Regional Oral History Office University of California The ...Oakland Tribune February 2, 1996...

$: Regional Oral History Office University of California The ...Oakland Tribune February 2, 1996 Industrialist Eugene Trefethen % Jr.\.dies . ASSOCLATED PRESS The 86-year-old philanthropist,$
Regional Oral Hi s to ry Off ice The Bancroft L ibrary

Univers i ty of Ca l i fo rn i a Berkeley, C a l i f o r n i a

Kaiser Permanente Medical Care Program Oral His tory P r o j e c t

Eugene E. Trefe then , Jr.

HISTORY OF THE KAISER PERMANENTE MEDICAL CARE PROGRAM

An In te rv iew Conducted By Malca Chal l

1985

Copyright @ 1986 by The Regents of t h e Univers i ty of Ca l i fo rn i a

A l l u se s of t h i s manuscript a r e covered by a l e g a l agreement between t h e Univers i ty of C a l i f o r n i a and Eugene E. Trefe then , Jr., dated June 11, 1985. The manuscript is thereby made a v a i l a b l e f o r r e sea rch purposes. A l l l i t e r a r y r i g h t s i n t h e manuscript , inc luding t h e r i g h t t o publ i sh , are reserved t o The Bancroft L ibrary of t h e Univers i ty of C a l i f o r n i a a t Berkeley. No p a r t of t h e manuscript may b e quoted f o r p u b l i c a t i o n without t h e w r i t t e n permission of t h e Di rec to r of The Bancroft L ibrary of t h e Univers i ty of Ca l i fo rn i a a t Berkeley.

Requests f o r permission t o quote f o r pub l i ca t ion should be addressed t o t h e Regional Oral His tory Of f i ce , 486 Library , and shouxd inc lude i d e n t i f i c a t i o n of t h e s p e c i f i c passages t o be quoted, a n t i c i p a t e d u s e of t h e passages, and i d e n t i f i c a t i o n of t h e user . The l e g a l agreement wi th Eugene E. Trefe then , Jr. r e q u i r e s t h a t h e be n o t i f i e d of t h e r eques t and allowed t h i r t y days i n which t o respond.

It is recommended t h a t t h i s o r a l h i s t o r y be c i t e d a s fol lows:

Eugene E. Trefethen, Jr., "History of t h e Kaiser Permanente Medical Care Program," an o r a l h i s t o r y conducted i n 1985 by Malca Chal l , Regional Ora l His tory Off ice , The Bancroft Library, Univers i ty of Ca l i fo rn i a , Berkeley, 1986.

Copy No.

Berkeley Benefactor Eugene Trefethen Dies at 86.

EugeneE.TrefedKn Jr., whoguided projects from the Hoover Dam and Bay Bridge to the creation of Haas School of Business,died Jan. 3 1 at his Napa home. He was 86.

"He was a legendary figure on the Berkeley campus," said Earl Cheit, dean emeritus of the Haas school. "I have never worked with anyone with greater generosity and idealism. More than anyone else, he was responsible for the success of the new building."

Trefethen, who concluded his ca-, reer with the prestigious Trefethen Vineyards, began it as a sand and gravel laborer for Kaiser's Livermore facility while still a Cal student

He soon became an assistant to Henry J. Kaiser, working with him on the Hoover Dam and the Bay Bridge. During five decades with Kaiser, he held many management positions and served as president and vice chair of Kaiser Industries Corp.

"Gene Trefethen will be remembered for his untiring service tom as an outstanding volunteerwhoselead- elship as a member of the UC Berke- ley Foundation Board of Tmtees, as well as his involvement in countless fund-raising campaigns, inspiredoth- ers toemulatehisphilanlbpicspirit,'? I

said Chancellor Tien. Trefethen was Alumnus of theyear

in 1979, received the Chancellor's Award in 1981 and in 1989 was I

, awarded the BerkeleyMedal. . .. He is survived by his wife of 60 i

I years, Catherine; his daughter, Carla 1 Jean; his son, John, and four grand-

children. A public memorial service will be held'at Grace Cathedral in Sar! Francisco Feb. 29 at 1:30 pm. .

I

Oakland Tr ibune

February 2 , 1996

Industrialist Eugene Trefethen % Jr.\.dies . ASSOCLATED PRESS The 86-year-old philanthropist, ' ~Trefetheri b6gm his' &eer in

who also helped create the Walter 1926 as a:;&and-and-gravel laborer NAPA - Eugene Trefethen Jr., A. Haas School of Business at the with the K+er Aluminum & Chem-

who oversaw the building of the University of California, Berkeley, ical Corp.~In five decades with the Hoover Dam and the Bay Bridge, died Wednesday at his home fol- company, -he worked closely with then later owned a world-class lowing a brief illness. Henry J. IGiiser on the Hoover Dam winery estate, + died. and the Bay' Bridge and rose to

, . 0cL Gi b~ >,.I e 42/94 president and vice chairman of Kaiser Industries Corp,

"Trefethen was the financial and managerial genius who . turned Henry J. Kaiser's dreams into re-

, ality, creating one of the largest in- dustrial forces of the 20th century," said Cornell Maier, retired chairman of the board and chief executive of-

I ficer of Kaiser. 1 Gov. Pete Wilson called Trefe-

- then "the eighth wonder of the world."

"Industrialist, philanthropist, master vintner and builder of a great university, of a great private health care system and of dams and bridges that have been c~mpared to the seven wonders of the world - Gene Trefethen was, to the legion of his friends and admirers, the eighth wonder."

Trefethen retired in 1979 and in his later years, tended to the 600- acre Napa Valley estate built in 1886.

His son, John Vance Trefethen, established the Trefethen' Winery in 1973 with his wife, Janet Spooner Trefethen. They built it into a well respected winery that now produces 100,000 cases of vintage-dated vari- etal wines. It won the Best Char- donnay In Thk World award in the GaultrMillau World Wm Olympics in 1979.

"Gene fiefethen, in addition to being a marvelous person; helped all of us develop Napa Valley to world-class status," vintner Robert Mondavi said.

Trefethen also was a philanthropist, who gave .generously of his time and money to UC Berkeley, his alma niater, MiUs College, theeSan Francisco Museum of - Modern":& ,and UC, San Fbicisco. ' : :.?f:,-,c.

Kais.er Permanente Medical Care Program

In terv iews t o be Completed i n 1986

Cec i l C. Cut t ing , M.D.

Frank C. Jones

Raymond M. Kay, M.D.

C l i f f o r d H. Keene, M.D.

George E. Link

Ernest W. Saward, M.D.

John G. Smi l l i e , M.D.

Eugene E. Trefethen, Jr.

Avram Yedidia

TABLE OF CONTENTS -- Eugene E. Trefethen, Jr.

PREFACE

INTERVIEW HISTORY

BRIEF BIOGRAPHY

I FAMILY BACKGROUND AND EDUCATION

I1 THE KAISER FAMILY AND KAISER INDUSTRIES

I11 THE EARLY YEARS OF THE KAISER PERMANENTE MEDICAL CARE PROGRAM World War 11, 1942-1945 The Health Plan Moves Out Into the Community, 1945-1950

IV THE KAISER PERMANENTE MEDICAL CARE PROGRAM: CRITICAL YEARS OF TRANSITION, 1952-1958

Building the Walnut Creek Hospital Philosophical and Policy Differences Between Henry Kaiser and the Doctors

Events Leading up to and Following the Tahoe Conference The Solution: The Organization and Its Philosophical and Financial Foundation

V INTO THE PRESENT ,The Kaiser Permanente Committee The Kaiser Foundation Health Plan / Kaiser Foundation ~ds~itals Board

Management: The Key to Success Extension to Hawaii

VI PARTNERSHIP BECOMES A REALITY AND THE HEALTH PLAN CONTINUES TO GROW

Management's Response to the Permanente Medical Group's Plan to Operate in San Diego, 1961

Extension of the Health Plan to Cleveland and Denver, 1969 The Kaiser Family Foundation The Boards of Directors of the Kaiser Foundation Health Plan and Kaiser Foundation Hospitals

The Central Office Summary: Henry Kaiser's Vision

vii

TAPE GUIDE

APPENDIX - Correspondence between E.E. Trefethen, Jr., Henry Kaiser, and representatives of the War Manpower Commission regarding approval of Kaiser proposal to construct an addition to the Oakland Permanente Hospital, 1943

Memorandum from Henry J. Kaiser, Jr. regarding formation of the Advisory Council, July 20, 1955

Some Recent Awards and Honors Biographical Data, 1978

INDEX

PREFACE

Background of t h e Oral His tory P r o j e c t

The Kaiser Permanente Medical Care Program r e c e n t l y observed i t s f o r t i e t h anniversary. Today, i t is t h e l a r g e s t , one of t h e o l d e s t , and c e r t a i n l y t h e most i n f l u e n t i a l group p r a c t i c e prepayment h e a l t h p l an i n t h e na t ion . But i n 1938, when Henry J. and Edgar F. Kaiser f i r s t co l l abo ra t ed wi th D r . Sidney Gar f i e ld t o provide medical c a r e f o r t h e cons t ruc t ion workers on t h e Grand Coulee Dam p r o j e c t i n e a s t e r n Washington, they could s c a r c e l y have envisioned t h a t i t would a t t a i n t h e s i z e and have t h e impact on medical c a r e i n t h e United S t a t e s t h a t i t has today.

I n an e f f o r t t o document and p re se rve t h e s t o r y of Kaiser Permanente's evolut ion. through t h e r e c o l l e c t i o n s of some of i t s su rv iv ing p ioneers , men and women who know and remember v i v i d l y t h e p l a n ' s o r i g i n s and formative yea r s , t h e Board of D i rec to r s of Kaiser Foundation Hospi ta l s sponsored t h i s o r a l h i s t o r y p r o j e c t .

I n combination wi th a l r eady a v a i l a b l e records , t h e in t e rv i ews serve t o en r i ch Kaiser Permanente's h i s t o r y f o r i t s phys ic ians , employees, and members, and t o o f f e r a major resource f o r r e sea rch i n t o t h e h i s t o r y of h e a l t h c a r e f inanc ing and d e l i v e r y , and some of t h e f o r c e s behind t h e r ap id and sweeping changes now underway i n t h e h e a l t h c a r e f i e l d .

A Synopsis of Kaiser Permanente His tory

There have been s e v e r a l mi les tones i n t h e h i s t o r y of Kaiser Permanente. One could begin i n 1933, f i f t y - t h r e e yea r s ago, when young D r . Sidney Gar f i e ld en tered fee-for-service p r a c t i c e i n t h e southern Ca l i fo rn i a d e s e r t and prepared t o c a r e f o r workers bu i ld ing t h e Metropol i tan Water D i s t r i c t aqueduct from t h e Colorado River t o Los Angeles. Circumstances soon caused him t o develop a prepaid approach t o providing q u a l i t y c a r e i n a smal l , well-designed h o s p i t a l f a c i l i t y near t h e cons t ruc t ion s i t e .

The Kaisers l e a n e d of D r . G a r f i e l d ' s experience i n h e a l t h c a r e f i nanc ing and d e l i v e r y through A. B. Ordway, Henry Ka i se r ' s f i r s t employee. When they undertook t h e Grand Coulee p r o j e c t , t h e Kaisers persuaded D r . Ga r f i e ld t o come i n 1938 t o e a s t e r n Washington S t a t e , where they w e r e managing a consortium cons t ruc t ing t h e Grand Coulee Dam. D r . Ga r f i e ld , and a handful of young doc to r s whom h e persuaded t o j o i n him, e s t a b l i s h e d a prepa id h e a l t h p l an a t t h e damsi te , one which l a t e r included t h e wives and c h i l d r e n of workers, a s we l l a s t h e workers themselves.

A few years l a t e r , dur ing World War 11, D r . Ga r f i e ld and h i s assoc ia tes - - some of whom had followed him from t h e Coulee Dam project--continued t h e h e a l t h p lan , aga in a t t h e r eques t of t h e Kaisers , who were now bu i ld ing Liber ty Ships i n Richmond, Ca l i fo rn i a , and on an i s l a n d i n t h e Columbia River between Vancouver, Washington and Por t land , Oregon. They would a l s o produce s t e e l i n Fontana, Ca l i fo rn i a . Eventual ly, i n h o s p i t a l s and f i e l d s t a t i o n s i n t h e Rich- mondloakland communities, i n t he Por t land , Oregon/Vancouver, Washington a r e a s , and i n Fontana, t h e prepaid h e a l t h c a r e program served some 200,000 shipyard and s t e e l p l a n t employees and t h e i r dependents.

By t h e time t h e sh ipyards s h u t down i n 1945, t h e medical program had enough s u c c e s s f u l experience behind i t t o motivate D r . Ga r f i e ld , t h e Kaisers , and a smal l group of phys ic ians t o c a r r y t h e h e a l t h p l an beyond t h e employees of t h e Kaiser companies and o f f e r i t t o t h e community a s a whole. The doc to r s had concluded t h a t t h i s form of prepa id , i n t e g r a t e d h e a l t h ca re w a s t h e i d e a l way t o p r a c t i c e medicine. Experience had a l r eady proven t h e h e a l t h p l an ' s va lue i n o f f e r i n g q u a l i t y h e a l t h c a r e a t a reasonable c o s t i n t h e o rgan iza t ion ' s own medical o f f i c e s and h o s p i t a l s . Many former sh ipyard employees and t h e i r f a m i l i e s a l s o wanted t o cont inue r ece iv ing t h e same type of h e a l t h c a r e they had known dur ing t h e war.

Also important were t h e z e a l and commitment of Henry J. Kaiser and h i s i ndus t ry a s s o c i a t e s who agreed wi th t h e doc to r s about t h e program's va lues , and d e s p i t e t h e antagonism of fee- for -serv ice medicine, were eager f o r t h e success of t h e venture. Indeed, they hoped i t might u l t i m a t e l y be expanded throughout t h e na t ion . I n September, 1945, The Henry J. Kaiser Company e s t a b l i s h e d t h e Permanente Heal th P lan , a nonpro f i t t r u s t , and t h e medical c a r e program was on i t s way.

Between 1945 and t h e mid-1950s, even a s membership expanded i n C a l i f o r n i a , Oregon, and Washington, s e r i o u s t ens ions developed between t h e doc tors and t h e Kaiser- industry dominated management of t h e h o s p i t a l s and h e a l t h p lan . These t ens ions threa tened t o tear t h e Program a p a r t . Reduced t o t h e s imp les t form, t h e bas i c ques t ion was who would c o n t r o l t h e h e a l t h plan--management o r t h e doc tors . Each had a c r u c i a l r o l e i n t h e organiza t ion . The symbiot ic r e l a t i o n - sh ip had t o be understood and mutual ly accepted.

From roughly 1955 t o 1958, a sma l l group of men r ep resen t ing management and t h e d o c t o r s , a f t e r many committee meetings and much heated deba te , agreed upon a medical program reo rgan iza t ion , inc luding a management-medical group c o n t r a c t , probably then unique i n t h e h i s t o r y of medicine. Accord was reached because t h e p a r t i c i p a n t s , d e s p i t e s t r o n g disagreements , were dedica ted t o t h e concept of prepaid group medical p r a c t i c e on a s e l f - sus t a ined , nonpro f i t ba s i s .

Af t e r s e v e r a l more yea r s of t e s t i n g on both s i d e s , a s t r o n g pa r tne r sh ip emerged among t h e h e a l t h p l an , h o s p i t a l s , and phys ic ian o rgan iza t ions . Rest ing on mutual t r u s t and a sound f i s c a l formula, t h e Program has a t t a i n e d a s t r o n g n a t i o n a l i d e n t i t y .

iii

The Oral His tory P r o j e c t

I n August 1983, t h e o f f i c e of Donald Duffy, Vice P res iden t , Publ ic and Community Rela t ions f o r Kaiser Foundation Health Plan and Hosp i t a l s , contac ted Wil la Baum, d i r e c t o r of t h e Regional Oral His tory Off ice , about a poss ib l e o r a l h i s t o r y p r o j e c t wi th twenty t o twenty-four p ioneers of t h e Program. A year l a t e r t h e p r o j e c t was underway,funded by Kaiser Foundation Hospi ta l s ' Board of Direc tors .

A p r o j e c t advisory committee, comprised of seven persons wi th an i n t e r e s t i n and knowledge of t h e o rgan iza t ion ' s h i s t o r y , s e l e c t e d t h e interviewees and a s s i s t e d t h e o r a l h i s t o r y p r o j e c t a s needed. Donald Duffy assumed o v e r a l l d i r e c t i o n and Darlene Basmajian, h i s a s s i s t a n t , served a s l i a i s o n wi th t h e Regional Oral His tory Office. Committee niembers a r e John Capener, D r . Cec i l Cutt ing, Donald Duffy, Robert J. Erickson, Sco t t Fleming, D r . Paul Lairson, and Walter Palmer.

By y e a r ' s end, t e n p ioneers had been s e l e c t e d and had agreed t o p a r t i c i p a t e i n t h e p ro jec t . They are D r s . Cec i l Cutt ing, Sidney Gar f i e ld , Raymond Kay, C l i f fo rd Keene, Ernest Saward, and John Smi l l i e , and Messrs. Frank Jones, George Link, Eugene Trefethen, Jr., and Avram Yedidia.

Plans t o in t e rv iew D r . Ga r f i e ld and D r . Wallace Neighbor, who had been a t Grand Coulee wi th D r . Ga r f i e ld , were sad ly d i s rup ted by t h e i r dea ths , a week a p a r t i n l a t e 1984. For tunate ly , both men had been previous ly interviewed. Thei r tapes and t r a n s c r i p t s a r e on f i l e i n t h e Cent ra l Of f i ce of t h e medical c a r e program.

The advisory committee suggested 1970 a s t h e cu tof f d a t e f o r research and documentation, s i n c e by t h a t time t h e p ioneer ing a spec t s of t h e organiza t ion had been completed. The Program w a s then expanding i n t o o the r reg ions , and was encountering a new set of cha l lenges such a s Medicare and competi t ion from o t h e r h e a l t h maintenance organiza t ions .

Research

Kaiser Permanente s t a f f and t h e in terv iewees themselves provided exce l l en t b iographica l sources on each in terv iewee a s w e l l as published and unpublished m a t e r i a l on t h e h i s t o r y of t h e Program. The c o l l e c t e d papers of Henry J. Kaiser on depos i t i n The Bancroft Library were a l s o consul ted. The o r a l h i s t o r y p r o j e c t s t a f f c o l l e c t e d o the r Kaiser Permanente pub l i ca t ions , and s t a r t e d a f i l e of newspaper a r t i c l e s on cu r ren t h e a l t h c a r e top ic s . Most of t h i s m a t e r i a l w i l l be deposi ted i n The Bancroft Library wi th t h e o r a l h i s t o r y volumes. A b ib l iog- raphy is a t tached.

To ga in a d d i t i o n a l background m a t e r i a l f o r t h e in terv iews, t h e s t a f f t a lked t o four Kaiser Permanente phys ic ians , two of whom had l e f t t h e program years ago: D r s . Martin Abel, Richard G e i s t * , Emphraim Kahn*, and James Smith*.

*Tapes of t hese in terv iews have been depos i ted i n t h e Microforms Division of The Bancrof t Library.

The s t a f f a l s o sought advice from t h e academic community. James Leiby, a p ro fe s so r i n t h e Department of S o c i a l Welfare a t UC Berkeley and a n advocate of t h e o r a l h i s t o r y process , suggested l i n e s of ques t ion ing r e l a t e d t o h i s s p e c i a l i n t e r e s t i n t h e admin i s t r a t i on of and r e l a t i o n s h i p s w i th in p u b l i c and and p r i v a t e s o c i a l agencies . D r . P h i l i p R. Lee, p ro fe s so r of s o c i a l medicine and d i r e c t o r of t h e I n s t i t u t e f o r Health Pol icy S tud ie s a t t h e Univers i ty of C a l i f o r n i a Medical School, proposed ques t ions concerning t h e impact of h e a l t h maintenance o rgan iza t ions on medical p r a c t i c e i n t h e United S t a t e s .

Organizat ion of t h e Pro j e c t

The Kaiser Permanente Oral His tory P r o j e c t s t a f f , comprised of Malca Chal l , S a l l y Hughes, and Ora Huth, m e t f r equen t ly throughout 1985 t o a s s i g n t h e in t e rv i ews , p l an t h e procedures and t h e t i m e frame f o r r e sea rch , in te rv iewing , and e d i t i n g , and t o s e t up a master index. In te rv iews of t h e f i r s t n i n e p ioneers took p l ace between February and June, 1985. During t h e fol lowing months t h e t r a n s c r i p t s of t h e t apes were e d i t e d , reviewed by t h e in te rv iewees , typed, proofread, indexed, copied, and bound.

Other p ioneers who, a t t h e time of t h i s w r i t i n g , have agreed t o p a r t i c i p a t e i n t h e p r o j e c t a r e : D r s . Morris Collen, Wallace Cook, Al ice Friedman, Benjamin Lewis, Sam Packer, B i l l R e i m e r s , Harry Shragg, and David Adelson, Lambreth (Handy) Hancock, Berniece Oswald.

The e n t i r e s e r i e s w i l l be completed dur ing 1987.

Summary v

This o r a l h i s t o r y p r o j e c t t r a c e s , from va r ious i n d i v i d u a l pe r spec t ives , t h e evo lu t ion of t h e Kaiser Permanente Medical Care Program from 1938 t o 1970. Each in t e rv i ew begins w i th a d i scuss ion of t h e i n d i v i d u a l ' s family background and education--those t a n g i b l e and i n t a n g i b l e f o r c e s t h a t shaped h i s o r h e r l i f e . The conversa t ion then s h i f t s t o t h e in te rv iewee ' s a c t u a l p a r t i c i p a t i o n i n and observa t ion of t h e s i g n i f i c a n t events i n t h e development of t h e h e a l t h plan. Thus, t h e r eade r i s t r e a t e d no t only t o f a c t s on t h e h i s t o r y of t h e Program, but t o opinions about t h e pe r sona l q u a l i t i e s of t h e men and women-- doc to r s , o t h e r h e a l t h c a r e p ro fe s s iona l s , lawyers, accountants , and businessmen-- who, o f t e n a g a i n s t g r e a t odds, dedica ted themselves t o t h e development of a h e a l t h c a r e system which, without t h e i r commitment and' s k i l l s , might no t have r e s u l t e d i n t h e human and o rgan iza t iona l achievement t h a t t h e Kaiser Permanente Medical Care Program rep resen t s today.

The Regional Oral Hi s to ry Of f i ce was e s t a b l i s h e d t o t ape record auto- b iog raph ica l in te rv iews wi th persons who have con t r ibu ted s i g n i f i c a n t l y t o r e c e n t C a l i f o r n i a h i s t o r y . The o f f i c e i s headed by Wil la K. Baum and is under t h e a d m i n i s t r a t i v e superv is ion of James D . Har t , t h e d i r e c t o r of The Bancroft Library.

Malca Cha l l , Di rec tor Kaiser Permanente Medical Care Program

Oral H i s t o r y P r o j e c t

14 January 1986 Regional Oral His tory Of f i ce Berkeley, C a l i f o r n i a

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, 19 49.

. Life Among the Doctors. New York: Harcourt, Brace and Company, 1949. (chapters XI11 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- off ice 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.X

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, 198i. Tran- scripts, Audio-Visual Department, Kaiser Foundation Health Plan.

. "The Coulee Dream: A Fond Remembrance of Edgar Kaiser." Kaiser X Permanente Reporter, January 1982, pp. 3-4.

Garfield, Sidney R., M.F. Collen and C.C. Cutting. "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, April 24, 1974."

Glasser, Susan, et al. Cultural Resources Catalogue. Middle Management Development Program 11, Group 111, 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, I ~ C . ~

Kaiser Permanente Mission Objectives. Report of the Kaiser Permanent: 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, 19 71.

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

v i i

INTERVIEW HISTORY

No h i s t o r y of t h e Kaiser e n t e r p r i s e s could omit Eugene E. Trefethen, Jr. anymore than i t could omit t h e i r namesake, Henry J. Kaiser , o r h i s son, Edgar. I n add i t ion t o being c l o s e l y a s soc ia t ed wi th t h e Kaiser family and Kaiser I n d u s t r i e s a l l of h i s a d u l t l i f e , Trefethen played a key r o l e i n t h e development of t h e Kaiser Permanente Medical Care Program.

The a s s o c i a t i o n with Kaiser I n d u s t r i e s began i n 1926 when, as a c l o s e f r i e n d and f r a t e r n i t y bro ther of Edgar Kaiser a t UC Berkeley, Oakland born and educated Gene Trefethen m e t Henry S r . , and began, along with Edgar, t o work on hol idays and v a c a t i o n s , a s a l abore r i n t h e Kaiser sand and g rave l p i t s . Trefethen had o r i g i n a l l y planned t o s tudy l a w and j o i n h i s f a t h e r ' s l a w firm. Ins t ead , a f t e r graduat ion, he at tended Harvard Business School and, a year l a t e r , joined fo rces with t h e Kaisers prepared t o p a r t i c i p a t e i n t h e dynamic growth of t h e Kaiser organiza t ion . I n 1967, having moved s t e a d i l y up t h e corpora te l adde r , always i n c l o s e personal and management a s s o c i a t i o n with Henry Sr . , Trefethen was named p res iden t of Kaiser I n d u s t r i e s Corporation.

Trefethen e s t ab l i shed h i s l i n k with t h e h e a l t h p lan during World War I1 when t h e Kaiser company was bui ld ing Liber ty Ships i n Richmond, Cal i forn ia . H e was given t h e r e s p o n s i b i l i t y f o r overseeing t h e p l an , a t a s k which he bore u n t i l 1980 when he r e t i r e d as vice-chairman of t h e Board of Direc tors of Kaiser Foundation Health Plan and Kaiser Foundation Hospitals . A s vice-chairman emeritus and honorary d i r e c t o r he s t i l l r e t a i n s c l o s e contac t wi th t h e program.

I n 1944 when Garf ie ld and about a dozen doctors wanted t o t ake t h e h e a l t h p lan i n t o t h e community a t l a r g e , Henry Kaiser assigned Eugene Trefethen t o he lp ca r ry out t h i s innovat ive concept i n prepaid medical care. As t h e plan evolved and i ts membership grew i n Ca l i fo rn ia and Oregon, s t r e s s e s developed between t h e doctors and Henry Kaiser whose indus t ry personnel dominated h e a l t h p lan management. Trefethen, represent ing Henry Kaiser , u l t ima te ly gained acceptance of a model con t rac t f o r t h e Kaiser Permanente Medical Care Program which has s tood t h e test of t i m e , making i t poss ib l e t o expand t h e program success fu l ly t o o the r reg ions throughout t h e United S t a t e s . H e has s i n c e been given c r e d i t f o r saving t h e h e a l t h p lan from what w a s thought i n 1955 t o be c e r t a i n d i s so lu t ion . I n t h i s o r a l h i s t o r y , Trefethen recounts , from t h e pe r spec t ive of one o f t e n caught a t t h e t i m e i n t h e middle of opposing f o r c e s , t h e i s s u e s a t s t a k e , t h e r e l a t ion - s h i p s between physicians and management, and h i s own f a c i l i t a t i o n of a success fu l compromise.

M r . Trefe then ' s l a r g e , comfortable, and handsomely decorated o f f i c e s u i t e a top t h e Kaiser Building i n Oakland w a s t h e s e t t i n g f o r one prel iminary conference on February 6, followed by recorded in terv iew ses s ions on February 22, March 5 , and June 12, 1985. A n almost l i f e - s i z e pa in t ing of Henry and Edgar Kaiser hangs a t t h e en t rance t o t h e s u i t e . On t h e she lves and wa l l s of t h e s i t t i n g room a r e p i c t u r e s , plaques, a i r p l a n e and sh ip models, and o the r memorabilia denoting Trefe then ' s years with t h e Kaiser organiza t ion and i t s far - f lung i n t e r e s t s .

M r . Trefethen ta lked q u i e t l y and thoughtfu l ly of h i s experiences with t h e h e a l t h p lan and t h e people i n management and medicine with whom he'd been i n contac t f o r s o many years . It was d i f f i c u l t t o imagine him "pounding out ," a s he expressed i t , t h e hea l th p lan con t rac t s , and tending simultaneously t o t h e many problems which bese t both the medical program and t h e Kaiser companies. Ref lec t ing on t h e a c t i v i t y and passion of the p a s t brought f o r t h an occasional chuckle, a f l a s h of fervor . Some inc iden t s were forgot ten . Busy now with h i s present venture , Trefethen Vineyards, he looks back upon h i s achievements and experiences not a s a hero but as a manager simply doing t h e job he w a s committed t o performing. The holder of medical record number 96 put i t t h i s way:

I t 's been a l o t of fun. I ' m not t h e guy t h a t ' s respons ib le f o r it. We had an organiza t ion around here. Henry had me looking a f t e r t h i s th ing , and I w a s very c lose t o him. He was very c l o s e t o me, and he w a s on top of me, r e s t assured , t o be s u r e t h a t I was doing t h e job.

. I w a s very a t tached t o i t , I w a s very a t tached t o i t [ t h e hea l th p lan] . Because I knew the people so very w e l l , and I ' d been through a l l t he growing pa ins , and i t was a chal lenge t o make i t work. I bel ieved t h a t Henry Kaiser ' s v i s i o n a s t o where t h i s th ing could go u l t ima te ly w a s r i g h t , and t h a t i t w a s something t h a t was worth working on. I enjoyed it . I enjoyed t h e chal lenge, and I enjoyed t h e r e l a t i o n s h i p s involved i n it.

Malca Chall Interviewer-Editor

29 January 1986 Regional Oral History Off ice Universi ty of Ca l i fo rn ia , Berkeley

Regional Ora l His tory Off ice Room 486 The Bancroft L i b r a r y .

Universi ty of Ca l i fo rn ia Berkeley, Ca l i fo rn ia 94720

BIOGWHICAI, INFORMATION

(Please p r i n t o r w r i t e c l e a r l y )

Your f u l l name EUGENE EDGAR TREFETHEN, JR.

Date 'of b i r t h 7 / 27/1909 Place of b i r t h Oakland, California

Father ' s full name . Eugena Edgar Trefethen

Bir thplace Oakland, California

Occupation attorney

Mother's full name Georgia Carro l l Trefethen

Bir thplace Ba.;ra-mento, California

Occupation

Where d id you grow up ? Oakland

Present community San Francisco

Education A. B. Polit ical Science, University of California, Berkeley 193:)

1 year at Harvard School of Business Administration

Occupation(s) Retired business executive

Specia l i n t e r e s t s o r a c t i v i t i e s pleanc sec attached bio sheet

X EUGENE E. TREFETHEN, JR.

Biography

Eugene E. Trefethen, Jr. is the proprietor of Trefethen Vineyards, Napa, California. He is also retired president of Kaiser Industries Corporation and an honorary director of Kaiser Aluminum & Chemical Corporation, Kaiser Cement Corporation, Kaiser Foundat ion Health Plan, Inc. and Kaiser Foundation Hospitals.

Mr. Trefethenls civic activities include:

Trustee, Past President, University of California Berkeley Foundat ion Trustee, University of California San Francisco Foundation Vice President and Chairman of the Executive Committee, Hastings

College of the Law, Law Center Foundation Past Board Member, University of California Santa Cruz Foundation Member and Past Chairman of the Advisory Board, University of California

Business School Lifetime Trustee and Past President of Board of Trustees, Mills College Lifetime Member and Past Chairman of Board of Trustees, San Francisco

Museum of Modern Art

He has also served in various capacities with:

Oakland Symphony Orchestra Association Stern Grove Festival Association United Negro College Fund Boy Scouts of America

Awards :

Jefferson Award for high ideals and achievement in public service, San Francisco Bay Area recipient, March 1981

Legal Assistance to the Elderly, for distinguished leadership, March 1981 University of California Alumni Association, Alumnus of the Year, 1980 University of Califolcnia College of Engineering, Honorary Alumnus, 19 76 University of Southern California School of Business Administration,

annual award for outstanding achievement in business management, 1968.

Mr. Trefethen was born in Oakland on July 27, 1909. He received an A. B. degree in political science from the University of California in 1930 and attended Harvard School of Business Administration. He holds honorary doctorate degrees from the University of Portland, Mills College and Golden Gate University.

Mr. Trefethen married Catherine Morgan in 1937. They have a married son, John Vance Trefethen; a married daughter, Mrs. Carla Jean Saunders; and three grandchildren. The Trefethens reside in San Francisco.

AWARDS

D i s t i n g u i s h e d S e r v i c e Award, G r o u p H e a l t h A s s o c i a t i o n o f A m e r i c a , 1 3 8 1

PUEL. 1'C:AT I O N S AND PRESENTAT IONS

R e p o r t o f Ten C a s e s o f P o l i o m y l . i t i s i n I n f a n t s U n d e r S i x M o n t h s o f Age, C h a r l e s M. P I ~ m t o n , M.D., J o h n G. S m i 1 1 i e , M. D., a n d A l b e r t G. Bower , M . D . , J o u r n a l o f P e d i a t r i c s , v . 3 6 , n . 4 , A p r i l , 1 95!:).

