1910 and joined our program
in 1946 as assistant chief of pediatrics at Richmond. She has
remained one of the most loyal and most respected physicians in
the group. She retired in 1975 but still attends staff rounds and
continuing education meetings regularly.

Although some of us have had some difficulty in understanding
her if she gets excited, the mothers of her pediatric patients
seemed to have no problem. . She was always most highly regarded and
sought after as a doctor.

Chall: Now with respect to the AMA hostility which we talked about last
time, I found a sentence about that in Dr. Neighbor's interview.
He -said, "Gradually, the" AMA, and Alameda, and Contra Costa, took
in a few Kaiser doctors, maybe about five a year."** Somebody who
had been a member of the Kaiser Permanente medical staff between
about '48 and '52 told me that, from his perception, it looked as
if there were token memberships. He thought that the AMA was
taking in a few members of the Kaiser staff each year sort of as
a token. It was his assumption that Dr. Garfield had made a deal
with the AMA so that they would take in a few doctors in order that
they would not be sued. Dr. Neighbor simply says that they took in
a few, maybe about five a year. I'm wondering what you might know
about that.

*Dr. Cutting, while reviewing his transcript, listed the following

doctors and the dates when they joined the health plan.

1944: Physicians with us during the war and who stayed on after
the war: Sidney Garfield, Cecil Cutting, Morris Collen,
A. La Mont Baritell, Norman Haugen, Donald Grant, Thurman
Dannenberg, Clifford Kuh, Richard Moore, Donald Ash, James
Basye, Peter Baroni, Paul Fitzgibbon, Beatrice Lei.

1945: Alex King, Robert King.

**Neighbor interview, transcript, tape 5, side 2, 20 September, 1974,
10.

Cutting: I don't know of any deal that Dr. Garfield made. Those of us who
were members of the medical society beforehand, during the war,
were not kicked out, but new members were not welcomed. The
major resolving point of that problem, I think, was the fact that
we got together on medical legal problems, malpractice problems.
We found that there was a hindrance to both of us if we began to
bicker over common malpractice problems, and witnessing, testifying
in court, that sort of thing.

Some of the attorneys would kind of think that we didn't
like the county medical society enough so that our doctors would
testify against them, and vice versa. We put a stop to that by
sitting down with the county medical legal committee. We found
very good reason for getting together. I think that was one of
the stepping stones to improving relationships.

Chall: That's interesting. How would they take in the four or five a
year? Was it that people requested admission, membership, and
then were granted it?

Cutting: Yes. I think there was probably just a managed delay in getting

around to accept some doctors , more than what they felt they could
absorb without running any risk.

The Kabat-Kaiser Institute: The Rehabilitation Centers

Chall: [chuckles] Okay, we've solved that one. I like to check these
rumors out. Now the other question that I have, which comes up
from time to time — I thought I'd work it over now. In 1946, this
was right after you were really getting started, the Kabat -Kaiser
Institute was established, apparently first in Washington B.C. ,
and then here, in Vallejo and in Santa Monica. Did Dr. [Herman]
Kabat come to Vallejo in time, and work here?

Cutting: Yes. The chronology of that: As you remember, Henry Kaiser, Jr.
got multiple sclerosis, and this stimulated a nationwide search
for somebody that could cure multiple sclerosis. They had a Kabat
Institute in Washington, D.C.

Chall: That's where it was?

Cutting: Dr. Kabat was treating multiple sclerosis with a new kind of

physiotherapy a resistance activity, and attracted Dr. Garfield 's
attention. He sent Dr. Richard Moore back to Washington for six
months or so — I think we went over this the other day — and then
he and Kabat moved out here; established the Rehab Center in Vallejo,

Chall: Was it a successful venture?

Cutting: Yes. They were very active. Near the end of the war, I guess,
he took on a large number of United Mine Worker disabled. Lots
of paraplegics, lots of poliomyelitis victims. Very active, still
is.

Chall: Yes. Under a different name, now.

Cutting: Yes. Dr. [Sedgwick] Mead was in charge for twenty years, and
then Dr. [Howard[ [Liebgold],

Chall: I also read that during the period of about '48- '52, that there

were some problems here. The whole McCarthy era even affected the
Kaiser Health Plan, and that Herman Kabat left because, and I'm
quoting here from I think Dr. Smillie, "because of unfortunate
rumors about a member of his family."*

Cutting: Oh, I guess that would be true. There was a lot of concern of

communism, and of leftist activities. Some of the doctors, some

of the administrative people, and I think probably Kabat, fell under

that general umbrella, too.

Chall: Rumors?

Cutting: No specific involvement that we know of.

Chall: At the same time, I understand that Dr. [Richard] Weinennan, who
was then the health plan director, resigned, that he gave the
reasons being administrative incompatability with Dr. Gar field.
They had different personalities. Weinerman was known for his
liberal political ideology, but many physicians, according to
Dr. Smillie, thought the resignation had been forced by the Kaiser
organization, which was trying to maintain respectability. What's
your recollection of that?

Cutting: I think the Kaiser people were more worried than Dr. Garfield

about the image. Probably it's true that Dr. Garfield had some
pressure from that source.

Chall: You think so? So that Dr. Weinerman did resign with that pressure
in mind. Well, those were hard years for liberals. Because the
Permanente Health Plan at that time was really sort of a
revolutionary step in medicine, was it considered, on the outside,
at any rate, to be, therefore, sort of a hot bed of political
liberals?

*Smillie, "A History of the Permanente Medical Care Group," 41-42.

Cutting:

Chall :
Cutting:

Chall:

Cutting:

Chall :
Cutting:

Chall:

Cutting:
Chall:

Cutting:

No question but what we were considered some kind of either
corporate practice of medicine, or some kind of a socialistic,
communistic group, yes.

So you were caught in the middle no matter what? [laughs]

That's right. It probably had a little influence on our trying
to be as clear as we could that we were neither one nor the other
too much.

That took a while. I noticed yesterday when I was going through
some of the Kaiser papers [in The Bancroft Library], a memorandum
from Dr. Keene (this is in 1955) to the Advisory Council that was
meeting at that time, with respect to the Kabat-Kaiser Center.
They were then called the California Rehabilitation Centers. His
question to the council was how either to use the centers, or how

to dispose of them. He appointed a committee Dr. Kay as chairman,

Dr. Baritell, Felix Day, and Paul Steil, and asked them to report
back in sixty days. Meanwhile, Dr. Keene would maintain supervision
at Vallejo and at Santa Monica, as soon as Dr. Garfield could make
arrangements with the Santa Monica staff. How was that resolved?

The Vallejo unit- persisted; as of today it's still active.
Santa Monica unit was sold soon after that, I think.

Why was that? Did it seem unproductive down there?

The

I think interest lagged,
unnecessary, I guess.

It was an expense that was considered

Was the whole rehabilitation aspect of medicine taken over by the
southern California group at some other hospital?

Yes. They absorbed it, provided it.

We can ask Dr. Kay about that. But here, you kept it somewhat
separate, even though it's part of the medical plan?

Part of Vallejo Hospital. In fact, the new Vallejo Hospital that
was recently built, had some federal money in it for the improvement
and the addition of the Rehabilitation Centers. The money we had
to spend actually cost us more than we got. When the government
gives you money, it has so many strings attached. You have to widen
the corridors, and do this and that, and all sorts of things that
probably cost more than if we hadn't received the help. Anyway it's
a very nice program.

Establishing the Medical Group Partnership; Northern California, 1948

Chall: Moving on to 1948, things begin to take shape. February 21, 1948,
the Permanente Medical Group established a partnership here in
northern California. The seven partners were Drs. Garfield, Cecil
Cutting, A. La Mont Baritell, Morris F. Collen, J. Paul Fitzgibbon,
who became chairman, Robert King, and Melvin Friedman. They were
the seven.*

Cutting: Dr. Neighbor was there, too, I know.

Chall: That's interesting. I don't have his name. He came down about

that time. He came back, I think, in 1948, from Oregon. I think
he went in then to take over the San Francisco —

Cutting: San Francisco from me.

Chall: And then you came back here to Oakland. Is that right?

Cutting: Right.

Chall: That's the date I have established.

Cutting: He was a founding partner.

Chall: Then, should we assume that Dr. Friedman was not in the original
group and that Dr. Neighbor was?

Cutting: Correct.

Chall: This is 1948. When the partnership was established, this was

because the organization, the whole health plan organization, was

disassembled from one entity, as it seemed to exist then, to three
separate ones.

Cutting: Permanente Health Plan, Permanente Foundation Hospitals, and the
Permanente Medical Group.

Chall: That's right. Was there any difficulty in selecting your seven
partners?

Cutting: No.

Chall: How did you determine that?

*Smillie, "A History of the Permanente Medical Group," 35.

Cutting: They were primary department heads, they were obviously leaders.
I believe that Dr. Grant and Dr. Haugen were invited to join, but
held out for a year before they joined the partnership, as
partners rather than the founding group. I think they were all
department heads, which meant that they had been either with the
group for some time, or came as very selected people right after
the war.

Chall: Was this a compatible group?
Cutting: Very.

Chall: Dr. Smillie, on page thirty-six of his draft, writes, "A second
partnership agreement, superseding that of February 21, 1948,
became effective July 1, 1949. Six of the original partners signed
the second agreement. Dr. Alexander King was the seventh, replacing
Sid Garfield."*

Cutting: No one replaced Dr. Garfield. Drs. Alex King and Melvin Friedman
became partners in 1949.

Chall: Then, on June 29, 1949, you established the executive committee
consisting of six permanent members. According to Dr. Smillie,
they were Drs. "Baritell, Collen, Cutting, Fitzgibbon, Robert King,
Neighbor, and two elected members."** Here he mentions Dr. Neighbor
as a permanent member of the partnership.

Do you know who were the two elected members?

Cutting: Dr. Melvin Friedman and Dr. Alex King. I should be able to put
my finger on the original articles of partnership.

Chall: Oh. You have your own archives.

Cutting: [chuckles]

Chall: Under the bed, in corners, and places like that. [laughs]

Cutting: In boxes — [laughs]

Chall: Well, you do have an executive committee set up now, in 1949. The
six permanent members according to Dr. Smillie were to serve
continuously until death, retirement, or withdrawal. In such an

*Sraillie, "A History of the Permanente Medical Care Group," 36.
**Ibid.

Chall: event the committee itself would appoint a successor who would
become a permanent member. Elected members were elected by the
partnership for two-year terms of office, as were their replacements.
And then, he writes that Sid Garfield served as executive director
of the health plan and hospitals, and continued as de facto
executive director of the medical group.

So that- even though he left, legally, in fact he still was
there.

Cutting: We certainly still respected him as the founder, and he was active
through the fifties.

Chall: Your six permanent members on the executive committee were to
serve basically for life, unless they retired. Why did you set
that up so tightly?

Cutting: I think it's a good idea. It gets politics out of the executive

committee. They don't have to spend their time politicking to get
elected all the time. It made for continuity, cohesive management,
and I think it was probably a very good idea. The partnership
changed that after a few years. Dr. [Wallace] Cook I think took
Dr. Robert King's place when he died. He [Cook] was the first
physician-in-chief of Walnut Creek.

That would be 1962 before Dr. King died, and I think he [Cook]
came on as the last lifetime member. After that, just because
there was considerable discussion whether he should be lifetime or
not, the partnership decided that from then on it would be nine-years
tenure. But those that were originally on it stayed on.

Chall: Is the nine-year tenure still in existence?

Cutting: I think it is five years now. The executive director was for nine

years, and the physicians-in-chief have a five-year tenure, I think;
•they have to be reelected every five years.

Chall: Of course the organization doesn't run by committee anymore, so I
suppose some of the rational behind it has changed. Dr. Cook, as
I understand it, was really a fourth year resident at the time
that he was appointed director of the Walnut Creek Hospital. Was
that a rather unusual step for a fourth year resident to be taken
into the partnership when the rest of you were long time persons?

Cutting: I think he finished his fourth year, his training in surgery, and
he was picked by Ale Kaiser to be the physician- in-chief at
Walnut Creek. So it would be a few years after that, 1962, that he
was elected to the board. Yes, it was a little unusual, but he was
a very sharp, capable fellow, and had good backing from the Kaisers.

THE KAISER FOUNDATION HEALTH PLAN/HOSPITALS AND THE
PERMANENTE MEDICAL GROUPS, 1951/1952*

Chall: During those years, in setting up your medical group and in

establishing the health plan, going into the community with it, you
had backing from Mr. Trefethen and the rest of the Kaiser executive
people. Were you generally relatively close at that time with
Trefethen and some members of the boards there? I'm thinking of
Trefethen primarily, but also Link.

Cutting: George Link was the attorney, Joe Reis, the treasurer of the Kaiser
company, worked with us. I would say that there were no serious
problems in the early fifties. It began to escalate toward the
end of the fifties. Their support was there, though there was no
particular activity until certainly the mid-fifties.

When Mr. [Henry] Kaiser began to get interested in the
administration of the program is when problems really began.

Chall: Otherwise you had confidence in Mr. Trefethen and that board?
Cutting: Sure.

Chall: And of course you had known the Kaisers, and Ordway, and others,

from your experiences in Grand Coulee and during the war. It would
appear, as you've already said, that some of this controversy
developed in the fifties, when Mr. Kaiser began to be more interested
in the development of the administration of the health plan.

*Rayraond M. Kay, M.D., Historical Review of the Southern California
Permanente Medical Group: Its Role in the Development of the Kaiser
Permanente Medical Care Program in Southern California (Los Angeles:
Southern California Permanente Medical Group, 1979), 80, gives the
date as April 1951. Smillie, "History of the Permanente Medical
Care Group," 51, gives the date as 1952.

Chall: One doesn't like to play the "what if" game, but I sometimes wonder
what if Mrs. Bess Kaiser hadn't died when she did, whether there
would have been this impetus to take a close look, the same look,
into the plan, as Henry Kaiser did, or whether, in time, it would
have become so big that reorganization would have been necessary
anyway. But it might have taken place without some of the
hostility.

Cutting: I think that probably the growth would have required a greater

separation of the three factors than we envisioned at that time,
certainly.

Cutting: The eventual solution was very healthy. I think if it continued

to be a medical group operation, primarily — controlling the health
plan and hospitals, and so on — we would have been less inclined to
expand and grow. A physician group doesn't borrow money on what
it's built to build more, to borrow money to build more, the way an
industry- inclined organization does. On the other hand, certainly
if the Kaiser industrial side had become more dominant, I think
the program would have suffered, would not have been able to attract
good physicians, and we would have been much less effective.

Building the Hospital in Walnut Creek and the Ramifications for
the Medical Care Program

Chall: Then now we can start going into the problems that developed, and
how they were resolved. I think the first was the fact that Henry
Kaiser married Alyce Chester. They decided, I guess, together to
build the Walnut Creek facility, and from what I can gather from
Dr. Garfield's interview, he was behind it. It was an opportunity
for a show piece in terms of the hospital and the development of
health plan in an outlying area.*

Cutting: Yes. There was question, even in Dr. Garfield's mind, as to the
advisability of putting our money there in Walnut Creek, rather
than San Francisco, or elsewhere.

Chall: Where you were planning already to build.

Cutting: But the idea of having a program there wasn't — it was only a matter
of whether that was the time to do it, to put as much monev as it
would take there, when the potential membership growth was in
San Francisco rather than the Contra Costa County area at that time.

*Interview of Sidney Garfield by Daniella Thompson, transcript, tape 3,
side 1, 6 September 1974 (Audio-Visual Department, Kaiser Foundation
Health Plan), 14-15.

44a

HISTORICAL DEVELOPMENT AND OPERATING CONCEPTS 19

With the continuing rapid growth and success, the stresses of decisions as to
goals and purpose, use of funds, and where to improve and expand our facilities be
gan to create administrative complexities requiring more and more attention. Honest
but strong differences of opinion began to appear.

Mr. Henry Kaiser's increasing intefest in public medical care was another sig
nificant factor in that period of metamorphosis from our single entity to the complex
assortment we now have. His increasing participation in the program's administration
began to emphasize the dichotomy.

FORCING THE PARTNERSHIP

Several factors, then, played a significant role in our organizational develop
ment: transformation of the program from an industrial to a community base, the
rapid growth in membership and area, the need for capital investment, and Mr.
Kaiser's growing interest. It was only after several years of sometimes painful nego
tiation between the Kaiser management and the medical groups that a legal modus
vivendi was achieved. It was several years more before traumatized feelings were
diminished to the point that the spirit of joint responsibility and partnership began
to emerge. By then the legal contracts were hardly necessary. Trust and mutual re
spect proved far more effective for progress than the most carefully-couched docu
ments alone.

The welding together — I use the term advisedly since at times it involved con
siderable heat — the welding together of a strong, aggressive lay management with a
resolute, highly principled, and contentious group of physicians is probably unique in
health plan and hospital-doctor relationships. The mutual respect, consideration and
responsibility to each other that emerged has surely been a major factor in the un
usual growth and strength of our program. Each of the now six regions operates
under the collaborative administration of a regional manager for health plan and
hospitals and a medical director responsible to his autonomous Permanente medical
group. The areas of responsibility of each are delineated with care in the various con
tracts, but the mutuality of interests commands concordant judgment.

THE KAISER GENETIC CODE

Clearly, the program was not preconceived but developed in response to chang
ing circumstances. There was a set of operating concepts, however, that was recog
nized early in the program and which has remained essentially constant throughout.
They were as applicable to our single entity as they are to our complex organization
today, which tends to support our faith in them as the six "Guiding Principles." Dr.
Ernest Saward has since described them as our "Genetic Code." Described somewhat
differently at different times, they remain the basic principles of our operation. Our
goal was to provide good quality medical care at reasonable cost. The principles are:

1. GROUP PRACTICE

Today, I do not have to describe to you the concepts or advantages of group
practice; but in the Thirties and Forties it was still a relatively new approach to the
practice of medicine. There is no doubt that the multispecialty group organization
represents a step toward more efficient coalescence of medical specialists, more effi-

An excerpt from Cecil C. Cutting, M.D., "Historical Developments
and Operating Concepts," in The Kaiser-Permanente Medical Care

Cutting: It certainly is true that Mr. Kaiser and Ale were more interested
in developing something there in Walnut Creek, and I'm sure
persuaded Dr. Garfield that, "If we're going to do it, let's do
it right, and let's get with it enthusiastically," which we all
did.

