In
the desert, Sidney Garfield started a new kind of health care
Kaiser Permanente
began at the height of the Great Depression with a single inventive young surgeon and a 12-bed hospital in the middle of the
Mojave desert.
When Sidney R. Garfield, MD, saw the thousands of men involved in building the Los Angeles Aqueduct,
he also saw something else—an opportunity to provide health care for those workers. He borrowed money to build Contractors
General Hospital, six miles from a tiny town called Desert Center, and began treating sick and injured workers. But financing
was difficult, and Dr. Garfield had trouble getting the insurance companies to pay his bills on time. And though not all of
the men had insurance, he refused to turn away any sick or injured worker. As a result, often he was not paid for his services.
And it wasn't long before the hospital's expenses were far greater than its income.
Enter Harold Hatch, an engineer-turned-insurance-agent.
Hatch approached Dr. Garfield with the idea that insurance companies pay a fixed amount per day, per covered worker, up front.
This would solve the hospital's immediate money troubles, and also let Dr. Garfield put one of his pioneering medical ideas
into practice: emphasizing prevention. By keeping people healthy and treating them early on to prevent more serious problems
later—rather than merely treating illness and injury—Dr. Garfield introduced a new kind of care.
And
so, along with preventive care, prepayment was born. For only 5 cents per day, workers received this new form of health coverage.
For an additional 5 cents per day, workers could also receive coverage for non-job-related medical problems. Thousands of
workers enrolled, and Dr. Garfield's hospital became a financial success.