"A C: lose Lool.:: a t P r e p a i d Gl-c~up P r a c t i c e . " 21st N a t i o n a l D e n t a l H e a l t h C o n f e r e n c e , A p r i 1 , 1970 ( U n p u b l i s h e d

" T h e P e r m a n e n t e M e d i c a l G r o u p , " S e m i n a r S e s s i o n , 1 l t h Annua l M e e t i n g I n d i a n a B l u e S h i e l d , 1 9 7 1 ( U n p ~ t b l i s h e d )

"t:::ai s e r - - P e r m a n e n t e S y s t e m s , " Panel . o n S t r u c t u r e u f S o m e Ex i s t i n g S y s t e m s C u r r e n t l y D e l i v e r i n g C a r e , U n i v e r s i t y of C a l i f o r n i a , S a n F r a n c i s c o , R p r i 1 , 1 7 7 2 ( U n p u b l i s h e d )

"L!ual i t y o f C a r e , " P a n e l , F ' r o c e e d j . n g s o f 2 2 n d Annua l G r o u p H e a l t h I n s t i t u t e , 1772, pp 74-73.

"Hea1t .h M a i n t e n a n c e : F a c t s a n d F a n c y , " P r o c e e d i n g s o f 2 3 r d Annua l G r o u p H e a l t h I n s t i t u t e , 1 9 7 2 , p p 53-55.

" E x p e r i e n c e w i t h H e a l t h M a i n t e n a n c e O r g a n i z a t i o n s : A r e C o s t Con t . ru1 s a n d H i g h D u a l i t y C a r e Compa t i b l .e?" lC10th Annua l M e e t i n y o f t h e A m e r i c a n Pub1 i c H e a l t h A s s o c i a t i o n , November , 1972. IUnpubl. I. s h e d 1

" P r e p a i d G r o u p P r a c t i c e a n d t h e D e l i v e r y o f H e a l t h C a r e , " H e n r y R. S h i n e C i e l d , M.D., a n d J o h n G. S m i l l i e , M . D . , A d v a n c e s i n P e d i a t r i c s , Yearbonk: M e d i c a l P ~ t b l i s h e r s , I n c . , 1973. v . 2 0 , p p 205--221

"H~c:r~.\i t m e n t o f P h y s i c i a n s , L a r g e P r e p a i d Gt-oup P r a c t i c e . " P r o c e e d i n g s o.f Ib l ed ica l D i r e c t o r s E d u c a t i o n a l C o n f e r e n c e , Medical . D i rec to r s D i \ ; i s i o n o f Groc.~p H e a l t h A s s o c i a t i o n o f A m e r i c a , O c t o b e r - , 1 9 7 6 , pp 14-26.

" P r @ p a i d I r r t j e p e n d e n t or G r o u p P r a c t i c e s a n d Communi ty H o s p i t a l 5" Annual. Me(3.t.i n g o f t h e A m e r i c a n H o s p i t a l . Associ a t i n n , S e p t e m b e r 3. 3, 15'753. ( U n p ~ t b l 3. shecl 1

" S k i 1 1 s R e q u i r e d f o r P h y s i c i a n Management , " P r o c e e d i n g s o f t h e M e d i c a l D i rec to r s C o n f e r e n c e , M e d i c a l D i r - e c t o r s D i v i s i o n o f Group - Heal t h A s s o c i at.i o n 0 . F A m e r i c a , F e b r u a r y , 1 7 8 1 , p p A-9.

" T h e F i r s t M e e t i n g of: G H A A M e d i c a l D i r e c t o r s , 1 9 7 3 , " i b i d . p p 39 -42

I FAMILY BACKGROUND AND EDUCATION

[Date of Interview: Febuary 22, 1985]#f

Chal l : I thought today we could go i n t o your family background. I n o t i c e t h a t you have been previous ly interviewed on some of your background, bu t no t a s much as I would l i k e t o have.*

Trefethen: I guess we should start wi th my b i r t h . I w a s born i n Oakland on J u l y 27, 1909. My f a t h e r w a s born i n Oakland. My mother was born i n Sacramento.

I was t h e t h i r d youngster i n a family of f o u r , t h e f i r s t two being g i r l s . I a t tended t h e Univers i ty of C a l i f o r n i a a t Berkeley and got a BA degree i n p o l i t i c a l s c i e n c e , and I went on t o Harvard Business School f o r one year . I f u l l y intended t o r e t u r n f o r t h e second year when I w a s persuaded by Henry Kaiser t h a t I should go t o work on a p i p e l i n e i n Deer Lodge, Montana.

Chal l : Well, be fo re we go on any f u r t h e r , I ' d l i k e a l i t t l e b i t more about your family. Could you t e l l me something about your mother? You s a i d she was born i n Sacramento?

Trefethen: She w a s born i n Sacramento.

Chal l : And what kind of background d id she have? Where d id h e r family come from o r i g i n a l l y ?

##This symbol i n d i c a t e s t h a t a tape o r a segment of a t ape has begun o r ended. For a guide t o t he t apes s e e page 69.

* In te rv iew of Eugene E. Trefethen, Jr., by S h e i l a O'Brien, t r a n s c r i p t , 1 9 Febuary 1982 (Audio-Visual Department, Kaiser Foundation Health P l an ) , 23-25 ( h e r e a f t e r c i t e d a s Trefethen in t e rv i ew) .

Trefethen: I be l i eve they were a Sacramento fami ly ; t h e family name w a s C a r r o l l .

Chall : They'd been a long time, you th ink , i n C a l i f o r n i a and i n t h e United S t a t e s ?

Trefethen: Yes, they had been.

Chal l : What were they doing i n Sacramento? Were they i n a g r i c u l t u r e ?

Trefethen: I don' t r e c a l l .

Chal l : You don ' t know your grandparents , your mother 's pa ren t s?

Trefethen: I knew my grandmother--my f a t h e r ' s mother. I never knew my grand- f a t h e r , bu t I knew my grandmother. She w a s very c l o s e t o t h e fami ly . She w a s a C h r i s t i a n S c i e n t i s t , and I remember my f a t h e r used t o ch ide h e r a l l t h e t ime about t h a t . Because he d i d n ' t be l i eve i n C h r i s t i a n Science.

Chal l : Was t h i s a l a t e i n t e r e s t i n your grandmother? Had your grandfa ther been one, too?

Trefethen: No, no. I don ' t know how she became a C h r i s t i a n S c i e n t i s t , b u t she w a s one. And a very- l o y a l one, and devout one, and be l ieved i t . As my f a t h e r used t o say , t h a t i f you broke your l e g , why, you d i d n ' t have t o go t o a doc to r , C h r i s t i a n Science would r e p a i r i t . She was being kidded by him, of course .

Chal l : What kind of background d i d your f a t h e r have? He grew up i n Oakland?

Trefethen: Yes, he d i d , and went t o t h e Univers i ty of C a l i f o r n i a , and he go t h i s law degree t h e r e . He w a s an athlete--he w a s i n track--and was q u i t e a good one. He p rac t i ced h i s law i n Oakland a l l h i s l i v i n g l i f e .

Chal l : He had a l a w f i rm?

Trefethen: The f i r m name w a s Chapman and Trefethen. [Melvin C.] Chapman w a s mayor a t one time, of the c i t y of Oakland, and t h a t w a s t he t i m e when they made Lake M e r r i t t . It w a s a marsh a t t h a t t i m e . My f a t h e r ' s p r i n c i p a l c l i e n t was t h e Key System, which was t h e t r a n s i t system i n e x i s t e n c e i n those days.

But he a l s o had many o thers ;he was a very succes s fu l lawyer. And q u i t e a sportsman. He used t o go t o a l l t h e t r a c k even t s , and t h e f i g h t s down a t the audi tor ium on Friday n i g h t s , I be l i eve they were. But he followed s p o r t s , and he loved t o p lay poker. He was a marvelous man, t h a t was saddened when my mother died reasonably e a r l y i n my l i f e .

Chall : How o l d were you?

Trefethen: I c a n ' t remember, b u t she was f i f t y when she d i ed , so I must have been around twenty-five, o r something l i k e t h a t .

Chall : And then your f a t h e r l i v e d on f o r a number of yea r s?

Trefethen: Yes, he d i d .

Chal l : l a a t kind of r e l i g i o u s background was t h e r e i n your family, i f your f a t h e r d i d n ' t p a r t i c u l a r l y c a r e f o r C h r i s t i a n Science?

Trefethen: Well, my f a t h e r d i d n ' t go t o church. W e went t o church, t h e c h i l d r e n went t o church f o r a per iod of t ime. We were a t t h e Episcopal church t h e r e , S t . P a u l ' s . But I remember I f i n a l l y ended up convincing my mother and f a t h e r t h a t i f I s t ayed home on Sunday and c u t t h e lawn I d i d n ' t have t o go t o Sunday schoo l , so my a s s o c i a t i o n wi th t h e church has been r a t h e r l i m i t e d . But I both c e r t a i n l y be l i eve i n and I have g r e a t f a i t h i n my Father i n Heaven, and I a l s o l i k e t o hea r , from time t o t ime, good l e c t u r e s by t h e var ious m i n i s t e r s and p r i e s t s which I ' v e heard from time t o t ime, g o t t e n t o know from time t o time.

Chal l : The l ead ing exponents of some of t he r e l i g i o n s ?

Trefethen: Yes.

Chall : So, was t h i s your mother 's doing t h a t you a l l went t o Sunday school and t o church t o some e x t e n t ?

Trefethen: Yes, it was. I had two o l d e r s i s t e r s , and a younger b ro the r , and they were more f a i t h f u l about going t o Sunday school than I w a s .

Chall : How o l d were you when you decided t h a t you would r a t h e r do t h e lawn than go t o Sunday school?

Trefethen: Oh, I c a n ' t remember t h a t , b u t I was an e a r l y teenager , I th ink .

Chal l : What were t h e expec ta t ions f o r you, n o t only a s an i n d i v i d u a l , bu t a s t o a l l t h e ch i ld ren?

Trefethen: My f a t h e r was determined t h a t we were t o have a f i r s t - c l a s s educa t ion , s o a l l of us went t o t h e Univers i ty of C a l i f o r n i a [Berkeley] , and a l l of us go t degrees t he re . He had always wanted me t o become a lawyer, and al though I was very impressed wi th h i s p ro fe s s ion , and wi th t h e o p p o r t u n i t i e s t h a t were involved i n i t , I ended up meeting Henry Kaiser , through h i s son, Edgar, when we both pledged t h e same f r a t e r n i t y o u t a t t h e Univers i ty of C a l i f o r n i a . And I became very

Trefethen:

Chal l :

Trefethen :

Chal l :

Trefethen :

Chal l :

Trefethen:

Chal l :

Trefethen:

Chal l :

Tref then:

Chal l :

a t t r a c t e d t o t h e bus ines s world, t h e bus iness l i f e , and s o I ended up going back t o t h e Harvard Business School, r a t h e r than t o t h e Harvard Law School, which my f a t h e r r e a l l y had dreamed t h a t I would do.

That was a choice, t hen , t h a t you made a f t e r meeting t h e Kaisers?

That is c o r r e c t . My f a t h e r was a ve ry good s p o r t about i t , but he was d isappoin ted because h e v i s u a l i z e d t h a t I ' d come i n t o h i s f i rm and c a r r y i t on. But he w a s ve ry happy wi th my development, a s i t d i d develop, and my i n t e r e s t s . And w a s always very sympathet ic t o my dec i s ion no t t o go i n t o t h e l e g a l profess ion .

What about your b r o t h e r ? Did your b ro the r go i n t o t h e law f i rm?

No, h e worked f o r u s i n t h e Kaiser organiza t ion . He was younger than I, but h e w a s i n t h e s e c u r i t i e s bus iness ; he worked f o r Shuman Agnew, and then Morgan Stanley. H e was a retiree working p a r t t i m e f o r Morgan Stan ley when he d ied , which was about two y e a r s ago.

H e w a s s u c c e s s f u l i n h i s bus iness ; he married twice. He l o s t h i s f i r s t w i f e t o r a t h e r an e a r l y death; had two youngsters . Then, subsequent ly he marr ied someone who had been divorced and who had a number of k i d s , s o they had a ve ry , very happy marr ied l i f e .

Big family.

And i t went along u n t i l he d ied , and he d ied t o o soon i n l i f e .

How about your s i s t e r s ? They d i d g e t t h e i r educa t ion i n co l lege . Was anything expected of them, i n t hose days, t o t a k e on any kind of c a r e e r , o r w a s i t a matter of a sound educat ion only?

No, my o l d e s t s i s t e r never d i d marry, and s h e ' s a l i v e , and she t r a v e l s an awful l o t now, a l l over t h e world. She worked f o r q u i t e a few y e a r s i n a d e n t a l o f f i c e ; many, many years . She was a d e n t a l s e c r e t a r y , and she has many, many f r i e n d s . My o t h e r s i s t e r was marr ied. Let m e s e e , t h e r e were one, two, t h r e e , g i r l s , and t h a t ' s t h a t , no boys. They've a l l done ve ry w e l l . And i t ' s been a very happy marr iage f o r bo th my s i s t e r , Dorothy, and he r husband, Ned [Dodds] . What i s your o l d e r s i s t e r ' s name?

Carol , C-A-R-0-L.

And you o t h e r s i s t e r ' s Dorothy. Did you a l l s t a y i n Oakland?

Trefethen: We a l l s tayed i n Oakland.

Chall : U n t i l r e c e n t l y , you have a l s o l i v e d i n Oakland?

Trefethen: T h a t ' s c o r r e c t . I went t o San Francisco when I r e t i r e d , which i s t e n yea r s ago.

Chal l : So, Oakland has r e a l l y been your home.

Trefethen: Oh, yes. And I, of course , went t o work f o r t h e Kaiser o rgan iza t ion wi th headquar te rs over here. I ' v e only had one job i n my l i f e , and t h a t has been wi th them.

Chal l : I want t o f i n i s h some background on your schools , now, and then w e ' l l go i n t o t h e Kaiser per iod. Which schools i n Oakland d i d you a t t e n d ?

Trefethen: The Univers i ty High School, and t h e Lakeview Grammar School.

Chal l : Where was your home?

Trefethen: I l i v e d on 291 Jayne Avenue.

I1 THE KAISER FAMILY AND KAISER INDUSTRIES

Chal l : Now, a s a r e s u l t of your meeting Edgar Kaiser , you met Henry J.. What's t h e name of t h e f r a t e r n i t y t h a t you both jo ined?

Trefethen: Chi P s i .

Chal l : You decided t o work f o r t h e Kaiser family. What were your e a r l y impressions of t h e Kaisers? What a t t r a c t e d you t o Edgar, f o r example?

Trefethen: Well, we had never met before t h e t ime t h a t we a c t u a l l y d i d meet one another when we pledged i n t h e same f r a t e r n i t y . W e seemed t o h i t i t off very w e l l t oge the r , and we d i d a l o t of t h ings toge the r . I met h i s f a t h e r t h e day t h a t we ce l eb ra t ed our being pledged t o t h e f r a t e r n i t y .

H i s f a t h e r came t o t h e f r a t e r n i t y f o r lunch t o meet a l l t h e boys, and t h a t ' s when I f i r s t met him. Af t e r t h a t , why, every vaca t ion per iod I worked f o r t h e Kaiser organiza t ion , whether i t was a t Christmas vaca t ion , o r E a s t e r vaca t ion , o r Saturdays, and summer vaca t ions . H e was a g r e a t worker, h e be l ieved i n work, and he be l ieved i n young men g e t t i n g s t a r t e d e a r l y . He was a very s t imu la t - i n g man t o be wi th , and every th ing was fun.

So, we worked a s l a b o r e r s i n a sand g rave l p i t a t one of t h e shops we had out i n Livermore. I used t o d r i v e him from time t o t ime. He d id a l o t of t r a v e l i n g those days, much of i t was i n an automobile, and I used t o d r i v e him.

Edgar Kaiser d id no t f i n i s h co l l ege . H e l e f t t o go t o work f o r h i s f a t h e r , because t h e r e was a p i p e l i n e up i n Montana t h a t h i s f a t h e r g o t , and t h e r e was an oppor tuni ty f o r a young man t o go up t h e r e and 'get s t a r t e d , and t a k e on t h e managership. By t h a t t ime he had t r a i n e d u s how t o run th ings . So, Edgar l e f t co l l ege , and d i d not f i n i s h , and went up t o Deer Lodge, Montana.

Trefethen: When I came back a f t e r f i n i s h i n g my f i r s t year a t Harvard Business School, I came home v i a Deer Lodge, Montana; went over t h e p r o j e c t wi th Edgar Kaiser , and then came home. As I w a s coming i n t h e door , t h e phone w a s r i ng ing , and Henry Kaiser was on t h e l i n e , and wanted t o know what I was going t o do. I s a i d , "Why, I don ' t know, I j u s t go t he re , I ' m on vacation." Well, I don ' t t h i n k he understood how t o s p e l l vaca t ion l e t a lone pronounce it.

So, I w a s on t h e next t r a i n back t o Deer Lodge, going t o work up t h e r e w i th Edgar, and I never d id r e t u r n t o Harvard. I never r e a l l y r e g r e t t e d t h a t , because I t h i n k my experience then and s i n c e then , has been t h a t t h e f i r s t year is t h e most important year i n t h e graduate school of bus iness . So I thought I w a s l ea rn ing more by working, and I did. I went from Deer Lodge, Montana, t o Boulder Dam, wh i l e w e were bu i ld ing Boulder Dam.

Chal l : Was t h e r e n o t another son i n t h e Kaiser family, Henry, J r . ?

Trefethen: Yes, Henry Jr. w a s a younger son; he developed mul t ip l e s c l e r o s i s e a r l y i n h i s l i f e .

Chal l : Ah, I see.

Trefethen: H e never could q u i t e measure up t o what he a sp i r ed f o r , because of h i s h e a l t h , and p lus t h e f a c t , being t h e second son, un fo r tuna te ly , he d i d n ' t ge t t h e same kind of a t t e n t i o n t h a t t h e f i r s t son got from h i s f a t h e r . But he d i d go t o co l l ege , and lie d i d ge t h i s degree, and he worked f o r u s , p a r t i c u l a r l y during t h e war yea r s , when we had him i n charge of t h e s h e l l p l a n t , where we were bu i ld ing s h e l l s f o r t h e government.

Then he worked a t our s t e e l company towards t h e t a i l end of t h e w a r , and then a f t e r t h e war. And then w e put him i n pub l i c r e l a t i o n s and he d id q u i t e a good job wi th t h a t . He d i d no t have a happy marriage; he had an unhappy marriage. It f i n a l l y ended i n divorce. Then he got marr ied aga in and he had one youngster , who i s a l i v e , and who w e seldom, i f ever , see. Has no connection wi th t h e Kaiser organiza t ion a t a l l .

Chal l : So t h e o the r Henry Kaiser t h a t i s i n t h e organiza t ion i s Edgar 's son?

Trefethen: Yes, t h a t ' s Edgar 's son, and h i s name i s Henry Mead Kaiser , Mead being t h e family name of Edgar Ka i se r ' s wife . [Elwood] Mead was a commissioner of reclamation. H e d i d a l o t of work i n t h e cons t ruc t ion bus iness f o r t h e Bureau of Reclamation, and t h a t ' s how Edgar met h i s f i r s t wi fe , Sue.

C h a l l : When d id Henry, Jr. come down wi th m u l t i p l e s c l e r o s i s ? I t ' s a long, slow d i sease .

Trefethen: H e had it f o r about f i f t e e n years . H e t r a c e d i t back t o g e t t i n g some numbness i n h i s t o e s , and t h i n g s l i k e t h a t . I don ' t q u i t e r e c a l l p r e c i s e l y , bu t he had it f o r f i f t e e n y e a r s be fo re he f i n a l l y died.

Cha 11 : So t h a t dur ing t h e war, and when h e was i n t h e s h e l l p l a n t and some of t h e o t h e r major i n d u s t r i e s , h e wasn ' t s u f f e r i n g any phys i ca l impairment a t t h e t ime?

Trefethen: No, he wasn ' t s u f f e r i n g , b u t he knew a f t e rwards t h a t he was beginning t o be a f f e c t e d .

Chal l : I t h i n k Henry J. Kaiser would have been a very hard a c t t o fo l low f o r anybody. It 's n o t s u r p r i s i n g t h a t h i s younger son found him a hard a c t t o follow. How about Edgar? Was t h e r e a reason why s o much a t t e n t i o n w a s showered on Edgar, a s i d e from t h e f a c t t h a t h e was number one? Was t h e r e some s p e c i a l p e r s o n a l i t y t h a t developed i n Edgar?

Trefethen: Edgar was a very personable man. He was my b e s t f r i e n d f o r years . Our f a m i l i e s were ve ry c l o s e . H i s family w a s ve ry c l o s e wi th h i s f a t h e r ' s and mother 's family. H e loved t o work, and he was a capable l eade r . But one t h i n g about fol lowing a famous f a t h e r : I saw Edgar s o many t i m e s p r a i s i n g h i s f a t h e r , which i s f i n e t o do, bu t i n a way he was say ing , "There's nobody can be l i k e my Dad." So h e wasn't a s a g r e s s i v e as h i s f a t h e r was. H i s f a t h e r was a l i v e , of course, a l l during Edgar 's e a r l y bus ines s l i f e , and h e was g iv ing a l l t h e c r e d i t , f o r what h e and t h e rest of u s w e r e doing, t o h i s f a t h e r . H i s f a t h e r was i n t h e p r e s s q u i t e a b i t . H i s f a t h e r always used t o s ay , it was t h e young men t h a t were doing a l l t h e work, and we were. We worked ve ry , very hard, and t h e r e w a s a whole group of u s t h a t ended up running these bus inesses a t an e a r l y age i n l i f e , r e l a t i v e l y speaking.

M r . Kaiser , Sr . , be l ieved i n g iv ing young men r e s p o n s i b i l i t y , and a u t h o r i t y t o go along wi th it. H e would say he wanted t o throw them i n t o co ld water , and l e t them s i n k o r swim.

Chal l : That ' s r e a l l y q u i t e an unusual c h a r a c t e r i s t i c i n a person. A self-made man, anyway. I know he kept h i s hands r i g h t on top of i t

' a l l , bu t s t i l l h e d i d l e t you a l l go ou t t h e r e and--

Trefethen: Y e s , he w a s a g r e a t follow-through man. He'd c a l l u s any time of t h e n i g h t o r t h e day, d i d n ' t make any d i f f e r e n c e what t h e hour was, he'd c a l l us . And w e had a l o t of fun wi th t h a t , because he would always say , "Oh, d i d I wake you?''

H e d i d n ' t need but about f o u r hours of s l e e p , and t h e r e s t of u s seemed t o need more than t h a t , o r a t l e a s t we t r i e d t o g e t more than we d id . But Edgar r e a l l y never d i d b u i l d t h e o rgan iza t ion

Trefethen: l i k e h i s f a t h e r b u i l t i t . The gross r e s u l t was t h a t a l though Edgar was r e a l l y t h e t i t u l a r head of t h e organiza t ion , when h i s f a t h e r was phasing ou t , he r e a l l y wasn ' t running it. The person t h a t was r e a l l y running t h e o rgan iza t ion was myself. A l l of t h e heads of a l l of t h e companies repor ted t o me.

I r e a l l y r epo r t ed t o Henry Kaiser . I kept Edgar Kaiser f u l l y informed of what w a s going on. But I w a s t h e one t h a t w a s r e a l l y a c t u a l l y ope ra t ing t h e bus inesses . A l l of t h e manufacturing bus inesses were s t a r t e d by myself, wi th Henry, of course. That ' s aluminum, cement, and s t e e l . Edgar concentrated on t h e cons t ruc t ion bus iness , which went from one job t o another . He d id very w e l l wi th it. H e d i d about h a l f of our sh ipbu i ld ing e f f o r t dur ing t h e w a r , and Clay Bedford d i d t h e o t h e r h a l f of our sh ipbu i ld ing e f f o r t dur ing t h e war.

I was with Henry a l l dur ing t h e w a r period--wherever he went, doing whatever he was doing, and a l s o dur ing t h e postwar per iod when w e were ad jus t ing . Edgar went from t h e engineering and cons t ruc t ion a c t i v i t i e s t o t h e automobile bus iness , back i n Willow Run. My con tac t t h e r e w a s one of j u s t fol lowing t h e ope ra t ion , w i t h h i s f a t h e r Henry. W e spent a l o t of t ime back t h e r e ; w e were on t h e board. But Edgar was running t h a t .

It got i n t r o u b l e , and then we had t o g e t i t out of t roub le , and w e got i t out of t roub le . I remember I went back t h e r e and s tayed f o r two years .

Chal l : Oh, d i d you?

Trefethen: W e decided t h e way t o keep from going i n t o bankruptcy w a s t o cont inue t h e bus iness , and s o w e had t h e idea of buying t h e Wil lys Jeep business . We bought t h e Wil lys Jeep bus iness , t h e two of us--Edgar and I toge the r d i d i t , from i t s owners, and then we phased out t h e passenger c a r bus iness , and b u i l t up t h e Jeep bus iness . By doing t h a t , w e kept i n bus iness , and avoided t h e bankruptcy. It was an easy way ou t because i t was a s e p a r a t e company; i t wouldn't have a f f e c t e d our o v e r a l l business . And i t was very succes s fu l . W e f i n a l l y ended up s e l l i n g t h e Jeep bus inesses t o American Motors, and subsequent ly s o l d our s tock i n American Motors.

Our e n t i r e automative experiences ended up p r o f i t a b l y f o r Kaiser Indus t ry , a l though most people f e e l t h a t we f a i l e d i n t h e passenger c a r bus iness . Again, t h a t ' s no t r i g h t e i t h e r because we inves ted the t o o l i n g and some of our c a r s down i n the Argent ine, and B r a z i l , and s e t up t h e f i r s t major au to companies i n both of those coun t r i e s , both of which were very succes s fu l . We so ld going bus inesses , one t o t h e French, and t h e o the r t o t h e Ford Motor Company.

Chall :

Trefethen:

Chal l :

Trefethen:

Chal l :

Trefethen:

Chal l :

Trefethen:

Tref e then :

That ' s i n t e r e s t i n g . One c a n ' t n e c e s s a r i l y f a u l t Edgar, o r anyone e l s e , f o r what might have happened wi th t h e Kaiser automobile.

No.

Maybe t h e t i m e w a s n ' t r i g h t .

Well, a s we looked back on i t , we r a i s e d a l o t of money t o go i n t o t h a t bus iness . We thought when we r a i s e d it--it was $100 million-- t h a t w a s a l o t of money. That was a l o t of money i n those days. But we've always looked back on i t and s a i d t h a t we should have r a i s e d $200 m i l l i o n and then , w i th t h e $200 m i l l i o n we should have s e t up our own o u t l e t s t o c o n t r o l our d i s t r i b u t i o n . Because, when t h e going g o t tough, General Motors, Ford, and Chrys le r , s t o l e our d e a l e r s , because they had t h e s t r e n g t h and t h e r epu ta t ion . So, our d i s t r i b u - t i o n w a s very d i f f i c u l t t o bu i ld i n a s t rong way. We l o s t a l o t of d e a l e r s from time t o t ime when they go t a b e t t e r o f f e r from somebody e l s e .

So, t o do i t over aga in , i f we had had t h e oppor tuni ty , we would have r a i s e d $200 m i l l i o n , which you could have a t t h e t ime, and we would have had our own o u t l e t s , so t h e chances a r e we would have succeeded.

Well, t h a t ' s what you l e a r n by doing. Now, a l l those yea r s t h a t you were working c l o s e l y wi th Henry Kaiser and Edgar had s p e c i f i c jobs t o do, w a s he aware of t h e f a c t t h a t you might have been, t o some degree , t ak ing on h i s f a t h e r ' s r o l e ? Did t h a t bother him?

He must have been; he was aware. But he wasn ' t t roubled wi th t h a t . He knew t h a t t h e o rgan iza t ion was r epo r t ing t o me, and t h a t they were r e a l l y my people. I guess i n t h e q u i e t of t h e n i g h t i t used t o bother him. From time t o time we used t o have a squabble o r two, bu t we had b a s i c a l l y a long-term r e l a t i o n s h i p t h a t he ld toge the r . So, I ' v e always thought t h a t he wasn ' t a s happy i n t h e bus iness a s I w a s . He worked ve ry , very hard , and I worked ve ry , ve ry hard .

And even when he took ove r , a f t e r h i s f a t h e r d i ed , had t i t l e , you were s t i l l running--

These people were s t i l l r e spons ib l e t o me. Then I r e t i r e d . I s e t up a mandatory r e t i r emen t program.

/i /I

I be l ieved i n i t , because I b e l i e v e t h a t t h e young people should be encouraged t o grow and do everything i n t h e i r power t o progress . Ce r t a in ly i f they knew t h a t t h e top people were going t o be l eav ing a t age s i x t y - f i v e , t h a t gave them an e x t r a i ncen t ive . Edgar d i d n ' t b e l i e v e i n t h a t , s o he s tayed on beyond s ix ty - f ive , and I s tayed on as an honorary d i r e c t o r of a l l t h e companies. He was one year o l d e r than I w a s . By t h a t t ime, why, a l l these bus inesses were e s t a b l i s h e d , and were s t r o n g , independent companies.

Trefethen: Then we decided, a s a po l i cy decision--I w a s p a r t of t h e decision-- t h a t we would l i q u i d a t e Kaiser I n d u s t r i e s , which a s t h e parent company--it was a pa ren t company and an opera t ing company a t t h e same time--because t h e s tock of t h e company was s e l l i n g a t a very s u b s t a n t i a l d i scount from i t s breakup va lue .

So, we decided t o l i q u i d a t e Kaiser I n d u s t r i e s v o l u n t a r i l y , which meant s e l l i n g a l l of i ts opera t ing u n i t s t o un re l a t ed purchasers and d i s t r i b u t i n g t h e n e t proceeds and Kaiser I n d u s t r i e s ' s t o c k hold ings i n Kaiser Aluminum, Kaiser S t e e l , and Kaiser Cement t o t h e I n d u s t r i e s ' shareholders . The l a r g e s t shareholder of I n d u s t r i e s w a s t h e Henry J. Kaiser Family Foundation, s o through t h e l i q u i d a t i o n i t became t h e l a r g e s t s i n g l e shareholder i n t h e o the r t h r e e pub l i c ly owned Kaiser companies.

They had been opera t ing independent ly, and wi th independent boards, s o t h a t t h e t r a n s i t i o n w a s no t a d i f f i c u l t one. Well, then Edgar got s i c k , and h e w a s s i c k f o r q u i t e a few yea r s . They were d i f f i c u l t y e a r s because we were going through t h i s l i q u i d a t i o n , and a t t h a t t ime, everybody w a s hopeful t h a t one of t h e sons would emerge.

Chal l : One of Edgar 's?

Trefethen: Y e s , bu t t h ings d i d n ' t work out t h a t way. Edgar was s i c k and made some dec i s ions t h a t turned out t o have been inappropr i a t e . Edgar, Jr. and Henry Mead both had oppor tun i t i e s t o make t h e i r way i n management p o s i t i o n s , bu t a l though both worked hard a t i t , n e i t h e r developed t h e c o n s i s t e n t support and fol lowing r equ i r ed t o make i t i n our c l o s e l y k n i t o rgan iza t ions . Both of them went on t o pursue o t h e r c a r e e r s independent from t h e Kaiser Companies.

Edgar, Jr. became chairman of t h e family foundat ion, which l a t e r s o l d a l l of i t s hold ings i n Kaiser Aluminum, S t e e l and Cement. Henry Mead and ~ d g a r ' s youngest son K i m both se rve on t h e family foundat ion 's board of t r u s t e e s , and Henry Mead is on t h e Health P lan and Hosp i t a l s boards. K i m never was i n t e r e s t e d i n e n t e r i n g any of t h e bus inesses . H e was a f i g h t e r p i l o t and f l i g h t i n s t r u c t o r i n t h e navy, and then became a commercial a i r l i n e p i l o t , which he is today, l i v i n g i n S e a t t l e . Henry Mead decided t o pursue h i s own bus iness i n t e r e s t s , and has been involved i n r e a l e s t a t e , insurance and ven tu re c a p i t a l a c t i v i t i e s .

Chall : It 's n o t unusual t h a t what one person has b u i l t up a t a c e r t a i n p e r i o d of t i m e , which is j u s t r i g h t f o r him and t h e bus ines s c l ima te of t h e t i m e , t o f i n d t h a t t h e fami ly cannot c a r r y i t on, f o r whatever many reasons t h e r e might be.

Trefethen: I t ' s too bad, bu t i t was t h a t way. I d i d have a person i n mind t o c a r r y on a f t e r m e , b u t Edgar d i d n o t approve.

Chal l : Who would have been t h a t person?

Trefethen: W e l l , I ' d r a t h e r no t mention h i s name.

Chal l : A l l r i g h t . But you d i d have somebody i n mind?