Chall: In time, of course, it did create some controversy within the

medical group, both north and south, because of the concern that
money was being siphoned off from the building of the San Francisco
and Los Angeles hospitals. That was one. I guess the other one
might have been that Mr. Kaiser and Ale chose their own staff
without going through any channels that might have been set up for
personnel. That would have been your medical group, of course.

Cutting: Yes, that created a problem. Mr. Kaiser — of course his basic
philosophy was that anything that he's a part of, he runs. He
felt, very strongly, I think, that the medical group should be
employees of the health pla,n. Employed physicians rather than a
separate medical organization contracting with the health plan. He
felt that Walnut Creek should be a separate medical group , that
each of the areas should be separate.

The medical group thought that that would be difficult.
Members went from one to the other, and so on. Obviously, it
seemed to us, the reason for wanting to break up the medical group
would be that each would have to negotiate with the Kaisers for
the contract, for the percentage of health plan dues, and so on.
So it would throw the entire management of the program with the
Kaiser side rather than the medical group and that was enough to
make us feel we should maintain a single large partnership.

Chall: In that case, my understanding is that Garfield really took the
side of the doctors opposing Henry Kaiser on that score, which
created ill will between them.

Cutting: Dr. Garfield got squeezed in the middle, there's no question

about it. His loyalty and respect, admiration of Mr. Kaiser was

undoubted and it was well founded. Mr. Kaiser was a magnificent

person, but he had to run things. Dr. Garfield felt that it should

be a medical program, and he argued with Kaiser day after day,

night after night. Which somehow or other didn't decrease Mr. Kaiser's

respect for Dr. Garfield personally, but he managed to squeeze

Dr. Garfield out of the program.

Dr. Garfield felt that the medical group should be developing
a war chest — money to stand up on its own hind legs. If you didn't
have any money, you couldn't argue with the Kaisers. I think he

Cutting: expected more backing from the medical group than he got toward
the last of his management days. A few of the doctors were a
little bit restless under Dr. Garfield's continued, very careful,
very cost conscious management.

They felt that he should spend more money on equipment and so
on. The Kaisers picked that up, and got commitments from a
couple of doctors that Dr. Garfield really wasn't the perfect
manager. Mr. Kaiser used that to ask Dr. Garfield to step down.

Chall: What was the reaction within the family? Dr. Garfield was married
to Alyce Chester's sister, and Garfield and Henry Kaiser were at
odds over some very basic principles. Did that affect the family
relationships in any way that you know?

Cutting: I don't think so. I think it's interesting that it didn't. I

think, as I said, Mr. Kaiser continued to respect Dr. Garfield's
judgment, except his feeling that doctors ought not to be in any
part of the managment. But other than that, the concept of the
prepay, group practice was respected by Mr. Kaiser.

He was proud of the program, the medical care program, which
he began to call .his. As I say, Dr. Garfield respected Mr. Kaiser.
They would spend hours together arguing, but each could stand that
without losing any personal goodwill or developing any animosity.
Quite unusual, I think.

Chall: Yes. So they actually moved the problem solving to the organizations,
that is, between the medical groups and the Kaiser organization, and
even though the two of them were in the center of the controversy,
it didn't affect their relationship.

Cutting: Dr. Garfield continued to be Mr. Kaiser's physician. Dr. Garfield
left no stone unturned trying to get as much help as he could for
Mr. Kaiser, and practically lived with him, gave him his
prescriptions, and so on.

Chall: It's quite remarkable when you think about it in terms of personal
relationships. How did it come about, that you know, that the
name of the hospitals and the medical plan were changed from
Permanente to Kaiser?

Cutting: The Permanente name was a favorite of Bess Kaiser's. Everything

was Permanente, practically, during the wartime. Permanente Steel
Company that was builder of the ships, Permanente Cement Company —
she liked the name. After she died, and Mr. Kaiser became more

Cutting: interested, more involved, in the health plan, he kind of wanted
it to be Kaiser Foundation Health Plan. I think he instigated
that. There are others that say someone else did". I think
Dr. Smillie said that. I'm not sure.

Chall: Dr. Kay, in his book, writes that Henry Kaiser approved of changing
the name, but as I think about it, you don't approve anything
unless it's been proposed to you first.* I just don't know where
the proposal came from.

Cutting: I happened to get a letter from a fellow by the name of Stubb
Stollery, who was kind of a public relations man in the Kaiser
company at that time. He said that he suggested the name, the
Kaiser Foundation Hospitals and Health Plan. I'm not sure that it
was really his idea. But anyway, Mr. Kaiser did accept it, and
wanted the medical group to change. We decided we'd rather maintain
a sense of identity of our own. Permanente seemed to be working
all right. It was sort of a peculiar name, but it was what we'd
gone under, no reason to change it.

The Concerns of the Physicians in Northern California

Chall: Yes, I think it also allowed you to indicate an independence from
the business end of things, which I guess you'd always been
criticized for anyway. Dr. Smillie indicated that before you formed
your Working Council, you were beginning to be concerned about a
change in attitude toward Sidney Garfield. [generally quoting
from Smillie, page 70] You were concerned about the board entering
into management, about lay domination of medical groups.

It seemed gradually to be evident that the trustees favored

a sharp separation of the health plan, the hospitals, and the

medical groups, and these kinds of concerns I guess ultimately led

to your asking for the Working Council.

Cutting: I think I would have put it just a little differently. I don't

think the Kaiser people were anxious to separate the medical group.
I think they wanted to assimilate the medical group. Probably
partly as an offspring of the county medical society criticism, and
so on, we became more and more sensitive to being called Kaiser
doctors. "You still working for Mr. Kaiser?" We said, "No, we
never did work for him, we had our own medical group." It was a
gradual build up through the years to that.

*Kay, Historical Review, 79-80.

Cutting: The development of the Working Council really, I guess, was a

culmination of that kind of difference of feeling. Dr. Garfield
was removed from the administration several years after the
partnership formed, really. He had continued helping us for two
or three years, tapering off. We were on a percentage of health
plan dues — payment to the medical group. This meant negotiating
between 48, 49, 50 percent, and so on, which became pretty awkward,
pretty clumsy. We were a medical group forecasting our budget,
what we felt our needs were, to provide good care, negotiating
with a separate industry group who really didn't know anything
about the medical care program. They were steel, and cement, and
concrete. Busy and tremendously successful.

But we felt that there was nobody there that really worked in
the medical program. They'd meet and make decisions, but nobody
was on the front line of the medical care program. This is where
we had our problem of accepting their administration, when they
weren't really a part of the program at all. Not necessarily a
medical group, but a health plan. They'd sit on a board, but they
didn't know what was going on.

Chall: That's why you needed Dr. Garfield there in between?

Cutting: Yes, that's right. So we became more and more at odds. There were
differences of opinion of how money should be spent. Expansion:
Should we build in Redwood City and Santa Clara? This sort of
thing. Do we need microscopes, or do we need new curtains in the
hospital, electric beds or not? This sort of thing which they
were, in effect, making decisions about, without being involved in
every day, day-to-day work.

Chall: Didn't your executive committee get into that sort of discussion,
too?

Cutting: Yes. Sure.

Chall: I note from Dr. Smillie some of the really very minute kinds of

problems that you would be concerned with aside from medical group
policy.

Cutting: The medical group was run by committee, really, from '48 to '57.
We had sub-committees: somebody was in charge of personnel,
somebody of financing, and so on. It worked fairly well. But
after the contract, the Tahoe agreement, it became obvious that we
needed a new kind of organization.

Chall: Was your medical group presenting certain kinds of matters to the

board of trustees, then finding that they might not have understood
them, and ignored them? Made decisions that you didn't agree with?

Cutting: Yes.

Chall: Were these the kinds of concerns that led to the request for leave
of absence in June 1953 of Dr. Fitzgibbon, and October 1953 of
Dr. Baritell?* Was this because they were concerned about Kaiser
management, attempts at management of the medical group? Exactly
what was that problem?

Cutting: The worry about the Kaiser influence was what bothered Dr. Fitzgibbon,
no question about it. He said, as he sees the future, "We're going
to be dominated by the Kaiser people, and it'll be another staff
employed physician kind of arrangement." And that's why he left.

Dr. Baritell 's problem was different, I think. Probably
difference of a philosophy of spending money with Dr. Garfield,
between him and Dr. Garfield. And Dr. Collen. He and Dr. Collen
and Dr. Garfield didn't get along too well.

Chall: .That's Collen and Baritell versus Dr. Garfield?

•

Cutting: In a way. And certainly Baritell against Collen and Garfield.
Chall: Is that so

Cutting: [chuckles] Yes. They were both very bright men with sometimes
divergent ideas as to process.

Chall: [laughs] Let's see, Dr. Collen, December, 1953, "submitted his
resignation as the medical director of San Francisco, over the
appointment of Felix Day as administrator of the San Francisco Hospital,
But he didn't resign from the organization as Baritell and Fitzgibbon
did. What was going on?

Cutting: Dr. Baritell left, intending to leave, but I talked him into coming
back, actually. Baritell was a very bright, very astute man. A
good surgeon, he was chief of surgery then; I thought an asset to

*Smillie, "A History of the Permanente Medical Care Group," 55-56.
**Smillie, "History: Chronology," 2.

Cutting;

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

the group, and really talked him into coming back. I think some
of the other fellows really thought that he shouldn't come back.
He did, and he was welcomed back.* Dr. Collen's separation was
different than that. He never dropped out of the group.

No, he didn't. He just left the San Francisco Hospital.
Was that 1953?

Yes. I have it from Dr. Smillie as December 1953. Let me check.
This is Smillie 's draft, page 56. "Dr. Baritell resigned from the
medical group suddenly and unexpectedly in mid-October 1953. The
letter of resignation which spelled out a variety of complaints,
received untimely publicity in the Bay Area newspapers. Dr. Garfield
met with the Permanente Medical Group Executive Committee, in a
special meeting to discuss the substance of Dr. Baritell's
complaints." I won't go on into that.

And then, "After Dr. Garfield left the meeting, a statement
was drafted affirming adherence to the principles and ideas of the
Kaiser Foundation Medical Care Program. However, (now he quotes
from somebody) 'recent events have brought to the surface some
crucial problems which are existent between the Permanente Medical
Group and the Kaiser Foundation. ' To overcome these problems and
institute the most satisfactory relations between these associated
entities, the committee recommended:" and then there's a list of
six recommendations.

[tape turned off while Dr. Cutting checks his records]

Dr. Collen was physician- in-chief of the San Francisco Hospital
from 1955-1961.

So he wasn't part of that 1953 ferment of resignations. You don't
think he left in 1953 over the appointment of Felix Day? It was
later?

Nineteen sixty-one. That was after Tahoe. That was in order to
head up a health plan in San Diego, that the medical group planned
to establish.

We seem to have a difference of opinion on dates.
straightened out.

It will get

*Smillie, "A History of the Permanente Medical Care Group," 56.

See also, S.R. Garfield, M.D., M.F. Collen, M.D., C.C. Cutting, M.D.,

Permanente Medical Group; "Historical" Remarks (presented at a

meeting of Physicians- in-Chief and Medical Directors of all six

regions of the Kaiser Permanente Medical Care Program, 24 April 1974) ,

7-8.

Chall: You said Dr. Baritell was opposed in principle to Dr. Garfield
on matter of economics. Was that it? Financing?

Cutting: Yes. He thought we ought to spend more money on equipment maybe
than Dr. Garfield felt we had money to spend. Perhaps wanted more
doctors, more nurses, things of that sort. Spending —

Chall: Rather important.

Cutting: Yes. Dr. Baritell, as I said, was a brilliant man, but he was

quite concerned about his own ability to survive and to make the
program survive.

Chall: And why would Baritell have had differences of opinion with Dr.
Collen?

Cutting: They were both very strong characters, and Dr. Collen was

interested in research. I. think the time that they really got
into loggerheads was after Dr. Collen left the San Francisco unit,
and became head of Medical Methods Research. I think just personality
differences, primarily; both very strong people. Dr. Collen is a
very brilliant man, with you might say telescopic vision as to what
he wants to do, and then he'll do it. And Dr. Baritell was a very
brilliant man with telescopic vision [laughs] and what he wanted he
was going to get, and it didn't always mesh.

Chall: And Mr. Kaiser had his telescopic vision.

Cutting: Oh, yes. [chuckles] Very strong personalities, and when you mix
them together, you either have turmoil, or hopefully you come out
with a pretty strong soup at the end.

Chall: What is interesting then, since you have these people, Baritell,
Collen, Fitzgibbon, for some years on all your various working
committees, was the fact that you had to work together. They must
have been pretty stormy meetings from time to time.

Cutting: The executive committee meetings were stormy sometimes. Yes,

differences of opinion. But in the discussions with the Kaiser
people, there were pretty much common interests there.

Chall: Yes. Protecting your turf together.
Cutting: That's right.

Chall: You could fight among yourselves, but not show division. For

about a year and a half after Baritell and Fitzgibbon resigned,
there' apparently was something going on that was satisfactory
enough, because it wasn't until April, 1955 that you suggested
a Working Council to Mr. Trefethen. Then from April '55 until
after Tahoe, and long after that, you all had to work out these
concerns.

Cutting: That was the period of building up dissatisfaction with the

decisions that were made — the percentage of the health plan dues
that the medical group was getting, decisions as to expansion,
purchasing of facilities, and where to spend the money, and so on.
This continued until '55, when it reached a point where we said,
"Look, things are going to explode here. We've got to sit down
and try to settle the differences."

Chall: I gather that there was some concern that if you didn't, that the
whole thing was going to fall apart.

Cutting: No question about it. Expansion was stopped, membership was

stopped, spending of money was stopped, everything ground to a

halt.

Chall: During that period? That was one of the objectives at the time.
I think one of the letters setting up the Working Council said
that for the six months or so that we'll be meeting, everything
should remain at the status quo. However, since you were all
meeting almost constantly, I'm not sure how you could have done
very much during that period. [laughs] At all. I don't know how
any of you even practiced medicine.

Cutting: Not exactly productive years, no. [chuckles]

The Southern California Medical Group and the Health Plan

Chall: The southern group and the northern group had some differences of
opinion with respect to organization even from the earliest —

Cutting: You said there were some differences between southern California
and northern California.

Chall: Yes. I think I'm taking this information from Dr. Kay's book.*

Regarding the northern California group, this is from Dr. Kay, their
"experience convinced them anew that the Medical Care entities
should be under the control of physicians, that the Medical Groups
should have representation on the Board of Trustees, of the Health
Plan and Hospitals, and that Sidney Garfield should be the primary
bridge between the Medical Groups and other medical entities."

It seemed always that the north wanted representation, and
rather quite a bit of organizational overlap, whereas the southern
California group agreed, in general, but felt that the Kaiser
organization had a great deal to contribute, "and we must find a
way to work together."** To continue quoting Dr. Kay: "We did
not believe that representation on Health Plan and Hospital Boards
was the solution, but rather an organizational pattern had to be
found that assured the Medical Groups of: control of medical care;
security against replacement, competition, or undesired fragmentation
of our groups; a mutually satisfactory integration of management
activities that utilize the Kaisers' contribution in arranging
financing and furnishing business expertise without interfering
with the delivery of medical care."

So that was some difference of opinion.
Cutting: No, not really a difference of opinion.
Chall: Organizational difference?

Cutting: I think the distance in mileage between northern and southern

medical groups made our position a little stronger, a little more
heated, we'll say. Vancouver was farther away, and it wasn't
bothered much at all. So that it is an inverse relationship
between the distance and the activity. Ray Kay also thought we
ought to be on the board, but he didn't carry it on quite as long
as we did. We pushed a little harder.

Chall: Was that because those of you in the northern California group,

particularly the ones who were the leaders, had really been within
the organization and the health plan since almost the beginning,
and were quite concerned about anything happening to it?

Cutting: We certainly were.

*Kay, Historical Review, 82-83.
**Ibid. 56.

Chall: Whereas they weren't?

Cutting: Yes.

Chall: They didn't have that long history.

Cutting: They didn't have the long history, they were farther away from
day-to-day relationships. Ray would come up and he'd get into
the heat of the argument, the Advisory Council and so on; we were
thinking in the same direction, but he could stand off and be a
little more gentle, perhaps, than we felt we could be.

Incidentally, Mr. Kaiser did not want us to move to southern
California.

Chall: Yes, I recall that. And it wasn't until you really had this offer
from DeSilva that you did so.

Cutting: Well, the longshore people came first, and then DeSilva.

Chall: But I guess it was DeSilva 's group that pushed you into Los Angeles,
as such.

Cutting: That's right. Rather than Harbor City.

Chall: Yes. Were you interested, though, in the northern California
group, in moving to southern California, not just because
Dr. Garfield had promised this to Dr. Kay, but because you felt
it was a wise thing to do to expand?

Cutting: Yes, we thought that with Ray Kay's interest and involvement, his
ability, that they could form a good group down there, and we
thought it was a good idea. The monies from the Permanente Foundation
that we had built up during the wartime was used really to help
southern California get going. Although Dr. Kay, I don't think,
accepts that idea. [laughs] He knows it.

The Tahoe Conference; Preliminaries and Follow-up, 1955-1958

Chall: Before you set up the Working Council, there had been meetings

between the Kaiser people and the medical groups, but since you

really weren't getting anywhere, it was decided to do something
quite significant and set up the Working Council.

Cutting: It was really an attempt to make them get involved. If they were
going to run their part of the show, we thought they ought to get
involved, and spend some more time learning what the program really
was. Our feeling was that if they were going to make any decisions,
let's have it based on the day-to-day conferences; knowledge of
the program.

