History

1933-1945: ‘There is no such thing as labor relations’

The health care program now known as Kaiser Permanente began in the Mojave Desert when Dr. Sidney Garfield, fresh out of medical school, opened a clinic for 5,000 Colorado River Aqueduct workers in 1933. Dr. Garfield soon found his practice foundering because insurance companies were sending the most serious—and most profitable—cases to Los Angeles hospitals. He developed a prepaid plan with a focus on safety and illness prevention, and it worked. The hallmarks of what would become the Kaiser Permanente Health Plan—prepayment, prevention and group practice—were forged here, but it would be 12 years before members of the public could join.

In 1938, Henry J. Kaiser and his son Edgar persuaded Dr. Garfield to create a similar medical program for workers building the Grand Coulee Dam in Washington.

The resulting industrial health plan was so popular, the unions insisted dam workers’ families be included. That feature carried over when Dr. Garfield built the largest civilian medical care program on the World War II home front, covering almost 200,000 Kaiser workers in California, Oregon and Washington.

With the traditional labor pool—young, healthy white males—serving in the military, thousands of African Americans and other people of color migrated to the shipyards, securing good union jobs after the long hurt of the Great Depression. Women came out in force, too. The Permanente Foundation Health Plan, both the on-the-job care and the broad coverage of the 50-cent-a-week supplemental plan, was extremely successful.

For the first time in their lives, ordinary people could count on affordable medical care.
 

1946-1989: ‘If not for organized labor’

On July 21, 1945, with the war in Europe over and the shipyards beginning to close, the Permanente Foundation Health Plan opened to the general public. A year later, on Aug. 1, 1946, Dr. Garfield signed the Permanente Foundation’s first union contract, with the CIO-affiliated Nurses’ Guild. The contract, in a first for Alameda County hospitals, established a 40-hour workweek, down from 48 hours.

Key support for the Permanente health plan came from unions. Harry Bridges, president of the International Longshoremen and Warehousemen’s Union, was an early advocate. He defended the plan against attacks by professional medical associations, whose members called prepaid group practice unethical, and brought all 6,000 ILWU members on the West Coast into the plan. Almost 15,000 members of the Retail Clerks Union in Los Angeles, a large and prominent union led by Joe DeSilva, joined in 1951.

But by the mid-1960s, financial pressures began creating divisions. In 1966, registered nurses in Northern California, represented by the California Nurses Association, became the first nurses in the state to conduct a work action. Major strikes erupted in 1968 in both Northern and Southern California. The strife simmered, and in 1986, a seven-week strike by SEIU Local 250 had some 9,000 clerks, certified nursing assistants and technicians walking the picket line at 14 Kaiser Permanente facilities in California. The action didn’t prevent a two-tier wage restructuring plan, but there was one positive outcome: The first Joint Conference on Service Issues, a precursor to the Labor Management Partnership agreement.
 

When I think about the Labor Management Partnership and Kaiser Permanente’s history, I can’t help but believe the creation of the LMP was inevitable—and that it’s been the linchpin to KP’s success after the financial challenges of the 1970s, ’80s and ’90s.

From the very beginning, Kaiser Permanente’s management and its unions shared a philosophy of engagement. This culture never went away entirely, but when the competition from for-profit HMOs mounted in the 1980s, it got pushed to the background. Kaiser Permanente did what many businesses do—it reduced its workforce and made other cost-cutting changes. Union members became frustrated, believing the changes undermined KP’s mission and eroded working conditions.

The unions responded with traditional work actions and strikes.

But I’d say four milestones changed the landscape.

First, in the early 1990s, the Industrial Union Department of the AFL-CIO created the KP Coordinated Bargaining Committee to improve the unions’ bargaining position. That committee, which included most of the major unions at Kaiser Permanente, became the Coalition of Kaiser Permanente Unions. We were charged with coordinating a full-scale “corporate campaign” against KP.