Trefethen: Oh, y e s , oh yes . Y e s . H e ' s s t i l l w i th us . It might have had some d i f f e r e n c e i n our d e c i s i o n t o l i q u i d a t e , probably would have had some d i f f e r e n c e . But youngEdgar , when he was running t h e s t e e l company, d id some t h i n g s t h a t were i r r e v e r s i b l e , and s o t h e r e s u l t was t h a t w e d i d have some th ings happen t h a t , had t h e r e been ano the r l e a d e r a t t h e t op , probably wouldn't have happened.

But, on t h e o t h e r hand, I must s ay t h a t t h e l i q u i d a t i o n of Kaiser I n d u s t r i e s w a s ve ry good f o r t h e sha reho lde r s of Kaiser I n d u s t r i e s . They ended up g e t t i n g a very s u b s t a n t i a l premium, and t h a t was a vo lun ta ry l i q u i d a t i o n . You see t h a t going on today i n v o l u n t a r i l y , where you see a l l t h e s e co rpo ra t i ons being taken over . Attempts, some of them s u c c e s s f u l , t o t ake them over , t o break them up, t o g e t g r e a t e r va lues o u t of them than t h e i r va lue is, as r e f l e c t e d i n t h e s t o c k market.

Tha t ' s a s o r t of a f a c t of l i f e , I guess . I f you have a ho ld ing co rpo ra t i on owning s t o c k i n subs id i a ry co rpo ra t i ons , t h e s t o c k of t h e ho ld ing company w i l l s e l l a t a d i s coun t s o t h a t t h e ho ld ing company can l i q u i d a t e a t p r i c e s t h a t i n t h e aggrega te would s u b s t a n t i a l l y exceed t h e s t o c k va lue of t h e ho ld ing company. Tha t ' s t h e way i t is , and s o w e decided t h a t t h a t was i n t h e b e s t i n t e r e s t of t h e sha reho lde r s , which was p r imar i l y t h e fami ly , i n t hose days. So t h a t ' s what w e d i d .

Trefethen: Of course, we decided t o s t a y i n t h e aluminum bus iness , and s t a y i n the cement bus iness , and s t a y i n t h e s t e e l bus iness , bu t then we got i n t o t r o u b l e i n t h e s t e e l bus iness because of t h e f o r e i g n competit ion from t h e Japanese. We decided we'd p u t a l o t of money i n i t , and we d i d ; we put $250 m i l l i o n i n i t .

But t h a t d i d n ' t do the t r i c k . We d i d n ' t have a l l t h e money necessary t o f u l l y become compet i t ive , so then somebody from t h e o u t s i d e go t t h e idea t h a t they could buy Kaiser S t e e l and break i t up and g e t more money f o r i t than i t s sha re s were s e l l i n g f o r i n t o t a l . And they d i d . So we s o l d Kaiser S t e e l . The cement company's i n t a c t , and t h e aluminum company's i n t a c t .

I ' v e been on those boards ever s i n c e t h e beginning. I ' m an honorary d i r e c t o r , b u t I go t o a l l t h e meetings, and they provide me wi th an o f f i c e and a s e c r e t a r y . I do t h i n g s , some th ings d i r e c t l y f o r them, but mostly I ' m working i n t h e community.

Chal l : Was t h e r e ever a po l i cy , spoken o r unspoken, about Kaiser people working i n t h e community? Was t h a t kind of a philosophy? I know you d i d , Edgar Kaiser c e r t a i n l y d i d , too . And t h e r e a r e many o t h e r s from the i n d u s t r i e s .

Trefethen: Edgar s t a r t e d i t . He l i k e d t h a t . And he spent a l o t of t ime on t h a t . He had a l o t of time t o spend on i t , so he d id spend a l o t of t ime on it , and d id a very good job i n t h e community. He w a s t h e chairman of t h e Bay Area Council , and he kept t h e [Oakland] Symphony a l i v e around he re f o r yea r s on end.

Then I worked on t h e museum, and r a i s e d a hunk of money f o r them, the Oakland Museum; then we branched. He was the head of t he Bay Area Council , and then I became head, oh, a number of years a f t e r he was t h e head.

Chal l : That 's a businessmen's o rgan iza t ion , r ed ly .

Trefethen: Yes, b u t we always worked wi th t h e United Crusade; o r some s p e c i a l fund t h a t was being r a i s e d . We always considered t h a t was a p a r t of our co rpo ra t e r e s p o n s i b i l i t y , bu t a l s o w e s o r t of l i k e d i t , because i t provided n i c e a s s o c i a t i o n s , p a r t i c u l a r l y i n educat ion; t h e Univers i ty of C a l i f o r n i a , and M i l l s Col lege, where I was very a c t i v e , and s t i l l am.

But t h a t was something t h a t we a l l f e l t w a s p a r t of our corpo- r a t e duty i n t h e community, p a r t i c u l a r l y with t h e s i z e of Oakland, with i t s problems, and no t very many people around t o do anything about i t .

Chal l :

Trefe then :

Chal l :

Trefe then:

Chal l :

Trefethen:

Chal l :

Trefe then:

Chal l :

Well, I guess we've touched on t h e Kaiser fami ly . We d i d n ' t r e a l l y t a l k ve ry much y e t about Mrs. Henry Kaiser , Bess ie . You might g ive m e j u s t a l i t t l e c l u e about h e r , and then w e ' l l go i n t o t h e h e a l t h p l a n , which is ou r r e a l p r o j e c t h e r e .

Bessie was a l o v e l y woman. And Henry Kaiser depended on he r ve ry heav i ly ; he never made a bus ines s d e c i s i o n , he never made a d e c i s i o n about a p a r t n e r o r about a person i n t h e o r g a n i z a t i o n , be fo re ob t a in - i n g h e r judgment and c l ea rance .

Is t h a t s o ?

He'd come home a t n i g h t and he 'd t e l l h e r eve ry th ing t h a t went on, and each i n g r e a t d e t a i l dur ing t h e day.

P a t i e n t woman. Was she p r e t t y a c u t e about understanding what s h e was hear ing?

She had very good judgment. Very, ve ry good judgment. y a r t i c u l a r l y about people . I was very c l o s e t o Bess ie . She l i k e d t o go t o t h e ho r se r a c e s , and I ' d t ake h e r t o t h e ho r se r a c e s .

She was a c t i v e i n t h e Women's A t h l e t i c Club h e r e i n Oakland f o r q u i t e a whi le . And she 'd t r a v e l wherever Henry Kaiser would t r a v e l . She was j u s t a ve ry f i n e , wonderful l ady .

She was heavy, too heavy, and he was t oo heavy, bu t she loved good food, you know, and she was a good cook h e r s e l f . She d i ed , oh my gosh, when d id she d i e ?

Must have been i n t h e f i f t i e s . *

Y e s , and then t h e nu r se t h a t was tak ing c a r e of h e r , who was t h e head n u r s e down a t ou r Kaiser-Permanente, Ale [Alyce Ches te r ] marr ied Henry Kaiser r i g h t a f t e r t h a t . Bessie l i k e d Ale [pronounced l i k e a l l e y ] ve ry much. She was a marvelous nu r se . Knew how t o t ake c a r e of people , and was r i g h t on top of h e r job a l l t h e t ime. So, she l i k e d h e r , and probably sensed t h a t Henry S r . was fond of A l e , you know, when she was a i l i n g . But no th ing was ever s a i d about i t . But anyway she d ied . It took q u i t e a wh i l e , f o r t h a t t o happen. It was s ad .

Was A l e a l s o a good w i f e , and was she a s pe rcep t ive i n t h e same way a s Bess ie?

*Bess Kaiser d i ed i n 1951 of Chronic Nephr i t i s .

Trefethen:

Chal l :

Trefethen:

Chal l :

Trefethen:

Chal l :

Trefethen:

Chal l :

Tref e then:

Oh, yes , she was a ve ry good wi fe f o r Henry, and took c a r e of him ve ry c a r e f u l l y . They moved t o Hawaii r i g h t a f t e r t h a t , and of course she wanted t o do t h a t , and i t was probably a good th ing , a l though Henry Sr . hated t h e t r o p i c a l weather, you know. But he got over t h a t , and he loved i t o u t t h e r e because he go t a l o t of freedom t h e r e by t h a t t ime. He could do th ings he wanted t o do without t a l k i n g t o h a l f of t h e v ice-pres idents .

He c e r t a i n l y d id .

And Ale was very h e l p f u l t o him o u t t h e r e . They made a l o t of f r i e n d s i n Hawaii, and they had a l o t of fun bu i ld ing . They got us i n t o t h e broadcas t ing bus iness , which turned i n t o a ve ry p r o f i t a b l e bus iness f o r t h e Kaiser companies. Got us i n t o t h e h o t e l bus iness , and we go t ou t of t h a t , bu t made a ve ry handsome p r o f i t i n t he process . They go t us i n t o t h e r e a l e s t a t e bus iness i n a b i g way, because they developed t h e Hawaii Kai, and based upon t h a t we had t h e people, so one of our bus inesses today i n Kaiser Aluminum is t h e r e a l e s t a t e bus iness .

That s t a r t e d o u t t h e r e . We had t o l i q u i d a t e t h e broadcas t ing bus iness a s a p a r t of t h e l i q u i d a t i o n of Kaiser I n d u s t r i e s , bu t t h a t had proven t o be a very succes s fu l bus ines s , and we had a wonderful man running t h a t , Dick Block. It was s o l d a t a handsome p r i c e , bu t i f we owned i t today i t would be worth so many times what we had hoped f o r .

One doesn ' t l i k e t o look back t h a t way.

No. But anyway, those th ings developed o u t of Hawaii. Of course we had a cement ope ra t ion ou t t h e r e be fo re Henry Kaiser went t h e r e . But he helped wi th t h e development of t h a t , and we b u i l t a cement p l a n t while he was t h e r e .

The h e a l t h p lan was developed.

The h e a l t h p l an was developed. That was a s t r u g g l e because we l o s t money f o r f i v e yea r s .

Yes. We' l l go i n t o t h a t one, l a t e r .

But he was determined, and Ale worked l i k e t h e dickens on t h a t , too. Sid Gar f i e ld worked l i k e t h e dickens on i t , because i t was a d ra in , and needed a t t e n t i o n . But i t was an important phase i n t h e development of our h e a l t h p lan , t h e r e ' s no doubt about t h a t .

I11 THE EAF&Y YEARS OF THE KAISER PEWWJENTE MEDICAL CARE PROGRAM

World War 11, 1942-1945

Chal l : A l l r i g h t . Now we w i l l s t a r t on t h e h e a l t h p l an . I wasn ' t s u r e t o what e x t e n t you had much con tac t w i th the Grand Coulee ope ra t i on . I know t h a t you w e r e busy w i t h t h e o t h e r f a c e t s of t h e bus ines s .

Trefe then: I d i d n ' t have very much con tac t w i th t h a t a t a l l , o t h e r than t o j u s t gene ra l l y know what was going on, and t h e same t h i n g f i r s t w i th t h e Bonnevi l le ope ra t i on and t h e Coulee ope ra t i on . I d i d g e t involved i n t h e h e a l t h p l an dur ing t h e sh ipyard days.

Chal l : Okay. T h a t ' s where w e ' l l t ake up your s t o r y then . There a r e people we're going t o be coming a c r o s s q u i t e a b i t . We've go t a l i t t l e p i ece of a p r o f i l e on Henry Kaiser and on Edgar, mainly Henry. What comes t o your mind when you th ink about Sidney Gar f i e ld? Since he played such a prominent p a r t i n t h i s e n t i r e medical p l an over t h e yea r s , and you were s o c l o s e l y a s s o c i a t e d wi th t h a t , what comes t o mind?

Trefe then: Sidney was a fun guy t o be around. Warm, pe r sona l fe l low. I f you had anyth ing wrong w i t h you, why, he ' d s t a y w i th you a l l n i g h t , o r anything. H e was a wonderful doc to r , a pe r sona l doc tor . Very f i l l e d wi th compassion and c e r t a i n l y devoted t o t h e p r i n c i p l e s of our h e a l t h p l an t h a t he r e a l l y founded. And h e had a l o t of f r i e n d s i n t h e o rgan iza t ion , t h e r e ' s no doubt about i t . It was h i s o rgan iza t ion . And he had a l o t of f r i e n d s i n our o rgan iza t ion . Edgar was fond of him, and I was fond of him, and Henry was fond of him, and everybody go t a long ve ry w e l l .

H e was a f r i e n d , and w e were j u s t happy t o have him around, and i t was a f a s c i n a t i n g thought t h a t he had, and i t was working, beginning t o work, on a small s c a l e . Then some people l i k e P a u l d e Kruif go t involved and i n t e r e s t e d i n i t . De Kruif wrote a l o t of books, and he was q u i t e a s t i m u l a t i n g guy t o be around. So w e t a lked about t h e

Trefe then: philosophy of t h e type of t h i n g we were doing, and t h e oppos i t i on , and how t o combat t h e o p p o s i t i o n , and how t o develop t h i s t h i n g over a per iod of t i m e t o g e t i t s f u l l p o t e n t i a l , which seemed t o b e boundless.

Chal l : When you were in te rv iewed ' a t one t i m e , by S h e i l a OIBr ien , you s a i d t h a t Ga r f i e ld was, " . . . a s t r a n g e , s t r a n g e guy i n many r e s p e c t s , bu t he is a c r e a t o r . H e was very c l o s e t o Henry Ka i se r ; Henry Kaiser i n s p i r e d him t o keep up ahead wi th h i s t h ink ing , t o look forward a l l t h e t i m e on r e sea rch , and a l l t he se things."* I n what way d i d you cons ide r him s t r a n g e ? Did you a t t h a t t i m e , o r only when you looked back?

Trefe then: I had a h o s t of f r i e n d s who were d o c t o r s , M . D . ' s , and we used t o t a l k about Ga r f i e ld and they cou ldn ' t understand him; they thought he was o f f base and r i d i c u l o u s , t h a t h i s i d e a s w e r e r evo lu t iona ry , would f a i l , and s o f o r t h , and s o on. The f i r s t p a r t I ' v e covered wi th you. Then a s t h e t h i n g got b i g , t h a t ' s when w e s t a r t e d running i n t o d i f f i c u l t y w i t h Gar f i e ld . A l l t h r e e of us r an i n t o t r o u b l e w i th Gar f i e ld .

Chal l : Y e s . I n t hose e a r l i e r days, though, you j u s t found him t o be an i n t e r e s t i n g , fun, c r e a t i v e , young man?

Trefe then: Oh, yes . We l i k e d t o be w i th him a t n i g h t , s o c i a l l y , and we l i k e d t o t r a v e l w i t h him, and we loved t o h e a r what he was t h ink ing about doing, and what h e was doing. He was one of t h e people running i t unt i l - -wel l , he was t h e person running i t . -

Chall : H e c e r t a i n l y was. Was he i n some ways a s c r e a t i v e , i nnova t ive , a s Henry Kaiser? Were they both h igh ly c r e a t i v e people who could bounce ideas ou t and g e t them moving?

Trefe then: Y e s , they would t a l k by t h e hours about medicine, and Henry Kaiser was always i n t e r e s t e d i n i t , t h e approaches t o h e a l t h ca re . Of course , t h e emphasis wasn't on i t i n t hose days t h a t is now on i t . But Henry Kaiser always f e l t t h a t Sidney 's c r e a t i v e i d e a s were something t h a t should be developed f u l l y .

Chal l : H e was another one of t h o s e young men t h a t he l e t ou t on h i s own t o see what he 'd come up wi th?

Trefe then: Tha t ' s c o r r e c t . So, he was f a s c i n a t e d by h i s accomplishment. Sidney was a dreamer and Henry Ka i se r was a dreamer, s o they dreamed t o g e t h e r . And w e l l , you know, Henry ~ a i s e r ' s dreams about what could be done, and Sidney 's dreams about what could b e done wi th t h e h e a l t h p lan have come t r u e .

* Trefethen in t e rv i ew , 19 Febuary 1982; 22.

Chal l : Cer t a in ly d i d .

Trefe then: I t ' s an unbel ievable o rgan iza t ion , and i t ' s growing and growing and growing and growing, and Henry Kaiser v i s u a l i z e d t h a t i t would do t h a t , used t o t a l k about i t , and i t ' s happened. I t ' s too bad h e ' s n o t he re t o see i t ' s happening, and wi th t h e tremendous s t r i d e s t h a t i t ' s making now.

But I doubt i f t h e program would have surv ived wi th Gar f i e ld running it. H e was an innovator , no t a manager. It grew t o o b i g f o r him t o manage, and w e had some s e r i o u s disagreements wi th him be fo re he accepted t h e i n e v i t a b l e and s tepped a s i d e . During t h a t pe r iod , he a l s o l o s t t h e suppor t of some of t h e l ead ing Permanente doc to r s because they were concerned about domination by Henry Ka i se r , and they be l i eved t h a t Sid caved i n t o o e a s i l y when M r . Ka iser wanted t o do something.

Chal l : Paul de Kru i f , i n d e s c r i b i n g Gar f i e ld would use such terms a s , a cool bus iness man, a s , i n s c r u t a b l e , enigmatic , young man of mystery, e l e g a n t , i n f i n e l y t a i l o r e d c lo thes .* Do you see t h a t when you th ink of D r . G a r f i e l d a s a young man?

Trefe then: W e l l , he always had i n t e r e s t i n g c lo thes . H e had them made s p e c i a l l y . Down i n Los Angeles he had some people. And he used t o g ive g i f t s , very unusual g i f t s a t Christmas t i m e , and he had them made up w i t h your i n i t i a l s on them, and t h i n g s l i k e t h a t . Wtlat else d i d he say about him?

Chal l : Oh, he w a s i n s c r u t a b l e , en igmat ic .

Trefe then: Y e s .

Cha l l : What was i n s c r u t a b l e about him? Closed mouth? H e was n o t a g r e a t t a l k e r , o r what?

Trefe then: Well--[chuckles]

Chal l : [ laughs] I n s c r u t a b l e ?

Trefe then: How do you d e f i n e i n s c r u t a b l e ?

Chal l : Enigmatic, young man of mystery.

~ r e f e t h e n : Sometimes i t would be very d i f f i c u l t t o fo l low what he was r e a l l y say ing t o you, you know. And he would s o r t of t a l k under h i s b r e a t h , and you'd have t o s a y , "Now, Sidney, j u s t what a r e you t a l k i n g about?" H e always f e l t t h a t people were a f t e r him, s o he would be defending h imse l f , and h e became very c r i t i c a l of people , o t h e r people.

*Paul de Kru i f , L i f e Among t h e Doctors (New York: Harcourt , Brace, and Company, 1949), Chapter X I 1 1 passim.

Chall : Is t h a t l a t e r on?

Trefethen: He was always t h a t way. He always knew t h a t t h e profess ion was a g a i n s t him, and i n s p i t e of t h a t he kept pushing on; i t a f f e c t e d h i s p e r s o n a l i t y , you see , t h e f a c t t h a t he knew t h a t he had a l o t of oppos i t ion . And t h e p r i d e of no t g e t t i n g accepted f o r what he was doing from h i s peer doc tors i n t he community; i t was a problem f o r him. He'd g e t mad a t them, and t h a t wouldn't do any good. He j u s t had t o l e a r n t h a t t h e way t o do what he was doing was t o j u s t keep h i s eye on t h e b a l l of developing a h e a l t h p l an , and developing t h e people t o b u i l d i t and run i t .

He was a b l e t o do t h a t . He had a very smal l group of doc to r s , who r e a l l y helped him b u i l d i t . Morrie Collen, and Cec i l Cut t ing , and Monte B a r i t e l l , and Wall ie Neighbor. Every now and then, he would run i n t o a problem wi th one of them. He r an i n t o a problem wi th Ernie Saward.

They had d i f f e r e n t views, a long t h e same t r a c k , r e a l l y . He used t o g e t peeved, and upse t , about d i f f e r e n c e s of opinion wi th in t h e organiza t ion . And he was very unhappy when he couldn ' t have h i s own way. He was s o r t of a baby about it. So t h a t ' s why he was s o r t of s t r ange , you know. When he and Henry would g e t i n t o a conversa t ion t h a t ended up where they were both leaving t h e room; they wouldn't t a l k t o one another any longer . Well, aga in , i t ' s an i n d i c a t i o n t h a t he would i r r i t a t e Henry a t t imes. J u s t make him madder than h e l l , because he was so stubborn and he wouldn't l i s t e n t o anybody e l s e on something t h a t he f e l t he knew more about than anybody e l s e i n t h e world.

Chal l : I see . De Kruif a l s o said--of course t h i s i s n ' t borne out by some of t h e m a t e r i a l t h a t I ' v e found--that Gar f i e ld , i n a l l of the s i x years--he's t a l k i n g from '42 t o '48, t h a t ' s during t h e war years and r i g h t a f t e r - - tha t he took no t a penny i n s a l a r y , he l i v e d on h i s own c a p i t a l . " I s a w l e t t e r s and memoranda i n t he Kaiser papers , t h a t i nd ica t ed t h a t he had a drawing account; he was the p r o p r i e t o r of t h e o rgan iza t ion , bu t he d id draw what i n those days would be considered a f a i r l y good account. You had a con t r ac t wi th him.**

Trefethen: Oh, yes. Henry Kaiser always be l ieved i n compensating h i s people adequately.

* De Krui f , L i f e Among the Doctors, 388, 405.

**E.E. Trefethen, Jr. t o Sidney G. Gar f ie ld M.D., 1 November 1943, Henry J. Kaiser Papers, S e r i e s 2, Carton 22, The Bancroft L ibrary , Univers i ty of C a l i f o r n i a , Berkeley ( h e r e a f t e r c i t e d a s TBL)

Chall : How do you th ink t h a t de Kruif would make a s ta tement l i k e t h a t ?

Trefethen: I can t e l l you why t h a t was. This is what would make Henry Kaiser s o mad when Sidney wanted t o do something t h a t Henry d i d n ' t want him t o do, because he [Henry] d i d n ' t b e l i e v e i t w a s t h e r i g h t t h i n g t o do, no t because of t h e money t h a t was involved. Sidney would always say t o Henry, "Then I ' l l go do i t myself , personal ly ," and t h a t r e a l l y made Henry Sr . mad, because t h a t wasn ' t t h e po in t . Sidney had a few d o l l a r s , no t many, bu t a few t o spend, and he d i d n ' t spend an awful l o t of money, personal ly , except on h i s c l o t h e s .

Trefethen: The sh ipyards . That was t h e b i g period wi th t h e h e a l t h plan. The war per iod . Edgar was i n charge of t h e sh ipyards and h e a l t h p lan up no r th [Vancouver, Washington], and I had more t o do wi th the ones down here. They r e a l l y were under Clay Bedford, too , because they were h i s people t h a t were being t r e a t e d . We had s o many problems wi th t h a t , wi th b u i l d i n g t o c a r e f o r t h e masses t h a t we took c a r e o f . We used t o say , we h i r e d everybody t h a t came t h a t was warm. So they were i n a l l kinds of ill h e a l t h and every th ing e l s e , t h e people t h a t we would have t o h i r e , because we used t h e manpower t h a t we could g e t . So t h e r e w a s a l o t of des igning and bu i ld ing of h o s p i t a l s and f a c i l i t i e s , and t ak ing c a r e of people, and r e c r u i t i n g doc tors . It was a very , very d i f f i c u l t t a sk , and we were a l s o t ak ing c a r e of t h e i r f ami l i e s .

A t t h a t time we had not s o many people p ick ing on us , because we were providing a s e r v i c e t h a t cou ldn ' t be provided any o t h e r way. And s o t h e four yea r s were t ry ing . We worked hard toge the r , and I worked very hard wi th Sidney and a l l of h i s people on the h e a l t h p l an down h e r e , and Edgar took c a r e of i t up t h e r e i n t h e northwest . Edgar had Ern ie Saward a s s o r t of t h e head doc tor up t h e r e , s o I had more con tac t wi th Sidney down h e r e about t h e o v e r a l l t h ing .

Chal l : I went through some f i l e s i n t h e Kaiser ca r tons i n The Bancroft L ibrary and saw some m a t e r i a l on j u s t one f a c e t of t h a t problem t h a t you had, and t h a t ' s wi th r e spec t t o b u i l d i n g on t o t he Fabiola Hos- p i t a l , t h e Oakland Hospi ta l . The cab le s , t he l e t t e r s , t he memoranda, a r e , of course, j u s t voluminous. It probably took a whole yea r , a t l e a s t , before you f i n a l l y got approval from t h e f e d e r a l government. I f you want t o , you can j u s t l e a f through t h e s e copies . They're i n order of d a t e , and t h e r e i s n ' t a f u l l s e t of a l l t h e correspondence, bu t i t w i l l g ive you an idea , h e l p you perhaps t o r e c o l l e c t what you were going through.

Chall : That i n d i c a t e s some r e a l problems, and I th ink it has t o do no t j u s t wi th g e t t i n g c learance from t h e f e d e r a l government because you were going t o be us ing wood and s t e e l and o the r meta ls , b u t because t h e r e was, i n i t i a l l y , h o s t i l i t y from t h e medical profes- s ion . They u l t ima te ly claimed they r e a l l y d i d n ' t have any oppos i t ion .* You f i n a l l y got t h e go ahead. I was j u s t wondering t o what e x t e n t Henry Kaiser got i n t h e r e and s t a r t e d t o make t h e p r o j e c t move?

Trefethen: Well, he was i n t h e background a l l t h e t i m e . [ looking a t t h e papers ]

Chal l : Do you th ink some of those b a r r i e r s were set up d e l i b e r a t e l y ?

Trefethen:

Chal l :

Trefethen:

Chal l :

Trefethen:

Chall:

Trefethen:

Chal l :

Trefethen:

Oh, yes , I th ink t h e r e was a l o t of animosi ty. There was, headed by [ I lor r i s ] Fishbein, t h a t was q u i t e open, a g a i n s t what we were doing. But because t h e r e was a tremendous need t o do t h i s t h ing , w e were succes s fu l i n s p i t e of t h e oppos i t ion , and a l l of t h e problems and obs t ac l e s t h a t people would put i n our way. But i t was hard work, and i t took a l o t of pa t i ence and de termina t ion and fo l low through, and a l o t of work i n Washington.

Did you go back t o Washington?

Oh, yes .

I n o t i c e t h e r e a r e s e v e r a l people involved. I th ink t h e r e ' s an admiral .

Admiral Vickery.

Yes. There's C.E . Wilson mentioned--probably Charles , head of t he War Product ion Board.

Admiral Land, chairman of t h e Maritime Commission, was involved i n i t because we were, of course, working f o r t he government, a c t u a l l y .

Everybody seemed t o have a hand i n t h a t . M r . [Murray] Brookman and o t h e r s from va r ious agencies i n and out of government.

J e r r y Sea le , I c a n ' t remember him. H i s name i s very f a m i l i a r .

*Correspondence between E.E. Trefethen, Jr . , Henry J. Kaiser , Sr . , Murray Brookman and o t h e r s r e l a t i n g t o cons t ruc t ion of an a d d i t i o n t o t h e Permanente Foundation Hosp i t a l i n Oakland, May t o November 1943, Henry J. Kaiser Papers , S e r i e s 2, Carton 22, TBL. See Appendix, page 70.

Chall : Now, i n a d d i t i o n t o a l l of t h e o t h e r work t h a t you were doing, you seem t o have had t o be i n charge on t h i s mat te r . Did you have somebody i n your o f f i c e who took on some of t h i s r e s p o n s i b i l i t y ?

Trefethen: No, I r e a l l y worked through Sidney and h i s o rgan iza t ion , i n those days, bu t then when we f i n a l l y s p l i t i t up, why, then yes , those people worked d i r e c t l y f o r me.

Chal l : I ' m th inking now about t h e w a r y e a r s . I ' m th inking j u s t about t h i s bu i ld ing problem where every few days e i t h e r you ' re g e t t i n g a memorandum o r you ' re sending one o u t , o r you ' re g e t t i n g a cab le , and you ' r e sending ou t an answer. The w a r w a s going on, t h e r e were o t h e r r a t h e r important problems here, and t h i s w a s something o f f t o t h e s i d e , as i t were, which c rea t ed a l o t of problems.

Trefethen: Yes, of course, i t wasn't my b igges t problem during t h e w a r , bu t i t w a s a problem. We were bu i ld ing s h i p s , and bu i ld ing s t e e l p l a n t s , and b u i l d i n g aluminum o r magnesium p l a n t s , and we were going a mi le a minute.

Chal l : With t h e h e a l t h p l an , now, wi th t h i s whole problem of tak ing c a r e of t h e workers, t h a t was an important f a c e t of Henry Ka i se r ' s organiza- t i o n .

Trefethen: Yes, he wanted t o do t h a t .

Chal l : - He wanted t o do i t ? And s o you had t o do i t . Did i t g ive you any i n s i g h t t h a t you might no t have had before , i n t o t he problems of developing a medical p r a c t i c e ? Working wi th doc to r s , working wi th t h e government i n a s p e c t s t h a t you hadn ' t considered before?

Trefethen: Well, we found ou t t h a t doc tors were very d i f f i c u l t t o work wi th , more d i f f i c u l t t o work wi th than l abo r unions. We found out t h a t when you ' re t ak ing c a r e of t h e masses, why, you've got a r e a l problem. You've got a pub l i c r e l a t i o n s problem t h a t has t o do wi th your tak ing c a r e of people ' s bodies and f a m i l i e s , and the g r e a t c a r e t h a t you have t o t ake i n t r e a t i n g those .people , meeting them--to h i r e t h e r i g h t kind of people; t o t r a i n them t o be a s s i s t a n t s , t o be nurses , t o be appointment c le rks- -a l l t he se th ings .

We found out an awful l o t i n a hur ry , t h a t t o run a t h ing of t h i s magnitude was a b i g o rgan iza t ion job.

Chall: But a t t h a t t ime, dur ing t h e war, D r . Ga r f i e ld a c t u a l l y w a s running i t . You were t r y i n g t o a i d him, t o ge t t h i s h o s p i t a l b u i l t , and I suppose t h e r e were o t h e r t h ings of t h i s kind. Did t h a t g ive you some knowledge t h a t you hadn ' t been aware o f , of t h e h o s t i l i t y of organized medicine t h a t permeated r i g h t through t h e government?

T r e f e t h e n : Oh, y e s . Because Henry picked t h a t up, and when Henry p icked i t up, why, I w a s w i t h him. He had a l l t h e problems i n d e c i d i n g what t o do abou t t h e o p p o s i t i o n t h a t was going on. How do w e combat i t ? He'd h i t i t head on, and t h e n h e wouldn ' t h i t i t head on. But w e knew t h a t we had a major problem t o s o l v e , and t h a t was a p u b l i c r e l a t i o n s one.

We knew we had a p r o d u c t , we knew we had a p roduc t i n t h i s h e a l t h p l a n . And we knew t h a t we had a g r e a t t r e a s u r e , r e a l l y , i n Sidney, and t h e peop le t h a t h e had developed who b e l i e v e d i n t h e p l a n , who were working a t i t . But we d i d f i n d o u t t h a t i t was a v e r y d i f f i c u l t t h i n g t o manage, a v e r y d i f f i c u l t t h i n g t o manage. And we d i d f i n d o u t t h a t Sidney cou ld n o t manage i t , t h a t i t w a s j u s t t o o b i g f o r him, and t h a t h e c o u l d n ' t b u i l d t h e peop le t o r u n i t . We l e a r n e d t h a t d u r i n g t h e w a r , which was one of t h e r e a s o n s why we ended up w i t h t h e form of o r g a n i z a t i o n t h a t we ended up w i t h .

C h a l l : Soon a f t e r w a r d s , t h a t ' s r i g h t .

Tre fe then : We determined t h a t h i s runn ing t h i s t h i n g f i n a n c i a l l y would n o t work, t h a t i t was t o o b i g f o r t h a t , and t h a t we'd have t o d e v i s e something d i f f e r e n t i n o r d e r t o make t h i s t h i n g work. So, w e d i d f i n d a l o t o f t h i n g s o u t d u r i n g t h a t war p e r i o d , where we had t o g e t t h i s job done. We had t o t a k e c a r e of t h e s e peop le , and we had t o do i t now, and we had t h i s o p p o s i t i o n . So we found o u t . A s I s a y , we l e a r n e d a l o t from t h a t t h a t he lped us b u i l d t h e f i n a l set up t h a t r e a l l y worked.

Cha l l : When you s a y " f i n a n c i a l l y , " what do you mean by t h a t ?

T r e f e t h e n : Well, we used t o do i t a l l through G a r f i e l d , you know.

C h a l l : I see, on a c o n t r a c t b a s i s .

Tre fe then : Cont rac t b a s i s . And keep t r a c k of t h e funds . Oh, e v e r y t h i n g was a problem. And Sidney always was d i f f i c u l t t o hand le . You know, a wonderful guy as a f r i e n d , b u t when you'd g e t i n t o a problem w i t h Sidney, why, h e was s t u b b o r n , and h e w a s d i f f i c u l t t o convince, and h e wouldn ' t l i s t e n t o you. He'd g e t mad. He'd g e t red-faced. That would compl ica te working o u t t h e problem. [ l a u g h s ]

So I. t h i n k w e d i d l e a r n a n awfu l l o t d u r i n g t h e war e f f o r t t h a t h e l p e d u s shape t h e form of t h e o r g a n i z a t i o n and unders tand how i t shou ld be r u n permanent ly , as i t is now r u n today.