Of course, obviously, they couldn't spend that much time.
They, in directing the hospitals, made the hospital administrator
their employee, which brought the medical group into immediate
relationship with the hospital administrators; it didn't do that
relationship any good. The hospital administrator having to look
over his shoulder to the Kaiser people, rather than sitting down
with the medical group and working together.

Chall: That is done now, of course. There is a working relationship.
Cutting: Yes, cleared up very well now.

Dr. Clifford Keene

Chall: Before even your April memo to the board, to set up the Working
Council, I saw in the Kaiser papers, a memo from Dr. Keene to
Henry Kaiser and Mr. [Tod] Inch relative to this problem, in which
he said that there was a lack of communication between the
physicians and the controlling boards.* He suggested that there be
either some kind of written communication from the Kaiser organization
to the doctors on some kind of a regular basis, by meetings or a
bulletin, which would inform them of the Kaiser administration's
point of view, or an opinion survey by a personal interview or
questionnaire. But, he suggested that it would be much better to
have some real contact — meet together in some way and try to educate
one another.

So that even at that time, before the Working Council, there
was concern on the part of Dr. Keene as to what was going on. Now,
Dr. Keene was caught in the middle, too. Can you explain what you
know about Dr. Keene 's coming in, and the point of view of the
medical group towards Keene?

*Clifford Keene to Henry J. Kaiser and Tod Inch, 3/14/1955, Henry
J. Kaiser Papers, Series 2, Carton 116, The Bancroft Library,
University of California at Berkeley (hereafter cited as TBL) .

Cutting: Of course, Dr. Keene came through, as we talked about earlier,

finishing his stint with the army, on his way to Willow Run. When

Willow Run closed, Dr. Keene, I believe, was thinking of going

to a steel company in Philadelphia, or something, but this was

just at the time when they were putting the skids under Dr. Garfield.

Mr. Kaiser, I think, wanted Dr. Keene to come out and join the group

here.

If Dr. Keene had come out as assistant to Dr. Garfield, would
have worked with him for a few years, or to be a member of the
medical group and get some knowledge of the program, it would have
been quite a different story for him, I think. When he came out,
he says Dr. Garfield invited him, which I think was probably on
the surface true. I think Dr. Garfield, if he did invite him,
expected him to work with him for a while.

But Dr. Keene, in my view anyway, came out feeling that he
was responsible to the Kaiser side, and he, without any qualms,
said that that was his boss, Mr. Kaiser, Edgar, and Trefethen — that
was his allegiance. Which put him, at that time, pretty much in
limbo, and not really acceptable to the medical group as a spokesman
for us, because he hadn't worked with the program. We felt that
he really didn't know anything about it.

So we were fairly adamant that he not be in a position of
management of the program. And at Tahoe, we were promised that
he would not be, which promise held for about two weeks.

It was obvious, of course, that the Kaiser people were not
that involved. Here they had by this time maybe five, six, seven,
hospital administrators, always responsible to them. They couldn't
take time. Mr. Trefethen couldn't have seven hospital administrators
responsible to him, or he for them; and running the whole shipyard,
or steel, cement, aluminum, and so on. So that it was natural for
them to need somebody, though it was not really ever accepted very
well by the medical group.

Chall: Even after the arrangements had all been set up through the Tahoe
meeting — although that took a couple more years — but even then,
when Dr. Keene was appointed to a position of authority, he was
still not accepted, I understand, by the medical groups. So that
Dr. Keene had a hard role there. It would be pretty tough to stay
in as long as he did.

Cutting: A very difficult position. I don't envy him at all for that

problem. He's a very capable man in many ways, but if he'd gotten
off on the other foot to begin with, I think his would have been a
much happier life.

Chall: So, was there always some animosity, all the time that he was
employed?

Cutting: I wouldn't say animosity perhaps, but there was never whole

hearted acceptance of his role as president of the health plan
and hospitals. We accepted that, as a title, but the role of
speaking for the program, or certainly for the medical group was
difficult.

The Working Council

Chall: The Working Council members in northern California were Baritell,
Collen, Cutting, and Neighbor. Did your executive committee
appoint them?

Cutting: I'm sure they must have, yes.

Chall: There was also the problem that Mr. Kaiser was interested in

setting up a number of medical groups. Not only starting it with
Walnut Creek, I guess, with that idea, but that he really was

interested in the" formation of small partnerships.

Cutting: I really don't know, don't remember, particularly. Except the

Walnut Creek, and of course, then Hawaii later, he did by himself,
or started by himself. He talked about the program being so great
it should be spread around the country. But I don't remember any
specific area, or certainly any group, that he had in mind.

Chall: Well, he did have in mind the formation of small partnerships.
That was one of his major concerns, along with everything else
here.

Cutting: He thought the smaller the better as far as the partnerships, and

negotiating the contract with him would be the way to control them.
It sure would have been.

Chall: And to set up competition.

Cutting: Competition was always great, yes. Let's compete within the
medical group over members, and so on. That would give him
leverage to give a better contract if he felt that one group was
doing a better job than another. It would give him complete control.

Chall: That's another area that you opposed. A subcommittee was appointed
to study this proposal, made up of Collen, Baritell, Reis, and
Link; but they couldn't quite see how they were supposed to come
up with anything there. So I don't know that that came to anything.

Cutting: I think that's the story of management by committee. You don't
get anywhere. It's an impossible kind of management.

Chall: There were other committees, other concerns. I think these are

all pretty well documented. You might some day want to go over it,
but I don't know that it's necessary for us to go over every single
meeting. I notice that you all had differences of opinion about
some of these things.

At one of the meetings, you were concerned about this whole
matter of integration of the program. Trefethen proposed that
the committees consider the word, "teamwork" rather than integration,
to see if you could handle it that way, regarding management
activities of the health plan, the hospitals, and the medical groups.
I don't know that that opened up the log jam, but it gave you an
opportunity to think of it in a different direction. Did it?

Cutting: Oh, not significantly, I don't think. Little better feeling; it
puts you on a team, but really nothing of the Working Council had
any great momentum; momentous decisions.

Chall: And yet you worked awfully hard.

Cutting: Awfully hard. Drew diagrams, responsibilities, management tables,
and all kinds of things.

Lake Tahoe

Chall: Trying to come up with a solution to something that you had been

doing more or less, as the engineers would say, by the seat of the
pants. It had been working, and I suppose nobody wanted to give
up his way of doing it.

Then I guess we get to Lake Tahoe. That was your last meeting
of your Working Council. According to Dr. Smillie, it was
contentious and heated, with posturing, demands, counter demands,
with both sides taking time to caucus. Mr. Trefethen claims it was

Chall: the toughest of all the meetings. "Each side," according to
Dr. Smillie, "gained and each side gave up something."*
[Mrs. Chall reads passages from the Smillie manuscript, pages 78.]

Why don't you just free associate here a while on the Tahoe
conference.

Cutting: Obviously, Lake Tahoe was a traumatic period. We had the feeling
that we would either come back with some sort of a compromise,
or we'd have no program. Because if neither side gave sufficiently,
nobody really wanted to work together. In the medical group, of
course, the physicians have the ability to go out and practice
on their own, so we don't feel we were captive, but we did believe
in the program, and wanted to see if it would work, and we weren't
sure that it would work under complete industry domination.

As you say, we had caucuses, and table pounding. The Advisory
Council was a way that we finally said, "Well, maybe we can work
this thing out, we can try for a while," but I don't think anybody
was terribly enthusiastic about having an Advisory Council.

The Trefethen Plan: The Contract

Chall: Because you'd been through the Working Council.

Cutting: I think the thing that broke the road block was Mr. Trefethen

coming up with the specific contractual relationship. We hadn't
really talked about that too much. We admitted that a non-profit
hospital and health plan couldn't really be run by a medical
group; a medical group is a profit organization. So the management
of that by industry seemed to be acceptable in concept, provided
that it would work out personality wise and so on.

The idea was of a contract which gave the medical groups prepaid
money , in other words , we got a share of the prepayment , so that
we indeed were at risk. We had the responsibility for the medical
care of the membership for a fixed amount of income. We all agreed
that the hospitals should survive, so they would be entitled to a
cost allocation.

I think Trefethen "s first idea also was that anything left over
between the contractual payment to the medical group and the
hospitals' needs could be split fifty-fifty. Whether that was all

*Smillie, "A History of the Permanente Medical Care Group," 78.

The Kaiser family lodge at Lake Tahoe, scene of the Tahoe conference.

Kaiser Permanente medical care pioneers attend the presentation to Dr. Sidney
Garfield of the Lyndon Baines Johnson Foundation Award for his significant
contribution in the field of health care services, 1977. Left to right: Drs.
Sidney Garfield, Raymond Kay, Morris Collen, Cecil Cutting, and Mr. Edgar Kaiser.

Chall:

Cutting:

Cutting: worked out at Tahoe, or in the Advisory Council — within a few

months, really, the pieces seemed to begin to fall together pretty
well. And of course we had infinite detail of problems. Would
the medical group get the non-membership income? We had a lot of
private patients. Should that go to health plan, or not?
Industrial work the medical group did was really not based on the
health plan. Should that go to the health plan? So working out
those relationships took a matter of several years, really.

The relationship between the hospital administrator and the
medical group that I alluded to before was a problem. They were
looking over their shoulder for their promotion, and kudos, from
the industry side, and yet the medical group was trying to work
with them.

You had to agree too on what each group meant by quality care and
cost-effective care.

That, of course, had been a prime motto, a prime reason for our
beginning, for our ever getting into a medical care program, and
certainly for continuing it as a community program after the war.
It was 'the fact that we were providing a good quality of care, and
at a reasonable cost. That's really what sustained the medical
group in its criticism by the medical societies; that we felt that
we were providing good quality at less cost than they were, and they
were criticizing us. So that was nothing new as far as the medical
group was concerned.

Chall: No, but it is a matter of controlling costs.

Cutting: Management controlling costs. Sure.

Chall: And I guess that's where differences of opinion came up.

Cutting: Sure. We have two parts of a program with different concepts of

what is quality care, and so on. It's difficult. It was a two-headed
monster of an organization, and it still is, but we've learned to
work together.

Chall: How do you look upon Mr. Trefethen in all of this?

Cutting: Certainly in the Working Council days, and before then, he was

acting for Mr. Kaiser. I think he believed, probably, in what he
was having to say, and I remember his pounding the table and saying
that, "Anything we're in, we run." I'm sure that was as much a
reflection of his reporting for Mr. Kaiser as it was his own management
idea, although he's a powerful manager in his own right.

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:
Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting;
Chall:

Cutting:

As I say, I think it was his concept of the contractual relationship
that broke the ice, that broke the stalemate. I give him credit
for that.

And therefore saved the program.
Yes.

Can you give me a little picture of how he operated in contrast,
let's say, to Henry Kaiser. They were very close, and he was his
spokesman. What was their difference in style?

Mr. Kaiser would come blustering in; he was too busy to argue,
you couldn't argue with him. He would put his declaration down,
and then get out. He didn't want to be a part of the nit-picking
discussions, and so on, and Mr. Trefethen had to sit there and
take our abuse, and try to present his conviction.

Did he have a quiet way about him, or quieter?

He was fairly bombastic. He was a hard manager. You had to be
to run all of those other industries, negotiate with unions, and
negotiate with purchasers, and so on. He was calm, but hard.

How about the rest of you.
heads among the medics?

Oh—

Were you emotional? Were there calm

Were you mostly emotional? [laughs]

A lot of emotion there. When we'd get off to ourselves, we would
calm down, and plan, and see where we were. But the rigidity of
the meetings was uncomfortable for us, and we'd tend to get a
little emotional, I'm afraid.

The rigidity of the meetings as well as the problems that you were
dealing with.

Sure.

Dr. Kay, in his book, has indicated what the main problems were,
and how the reorganization took effect. I would think that's a
relatively complete account.

I think one of the important decisions, whether it came as soon
as Tahoe , or soon after, anyway, was the fact that employees of
the departments, even though they were in the hospital — x-ray,

Cutting: laboratory, physiotherapy — those things that were really controlled
by the medical group, had a physician department head. Those
employees became medical group employees, rather than hospital
employees, which they ordinarily would have been.

Chall: Is that the battle over the ancillary services?

Cutting: Yes.

Chall: Yes, that seems to have been a sticky point.

Cutting: I'm not sure whether Dr. Kay's contract arranged for that or not.
That was one of the sticking points in the northern California
region, anyway.

Chall: Yes. I noticed that Dr. Kay and Mr. Trefethen worked out the

contract dealing with some of these reorganization matters. Then,
when they were found to be working, after, I think, a trial run of
about eighteen months, they brought it up here, and the northern
California group accepted it.

Cutting: They brought it up to us the same time they took it down south.
Chall: But you didn't accept it.

Cutting: We were hesitant, we were still arguing about some of the points.
Dr. Kay was far enough away to feel that he had a little more
control of things. I think distance, as I said, made that a little
bit easier. So he signed the contract, essentially the same one
that was presented to us. So we were still nit-picking, paragraph
by paragraph.

We thought he signed a little bit too easily, too quickly,
though I'm not sure that we gained too much by going over it word
by word in the contract. We got some changes, mainly things that
were in the base period, upon which the contract was based, and
so on; handling of industrial and non-member income, the employees
of the ancillary services. But essentially the same contract. We
were just a little harder to buy.

The Northern California Medical Group Selects Cecil Cutting
as its Executive Director, 1957-1975

Chall: [laughs] You were. Now, shortly thereafter, at least in 1957, and
this was all resolved about that time, it was determined that
after almost a decade of experience with the executive committee

Chall: of the medical group, that it would be better to have an executive
director for the group. There was a contest among three of you.
I think it was among you, and Dr. Collen, and Dr. Baritell.

Cutting: Seemed to be the prime nominees.

Chall: Right. And you came out ahead. How do you account for, one, the
decision that you should have an executive director rather than
continue working by committee, and secondly, that you won the spot?

Cutting: By this time, the Advisory Council had vanished. Dr. Keene was
getting pretty well established as the representative for the
board. His relationship with the hospital administrators, and
so on, was not particularly to the medical group's advantages. It
just seemed that the committee was not able to really negotiate
with the regional managers that were appointed, the hospital
administrators, and so on.

Since there was by this time a regional manager in each region,
a single person, it needed a single person to negotiate with him.
Incidentally, the regional autonomy was an important concept in
the Tahoe agreement, and I think it's still a most important,
significant concept of the program.

I think Dr. Collen first vocalized the need, or the desirability
of having a single person to meet with on a day-to-day basis, with
the regional managers. I think Dr. Collen probably felt that he
could do that; Dr. Baritell felt that he could. As we said before,
they were both very strong people, and each a little controversial,
and I guess the rest of the committee finally decided maybe someone
with a little broader viewpoint, or not as controversial, might be
more acceptable to the medical group as their representative. They
thought maybe I could do that.

Chall: Do you look upon yourself as a moderating influence, and was that
a role that you played during all these heated meetings in those
several years?

Cutting: Yes, I somehow could moderate the two extremes, could get along

with both sides, the industry side as well as ours, a little more
quietly and more effectively, I think. I think both Dr. Collen
and Dr. Baritell were brighter, they were more dynamic people than
I, but I did seem to have the ability to calm things down a little
bit.

Chall: They must have felt that was important, after all these years of
battling.

Cutting: Kind of tired of fighting.

Surgery and Administrative Duties

Chall:

Cutting:

Yes, it is tiring,
of medicine?

Does that mean that you gave up the practice

No, not entirely, although I had to begin to taper it off. I
never really quit entirely, although to all intents and purposes,
I did the last five years, 1970-75. It did give me freedom of
administrative responsibility in the medical center, and it gave
me the opportunity to limit my medical activities to a few areas
that again were on the leading edge of medicine, really.

Because of my traditional position, and somehow respect that
I was given, I could take chances that other surgeons couldn't.
I did the first thoracic surgery, a few cases, until Dr. [Donald]
Grant, and others came along, took over, and did a better job than
I. This is in a period when heart surgery was just beginning. The
first that came along was the patent ductus arteriosus surgery; the
little blood vessel, the short circuit between the heart and the
lungs that's open before birth, and has to close at birth.
Sometimes it doesn't. It was just about the time that Dr. [Robert]
Gross, in Boston, discovered that you could go in and tie off that
little ductus that didn't close, otherwise the patient would die
around age twenty, or so.

So I took a trip to Boston, and watched him operate a few
times, and did some dog surgery, and so I began. We had quite a
backlog of those cases then, because it was new. Then, the
coarctation, a narrowing of the aorta just below the arch, about
the same point where this ductus came in, was another congenital
abnormality that led to, usually, early deaths, at twenty, twenty-
five.

That was just beginning; to realize that we could go in and
cut out that narrow section and sew the arteries together. I
visited a few centers that were doing that, and came home and
started. Then again we had quite a backlog. Similarly, the mitral
stenosis, a narrowing of one of the valves of the heart, was a
cause of disability. Particularly forty, forty-five year old
people began to have heart failure because of this condition,
usually caused by rheumatic fever.

They discovered that they could go in, put a finger into the
heart auricle, the low pressure chamber of the heart, and crack
that stenosis with one's finger. So it was not an open heart
surgery, but it was effectively the first opening of a valve. And

Cutting:

Chall:
Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

there was a big backlog of those patients. I did those for a
while. It was enough to keep me busy, and in surgery. At the
same time I could limit my load; I wasn't taking general surgery
patients.

So I combined those and similar special cases through most
of my administrative time, in the sixties, and seventies.

Nearly ten years.

Gradually, as we caught up with the backlog, my value there was
diminishing, and others began to take over and to teach the new
residents as they came through, how to do them. So they were
gradually taking it on.

Some of them may have been seeing that development while they were in
medical school, too.

Sure, by that time it was being done in medical school. The
residents in surgery getting their residency training elsewhere
had pretty good exposure. We let them do a few under management
here, then they could go on their own.

When you say, "We had a backlong, here," what happened to the
patients suffering from some of those ailments that you couldn't
take care of until somebody learned how, mainly you at one point?
Wouldn't you transfer them, let's say, to other hospitals where
this was already being practiced?