But we realized we might do permanent damage to the company and to our 57,000 coalition union members. So we opted to pursue an alternative strategy. In the mid-’90s, we approached KP with a bold new idea—partnership. Unlike other union-employer “cooperation” arrangements, where management would come to labor for help after decisions had been made, the proposed partnership called for labor’s integration into KP’s management and operations structure.

After almost a year of discussions, Kaiser Permanente agreed, and in 1997, the Labor Management Partnership was formed. The decision demonstrated courage on both sides. It placed a value on the knowledge possessed at every level of the organization, from the boardroom to the front line. Building on that, we broke away from traditional, reactionary problem solving and turned to interest-based problem solving and consensus decision making.

This led to the fourth milestone—the decision to conduct national bargaining using those same problem-solving methods and to include operational leaders and rank-and-file union representatives at the bargaining table.

Other factors have contributed to KP’s financial turnaround, but there can be no denying the impact the partnership made—and continues to make—in ensuring that Kaiser Permanente is the national leader in health care, with a great place to work and industry-leading salaries, wages and benefits. Its position did not come about by accident, but by the courage of leadership and the power of partnership.

Visit Kaiser Permanente's 70th anniversary mini-site.

“Henry J. Kaiser’s Permanente Foundation Hospital in Oakland, built to provide pre-paid medical care for 100,000 shipyard workers, has been opened to the public,” the San Francisco Chronicle announced on July 21, 1945—a momentous shift for a health plan that had been serving only employees and their families.

With World War II coming to an end, the plan’s future had been in doubt. Sidney Garfield, MD, the sole proprietor of the Permanente Foundation Health Plan, argued for its continuance, as did ex-Kaiser workers and their unions in the San Francisco Bay Area. Henry J. Kaiser, always open to bold moves, said: “Well, why shouldn’t we open the plan to the public and see if it works?” While other industrialists had adopted programs to improve their workers’ health, Kaiser was the first to embrace the public.

The plan came under attack—doctors in private practice called it “socialistic.” But support from key labor leaders made the difference that ensured the plan’s success.

Kaiser’s long history of supporting labor—an ethical and business decision he’d come to when handling huge government contract projects—became even stronger in his remaining years. In 1965, the AFL-CIO presented Kaiser with its Murray-Green Award, the first businessman to be so honored by organized labor.

Relations between Kaiser Permanente and labor unions have experienced ups and downs since then. But as the early history of unions at KP and the advent of the Labor Management Partnership in 1997 make clear, there is no health plan in the country with a richer and more positive relationship with working people and the organizations that represent them.

Visit Kaiser Permanente's 70th anniversary mini-site.

For the first five years after the Permanente Foundation Health Plan opened to the public, there were no separate regions. Three hospitals—two in Northern California and one at the Fontana steel mill in Southern California—served the new members.

Northern California

The Oakland hospital opened on Aug. 21, 1942, and the Richmond hospital opened nine days later. Once the plan went public, the International Longshoremen and Warehousemen’s Union and other unions were prominent among the early member groups. Oakland city employees, union typographers, street car drivers and carpenters also embraced the plan. In 1953, state-of-the-art hospitals opened in San Francisco and Walnut Creek, as well as Los Angeles. Today, three union locals in Northern California belong to the Coalition of Kaiser Permanente Unions: SEIU-UHW (28,800 members), OPEIU Local 29 (2,400 members) and IFPTE Local 20 (1,300 members).

Southern California

Harry Bridges, the ILWU president, wanted a hospital in the San Pedro area in 1949, and it was his promise of a large and stable membership that convinced health plan leaders to expand. He proved as good as his word, and KP became the sole supplier of medical care to ILWU’s 6,000 West Coast members. The Southern California Permanente Group was established in 1950. In 1951, the 15,000 members of the Retail Clerks Union Local 770 in Los Angeles, at the time the largest local in the country, joined the plan. Today, there are 13 coalition locals in Southern California: SEIU-UHW (18,000 members); UNAC/UHCP (16,000); United Steelworkers Local 7600 (6,000); OPEIU Local 30 (4,000); UFCW locals 770 (a descendant of the clerks union), 324, 135, 1428, 1442 and 1167 (3,860 total); Teamsters Local 166 (500); KPNAA (350); and SEIU Local 121RN (200).