[ In te rv iew 2 , March 5, 19851 ///I

Chal l : I have been r e l y i n g f o r background very l a r g e l y on t h e m a t e r i a l t h a t M r . [ S c o t t ] Fleming wrote,* t h a t D r . [Raymond] Kay wrote,** and t h a t D r . [John] S m i l l i e i s now writing.***

Trefethen: Oh, S m i l l i e . I saw h i s wri te-up, and have a copy of h i s i n t e rv i ew wi th m e , and i t was s o f a r from what I s a i d . H e wanted m e t o c o r r e c t i t , and I s a i d I could n o t c o r r e c t i t ; I would have t o rewrite t h e whole t h ing .

Chal l : Did he i n t e rv i ew you on t ape?

Trefethen: No.

Chal l : It was an i n t e rv i ew t h a t he took by notes . W e l l , w e ' r e t a p i n g s o t h a t t h e t r a n s c r i p t should be accu ra t e . So, i t w i l l b e e a s i e r f o r you t o review.

There i s a g r e a t d e a l of information a v a i l a b l e about t h e e a r l y days of t h e Kaiser Permanente Heal th Plan. I don ' t know whether you want t o go i n t o a l l t h a t i n g r e a t d e t a i l s i n c e much of i t i s a l r eady on t h e record , bu t w e ' l l see today how much w e want t o cover. I f w e want t o go through more of i t , w e w i l l a t another t i m e . This is t h e chronology which D r . S m i l l i e has prepared f o r t h e d r a f t of h i s book. I t h i n k w e ' l l u t i l i z e i t . [hands copy of t h e chronology t o M r . Tre fe then] You can t a k e a look a t t h i s i f you want t o .

Trefethen: [ looks through chronology] I presume t h i s is reasonably accu ra t e .

Chal l : Yes.

Trefethen: I wouldn't have any way of checking i t .

* S c o t t Fleming, "Evolution of t h e Kaiser Permanente Medical Care Program: H i s t o r i c a l Overview" (Oakland: Kaiser Foundation Heal th Plan, Inc . , 1983).

** Raymond M. Kay, M.D. , H i s t o r i c a l Review of t h e Southern C a l i f o r n i a Permanente Medical Group: Its Role i n t h e Development of t h e Kaiser Permanente Medical Care Program i n Southern C a l i f o r n i a (Los Angeles: Southern C a l i f o r n i a Permanente Medical Group, 1979).

***John S m i l l i e , M.D., "A H i s to ry of t h e Permanente Medical Care Group and t h e Kaiser Foundation Heal th Plan," (unfinished manuscript i n d r a f t form.)

The Health Plan Moves Out I n t o t h e Community, 1945-1950

Chal l : No. As we work through some of t h e m a t e r i a l i n t h i s o r a l h i s t o r y p r o j e c t w e ' l l probably be f i l l i n g i n some d e t a i l s , perhaps making co r rec t ions t o t h e record . D r . S m i l l i e w i l l too , I ' m su re . So, l e t us s t a r t .

As I understand i t , a f t e r t h e war, t h e doc to r s , mainly Sidney Gar f i e ld , [Cec i l ] Cut t ing , [Monte] B a r i t e l l , [ ~ i c h a r d ] Moore, [Morris] Collen, and a few o t h e r s , wanted t h e p lan t o become publ ic . That was s o r t of a dream of t h e i r s . I understand they went t o M r . Kaiser wi th t h i s idea , and he concurred gene ra l ly , and s e n t them over t o you f o r guidance. Is t h a t how you understand i t ?

Trefethen: What do you mean, "they wanted t o go publ ic?"

Chal l : Well, you s e e , t h e war had ended, and they d i d n ' t have shipyard workers i n t h e p lan anymore. They wanted t o organize a community h e a l t h plan.

Trefethen: Oh, yes .

Chall: So i t was decided t o s e t up t h e Permanente Health Plan a s a non-profi t t r u s t t h a t would e n r o l l t h e members and c o l l e c t t h e dues. You suggested Jack Baird be appointed the h e a l t h p lan manager. Where d id M r . Baird come from?

Trefethen: A s I r e c a l l he was with us , bu t I c a n ' t remember where. But he was a very a t t r a c t i v e , personable fe l low, t h a t I f e l t would be a good p re sen te r of t he h e a l t h p lan . P re sen te r meaning s e l l i n g i t . He d id have a good r e l a t i o n s h i p wi th people, and I thought he could g e t along we l l w i th t h e doc tors . But I c a n ' t r e c a l l j u s t what h i s t r a c k record was wi th us , up t o t h a t time.

Chal l : I th ink t h e r e were q u i t e a number of h e a l t h p lan managers i n t h a t f i r s t decade o r so . I noted t h a t D r . Gar f ie ld had appointed, sometime i n maybe t h e l a t e f o r t i e s , e a r l y f i f t i e s , a D r . Richard Weinerman a s a medical d i r e c t o r of t h e Permanente Health P lan , s o I assume t h a t Baird l e f t somewhere around i n t h e r e , and maybe t h e r e was somebody e l s e i n between.

On t h e s t a f f were [Avram] Yedidia and M r . Tom McCarthy, who was probably t h e l e g a l person. Mere those s t a f f persons genera l ly picked by you, o r were they picked by D r . Ga r f i e ld? Did he have t h e most r e s p o n s i b i l i t y ?

Trefethen: Yedidia was a person t h a t t he doc tors pr imar i ly developed the i n i t i a l r e l a t i o n s h i p with. Of course I had had a long term r e l a t i o n s h i p wi th M r . McCarthy. He was o r i g i n a l l y with t h e f i rm of Thelen, Marrin,

Trefethen:

Chal l :

Trefethen:

Chal l :

Trefethen:

Chal l :

Trefethen:

Chal l :

Trefethen:

Johnson, and Bridges. So i t was a good team, because Yedidia was an expe r t i n r a t e s and McCarthy was an expe r t i n l e g a l ma t t e r s pe r t a in ing t o t h e formation of t h e p lan , and the subsequent problems and growing pa ins t h a t - w e went through involv ing l e g a l ques t ions .

Now, then, t h e t r u s t e e s t h a t were appointed t o t h i s h e a l t h p lan were you, and M r . Inch. He was, I th ink , one of your c l o s e a s s o c i a t e s i n t h e Kaiser o f f i c e .

That was M r . Tod Inch. M r . Tod Inch was i n charge of our i n d u s t r i a l r e l a t i o n s , o v e r a l l , i n a s t a f f capac i ty . A t t h a t time, why, t h a t s t a f f served our o t h e r companies, which would be t h e cement company, and t h e aluminum company--they were Permanente i n those days, too-- t h e s t e e l company, and our cons t ruc t ion , and sand and g rave l bus iness . So he was t h e o v e r a l l i n d u s t r i a l r e l a t i o n s head.

And aga in , a very smart, personable fe l low, who d id do a l o t of work i n he lp ing t o mold t h e r e l a t i o n s h i p s from t h e beginning.

Between t h e Kaiser management and t h e h e a l t h plan?

Y e s , he got t o know Gar f i e ld q u i t e we l l . He was c l o s e t o Henry. Kaiser , he worked w e l l wi th everybody, and was very c l o s e t o me. A s a r e s u l t , we were a b l e t o accomplish q u i t e a b i t t oge the r .

Who were t h e o t h e r t r u s t e e s ? Who was M r . Sherwood? G.G Sherwood?

H e was one of t h e o r i g i n a l f i n a n c i a l o f f i c e r s of t h e Henry J. Kaiser Company. He was a long-time t r u s t e d employee, and was a very s e n i o r man around h e r e i n t hose days. So, t h e reason f o r him being on t h e r e was t o add t h e f i n a n c i a l i n p u t i n t o p u t t i n g t h i s ope ra t ion toge ther .

L e t ' s s e e , we've t a lked about M r . McCarthy. What about Harry Morton? Who was he?

Well, Harry Morton was t h e l a b o r n e g o t i a t o r , and had been wi th us f o r a long period of t ime. He was a l s o a s t a f f man t h a t we used with a l l our ope ra t ions ; from time t o t ime depending upon whether we had a problem o r a p r o j e c t t h a t he would be p a r t i c u l a r l y s u i t e d f o r . He was q u i t e i n s t rumen ta l i n he lp ing a s t h i s t h ing began, bu t was pure ly another member of our Kaiser--versus t he Garfield--point of view. And he was a p r e t t y s t r o n a guy.

Chall :

Trefe then:

Chal l :

Trefethen :

Chal l :

Trefe then:

Chal l :

Trefe then :

Chal l :

Now, a s I understand i t , your t r u s t e e s m e t maybe only about s i x t i m e s between 1945 and 1948.h I don ' t know t h a t t h a t ' s abso lu t e ly accu ra t e , bu t i t looks a s i f you d i d n ' t meet very o f t e p , and t h a t you allowed t h e c o n t r o l of po l i cy and the h e a l t h p l an t o be handled by Sidney Gar f i e ld , on t h e whole. Is t h a t how you r e c a l l i t ?

Yes.

So poss ib ly D r . Ga r f i e ld was r e a l l y on h i s own, a s t h i s s t a r t e d , except f o r some ove r s igh t by your committee, o r your t r u s t e e s ?

Tha t ' s c o r r e c t . H e was commissioned t o do t h i s and he was doing i t q u i t e w e l l i n t h e e a r l y days. H e had t h e imaginat ion. It was h i s p lan , and h i s doc to r s . And i t d i d work q u i t e w e l l f o r q u i t e a per iod of t i m e .

Then, i n a d d i t i o n t o t h a t , of course , we have t h e Kaiser-Permanente Foundation, which had been set up dur ing t h e war. On t h a t board of d i r e c t o r s , aga in , you served , a s chairman of t h e board. Also t h e r e w e r e Tod Inch, B i l l Marks, M r . McCarthy, and of course t h e two Kaisers--Henry and Edgar. Who was B i l l Marks?

B i l l Marks ended up a s o u r ch i e f counsel . I do.n1t know what he was a t t h a t t i m e . Ac tua l ly , I th ink he worked f o r Tod Inch, bu t h e ended up a s ou r ch i e f counsel of a l l o u r companies. H e was a very c l o s e pe r sona l f r i e n d of mine u n t i l he d i ed , a s a matter of f a c t . Henry Kaiser had tremendous confidence i n him, everybody had confidence i n B i l l . H e was tough, he was tough. So he was a p a r t of t h e i n i t i a l formation and launching and i n i t i a l ope ra t i ons .

Again, I r ead some p l ace t h a t t h e foundat ion t r u s t e e s , t h e board of d i r e c t o r s , a s they w e r e c a l l e d , d i d n ' t m e e t more than once o r twice a year , and they l e t Gar f i e ld p r e t t y much o p e r a t e t h a t s i d e of t h e business--the h o s p i t a l s .

The board d i d n ' t m e e t ve ry , very o f t e n , bu t they had m e r e spons ib l e f o r what Ga r f i e ld was doing. I th ink t h a t ' s about it. So t h e s t a f f people t h a t you not iced , t h a t I spoke about , who w e r e on t h e board, w e r e working very c l o s e l y w i th Gar f i e ld , i n a l l t h e va r ious t h ings t h a t h e was doing. This i s Tod Inch, and B i l l Marks, and Harry Morton, and Tom McCarthy. So he wasn ' t j u s t o u t t h e r e running l o o s e .

I n 1948 t h e r e came a per iod when i t was necessary t o , I guess , reorganize , because o f t h e growth and maybe l e g a l f a c t o r s . Then t h e s i n g l e medical c a r e program, o r t h e medical c a r e program which was ope ra t i ng a s a s i n g l e e n t i t y , was disassembled i n t o t h r e e e n t i t i e s .

*Smi l l ie , "A H i s to ry of t h e Permanente Medical Care Group," 21.

Chal l : You a l r eady had t h e Permanente Heal th P lan s e t up i n '45. The Permanente Foundation Hosp i t a l s , then , were e s t a b l i s h e d i n 1948, and t h e Permanente medical groups were s e t up i n 1948, a t l e a s t t h e one i n no r the rn Ca l i fo rn i a .

Did you have any i n t e r e s t i n t h e development o f , l e t ' s s ay , t h e Permanente Medical Group, t h a t was set up w i t h t h e seven p a r t n e r s ?

Trefe then: Oh, ye s , I had a ve ry c l o s e r e l a t i o n s h i p w i t h a l l t hose doc to r s .

Chal l : Sidney G a r f i e l d , Morris Col len, Paul Fi tzgibbon, C e c i l Cut t ing , Nonte B a r i t e l l , Robert King, and Melvin Friedman. Those were t h e f i r s t seven p a r t n e r s , I th ink .*

Trefe then: Y e s , and I knew them ve ry , very w e l l , and had confidence i n them a s doc to r s . And they w e r e r e a l l y t h e l e a d e r s h i p i n t h e o r i g i n a l Permanente Medical Group, and they cont inued on f o r many y e a r s i n very important c a p a c i t i e s .

Chal l : A s t h e p a r t n e r s , they b a s i c a l l y represen ted t h e e a r l y people , some of whom had s t a r t e d i n Grand Coulee and 'some of whom had come du r ing t h e war yea r s . They had a s t r o n g emotional concern f o r t h e whole ope ra t i on .

Trefe then: They had a l l been s e l e c t e d by Gar f i e ld . And they were g r e a t b e l i e v e r s i n t h e ope ra t i on , i n t h e b a s i c s of t h e plan. They be l i eved i n Gar f i e ld , very s t r o n g l y be l i eved i n Gar f i e ld , and were hard workers, some of them were ve ry innovat ive . Some of them had been, l i k e B a r i t e l l , a famous surgeon. Then he turned i n t o an admin i s t r a to r . A s was Cut t ing .

So t h e s e a r e very important people i n t h e formation of t h e or ig ina l - -wel l , i n t h e whole program, going back t o t h e beginning, and going through t h e sh ipyards . They had r e s p o n s i b i l i t i e s dur ing t h e sh ipya rds , and then a f t e r t h e sh ipyard days, when we decided t o o f f e r t h e p lan t o t h e p u b l i c , why, t h e i r r o l e s became more c e n t r a l - i z ed . They became a team wi th Gar f i e ld . A s I s a y , they w e r e very important t o t h e ope ra t i on .

Chal l : Eventua l ly , a f t e r another y e a r , t h e p a r t n e r s excluded Gar f i e ld , presumably f o r l e g a l reasons . Then they formed t h e i r execu t ive committee, which I guess was q u i t e s t r o n g f o r a good decade, a lmost .

*For a d i f f e r e n t l i s t , see in t e rv i ew wi th Cec i l Cu t t i ng , M . D . , H i s to ry of t h e Kaiser Permanente Medical Care Program, an o r a l h i s t o r y i n t e rv i ew conducted 1985, The Regional Ora l H i s to ry O f f i c e , The Bancroft L ibrary , Univers i ty of C a l i f o r n i a , Berkeley, 1986, 40-41.

Trefethen: hat ' s c o r r e c t .

Chal l : With which you were dea l ing q u i t e a b i t . However, I understand t h a t Garf ie ld remained nominally i n charge of t h e e n t i t i e s , r ega rd l e s s .

Trefethen: That ' s c o r r e c t .

Chal l : De Krui f , i n h i s book, L i f e Among t h e Doctors, made one s ta tement 1 l about t h i s , say ing , S id Gar f i e ld was Permanente. That was maybe

the weakness of t h i s experiment i n prepaid group s p e c i a l i s t medical care."* Is t h a t a s ta tement t h a t you cons ider reasonable?

Trefethen: De Kruif became very i n f a t u a t e d , i n t r i g u e d i s a b e t t e r word, w i th the h e a l t h p lan , s o l d on i t , got t o be very , very fond of Henry Kaiser , and be ing both very a r t i c u l a t e people, express ive people, outgoing people, why, t h e r e was l o t s of conversat ion t h a t went around. When we were t r y i n g t o p l ace everybody i n a homogeneous o rgan iza t ion , I mean, t h e phys ic ians , and our o rgan iza t ion , we had q u i t e a few d i scuss ions wi th de Kruif . De Kruif c e r t a i n l y be l ieved i n Gar f i e ld , bu t he knew t h a t Gar f i e ld had l i m i t a t i o n s when i t came to--that Gar f i e ld f e l t , t h a t he was e n t i t l e d t o have t h e whole t h i n g f o r h imsel f ; he could run i t a l l , and t h e doc tors could run i t a l l . And t h e r e were times when they came t o t h e conclusion t h a t they d i d n ' t even need Henry Kaiser . So t h a t may have been t h e background th ing f o r de Kruif t o have s a i d t h a t a f t e r a l l he was--What does he say aga in? That he was--

Chal l : He was Permanente. I guess i n a sense he--

Trefethen : He was. That ' s c o r r e c t .

Chal l : It was hard t o disassemble i t .

Trefethen: Yes, t h a t ' s c o r r e c t .

Chal l : I n t h e 1948-1949 per iod , t h e r e was some d e s i r e , on t h e p a r t of D r . Ga r f i e ld , a t any r a t e , t o move i n t o t h e Los Angeles a r e a , which was opposed by M r . Ka iser , and you, and maybe your fe l lows i n management. it*

Trefethen: When was t h a t ? '48, '49, you say?

* De Krui f , L i f e Among t h e Doctors, 407

**Interview of Sidney Gar f i e ld , M . D . , by Dan ie l l e Thompson, t r a n s c r i p t , Tape 3, s i d e 1, 6 September 1974 (Audio Visual Department, Kaiser Foundation Heal th P l an ) , 6 ( h e r e a f t e r c i t e d a s Garf ie ld i n t e rv i ew) .

Chal l : Yes, and t h a t was j u s t before--well, what happened was t h e t h e ILWU [ I n t e r n a t i o n a l Longshoremen's and Warehousemen's Union], i n ' 49, reques ted a coast-wide c o n t r a c t , so you d i d move i n t o San Pedro. But no t i n t o Los Angeles a s such. Ga r f i e ld had promised D r . Kay t h a t t h e r e would be a h e a l t h p l an i n Los Angeles f o r him a t t h e end of t h e war. So I guess he put him i n t o Fontana f o r a whi le , and then he helped w i t h t h e San Pedro f a c i l i t y . But Los Angeles, a s such, you had opposed.

Trefe then:

Chal l :

Trefe then:

Chal l :

Trefe then :

Chal l :

Trefe then:

Chal l :

Trefe then:

Chal l :

Trefe then :

Chal l :

I do n o t r e c a l l t h a t . I don ' t r e c a l l ou r opposing t h e development i n t o southern C a l i f o r n i a from t h e r e , because we a l r e a d y w e r e involved w i t h t h e steel p l a n t and w e had a u n i t t h e r e . I th ink one problem we had is t h a t we d i d n ' t want t o be c l o s e t o t h e ILWU. What they had i n mind f o r a h e a l t h p l an , and how they might p a r t i c i p a t e i n i t was something t h a t was n o t a long t h e l i n e s t h a t we be l i eved i n , and s o we were a l i t t l e b i t concerned t h a t maybe they might g e t away from us. They wanted us t o t ake on some r e s p o n s i b i l i t i e s t h a t we r e a l l y d i d n ' t t h ink we should do. I th ink t h a t was i t .

Do you r e c a l l what they wanted?

Well, they wanted s p e c i a l ' t h i s , s p e c i a l t h a t , and we wanted t o cons ider them a s j u s t another group.

I see, b u t u l t i m a t e l y you took them i n .

W e took them i n , a s I r e c a l l , under a s t anda rd c o n t r a c t . I th ink t h a t ' s c o r r e c t .

It was when t h e R e t a i l Clerks Union reques ted t h a t you come i n t o Los Angeles t h a t t h a t was f i n a l l y e s t a b l i s h e d .

Y e s , t h a t was a huge union, and i t was a well-managed union, and we had confidence i n t h e s e people . So, we r e a l l y s t a r t e d t h e Los Angeles u n i t around t h e i r suppor t . Tha t ' s probably l o c a t e d i n t h e Rexal l Bui ld ing .

Tha t ' s r i g h t . So, your concern, then , was w i t h t he way t h e unions a s a group, wanted t o come i n t o t h e h e a l t h p l an , on whatever t h e b a s i s would be. You wanted them t o come i n under t h e s tandard c o n t r a c t .

Tha t ' s c o r r e c t .

Did your i n d u s t r i a l r e l a t i o n s people happen t o know Joe DeSilva, who was t h e head of t h e R e t a i l Clerks Union?

Y e s , very we l l .

There was some k ind of a t r u s t t he re?

Trefethen: Joe was an agg re s s ive fe l low, bu t he was hones t . He c e r t a i n l y be l i eved i n ou r h e a l t h p l an , and was very coopera t ive i n working ou t problems t h a t came up from t i m e t o t i m e . He was a ve ry good l abo r l e a d e r t h a t w e l i k e d working wi th .

Chal l : It was Harry Bridges t h a t you weren ' t s u r e about?

Trefethen: Oh, Harry was a l l r i g h t . H e was more of a c h a r a c t e r i n t hose days than he is now. H e was considered t o be a l i t t l e b i t dangerous-- I 1 l ook o u t f o r him," bu t we never heard t h a t he had any major problems. We j u s t wanted t o b e s u r e t o be independent.

I V THE KAISER PEPWANENTE MEDICAL CARE PROGRAM: CRITICAL YEARS OF TRANSITION, 1952-1958

C h a l l : I n abou t 1952, what prompted t h e d e c i s i o n t o change t h e names of t h e e n t i t i e s from Permanente t o K a i s e r ? The background material s a y s t h a t i t was approved by Henry Kaiser, b u t t h o s e t h i n g s a r e n ' t approved u n l e s s t h e y ' r e f i r s t proposed. What c a n you r e c o l l e c t abou t t h e r a t i o n a l e f o r t h a t change?

Tre fe then : The name Permanente came o u t of a c r e e k t h a t r u n s through o u r cement p l a n t down i n Los A l t o s . W e thought i t was a good name t o u s e when we s t a r t e d t h e h e a l t h p l a n . But, i t was n o t a name t h a t would mean a n y t h i n g t o anybody, and s o we wanted t o g e t t h e name Kaiser invo lved i n t o i t . So, w e b rought t h e name Kaiser i n t o i t . Of c o u r s e , i t ' s been t h a t way e v e r s i n c e .

P r i m a r i l y , Permanente was a d i f f i c u l t name. Some peop le c o u l d n ' t even pronounce i t , and nobody knew i t . W e wanted t o b u i l d up K a i s e r i n t h i s t h i n g , and s o we ended up w i t h Kaiser-Permanente. But w i t h t h e h e a l t h p l a n and t h e h o s p i t a l s , we d i d n ' t c a l l t h a t Permanente. It was Kaiser Foundat ion Hea l th P l a n / K a i s e r Foundat ion H o s p i t a l s , and t h e Permanente Medical Group. ,

C h a l l : Yes, because t h e medica l g roups , a f t e r they met among themse lves , b o t h n o r t h and s o u t h , dec ided t h a t t h e y would n o t t a k e on t h e name K a i s e r , t h a t t h e y would r e t a i n Permanente.

Tre fe then : They wanted t o have t h e i r own name, t h a t ' s c o r r e c t .

C h a l l : P a r t of t h e r e a s o n , t h e y c la im, was t h a t they d i d n ' t want i t t o l o o k as i f Kaiser were invo lved i n any way i n t h e medica l group.

T r e f e t h e n : Yes, we d i d n ' t e i t h e r . W e wanted t o b e ve ry c l e a r t h a t t h i s was an autonomous group. Each one of t h e s e u n i t s was t o b e autonomous, s o w e c o u l d n ' t b e accused o f p r a c t i c i n g medicine , which would b e a g a i n s t

Trefethen: t h e law, and would be bad pol icy .

Chal l : But a t t h a t t ime, i n 1952, t h e r e were some problems a r i s i n g between Henry Kaiser and t h e medical p lan , Gar f i e ld and t h e doc to r s . I wondered whether t h a t w a s a p a r t of t h e beginning of t h e problems, t h e d i f f i c u l t i e s between them.

Trefethen: The b a s i c d i f f i c u l t y was t h e ques t ion of who was going t o run i t . That went on f o r a long time, u n t i l f i n a l l y we pos i t ioned everybody i n a common, a v e r a l l o rganiza t ion .

Chal l : That took a long time.

Trefethen: It d id t ake a long time; i n t h e meantime we went through a l o t of d i scuss ions , and a l o t of p re s su re s , and a l o t of a t tempts t o change what we had v i s u a l i z e d , from something t h a t would r e a l l y be dominated, control led-- the whole thing--by Gar f i e ld and h i s doc tors .

Building t h e Walnut Creek Hospi ta l

Chal l : The controversy came t o some kind of a head, a t l e a s t t h e r e began t o be rumblings, i n 1951-2, a f t e r Henry Kaiser married Alyce Chester , and decided then t o b u i l d t h e Walnut Creek Hosp i t a l , more o r l e s s on h i s own.

Trefethen: When d id h e marry Ale Chester?

Chal l : I have t h a t d a t e a s June 10 , 1951, which I guess was n o t very many months a f t e r t h e f i r s t Mrs. Kaiser d i ed .

Trefethen: Correc t .

Chal l : Now, some have i t t h a t Alyce Chester , having married Henry Kaiser , f e l t t h a t she was no t accepted a s p a r t of t h e execut ive family, a s Bess had been, and having been a nurse , she may have persuaded Henry Kaiser , o r , t oge the r , they may have decided t h a t i t would be n i c e t o bu i ld a h o s p i t a l o u t where they l i v e d . So Henry Kaiser went ahead, and they b u i l t i t . I n a d d i t i o n t o t h a t , she chose who would be on t h e medical s t a f f . She s e l e c t e d Wallace Cook a s physician- in-chief . This c r ea t ed a c o n f l i c t , of course, w i th t h e medical group. They saw two problems.

One, Henry Kaiser was bu i ld ing t h e h o s p i t a l on h i s own and s t a f f i n g it on h i s own, and secondly h e was u t i l i z i n g funds which they f e l t had a l ready been committed t o t h e bu i ld ing of t h e Los Angeles, and t h e San Francisco h o s p i t a l s , and some of t h e c l i n i c s , and it was siphoning away some of those funds. W i l l you comment on t h a t ?

Trefe then: I ' m no t s u r e whether A l e got him a l l e x c i t e d about b u i l d i n g a h o s p i t a l i n Walnut Creek, o r whether i t was j u s t a n a t u r a l development. Walnut Creek was a growing a r e a , and Henry Kaiser was a man of v i s i o n . H e used t o t e l l m e what would happen o u t t h e r e i n Contra Costa County.

Trefe then: I t h i n k Wally Cook was very c l o s e t o Edgar Ka i se r , and I ' m t r y i n g t o pu t t h a t t o g e t h e r i n my mind. I c a n ' t q u i t e remember, b u t Ale Ka i se r would, o f course , t a l k t o Henry Kaiser about t h e h e a l t h p l an every day of t h e yea r t h a t s h e was w i t h him, you know. She was a s t r o n g person, i s a s t r o n g person, had some very good i d e a s , and was one of t h e b e s t admin i s t r a to r s we've eve r had.

- H e , being a b u i l d e r and i t being c l o s e t o where he was l i v i n g , why, he s p e n t a l o t of t ime whi le we w e r e b u i l d i n g t h e Walnut Creek Hosp i t a l , j u s t because he loved i t , and he loved cons t ruc t ion . Yes, we d id have some problems about t h e a l l o c a t i o n of funds. I mean, they d i d n ' t have t h e vo t e s on i t , b u t they were concerned wi th t h e ques t i on of p r i o r i t i e s , and we had t o have p r i o r i t i e s i n t hose days, and we s t i l l do have p r i o r i t i e s today.

So t h e r e were d i f f e r e n c e s of op in ion about t h a t , t h e r e ' s no doubt about t h a t . But anyway, f i n a l l y bo th of t h e o t h e r h o s p i t a l s got b u i l t . I n t h e meantime, t h e r e were probably a few harsh words between t h e p a r t i e s , bu t i t got worked ou t .

Chal l : But i t was t h e beginning o f a s t r a i n . I d o n ' t know whether t h a t was t h e beginning of t h e s t r a i n , b u t D r . G a r f i e l d d id s i d e wi th t h e - medical p ro fe s s ion i n terms of t h e Kaisers' p r i o r i t i e s , i t not be ing t h e i r p r e roga t ive t o s t a f f t h e h o s p i t a l .

Trefe then: Oh, I th ink t h a t ' s t r u e , I th ink t h a t ' s t r u e . Of course , that--

Chal l : Angered Henry Kaiser?

Trefethen: You s e e , when we'd f i n a l l y decided what t h i s r e l a t i o n s h i p should be, t h e r e had t o be a s e p a r a t i o n of r e s p o n s i b i l i t y a s w e l l a s o rgan iza t ion .

Chal l : This was a t e s t i n g ground?

Trefe then: Y e s , and then as you do t h a t , why, you know, people don ' t understand i t , o r they don ' t b e l i e v e i n what you ' re t r y i n g t o do. It t akes time t o undergo change, and w e were going through a pe r iod of change.

Cha l l : Now, do you th ink t h e r e ' s much credence t o t h e s ta tement t h a t Ale Kaiser was no t accepted by t h e execu t ive f a m i l i e s i n Kaiser?

Trefe then : Oh, no. She w a s accep ted . She was a very k ind person and an e x c e l l e n t n u r s e , even a f t e r s h e mar r ied Henry Ka i s e r . I f anybody had any th ing wrong w i t h them, s h e ' d be r i g h t t h e r e . She remained c l o s e t o t h e d o c t o r s , ve ry c l o s e t o G a r f i e l d , b u t when they g o t i n t o some d i s c u s s i o n between G a r f i e l d and Kaiser, why, t h e r e were t i m e s when i t w a s a l i t t l e b i t d i f f i c u l t because we d i d n ' t know whether A l e w a s i n f l u e n c i n g Henry o r i n f l u e n c i n g G a r f i e l d .

But w e r e spec t ed h e r , w e , t h e management people , r e spec t ed h e r , and go t a l ong w e l l w i t h h e r , l i k e d t o be w i t h h e r s o c i a l l y . I d o n ' t remember e v e r having a problem wi th A l e about any th ing .

Cha l l : I see. I f t h e r e was d i f f i c u l t y between G a r f i e l d and Kaiser, which t h e r e w a s d u r i n g t h i s p e r i o d , and fo l lowing , and, s i n c e G a r f i e l d had mar r ied A l e Ches t e r ' s sister, Helen, and t hey l i v e d , I t h i n k , nex t door t o one ano the r , d i d t h a t c r e a t e problems t h a t you f e l t i n management? You were very c l o s e t o t h e Kaisers, o f course .

Tre fe then : I w a s ve ry c l o s e t o Ale and v e r y c l o s e t o Hel.en, s o I knew them a l l ve ry , ve ry w e l l .

Cha l l : How d i d i t a f f e c t t h e r e l a t i o n s h i p s of t h e sisters o r t h e r e l a t i o n - s h i p s among fami ly members?

Tre fe then : I don ' t t h i n k i t a f f e c t e d them, I t h i n k they go t a long very w e l l t o g e t h e r . It w a s on ly when w e g o t i n t o d i s c u s s i o n s about t h e phi losophy and t h e r e l a t i o n s h i p o f t h e doc to r s t o u s t h a t we got i n t o problems.

Cha l l : I n t h e meantime, what was happening w i th t h e r e l a t i o n s h i p between Henry K a i s e r and G a r f i e l d ? Is t h a t when i t s t a r t e d t o s o r t of f a l l a p a r t ?

Tre fe then : H e became ve ry c r i t i c a l of Sidney, and Sidney was c r i t i c a l o f him, and t h e r e were some, you know, some a n i m o s i t i e s t h a t grew up t h a t r e a l l y t u rned o u t t o be s h o r t l i v e d . A s soon a s w e go t t h e b a s i c p l a n worked o u t , eve ry th ing s o r t o f q u i e t e d down. But t h e r e was a pe r i od when, oh , Henry wouldn ' t even speak t o G a r f i e l d f o r a wh i l e . But it was some s t r o n g people exp lo r i ng new ground and new t e r r i t o r i e s . I t ' s unders tandab le .

Ph i l o soph i ca l and P o l i c y D i f f e r ences Between Henry Ka i s e r and t h e Doctors

Cha l l : Henry Ka i s e r , du r ing t h i s p e r i o d o f t ime , was i n t e r e s t e d i n compet i t ion w i t h i n t h e medical p l an . He was i n t e r e s t e d i n having set up sma l l medical groups t h a t might compete w i th each o t h e r , t o

Chal l :

Trefethen:

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Trefe then :

Chal l :

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Trefethen:

Chal l :

Trefe then :

Chal l :

s e e who could g ive b e t t e r s e r v i c e , appa ren t ly . And he r e a l l y cont inued t o f i g h t f o r t h a t f o r q u i t e some t i m e . Did you ag ree t h a t you could set up t h e h e a l t h p l a n / h o s p i t a l s s o t h a t t h e doc to r s could compete l i k e p a r t s of t h e bus ines s? I understand t h a t was a Kaiser phi losophy; i t i s a philosophy i n some l a r g e companies.

