RAILROAD DOCTORS, HOSPITALS AND ASSOCIATIONS - Pioneers in Comprehensive Low Cost Medical Care by Henry J Short. Shearer/Graphic Arts, Lakeport, California, 67 pp.
Review by Del Meyer, MD
Dr Patricia Stanford, RN, PhD, of the Historical Committee gave me a copy of this historical treatise for my review. Henry Short, a telegrapher for a number of railroads, who became the manager of the business and financial affairs of the Southern Pacific Hospital department, was prompted to write this book to inspire more efficient methods in the operation of hospitals, thus lowering the cost of comprehensive medical care. He suggests returning to methods that were originated and were successful more than a hundred years ago, namely the prepaid hospital plans.
The first prepaid hospital and medical care plan began with the French inhabitants of San Francisco in 1851. The first prepaid medical plan serving subscribers at more than a central point had its inception on the Central Pacific Railroad in Sacramento, California, in 1867. The first chief surgeon was Dr S P Thomas. This arrangement was so successful that in 1870 the railroad built a hospital devoted exclusively to serving railroad employees.
The hospital plan of the Central Pacific was the impetus for other railroads to build hospitals and employ physicians and surgeons to treat railroad employees. These comprehensive low cost plans caught the eye of Henry Kaiser, one of the constructors of Boulder Dam who then made a prepaid plan available to all of his employees. This plan was then extended to all of the Kaiser industries which included steel, cement, aluminum and ship building. His health plan became firmly established and continues to grow even though some of the Kaiser industries no longer exist. Kaiser remains the primary nonprofit HMO in the nation.
Short gives us insight into railroad medicine, their intern and resident programs, developing ICUs, and their evolution into corporate nonprofit hospitals. When Medicare came along, Short, as manager for the Railroad hospital plans, was invited to Baltimore to implement the Medicare legislation which was to be effective on July 1, 1966. The railroad contingent was amazed at the regulations that had been adopted for the payment of benefits. Social Security apparently did not want advice from anyone actually engaged in operating hospitals or providing care for the aged. The regulations made a federal case out of every patient. They understood that they would either do it Medicare's way or there would be no reimbursement. They were unable to convince a federal bureaucrat that providing hospital and medical care could be simple and efficient. In order to comply with Medicare regulations, Short employed thousands of clerks, supervisors, auditors, etc, with computers generating tons of paper, very little of which would ever be scrutinized. Had Medicare built on the experience of prepaid plans, Short feels they would have saved billions of dollars.
When Southern Pacific hospitals aged and required modernization, a contract was signed with Harold L Upjohn, MD, in which the latter organization infused $8 million to upgrade Harkness Hospital in San Francisco and Carl Hayden Community Hospital in Tucson. Short says this was the beginning of the end which came in 1975 after 108 years because of the ineptness of the parties in conducting the financial affairs. Short feels it was a mistake for the board of directors to surrender substantially all of their prerogatives to Dr. Upjohn who impressed them by being a Harvard Graduate.
When I made a phone call to the Short residence in Lake County, Anne Short said her husband had died last October. We are fortunate that he left us with this archive of medical history. If SEDMS continues to maintain our library, without selling it to disinterested parties, such as a hospital, which will later discard it, this legacy will be available to another generation of doctors.