Anything that we couldn't do, we transferred, but it was economically
important, I think, to us that we should do them. It would be two
or three hundred mitral stenosis, costing five, six thousand dollars
apiece. That was pretty heavy money for us in those days. They
were backlogged all over the country, not just our members. It
was really just the first year or two that those things were being
done; we picked them up.

That's always been something that you were concerned about, not
being too far ahead, but could pick it up as it seemed essential.

Yes. The medical schools had a backlog, too, with their patients,
and every doctor did. I don't think we deprived our members.
It was the level of knowledge of medical technique.

The other part of your life has been spent in administration,
did you have an office, and how much time was spent?

where

Cutting: First regional office was behind Oakland Tech High School.
Twenty-second Street, just off Broadway in Oakland.

Chall: How much time did you spend there?

Cutting: Probably about half-time.

Chall: A few days a week, or some time every day?

Cutting: Probably a few days each week. I would have surgery in the

morning, and see a few patients in the afternoon, then go over
there to see what was going on at that office. It was just a
couple of blocks from the hospital.

Chall: What in general was your duty? I get confused now as to health
plan managers, medical directors, and regional managers. I
wondered how to separate functions here.

Cutting: We continued to have the executive committee, of course, which we
felt was the management body of the medical group. I worked for
them. I represented them, meeting with the regional manager of
the hospital and health plan. He had his offices there, in the
same building. First problems were forecasting health plan
membership. So we'd sit down with the health plan manager,
Mr. Babbitt, that particular year. Hie regional manager was Fred
Tennant .

So we'd sit down and look at the forecast of membership. We
would try to itemize our budget requirements for the next year,
developing forecasted requirements for health plan dues, and
established the dues structure for the following year. We'd make
rounds of the facilities to look at their equipment requests. We'd
done this before, you know, while Dr. Garfield was manager. I used
to go around with him, look at the autoclave in Richmond. If they
wanted a new autoclave, he'd go and kick it and see whether they
could have a new one, or whether they'd have to have that one
mended .

So it was a continuation, sort of, of developing the equipment
budget. Everything was based, of course, on the membership forecast,
to set up a financial requirement for the dues. The health plan
membership forecast established then the dues structure.

The internal medical group problems could pretty well be
handled by the executive committee. It was made up of the physic ians-
in-chief of each of the units, and an elected member. Differences

Cutting: of numbers of nurses, full time equivalent personnel could be
argued in the committee. We let them do that. When one unit
wanted a medical residence/intern program, and another one didn't,
it caused some differences of opinion, and that could be hashed out
by the committee.

The income, the capitation negotiations, were pretty much
my responsibility. I informed them of what the monies were going
to be, but I could not be in a position of running back and forth.
They telling me, "Oh, you want to get some more money," and they
"won't accept this." I didn't let them do that.

Chall: You were in charge.

Cutting: I would be in charge, yes. We told them what the membership

forecast was going to be, what the expenses that they each had
asked for, what we had to cut down to meet a reasonable dues
structure, so that we had agreed with the health plan to have a
dues increase of 8 1/2 percent. That meant that the contract
monies for the medical group would be an increase of 7 percent that
year. So they had to take that.

They could then spend that money pretty much as they wanted
to. We allocated a contractual income increment to each of the
medical groups, and they would come up with how to spend their
percentages, their portion of that increment. Each physician-in-
chief of a medical center had his department heads, and they would
come up with the increase in income for the individual physicians.
I would go over each of that allocation of funds with each physician-
in-chief to get approval , and then they would take it to the
executive committee for final approval.

I worked with each individual physician- in-chief on his
problems. They were all new, actually my appointees, so we had
to develop a relationship. Their problems became my problems. We
' could usually settle it, except for those overall across medical
group problems which had to be sifted out by the committee.

Chall: Now, as there were other hospitals built in San Rafael, and

Martinez, and all these other places, did they send representatives
to your executive committee?

Cutting: When they got a medical group of twenty-five partners. Then the
head physician there was designated as physician- in-chief , and he
then became a member of the executive committee. Before then, they were
called physicians-in-charge of the smaller units. Napa, for instance,
didn't have, still doesn't have, twenty-five physicians. Vallejo
has twenty-five and more physicians, so Vallejo has a physician-in-
chief , and Napa has a physician- in-charge.

Cutting:

Chall:

Cutting:

Chall :

Then each center had an elected representative. This was developed
too, during the years as part of medical group management. The
elected member was a popularly elected member, came in as an
agitator, as a do-gooder, you know. In a couple years on the
executive committee, he would calm down, and so they'd want
somebody else for the next couple of years.

A physician- in-chief stayed on as long as he was physician-
in-chief .

And you had terms for the physicians-in-chief , you said, five
years, or something like that?

I think they were nine years when I was there, they are now five
years.

That gives continuity to the program, doesn't it. I think we're
about out of tape, and I don't want to get into anything major,
in the few seconds left.

VI THE KAISER PERMANENTE MEDICAL CARE PROGRAM FINALLY BECOMES
A PARTNERSHIP, 1962

[Interview 3: March 19, 1985]

The Effects of the San Diego Crisis, 1961-1962

Chall: I thought today we'd just get started with the problems that

developed leading up to San Diego. We finished just last week with
the solution, the so-called Tahoe Plan, or the Tahoe Solution.

But from reading Dr. Smillie's report, and others, it would -
seem that that didn't solve it all, particularly in northern California.

He claims that in 1957, Fred Tennant was appointed the regional
manager, and Arthur Reinhart was appointed health plan manager,
and that both appointments had been made without prior consultation
with the Permanente Medical Group. That, I assume, created some
tensions. Then, he writes, that Felix Day, who had continued on
as regional administrator of the hospital, had appointed a hospital
administrator who was unwelcome to the physician-in-chief at one
of the medical centers.*

So we have apparently tensions of various kinds coming up.
One, that the regional manager and the health plan manager had been
appointed without any consultation with the medical group. Secondly,
that a hospital administrator had been appointed who was unwelcome
to the physician- in-chief . Can you fill in the name of the hospital
administrator who had been appointed, and in what hospital? Would
that have been San Francisco?

*Smillie, "A History of the Permanente Medical Care Program," 99.

Cutting: Yes, I think he's referring to the San Francisco Hospital. Verne
Brammer was the hospital administrator that was moved from Vallejo
to San Francisco.

Chall: By Mr. Day at that time?
Cutting: By Mr. Day.

Chall: And he was appointed without — I guess it was Dr. Collen, then, who
didn't approve of him?

Cutting: Yes. To be more general, one can say that, although the contractual
arrangement that was worked out at Tahoe, and subsequently, through
1956, 1960, and so on, proved very satisfactory, no matter how
carefully and astutely the piece of paper can be worked out, it
needs people who want to make the project work. There was consider
able feeling lagging from the prior five, six years, of suspicion,
paranoia on both sides — medical group and the hospital side.

There is no question but what the hospital administrators got
most of their acclamation by how well they could keep the doctors
under control. A typical example, I think, I often use, was over
in San Francisco. I think we stated that the ancillary services
were employees of the medical group. In San Francisco, in the
clinical laboratory then, the employees would be employees of the
medical group.

The laboratory was in the hospital confines, there. The
waiting room across the hall needed to be painted. Was that
hospital, or was that laboratory? The hospital administrator and
the medical physician- in-chief could not agree on the color of
paint to paint the waiting room. Things of that sort, literally,
were flamed into terrible problems. It came all the way up to the
highest decision makers, and so on, to be squelched.

Chall: How high?

Cutting: To me, and to, I'm sure —

Chall: Dr. Keene?

Cutting: Dr. Keene.

Chall: It would have gone that high up?

Cutting: He probably heard about it. So it was in that atmosphere, really,
that someone, and I'm not sure who, saw an advertisement in the
Wall Street Journal for a hospital in San Diego that was in
bankruptcy sale. It seemed to us that there might be a chance to
develop a little program where the physicians had more control of
it than we did here.

It was never our intention to destroy or injure the program
in northern California, but we thought that a little experiment
working with the predominant management — decisions by the physicians-
would be interesting, and might be helpful in understanding the
whole program.

So we purchased that hospital, and Dr. Collen was to be the
medical director, head administrator, of the hospital there. But,
as Dr. Smillie reports in his notes, Mr. Kaiser, Sr. became so
adamant that this was a conflict of interest, that he said he would
actually destroy the whole program if we went ahead with it.

Chall: Let me ask you a few questions about that, going back to these

decisions to put people in, major decision, without consulting vou.
Were those bad decisions? Had you been consulted, would you have
probably agreed to them, and then been able to work with those
persons? Or, would you not have appointed them?

Cutting: It's hard to say. In general, I think probably if we had agreed
on those same people, we could have worked together and probably
gotten along all right. But there was an ingrained animosity,
or suspicion, of physicians; an envy of physicians, worry of their
role of taking over, by the hospital administrator side.

Chall: So that it was just poor judgment administratively to do it that
way?

Cutting: I think so.

Chall: Felix Day had been with the program for many years. I understand
that he had a reputation for really checking on doctors and
hospitals, even to the point of opening traps in sinks to see if
there were any needles that went down in them, to make sure that
costs were being held down. I know he stayed on for many, many
more years. I wondered whether this was another facet of opposition
among the doctors in terms of controlling their use of time and
the use of equipment.

Cutting: I don't remember any specific instances of that sort. Felix,

though not an academically trained hospital administrator, was a
good administrator. I think he had a little problem working with
some doctors, and understandably so. Some doctors are pretty
contentious, and difficult to work with. So it often was a two-way
street, I'm sure.

Felix was very enthusiastic, and a very likeable fellow. We
put him in charge of the Ohio region as the hospital administrator.
And he worked there very well.

Chall: About San Diego I have some other questions. From 1957, when these
persons were appointed whom you were opposed to for one reason or
another, until 1961, when you began to look into San Diego — that's
anywhere from three to four years — had you been trying to work
these problems out , and had they been festering so long that you
just sought quickly this opportunity?

Cutting: Yes, we had been trying what was essentially a management committee,
made up of the health plan manager, the hospital administrator, and
someone from the financing side, and three doctors. So there were
six of us. We spent hours and hours very uncomfortably trying to
work out something. I think the most important decision we ever
made, probably, was who could use the electric typewriters, and who
couldn't.

Someone, I think Felix Day again, bought a carload, it seemed
like, of manual typewriters at a very good price just about the
time the electric typewriters came along. Of course, all the
secretaries wanted electric typewriters. So we had to establish
the criteria for the pecking order of who would get an electric
typewriter. And that's the kind of thing that we spent hours on.

Chall: I also was interested in knowing, when you were under this kind
of tension, and then finding the opportunity for the hospital,
whether or not, because you were old friends and you had been a
part of this growing up period , whether you consulted with
Dr. Garfield. He hadn't been appointed to the board yet, but he
had a position still. You might have wanted to talk to him about
this. I wondered whether you had, in fact, and what he felt.

Cutting: Oh, I'm sure we talked it over with him at long length. As I
remember it, he was fairly non-committal. He thought it was
probably a good idea. He was always strongly in favor of a strong
physician role in the management program. So I'm sure that he
concurred in the idea. As it developed, of course, we offered the
Kaiser people to come in with us in San Diego, but not as prime,
not in charge.

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:

We were going to be in charge, we wanted their expert help, we
felt they were experts.

I note from Dr. Smillie's draft that it took two votes to get the
necessary majority vote to go to San Diego. One was a vote of
the partnership at a meeting which was not quite sufficient. So
then you went to a mail ballot shortly thereafter. Did you have
to do any lobbying at all to get the necessary votes? Do you
recall that?

I remember that in the lobbying, we tried to meet with the
various groups of physicians. Now, by this time, there were units
in San Francisco, and Oakland, and Walnut Creek, and then South
San Francisco, Vallejo — We made tours, anyway, and I'm sure that
during those tours, the question may have come up.

Had there been any contact between you and Dr. Kay as to their
expectations, in southern California, of what you were going to
do?

We called Dr. Kay before we did anything about it, and asked him
if they had any intention of going down to San Diego. If not, did
they have any problem if we did, and the answer was no. Subsequent
to that, he has been a little less definite in his no, I think.
But basically, we felt that we had perfect clearance, as far as
the southern California group was concerned, to go ahead.

Then, were you surprised when Kay and Edgar Kaiser went to Hawaii
to see Henry Kaiser about this, and then by Henry's subsequent
stand on your project?

I didn't remember, until I read Dr. Smillie's note, here, that
Dr. Kay had gone to Hawaii.* I know that Mr. Kaiser came back
from Hawaii, here. I remember very clearly the meeting in his
office with Edgar Kaiser and Gene Trefethen, and Mr. Kaiser, at
which time he was very irate. He said he would certainly consider
it a conflict of interest, and he would destroy the whole program.
"Do you really mean that, Mr. Kaiser?" He said, "Yes, I do." I
said, "In that case, we won't go." He said, "Can you make that
decision?" And I said, "Yes, I think I can."

Chall:

That probably took you by surprise,
this might be part of the scenario?

Or had you contemplated that

*Smillie, "History: Chronology," 6.

Cutting: I had heard that he was upset. I think there was an exchange of
letters, memoranda that indicated he had felt that it was a
conflict of interest. And in fact, I'm not sure but what there
was a legal opinion of what conflict of interest really meant, and
so on. Kind of vague, in legalese. I was surprised at his
adamancy. I think Edgar and Gene Trefethen were, too. They stood
looking out the window, rather embarrassed, while Mr. Kaiser and-
I were talking.

Chall: What made you think that you could turn your medical group around
after having spent some little effort getting them moved towards
the project itself?

Cutting: I felt I had that much respect and clout with my medical group at
that time.

Chall: And was it difficult?
Cutting: No.

Chall: I get the feeling that there was a difference between the approaches
of Henry and Edgar Kaiser to problems of this kind. Edgar Kaiser,
for example, was willing to allow the northern California medical
group to proceed, and perhaps Trefethen, to see how it would
develop.* But Henry Kaiser immediacely was totally upset by it,
and there was no negotiating. In this case, and in other cases,
were there differences in their styles?

Cutting: Oh, yes. All three were different. Mr. Kaiser was adamant, abrupt,
made up his mind and pounded it out on the table. Mr. Trefethen
was more business-like, but obviously had to carry out the position
of Mr. Kaiser. Edgar was the kind, softer, more gentlemanly — trying
to make peace.

Chall: Was he a moderating —

Cutting: Moderating. As much as you could moderate with Mr. Kaiser. [laughs]
I'm sure he had an effect on Mr. Kaiser. But he was definitely a
moderator.

Chall: As long as Henry Kaiser was on scene, then, he was in charge.
Cutting: No question about it.

Chall: And after that, would there have been difficulty between Edgar and
Mr. Trefethen on things of this kind?

*Smillie, "A History of the Permanente Medical Care Group," 105-107.

Cutting: No, I don't think so. Mr. Trefethen kept in the Central Office
running the business. Edgar took to the skies; he traveled,
getting business contacts around the world. He did an awful lot
of traveling those years after that. Public relations, and
developing business.

Chall: For the business. So that their impingement on the medical

program, by this time if it were running smoothly, was less and
less?

Cutting: Yes, almost nil.

Chall: Dr. Garfield, in his interview, his oral history, has said of this
whole project with San Diego, "This caused the layman to realize
the need of some kind of joint venture."* I wondered whether there
was a quid pro quo regarding reorganization of the management
team when you backed down? It did take place, although it took
place a couple of years later. Did it just happen to come about?

Cutting: I think it had a profound effect. Mr. Kaiser was by no means

stupid; he got the message that we weren't happy, that something
ought to be done. And I'm sure he told Gene and Edgar to get busy
and straighten things out. What they did was to bring Karl Steil
up from southern California.

Chall: That was a year and a half later, so something must have been going on
to prepare the group for that, or prepare the management for
that. In my dates I have September, 1961, as being the date when
the San Diego plan went down, after disapproval of Mr. Kaiser. Then
it wasn't until December of 1962 that Karl Steil came in to replace
Mr. Tennant. So that was, I figure, something more than a year.
Were you being consulted about this? I mean your medical group
during that time.

Cutting: According to Smillie's notes, we sold the hospital in May of '62.

Chall: Yes, that is a different date. I'm glad you pointed that out.**
Thank you.

*Garfield interview, tape 5, side 1, 10 September 1974, 5-6.

**Smillie, "History: Chronology," 6. See also "A History of the
Permanente Medical Care Group," 106-107.

Cutting: It didn't seem to me it was very long.

Chall: Now, in the appointment of Karl Steil, were you consulted at that
time? Was that appointment made with your acceptance?

Cutting: I don't remember being consulted about Mr. Steil either.
Chall: [laughs] Isn't that interesting.

Cutting: I may have been told about it. It may well have been that

Dr. Garfield, knowing Mr. Steil, could have told me, "Look, here's
the fellow that's been through the fire with Ray Kay. He is a
fellow that knows how to work with the medical group." I think
maybe he gave me a good introduction.

Chall: Eased the way. Now, Mr. Steil brought up Martin Drobac to be his
assistant here. Did he work out well with you?

Cutting: Martin wasn't particularly effective. He wasn't around too long,
I don't think. I think he was not particularly happy with the
health plan job; he had his sights set a little higher. And I
think he moved up, or out, pretty much of his own volition, pretty
soon.

The Team Approach Begins to Work: Karl Steil, Frank Jones,
Felix Day

Chall: All right, now you've got this team, a staff you were satisfied with.
This was Karl Steil, Frank Jones, and Felix Day. Can you give me
some idea of how you worked things out with them? What was your
team approach that worked with them that hadn't with the preceding
team?

Cutting: Mr. Steil immediately tried to create an atmosphere of openness,
of willingness to work. No deals under the table, and this sort
thing; everything was on top of the table. He included me in
discussions with health plan, as to their forecast of new members,
and so on. He put me as head of the Permanente Services Organization,
which was really a group of the heads of the departments that worked
for him and for us — for the medical group.