I thought t h a t they could be compet i t ive i n t h e i r performance, bu t no t i n t h e same a r e a . I never d i d b e l i e v e t h a t w e could have s e p a r a t e groups of doc to r s i n t h e same a r e a competing.

But Henry Ka i se r d id?

A t one time he thought t h a t might be a good th ing , bu t t h a t was a phase t h a t d i d n ' t l a s t very long. B a s i c a l l y , i t would have been impossible t o admin i s t e r .

The doc to r s , f o r q u i t e some t i m e , w e r e concerned about t h a t . That was one o f t h e i r concerns i n t h e i r b i l l of p a r t i c u l a r s . They d i d no t want t o be forced t o compete w i t h each o t h e r i n t h e same a r e a .

[chuckles 1

I t ' s i n t e r e s t i n g t h a t you chuckle , s o r t o f laugh about i t now, but a t t h e t i m e i t must have been t e r r i b l y d i f f i c u l t . W e l l , i t was a deep concern of t h e i r s , and probably of yours , i n handl ing i t .

Bel iev ing i n competi t ion, a s w e a l l b e l i e v e i n competition--but a t what l e v e l s ? Henry j u s t f e l t t h a t t he se doc to r s were g e t t i n g t oo b i g f o r t h e i r b r i t c h e s . I t h i n k he used t o say t h a t . So h e thought i f they were broken up i n t o sma l l e r groups, where they competed wi th one ano the r , he 'd g e t t h e advantages of compet i t ion, and a l s o you'd avoid t h e p o s s i b i l i t y of t h e i r g e t t i n g s o b i g t h a t they would be impossible t o handle .

Some o f t h e r e s t of us f e l t t h a t , ye s , w e w e r e s t r o n g enough t o handle them. W e be l i eved i n a r e a competi t ion, bu t w e d i d n ' t b e l i e v e i n competi t ion w i t h i n an a r e a , and s o w e p r eva i l ed i n t h a t , because w e couldn ' t eve r f i g u r e how you could admin i s t e r i t . It would have been e n t i r e l y t oo confusing.

Did you d i s c u s s t h i s w i th Henry Kaiser , o r j u s t a l low t h e process i n which you were then involved t o work i t s e l f ou t ?

Oh, we had many d i scus s ions about i t , and f i n a l l y agreed.

Was t h i s c r ea t ed by Ka i se r ' s o r g a n i z a t i o n a l philosophy, o r , a s you i n d i c a t e , might i t have come about because of a c e r t a i n amount o f pique w i th t h e doc to r s a t t h a t t i m e ?

I n t h i s case i t was, yes .

J u s t pique?

~ r e f e t h e n :

Chal l :

Trefethen:

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Trefethen:

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Trefethen:

I th ink he j u s t wanted t o be s u r e t h a t we could handle them, so t h a t they wouldn't run off and do something t h a t w e d i d n ' t t h ink they should do.

What d id you th ink they were going t o run o f f and do?

Oh, s e t up t h e i r own u n i t , and abandon t h e n e s t , and then we'd be without any doc tors .

They f e l t you were going t o go o f f and s e t up competit ive hea l th p lans , and abandon them. That seems t o have been p a r t of t h e controversy.

When people g e t mad, o r upse t , o r i n a b i g argument which goes on f o r a long period of t ime, why a l o t of s t r a n g e thoughts come o u t . We went through t h a t .

Now, Henry Kaiser was a very dynamic man, and he could al low, l e t ' s say , h i s philosophy, and maybe even pique, t o s o r t of take over and c r e a t e c e r t a i n k inds of managerial problems, I suspec t . And you ' re q u i t e a d i f f e r e n t kind of person. How d id you dea l wi th t h a t ? I mean, you were s o r t of s t u c k between him and t h e doc tors f o r many, many yea r s ; How'did you look upon your r o l e here?

I r e a l l y had t h e r e s o n s i b i l i t y f o r Henry Sr . , t o make t h i s t h ing work, so I f e l t I had t o f i g u r e ou t a way t o g e t a r e l a t i o n s h i p t h a t was workable and long term, over t he long p u l l . That meant I had t o be a b l e t o d e a l wi th these people on a workable, harmonious, b a s i s where we would develop some mutual confidence. We d id do t h a t . And we, f i n a l l y , a s a r e s u l t of t h e mutual confidence, and knowing what could be done, and what couldn ' t be done, w e worked o u t a program t h a t met enough of t h e requirements of both s i d e s , s o t h a t we ended up wi th a program t h a t ' s been very h ighly succes s fu l and expandable, which is very important .

So, you say you d id i t because Henry Kaiser wanted i t t o succeed. I was wondering t o what e x t e n t you personal ly were i n t e r e s t e d i n having t h e plan succeed.

Oh, I was very a t t ached t o i t , I was very a t t ached t o i t . Because I knew t h e people s o very w e l l , and I ' d been through a l l t h e growing pa ins , and i t was a cha l lenge t o make i t work. I be l ieved t h a t Henry Ka i se r ' s v i s i o n a s t o where t h i s t h ing could go u l t ima te ly was r i g h t , and t h a t i t was something t h a t was worth working on. I enjoyed i t . I enjoyed t h e chal lenge, and I enjoyed the r e l a t i o n s h i p s involved i n i t .

Trefe then: But my job was t o make t h e t h i n g work, anyway, s o i n o r d e r t o do t h a t , w e had t o f i n d an answer t o t h e problem t h a t had been growing and g e t t i n g worse a l l t h e t ime. W e r e a l l y f i n a l l y d i d pound i t ou t .

Events Leading Up t o and Following t h e Tahoe Conference

Chal l : Y e s , indeed. I th ink by 1955, when you began your Working Council meetings, be fo re t h e Tahoe meeting, t h a t t h e doc to r s f e l t t h a t i t was almost a d i s a s t e r , t h a t t h e whole program would f a l l a p a r t . Many people c r e d i t you wi th p u l l i n g i t toge the r , and making i t work.

Trefethen: W e l l , you s e e , as I look a t t h e s e names [Working Council and Advisory Counci l ] , t he se a r e very s t r o n g people--Dr. Kay, D r . Saward, D r . Collen--they're a l l very emotional people , too . These people g e t a l l emotional ly en tangled wi th t h e s u b j e c t , and you have t o q u i e t them down i n o r d e r t o r e a l l y have them s e n s i b l e about t h e pros and cons of v a r i o u s r o u t e s t h a t w e might go.

There i s t h i s ma t t e r about F e l i x Day, t h e a d m i n i s t r a t o r i n San Francisco. We had t o have some s t r e n g t h ove r t h e r e . It was j u s t D r . Col len, who was n o t a good admin i s t r a to r . But they d i d n ' t t h i n k s o , s o w e had t o work t h a t ou t . Y e s , I was involved i n i t i n t i m a t e l y from t h e very beginning.

Chal l : One of t h e t h i n g s t h a t would touch o f f t h e medical groups from t i m e t o t ime would be b r ing ing an a d m i n i s t r a t o r i n t o one of t h e o t h e r e n t i t i e s . An e a r l y one i n 1953 and '54, and aga in i n 1960, I t h i n k , was b r ing ing D r . [ C l i f f o r d ] Keene i n t o manage t h e program.

I n 1953 Henry Kaiser brought him i n from Willow Run, and t h a t upse t t h e doc tors . You had a long-time r e l a t i o n s h i p wi th D r . Keene ove r t h e years . What do you r e c a l l ?

Trefe then: W e r an i n t o him back a t Willow Run. Edgar Kaiser had him back t h e r e a s h i s i n d u s t r i a l phys ic ian a t Willow Run. And we got t o know him, and b e l i e v e i n him. He was running q u i t e a b i g u n i t back t h e r e . W e saw h i s a d m i n i s t r a t i v e q u a l i t i e s . So, we--Edgar, and Henry Kaiser , and myself--all agreed t h a t what w e ought t o do i s b r i n g him i n h e r e t o set him up t o run t h i s t h ing . And s o we d id .

Of course , t h a t d i d n ' t set w e l l a t a l l wi th t h e doc to r s . But he d id an e x c e l l e n t job, and only w i th t h e t i m e and t h e exper ience wi th him d i d they f i n a l l y q u i e t down. But they never d i d r e a l l y g e t over t h e f a c t t h a t C l i f f o r d Keene wasn't one of them.

Chall : I not iced from time t o time t h a t from 1953 u n t i l a s l a t e a s 1960, he was always put someplace and then moved.

Trefethen:

Chal l :

Trefethen :

Chall :

Trefethen :

Chall :

Trefethen:

Chal l :

Trefethen :

He was never completely acceptab le .

It 's q u i t e i n t e r e s t i n g t h a t h e s tayed i n t h e r e .

Well, he was s t rong , and by t h a t time we had a p r e t t y good board, and he had t h e confidence of t h e board, and he had the confidence of Henry, and me, and Edgar; everybody knew t h a t . And he was doing t h e job. So, t h a t ' s why he survived.

Another mat te r t h a t seemed t o b r ing some problems t o a head, and lead--I guess i t was t o lead--to t h e meetings t h z t you a l l had, was t h e r e s i g n a t i o n of D r . Fi tzgibbon and then t h e r e s i g n a t i o n of D r . B a r i t e l l , apparent ly over mat te rs r e l a t e d t o who was i n charge, I suspec t , t o put i t b r i e f l y , t h e doc tors o r t h e Kaiser management. I don' t t h ink Fitzgibbon ever came back, but D r . B a r i t e l l d id .

Well, F i t z was a doc to r of mine, I c a n ' t remember why he resigned. Do you know? What happened t o him? Did he r e s ign from t h e h e a l t h p lan , o r from the Permanente group?

Here I f i n d t h i s on page 55 of t h e Smi l l i e manuscript. " D r . Paul Fi tzgibbon, who had funct ioned a s t h e r eg iona l medical d i r e c t o r of t h e medical group from 1946-1952, one of t h e founding p a r t n e r s and a member of t h e Executive Committee, reques ted te rmina l l eave of absence i n June, 1953. While h i s leav ing t h e medical group had been a t t r i b u t e d t o some personal family problems, he expressed s t r o n g f e e l i n g s t h a t t h e program would no t work i f run by businessmen.*

I don ' t eve r remember having any kind of a conversat ion wi th him about t h a t , and I was very c lose t o F i t z . I th ink S m i l l i e ' s got i t wrong. He had some personal problem, and I don ' t know what i t was. I don't th ink he was too happy with D r . Ga r f i e ld , bu t I don ' t th ink he f e l t t h a t we were going i n t he wrong d i r e c t i o n . Again, he was my personal phys ic ian f o r q u i t e a while .

Tha t ' s q u i t e poss ib l e . Tha t ' s one of t h e reasons f o r doing t h i s o r a l his tory-- to s o r t of f i l l i n missing l i n k s .

1 ' m no t s u r e a t a l l t h a t he l e f t f o r t h a t , bu t when you t a l k t o Cut t ing , you might ask him. He might have a r e c o l l e c t i o n on t h a t .

* S m i l l i e , "A His tory of t h e Permanente Medical Care Group," 55.

Chall : Y e s , h e probably would.

Trefe then: O r Collen. Col len would. B a r i t e l l ' s gone, and Neighbor's gone.

Chal l : Gar f i e ld , too.

Trefe then: Kay, I don ' t t h ink would remember. Maybe Kay might remember.

& a l l : We'll be t a l k i n g t o him. Y e s , Kay was r e a l l y i n t h e sou th more. Then D r . B a r i t e l l res igned . This aga in i s from S m i l l i e , on page 56, " D r . B a r i t e l l res igned from t h e medical group suddenly and unexpectedly i n mid-October, 1953." Tha t ' s j u s t a few months a f t e r Fi tzgibbon. "The l e t te r of r e s i g n a t i o n , which s p e l l e d ou t a v a r i e t y of complaints , rece ived untimely p u b l i c i t y i n Bay Area newspapers. D r . G a r f i e l d m e t w i th t h e Permanente Medical Group Executive Committee i n a s p e c i a l meeting t o d i s cus s t h e subs tance of D r . B a r i t e l l ' s complaints. Members of t h e committee were reassured t h a t t h e problems were being addressed. In a d d i t i o n , they would have a f u l l vo i ce on t h e enrol lment of new groups, and a l l f i n a n c i a l d a t a on t h e ope ra t i on of t h e t o t a l program (Heal th P l an , Hosp i t a l s , arid Permanente Serv ices ) would be a v a i l a b l e t o t h e Execut ive Committee. G a r f i e l d s t r e s s e d t h a t h i s d e s i r e t o be h e l p f u l and provide advice had been mi s in t e rp re t ed a s c o n t r o l and domination."*

This i s t h e d i f f i c u l t y they had w i t h D r . G a r f i e l d i n t h e c e n t e r of t h e f o r c e s t h e r e . Then D r . B a r i t e l l came back.

Trefethen: B a r i t e l l was p r imar i l y a surgeon. H e was a h e l l of a good surgeon. He was pu t i n t o a d m i n i s t r a t i v e capac i ty , and he r e a l l y d i d n ' t l i k e i t . I d o n ' t t h ink he r e a l l y understood what was going on, except t h a t h e had t h e r e s p o n s i b i l i t y of running t h e Permanente Hosp i t a l ou t h e r e on MacArthur and Broadway. He would have much p r e f e r r e d t o have been i n t h e o p e r a t i n g room.

I th ink , yes , he go t upse t about who was running what, and what was h i s r e s p o n s i b i l i t y , and what was G a r f i e l d doing, and what was Collen doing? They were a l l r i g h t t h e r e t oge the r , you know, Cut t ing , too. And I j u s t t h i n k he go t f r u s t r a t e d and l e f t , I mean i n h i s capac i ty , and went back t o surgery . I th ink t h a t ' s what he d i d , d i d n ' t he?**

* I b i d . , 56.

**Cutting i n t e rv i ew , Regional Oral His tory O f f i c e , 49-50.

Chall : I don ' t know. I know t h a t h e came back even tua l ly as a f u l l p a r t n e r and resumed h i s p l ace on the execut ive committee. Then he was on a l l t h e committees t h a t were developed p r i o r t o and fo l lowing t h e Tahoe meeting.

There w e r e a l s o problems i n southern C a l i f o r n i a , and these a r e t h e same k inds of d i f f i c u l t i e s regard ing management. The S t e i l s were put i n t o p o s i t i o n s down t h e r e , management p o s i t i o n s during 1953-1954, e i t h e r w i th t h e h e a l t h p l an [Karl S t e i l ] o r t h e medical group [Paul S t e i l ] . The S t e i l s even tua l ly were accepted , both i n no r the rn and southern Ca l i fo rn i a .

Trefe then: Yes, Paul S t e i l , I th ink , was t h e one w e had i n charge down t h e r e .

Chal l : And then Karl f o r a while--I mean both. A r e they b r o t h e r s ?

Trefethen : Yes, they a r e b ro the r s .

Chal l : Did you know them?

Trefe then: Oh, yes , very we l l .

Chal l : Were they members o f Ka i se r i n d u s t r y s t a f f ?

Trefethen: No. They picked them up i n t h e process of forming t h e h e a l t h p lan down the re .

Chal l : Well, now w e can g e t i n t o some of those e a r l y meetings of t h e Working Council. It was set up a t t h e r eques t of t h e medical groups, and they s e n t a le t ter t o you i n Apr i l 1955, A p r i l 20 o r 21. According t o t h e records , t h e medical group urged t h a t t h e r e be r e p r e s e n t a t i o n from t h e board of t r u s t e e s , sugges t ing you, t h e two Ka i se r s , and M r . Link. They a l s o wanted r e p r e s e n t a t i o n from each medical group and D r . Ga r f i e ld ; they wanted to .mee t semi-monthly f o r s i x months, and wanted every th ing e l s e t o remain a t t h e s t a t u s quo.

You a c t u a l l y d i d meet once a month f o r s e v e r a l months, f o r a couple of days each. Some of t h a t in format ion is on page t h r e e of D r . S m i l l i e ' s chronology. [Mr. Trefe then and M r s . Cha l l review t h e background of t h a t s e r i e s of meetings. I *

I t h i n k t h e r e ' s no po in t i n going through more of t h i s . It looks a s i f always, whenever a committee was set up t o cons ider one a spec t of t h e p lan o r ano the r , t h e nor thern C a l i f o r n i a group was

*Smil l ie , " H i s t o r y : Chronologp , I ' 3 .

Chal l :

Trefe then :

Chal l :

Trefe then :

Chall :

Trefe then :

Chall :

Trefe then :

made up of D r s . Col len and B a r i t e l l , sometimes F e l i x Day, Hal Babbi t , George Link, D r s . Ga r f i e ld , Keene, Cut t ing , and Neighbor. From southern C a l i f o r n i a t h e r e were D r s . Kay, Weiner, and Scha r l e s ; bo th S t e i l s , and occas iona l ly Dorothea Daniels .

These were people you w e r e dea l ing w i t h cons t an t ly . You say they were s t r o n g , emotional people?

Yes, t h a t ' s r i g h t . And I guess i t j u s t took many meet ings, of s i t t i n g down and l i s t e n i n g t o them, and they l i s t e n i n g t o u s , i n o r d e r , f i n a l l y , f o r them t o r e a l i z e what might be p o s s i b l e , and what might n o t be pos s ib l e .

What do you remember of t h e s e v e r a l days a t Lake Tahoe? That j u s t happened t o be t h e culminat ing po in t . I suppose t h e same meeting could have been he ld i n Oakland, a s t h e o t h e r s w e r e .

Yes, w e thought i f w e go t up t h e r e we'd ge t away from t h e i n t e r rup - t i o n s . Yes, I t h i n k i t he lped , and w e began t o pound ou t t h e va r ious r e l a t i o n s h i p s , bu t w e d i d n ' t g e t t o t h e economics of i t a l l a t t h a t t i m e a t Tahoe. W e d i d n ' t r e a l l y g e t t o t h a t u n t i l I pounded i t ou t down i n sou the rn C a l i f o r n i a w i t h D r . Ray Kay.

Why do you th ink i t was e a s i e r t o g e t i t through D r . Kay and h i s group than up he re?

Well, Kay was d i f f i c u l t , bu t h e was a s t r o n g l e a d e r . By t h i s t i m e i t was a very b i g u n i t , and I th ink I j u s t f e l t t h a t I ' d l i k e t o go down t h e r e , and s i t down and t a l k t o him, and see what w e could work o u t , because i t , from t i m e t o t ime, would g e t ou t of hand up i n no r the rn C a l i f o r n i a , when you were t a l k i n g t o B a r i t e l l , and Collen, and Cu t t i ng , and Gar f i e ld . And going down t o southern C a l i f o r n i a I could t a l k t o Ray Kay a lone .

Although Fred Schar les go t involved, and Herman Weiner, and Paul and Kar l S t e i l , t o a l i m i t e d e x t e n t , t h e main t h ing was s i t t i n g down and pounding i t o u t w i t h Ray Kay. It made i t p o s s i b l e . I n o t h e r words, t o ge t t h e b a s i c s , and t o g e t an answer t o t h e b a s i c problem, u s u a l l y i t ' s e a s i e r t o do t h a t through two people s i t t i n g down, than f o r a group t o s i t down t o do.

Do you t h i n k i t was because Kay was no t one of t h e e a r l i e s t founding members, and d i d n ' t have t h e emotional a t tachment t o doing t h i n g s a s they were?

Well, sometimes he was more emotional than t h e r e s t of them. He was a b s o l u t e l y imposs ib le a t times. But a t l e a s t h e was t h e head of southern C a l i f o r n i a , which was l a r g e , l a r g e r than no r the rn C a l i f o r i a , and t h e people i n no r the rn C a l i f o r n i a d i d have confidence i n him.

Chall : Now, we've been t a l k i n g about t h e f a c t t h a t t h e doc tor s i d e was very emotional. Did a l l on your s i d e s t a y calm, cool , and c o l l e c t e d ?

Trefe then: No; no, Henry Kaiser would ge t t e r r i b l y emotional. And I had some hard words wi th a l l of t hose people. But w e s t ayed wi th i t u n t i l w e worked i t o u t .

The Solu t ion : The Organizat ion and Its Ph i lo soph ica l and F inanc i a l Foundation

Chal l : M r . Fleming has w r i t t e n t h a t a f t e r you'd had a number of meetings of t h e newly-formed Advisory Council , fo l lowing t h e Tahoe meeting, you found t h a t you weren ' t g e t t i n g very far--not coming c l o s e r t o a s o l u t i o n t o t h e problem. So, you asked your s t a f f t o come up wi th

. some answers t o some of t he se problems. On t h e s t a f f were J .F. R e i s , a f i n a n c i a l o f f i c e r i n K a i s e r - a f f i l i a t e d companies, Arthur Weissman, a medical economist i n t h e medical c a r e program, Kar l Palmaer, a f i n a n c i a l a n a l y s t from t h e medical c a r e program, and S c o t t Fleming, l e g a l counsel , K a i s e r - a f f i l i a t e d companies. From t i m e t o t i m e you w e r e a s s i s t e d by Paul and Kar l S t e i l i n southern C a l i f o r n i a , W.R. P r i c e , Jr. , Hal Babb i t t , and W.F. Day i n nor thern Ca l i fo rn i a .*

P a r t of t h e s o l u t i o n had t o do wi th t h e d i v i s i o n of respons i - b i l i t y - - t h e way doc tors would be compensated, and t h e way t h e h e a l t h p lan would be compensated. Cap i t a t i on and a f o u r pe rcen t f a c t o r f o r dep rec i a t i on seemed t o be a d d i t i o n a l f i n a n c i a l f e a t u r e s of t he plan.

Did t h i s develop ou t of your background i n bus iness? O r w e r e you c h a r t i n g new t e r r i t o r y here?

Trefe then: W e l l , b a s i c a l l y , w e f i n a l l y agreed t h a t w e w e r e p a r t n e r s , and t h a t they had t h e autonomy i n medicine, and they would have pa r tne r sh ips t h a t they would organize themselves, and run themselves, and w e would c o n t r a c t wi th them on a p e r c a p i t a b a s i s t o handle t h e medical s i d e of ou r h e a l t h plan. Our h e a l t h plan would be manned by us , and w e would have a board of our own, and they would n o t be represen ted on i t , and w e would no t be represen ted on t h e i r execu t ive committees, o r t h e i r boards. But t h e heads of our r eg iona l o f f i c e s , t h e head of

* S c o t t Fleming, "Evolution," 26.

Trefe then : our r e g i o n a l o f f i c e i n n o r t h e r n C a l i f o r n i a would work w i th t h e chairman of t h e i r e x e c u t i v e committee, o r c h i e f a d m i n i s t r a t o r i n working t h e problems o u t between o u r h e a l t h p l an and h o s p i t a l o r g a n i z a t i o n s and t h e doc to r s .

I n o r d e r t h a t they would have a n i n c e n t i v e t o do a good job i n t a k i n g c a r e of t h e people , and keeping them happy, s a t i s f i e d , and a l s o i n t e r e s t e d i n c o n t r o l l i n g t h e c o s t s , w e s a i d t h a t t hey would be e n t i t l e d t o 50K of any of ou r cash f low t h a t w e ob t a ined from t h e o p e r a t i o n t h a t they w e r e invo lved i n . That meant t h a t i f they cou ld s a v e a d o l l a r they go t h a l f of i t . I f i t c o s t a d o l l a r , i t would c o s t them h a l f of i t .

W e l e d them i n t o t h i n k i n g t h a t they shou ld set up, i n t h e i r p a r t n e r s h i p , a compensation program, and i n c e n t i v e program w i t h i n t h e i r own p a r t n e r s h i p , and s o they had p a r t n e r s h i p s and v a r i o u s g rades of p a r t n e r s h i p s , employees. And t h e n w e urged them t o set up some b e n e f i t s f o r t h e i r d o c t o r s , b e n e f i t s be ing pens ion p l a n s , t h a t t y p e of t h i n g , which they d i d .

W e c l e a r l y ve toed any i d e a t h a t they would be on ou r board , o r t h a t they would have any d i r e c t r e s p o n s i b i l i t y f o r t h e o p e r a t i o n of t h e h o s p i t a l s o r t h e h e a l t h p l a n . But because they w e r e a p a r t n e r , f i n a n c i a l l y , and i n eve ry th ing t h a t w e d i d , we a d d i t i o n a l l y set up a program where t h e head of each r e g i o n , f o r us , would m e e t r e g u l a r l y w i th t h e head of t h e i r medical group, and work hand i n hand as p a r t n e r s i n making t h i s t h i n g go. That meant ve ry good communication, a l l t h e t i m e , between t h e two of them.

The r e g i o n a l manager of t h e Hea l th P l an and H o s p i t a l s i n each r eg ion and t h e head d o c t o r i n t h e Permanente Medical Group i n each r eg ion would have t h e r e s p o n s i b i l i t y f o r working ou t a l l t h e major d e c i s i o n s i n t h e r eg ion , such a s t h e annua l o p e r a t i n g budge t , t h e f a c i l i t i e s c o n s t r u c t i o n program, and t h e l i k e . The i d e a i n mind was one of a p a r t n e r s h i p i n which t h e u n i l a t e r a l decision-making w a s minimal, and our management and t h e t op Permanente d o c t o r s would s t r i v e t o a ch i eve 100 pe r cen t agreement on whatever w e dec ided t o do. But on fundamental non-medical m a t t e r s , i f w e c o u l d n ' t r each agreement , then our f i n a l p o s i t i o n would p r e v a i l , and t h a t was c l e a r t o t h e d o c t o r s and accep ted by them.

Of course , we never i n t e r f e r e d w i t h t h e i r p r a c t i c e of medicine. The medica l groups c o n t r a c t e d w i th us t o p rov ide and a r r a n g e a l l covered medica l s e r v i c e s f o r our members a t an agreed upon c a p i t a t i o n payment, and we he ld them t o t h a t agreement wi thout g e t t i n g invo lved i n t h e i r d e c i s i o n s about s t a f f i n g , medica l p r a c t i c e , and incomes of i n d i v i d u a l phys i c i ans i n t h e groups.

Trefethen: Under t h e new arrangements, t h e medical groups had a s t a k e and a r i s k i n t h e f i n a n c i a l r e s u l t s , and how w e l l they s a t i s f i e d our members a s t h e i r p a t i e n t s s t r o n g l y a f f e c t e d those r e s u l t s .

Charges a g a i n s t earn ings f o r dep rec i a t ion d i d n ' t produce enough cash flow f o r t h e Heal th P lan and Hosp i t a l s t o s a t i s f y t h e c a p i t a l genera t ion requirement f o r new and expanded f a c i l i t i e s . So w e added a 4 percent f a c t o r t h a t t h e h e a l t h p lan and h o s p i t a l s took from n e t revenues of each reg ion before sha r ing t h e n e t / n e t with t h e medical group i n t h a t region. That 4 percent f a c t o r s tood f o r a number of years .

Our people n e g o t i a t e what amounts t o an annual f i x e d p r i c e c o n t r a c t w i th each medical group. While i t ' s an exc lus ive arrangement by mutual agreement, e i t h e r pa r ty could s e r v e n o t i c e and walk away. A medical group could dec ide t o c o n t r a c t w i th one of our h e a l t h p l a n ' s compet i tors , and w e could dec ide t o swi tch t o another medical group. That happened only once, i n Hawaii, when M r . Kaiser found t h a t t h e o r i g i n a l medical group t h e r e was t r e a t i n g our members a s second c l a s s c i t i z e n s , compared wi th t h e i r fee- for -serv ice p a t i e n t s , and was making u n j u s t i f i a b l e p r o f i t s f o r what s e r v i c e s they provided. He cance l led t h e con t r ac t , and s e v e r a l of t h e dedica ted phys ic ians i n t h a t group who be l ieved i n prepa id group p r a c t i c e s tayed wi th i t , formed a new group wi th t h e he lp and advice of C l i f f Keene and Ernie Saward, and s igned an agreement wi th us .

I f f o r some reason t h e r e is a b i g w i n d f a l l i n any yea r , t hose unexpected earn ings a r e s e t a s i d e and c a r r i e d forward t o o f f s e t increased expenses i n f u t u r e years . I n t h a t way, our members and t h e i r employers who pay t h e c o s t s of employee h e a l t h b e n e f i t s a r e t h e ones who b e n e f i t from unexpectedly l a r g e earn ings . Not t h e doc tors and no t us.

So, back i n t h e mid-1950s a f t e r w e pounded it out t oge the r w i th t h e top doc to r s , we a l l agreed t h a t t h e concepts sounded r i g h t and needed t o be t e s t e d f o r f a i r n e s s , equ i ty , and workabi l i ty . The r e l a t i o n s h i p and t h e arrangement passed a l l t h e t e s t s because a l l p a r t i e s be l i eved i n what we're doing i n our approach t o meeting h e a l t h c a r e needs. I t 's worked i n a l l of our r eg ions , and t h e r e ' s never been any reason f o r change.

I V INTO THE PRESENT

The Kaiser Permanente Committee

Chal l : T e l l me how t h e Kaiser Permanente Committee works.

Trefe then: They meet r e g u l a r l y . They u s u a l l y meet a p a r t from t h i s a r e a , they go down t o Came l , o r someplace; s i t around f o r a few days. And they t a l k about a l l of t h e p o l i c y ques t i ons . Po l i cy ques t i ons being, do w e go i n t o New York? Do w e go i n t o Cleveland? What do w e do about ou r expansion w i t h i n a r e a s ? Do w e expand beyond t h e cash flow t h a t comes from a p a r t i c u l a r a r e a , i n an a r e a ? I n o t h e r words, do w e borrow money from one a r e a t o ano the r?

And those t h i n g s have a l l been pounded o u t , by reason of t h e f a c t t h a t t he se people do communicate very , very , w e l l , and cons t an t ly , and they make a l l t he se po l i cy recommendations t o t h e board. They recommend t o t h e board something t h a t . t h e y a l l ag ree upon. And u s u a l l y , they a l l do ag ree upon i t .

The Ka i se r Foundation Heal th Plan/ Kaiser Foundation Hosp i t a l s Board

Trefethen: Then, w e i n v i t e .each member of our r e g i o n a l management team, of which t h e r e a r e two people , t h e doc to r and t h e a d m i n i s t r a t o r , t o our board meeting, and they a r e i n a t tendance a l l dur ing t h e board meetings. They make r e p o r t s t o t h e b o a r d i n d i v i d u a l l y , and then we have an execut ive s e s s i o n a f t e r we've gone a l l through t h a t . O r only t h e board s i ts down and m e e t s t o t a l k about whatever they want t o t a l k

, about .

Trefethen: That is , sometimes, w e g e t i n t o people problems, and sometimes w e g e t i n t o f i n a n c i a l problems, and sometimes w e g e t i n t o problems on what t o do about t h e q u a l i t y assurance t h a t we must have, having t o do wi th t h e i r performance w i t h ou r p a t i e n t s , wi'th ou r h e a l t h p l a n members.

So, i t ' s workable because people make i t work, and t h e s e t up is such t h a t it can work i f t h e people communicate and a r e f a i r and honest and b e l i e v e i n what t h e y ' r e doing, r e a l i z i n g t h a t i n o r d e r t o remain hea l thy , why, they 've got t o do a harmonious, and a good, job.

Chal l : Are you s t i l l on t h e board o r any a s p e c t of t h i s whole--

Trefe then: I ' m vice-chairman emer i tus of t h e board of t h e Kaiser Foundation Heal th P lan and Hosp i t a l s .

Chal l : And do you a t t e n d meetings?

Trefethen: I a t t e n d meetings.

Chal l : Do you speak?

Trefe then: Oh, yes .

Chal l : I see . That keeps you i n touch, then. You know how i t ' s succeeded.

Trefe then: I don ' t go t o t h e Kaiser Permanente meetings. This is t o ou r own board meet ings, and then I, of course, keep i n c l o s e con tac t w i th J i m Vohs, and I know a l l t h e p r i n c i p a l people , because we meet them whenever we have a board,meet ing. We always have a s o c i a l f unc t ion a t t a c h e d t o them, s o you g e t t o know t h e people , and t h e i r wives, inc lud ing t h e doc tors and t h e i r wives, t h a t a r e l e a d people.

So, by doing t h a t ou r board g e t s t o know t h e s e people w e l l , and t o have a chance t o s i z e them up when they make r e p o r t s . And when appointments a r e made and recommended, why, they have a good background about i t .

Management: The Key t o Success

Trefe then: I might j u s t add t h i s . I t 's a very d i f f i c u l t t h i n g t o manage, t h i s o v e r a l l h e a l t h p l an of ours . We've had ve ry good management, w i th Keene, w e have very good management with Vohs, and the reason t h a t a l l t h a t we read about t h e HMOs running i n t o t r o u b l e , is because of management, o r l a ck of i t . We've go t a procedure, and we've got a s e t up, t h a t is sound and s o l i d and e s t a b l i s h e d by t i m e , b u t , t h e management of i t is what i s t e r r i b l y imvortant .