Northwest

Health plan enrollment opened to the community in 1947 with the opening of an outpatient facility across the Columbia River from the closed Kaiser shipyards. It became a region in 1951 and has been at the forefront of several innovative practices. In 1964, it launched the Center for Health Research to advance evidence-based medicine. In 1974, it became the only KP region to provide prepaid dental services. In 1991, the Northwest started Kaiser-on-the-Job, a workers’ compensation program that has since spread to all regions. Coalition locals in the Northwest are: OFNHP/ONA (3,400), SEIU Local 49 (3,900), UFCW Local 555 (900) and ILWU Local 28 (65).

Hawaii

Hawaii opened in 1958—before the territory became a state—with strong support from the building and construction trades, which benefited strongly from Henry Kaiser’s hotel and housing projects. It was the last region to join the partnership, in 2009. The Hawaii Nurses Association, OPEIU Local 50 (800 members), belongs to the coalition.

Ohio

The Ohio region was the first organizational expansion of the health plan outside the western United States. The Community Health Foundation in Cleveland—which had been established by the Meatcutters and Retail Store Employees Union and had a structure similar to KP’s—merged with Kaiser Permanente in 1969 to form the Kaiser Community Health Foundation. The region left KP in 2013.

Colorado

Colorado also joined Kaiser Permanente in 1969, after requests from a group of labor, medical, university and government leaders. The United Mine Workers had regional headquarters in Denver, and Kaiser Permanente had longstanding relations with UMW through the Kabat Kaiser Institute in Vallejo, later known as the Kaiser Foundation Rehabilitation Center, where injured miners were treated. Today, SEIU Local 105 (3,500 members), UFCW Local 7 (1,800) and IUOE Local 1 (23) belong to the union coalition.

Mid-Atlantic States

In 1980, KP acquired the failing Georgetown Community Health Plan and, through the use of existing community hospitals, began to operate profitably within two years. Kaiser Permanente believed locating in the Washington, D.C., area would provide high visibility regarding health care legislation. The effort was successful: In 1992, Jim Doherty, president of the Group Health Association of America, the professional organization for HMOs, remarked that the move “did more for the HMO movement than any single act since the HMO Act of 1973.” In 1984, the region opened its first pharmacy and changed its name to Kaiser Foundation Health Plan of the Mid-Atlantic States. In 1996, it acquired Humana Group Health Inc., one of the country’s oldest HMOs. OPEIU Local 2 (3,800 members) and UFCW locals 400 and 27 (1,600 total) belong to the coalition.

Georgia

The Georgia region opened in 1985. Its first medical director was Harper Gaston, MD,
a Northern California physician and Georgia native who was proud to return home and serve the initial 265 members. In 1988, the region experienced dramatic growth when the state of Georgia came aboard as a major account and Kaiser Permanente acquired the financially ailing Maxicare Georgia HMO; within a year, the region celebrated its 100,000th member milestone. UFCW Local 1996 (1,800 members) is part of the Coalition of Kaiser Permanente Unions.

Visit Kaiser Permanente's 70th anniversary mini-site.

When I was asked to represent The Permanente Medical Group at 2012 bargaining, I leapt at the opportunity. My own experience with partnership at Fresno Medical Center showed me what great things could be accomplished with collective problem solving.

I sat on the subgroup that looked at how to improve partnership to enhance performance and Kaiser Permanente’s operational agility. I was amazed at seeing so many people with different backgrounds sharing their thoughts and shaping the outcomes. From the highest levels of Kaiser Permanente and union leadership to the front line, everybody was around the table, and they were all equal in this venue. Everyone was heard and engaged.