He managed to present a feeling of honesty and f orthrightness.
We argued, sure, but we felt we were arguing from the same figures,
the same book, and our books were open to him, and his books, the

Cutting: hospital books, were open to us. There was just no suspicion and

feeling that he was trying to pull something over on us. I reacted
to that very quickly, because that's the way I like to work.

Chall: Did you think that he respected the professionalism of the doctors
more perhaps than the others?

Cutting: No question about it. He respected their training, what they were

trying to do with their life, and what they meant to the organization.
He realized that the program was nothing without the physicians,
was nothing without taking care of the health of the people. His
role was to help the process of health care.

Chall: What about Mr. Jones? How did he work with you?
If

Cutting: He came up as an ambulance driver in the Richmond Field Hospital,
so we'd known him the whole, time. He was very friendly, everybody
loved him. He started out without much experience in the health
plan, but he picked it up. His relationship with the unions, with
the members, the public, was excellent. He, too, was open and
honest, and they seemed to respond to him.

The Eden Medical Group

Chall: There was also, during the time, and you did discuss it once before
with me, the San Leandro project, Eden, it was called. That went on
from '53- '62 — shortly before, I suppose, Mr. Steil came in. It was
brought right into the medical plan. Dr. Smillie in writing
about the Eden group says that the physicians at the Eden Medical
Group had been compensated on base salary, plus incentive payment
for each patient visit. Hence, he says, "They brought to the
Hayward medical center a style of practice which resulted in greater
physician productivity at that location than at most other
Permanente locations."*

They operated under a sub-contract of the Permanente Medical
Group, not a direct contract with the Kaiser Foundation Health Plan.
Was that another type of experiment? Did you then decide that it
would be better if they were brought into the one health plan
organization?

*Smillie, "A History of the Permanente Medical Care Group," 109.

Cutting: Yes. Dr. John Mott , a wonderful gentleman, very fine man, finished
his residency in surgery with us. John was a pioneer in spirit.
He was a little restless within the confines of the partnership
of Oakland which seemed to be a little bit too bureaucratic. He,
and David de Kruif, and George Ekhart, and a pediatrician lady,
Edna Schrick — she later went to Hawaii — decided to start a little
clinic in San Leandro.

John and I were very good friends. It was really my arrangement
with him that allowed him to do it. And we did give him a base
salary, plus so much per office visit; I've forgotten how much it
was now. There's no question but what they made it work. John was
a terrific worker, kept the clinic open day and night, satisfied
the patients; did beautifully for almost ten years.

There's no question but what they were productive and
enthusiastic. But eventually, they needed a little bit more money
on the per visit basis. It hurt me to tell John, but we sat down,
and I said, "Look, I can't do this, because this is just getting
into a f ee-for-service, getting one step away from prepayment. As
long as you can keep it at one prepayment level, fine, piecemeal,
on a per service, per visit, basis but I just can't start increasing
it. Why don't you come on back into the partnership." So he took
a big breath, and he said, okay, he would.

Chall: But then did they stay out in the Hayward area?

Cutting: They stayed in the Hayward area.

Chall: That allowed them a little more freedom.

Cutting: Yes. Built them a nice hospital and clinic. I can probably get
that date for you. [checking the Directory of Physicians, The
Permanente Medical Group. 1969] Let's see if this goes back far
enough. No. His residency with us, '48-'50. I believe '53 is
right for Dr. Mott's clinic. The new clinic and hospital started
in 1962.

Chall: Where did Dr. Mott go? Did he stay in Hayward?

Cutting: He stayed in Hayward until Sacramento opened. And he, as a

pioneering spirit, was the only guy that was willing to go to
Sacramento. He burnt his life out making Sacramento a success.

Chall: A question that I find here for you [on Chall's outline] — at about
this juncture it seems appropriate: Dr. Saward has the impression
that the northern California Permanente Medical Group was mainly

Chall: interested in creating optimal conditions for physicians, whereas
the Oregon group was mainly interested in creating optimal
conditions for its members. Do you want to comment on that?"

Cutting: [chuckles]

Chall: [laughs] Besides just chuckling.

Cutting: Not particularly. [laughter] I think it is very admirable that

each area has something that they can feel is a little better than
anybody else.

Chall: You don't claim that that's accurate?

Cutting: I don't think it is accurate. I think we are as aware of our
members as anywhere or anyone else.

Minorities and the Medical Staff

Chall: During these first years, before and after 1962, which we're talking
about now, during all that time of developing one clinic and
hospital after another, what was the practice, in terms of hiring
medical staff, with respect to blacks and Orientals?

Cutting: 1962?

Chall: Up to, and then following the time when you were able to work
harmoniously with Steil and Jones and the others.

Cutting: I think we talked about the postwar era, of the McCarthy kind of
spirit, worrying about liberal thinking. I think the prejudice
toward the blacks was involved in the same thing, or at the same
time. It seemed to be part of it.

Chall: What do you mean?

Cutting: We had one resident in Ob-Gvn, I think, a black man, that we took
on, and we were criticized for doing that by Mr. Kaiser.

Chall: Henry?

Cutting: I believe so. To the point that we had considerable difficulty
with keeping him for his contractual year, then letting him go.

*See interview with Ernest Saward, M.D., The History of the Kaiser
Permanente Medical Care Program, an oral history conducted 1985,
Regional Oral History Office, The Bancroft Library, University of
California, Berkeley, 1986.

Chall: Then you let him go? Why was Mr. Kaiser opposed?
Cutting: He would have to tell you that.

Chall: I see. [laughs] Well, now you really — you aren't being fair.
Were other people opposed, on the medical staff?

Cutting: As far as I remember, none on the medical staff objected.

Chall: Did it cause tensions in the medical staff that this would happen?

Cutting: At that time there probably were relatively few well trained black
physicians. The concept of Howard University as the source of
training for most blacks was not comparable to some of the better
schools. I know that has improved, and it's no longer a problem.
We have many blacks now. Females? Well, same thing. Gradually
they earned their way into full acceptance.

Chall: And Orientals?

Cutting: And Orientals, same. There was a period when we had a lot of

foreign graduates in our intern/resident program. Lots of Indians,
who were a problem, because they didn't have English. You
couldn't read their writing, and you could hardly understand their
speech, so that it made relationships with the patients difficult.
But many of them we still have with us.

I think all that is well under the bridge by now.
was a gradual awareness and learning, understanding.

It certainly

Expansion to Cleveland, Ohio, 1969

Chall: Now, let's go to Cleveland. As I understand it, this was 'started —

I don't want to get my dates wrong — 1964. It began under Dr. Saward's
sponsorship, when the meat packer's union came to him.

Cutting: Yes. Dr. Saward and Avram Yedidia.

Chall: Right. And they set up a plan that didn't succeed at first.

Dr. Gar field has said that, in setting it up, you departed from the
genetic code, one of the principles which guided and made Kaiser
Permanente successful. It was not followed in Cleveland or
Denver — having integrated facilities.* I guess it wasn't until

*Garfield interview, tap.e 4, side 1, 9 September 1974, 10-11.

Chall:

Cutting:

Chall:

Cutting:
Chall:

Cutting:

you did develop integrated facilities, that is really finding a
place to build a hospital in the right place, that it was successful
in Cleveland.

However, during a period of several years, Dr. Saward and
Mr. Yedidia had a group there called the Community Health Foundation,
You were asked to take it over. And I understand that you went to
Cleveland and looked it over and thought that it would be a good
move, and came back and reported this to the Kaiser Permanente
Committee.

I think Mr. Steil and I went together. We felt that since it had
been developed by our own people in much the fashion of our program,
although it didn't conform entirely, it was a shame to let it go
down the drain. So that we thought it was probably worth salvaging,
and to give it a try.

from the Kaiser

And you did have some money available, I guess,
Family Foundation for extensions outward.

Loan and gifts.

In terms of its being under the sponsorship — the administration in
a sense — of the northern California region, what exactly was your
responsibility there?

Reviewing the physicians, deciding whether Dr. [Sam] Packer was
the doctor that should head the program, or not. He was the senior
physician there. We went back several times, talked to the staff,
talked to each of the members of the staff individually about each
other, and so on. My role was really to make the decision that
Dr. Packer, I felt, was the one to be the physician in charge.
Mr. Steil looked at the clinic books and the accounting, business
side of it, and made some suggestions.

We were driving out to the airport one time, and passed all
these big industrial plants — tremendous area, lots of workers out
there on the west side of Cleveland. There was a little convalescent
hospital that was for sale, so I said, "Why don't we pick that up?"
That's how we happened to get started on the hospital on the west
side.

Cleveland is a peculiar city in that it's divided by a river —
that catches fire once in a while, because there's so much oil in
it — between east and west. Those that live on the east never go
to the west, and vice versa. So it was a difficult city to really
try and put together.

Chall: Most of your work was on the west side, then, if you built your
hospital eventually there.

Cutting: Yes, and we have one on the east side also.

Chall: What's the relationship now between the Cleveland medical group

and the whole Kaiser program? Are they still under your aegis in
northern California?

Cutting: No. They're an autonomous region, just as southern California is,
Denver, and Hawaii. They are members of the Kaiser Permanente
Committee, and it's the same. Maybe the constituents are a little
different as to the board of directors of the hospital/health plan
there, as it is here, and some others. But it's essentially the
same. It's a self standing region.

The Kaiser Permanente Committee, 1967

Chall:

Cutting:

Chall:

Cutting:

During that period the Kaiser Permanente Committee became a
functioning committee. You've "been looking at it, naturally, for
all those years. Can you give me a little background on the way it
functions, and how you feel it works in' terms of its general team
approach, and the understanding of its members toward their function?

It originated really because of the disparity of response to
visitors. Visitors would come to this building [Ordway Building].
Dr. Keene would talk to them, and they'd get one story. Some of
them would end up in 1924 Broadway, and we'd see them, and they'd
get a different story.

About how the program worked?
plan?

They were interested in the health

Not opposite stories, but different slants to what is important,
and so on. They were wondering if they could start something, and
they got different kinds of advice. Our popularity, reputation,
was growing, so that we got a tremendous number of visitors. Just
really quite overwhelming. And we felt that there ought to be
some kind of a consensus, some kind of a common way of handling
the problem.

This evolved into, "Well, maybe we ought to sit down together
and talk about what we are and how we should respond." And that
was really the way the Kaiser Permanente Committee started. It

Cutting: started as the regional managers, and the medical directors, from
each of the then regions, and four, I think, from the Central
Office. Dr. Keene, Bob Erickson — you've got that somewhere.

Chall Probably. If we don't have it we'll get it.

Cutting: About an equal number of us and the Central Office people. It

was intended not to be a management tool. We weren't making decisions
for anybody, but we would get a consensus of ideas, and exchange
ideas. One of the earliest decisions that we did make was to go
to Ohio. We arrived at that by a big blackboard; I think this
was down at Pebble Beach, where we were taking consensus. We had
a list of possible decisions: yes, we'll go; no, we won't go;
maybe, yes; maybe, no. [chuckles]

Chall: All the possibilities.

Cutting: All the possibilities, and then we checked them off. Finally

decided to go. That's when Ray Kay said, "If northern California
goes to Ohio, then we want to go to Denver." There had been a
little talk about somebody wanting to start something in Denver.
So we —

Chall: Shared.
Cutting: [laughs]

Chall: I see. That's- interesting how it came about. The health plan had
been struggling with committees for many, many years, and to some
degree to no avail, but this one really was a committee which knew
what its purpose was, and there was no animosity or suspicion
among people from the start.

Cutting: It knew what its limitations were, that it was to associate with
each other, to get acquainted, to surface common problems, and to
get a consensus where possible. But not to try to manage any one
region's business. And it's been very, very helpful. Probably
the most significant development, or has been, to hold, to congeal,
to maintain, the partnership idea between the industry and the
medical group.

Chall: That's fine.

Cutting: They alternate being chairman or president, whatever they call
them, between a doctor one year, and a non-doctor the next.

The Growth of the Central Office

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

That brings us into the growth of the Central Office. That has
also come about gradually, hasn't it? As the Central Office was
growing, how did you relate, as medical director, to the Central
Office? In what ways, beyond your own team there of Steil, and
Day, and Jones — did you reach out?

We had very little relationship with Central Office. What there
was was rather ineffective. Usually it was that I would call up
and say, "Why in the world are you adding any more people there?
Look at your budget, it's bigger than ours is."

And whom would you call and complain to about that?
I'm sure I called everybody. [laughs] With no effect.

As it grew were you in fact upset with the growth? Did you see it
not of any value?

As it was growing, we felt that it was growing beyond its need,
beyond its' function. But admittedly, that was- a limited viewpoint.
We were in the trenches, and the ivory tower is always criticizable.

How have you felt about it in the last few years? You've changed
your opinions?

Moderated it somewhat. [chuckles]

Where do you feel that it serves its purpose? A purpose?

It serves an important service in legislative functions. That is,
monitoring and influencing legislation, both state and federal>
which affects probably all the regions. It is certainly effective,
in financial dealings with the insurance companies, and banks, in
borrowing money.

I think it's less essential in the personnel side, less
essential in some of the legal side except for the legislative.
But I wouldn't want to be quoted as to criticizing. You see, I've
been out of it for eight years.

So, as you looked at it eight years ago, you felt this way, I
assume.

Cutting:

Chall:

The other side of the fence always seems to be spending more
money than it should.

I'm just interested in your perceptions. [laughter]
else will talk to Dr. Keene about his perceptions.*

Somebody

Research: Basic and Applied////

Chall: One of its responsibilities has been research; over a time, I
think it assumed that responsibility. I don't know who was
responsible for the research prior to that. However, research
goes back a long way.

Cutting: Yes. A certain amount of the dues is allocated to research. It
needn't be a Central Office function; it actually isn't. It is
allocated to the regions, though there is a certain fund that the
president likes to have to use for whatever he wants to spend it
for, toward research, or public relations, or what not.

Chall: How do the regions handle it? Is it handled by the regional manager,
or is it divided with the medical group in some way?

Cutting: It's handled through the hospitals. It must be handled through
a non-profit organization, so it is a function of the Kaiser
Foundation Hospitals. As such, the board of directors, I suppose,
it being a Central Office function, is responsible for it. But it
is the regional hospital that develops the protocols, reviews the
protocol for research, then makes the applications to the government
for outside grants, and coordinates inside monies and outside grants,
and so on, for priorities of research.

Chall: I was interested in noting, when I went through some of the papers
in the Kaiser collection in The Bancroft Library, that Dr. Garfield
was asking for research monies as long ago as 1943. He asked the
Permanente Foundation for monies to do some research on new methods
for the cure of syphilis, for the publication of a medical journal,
for care of the sick and destitute coming in ill before they got
their jobs, and more. This all had to do with the health plan, plus,
research. He asked for funds to cover it and did get close to
$50,000.**

*See interview with Clifford Keene, M.D., The History of the Kaiser
Permanente Medical Care Program, an 'oral history conducted 1985,
Regional Oral History Office, The Bancroft Library, University of
California, Berkeley, 1986.

**E.E. Trefethen, Jr. to Sidney R. Garfield, M.D., 1 November 19^3,
Henry J. Kaiser Papers, Series 2, Carton 22, The Bancroft Library,
University of California, Berkeley, (hereafter cited as TBL).
See Appendix, 108.

Chall: There was a lot of memoranda and letter writing because there wasn't
assurance that this was legal, so that the attorneys were in on it,
as well as Trefethen, and Garfield; it was a big problem. However,
he wanted also a preliminary study and analysis of a program for
rehabilitation of disabled physicians discharged from the armed
services.

The first edition of the publication of the Permanente
Foundation Medical Bulletin came out in July, 1943, with a report
on appendicitis. This was sort of in-house research, in a way, as
to what you were all doing.

Cutting: The first one was, I guess in '43, probably. We had an excellent
bulletin going there for a number of years. They're all in the
library. Dr. Collen was the editor of that. We all contributed
articles to it. Yes, that would be research.

Chall: Of a kind.

Cutting: Eleemosynary or whatever you want to call it. [chuckles] Not, I
guess.

•Chall: Not exactly.

Cutting: Not exactly research. Charitable? I guess research.

Chall: Now, your material was sort of in-house, I think — what you were

doing, like the report on appendectomies, major and minor surgeries,
and whatever else there might have been of interest to the physicians.
In 1945, I see that Clifford Kuh reported on the value of the
periodic health exam, which is always something that you were
concerned about.

Cutting: That was before there was a Central Office, as it were, that was
the foundation, which was part of the hospital.

Chall: There were also, in your various annuals, reports and articles on
research .

Cutting: I've been intending someday to write a report on our research,
because I think we've done a lot of excellent research.

Chall: Yes. The Kaiser Foundation Research Institute, was that founded in
1958?

*Kaiser Foundation Medical Care Program, 1960, p. 7, lists various
research projects and where they are located.

Cutting: In Richmond?

Chall: I'm not sure, I don't know about that. I took this from the annual
reports of 1960 and 1961. Weren't you an advisor for the Kaiser
Foundation Research Institute? I find a clue in there somewhere.

Cutting: I was a medical director of it, or advisor, after I retired — 1976,
'77, and '78. The research institute was established, yes, as far
back as — you said 1958?

Chall: Yes.

Cutting: I think that's probably about right. The formal research institute
started in Richmond, as a facility for basic research. They were
studying DNA — nematodes, and all kinds of non-clinical, basic
subjects. That was disbanded after ten years, I guess.

Chall: The research institute?

Cutting: No, that basic research was discontinued. The title of research

institute remains today, of course. They're meeting next door, that's
the Institutional Review Board for the research.

Chall: But that is handled now through the Central Office?

Cutting: That's regional.

Chall: Oh, I see, so your own regional group is meeting?

Cutting: Yes.

Chall: Dr. Collen did a lot of research, too, with respect to medical

methods, and the multiphasic testing, and all of that sort of thing.
Was that done under the auspices of the research institute? Well,
actually, it's not basic research in the same sense that the other
was.

Cutting: Not basic research. That was applied research, you might call it.