Trefe then: I th ink t h a t w e have i n J i m Vohs a very s u p e r i o r person. H e came up through l a b o r r e l a t i o n s , which means h e had t o have good r e l a t i o n s ; he was good wi th people . And s o h e is good wi th t h e doc tors , he is good wi th t h e s t a f f , he is good wi th h i s t r u s t e e s , he is good w i t h h i s p a t i e n t s . H e ' s a man wi th compassion, very good judgment, very s t r o n g , very s t r o n g . H e must be very s t r o n g because he has t o make dec i s ions ; sometimes t h e y ' r e n o t completely popular w i t h c e r t a i n people . But you must have good execu t ive management i n o rde r t o make t h i s t h i n g work, and we've had i t .

Chal l : Yes. One of t h e d i f f e r e n c e s between, I guess , Ka i se r and o t h e r HMOs is t h a t they don ' t u s u a l l y have t h e i n t e g r a t e d u se of h o s p i t a l s and c l i n i c s , s o t h a t you ' r e s t i l l ahead . in t h a t a s p e c t .

Trefethen: Tha t ' s r i g h t . And one t h i n g about doc tors a s a group--this doesn ' t apply t o a l l of them--they a r e n o t ( t h e y ' l l probably shoot m e when they read t h i s ) they a r e n o t good a d m i n i s t r a t o r s , and t h e y ' r e r e a l l y no t very good businessmen. I t h i n k t h a t ' s because of t h e i r t r a i n i n g . You know, they 've been t r a i n e d i n medicine, and t h a t ' s what t h e i r l i f e ha s been devoted t o , and a l l of a sudden you say , "I want you t o be p r e s i d e n t , o r an admin i s t r a to r , " o r something. They haven ' t had t h e t r a i n i n g and t h e background t h a t is necessary i n o r d e r t o run a bus ines s . And t h i s is a very b i g bus iness .

Chal l : It is , c e r t a i n l y . Well, i t was, i n a sense , from t h e beginning. Sidney G a r f i e l d was, somebody has s a i d , "Ent repeneur ia l by na tu re , " and I guess t o some e x t e n t he was.

Trefethen: H e was. Very. Very, very . You know, he had t h e i d e a and he s o l d i t , and he r an i t , and he go t i t f inanced . H e pu t t oge the r t h e doc to r s , and t h e o rgan iza t ion t o do t h e t h ing . Tha t ' s an en t repeneur .

Chal l : I suppose t h a t one person cou ldn ' t eve r manage t h e whole t h ing a s i t got b igger .

Trefethen : Well, - he couldn' t . Chal l : Nobody could, perhaps.

Trefethen: And of course he wanted t o des ign a l l t h e h o s p i t a l s , and he wanted t o do every th ing h imse l f . But t h e po in t is , he couldn ' t do i t .

Chal l : Do you th ink anybody could have s inglehandedly run those t h r e e e n t i t i e s ?

Trefe then: No, I don ' t t h i n k s o , I th ink you have t o have them s e p a r a t e because they 've got t o have t h e i r own autonomy, t h e i r own th ing , you know. And y e t they have t o be a b l e t o work very c l o s e l y t oge the r .

Chal l : Well, you should f e e l a c e r t a i n sense of p r i d e i n wha t ' s developed here .

Trefethen: I t 's been a l o t o f fun. I ' m no t t h e guy t h a t ' s r e spons ib l e f o r i t . We had an o rgan iza t ion around here . Henry had me looking a f t e r t h i s t h i n g , and I was ve ry c l o s e t o him. He was ve ry c l o s e t o me, and he was on top of m e , rest assured , t o be s u r e t h a t I was doing t h e job.

Extension t o Hawaii

Chal l : When Henry Kaiser went t o Hawaii and at tempted t o s e t up h i s p lan a l l by h imse l f , i t d i d n ' t work.

Trefethen: Oh, i t worked. The problem t h e r e was t h e l e a r n i n g curve; i t took longe r over t h e r e . It took f i v e yea r s t o b r i n g t h a t t h i n g i n t o t h e b l ack , and i t wasn't h i s problem, h i s f a u l t . It was j u s t a s i t u a t i o n where they had a very good medical set up over t h e r e i n Hawaii. Those doc to r s were very s t r o n g , very c l o s e l y k n i t , and they d i d n ' t l i k e us coming i n t h e r e a t a l l .

So we were f i g h t i n g t o ge t h e a l t h p l an members, and g e t t i n g doc to r s , and i t was a ve ry d i f f i c u l t t h i n g t o do. It took more t i m e than i n a c i t y where you haven ' t go t t h a t k ind of compet i t ion, and where you have more sympathy from t h e people t h a t a r e i n t h e community. So, i t worked; evidence t h e f a c t what we're p u t t i n g i n over t h e r e now-- What was it-- F o r t y l f i f t y m i l l i o n ?

Chal l : What, of new h o s p i t a l s ?

Trefethen: New h o s p i t a l , and new c l in i c s - -

Chal l : Is t h a t so?

Trefe then: Oh, ye s , i t ' s very s u c c e s s f u l now. It j u s t took f i v e yea r s be fo re i t turned around, which is longer than we usua l ly expect i t w i l l t ake . We usua l ly expec t i t w i l l t ake a couple of years . But over t h e r e i t took f i v e . It t a k e s s o much time t o g e t t h e members; you j u s t c a n ' t go s i g n them a l l up l i k e t h a t . [snaps f i n g e r s ] I t 's l i k e s t a r t i n g a t e l e v i s i o n s t a t i o n . You go ou t and s t a r t a t e l e v i s i o n s t a t i o n , and i t ' s going t o be yea r s b e f o r e you f i n a l l y g e t t h e t h i n g i n t o t h e b lack , because you've go t t o develop the programming and t h e viewers be fo re you ge t t h e a d v e r t i s i n g .

Here, you have t o develop a program, and a suppor t , be fo re you can ge t t h e h e a l t h p lan members t o come i n t o our h e a l t h p lan . Tha t ' s what t h e problem was over t h e r e .

Chal l : It wasn ' t j u s t Henry Ka i se r ' s rush ing i n t h e r e and s e l e c t i n g a group of doc to r s , t h a t f i r s t of a l l d i d n t t work o u t ?

Trefe then: No, I th ink D r . Lin over t h e r e was a ve ry good doc tor . I th ink we had a p r e t t y good h e a l t h p l a n manager over t h e r e , a s I remember.

Chal l : A t t h e beginning?

Trefe then: But i t j u s t was tough. It was tough t o g e t t h e bus iness .

Chal l : There weren ' t t h a t many people l i v i n g over t h e r e , e i t h e r , a t t h a t t i m e .

Trefe then: Y e s , t h a t ' s r i g h t , t h e r e a r e more t h e r e now. But t h e competi t ion was tough. They had good h o s p i t a l s , and they had good doc to r s , and they had some k ind of a n o rgan iza t ion over t h e r e t h a t was p r e t t y d i f f i c u l t t o break through. Boy, they d i d n ' t want us t o succeed; t h e r e ' s no doubt about t h a t .

Chal l : So t h a t i t was almost l i k e t h e beginning over he re , when you had t o have very ded ica t ed doc to r s t o f i g h t t h e h o s t i l i t y of t h e organized medical p ro fe s s ion .

Trefe then: Very c l o s e l y . Very c l o s e l y r e l a t e d .

Chal l : I th ink t h a t ' s a l l I want t o go i n t o w i th you today. I may want t o come back t o f i l l i n some d e t a i l s .

Trefe then: A l l r i g h t . Now, of course , you s e e t h a t what 's happened is t h a t everybody's seek ing us o u t . They want us t o acqu i r e them; t h e r e ' s no problem t o g e t t h e b e s t doc to r s i n t h e na t ion . We have c a p i t a l g a l o r e , we have a l l bhe t h i n g s t h a t success b r ings t o you, bu t even s o , i t ' s a ve ry d i f f i c u l t t h i n g t o manage.

Chal l : Yes, and I suppose you have t o cons ider , t oo , what is s i z e ? What meaning does s i z e have which you d i d n ' t have t o cons ider always before?

Trefe then: I th ink ~ e n r y ' s goa l was t o ex tend i t t o a s many people i n t h e United S t a t e s a s p o s s i b l e , because he thought t h a t i t was going t o be a s e r v i c e t h a t t h e country needed, and he wanted t o provide i t t o them. Of course i t would be non-profi t . There wasn ' t any f i n a n c i a l i n c e n t i v e t o doing i t , i t j u s t was something t h a t was a s e r v i c e t h a t we could perform, t o b e n e f i t many. Tha t ' s why a l l t he se people a r e working i n t h e program. They ' re pa id very w e l l , now. They have i n c e n t i v e programs and bonuses, and pension p l a n s , and vaca t ion p o l i c i e s , and a l l t h a t s o r t of t h ing .

Chal l : And r e sea rch t i m e . Education.

Trefe then : Research t i m e .

Cha l l : I t ' s a g r e a t t r i b u t e ' t o a l l of t h e people who s t u c k i t ou t . Pounded i t o u t , a s you have s a i d .

Trefe then : It 's been a l o t o f fun.

V I THE PARTNERSHIP BECOMES A REALITY AND THE HEALTH PLAN CONTINUES TO GROW

[Date of In te rv iew: June 12 , 1985]##

Management's Response t o t h e Permanente Medical Group's Plan t o O ~ e r a t e i n San Dieeo. 1961

Chal l : I wanted t o come back and t a l k t o you about t h e a b o r t i v e move i n t o San Diego, which I d i d n ' t r e a l l y know about when I was h e r e before . Sometimes I p i ck up informat ion a s I go along. Then I want t o ask you about t h e extensions-- the f i r s t ones--into Cleveland and.Denver, and a l i t t l e b i t more about Hawaii. F i n a l l y , I want t o t a l k t o you about t h e board and how it works, and who a r e on i t .

So l e t us begin. San Diego. Even though t h i s came s h o r t l y a f t e r you had s e t t l e d t h a t whole pa r tne r sh ip and c o n t r a c t arrangement a f t e r t h e Lake Tahoe conference, t h e r e was s t i l l some d i s sens ion appa ren t ly between management and t h e phys ic ians . A s I r e c a l l , Fred Tennant was appointed r eg iona l manager, Arthur Reinhart was appointed h e a l t h p lan manager, and then a h o s p i t a l a d m i n i s t r a t o r [Verne Brammer] whom D r . Collen d i d n ' t l i k e was appointed t o t h e San Francisco h o s p i t a l by F e l i x Day. So it prope l led a move toward s e t t i n g up a h e a l t h p lan i n San Diego, by t h e phys ic ians i n no r the rn C a l i f o r n i a , apparen t ly t o show how they thought a p lan should be run. What's your r e c o l l e c t i o n and assessment of t h a t ?

Trefe then: I ' m no t s u r e j u s t who p a r t i c u l a r l y brought i t up. I th ink i t was some group i n s t i g a t e d it--maybe Ray Kay. O r pos s ib ly they a l l go t t oge the r , t h e var ious r eg ions , and decided t h a t they would l i k e t o t r y one on t h e i r own, and they wanted t o do t h i s i n San Diego.

Chal l : I t h i n k , a c t u a l l y , t h a t t h i s was j u s t no r the rn C a l i f o r n i a , and southern C a l i f o r n i a agreed gene ra l l y , because they s a i d t h a t a t t h a t po in t they d i d n ' t p lan t o go i n t o San Diego. I th ink i t was t h e nor thern C a l i f o r n i a group, wi th whom t h e r e had always been some l i t t l e d i ssens ion .

Chal l : When I t a l k e d t o D r . Cu t t i ng about i t , h e s a i d t h a t some o f t h o s e people probably would have been accep t ab l e t o t h e phys i c i ans . But i t was t h e f a c t t h a t management - put them t h e r e , w i thou t c o n s u l t i n g w i t h t h e medical group, t h a t r e a l l y w a s one of t h e major bones o f con t en t i on . " I w a s j u s t wondering why a t t h a t p o i n t M r . Tennant would have been appoin ted as r e g i o n a l manager, and what h i s a t t i t u d e s towards t h e phys i c i ans might have been.

Tre fe then : W e l l , l e t me s e e . Fred Tennant, of cou r se , had been w i t h us f o r many, many yea r s .

Cha l l : With Ka i s e r ?

Tre fe then : And Fred always w a s a man who could g e t a l ong w i th people . A n e g o t i a t o r , h e w a s a l a b o r r e l a t i o n s man, an i n d u s t r i a l r e l a t i o n s man. I b e l i e v e w e had him as manager of t h e h e a l t h p l an , d i d we n o t ?

Cha l l : Regional manager, ye s , of n o r t h e r n C a l i f o r n i a .

Tre fe then : I n n o r t h e r n C a l i f o r n i a . I d o n ' t t h i n k w e brought up t h e q u e s t i o n of San Diego.

Cha l l : No, I t h i n k t h e d o c t o r s d i d .

Tre fe then : The doc to r s brought i t up, and w e of cou r se , immediately o b j e c t e d t o t h a t . It would be a breakdown i n o u r b a s i c r e l a t i o n s h i p , and would cause no th ing b u t t r o u b l e ove r a pe r i od o f y e a r s , because San Diego is a b i g market , r a t h e r c l o s e t o Los Angeles.

So w e j u s t s a i d , no, t h a t i f i t was going t o b e done, why, we would do i t . W e made a s t udy of t h e t h i n g and decided i t w a s t h e t h i n g t o do, b u t do under t h e b a s i c p l a n t h a t we had worked ou t i n n o r t h e r n C a l i f o r n i a and sou the rn C a l i f o r n i a . I j u s t don ' t remember t h e c i rcumstances sur rounding p u t t i n g Fred i n t h e r e , excep t t h a t Fred w a s ve ry capab le and a very capab l e o rgan i ze r . He d i d n ' t have a l l t h e d o c t o r s ' s uppo r t , I don ' t t h i n k , b u t we thought h e had enough accep tance by t h e doc to r s t h a t h e would be a b l e t o do t h e job.

Chall. : According t o D r . S m i l l i e , you and Edgar Kaiser, a t t h e beg inn ing , seemed g e n e r a l l y amenable t o t h e move, a l though no t whol ly f a v o r a b l e . But i t was when Henry Ka i s e r found o u t about i t t h a t t h e c h i p s were down, and h e t o l d D r . Cu t t i ng t h a t he would d e s t r o y t h e program i f they went t o San Diego. Do you r e c a l l tha t?**

"Cut t ing i n t e rv i ew , Regional Oral H i s to ry O f f i c e , 69-76.

**Smil l ie , "A H i s to ry of t h e Permanente Medical Care Program," 105-106.

Trefethen: No, I don ' t . I don ' t t h ink t h a t Edgar Kaiser nor I would be say ing i t ' s okay t o go ahead wi th t h i s t h ing , a t a l l , because w e j u s t wouldn't do t h a t . It was b a s i c a l l y wrong. I don ' t know when w e t a l k e d t o Henry Kaiser about i t . W e t a lked t o him about i t a f t e r t h e r e had been some d i scus s ions w i th t h e d o c t o r s , bu t w e w e r e never , t o my knowledge, amenable t o such a move.

Chal l : I s e e . So i t was Henry Ka i se r who j u s t pu t h i s f o o t down and--?

Trefethen: Well, he would.

Chal l : Y e s , h e would.

Trefe then: H e was t h e boss . H e s a i d , "No, i t i s n ' t going t o be done." So, i t wasn ' t going t o be done. That ended t h e argument.

Chal l : Y e s . Right away. However, what seemed t o have come o u t of i t , accord ing t o D r . G a r f i e l d , was t h a t i t caused t h e laymen t o r e a l i z e t h e need f o r some k ind of j o i n t ven tu re , and understanding between phys i c i ans and management.* The outcome was t h a t M r . [Kar l ] S t e i l was brought i n i n p l ace of M r . Tennant. That seemed t o make th ings work from then on. I would l i k e t o know from you what might have been going on w i t h i n t he board o r t h e management t o have brought about t h e replacement of Tennant wi th S t e i l .

Trefe then: Can you he lp me on t h i s ? When d i d S t e i l become no r the rn C a l i f o r n i a r e g i o n a l manager?

Chal l : Let m e check t h a t date.**

Trefethen: And t h a t was a f t e r t h e beginning of t h e San Diego--?

Chal l : Yes, i t was about a yea r a f t e r San Diego was dead i n t h e water . A f t e r Tennant r e s igned and Karl S t e i l came i n , eve ry th ing then worked o u t a l l r i g h t . Was t h e r e something about M r . S t e i l ' s method of ope ra t i ng t h a t made i t work?

* Gar f i e ld i n t e rv i ew , t ape 5 , s i d e 1, 10 September 1974, 5-6.

**Karl S t e i l r ep l aced Fred Tennant a s r eg iona l manager i n December, 1962. See S m i l l i e , "A His tory of t h e Permanente Medical Care Program," 107.

Trefe then: I don ' t t h ink i t was Tennant t h a t was t h e problem. H e might have been p a r t of t h e problem. I t h i n k i t was b a s i c a l l y t h e ques t i on t h a t they wanted t o go ahead and do t h i s themselves, and w e s a i d , no. It took them about a yea r t o ge t over i t , I th ink .

By t h a t t i m e , w e made a change and S t e i l became r e g i o n a l manager. W e decided a t t h a t t i m e , we t h e h e a l t h p lan and t h e doc to r s , t o go ahead wi th San Diego on t h e same b a s i s t h a t w e had worked ou t .

Chal l : Having i t a p a r t of t h e southern C a l i f o r n i a medical c a r e program?

Trefe then: Tha t ' s r i g h t . It f i n a l l y go t under t h e wing of sourhern C a l i f o r n i a , which i s where i t belonged. There w e r e always some problems t h a t e x i s t e d between nor thern C a l i f o r n i a doc to r s and southern C a l i f o r n i a doc to r s . They always d i d n ' t see eye t o eye t oge the r . But a s t i m e has gone on, they 've g o t t e n t o work ve ry c l o s e l y t oge the r and very harmoniously t oge the r , bu t t h e r e was a t i m e when t h e no r th was t h e no r th and t h e south was t h e south . So S t e i l never was involved down i n San Diego?

Chal l : No, he never was involved. H e came a f t e r t h i s whole c r i s i s occur red . Then S t e i l was brought up he re .

Trefe then: Well I don ' t see t h e r e l a t i o n s h i p between our s t a r t i n g up t h e San Diego and t h e f a c t t h a t Tennant had been rep laced by S t e i l , because t h e t h ing about i t was t h a t i t was pure ly and l o g i c a l l y a southern C a l i f o r n i a venture . When t h a t f i n a l l y go t s e t t l e d , w e went forward wi th i t . I don ' t t h ink t h a t had anyth ing t o do wi th S t e i l because S t e i l was on ly involved i n no r the rn Ca l i fo rn i a .

Chal l : Well, what I th ink i t means i s t h a t t h e no r the rn C a l i f o r n i a medical group was upse t wi th t h e Tennant appointment and o t h e r appointments t h a t were made a t t h a t t i m e . They decided t o go down t o San Diego because nobody was t h e r e y e t , and set up a h e a l t h plan--some type of organizat ion-- to s o r t of show t h e management t h a t i t could be done i n a d i f f e r e n t way.

When t h a t f a i l e d , my assumption is t h a t t h e board r e a l i z e d t h a t t h e pa r tne r sh ip agreement, a s i t was set up, depended on p e r s o n a l i t i e s more than s o l e l y t h e paper o rgan iza t ion , and t h a t perhaps somebody had t o be brought i n a s r e g i o n a l manager who could g e t a long b e t t e r wi th t h e phys ic ians h e r e than M r . Tennant d id , s o M r . S t e i l was brought up t o do e x a c t l y t h a t .

From t h a t t i m e on, t h e r e was harmony. It was r e a l l y a ques t ion of management and doc tors i n nor thern C a l i f o r n i a , no t San Diego, per se. M r . S t e i l appa ren t ly worked, and has always worked, more harmoniously wi th t h e doc to r s than h i s p redecessor .

Trefe then: There ' s no doubt about i t t h a t he h a s worked much more harmoniously w i th t h e doc to r s .

Chal l : What i s h i s s t y l e ? Why d id he--?

Trefe then: He understood t h e i r problems b e t t e r . And, I t h i n k , by t h a t t i m e , was more t o l e r a n t of them, and more l e n i e n t t o them, and more of a mind t h a t t h i s was a p a r t n e r s h i p . I n t h e e a r l y s t a g e s i t was j u s t a ques t i on of one pe r son ' s i n t e r p r e t a t i o n of t h e b a s i c unders tanding v e r s u s a n o t h e r ' s . There could be d i f f e r e n t answers t o t h a t ques t i on and d i f f e r e n t approaches. So f o r a whi le , t h e r e were some people t h a t would be going i n one d i r e c t i o n , and t h e o t h e r people would be going i n t h e oppos i t e d i r e c t i o n . It took a whi le t o g e t everybody working toge the r .

Chal l : I was wondering whether t h a t f a c t t h a t M r . Tennant had been i n i n d u s t r i a l r e l a t i o n s wi th t h e Kaiser company, whether he looked upon t h e doc to r s a s employees r a t h e r than a s p a r t n e r s . Tha t ' s j u s t a ques t ion I throw ou t . I t ' s perhaps i r r e l e v a n t .

Trefe then: I d o n ' t know. I don ' t r e c a l l any i n s t a n c e s of t h a t . But remember t h a t J i m Vohs came up through i n d u s t r i a l r e l a t i o n s , and s o d i d Dan Wagster. These people were brought i n because t hey knew how t o handle people and they could g e t a long wi th people . I t ' s no t j u s t g e t t i n g up i n t h e r i n g and f i g h t i n g i t ou t . That wasn ' t ou r way of handl ing i n d u s t r i a l r e l a t i o n s .

Then t h e r e were a number of o t h e r people t h a t were involved i n i n d u s t r i a l r e l a t i o n s t h a t go t i n t o t h e h e a l t h p lan p i c t u r e ; Dave B e l l . The po in t is t h a t I don ' t t h i n k t h a t was i t . Fred was ve ry good--I considered him t o be a ve ry good manager. H e j u s t wasn ' t t h e most popular guy w i t h t h e doc to r s , s o w e made a change a f t e r q u i t e a long per iod of time. H e d id a l o t of good th ings f o r t h e h e a l t h p lan .

Chal l : T h a t ' s worth knowing. One doesn ' t l i k e t o l eave a cloud over somebody.

Trefethen: No, h e was a f i n e fe l low. Everybody l i k e d him and got a long wi th him. But one has t o b e a r i n mind t h a t t h e doc to r s were a long, long t i m e g e t t i n g t o t h e po in t t h a t w e were i n a t t h a t po in t . It t a k e s a l o t of hard work t o keep everybody working toge the r , even today. I t ' s j u s t no t easy . You've go t t o go a t l e a s t halfway, and u s u a l l y more than halfway i n o rde r t o work t h e s e problems o u t .

Extension of t he Heal th Plan t o Cleveland and Denver, 1969

Chal l : A l l r i g h t . Now w e ' l l look a t Cleveland. A s you know, i n 1961, t h e meatpackers union came he re looking i n t o some k ind of h e a l t h p lan and approached D r . Saward. He, a long with M r . Yedidia , worked ou t a p l an i n Cleveland, which was no t succeeding. However, when D r . Saward t a lked t o you about t h i s , you s a i d t o him, accord ing t o D r . Saward, "Don't you eve r , eve r g e t us involved i n Cleveland."*

Trefethen: I don ' t r e c a l l t h a t i n c i d e n t .

Chal l : Do you r e c a l l i f you were opposed i n i t i a l l y t o Cleveland, and why t h a t might have been? It came n o t too many yea r s a f t e r a d i f f i c u l t t i m e you had g e t t i n g Hawaii s t a r t e d . I don ' t know whether t h a t had anything t o do with i t o r no t .

Trefe then: It could have been, bu t I don ' t r e c a l l . I don ' t r e c a l l being opposed t o Cleveland, o r be ing opposed t o any of ou r expansion programs. A s a ma t t e r of f a c t , I ' v e been more of an expans ion i s t than most people .

Chal l : Do you r e c a l l a meeting--I don ' t know whether you a t t ended it--between t h e Cleveland people and t h e Kaiser o rgan iza t ion he re , t h e h e a l t h p lan o rgan iza t ion , a t , I th ink , a d inne r i n The Blue Fox? D r . Saward go t t h e opposing s i d e s t oge the r because Kaiser people h e r e were r e a l l y a t t h a t t i m e no t too much i n t e r e s t e d i n t ak ing on Cleveland. The Cleveland people were from t h e union mainly.

Trefethen: You mean t h e Ka i se r people being the--?

Chal l : Well, t h e board. And t h e board p r imar i l y was i n d u s t r i a l , made up of t h e i n d u s t r y people. So h e brought t h e two toge the r .

Trefe then: I t h i n k i t was a problem a l s o of whether t h e doc to r s wanted t o do i t . There was an unce r t a in ty a s t o whether o r no t i t was t h e r i g h t t h i n g t o do. Why Cleveland i n s t e a d of D e t r o i t , o r Timbuktoo.

Chal l : O r e lsewhere i n Ca l i fo rn i a .

Trefe then: It was a long way from home, and management of t he se t h ings is t h e key t o t h e i r success . A s you noted, we had a long , long per iod of t i m e be fo re w e could b r i n g t h e Hawaiian plan i n t o t h e b lack . That was a memory t h a t was stamped ve ry c l e a r l y i n f r o n t of us t o look a t a s a record .

*See i n t e rv i ew wi th Ernes t Saward,M.D.,History of t he Kaiser-Permanente Medical Care Program, an o r a l h i s t o r y i n t e rv i ew conducted 1985, t h e Regional Ora l ~ i s t ~ r ~ o f f i c e , The Bancroft L ibrary , Univers i ty of C a l i f o r n i a , Berkeley, 1986.

See a l s o i n t e rv i ew with C l i f f o r d Keene, M.D., His tory of t h e Kaiser- Permanente Medical Care Program, an o r a l h i s t o r y i n t e rv i ew conducted 1985, t h e Regional Oral His tory Of f i ce , The Bancroft L ibrary , Univers i ty of C a l i f o r n i a , Berkeley, 1986, 144-145.

Trefethen:

Chal l :

Trefethen :

Chall :

Trefethen:

Chal l :

Trefethen :

Chall :

Trefethen:

Chall :

Trefethen :

We knew, t h e r e f o r e , t h a t wherever we went t h e r e would be a per iod of t ime where we would have t o be prepared t o absorb l o s s e s i n o r d e r t o ge t e s t a b l i s h e d . A s i n our f i n a n c i a l r e s p o n s i b i l i t i e s , we wanted t o he s u r e t h a t we had p rape r ly assessed t h a t problem, proper ly es t imated t h e cos t of i t , i n o rde r t h a t we would be s u r e t h a t we weren ' t making some mistake t h a t would be a s e r i o u s one.

L e t ' s s ee . Who d i d we send back t h e r e f i r s t ?

You put t h e no r the rn C a l i f o r n i a group i n charge, D r . Cut t ing and M r . S t e i l . M r . S t e i l , I t h i n k , became t h e i r r eg iona l manager f o r a number of yea r s , and D r . Cut t ing was on t h e i r board. D r . Packer was medical d i r e c t o r of t h e region.

Sax Packer. He was a p e r f e c t choice!

Then, t h e r e was Denver, t h a t came a l s o i n 1969. The southern Ca l i fo rn i a group took t h a t over . That had been s t a r t e d a l i t t l e d i f f e r e n t l y , but I th ink t h e r e was--I'm not s u r e whether t h e r e was a h o s p i t a l o r a c l i n i c t h e r e , a l r eady a v a i l a b l e .

There was a doc to r t h e r e t h a t we were a b l e t o work with. [Wilbur Reimers] We took him on, and he j u s t r e c e n t l y has r e t i r e d . He d id a marvelous job, and he was a wonderful person, i n very good s t and ing i n t h e community. He was a b l e t o work out some very s e r i o u s problems t h a t t h e doc to r s had i n t h a t community because of t h e p re jud ice a g a i n s t doc to r s , p a r t i c u l a r l y t h a t group p r a c t i c e type of medicine.

That took a while , I th ink q u i t e a whi le be fo re i t came i n t o t h e b lack .

Quite a whi le . But t h e y ' r e very succes s fu l and have done a very f i n e job.

J u s t an a s i d e , of t h e next twelve people t o be interviewed, I th ink these two doc to r s from Cleveland and Denver w i l l be on t h e l i s t .

You ' l l enjoy Packer. D r . Reimers i s a very f i n e gentleman, e n t i r e l y d i f f e r e n t from Sam. You ' l l l i k e them both.

You say t h a t s i n c e 1969, when gradual ly t h e r e ' s been a move t o expand q u i t e a b i t a l l over t he United S t a t e s , you have been i n favor of t h i s .

Oh yes. Yes, because I th ink the p lan is s o b a s i c a l l y sound t o t he ex t en t t h a t i f you can develop management and c a p i t a l t o do i t , you should do i t . You should extend i t around t h e country, because i t f i l l s a very d e f i n i t e need. And, of course, i t has s t imu la t ed a l o t of o t h e r h e a l t h p lans t h a t a r e now i n competi t ion, and t h a t is good f o r t h e h e a l t h indus t ry .

Trefe then: I t h i n k t h a t a s a r e s u l t of t h i s j o i n t e f f o r t w i th t h e d o c t o r s , we've made a r e a l impact on h e a l t h . . c a r e and w i l l cont inue t o do s o , more and more s o a l l t h e t ime. Because a s we've s t imu la t ed o t h e r s t o do i t and they 've done i t , they 've s t imu la t ed o t h e r s t o do i t .

The Kaiser Familv Foundation

Chal l : I n t h e e a r l y days, i n t h e Cleveland and Denver days, t h e Kaiser Family Foundation provided a cons iderab le amount of money. Although you weren ' t on t h e i r board, I suppose t h a t you may have had a c e r t a i n i n f luence .

Trefe then: I was t h e p re s iden t of t h e Ka i se r Family Foundation from i t s very beginning, u n t i l such time a s i t was thought t h a t t h e r e might be some c o n f l i c t of i n t e r e s t between t h e family foundat ion and a l l of t h e ope ra t i ons of t h e va r ious Kaiser companies t h a t I was r e spons ib l e f o r . It was decided t h a t I should withdraw from t h e fami ly foundat ion.

A t t h a t t i m e George Woods was t h e chairman of t h e board of t h e family foundat ion, and he s e l e c t e d D r . Bob Glaser a s t h e p r e s i d e n t , t o r ep l ace me.

The Kaiser Family Foundation owned c o n t r o l l i n g i n t e r e s t i n Kaiser I n d u s t r i e s , and Kaiser I n d u s t r i e s owned c o n t r o l l i n g i n t e r e s t i n Aluminum, S t e e l , and Cement. With my r e s i g n a t i o n from t h e board of t h e famTly foundat ion, any p o s s i b i l i t y of c o n f l i c t s of i n t e r e s t was e l imina ted .

The f a c t was t h a t t h e on ly connection t h a t e x i s t e d a f t e r t h a t was Edgar F. Kaiser . He was on t h e family foundat ion board and was a l s o chairman of t h e boards of t h e var ious ope ra t i ng Kaiser companies. I was r e spons ib l e f o r t h e day-to-day ope ra t i ons of a l l t h e va r ious Kaiser companies. Because of t h a t , t h e a t t o r n e y s s a i d , "Well, i t would be b e t t e r i f Gene got o f f t h e board." I d i d no t want t o g e t o f f t h e family foundat ion board. I f e l t t h a t t h e c o n f l i c t s could be handled and i n view of t h e f a c t t h a t I had s t a r t e d i t wi th Henry Kaiser , I wanted t o be a p a r t of i t s f u t u r e . But I cou ldn ' t do both, t h e a t t o r n e y s s a i d , and I res igned .

Chal l : You s t i l l had a l i t t l e i n f luence , I ' m s u r e .

Trefe then: Oh yes . Y e s .

Chall : It was an important move on t h e p a r t o f t h e family foundat ion t o have provided t h e m i l l i o n s of d o l l a r s i n g r a n t s and loans t o t h e Kaiser-Permanente Heal th P lan and Hosp i t a l s t h a t i t d id . It got those f i r s t ex tens ions underway.

Trefethen: Oh, yes , I was very ins t rumenta l i n t h a t . The Henry J. Kaiser Family Foundation o r i g i n a l l y provided t h e money f o r t h e start of t h e h e a l t h p lan a f t e r t h e w a r . Then they provided t h e money--and I was r i g h t i n t h e middle of that--for Hawaii. That was a tough one, because i t w a s l o s i n g money, and l o s i n g money, and l o s i n g money. Af t e r t h a t , we had a b e t t e r understanding about how t o f inance f u t u r e ope ra t ions , and a b e t t e r understanding w i t n t h e doc tors . We d id g e t some s u b s t a n t i a l h e l p from t h e family foundat ion i n connec- t i o n wi th both Denver and Cleveland. It was very important t o us .

Chal l : Yes. Any bus iness has t o start ou t w i th some funds.

