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Managed Care Was Founded by Contrarians

MANAGED CARE August 2014. © MediMedia USA
The Contrarians

Managed Care Was Founded by Contrarians

You might not agree with them, but you can’t ignore them. The history of health care in the United States is filled with those who identified the system’s failings and offered new, unproven ideas. Is it time for a single-payer system? Are accountable care organizations unworkable? Will CMS go under? Read on.
Joe Burns
Contributing Editor

In 1945, consumers, farmers, and union members in Seattle were unhappy about the rising cost of health care. After hearing about the work of Michael Shadid, MD, who had founded the first cooperatively owned and managed hospital in Elk City, Okla., the consumers, farmers, and union members invited Shadid to talk about reforming the health care system in the Pacific Northwest.

Given what Shadid accomplished in Oklahoma and in Seattle, he was one of the nation’s preeminent contrarians — someone who offers unconventional wisdom, someone who identifies the weaknesses in current systems that others overlook or are unwilling to address.

Perhaps the words of Robert F. Kennedy describe the contrarian most eloquently: “There are those that look at things the way they are, and ask why. I dream of things that never were, and ask why not.”

Shadid certainly fits Kennedy’s description. “Dr. Shadid’s crusade was to overthrow the traditional fee-for-service practice of medicine dominated by solo practitioners, expensive specialists, and private hospitals and clinics,” according to a history of Group Health Cooperative. “He advocated affordable, prepaid healthcare through the cooperative ownership of hospitals staffed by physicians — practicing as a group — who promoted the new idea of preventive medicine. Group Health Cooperative began providing health care after merging in 1946 with the Seattle-based Medical Security Clinic, a physician-owned group practice whose idealistic doctors also believed in preventive care. After years of struggle and despite virulent opposition by the medical establishment, Group Health became one of the nation’s largest consumer-directed health-care organizations.”

Even before going to Seattle, Shadid saw the need to reform the practice of medicine. In October 1929 he organized Community Hospital in Elk City, Okla., a cooperative effort of farmers.

Despite opposition from the Beckham County Medical Society, the Oklahoma Medical Association, and the American Medical Association, Shadid persuaded farmers from 10 counties in Oklahoma that if each one chipped in, as they had done earlier to build a cooperative cotton gin, they would have good medical care for themselves and their families. Shadid sold shares at $50 each to fund the hospital and each shareholder received medical care at a discounted rate.

The hospital he founded in Elk City is now Great Plains Regional Medical Center.

Truly, the history of medicine in the United States is filled with contrarians who identified its failings and offered new, unproven ideas. Contrarians today are doing similar work, as we report on these pages. Perhaps some of them will have a lasting effect on the health care system.

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