I personally learned a lot from the different perspectives voiced by all of the individuals representing their fields. I strongly believe that collective wisdom is better than individual wisdom, and that with collective wisdom you can achieve anything in life. Interest-based bargaining, which assembles voices from all levels and reaches of Kaiser Permanente, is a great example of collective wisdom.

Another thing that struck me—how much folks craved the physician perspective. When I spoke, all 25 to 30 people in that subgroup really listened. And there were issues where a physician perspective was critical. That was a strong message I brought back to physicians. In most unit-based teams at Fresno, there is physician involvement. The intention is to bring those perspectives together to enhance the care for our members and patients. But does that mean if I walk into a UBT meeting I’ll see a doctor? Maybe yes, maybe no.

I’ve worked at Kaiser Permanente for 34 years, and I saw the pre-partnership years. They were contentious ones. We’ve had relative peace with coalition unions since partnership. That’s not to say that working in partnership is perfect in every way. It can’t be done without trusting each other. And how do you develop trust? Through transparency. The whole bargaining process was about transparency; essentially, everybody could share everything. That doesn’t mean people didn’t disagree.

The interest-based, collective approach takes into account everyone’s perspectives to reach a better outcome, which is ultimately a common goal—superior care for our members and patients.

Two people—one, a white woman, the other, a black man from the West Indies—witnessed the crucible of new workers who arrived by the tens of thousands at the Kaiser shipyards during World War II. Together, they laid the foundation for an extraordinary photographic record of the organization’s history.

Ann Rosener was a San Francisco Bay Area local whose assignment with the Office of War Information included writing and photography. Emmanuel Francis Joseph was born on the island of Saint Lucia. He settled in Oakland in 1924 and became the first professional black photographer in the Bay Area. Both artists brought a keen eye to the history unfolding before them and chronicled the often-overlooked working lives of women and people of color.

Do corporate leaders understand the lives of working people? Some do. In the long history of Kaiser Permanente, several executives—including Henry J. Kaiser himself—worked their way up from poverty. Clifford Keene, MD, was another. In a 1985 interview, he described his roots:

“I came from a very humble family. My father was a factory foreman at best....During the summer I always worked. I sold papers or worked in factories doing minor tasks. Then, when I was fourteen I went to work in the steel industry as a steel construction punk, an apprentice first....I would find myself doing construction all over western New York State. I became a connecter; that is, a person who gets up on the steel and puts it together. I became accustomed to being up in the air and being up high, although I was always frightened of being up in the air. I don't think anyone is not frightened when you're way up in the air and the steel moves. It's a situation that commands your respect and gets your attention, I can tell you. I earned quite good money and continued to do that until I was a sophomore in medical school.”

The experience stayed with him throughout his life. He reflected on it when commenting on a successful infant bowel surgery while serving as a cancer specialist at the University of Michigan State Hospital at the end of the 1930s:

“When I was in the army I further developed my interest in bowel surgery, and reconstruction of all kinds, and also in plastic procedures, orthopedic procedures, all of which were an extension of my interest in doing things with my hands. I [had been] a steel worker* and it was satisfying to correct things with my hands.”

In May 1951, Bay Area longshore workers participated in a groundbreaking medical program—the Multiphasic Screening Examination, the first comprehensive health assessment conducted in cooperation with a union.

The trustees of the International Longshore and Warehouse Union–Pacific Maritime Association (ILWU-PMA)Welfare Fund came up with the idea for the tests, thinking it would be a useful corollary to existing medical care by helping detect unsuspected chronic diseases so members could get early and effective treatment. The tests, given in the Local 10 offices, were designed to search out signs of lung cancer, tuberculosis, heart trouble, syphilis, diabetes, anemia, kidney trouble, and sight and hearing defects.

The trustees, together with the Local 10 welfare officer and the ILWU research department, worked out the program with the Permanente Health Plan. ILWU leader Harry Bridges promised results would be confidential and not affect job security, and complete follow-up care was assured as part of health plan coverage.