I might carry on the story of San Diego. Dr. Collen, as I said, was
to be the medical director of San Diego. When that fell through,
instead of putting him back as medical director of San Francisco,
we put Dr. Smillie in that, and we created Medical Methods Research.

It happened at that time, a number of things coincided.
Computers were just beginning to come in. Automated technology;
the automated chemical analyses, laboratory technology, and so on.

Cutting: We had been doing multiphasic examinations before. Dr. Collen had
been primarily involved in that. Dr. Garfield had asked him to,
because the longshoremen wanted him to.

So Dr. Collen had been doing that. But here it looked as if
there was an opportunity to develop a really automated program,
combining special procedure of a multiphasic program — going from
one room to another, and doing it in a good procedural manner.
Combining that with a lot of automated and computerized height and
weight measures, and blood pressure, plus the laboratory program.

So that gave us a tremendous amount of experience, of source,
of patients going through this multiphasic program. We had some
that came in on their own, or didn't come in, and some that they
asked to come in every year, as a comparative study. We got much
of the money from outside grants for that, too.

So for ten, fifteen years, we have amassed just a tremendous
resource of material that still is being used to go back to see
what effect the pill had, what effect smoking had, and drinking,
and all the questions that were on the questionnaire, and in the
laboratory. We drew blood which is back in Washington now. They
bought it. Every once in a while, somebody wants some sample of
thousands and thousands of blood samples and serum. That is the
Medical Methods Research, and Dr. Collen is still involved in that,
and has amassed a very impressive history, and bibliography, and
is world renowned for his work.

Chall: The study of the so-called Medical Care Delivery System, I guess

that's been done by other doctors trying to establish the standards —
Dr. [Leonard] Rubin, and maybe others? — does that have any relation
ship to your own study on total health care?

Cutting: Not Dr. Rubin's. That is a quality assurance. There are two ways
of looking at quality. One is to go through a chart like a cook
book and see what the doctors have done, and rap their knuckles
if they haven't done so many blood tests, or taken so many EKGs for
a heart patient or something.

Dr. Rubin's idea isn't a cookbook, but a process. You find
an x-ray was taken in emergency; see what the emergency doctor read
as no fracture. The next day the x-ray man says there may be a
little crack in it. Did that report get to the doctor? Did the
doctor get to the patient? Was the process completed? If not, then
you can involve the nursing, the doctor, the whole procedure; so it's
exciting, it's fun, and it's worthwhile.

Cutting: The other, the cookbook kind, every committee spends all of its
time trying to agree on what should be done. They never can do
that. So that's Rubin's. Total health care is different. Do you
want to hear about that?

Publications and Public Relations

Chall: I do, but first I want to get through this business of the Central
Office or general administration. The magazine, the little paper
here, Planning for Health, comes out periodically. Volume II,
number 5, I saw in one of the Kaiser cartons. It was dated
January /February , 1957, so I assume it was probably begun in 1956.
What was the motivation for this kind of publication, and is this
a Central Office activity?-

Cutting: No, that's regional.
Chall: This is regional?

Cutting: Each region does its own. Wait a minute, they're beginning to come
out — they look like Central, at that.

Chall: They all have the same basic articles, and then there's material

within it that relates to the region, or sometimes it's just to the
area, like Hayward has its own information about its own staff and
facilities, similarly Oakland.

Cutting: It's regional. Planning for Health is northern California. Pulse ,
Portland calls it The Pulse, so it's regional. Health plan puts
them out. It was a way of communicating with the membership. As
the membership began to grow and get large, somebody came up with
the idea that we ought to do a better job of informing them as to
new facilities, and new telephone numbers. Communication.

Chall: What about all these publications that one finds in various Kaiser
clinics? They're also for members, are they regional?

Cutting: They are regional.

Chall: Who publishes those? I mean, within a region, and in what office,
who makes decisions about those little pamphlets, the films, the
recorded messages that you can get over the telephone? Where does
all that come from? Who does it?

Cutting: Nowadays they've got a public relations department in every hospital,
plus a regional central public relations, in 1924 Broadway.

Chall: Must have a good size staff there, too.

Cutting: Yes, they have. And they print out all kinds of things. There are
other publications.

Chall: I'm sure that these are just ones that somebody on the staff for
this project has gathered up for our files.

Cutting: Here is a Portland one, called The Pulse. And there are in-house

ones, ones directed not to members, but to staff, to hospital staff.

Chall: So that's a growth, of, you might call it a sort of regional
Central Office.

Cutting: Sure. Oh, yes.

Chall: How do you look at that?

Cutting: I think it's getting pretty bureaucratic. But I'm an old timer,
[laughs]

Chall: You have to go through too many layers in order to get something
accomplished? What do you mean by bureaucratic?

Cutting: I mean bureaus, too many separate organizations, which beget bigger
organizations. The public relations used to be somebody in the
health plan office that would take problems that arose from the
public, and patients, and so on. And it's grown to having editors,
and assistant editors, and probably fifty people in there.

In each hospital, now, there's a public relations person. And
maybe they do good; we've grown, we're awful big. But the larger
we get, the larger any institution gets, the more it tends to grow,
and the harder it is to change course. It tends to grow in the same
direction, rather than to conserve, or to change and contract.

Cost Effectiveness and Cost-Benefit Standards

Chall: In terms of how things work, the issue of cost effectiveness has
always been a concern of the health plan. It is, of course, of
tremendous concern, nationally, now. Dr. Garfield, according to

Chall: Dr. Neighbor's oral history, had what Dr. Neighbor termed "Garfield's
theory of the economy of shortages."* He gives a couple of examples.
I'll see if I can recall one.

He says that Dr. Garfield was concerned with the number of
patients that doctors saw. That if the schedule was such that
the doctors were kept very, very busy, that they would tend to
work better and harder, and get more accomplished — it's a more
efficient operation. I had been also told that Dr. Garfield found
at one time,, this was early, that blankets were being stolen. So
he instituted some such thing as one blanket per bed, so that nobody
would be interested in stealing blankets because if they did, they
would know that there would be no blankets for the next patient.

Of course, Mr. [Scott] Fleming and others write about the
business of the pencils.** But I think it's more interesting to
consider the theory of the economy of shortages from these other
standpoints; also from the standpoint of how many hospital beds
there would be per patient. Dr. Garfield was quite concerned
about that. And then there's the story about Mr. Day checking the
drains and the traps in the sinks. What's the theory of the
economy of shortages as you knew it from Dr. Garfield, and as you
saw it in practice?

Cutting: I never remember him checking the number of patients that a doctor
sees.

Chall: Is that standardized?

Cutting: Yes, by the physician group. A half-hour for a new patient,

fifteen minutes for a return, something of that sort; standard.
And then you can make variations. A doctor can ask for twice that
much or something, but there has to be some kind of a standard
because people who make the appointments have to know roughly how
much time to allow — you can't rush to a doctor each time you get
a phone call and say, "How long do you want Mrs. Smith?" So you
have to schedule.

Dr. Garfield was not looking over our shoulders as to how hard
we were working that way. As early as Coulee, he was looking over
our shoulders to see whether fellows were sitting out on the docks
smoking while patients were waiting in the waiting room to be seen.
He would give us hell for making patients wait.

* Neighbor interview, tape 5, side 2, 12-13.

**Scott Fleming, "Evolution of the Kaiser Permanente Medical Care
Program: Historical Overview" (Oakland: Kaiser Foundation Health
Plan, Inc., 1983), 14.

Cutting: I don't remember the blanket deal. I do remember how proud he

was when he got some whole set of stainless steel knives, and forks,
and spoons during the wartime. You couldn't get that. I've forgotten,
must have been fifty of each maybe. And within two weeks they were
all gone. Every nurse, everybody, had furnished their own home.
Sort of discouraging.

The economy of shortage, I would say, was in not building a
hospital too much ahead of time; or office space before you get
the members. Build your hospital as your best estimate, but
conservative estimate, and then if you got more members, why, you'd

have a couple of tough years before you could build again.
• .

So we would run a little tight on office space, a little tight
on beds, rather than building a hundred beds that we weren't going
to use for another five years. So there was an economy of shortage
if -you look at it that way, but —

Chall: Dr. Smillie has written that, during the 1960s, Garfield's cost
consciousness continued. The executive committee, he writes,
examined expenditures large and small. As an example of that, is
the purchase of scintillation cameras for isotope scanning.* How
does the medical group examine this kind of thing? Can it examine
such expenditures, and to what extent?

Cutting: The medical group determines whether we get what we want. Then
the dues structure determines how much of it we can get. For
instance, if we want a new cat scan: we've got one in Oakland,
but it's a couple of generations old, maybe; we'd like a new one.
Doctors there would say, "It's really time we got a new one. Hayward
got a new one, we want a new one."

The executive committee would vote — now the board of directors
of the medical group — on the recommendation of the regional hospital
administrator, Dr. [Walter] Caulfield. He will say, "I think it's
time that we should get a new one for Oakland," and the executive
committee will approve it. This all within the general constraints
of the budget, which is set in July for the following year. So Caulfield
knows about how much he can spend. Really the regional hospital
administrator is a relatively new job, within twenty years. [Gerald C.]
Stewart was the first one, and then Caulfield.

Cutting: The request might be for a microscope, or it might be buying electric
beds, or curtains for the hospital, or something. But as far as
medical equipment, and so on, that would be a doctor's request, which
would have to conform with the budget.

*Smillie, "A History of the Permanente Medical Care Group," 120.

Chall: So the budget is made up first, in terms of what? Is there

something set aside for capital equipment, like a new cat scan, and
things of this kind, money that's in reserve for such things?

Cutting: In establishing a dues structure, the first is the forecasted
membership, which tells you how many members. Then you've got
the members. Then you ask what is necessary. Are we going to
open up a new hospital? Do we need six more million-dollar cat
scanners, or something? And each hospital, each medical center,
will develop a budget, a request, and it'll come up and be sifted
through as to priority, and come up with a total amount of money.

Plus of course the wages and salaries that are forecasted.
An increase of 5 percent, 6 percent, or something. The union
people, therefore the others, will get it, the doctors will get it.
So it's all lumped into an amount of money, and you look at that
with the number of members. If the dues are way up here, you say,
wait a minute, we can't hike our dues, we've got to cut down, so
we go back to the budget.

Chall: Regular budget process in a large, organization.
Cutting: It goes up and then down again.

The Doctors and Idealism in the Medical Care Program

Chall: I wanted to talk to you about the differences in the health plan
let's say between the 1970s and the 1980s. I wonder if you have
seen a falling away from the idealism as the plan has matured, and
the membership is larger. Is the same spirit still among doctors,
as there used to be because there's no consideration of money
between them and the patients? The idealism de Kruif saw in the
1940s?

Cutting: Just what do you mean by that?

Chall: In the 1940s Dr. de Kruif saw a spirit, he called it the spirit of
the Good Samaritan, that was there among the doctors because there
was no consideration of money between them and the patients. And
that, of course, is part of your philosophy. I was wondering if
you still — as the plan is larger and doctors are coming into HMOs
because that's the way to go — find the same spirit, as you
knew it, among doctors who are coming in?

Cutting: Oh, I think it's still there. Yes. It may not be quite as apparent

as it was in a smaller group of fifteen or twenty doctors, pioneers. .
As you get larger, it does attenuate to a certain extent. I don't
think the Good Samaritan concept is particularly apt.

Chall: May not have been then, either.

Cutting: Yes. The comfort, the satisfaction, of being able to provide care
without worrying about the patient having to pay for each of the
services that you give, and on your side, not having to tally up
and count everything that you give; the ease and freedom to provide
what you want to provide is there, very much. That's why the
doctors join us, with that freedom of practice.

I think the realization that appropriate care is what we want —
we don't want inexpensive care, we want appropriate care. That's
the best care, and I think every doctor feels that very strongly,
just as much as we ever did.

Chall: Dr. Kay, in a speech that he made just a few months ago, said,

"I hope we will attract doctors primarily because of interest in,
and dedication to, our pattern of practice, rather than salary, as
I'm sure that our strength in the past and the future comes from
the doctors."* You agree with that?

Cutting: Sure. Sure. Salary is awful good these days, and it's getting
tougher on the outside, and we're doing a better job. Probably
more than we should. [chuckles] Again, old timer speaking, but I
think our physicians are selecting us because the amenities, the
freedom to practice, the satisfaction of working in the group, the
pride of working with other good physicians, is the thing that
attracts the good doctors.

Chall: How about the attitudes of doctors, as the pioneers no longer have
that much control? At one time, I think it was in the seventies,
doctors wanted to get into leading roles within the partnership.
You had long terms then, and I think the doctors were getting a little
restless. At least, some of them wanted to come into leadership
roles, and so, as you said, you did lower the tenure of executive
director and chief s-of-staff . What about these doctors coming in?
Were they an irritant to the pioneers? Or did you see yourselves
in those roles when you were younger and setting things up?

^Raymond Kay, M.D., "Kaiser Permanente Medical Care Program: Its
Origin, Development, and Their Effects on Its Future." (Presentation
before the Regional Conference, January 28, 1985).

Cutting: No, there are as many different kinds of doctors as there are

people in any other clime. Some are very ambitious, and some are
very talkative, and some are very quiet. There's a place for all
kind of personalities.

Chall: How do they find their places? You were not one of the leading
talkative ones in the early days, in the pre-Tahoe days, and
afterwards, and you gained your position because of your kind of
personality, and the role that you played. What about other doctors
coming into the so-called team. Who wins out? How do they find
their places, whether they're exacting, whether they're quiet? Do
they all find a niche somewhere, or do you lose some?

Cutting: I'm sure we lose some good possibilities. I'm sure some that we

take because they seem more apparent, are not necessarily any better
or as good as some that are quieter. On the other hand, there's
room for the aggressive, the active. It ' s a matter of selection in
life. I don't know how one gets chosen this way, one way or
another.

Chall: But you do have the doctors coming in with all these various
personalities, and they find their places?

Cutting: Sure. Every doctor's different, just as any group of people 'are
different.

Chall: Was it difficult for the executive board to give up some of its
long term tenured leadership roles to this new group of doctors
pushing for power?

Cutting: No, I don't think so. It became apparent that probably a finite
term was appropriate. And they could be reelected; reelection is
possible, is usual, as a matter of fact, so far.

Chall: It's 11:48. I know you have to be at a meeting by 12:00.

Dr. Cutting's Post Retirement Activities in the Medical
Care Program ##

[Interview 4: March 21, 1985]

Medical Consultant, the Kaiser Permanente Advisory Services,
1976—

Chall: I think we're going to talk about your activities since your

retirement, and catch up on a few other matters we may have omitted.
Let's start with your responsibilities with the Kaiser Permanente
Advisory Services.

Cutting: The Kaiser Permanente Advisory Services was an organization that

was developed in 1976, just at the time of my retirement. Again, we
were bombarded by requests for help, advice, and so on, from a
number of clinics, people, organizations of various sorts, around
the country, looking for ways to start a program somewhat like ours.

They. wanted a quick fix, do-it-yourself kind of a tool, some
of them. Some of them were programs that had made a real effort,
and were finding that they were not getting along. Others were
just interested in knowing more about us, because they were considering
the possibility of starting such a program.

Chall: Were these the same kinds of groups that were coming in that caused
you to set up the Kaiser Permanente Committee, or were these people
asking different kinds of questions?

Cutting: These were a little more specific. The ones that we responded to

were the ones that really had something going in interest or actual
attempts. The ones that we responded to, to originate the Kaiser
Permanente Committee, were more apt to be foreign visitors and
general people. But the KPAS group were specific little groups
that were trying to really look seriously into starting a program.

Some of them had. One of them particularly had something
going pretty well except that the health plan manager and the
medical director couldn't stand each other. They couldn't stay
in the same room. And it was pretty obvious that they had to do
something between themselves before they were going to get a program
that would be viable.

Cutting: Other medical groups were thinking about developing a program. They
had a long way to go because some of the physicians in the group
really weren't too enthusiastic about it. They knew nothing of the
marketing or the way to establish the prepayment program; forecasting
budgeting, and things of that sort.

As medical consultant, I was a doctor of a two-man team.
Chall: Who was the other person on the team?

Cutting: The other man was John Boardman. He died not too long ago.

Beautiful fellow. Soon after that, Bill Slayman joined us, a
third person. He had been a health plan manager in Cleveland, and
had a long history with Kaiser Industries. He knew public relations,
and so on. So we traveled around the country, and it was a very
interesting number of years.

It is still in existence, though in the last few years it's
tapered down considerably. It was supported by Kaiser Family
Foundation.

Chall: The rise of these requests, did they come after the legislation for
HMOs, and that kind of change?

Cutting: I'm sure that was a stimulus. It began to give the whole idea a
little more credence and acceptability.

The Kaiser Foundation Research Institute, 1976-1980

Chall: Then you had duties as a medical director of the Kaiser Foundation
Research Institute. We discussed the institute the other day, but
I didn't know exactly what your own role in this might have been.

Cutting: More titular than anything else, perhaps. It was a very pleasant
few years. It was to supervise the research institute. It's
a program well organized, and can go on without any such person
pretty well, but it needs a physician as director. And since I
was at this time loose, having been retired from active practice and
administrative work, and not yet seventy, they couldn't quite put
me on the shelf, so I inherited that position.

Chall: This is when it was applied research?

Cutting: Clinical, applied research. Most of the projects were from the
northern California region, although the crew in the research
institute also managed the outside grant applications for other
regions; for the Vancouver /Portland region, or southern California
region, and so on.

Chall: Were you advising in that capacity?

Cutting: A little advice on that, but primarily it was related to regional,
northern California region.

Chall: How long did you do that?
Cutting: Four years.

Co-Director, Total Health Care Program, 1982 —

Chall: During the last decade or so, maybe longer than that, there has

been a change in medical practice, to some degree, with the use of
paramedics and nurse practitioners, and a little more movement into
the mental health field in Kaiser. You were telling me the other
day about being an old timer, and not being too happy about the
growth of the central offices, and I wondered how you looked upon
the use of nurse practitioners and paramedics in the medical field
here.