Trefethen: The h e a l t h p lan is s e l f suppor t ing i n every way. The family foundat ion has helped t h e h e a l t h p lan from time t o t ime i n o rde r t h a t i t could do more. I f t h e family foundat ion had a program t h a t we were i n t e r e s t e d i n and we f e l t t h a t i t was i n l i n e w i t h our own o b j e c t i v e s and we were s a t i s f i e d t h a t we had t h e management t o do i t , we would do i t . I th ink i t ' s t e r r i b l y important f o r t h e two o rgan iza t ions t o work somewhat c l o s e l y toge the r , a s c l o s e l y a s they can. That ' s one of o u r o b j e c t i v e s .

The Board of D i rec to r s of t h e Kaiser Foundation Heal th Plan and Hosp i t a l s .

Chal l : About t h e board of d i r e c t o r s of t h e h e a l t h p lan and h o s p i t a l s . It was r e a l l y almost e n t i r e l y , i f no t e n t i r e l y , Kaiser i n d u s t r i a l people u n t i l 1962 when M r . Woods came i n . But I understand he had been more o r l e s s c l o s e l y a t t ached t o t h e Kaiser I n d u s t r i e s before he came on t h e board. I hadn ' t r e a l i z e d t h a t he had been placed on the Kaiser Family Foundation board.

Trefethen: He w a s t h e head of F i r s t Boston Corporat ion, and he was t h e one t h a t I worked wi th i n f inanc ing a l l of our ope ra t ions : aluminum, s t e e l , cement, Kaiser I n d u s t r i e s . We became very , very c lose . And I th ink we f i g u r e d ou t one day we had r a i s e d some two and a h a l f b i l l i o n d o l l a r s , which was a l o t of money i n t hose days.

Chal l : B i l l i o n ?

Trefethen: B i l l i o n . For our va r ious o u t f i t s . H e w a s about s i x o r e i g h t yea r s o l d e r than Edgar and me. Although he w a s chairman o f F i r s t Boston Corporat ion, he.was phasing ou t . W e t a l k e d about i t , and we decided t h a t h e would be g r e a t i f h e would go on t h e board [of t h e foundat ion] and t ake over t h e chairmanship and run i t .

By t h i s t i m e t h e r e were a l o t of l a w s t h a t had been passed about how you handle non-profi t foundat ions l i k e t h i s , and you had t o be more c a r e f u l about what you d id . H e took i t on, and engaged Bob Glaser, who w a s t h e p r e s i d e n t of i t f o r t e n yea r s , u n t i l about a y e a r and a h a l f ago. H e came onto t h e h e a l t h p lan board too. D r . Alvin Tarlov rep laced D r . Glaser a s p r e s i d e n t i n 1984.

Chal l : It wasn't u n t i l about 1967, a c t u a l l y , t h a t people came from t h e o u t s i d e o f i n d u s t r y on to t h e board. Mostly they 've been men, and mainly they w e r e members of corpora t ions . Mainly they a r e caucasian. A few of them a r e famous o r household names, l i k e Arthur L i n k l e t t e r , o r former Supreme Court J u s t i c e Goldberg, and i n t h e Northwest, of course , N e i l Goldschmidt. What w a s t h e c r i t e r i o n f o r moving beyond t h e Ka i se r i n d u s t r y people?

Trefe then: There w e r e people on t h e board i n a d d i t i o n t o our own indus t ry people , but they r e a l l y were our own people. George Link w a s on t h e board from t h e very beginning, and of course , h e "as our lawyer. A very f i n e person. H e s t ayed on t h e board a f t e r h i s r e t i r emen t from Thelen and Marrin.

Trefethen: I t h i n k ou r c r i t e r i a came i n p a r t t o o b t a i n people who represen ted , o r w e r e community l e a d e r s i n t h e communities Tn which w e w e r e doing bus iness . W e d i d t h a t i n t h e main, and w e go t some very good board members a s a r e s u l t .

A r t L i n k l e t t e r , he was on t h e r e because h e was a f r i e n d of Henry Kaiser. H e wasn't on t h e r e f o r very long. H e was a southern Ca l i fo rn i an , and we were heavy i n southern C a l i f o r n i a . But then he developed a c o n f l i c t . He was promoting some k ind of an insurance p lan , s o i t w a s adv i sab l e t h a t he g e t o f f t h e board. It was a developing c o n f l i c t between what w e were t r y i n g t o do and what he was t r y i n g t o do. He d i d n ' t r e a l i z e i t a t t h a t t ime. There wasn ' t any malice involved i n i t . It j u s t developed t h a t way.

Then B i l l Grant, a lawyer from Denver, became a member of our board. H e was both a wonderful person and most va luab le t r u s t e e . Then from Hawaiiwe had Ralph Yamaguchi, who happened a l s o t o be a lawyer. But he too was a wonderful board member u n t i l he had t o

Tref e then :

Chall :

Tref e then :

Chall :

Tref e then :

Chal l :

Tref e then :

Chal l :

Tref e then :

Chal l :

Tref e then :

Chall :

retire. H e was rep laced by a lady who was very a c t i v e i n t h e community over t h e r e i n Hawaii, known by many people , and a member of a number of boards. She has proven t o be a very good board member.

T h a t ' s Mrs. Jean Cornuel le?

H e r husband i s q u i t e a guy over t h e r e , too. Then w e had somebody from t h e Cleveland a r e a . What was h i s name? Lee Howell. He a l s o h a s r e t i r e d . We had Charles Vanik, who was an a t t o r n e y and a very a b l e p o l i t i c i a n . We a l s o had people i n t h e h e a l t h f i e l d . We have Nancy Hicks on t h e r e . She 's q u i t e a writer and a very a c t i v e woman. She is t h e wi fe of t h e pub l i she r of t h e Oakland Tribune, Bob Maynard. W e never had any doc to r s on t h e board, a s you know. We had a p o l i c y a g a i n s t t h a t .

L e t ' s s ee . You d i d have a D r . Mi t che l l Spellman, who r e p r e s e n t s t h e Drew Medical School.

Tha t ' s t r u e . W e d i d n ' t have any of ou r doc to r s on the re .

Right. But you d i d n ' t have many doc to r s anyway.

H e was famous and s t i l l i s , and very a c t i v e i n medical c i r c l e s - - based a t Harvard. He has been a marvelous board member.

I have t h e names of o t h e r s , l i k e Arthur Goldberg, t h e a t t o r n e y and former Supreme Court j u s t i c e .

Goldberg was a l i f e l o n g f r i e n d of a l l of ours and a ve ry imagina t ive man, a very l i b e r a l minded man. H e was on t h e board f o r q u i t e a whi le and then r e t i r e d . He was on because he was a p u b l i c f i g u r e and we knew him, and we thought he would add something t o what w e were t r y i n g t o do., And he d id .

You say you had known him f o r many yea r s . I guess t h a t means you and t h e Kaisers . How d i d t h a t come about?

H e used t o be an a t t o r n e y f o r t h e United S t e e l Workers of America. We had been i n n e g o t i a t i o n s w i t h them, and r a n i n t o Arthur . He was t h e ch ie f n e g o t i a t o r . We found him t o be a very s t r o n g and a very f a i r person, and a very honest guy. So we asked him one day t o go on t h e board, and he s a i d , ye s , and he was on f o r q u i t e a while .

Y e s , he was. Seven yea r s , a s a m a t t e r o f f a c t . We t a l k e d about D r . Spellman, and Ralph Yamaguchi. Of course, William Hewlett would have a management background.

Trefe then :

Chall :

Trefethen :

Chall :

Trefethen :

Chall :

Trefethen:

Chal l :

Well, w e had known B i l l f o r many, many yea r s . H e went on boards from t i m e t o t i m e . H e was on t h e Chrys le r board. H e was i n t e r e s t e d i n t h e h e a l t h program, s o w e i n v i t e d him on. H e was a board member f o r how many years.?

I don ' t have t h a t . Sometimes your annual r e p o r t s t e l l when people l e a v e , bu t I haven ' t seen a l l t h e da t a .

Qu i t e a few yea r s . I had d inne r wi th him Friday n i g h t . I n c i d e n t a l l y , he b u i l t a b e a u t i f u l new p l ace down i n P o r t o l a Val ley. Gorgeous. W e a l l went down t h e r e and had d inner w i t h him and had l o t s of fun.

Quigg Newton.

Quigg Newton was a f r i e n d of Bob Glase r ' s . They had q u i t e a r e l a t i o n s h i p , and he happened t o be from Denver, too. H e ended up working f o r t h e fami ly foundat ion f o r a number of yea r s . H e had some r o o t s i n t h e h e a l t h f i e l d . He was t h e head of t h e Commonwealth Fund.

Y e s , t h a t ' s c o r r e c t .

He was t h e r e f o r a reason. I t h i n k we ended up w i t h a k ind of well-balanced board and a workable board. Because of t h e committee system t h a t w e ope ra t e under, a l l of them w e r e put t o work. Some w e r e on t h e Audit Committee, and some were on t h e F a c i l i t i e s Committee, and some were on t h e Qual i ty of Care Committee, and some on t h e Execut ive Committee. What else d id w e have, o r do w e have?

But they a l l went t o work. W e go t t o g e t h e r and moved ou r board meetings from reg ion t o reg ion s o everybody could g e t acqua in ted wi th what was going on, and a l s o ge t acqua in ted with t h e doc to r s . Then w e adopted a p r a c t i c e of i n v i t i n g t h e t o p . p e o p l e from each of our r eg ions , t h e r e g i o n a l manager and t h e medical d i r e c t o r t o a t t e n d our board meetings and r e p o r t on s i g n i f i c a n t developments i n t h e i r region. They a l l s i t i n on our board meet ings; every board meeting.

Occasional ly w e w i l l have an execu t ive s e s s i o n , bu t most eve ry th ing t h a t ' s d i scussed i s d iscussed wi th them i n t h e room. They do n o t have any v o t e , bu t w e do h e a r r e p o r t s from them a t every board meeting. Each person, two from each a r e a , speaks a moment, and they a r e a b l e t o answer ques t i ons of any of t h e board members about t h e i r r e s p e c t i v e a r e a s , and about t h e i r problems. Tha t ' s worked o u t extremely w e l l , and has tended t o cement t h e whole t h i n g toge the r .

I t h i n k you t o l d m e t h e l a s t t i m e I was h e r e t h a t you have a s o c i a l a f f a i r a long wi th t h e board meeting s o t h a t you g e t acqua in ted with a l l of t h e s e persons, a s w e l l a s t h e i r wives, i n many cases .

Trefethen: W e do t h a t . We do t h a t p a r t i c u l a r l y when we go t o some o t h e r reg ion . It 's good f o r t h e i r morale, and very good f o r our t r u s t e e s t o s e e t h e type of people they a r e ; how they a c t and r e a c t , and who t h e i r spouses a r e . You g e t a good f e e l about t h e whole th ing a s a r e s u l t of g e t t i n g toge the r .

Chall : W e d i d n ' t t a l k about Mary Bunting.

Trefethen: She w a s marvelous. She was t h e p re s iden t of Radc l i f f e f o r many yea r s . She w a s an educa tor , and a marvelous board member because s h e w a s very i n t e l l i g e n t , kept very much up t o d a t e on t h e va r ious h e a l t h systems. She made a s u b s t a n t i a l con t r ibu t ion .

Chal l : She w a s h ighly q u a l i f i e d . But s h e was your f i r s t woman appoin tee , i n 1969. Was she a token? Why w a s a woman picked a t t h a t time?

Trefe then: A pol icy dec i s ion w a s made t o inc lude some q u a l i f i e d women. Henry Mead Kaiser is on our board.

Chal l : Y e s , he is.

Trefethen: He's t h e only Kaiser family r e p r e s e n t a t i v e on our board. He i s on t h e F a c i l i t i e s Committee. He works a t i t and he does a good job.

Chal l : It looks as i f you p ick people c a r e f u l l y , t h a t you ' re no t j u s t .

br inging on anybody from a region. That person has t o have something t o c o n t r i b u t e t o your board. It t h a t one of your c r i t e r i a ?

Trefethen: Oh, yes. hat's co r rec t . We had- one from t h e southwest, John Mi l l e r .

Chall : Yes.

Trefe then: He knows everybody and t h e i r b ro the r i n t h a t a r e a , and h e ' s t e r r i b l y important i n he lp ing t h e l o c a l people down t h e r e i n t h e Texas region. He's a very succes s fu l merchandiser of goods. He understands t h e merchandising of a h e a l t h p lan . He's a businessman, a very s u c c e s s f u l businessman. He's a g r e a t p lus .

Chal l : I suppose t h a t t h e r e a r e two ways of looking a t these people. One is t h a t they can con t r ibu te a g r e a t d e a l t o t h e board. The o t h e r is t h a t because of t h e i r r epu ta t ions , they enhance t h e r epu ta t ion of t h e Kaiser Heal th Plan i n t h e i r own communities, when a s a r u l e , over t h e yea r s , and s t i l l , i t ' s not always accepted.

Trefethen: Exact ly. They do j u s t t h a t . Then a l s o , from t h e Denver a r e a , we have--

Chal l : Bruce Rockwell?

Trefethen: Bruce Rockwell. He w a s one of Colorado's lead ing bankers u n t i l he changed c a r e e r s l a s t year t o become.the head of Colorado's l a r g e s t c h a r i t a b l e foundat ion. He asks the hard f i n a n c i a l ques t ions .

Chal l : That 's important . There 's always a problem i n acceptance, even today, wi th the h e a l t h plan. I t ' s not considered j u s t any HMO.

Trefethen: W e t ake c a r e of twenty-five percent of t h e people i n t h i s a r e a now. I th ink t h a t ' s t h e f i g u r e . That means one ou t of every f o u r , s o i t ' s a tremendous f a c t o r i n t h e a r ea . I t 's a tremendous f a c t o r .

Chal l : For many years (1960-1966) E.B. Dodds was a board member, l i s t e d a s Owner's Representat ive. What d i d t h a t mean? Who was M r . Dodds?

Trefethen: I n charge of f a c i l i t i e s - - a l l cons t ruc t ion and r econs t ruc t ion .

Chal l : I presume t h a t t h i s board, l i k e a l l boards, has t o have a g r e a t d e a l of confidence i n i t s execut ive d i r e c t o r s . You c a l l them p r e s i d e n t s , p rev ious ly D r . Keene and M r . Vohs, now. Is t h e r e some way t h a t t h e board comes t o understand t h e c r e d i b i l i t y of t hese execut ive d i r e c t o r s , and c a n , t e l l whether t h e y ' r e func t ioning proper ly o r no t?

Trefethen: Well, through t h i s committee se tup . And then we have a Conf l i c t of I n t e r e s t Committee. We have a Committee on Board Composition. We have a Committee on Compensation t h a t has a r e s p o n s i b i l i t y t o e s s e s s t h e top people i n t h e organiza t ion ." They i n t u r n r epo r t back t o t h e board t h e i r f i nd ings and t h e i r recommendations of s a l a r i e s , and b e n e f i t changes, and so f o r t h and s o on.

I do th ink t h a t i n s p i t e of t h e f a c t t h a t we have a r a t h e r l a r g e board, they a r e kept very w e l l informed about what is going on. They t ake a r e a l i n t e r e s t i n i t , and have been very , very heav i ly invblved i n watching the q u a l i t y of o u r h e a l t h program. - The committee on q u a l i t y assurance i s t h e r e t o be s u r e t h a t t h e proper a t t e n t i o n is be ing given t o t h a t by our people, and a l s o by t h e doc to r s .

I th ink our board is very w e l l involved i n t h e operation-- without having day t o day respons ib i l i ty - -but they know what 's going on. They have an e x c e l l e n t oppor tuni ty t o view t h e management, inc luding t h e ch ief execut ive o f f i c e r , a s he i s performing. They can we l l a s s e s s whether o r not a man o r a woman is doing t h e proper kind of job.

* Executive Compensation Committee

The Cen t r a l Of f i ce

Chal l : There has been some, I don ' t know i f i t ' s c r i t i c i s m , bu t a c e r t a i n awe, I guess , i n some q u a r t e r s , a s t o how l a r g e t h e Cen t r a l Of f i ce has grown i n t h e l a s t number of yea r s . Do you have any f e e l i n g s o r a t t i t u d e s about t h e Cen t r a l Of f i ce , o r growth i n t h e bureaucracy, a s some would c a l l i t ? Bureaus, maybe. Put i t t h a t way.

Trefe then: Well, I th ink when you ' re expanding, you've got t o have a c e n t r a l o f f i c e t h a t l e a d s you and h e l p s you w i t h something t h a t r e q u i r e s a l o t of a t t e n t i o n and a l o t of t r a i n i n g . You have t o have a group t h a t i s capable of doing t h a t . The f i n a n c i a l s t r u c t u r e has t o be set up. A l l t h e procedures have t o be s e t up. And you have r e sea rch people , and s o f o r t h .

We have people who know t h e func t ion ing of how you s e l l our h e a l t h p lan . We j u s t f a n t hose people o u t i n t o an a r e a . Tha t ' s why we can t a k e new a r e a s on. Management is a very important p a r t of t h i s t h ing . Without good management, you j u s t never would succeed. We've seen many of t h e s e HMOs s t a r t up and f a i l because they j u s t d i d n ' t have t h e management s t r u c t u r e o r know how t o do i t .

Our success r eco rd i n s e t t i n g up t h e s e u n i t s has been very , very good. The reason f o r t h a t , has been i n l a r g e p a r t because we have such a s t r o n g c e n t r a l group t h a t can i n i t i a t e a l l t h e s e t h ings t h a t have t o be done. P lus t h e f a c t t h a t when you a r e running anyth ing t h i s l a r g e , you've got t o have a c e r t a i n amount of r e sea rch people t h a t watch t h e t r e n d s i n t h e i n d u s t r y and come up w i t h new i d e a s and new innovat ive t h i n g s t h a t we could do o r should do.

I th ink t h e y ' r e a l l busy.. I s e e them working, and t h e y ' r e a l l busy. They ' re on t h e road a l o t . I ' v e been i n a number of ou r u n i t s , and I ' v e seen t h e r e l a t i o n s h i p , and how important i t is. I ' v e never heard anybody f u s s i n g about i t . The board, t o my knowledge, has never ques t ioned t h e growth of t h e Cen t r a l Of f i ce .

Chal l : I t ' s j u s t p a r t of t h e growth?

Trefe then: How d i d you p i ck t h a t up?

Chal l : I picked i t up by read ing . Mr. S c o t t Fleming has w r i t t e n a l i t t l e h i s t o r y , and he devotes a few pages t o t h e growth of t h e Cen t r a l Off ice .* 1 don ' t t h ink he w a s c r i t i c a l of i t , I th ink he was j u s t

Chal l : exp la in ing i t . But I d i d t a l k t o D r . Cut t ing about i t , because I would f e e l t h a t from h i s vantage po in t he might have a d i f f e r e n t opinion. H e looks a t i t somewhat d i f f e r e n t l y , a l though he r e a l i z e s t h e need f o r i t , a s you do.* But you ' re a management person, and I thought I would l i k e t o a sk you about i t .

Trefethen: Take S c o t t Fleming f o r i n s t ance . H e s t a r t e d up t h e l e g a l and governmental r e l a t i o n s s t a f f . H e ' s working on s p e c i a l p r o j e c t s now, and is s t i l l inva luab le t o us because of h i s thorough understanding of our o rgan iza t ion and our h i s t o r y .

Chal l : Well, t h e r e a r e always people on va r ious s i d e s of an i s s u e , p a r t i c u l a r l y i n an o rgan iza t ion , a s you w e l l know. You can ' t s a t i s f y them a l l .

Trefe then: That ' s r i g h t .

Surmnary : Henry Ka i se r ' s Vision

Chal l : Tha t ' s a l l I t h i n k I wanted t o t a l k t o you about . Do you have anyth ing t h a t you want t o add?

Trefethen: No. I j u s t might c l o s e by say ing t h a t I see a g r e a t f u t u r e f o r our o rgan iza t ion . Ce r t a in ly t h e b a s i c s a r e s o l i d and r i g h t . There 's a huge need throughout t h e United S t a t e s f o r more of t h i s type of ca re . I t h i n k t h e t r e n d s a r e a l l t h a t way.

I b e l i e v e t h a t our people have t r a i n i n g programs t h a t a r e t r a i n i n g new management t o go f u r t h e r w i t h i n t h e i r own o rgan iza t ion , o r perhaps t o form new a r e a s . I t h i n k t h a t t h i s is t e r r i b l y impor tan t , and I t h i n k a d d i t i o n a l l y t h a t t h i s is e x a c t l y what Henry Ka i se r wanted done.

H e v i s u a l i z e d a l l o f t h i s . H e thought i t could be a p l an t h a t would t ake ove r t h e United S t a t e s h e a l t h needs. H e would go a l o t , f u r t h e r than any of us by say ing t h a t t h i s is t h e one t h i n g tha t w i l l keep us from g e t t i n g i n t o s o c i a l i z e d medicine, and i t ' s t h e way t o set up medicine s o you g e t b e t t e r q u a l i t y care . You can spend t h e money on r e sea rch , and you can ge t t h e b e s t doc to r s , and you can g e t t h e b e s t t a l e n t s , and t h e b e s t f a c i l i t i e s . H e would go on and on and on. H e would be very happy.

Chal l : It looks a s i f t h e dream has come through a f t e r a l o t of hard work.

*Cutting i n t e rv i ew , Regional Ora l His tory O f f i c e , 84-85.

Trefethen: That ' s r i g h t . A l o t of hard work. Nobody p r o f i t s from it because we're not - for -prof i t o rganiza t ions . There a r e no owners, no shareholders . Of course , t h e people running i t a r e w e l l pa id , and be l i eve me,, they ea rn every dime of s a l a r y . I t h i n k i t ' s a very succes s fu l program. It w i l l be , a s Henry Kaiser s a i d , t h e one accomplishment h e ' l l be remembered f o r .

Chal l : Yes, I t h i n k he w i l l be remembered f o r i t . Thank you very much f o r your t ime, and your w i l l i ngness t o s t r e t c h your memory back t o long-ago d e t a i l s .

Trefethen; Well, good luck; and thank you very much.

T ransc r ibe r s : Michele Anderson and David Pol lock F ina l Typis t : Michele Anderson

TAPE GUIDE -- Eugene E. T r e f e t h e n , Jr.

I n t e r v i e w 1: February 22, 1985 t a p e 1, s i d e A t a p e 1, s i d e B t a p e 2, s i d e A t a p e 2, s i d e B ( s i d e B n o t r ecorded)

I n t e r v i e w 2: March 5 , 1985 t a p e 3 , s i d e A t a p e 3 , s i d e B t a p e 4, s i d e A t a p e 4 , s i d e B ( s i d e B n o t r ecorded)

I n t e r v i e w 3: J u n e 12 , 1985 t a p e 5 , s i d e A t a p e 5 , s i d e B

APPENDIX

OFFICE FOR EMERGENCY MANACEMEN'I'

WAR MANPOWER COMMISSION IWWI'HEMWT a d * I W G N M M SFHVI('1. 11-

PIIYSICIANS. uFN'rIsi3. VF:WXINAI~IANS

Room' 1435, 450 Sutter ~ t k e t San Francisco 8, Califorrda November 9, 1943

M r . Murray Brooban, Chairman Northern California Area Product ion Urgency Committee Room 573, 1355 Yarket Street San Frcrncisco, California

Dear Sir:

Enclosed is a statement of policy adopted by the Coordimting Committee of Procurement and Assignment Service on the m a t t e r of an addition t o the., Pemanente Hospital in Oaklard, California.

This sfitement n i t e r a t e a the approral given &the C o o r d i n a t a Conunittee of Procurement Assignnent Service on A p r i l 12, 1943, t o t h i s proposed conqtruction. The re i tera t ion of policy was adopted after a resurvey of the b a p i t a l bed si tuation i n the Oakland - Eaat Bay area by a representative of the United Sta tes Public Health Service. Also,. representatives of the Alameda County Medical Association of of the East Bay Hospital Conference, representing nine non-profit hospitals i n the East Bay area, had been accorded a complete hearing on the i r views by the Coordinating Committee.

For your information, the Coordinating Committee of Procurement and Assignment Service is a voluntary group made up a t the suggestion of the Rashington headqu~arters of Procurement and Assignment Service .and composed a t the present timo of representatives of the American Red Cross, Office of Civilian Defense, California State Depa-nt of Public Health, United Statea Public Health Service, California , State War Councll, California Medical Association, California State Dental Association, medical and dental education and hospital superintendents.

Sincerely yours,

- , - a + / . . - Habold A ; - h e t b e r , M. D. California State Chairman fo r Physicians Procurement alld Assignment Service

The Coordinating Comaittee of Procurement and Assignment Service

on April 12, 1943, voted a that the Coordinating Committee of Procurement

ard Assignment S e m c e go on record a8 favoring construction of a 166 bed

addition t o the Permanante Hospital, through the use of Lanham Act. funds, . .

such addition t o be open t o all physician^.^

The Coordinating Committee of Procurement and Assignment Sexvice hes

again considered the subject and appraised the medical needs.

The Coordinating Committee of Procurement and Assignment Service has

considered the fac t tha t there are empty W e in the Alameda County

Hospital. These represent the normal e las t i c i ty , demanded by reasonable

precaution,

The Coordinating Committee of Procurement and Assignment Semdce is

aware tha t a t the present time the ~ o s F i b l s i n the area are more than

normally full; t ha t patients a re discharged from the hospitals a f t e r

shorter reeidence than i s customarily considered neceesary.

The Coordinating Committee of Procurement and Assignment Service is

aware tha t the present high population of hospitals, without any abnormal

incidence of disease o r emergency, leaves no provision fo r emergencies,

such as epidemic o r catastrophe, customarily considered advisable.

The Coordinating Committee of Procurement and Assignment Service on

November 8, 1943, voted unsni~~ously t o reaffirm i t s action taken on

April 12, 1943.

W. -ti dirrrd W' i ~ o t that tkmy bb' rppta&Wy ZOO norot bed. Z- tha obt.w;.*l wbt8b w e a I * \ m ~ i n i s g b.L., n hllm a t yau

4U ooa4lrrSa tbrt bed.; q r m prsotlsrllyj $ariioat&m taw tho r a n o f oro .c - and #.it <anUha byrur, it i r r f & t ttut of t h a n r W rrerrm4 kd., 26

aro rcwrrred far p r l w t b i o r d remmwd Z o c ieohtlaa -&&mu aasu, lea* 6- I28 bmdr avk&bla ?or,,- d i m & aad swgiaal e m m a d than -/' . d y u3Wi.r t b f ~ ~ - - r ~ * i . ~ , . - .-

C

IL2F?ICtLOl BI). $a b. =a& mi4 fcitld emugh Bo qitr, 38 cilbtceBiaw trtm fr,a aimL- d tho CamCy Ims$iQaaUoaa hbw urdor rhfab the Eigklaad Z a s y i t a l optstam, qsa

fauawor I : I :

,.. / '.., '. .. ---___. . 1- ,./

felloriry I t mns th* wn+erwm of opinion ttrt tkm -3 & 8 ~ & t d Vd.d -% I ~ B !?001@ 1- F.f ptil~~trl, blB1 $hat it :ma i~mbart W s t a d riudy 40 mt d l errrerg+rwisr in hamamy a i t h the ixwsent bxirtitq &aim#,

-8 M r a k o a reitarakd t h e firm pollik.lor that if had take8 abd ah- thab. the &uy uauU aanUmm rharob the Cam* b o a p i t a b rrarrlia nab aaeryt. pa7 patiant. as s a d bat aa ty

W t m t i o . r tha m r haryitula would be wm@ to sect sap a r y m e l a r r h m ptir8l)r r q m l m herpiGI earo a d a d d net k a-td la d a t i a ( primt. PadUtimr.

10 and8rsO.d t?,at no ratlea bas bean h k e a br t k m rrioa othsr than tbat qoatd *ban and 10 ir, thereforcr, nyp.mn* that theism a b e d m u e inaff'aa+,irr exempt to tcng0mrU.y c a n fm ra*rgew earner uuffnim fr ar aerfoua iUnesa, 8Nob cwaea muhi bm tnarfmsd if parribla sr dlroettug.6 u ma parribla, ar PWlb ?.9oVeJr7.

tho operatlorn of the Counw barpihl Ladigen% ;.&tiant8 that rrr h w m ~ t b. uklttd. O f the 90.000 mP14JH. ia ~ . m ~ n t 11~0 a%aid. of & l a d . C-. It La IIR.r.ating J d , T : ' n of au wplepee 18 ar i'ellums

/a' 1

/' ,/' ;L3,08f)<\

// A h m d 8 -3 ,.#'I 31.U S contra Corta cam z , d '\..., ,, /

' ., \ ,/ ,,' ' 42.m $

3aa Itnnoisso C l C J sad C d y l B * L \. .

\ - \ . LI \

2t.W rr A l l Q**m

,' y V 3 & P , ,\ . \ 5.70 s . , mu . f 90,- ' , m.oo f

I ' I

?kersfors, it 11 to 3s ; td thnt "or ado 73,000 erployemr l iring m i t a i ie ef A L u d . Couaty, glna t k e t r tea - ra e a t M t d total d 250,000 1:aopl. - these meant b d a ab Highhad Hospitd bk not a r o ~ h 3imo the aajurity of these ffi0,000 p e p 1 0 Fall in %hr ~ w l I o n l l ~ . - 1 ~ I i g c 6 h & ~ .. '

' /"-..--' - .--/-. R?:;T?'ICIfOll B9. a r I&$laek a E v i q r w that udar tho Gounty and S + ~ f ; e lsrm A i r 4 Couw illdigants &annpt bo sdrittr4 @ ?.he Caunty flaspital tf thuy hrwm PO+, rastd+4

/ ; , . /' /.

RfSF.ICTIOl 0. 48 D t \ ~ ~ @ , - . ~ , ~ t a t d thnt u l t b u ~ h tho County H M p i b l i a open ta $iqiaa( patiamtr in m a a s a W g r r u y only ft is the )alley of tho Cmnty Iforpi ?d ts : f i s s m g s , , d n q ;atlamto rhonner @@riblo.

839?'9LCn0)1 S3. (It Dr. I l n d a2ris.r w Mst ao doo+an: can ?ring n ;.atisnb inte h t y EbtpftrS, and aarr far *.hat p t l a a t d e w he ia a nmbr 3f t h e volmtary a b f f w h i o b o m p r i m e n?p1d8lstdy UO !lasters in thir arm, It La to be mtsd t h ~ t thwre rre a p p r o x i u t d y SOC) destora in % h i m aru.

253TdXCZZQll Bl, Bt Dr. 31aak hrr rbbd %hat duo t o tho t ~ a t that tk- nra rqtrird by l a w to ad.~taIn 3sds far tho Fndlgemt reaidonC. of A l d s C m a t y ord that t k a L.. requlrcrd residema in the atat. for thrn p a r a a d La the 0-W fer OIY year, tha*

th. tcroumioo e x i r t l q la tho w;f h p i ~ e n p r c r s t i ~ ina f tea t in w mm omployam d thir fsrflior.

Dr. dhak ham rtakd bBihd ko i r M o p p o d to arp oondtmet3en of the . d d i t i o d faaiUtioa rst f h b he i r not ~pgormd t o t)?. mark w 8 aro doing Ln t h i m e o d t y , aad.)lm tialirr*, that our work be. redtuS in a ta tho county in C t t d' jru u r k m a be In a. indq.gm* t&u @aP oorratJ, 6brrg.a.

1 b ~ * e r.3~ this stat.r.nta aohtrb.4 k.r.fa. I am happy If yaaz .ouU rsri* with

"3, \ I 4 T e a r.;v\, w, I ! : j.

./' ,/ ' , q\-/.k :,. - ...**---.. 5. /.--

/7-- ' .,I K, E, Trafeht.aa, Jr. !/ : ' '.\, 't

Oiao Preafdent 1 i

I u p l e a d to a t b & hore H u r r a y Brookmn, Cbiinmn of Couitteo, p.- to o m

hospital of Tha Permanento ?013CLd.tioa at B o u b y sad ~ ~ u r

m a proleat ia being iinanaad A;-, and ib.n ~ 8 p l a t . l i t in tho eu-• of tb.

eaplopao of th. Uaku\.d thair iamllier, ad, in 6 d i t i a q dll be mado th ia uu, ar w e l l 4 to tho p w u at large. 1 a d t,h. ?a.l R o r b aU of t b Wtd Shtm., eh. W8r ha8 approved the pm ject,

to tb. a p p r o d of tho now, haa ke.itat.l to pi.. it. .pp*+p. , J J I !

/ /

A t r recat ma ~artholauaw, t ~ e miter fulb explained fne requested that we mite you in con- P i n u t i a n , more af f ic i snt ly and mlv

In addition, of the ea)ployee. of

to them* vorkerr

worked out, bta a d o i n . .hi& ta tb. rplopmr of th. Rich.od Ship~udr. - We eonmidor t&t tho appraval of thir projeut is suential to the proper car0 of tha eaployeu of tho Eidmoed Shf~rgarda and their families - a group that total8 approAmt.4 250,000 nea, women, 8nd children. A t tho same tima it rill .id the w u effort by increuing the arrilabie m~ppowu ia Vila camunity by a a t a r i w reducring the loat time due to aceidante uui ri-

Anything that your group a m do to'eadorre the project with the Northern CiLifornica Area Prodaation Wgsnuy Coamittea in Sur Prsnaiuao %ill h l p to

Mr. Breobm, Chi- llolrtbran w f o r n i 4 Prw ?ro&mtiaa Urgeaq Commit- ?*or 573, 1355 l luket Street & ~ ~ i * o a , CI;Ufollrt.

Dear b. Brooh.ru ,

On laromber 8 , 190, we rubmittad tion of an

a t Bra- and haArthur Boulevard. addition to tho erlat ing ho.pit.1

I. u e now addmi tha t tho ~ o r t h e ~ ' ~ d h i i o r n i d l m ~ u e t i o n ' ~ t g a n ~ commit- hefitatam to approve thi. *ot ~ A a e r j of report thst thore are upL wpim becis a = i i . L a wm ool.nit7 to properv owe fo r horp5tall sation r.quir.~~emtr.

,--. - '\:

--. .\ '\

k d.h to driu you tha t e* P ~ O * ~ of hA?oruaan te ?olmd.tio. w t u r d to the l i m i t , mi rJ in been rmh@&o ts ~10perly ~ a o m m d a t e our employee. requiring hompi&satioa. . * \ f

I ' ' I Thir momin6 w recoiind following igfbrut ion irom tba Management of The Pemu~ento PorPldatioa \, 2' ,\

/

\. .\.. . / ' .'

1. '=here are e w p 3 t i a n - located i n the hallw.grr. ,.' /- --

2. S e m ip ,&ing p.ti-9 roquired he8pitalisaticn. O f them neven, J' re* we?. aae t.d the Berkeley Conoral Hospital hio oh that to ~ ~ ~ i t y . bong the other

ir case md a cardiac cue . T'0Ll.o~. a f fo r t mads to obtain h o ~ p i ~ l i ~

1- - -' a. Peralta Ho8pit.l reported no rraurt bodr, and, in

addition, had a rrr i t iag l i r t of pr t len t r .h.d of ours.

b. Mutinor County Horpital reported that it cuurot take p p p a t i e n t r md amnot take eaergenq w e e .

a, Fh. following h o r p 1 t . l ~ reported no b d r availabler

krritt Hoqlltrf. &t O1Lrl.nd Horpftal, fru. Con- Horpital mhmt cM.IL auiilsritl)

u!d Rort &ow Antloch Horpital Ikrtdnes ~ ~ t y Borrpitd

Tho c d t 1r H nowhawo t8el.w~ patdank in the hlf.rq8.

3. 'Ib. h r b l q - Eoo#trl rU1 not - 0 q P t adarai pm0pl.i rU1 not aacept Upp@r-r88pir8tOry cue.; mad qeit aeaept *rt- t i m a CU+.. \ \

4. The Perrlt. Hospital uld tha b r r i t t Hosp1kl. d r d patients, .ad want ao convalaurmt rwovarbg from fraaturor, atc.

5. Joo Mau, .n em VIU.jo, 9 d . d - hir in 8 hospi uuablo tO find 8 ru: &U8. from V8llojo to with other pBti.nt8.

B m t ~ Boepital, or atated that if

/ ,

Tho .ban 18 a r s p o ~ . 4 t y p & $ - - ' h e Permnente Fouodation, and indiaat.1 a suba&tiiL nadf ~ t i o n r l tie. to care for theso pwpl. .

r I

Pours very truly yours,

Vico President

B, It. 'Trofatheer, ~ r . / c

h o r g i b l -ah i r sapablo of p r a i d l a g cup. r m p a o a t l q ~ ~ p p m d a s t o l f 250.060 pooplo.

a 0 b t e War Gomail, &miat ion, Idid and

tad S t r t u Pub110 Hedth 80.rica @ Y U , usd it i8 OPT iXlf0lllltibn e i x i n f 6 m a b i ~ 8 war h o d -a

~ d t h 3 a m m , ha Procurement and Arrignmnt Semieo in d.6.rptidng

Franofrrao Gcvunt~ worm taka intm a o m n t , 5ut gn t h e con+,rar]r thsra i r 9-f the CsoFdlacrtiw C o n i k k . sf Pro-ant and A~~iLpmn* hlrrirrs that reprseent.titea sf bhe Nedi8.l h m o h t i o a 18 &n hnmiree , rho erm repreuentatlver o f tho horpitalr of Sea hinefaos, that t h q inria* that r d d i t i o n l bod8 90 arovided far tha %at Bq Pistrf oik

~ d r 1 ~ - ~ i r r ~ i s l a d 4 n ~ ~ r f ~ b b . p r e j e a t ~ ~ d . i n A @ l @ f 1942 ~ t b ? . d d B o r L I A g . ~ ~ p o a d v i a . trorr UI.fMkl k k a PabXo B d h hrdee a& baa rwra boom rd-w blr tho h k J q l h p i t r l .

Pmarrnh Vfc - TUa k a niileadhq statomoat ao i a k o n t p ~ . i f . . ~ o 8 u u l d , ~ . Y + . f m m B i o h . o a a . m i r u fea tho Sara Irlrnl IV... b a m a m ~ ~ e i t j l a p r d d d for

1-w m.l f k a U d . --- Mi.

thirty-fm,u !dl.. tram O U , t U t b prmldm for ur entirw d i l f u u a t ided far . ~a r f lm frm oaklaad.

~ n r I , - ~ l r a u 1. haw* bnn .dtiaod t h t them faoilitdam r m p r o d Ur h i d murg.sroiaa a d arm not a-

a b & n t cu them bdm w s n set ad to avold noe-aiw of tho a i ty e x p o ~ i ~ . mapower tQ b U a*

regret- t h a t t h m rarcratia refuronce er regrattad that pressure fa n e d d to present

8 l a iaislsadiag r~fereneo to Luxury f a a i l i t b e fa t iants slaeping i n the halls of Tho Permnasnk be U a d hmarba.*

Appl.ently ?Ire liiaorr ram unable to looat* l s t t e r a from Dr. Hrrdld A, Fletcher af bvembnr 99fh .rd -bar 29th. KO do not hxm the reasas for omitting these eineo Dr. Flatehar fa head of the Coordinating Committee of Proouremnt a d Irsigmmnt Service mggerW, by the Waabl%ton Eeadr;laartars at ?rouursaeat and h a a i m rnnt Service, and cmpoetS of saa tea different Bsalth S d a u set up spec iff^ t0 give reliable AMO* tO tho W a a e n t on m e d i d c u e in tbs entirs Bay k s r and rs&qalsd by tha Amariean ?Idid huoeiati01t.

You s5ould knew tiiat thia troublemee aikution, both to you m a d b

w, red thir dday oi thtw drjr, i n m 1 t ~ o d g 50 b la m-prr by, depmadiq -8 the a. @f .8d d 8 a t Va-WF, rb# t b b t h . l o a t t i r r r ~ n v d u U U n l w l $ d t h i s ~ d ~ r r J a d ~ p i W oars I 8 531, tMslr .iU return the W v e d is tbr a o ~ & ~ ~ U o a ob thir f.6Iuv nug tbu. 11 la 8- I.po.tilh tm undmW you? ~ l l f p ~ ) t . in -ng th. withdr#lrf of a a o d i t b n .hiah m d d rive manburr.

C. C a YlLSO# IS 111 AaD IM ALL )ROMB1LITY MILL WO't RtWRW TO THE

o t r l u TYIS VCSX. I YAW TALULP MOVEVEI UITH COLOMSA s. r. ~srts. nr, W I L S O M , ~ rxrcwrvr ASSISTAWfB WHO I H ~ O R ~ PU TWAT tmv W A I ~ THE

CORPLSTS tru OW tnr rzRRAnr#rr taunwriow s t o s r r t ~ t nnD rnht rwcy

ARE QYLY AUAITXNG HR. YILSOW,~ RLTURY IN ORDER TO ACT. rrasnucn AS

THC PERRAWntL ADQXtfOM UAS RtVlTUSD A I D OSWIED BY TMS AREA URCTHCY

COMITTEL rnr oalr APPCAL PQSSIOLL IS rmoucn THE PROPICTIOI E X L C U T I V ~

connr~trr or uwrcr m e urlsow IS cwrrrru. THIS Prooucrron LX1;CUTIVC COCIRITTSL NLTS fOR TWlR U C U L A R USLKLY HfLTIW NEXT

YLDMtSDAY, OLCLPOER 15TW, hYB COLOWLL 3ErFS D O U MOT BtLILIt

PABtleuuRLY XY VIEY OF w e Y I U O L I , ~ ILLNTSS THAT Any nctrow WILL

' "" " ~ , ~ & t & ~ ~ ~ U4TR lm. U I L 8 m A tnt tlt . .- - lli;trm8

tO UAIl IWI ACTfH UtU D t 'tl4l.

TYlrt ttmr Yt TWIT m e UlUOll U 8Y'll)AIlEtEt rW TllI: CAWS BUT M61 JUST UUAT ACTlW U f U 10 t A U t l e

TELETYPE

CQWTRUCTZW TO BEGIN. lfO HAS ARGUED PROFUSELY VITH WILSON AHOW

OTHERSITQ THE EFFECT ?!U THE RTASOM FOR VlICU THE ADDITION WAS DLWIPP

WAS BASEB UP@# IliGQILlLTlClCT ABVIeP Th1)OtEB Y I T X SOCIALIZED NOQfClNLe

AU, IW ALL I weuu SAY mmxx mrr MIRO S ~ E R HAS BEEM AND w r I u

C810TIHUl 10 80 WU7 SOLfDLT BRIIIdD THE PIRfiAWLMTE FOUNDATION ADDITIOW

AWP V I U AT EITPBY OPWRTWITY ARCUS AGAINST M Y QPPOSXT101 FROH AMY

em. JXRRT SULS

rWX

OK U O

Memorandum from Henry J. Kaiser, Jr.

1. The Kaiser Foundation Health Plan and Hospitals and the

Permanente Medical Groups have grown to the point that today their activities

encompas s the following:

13 Hospitals 3 0 Outpatient Medical Centers (clinics) 500,000 Members 500 Doctors

2. Because of this tremendous growth a study has been conducted

over the past six months by the Foundation Trustees, the representatives of the

Medical Groups and other executives of the various health organizations looking

to strengthening the organizational structure and bringing about the most

effective coordination of efforts to provide Health Plan members with the best

possible health services a t reasonable costs.

3. As result, an Advisory Council has been formed, comprised of

key Trustees of the Health Plan, Directors of the Hospitals and representatives

of the several Medical Groups to coordinate administrative and operational

functions in the overall health program. This is a teamwork council. The

members of this Advisory Council a r e the following:

Messrs. Henry J. Kaiser Edgar F. Kaiser E. E. Trefethen, Jr. George Link

Doctors Sidney R. Garfield Clifford H. Keene

Doctors A. LaMont Baritell Morris F. Collen Cecil C. Cutting Raymond M. Kay J. Wallace Neighbor Ernest W. Saward -

Frederick H. Scharles Herman Weiner

4. Regional Management Teams, with representatives of the

Medical Group, Health Plan and Hospitals, likewise have been formed in each

of the regions in which the health program operates, namely for Northern

California, Southern California and the Washington-Oregon region. The regional

teams will serve as a coordinating o r teamwork body for activities of the various

health organization entities within a region, and will receive assistance from

the overall Advisory Council.

5. The above strengthening of the organizational structure and

delegation of teamwork responsibilities will permit Dr. Sidney R. Garfield to

concentrate on further development, and will permit Dr. Clifford Keene to

devote more time to assisting E. E. Trefethen, J r . , Chairman of the Advisory

Group. Dr. Keene will move his office to the Kaiser Building to work directly

with Mr. Trefethen.

6. These organizational developments, which will strengthen and

coordinate the health program, represent an internal knitting together of

responsibilities of a growing organization, and we have not felt that the establish-

ment of the Advisory Council and Regional Teams called for the issuance of a

press release. However, should you receive any inquiries from any members

of the press, please refer them to me and tell them I will give them the

information.

United Way News 3 , ?&:;-:. ,7 2

I Volume V, Issue 3 410 Bush Street, San Francisco, California 94108 (415) 772-4300 June 1985

COMMUNITY PHILAlUTHROPY AWARD PRESENTED

The first Bay Area Alexis de Tocqueville Society Community Philanthropy Award has been presented by United Way of the Bay Area's Circle Club to Eugene E. Trefethen Jr., retired president of Kaiser Industries Corporation and proprietor or Trefrthen Vineyards, Napa.

Since his graduation from the University of California in 1930, Eugene Trefethen has demonstrated exemplary and diversified community service for more than half a century. He has held leadership volunteer posts in a number or important organizations in the fields of education, art, the professions and human care.

I (Continued from page I )

Trefethen's many contributions to community life have been recognized by a number of prestigious awards. For his "public service achievements" he received the prized Jefferson Award in 1981 and in the same year, he was honored by Legal Assistance to the Elder- ly "for distinguished leaderhipl' Among Trefethen's numerous other awards are honorary doctorates from the Universi- ty of Portland, Mills College and Gold- en Gate University.

The Alexis d e Tocqueville Society C o m m u n i t y Ph i l an th ropy Award presented to Eugene Trefethen is made of molded lead crystal, and depicts a fa-

mily, the "essential foundation of a strong, caring community."

The award was established by United Way "to recognize an individual whose financial contributions have made a sin- gular impact on improving the well- being of the people in our community. " The criteria of the award states that the recipient "must have been a member of the Circle Club for two consecutive years and, through his or her personal philanthropy, demonstrated a desire to improve the quality of life for the people in the Bay Area community. " Members of the Circle Club contribute S10.000 or more for support of the United Way human

care services which currently benefit more than two million Bay Area resi- dents. In the past year membership in the Club has risen to 97 contributors; this past year, the Club raised some $1.25 million.

The Alexis de Tocqueville Society, created by United Way of America to recognize persons who have rendered outstanding community service as volunteers, is named for a French reformer who, o n a visit to America in the 1830's, was so impressed with this na- tion's voluntary spirit that he wrote the now-legendary "Democracy in America:'

ALUMNUS OF THE YEAR: Eugene E. Trefethen Jr. '30, retired president of Kaiser Industries Corporation, has been named Alumnus o f the Year for 1979. He will be honored at the tradi- tional Charter Banquet o m 1 10 at the Hotel St. Francis in San Francisco.There will be a no-host reception in the Italian- Colonial Room at 6:30 p.m.,with the banquet following at 7:30 in the Grand Ballroom. Advance tickets are required; for further information, call (415) 642-1573.The University's annual Charter Day will be celebrated during the day of April 10. The academic procession begins at 2 p.m.. the program and ceremonies at 2:30. Principal speaker will be John Kenneth Galbraith economist and author. Free tickets to Charter Day can be obtained after March 17 by writing to: Public Ceremonies, 326 Sproul Hall, UC, Berkeley 94720. Please include a stamped. self-addressed envelope with your ticket request.

Alumni Monthly

May 1980

Alumnus of I the Year- E ugene E. Trefethen Jr. first began

working for Kaiser in 1926, when he took a job in a sand and gravel plant

at Livermore to make money to go to school. His associations with Kaiser and the University. from which he graduated in 1930, both have proved to be life long since then. This year Trefethen has become the 37th recipient of the California Alumni Association's highest honor: he is the 1980 Alumnus of the Year.

After attending the Harvard School of Business Administration,, Trefethen re- turned to the West and in 1931 was appointed administrative manager of a nat- ural gas pipeline construction project in Montana. Soon after, he became executive assistant to Henry Kaiser, with whom he worked closely during the years ot'che construction of the Hoover Dam.

Trefethen's career with Kaiser has both paralleled and mirrored the growth of that company. In the words of Edgar Kai- ser, chairman of the Kaiser companies, "Gene Trefethen played a key role, in association with Henry Kaiser, in the organization, financing, and management of the companies which formed the bulwark of the Kaiser organization. His tal- ent for administration and finance has been one of the key factors in the development of the Kaiser companies, and he was largely responsible for the reorgani- zation of the companies in the late 1950s. which resulted in the decentralized strength of the individual Kaiser entities."

Trefethen's first executive position was as vice president and director of the ln- dustrial Equipment Company in 1934; that company was formed to sell the heavy equipment that the Kaiser company had acquired to build the Bay Bridge. In 1941, Trefethen became vice president of the Henry J. Kaiser Com- Pay. (Continued on page 6)

Throughout the 1940s and 1950s. he held high executive positions with many Kaiser companies. In 1967, he was elected president of Kaiser Industries, a position he held until 1974, when he was made chairman of the board. Now retired from that position (Kaiser Industries is in the process of voluntary liquidation), he is an honorary director of Kaiser Aluminum. Kaiser Steel, and Kaiser Cement & Gyp- sum and is vice chairman of the boards of Kaiser Foundation Health Plan and Kai- ser Foundation Hospitals.

A civic leader throughout his active life, he is president of the board of trustees of the UC Santa Cruz Foundation, and is a member of the boards of the San Francisco Museum of Modern Art, the Bay Area Council, Mills College, and the Berkeley School of Business Administra- tion, and is an advisor to the Oakland Symphony. He is no stranger to honors. In 1968 he received the annual award of the University of Southern California School of Business Administration for outstanding achievement in business management, and in 1976 he was named Honorary Alumnus of the College of En- gineering at the University. He also holds honorary degrees from the University of Portland, Mills College, and Golden Gate University.

Although his business offices are in Oakland and he lives in San Francisco with his wife Catherine, he says, "I still feel very close to Berkeley and completely at home there!' And well he should. He has served on the board of trustees of the UC Berkeley Foundation for years, has been a member of its strategy committee, and served as president of the board for two years.

Most recently. he has been named chairman of the Chancellor's Circle, a new and select group of people who are

creating a fund to which the Berkeley chancellor has direct access during emer- genkies.

"Besides my work with the chancellor and the Foundation:' he says, "I have constant contact with Berkeley people at work. There are many Berkeley people in the various Kaiser companies, and they help me stay in touch with the school too. They also are some of our most important people."

Life has been somewhat different for Trefethen since 1%8, when he purchased a vineyard (actually ten contiguous pieces of property, now combined) in the Napa Valley. Working closely with specialists from UC Davis, Trefethen saw to the complete replanting of varietals on the land; he also set up his new vineyard for mechanical harvesting.

Not surprisingly, in 1973 he started a winery in the Napa Valley, using a refur- bished facility dating from 1886. The winery uses about one-fourth of the grapes his vineyard produces-good grapes, it

seems, as the winery is already producing premium wines. In 1979, the 1976 Trefe- then Chardonnay won first prize-competing with Europe's finest-at a Gault- Millau tasting in Paris. According to Time magazine, "Since the family-owned winery distributes only 15,000 to 20,000 cases a year of all its wines, the laureate Chardonnay is as scarce as truffles in the parking lot!'

His son lives on his Napa property, where Trefethen, now 70, spends his weekends. What he has learned from his latest enterprise: "It's hard to make a bad wine of good grapes, and it's almost impossible to make a good wine out of bad grapes ."

It is impossi ble to make an Alumnus of the Year out of anything but a loyal alumnus. May there be good wine at the table when Trefethen is saluted at the Charter Day Banquet at the Hotel St. Francis the evening of April 10, the University's 112th Charter Day. A toast to Eugene E. Trefe- then Jr. -Timothy Pfaff

EUGENE E. TREFETHEN. JR.

BIOGRAPHY

Eugene E. Trefe then, J r . , r e t i r e d p res iden t of Ka i s e r Indus t r i es Corporat ion, is a d i r e c t o r of Ka i s e r Aluminum & Chemica l Corporat ion, Ka i s e r Steel Corpora t ion , . and Kaise r Cement & Gypsum Corporation. He is a l s o a d i r e c t o r and vice cha i rman of the boa rds of Ka ise r Foundation Health P lan , Inc. and Ka i s e r Foundation Hospi ta ls and a d i r ec to r of the C lo rox Company.

T re f e then l s c a r e e r ha s pa ra l l e led the Ka i s e r organizat ion 's growth f r o m a fledgling const ruct ion company into a worldwide mining and indus t r i a l complex.

Edga r Ka i s e r , cha i rman of the Kaise r companies , and T re f e then ' s lifelong f r iend, d e s c r i b e s h is contribution a s follows:

"Gene Trefe then played a key ro le , in associa t ion with Henry Kaise r , in the organization, financing and management of the companies which fo rmed the bulwark of the Ka i s e r organization. His ta lent f o r admin i s t ra t ion and finance has been one of the key f ac to r s in the deve lopnen t of the Ka i s e r companies , and he was l a rge ly respons ib le fo r the reorganizat ion of the companies in the l a te 1950's which resul ted in the decen t ra l i zed s t reng th of the individual Ka i s e r ent i t ies . "

Trefethen began working fo r Ka i s e r in 1926 a s a sand and g r ave l plant l a b o r e r a t L ive rmore , Cal i fornia , dur ing school vacations.

After graduation f r o m the Univers i ty of Cal i fornia , Berke ley , in 1930, he attended Ha rva rd School of Bus iness Administrat ion.

In 1931 he was appointed admin is t ra t ive manager of a na tu r a l gas pipeline const ruct ion p ro j ec t in Montana.

Subsequently, he became a n executive a s s i s t an t to Henry Ka i s e r and worked and t rave led with him dur ing the y e a r s when Hoover Dam w a s being cons t ruc ted on the Colorado River.

Trefe then ' s first executive posit ion was vice p res iden t and d i r ec to r of the Industr ia l Equipment Company in 1934, which was fo rmed to s e l l a l l the heavy equip- m e n t that the Ka i se r company had acquired to build the foundation fo r the San F r a n c i s c o - Oakland Bay Bridge, one of the world 's longest br idges .

A few months l a t e r , Trefe then was named gene ra l s a l e s manage r of the sand and g rave l division of the Kaise r Paving Company. He was given additional r e spons i - b i l i t ies in 1936 a s s e c r e t a r y of the Henry J. Kaiser Company which w a s engaged in heavy construct ion pro jec t s , including the Bonneville and Grand Coulee d a m s on the Columbia River.

Trefethen was c lose ly assoc ia ted with the s t a r t of the indus t r i a l e r a of the Kaise r organization in 1939, when he was elected a d i r e c t o r of Pe rmanen te Corporat ion (now Ka i se r Cement & Gypsum Corporat ion) . He became vice p res iden t a y e a r l a t e r when a cemen t plant was es tabl ished to supply cement f o r const ruct ion of Shasta Dam.

In 1941, Trefethen became vice p res iden t of the Henry J. Kaiser Company and played impor tan t r o l e s as it a l s o en te red the s tee l , shipbuilding and magnes ium indus t r i es .

After World War 11, the Kaise r organization went into production of automobi les , a luminum and homes. Trefethen became a vice p res iden t of e ach of these companies .

In the y e a r s 1947 and 1948, Trefethen was appointed executive vice p res iden t of Kaise r Aluminum, Ka i se r Steel , Ka ise r c e m e n t and Kaise r Gypsum, and pres iden t of Ka i se r Metal P roduc t s , which produced kitchen cabinets , s inks and d i shwashers .

When the Kaise r e n t e r p r i s e s w e r e reorganized in 1956 with the es tabl ishment of Ka i se r Industr ies Corporat ion a s the pa ren t company, Trefethen was elected executive v ice pres ident . In addition to h i s new dut ies , he continued to s e r v e a s executive vice p res iden t of Kaise r Aluminum, Kaise r Steel, and Kaise r Cement & Gypsum until 1959 when he was e lected vice cha i rman of the boards of those t h r e e companies .

In 1967, Trefethen was e lected pres iden t of Kaiser Industr ies and in 1968, vice cha i rman of the boards of Kaiser Foundation Health Plan and Ka i se r Foundation Hospitals . He remained pres iden t of Kaise r Industr ies until January , 1974, when he was elected vice cha i rman of the board. He r e t i r ed f r o m that office on Ju ly 31, 1974. Kaise r Industr ies cu r r en t l y i s in the p roces s of voluntary liquidation. Trefethen continues as a d i r ec to r of Kaise r Aluminum, Ka i se r Steel, and Kaise r Cement & Gypsum and a s vice cha i rman of the boa rds of Kaise r Foundation Health Plan and Kaise r Foundation Hospitals .

Trefethen was a key f igure in many diversification projects of the Kaiser companies in the s ixt ies . As t r e a s u r e r and l a t e r executive vice president of Kaiser Burns Development Company, he helped Henry Kaiser build the Hawaiian Village r e s o r t and entertainment complex in Waikiki, Honolulu. He became vice cha i rman of Kaiser Aerospace & Electronics Corporation in 1963; president of Kaiser Broadcasting in 1967; and a d i r ec to r of companies operating in Ghana, Austral ia and Canada.

Trefethen 's civic activit ies include: t rus tee and pas t president , University of California, Berkeley Foundation; president , San Franc isco Museum of Modern Art ; vice cha i rman, board of t rus tees , The University of California, Santa Cruz Foundation; member of the executive commit tee and pas t cha i rman, (San Franc isco) Bay Area Council; and lifetime member and pas t president , board of t ru s t ee s , Mills College in Oakland. He i s a member of The Pacific - Union Club.

In 1968, Trefethen received the annual award of the University of Southern California School of Busines s Administration for outs tanding a ~ h i e v e m e n t in business management. In 1976 he was named Honorary Alumnus of the College of Engineering, University of California, Berkeley. He holds honorary doctorate degrees f r o m the University of Port land, Mills College, and Golden Gate University.

Trefethen was born in Oakland on Ju ly 2 7 , 1909. He m a r r i e d Catherine Morgan in 1937. They have a m a r r i e d son, John Vance, a m a r r i e d daughter, Mrs. C a r l a Jean Saunders, and two grandchildren. The Trefetllens res ide in San Francisco.

INDEX* -- Eugene E. Trefethen, Jr.

Advisory Council, 43. See also Fontana, California, 30 Permanente medical groups Friedman, Melvin, 28

Babbitt, Hal, 42, 43 Baird, Jack, 25 Baritell, A. LaMont (Monte), 19,

25, 28, 39-41, 42 -

Bedford, Clay, 9, 20 Bell, David, 56 Block, Richard (Dick), 15 board of directors. - See Kaiser Foundation Hospitals/Kaiser Foundation Health Plan

Brammer, Verne, 52 Bridges, Harry, 31 Bunting, Mary L. (Polly), 64

Central Office, 66-67 Cleveland, Ohio, KPMCP in, 57-58,

60 Collen, Morris F., 19, 25, 28, 38,

40, 42, 52 Cook, Wallace H., 33-34 Cornuelle, Jean F., 62 Cutting, Cecil C., 19, 25, 28, 4011,

42, 53, 58, 67

Daniels, Dorothea, 42 Day, W. Felix, 38, 42, 43, 52 de Kruif, Paul, 16-19, 29 Denver, Colorado, KPMCP in, 58-59,

6 0 De Silva, Joseph, 30-31 doctors, 22, 35-38, 48. See also Permanente medical groups

Dodds, E.B., 65

Fabiola Hospital, 20-22 Fitzgibbon, Paul, 28, 39 Fleming, Scott, 24, 43, 66-67

Garfield, Helen Chester Peterson (Mrs. Sidney R.), 35

Garfield, Sidney R., 15, 16-20, 22, 23, 25, 26-27, 28-30, 33- 35, 39-40, 42, 48

Glaser, Robert J., 59, 61, 63 Goldberg, Arthur, 61, 62 Goldschmidt, Neil E., 61 Grant, William, 61

Hawaii, KPMCP in, 15, 49-50, 57, 6 0

health maintenance organizations (HMOs), 47-48

Hewlett, William, 62-63 Howell, Lee, 62

International Longshoremen and warehousemen's Union (ILWU), 30- 3 1

Inch, Thomas T. (Tod) , 26, 27

Kaiser, Alyce Chester (Ale), 14-15, 33-35

Kaiser, Bess (Mrs. Henry J., Sr.), 14 Kaiser, Edgar F., 6-13, 16, 20, 27,

34, 38, 41, 53-54, 59 Kaiser, Edgar F. , Jr . , 11-12 Kaiser, Henry J., Family Foundation,

59-60, 63 Kaiser Foundation Hospitals/Kaiser

Foundation Health Plan, 32, 50-51 board of directors, 46-47, 60-65 committees, 63-65 contract between health plan and medical groups, 43-45. See also Central Office

* Unless otherwise specified all place names are California. KPMCP refers to Kaiser Permanente Medical Care Program.

Kaiser Foundation Hospitals/Kaiser Foundation Health Plan (continued)

expansion of, 57-59, 60 management, 47-49, 66

Kaiser, Henry J., Jr., 7-8 Kaiser, Henry J., Sr., 6-10, 14-15,

16-18, 19, 20, 21-23, 25-29, 33- 37, 38, 41,43, 49, 50, 53-54, 61, 67-68

Kaiser, Henry Mead, 7, 11, 12, 64 Kaiser Industries, 11-13, 15 Kaiser, Kim, 11 Kaiser Permanente Committee (Kai Perm), 46-47

Kaiser-Permanente Foundation, 27 Kaiser Permanente Medical Care

Program 1945-1950, 25-31 1951-1958, 33-45

Kaiser Permanente medical care programs, regions, and areas. See region in which program is located

Kay, Raymond M., 24, 30, 38, 42, 52 Keene, Clifford H., 38-39, 42, 27 King, Robert, 28

Link, George E., 41-42, 61 Linkletter, Arthur, 61 Los Angeles, KPMCP in, 29-30

Marks, William, 27 Maynard, Nancy Hicks, 62 McCarthy, Thomas, 25-26, 27 medical societies, relationships with KPMCP, 21-22

medical groups. - See Permanente medical groups

Miller, John, 64 Moore, Richard, 25 Morton, Harry, 26

Neighbor, J. Wallace, 19, 42 Newton, J. Quigg, 63

Packer, Samuel, 58 Palmer, Karl, 43

partnerships. - See Permanente medical groups

Permanente Foundation Hospitals, 2 8

Permanente Health Plan, 25-27 Permanente medical groups, 35-38 northern California, 28, 32, 42- 45, 52-56, 58

southern California, 32, 42-45, 55, 58

Price, W. R. , 43

regions and areas. See region in which program is located

Reimers, Wilbur L. (Bill), 58 Reinhart, Arthur, 52 Reis, Joseph F., 43 Retail Clerks Union, 30 Rockwell, Bruce M., 64-65

San Diego, northern California Permanente Medical Group venture in, 52-56

Saward, Ernest W., 19, 38, 57 Scharles, Frederick H., 42 Sherwood, G. G., 26 Smillie, John S., 24 southern California, KPMCP in,

29-31, 42 Spellman, Mitchell W., 62 Steil, Karl T., 41, 42, 43, 54-56,

58 Steil, Paul J., 41, 42, 43

Tahoe conference, 38, 42, 43 Tarlov, Alvin, 61 Tennant, Fred, 52-56 Thelen, Marrin, Johnson and Bridges,

25 Trefethen, Eugene E., Jr. comunity activities, 13, 92 concern for success of the health plan, 22, 37-38, 43-45, 49

family and education, 1-5 Kaiser Family Foundation board, 59-60

Vanick, Charles A . , 62 Vohs, James A. , 47-48, 56

Walnut Creek, Kaiser Foundation Hosp i t a l i n , 33-35

Wagster, Daniel O., 56 Weiner, Herman, 42 Weissman, Arthur , 43 Willow Run, 9-10 Woods, George D., 59, 60-61 Working Council, 38, 41-42. See -

a l s o Permanente medical groups World War 11, Kaiser Company

medical programs during, 16-24

Yamaguchi, Ralph T. , 6 1 Yedidia, Avram, 25-26

Malca Chall

Graduated from Reed College i n 1942 wi th a B.A. degree, and from t h e S t a t e Univers i ty of Iowa i n 1943 wi th an M.A. degree i n P o l i t i c a l Science.

Wage Rate Analyst w i t h t h e W e l f t h Regional War Labor Board, 1943-1945, s p e c i a l i z i n g i n ag r i cu l - t u r e and s e r v i c e s . Research and w r i t i n g i n t h e New York pub l i c r e l a t i o n s f i rm of Edward L. Bernays, 1946-1947, and research and s t a t i s t i c s f o r t h e Oakland A r e a Community Chest and Council of Soc ia l Agencies 1948-1951.

Active i n community a f f a i r s as a d i r e c t o r and p a s t p re s iden t o f t he League of Women Voters of t he Hayward A r e a s p e c i a l i z i n g i n state and l o c a l government; on county-wide committees i n t h e f i e l d of mental hea l th ; on e l e c t i o n campaign conrmittees f o r school t a x and bond measures, and candida tes f o r school board and state l e g i s l a t u r e .

Employed i n 1967 by t h e Regional Oral His tory Off ice in terv iewing i n f i e l d s of a g r i c u l t u r e and water resources. P r o j e c t d i r e c t o r , S u f f r a g i s t s P r o j e c t , Ca l i fo rn ia Women P o l i t i c a l Leaders P ro jec t , and Land-Use Planning P ro jec t .

Regional Oral History Office University of California The ...Oakland Tribune February 2, 1996...

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