Cutting: I think it has exciting possibilities. There are places where the
nurse practitioners can do a tremendous job. There are places
where they have been a little disappointing.

Chall: In each case where, do you think?

Cutting: They have been very helpful in pediatrics, though in general the
pediatricians have been slow in accepting the idea of using nurse
practitioners. I think because so much of the pediatric practice
is really nursing to the baby, sort of, it's almost a nurse
practitioner's role. In outside practice, I'm sure they use
nurses, not even nurse practitioners, to a great extent in the
pediatrician's office.

In the Ob-Gyn department, prenatal workups and prenatal
following is an excellent place for nurse practitioners. For
physical examination — they do a perfectly satisfactory general
physical examination. They can evaluate, can follow their patients.

Cutting: They do an excellent job in health education, and can give the
attention to the non-sick patient's problems; the stress, the
marital problems, the smoking, the obesity, and so on.

A general physician will tell a patient to stop smoking, but
that's about as far as he goes. Whereas, the nurse practitioner
can spend more time discussing reasons, and introducing health
education programs, and so on. The nurse practitioner is not
equipped to take care of the really difficult diagnostic and sick
patients. Therefore, she turns her energy and her interest to the
health maintenance side.

The problems with nurse practitioners is that they do take
more time with patients. Their costs are lower, but it pretty
much washes out as far as economy is concerned.

Chall: In terms of the patient, preventive care is what you used to stress
in the early days. Does this fit into the preventive care aspect
of the health program?

Cutting: It certainly can. We've got it in varying degrees in all of our
medical centers, some considerably more than others. Again, it
depends primarily on the interest of the physician in the medical
center, to spark the new idea, the new concept, of medical care.

Chall: Is the problem at Kaiser still one of accessibility of the client
to primary care? This, I see, is discussed practically from day
one. It has always been an area of concern.

Cutting: There's no question but what it is a problem. I think it ' s a
problem of any physician's practice, but, as you enlarge the
membership, enlarge the mass of people that you're taking care of,
it becomes more acute. The telephone system begins to break down.
In the past, in history, we have used up the entire telephone
system of the entire Walnut Creek city, for our hospital. And they
gave up, they can't do anything until they get some more equipment;
so that it's a tremendous, massive problem, just the pure
telephoning.

We always can take care of the acutely ill patient in the
emergency departments open twenty-four hours a day. We can always
take care of the urgent patient, through emergency or through a
drop- in, or a non-appointment program, if a patient really needs
care. The patient who calls up and wants a physical examination
can be kind of startled if it's two, three, four months down the
line. It seems horrendous. And yet it really is perfectly appropriat
although we would like to have it much quicker, better accessibility
than that.

100

Cutting: So the problem of accessibility depends really upon the acuteness
of the need. We think that we can adjust to that pretty well,
although it's not always highly satisfactory from the patient's
standpoint.

Chall: With all of those little pamphlets and things that we looked at

the other day, in which this kind of information is available, is
that sufficient? If a member learns to use the system properly,
then is the fact that you have to wait three months for an
appointment — that kind of accessibility — a problem still?

Cutting: No, once the patient learns to use the system, I think they do very
well. They have attached themselves to one physician, one primary
physician, and he can explain that he wants to see them in six
months again. He remembers the patient if the patient calls up.
The patient can get to that doctor, the doctor's nurse, and there
is personal accountability there, so that they can come in and be
seen. It works very well once the system is understood.

Chall: Yes. Is what you're telling me what Dr. Garfield was speaking

about in 1974, and at other times — what he called the "new medical
care delivery system approach." He claimed it was a great deal
better and less expensive than the current approach to medical care.
"I would urge you, "he said, "to get on with it as soon as possible."

This was his speech that he made to the executive committee
of the Permanente Medical Group, on April 24, 1974.* You and he
and Dr. Collen spoke. What was he talking about?

Cutting: Dr. Garfield, for years, has said that we've got a sick plan, not

a health plan. That we can be pretty proud of the organization, the
prepayment to a group of physicians and hospital, to provide care
under the prepaid, group practice, mode. It reverses the usual
economics of medicine; the sick patient is the liability, and the
well member is the asset, but we don't pay as much attention to the
well people as we should because they're the ones that really support
the program.

He pointed out that the membership is a mixture of sick,
asymptomatic ill, of the worried well, and the well, and what we
do is to mix them all together and dump then into a sick care
system. They have to be shuffled around in a rather inappropriate
way, an inefficient way, to get to the appropriate care that they
need. Wouldn't it be better to identify their needs before we
dumped them into this system?

*Garfield, et al , "Historical" Remarks, 6.

101

Cutting: We know that 60 percent of the doctor's office visits don't require
the expertise of a physician. Therefore, a physician spends half
of his time trying to find something wrong with well people. He
doesn't have any time left to really spend, with interest, in the
health maintenance, in the habit, the lifestyle changes, the
health care, health education side. So let's identify the needs
of these patients before they come in.

Ideally, the multiphasic screening program, with the health
questionnaire, provides a good base view of the needs of the patient.
That, together with a physicial examination. Why not have the
physical examination be done by a nurse practitioner, who does a
perfectly adequate examination? There would be a primary care
physician next door to refer and to consult with, who would take
care of the sick patients that come through.

This would make the nurse practitioner, the provider of care,
the captain of this patient's care. She will work out with the
patient a program for continuity of care, put that into a computer
, so that there can be monitoring of compliance of the treatment as to
the months and years. Add to that a health education department,
where the nurse practitioner can send the patient, not across the
street or down the -corner, but right next door, right in the same
department.

So a patient can't help but go through the health education
department where there is real attention again to stop smoking, or
where there are pictures of why, and what happens, and through
which a patient can begin to get some impact. Not just tell a
patient to lose ten pounds, but a place where there would be
instructions on diet and nutrition, and so on.

This would comprise a health hazard appraisal program, breast
examination programs, and so on, so that you have a key to a
patient's general health. Add to that a mental health consultant
that can help the nurse practitioner develop an ease in talking to
patients about psychosomatic problems, and also to make an easy,
informal referral to the mental health counselor, rather than having
to make a formal phone call to the psychiatry department, which
people don't like to do very much. Here is, again, a mental health
counselor right next door, on the same team.

Chall: Has that worked out? We've already talked about some of these

things happening, without calling it by name. Is this Dr. Garfield's

Cutting: Total Health Care Program.

102

Chall:
Cutting:

Chall:

Cutting:

Chall:

Cutting:

It has been developing.

It's been in progress now for three years, and it's worked very
well. The actual program is based, as a research project, in that
new members joining the Oakland area are divided on a random basis
between two groups: the Total Health Care group, and the
traditional medical group. The traditional goes their usual way.
When they want to see a doctor, they call up, and try to get into
the system.

The Total Health Care group, the major group, are contacted
by letter, encouraged to come in. We want to see them, and we give
them an appointment for the multiphasic program, to start them
in this Total Health Care outreach. It's too early yet to give
any very hard statistics, but we do have an extensive evaluation
program going on — that's the research part — trying to identify the
utilization, the satisfaction, the accessibility, the terminations.

We find that during an open season, it looks as if fewer Total
Health Care members terminate than traditional. Of course, the
other question is the cost. Eventually, we'll know better about
mortality, but that's way down the line, if we ever get there. So
much of it is difficult to put down in figures, but we are trying
to get as objective an evaluation as we can.

So this is your work as investigator of the Total Health Care
Program that you are now doing. And you and Dr. Garfield were
co-directors, or co-workers.

He was primarily doing it. He gave me the title because I was
interested and talked about it, but he was really running it. When
he died, it fell onto my shoulders. I've had to pick it up.

How did Dr. Garfield take his ideas and get them out there so that
they could be tried? With whom?

It's not easy. There is a lot of inertia in a medical center. In
a medical department, most physicians tend to be satisfied with
the status quo, and you have to find someone who's willing to take
a challenge, to try something new. Dr. Robert Feldman was the
doctor that Dr. Garfield worked with, he's been managing the clinic.

The two of them together developed it with the concurrence of
the administration, hospital administrator and physician-in-chief
Dr. [A. Joseph] Sender, in Oakland. The research is largely
supported by the family foundation, with additional support from
Central Office, Mr. [James] Vohs' private kitty, and some from the
northern California region Mr. Steil, and Dr. [Bruce] Sams.

103

Chall: I think it's quite interesting that Dr. Garfield always had an
innovative approach, even as he grew older and the health plan
became established. Perhaps it was because he wasn't caught up
in the establishment, day-to-day, that he was outside enough to
be able to look at things from a different perspective. But he
didn't lose that creative touch, did he?

Cutting: He certainly did not. Idealistic, enthusiastic, persistent. He

worked day and night twisting arms, and doing everything necessary
to further a trial. Some of the things are probably so idealistic
they won't really hold water, but you never know. Certainly without
trying you won't get anywhere. A motivated, tremendously innovative
man.

Chall: And he obviously could motivate others?

Cutting: He had a very persuasive, quiet, shy way of twisting your arm.
[laughs]

Chall: So as the present investigator of the Total Health Care Program,
do you have to carry on arm twisting, and prodding the same as
Dr. Garfield did? How is your working relationship with Dr. Feldman?

Cutting: Excellent. Good.

Chall: So he's a pioneer in this sense?

Cutting: Yes.

Chall: There are always pioneers, you just have to find them, I guess.

Cutting: That's right.

Chall: And you're starting this, the pilot program in Oakland, and not
moving it into Hayward, or Fremont, or other centers?

Cutting: We are asked to give a report of it next week in Richmond, and the

week after that, or two weeks or so, in Fremont. Santa Clara started
a similar program when the San Jose, the Santa Teresa group started
a somewhat similar program. I haven't caught up with them in the
last couple of years to know what they're doing now.

Dr. Mott, when he went to Sacramento, started the multiphasic
program, and parts of the so-called Total Health Care concept.

Chall: Is he retired?
Cutting: He died.

104

Dr. Cutting Reflects on the Kaiser Permanence Medical Care Program
and His Parv in It////

Chall: Have your ideas about the plan changed over the years? Or have
they just been extended, from the time you started until today?

Cutting: Oh, I think the fundamental principles that were identified early
are still as valid as they were then. They can occasionally be
modified for a while, but the best combination is what we had in
the beginning, and what we have in the best of the organizations
today.

I think it's remarkable. Sort of like the constitution of .
the United States, it's stood the test of time surprisingly well.

Chall: Do you think that Kaiser Permanente, the health plan, has suffered
as a result of size, and if there's a limit which affects the cost-
benefit ratio to the detriment of the patient and the doctor?

Cutting: No question but that size tends to attenuate the spirit, the

motivation, the enthusiasm, perhaps. This isn't a necessity, but
it usually happens with any institution, I think. The larger the
institution, the more difficult it is to change, to adapt to
changes. And certainly medical care is changing in the country,
so, even though our principles are the same, we have to adapt to
changing competition, to requirements for benefits and things of
that sort. Changing technology.

A one-hundred bed hospital with twenty-five or thirty doctors
which can develop an esprit de corps, an enthusiasm, a pioneering
spirit dedicated to an identified, particular group of members,
would be ideal. As you get bigger, it becomes more difficult.
Training personnel: receptionists, their attitudes, nurses'
attitudes. The union's influence in a large institution has real
effect, a different influence.

The so-called Hawthorne Effect of a small group, enthusiastic
pioneers, is a real true factor. If we could develop that in a
hundred different little Hawthorne groups of enthusiasm, it would
be ideal.

Chall: Tell me about the Hawthorne Effect, I haven't heard of that.

Cutting: I don't know much about it either, but I know there's a so-called
Hawthorne Effect. That is the spirit that can be developed in a
small group of people that is there only because it's small, because
it's pioneering, because it's something new. And when it gets old,
it kind of fades off.

105

Chall: I see. Dr. Neighbor lamented that in his oral history in 1974.*
He felt it keenly, and I don't think that I've seen it discussed
in anybody else's interviews. Dr. Garfield might not have
expressed it, because he was always looking ahead. But Dr. Neighbor
did feel it keenly.

Cutting: I've always wanted to develop a program with a module, a small
group of our physicians, much like the Total Health Care, not
necessarily nurse practitioners, but maybe some. Two or three or
four primary care physicians would have a certain group, maybe the
hod carriers, or something of that sort, as their group, and they'd
be proud of how they could take care of that particular group.

Then you'd get interested in what their occupational problems
were, and their home life. It would be to me a more meaningful
kind of a group. I'm going to keep on working along that line for
a while.

Chall: Let me ask you one final question. In terms, over the years, of
your friendships, they remained strong with Dr. Garfield and
Dr. Neighbor, I assume.

Cutting: Very strong.

Chall: Where did you find your other friends? Were they within the group
here, I'm thinking of the health plan people? And were they mainly
with your original pioneers, or did you branch out to some of the
younger people?

Cutting: Oh, I have a vast group of friends.
Chall: In and out of the program?

Cutting: In and out of the program. I think our best friends, as it were,
were Dr. Garfield and Dr. Neighbor. Good friends with Dr. Olson,
who was at Coulee when we were there. Dr. Moore, the Moores, we
were classmates. He's dead now. A good many of those old friends
are gone, I'm afraid.

Chall: That's true.

*Neighbor interview, tape 5, side 2, 12-13.

105a

San Francisco Chronicle
October 29, 1985

Mildred Cutting

Mildred Rignell Cutting, a reg
istered nurse who worked alongside
her husband, Dr. Cecil C. Cutting, in
helping to establish the Kaiser Per-
manente medical program, died at
her home in Oakland last Friday
after a long illness. She waa 73.

Born in San Francisco, she
graduated from Girls' High School
and the Stanford School of Nursing.
In 1938, she and her husband Joined
with Kaiser Permanente's founder,
Dr. Sidney R. Garfield, in establish
ing a prepaid medical care program
for workers building Grand Coulee
Dam in Washington State.

Dr. Cutting was chief surgeon
and Mrs. Cutting was a registered
nurse at Mason City Hospital near
the dam site.

At Grand Coulee Dam, the Cut
tings met industrialist Henry J. Kai
ser and his son, Edgar, who were
among the contractors on the pro
ject. Early in World War II. the Cut
tings Joined Garfield in organizing a
prepaid medical care program for
Kaiser shipyard workers in Rich
mond.

Mrs. Cutting served as an aide
to Garfield during the establish
ment of the program that served
more than 100,000 workers and
their dependents at the peak of Lib
erty Ship construction.

After World War II, Mrs. Cut
ting began nearly 40 years of com
munity service as a volunteer at
Kaiser Foundation Hospital in Gate-
land. Her husband became the first
executive director of the Perma-
nente Medical Group, the nation's
largest group of doctors who pro
vide medical services for Kaiser
Permanente members in Northern
California. Dr. Cutting retired in
1975.

Kaiser Permanente now has
millions of members in California.

In addition to her husband of 50
years, Mrs. Cutting is survived by a
daughter, Sydney Cutting Ruegseg-
ger of Clements (San Joaquin Coun
ty), a son, Christopher, and two
grandsons. There will be no ser
vices. The family prefers contribu
tions to Volunteer Services, Kaiser
Foundation Hospital, Oakland CA
94611.

106

Cutting:

Chall:

Cutting:

Chall:

Cutting:

Chall:

Cutting:
Chall:

We have lots of friends outside of the program. The neighbors
where we lived, and so on. Mrs. Cutting made lots of friends in
the neighborhood, through the kids at school, their parents.
Doctors' wives, doctors, down the line.

I understand in the early years the doctors' wives, because they
weren't accepted in the medical auxiliary, were part of what was
known as "Garfield's Girls," and that your wife had many of their
socials and meetings in your home.

Yes, "Garfield's Girlies" were a very active bunch, and I think it
played a very important cohesive role in the early days. Their
picnics and their sales — garage sale type of things, and all that
sort of thing.

Mrs. Cutting was extremely active in a lot of areas in those
days. She actually hired most of the help during the wartime, and
found housing for most of the doctors during that time. She drove a
station wagon between the Oakland Hospital and the field hospital
and first aid stations. When our purchasing agent was drafted in
the army she had to learn purchasing. She was —

A very capable woman.

She was an active gal.

Now, is there anything that you would like to say to sum up?
there something on your agenda that we haven't covered?

You've done a pretty good job. It's been a very satisfying,

fulfilling life. I think it's been very interesting to go through

the cycle of being questioned, and ostracized, and criticized, to

being respected, and emulated, and challenged by competition.

Well, if there's anything else you find you want to set in there,
you can do that when you're reviewing. Thank you for your time
and for your thoughtful and candid interview.

Transcriber:
Final Typist:

Michele Anderson
Keiko Sugimoto

107

TAPE GUIDE — Dr. Cecil Cutting

Interview 1: February 26, 1985
tape 1, side A
tape 1, side B
tape 2, side A
tape 2, side B

Interview 2: March 6, 1985
tape 3, side A
tape 3, side B
tape 4, side A
tape 4, side B

Interview 3: March 19, 1985
tape 5, side A
tape 5, side B
tape 6, side A
tape 6, side B

Interview 4: March 21, 1985
tape 7, side A
tape 7, side B

1
1

11
21
30

35
35
44
52
60

69
69
77
85
92

104

APPENDIX

108

•ovemfeer 1. 1949

Sidney 1. Oarfield, H. D. ,
yermmsmte Foundation Hospital,

Oakland 11, California.

Dear Boo tor Oarfloldt

This will confirm and iauHlsment tho understand

reached la cmr prcrloua ii»e*«xiaa* oeeeeraiag the carrying
out of aortal* pi'Oggmmo aatfeeris** fey the trustees of The
P«nMB«it« PowMUUoa. At our •*•*!>* witfc JMI «• July
e«rtaia pro j««t» W«T« diao««a*4 oA »

oj§ eottT«rwao»« h*T» te«a told with yww

b««n ctart«d. In «rrd»rf hovtmnr, that •• may hat*

,
IB rogwrd to this work:

1. Th» troat««« of tho Fov&datiOB hato «athorlsod
dlsborooMoat of tho following ••nnuta for caorryln^ on tho
following aetiTitloa:

(*) Tho am of $25,000.00, for tho pnrpooo of
obtaining tho noooosary oqaipaont and for tho training of
por*OBDj»l and for tho ootabliabaont and oporation of a clinic
for tho intonaiT* troataont of CTphilia in tho Saat Bay aroa;

(o) Tho ran of $10,000.00, to eoror tho axponoo of
••dieal troataont and hoayitallsation of war »ork»r», particu
larly in tho •hipyards, who ha*» oomm to this locality and
who, bofor* obtaining OBployaont, hai« OOCOMO injvrod or «lok
and aro unablo to prorido for thoir own modieal troataont;

(o) Tho nm of |5tOOO.OO, for tho porpoao of mak
ing a •tatifttioal «t«dy of tho evaluation of tho aodioal oaro
progroji in varloua

(d) Tho •« of 15,000.00, for tho purpoo* of
ing a preliminary atvdy and analyai* of a progron for tho
habilitation of diaablod phyaieiana diaehargod from tho
aorrieoa;

(o) Tho rat of $8,500.00, for tho ptcrpooo of pur
chasing supplies for oeonpational therapy program, for injured
and disabled shipyard employees.

109

Sidaay H. Qarflold, I. 0. -8* IoT««**r 1, 1949

8. In cmr proTioma 41 MU« «i on* 1% was <Ueid«4 that
tO tho fsat that yOU now *a*0 *YailA*lo at tha

Fouadatiom lowpital a staff vha aaa «arry on tha

witn you for carrying out thos« pro grass. «•
that at tha proaoat timo a largo portion or tha program o«
bo oairlod OB by T»^LOU* •••baya of y*»^y ata^Tf ca a pajrt^tJjM
baaia is eow^mctloa with tbair atkav dmtiaa, aaA that tn thia
way Mbataatially graatav raaalta o«n to aatatnad fr«a th«
ftm4a alloaata4 t2uoi by tattiac up a aaparata organisation la
tha FoortatiaB to aarry o. thia work. ?feia will alaa> vaaalt
la a aatarial •I'inmaif la ••miny. At a latav 4ata
of thaaa progr«Jae hioiiaa acra folly davalaya*!, it atq
eoa» adrlaahla for tha yoMaditlaa ta Mt «» am aatiyaly
rata ayganlsatjon to eontlnno thia work. Tor tha abovo
raaaoaa, «a vaggaat that ttba folloviac ^i-oooduro ba adaytad
for tha tiaa baiac *ai on til fnrthar aotiaa fraa aa that a
diffaraat arraanaaat ahall ba aada*

(A) SYPpLia

C. 1. Fria«l«f •• D«> «ad Miaa W. Ba«k hara
Mlactad to orgaaixo tha elinio, and hava baaa aaBt to Chi
cago for a pariod of from oaa to two moatha for training la
thia work. lha Foundation will eompoaaata you for thoir
•alariaa aad axpoaaaa doriac this pariod. Upom thoir rotara
you will proparo aad cubmit for oar approrml tho plaaa for tha
clinic and tha oqaipmoat liat whioh upon approval will bo ordar-
•d for us «ad at our ooat* Aa aooa aa poaaibla tharoaf tar you
will submit to «a a prowaaal for tha oporatiaa of tho oliaio
olthar undor am arraacamoat wharaby yon will oporata tha eliaia
for us at our ooat or uador aa arraagismaat wharaby tha oliaio
staff will bo oarriad aa a aoparato orgaaisatiom, waiohoTsr
srrsagamoat shall pro^o tha moat offioiaat sad praatiaal.
With yo«r proposal for oporatioa you will also submit a budgat
for ostimatad montti'ly oporatiag ooata, sad at that tima wo
will dotoraiao tho msthad of oporatioa sad sllooata oporatiag

(B) TB"glTffJBff OF IHDICHOIT

It is uadorstood that you will proTida modioal 01
sad hospitslisatioa for suoa workars sad will bill tho Fouada
tioa for tho ooat of suofe sorrloos at your rognlar ratoa.
Waors possibla, tha eligibility of tho patiaat for troataoat
uador thia program will bo dotoraiaod prior to somisaioa to
th.» hospital or oliaio, sad wo will pro-rid* tho sorrioos of

110

Sidaay *• 3*rfi*ld, 1. D. -*- loraabar 1. 1943

«i adaiaiatrator &t tha ho*pit*i vmo will paaa upaa tha
bllity •* th* ?*tl4nt«. It la T««rtaji1wii, how«T»r, that 1%
ia not p«*ai»l« «r pr*0ti«*l la all laataaaaa ta dataralaa
tha atatoa of tha patiaata prior to traataant, aad yaa may
tharafara raadar bill* t* th» Fowndatiaa for tha traafeaaat or
patiaata waaa jwt »olia*o avo oatitlaA t*

of allglbllity, alt^cmch tl^Lr
adadaaiom, aa4

»t ilawmriaad prior ta adalaaiaa, aad if,

•llCibla. raiaawaaaaa* will ba aada far
far tha* ia tha aaaa aaaaar aa if thair
had baaa proTiamaly apprarad. It ia wndar
ataod that tha FouadatiaB aaa allaaatad aa aaowat af il.CCX3.oo
a aaath far thia parpaaa, bat that futhar aaaa ia taa diaai
tiaa of taa twataaa aay ba aaaa arailabla*

va baaa oaplajad at a aalarr of flM.OO aa4 |19O,OO a aaata,
raapaatiTftly* ta prapara praliainarj data for taia pi'tigraa.
It ia ntaaratoad that jom will bill oa aoataly for taa aala-
riaa of thaaa tva atatiatioiaaa. Thair praliainary amrraj
vtaaa coxpletod aball ba a«baltta4 to tha Fowadatioa, toffathar
with roeawjaaadatloaa for tha aaaaar ia vaieh tha work aball
ba ooatianad. At that tiaa fttrthar approTal for tha earry-
iag oat of tho yroggaa will b«

(D) P*wT.T»TWMCr gTgPY AID A1ALT3I3
FOR KBaiBIUTATIQl OF

PBOM

Or. Koa, Dtp. Jaaaa aa4 Dr. Rioa ar* daTotia* a
partioa of thair tiaa ia aafciac a proliaiaary atody of tha
aataada by whioa a pja^aa far tha ra&abilitatioa of diaablad
phyaioiaaa aay bo «arria4 oa. Wa azpaot that this pragraa
will bgnoaa a aajar paat-war procraa of tha treat, and at thia
tiaa it ia daairad ta prapara tho praliainary work ta aaka
thia profrsa •ffa«tif« at tha propor tiaa. It is tsndaratood
that yom will bill ua aoathly for th« tiaa of th* doctor*
•paat ia thia work.

(X) OCCgFATIQlAL gngLAPT PROGRAM:

A liat of woppliaa for tha oaeupationAl tiiorapy
pgogjfaa of patiaata at th« boapital baa haratoforo b««a aub-
aittad aad haa boaa avpro^iad. Th» aaa involved in thia liat

Ill

Sidney B. 0«rfi*ld, I. D. -4- loroafcir 1, 1948

it* to aoproxiaatoly $1,000.00. It i« ••iantiml that

«Fpli*« of th* MM n*t«r« will b« p«raaaoo4
for tho MtoaoJ of mo ToojaaatiOB to ooanry fowavd thi*
). Iho total oooatt ftllooato* for t*a«, boootor, !•
to IS.SOO.OO.

It ia fiuUfcor m4orotoo4 tkot aomtkly roporto will
ttw to tte FiMiiUoa. to Iko attomtioa of 4te
«poo oil of th» forocoiAf Mtirlti**, and
of tho foroflolBC «rroBflOBomta m*j oo ao41flo4
OA at orr

If tho forogoiac aooto with 7007 approval, will yom
kindly »i«» tad zotara to «o ooo eopy of this lottor.

B. B. Trofothom, Jr.,

112
BIOGRAPHICAL DATA

•

Cecil C. Cutting, M.D., is one of the pioneering
physicians of Kaiser Permanente. Dr. Cutting was Chief
Surgeon at Mason City Hospital on the construction site of
Grand Coulee Dam, where a group practice prepayment plan
was developed for Kaiser workers and their families. In
1942, Dr. Cutting became the first Chief of Staff of the
Permanente Foundation Hospital in Oakland, and in 1947, he
was elected a Director of The Permanente Medical Group.
He served in both capacities until 1957, when he was elected
Executive Director of The Permanente Medical Group, holding
this position until his retirement in 1976. For the next five
years, Dr. Cutting was Medical Advisor to Kaiser-Permanente
Advisory Services and Medical Director of Kaiser Foundation
Research Institute.

A graduate of Stanford University and the Stanford
University Medical School, Dr. Cutting interned at Stanford
Lane Hospital in San Francisco. He fulfilled his resident
training in surgery at Stanford Lane Hospital and San
Francisco City Hospital. During his tenure as Chief of Staff
for TPMG, Dr. Cutting also served as a Clinical Instructor in
Surgery at the Stanford University Medical School from 1943 to
1945.

113

INDEX* — Cecil C. Cutting, M.D.

Advisory Council, 54, 59, 63.

See also Permanente medical groups
Agnew, George, 9

American Medical Association, 11-12
Ash, Donald, 25

Babbitt, Hal, 8, 66

Baritell, A. LaMont (Monte), 15, 24,
26, 39, 40, 41, 49, 51, 57-58, 63
Baroni, Peter, 36n
Bayse, James, 36n
board of directors. See Kaiser

Foundation Hospitals/ Kaiser

Foundation Health Plan
Boardman, John, 97
Brammer, Verne, 70

Dannenberg, Thurman, 35

Day, W. Felix, 39, 49, 69-72, 76

de Kruif, David, 29-30, 78

de Kruif, Paul, 28, 30, 32, 93

Denver, Colorado, KPMCP in, 83

De Silva, Joseph, 54

doctors

idealism of, 93

selection of, 34-35, 95

See also Permanente medical groups
Drobac, Martin, 76

Eden Medical Group. See San Leandro

Kaiser Permanente Clinic
Ekhart, George, 29, 78
Erickson, Robert, 83

cardiovascular surgery in the KPMCP,

Caulfield, Walter, 92
Central Office, 83, 84-85, 102
Cleveland, Ohio, KPMCP in, 80-82,

Collen, Morris F., 15, 21, 24, 27,
40, 41, 49-51, 57, 58, 63, 70-71,
86, 87-88

Cook, Wallace H., 42
Coulee Dam, Kaiser Company medical

program at, 4-12, 91
Cutting, Cecil C.

as administrator, 65-68, 73-74, 81
committee memberships, 40-41, 57,

education, 1-3
ideas on centralized administration,

84, 90

non-medical activities, 105-106
retirement projects, 96-103
as surgeon, 28, 64-65
Cutting, Mildred, 6, 10, 14, 18, 106

Fabiola Hospital, 14-16, 20. See
also Oakland, Kaiser Foundation
Hospital in

Feldman, Robert, 102-103

Fitzgibbon, Paul, 18-19, 24, 36,
40-41, 49

Flint, Thomas, 31

Friedman, Melvin, 24, 40, 41

Garfield, Helen Chester Peterson
(Mrs. Sidney R.), 17-18

Garfield, Sidney R. , 4-9 passim, 12,
14, 15-16, 17-18, 19-20, 22-23,
24-25, 30, 31, 32-34, 36-37, 38,
40-42, 44-51, 56, 66, 72, 75-76,
80, 85, 88, 90-92, 100-103, 105

Garfield, Virginia Jackson, 16-17

Gill, Gerald, 15

Gillett, Ray, 4, 6

Grant, Donald, 15, 24, 36, 41, 64

*Unless otherwise specified, all place names are California.
Kaiser Permanente Medical Care Program.

KPMCP refers to

114

Harbor City, Kaiser Foundation Hospital

in, 54
Harbor Hospital (south San Francisco),

Haugen, Norman, 15, 24, 41
Hayward, California, Kaiser Foundation

Hospital in, 78

Inch, Thomas T. (Tod), 55
Industrial Indemnity Insurance Company,
26

Jones, Frank C., 76-77

Kaiser Permanente Medical Care

Program (continued)

expansion of, 80-82

financing for, 90-93

quality assurance, 91

total health care program, 98-103
Kaiser Permanente medical care

programs, regions and areas. See

region in which program is located
Kay, Raymond M., 24, 39, 43n, 53-54,

62, 73, 76, 83, 94

Keene, Clifford H. , 31, 39, 55-57,

63, 70, 82-83

King, Alexander, 25., 41
King, Robert, 20, 36, 40-42
Kuh, Clifford, 25, 86

Kabat Kaiser Institute, 37-39

Vallejo, 29-30, 39
Kaiser, Alyce Chester (Ale),

42, 44-45
Kaiser, Bess (Mrs

18, 34, 46
Kaiser, Edgar F.,
Kaiser, Henry J. ,

81, 97, 102

Kaiser, Henry J., Jr.,
Kaiser, Henry J., Sr.,

17-18,
Henry J. , Sr. ) ,

7, 8, 22, 73-75
Family Foundation,

28-29

15-16, 18, 19,

22, 24-25, 29, 33, 43-47, 54-56,
57, 61, 71, 73-75, 79-80
Kaiser Foundation hospitals. See city

in which hospital is located
Kaiser Foundation Hospitals/ Kaiser
Foundation Health Plan, 46-47
board of directors, 48-49
management, 55-56, 60, 63, 66, 70
See also Central Office
Kaiser Foundation Research Institute,

86-87, 97-98
Kaiser Permanente Advisory Services,

96-97
Kaiser Permanente Committee (Kai Perm) ,

81-84, 96

Kaiser Permanente Medical Care Program
(KPMCP)

1944-1950, 24-42
1951-1958, 43-68
1959-1970, 69-106

Lei, Beatrice, 25, 36
Liebgold, Howard, 38
Link, George E., '43, 58
Liu, , 28

Mead, Sedgwick, 38

Medical Care Delivery System, 88

medical groups. See Permanente

medical groups

Medical Methods Research, 51, 87-88
medical societies, relationships with

KPMCP, 19, 27-28, 30-32, 36-37
Merritt Hospital (Oakland), 15
Miller, Michael, 8
Moore, Richard, 4, 6, 12, 25, 29,

105
Mott, John, 29, 78, 103

Napa, Kaiser Foundation Hospital in,

26
Neighbor, J. Wallace, 6, 8, 10, 11,

25-27, 36, 40-41, 57, 105
nurse practitioners, 98-99

Oakland, Kaiser Foundation Hospital

in, 14-15, 20-21
Olson, Charles, 9, 10, 105
Ordway, Alonzo B. , 8

115

Packer, Samuel, 81

partnerships . See Permanente medical

groups
patent ductus arteriosus, surgery for,

Permanente Foundation, 16, 22, 54
Permanente Health Plan, 20., 22, 25, 26
Permanente medical groups, 55-56, 57-62
northern California, 25, 40-42,

44-53, 57, 62-63, 66-68, 69-79, 89,
92

southern California, 52-54, 73
Permanente Services Organization, 76
Portland, Oregon, KPMCP in, 89
publications and information, KPMCP,
89-90

Searcy, Geraldine, 6
Sender, A. Joseph, 102
Slayman, William, 97
Smillie, John S., 35, 43n, 87
Steil, Karl T., 75-77, 81, 102
Steil, Paul J., 39
Stewart, Gerald C., 92
Stollery, Stubb, 47

Tahoe conference, 19, 48, 54, 56,

58-62, 63, 70

Tennant, Fred, 66, 69, 75
Total Health Care Program, 98-103
Trefethen, Eugene E., Jr., 20-21,

22, 25, 43, 56, 58-62, 73-75

quality assurance, 88-89

race relations in the KPMCP, 79-80
regions and areas, 63, 85. See also

region in which program is located
Reinhart, Arthur, 69
Reis, Joseph F., 8, 43, 58
research in the KPMCP, 85-89, 97-98,

102
Richmond, Kaiser Foundation Hospital in,

14-15, 22, 27
Rubin, Leonard, 88-89

Sacramento, Kaiser Foundation Hospital

in, 78

Sams, Bruce, 102
San Diego, Northern California

Permanente Medical Group venture in,

69-76
San Francisco, Kaiser Foundation Hospital

in, 26-27, 49-50, 69-
Sanger, Evelyn, 9
San Leandro Kaiser Permanente Clinic,

29, 77-78

Saward, Ernest W., 78, 80-81
Schrick, Edna, 78

Vallejo, Kaiser Foundation Hospital

in, 26
Vancouver, Washington, KPMCP in,

25
Virginia Mason Clinic (Seattle),

12-13
Vohs , James A., 102

Waddell, Todd, 8

Walnut Creek, Kaiser Foundation

Hospital in, 42, 44-45
War Manpower Commission, 20
Weinerman, Richard, 38
Wetherall, Winifred, 6
Wiley, Eugene, 7, 12
Working Council, 47-48, 52, 54-55,
57-58, 60. See also Permanente

medical groups
World War II, and the Kaiser

Company medical programs, 14-22,
106

Yedidia, Avram, 80-81

Malca Chall

Graduated from Reed College in 1942 with a B.A.
degree, and from the State University of Iowa in
1943 with an M.A. degree in Political Science.

Wage Rate Analyst with the Twelfth Regional War
Labor Board, 1943-1945, specializing in agricul
ture and services. Research and writing in the
New York public relations firm of Edward L.
Bernays, 1946-1947, and research and statistics
for the Oakland Area Community Chest and Council
of Social Agencies 1948-1951.

Active in community affairs as a director and
past president of the League of Women Voters of
the Hayward Area specializing in state and local
government; on county-wide committees in the
field of mental health; on election campaign
committees for school tax and bond measures, and
candidates for school board and state legislature,

Employed in 1967 by the Regional Oral History
Office interviewing in fields of agriculture and
water resources. Project director, Suffragists
Project, California Women Political Leaders
Project, and Land-Use Planning Project.

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