1 307

THE COMMUNITY HEALTH FOUNDATION

OF CLEVELAND*
EUGENE VAYDA
Medical Director, Community Health Foundation Medical Group
Assistant Clinical Professor of Medicine
Senior Clinical Instructor in Preventive Medicine
Case Western Reserve University School of Medicine
Cleveland, Ohio

UTNTIL I959 Ohio statutes that govern prepaid health plans were
restrictive and, among their many limitations, was the condition
that at least 5 I per cent of all the physicians in any area had to approve
a new health plan before it could be established. This was like asking
one department store if it wanted another one to move next door, and
it is not surprising that no community health foundation type of pro-
gram emerged. In i959 a law was enacted which allowed any consumer
group to establish a prepaid health program and to negotiate with pro-
viders on any terms mutually acceptable to both parties. Among those
involved in the passage of permissive legislation for prepaid group
practice was a group who wanted such a program for northeastern
Ohio. This group had the foresight and understanding to secure expert
technical consultation, and the health plan which emerged was a com-
munity program in which none of the sponsoring groups retained a
proprietary interest.
The Community Health Foundation of Cleveland is a direct-service,
prepaid, group-practice health plan. Direct-service prepayment means
that each family pays a single monthly premium which entitles all the
members of that family to receive medical care. There are no fees for
individual services. The services are provided by an organized group of
physicians but cash payments are not made for individual services.
Group practice, like prepayment, is necessary because of the increased
cost and the improved technology of modern medicine. Medical care is
provided by many different specialists. No single physician is able to
provide all of the medical services which have been developed. Teamwork
among physicians, either within the same specialty or in more than
*Presented in a panel, New Developments in Prepaid Group Practice, as part of the 1968
Health Conference of The New York Academy of Medicine, Group Practice: Problems and Per-
spectives, held at the Academy, April 25 and 26, 1968.

Vol. 44, No. 11, November 1968

 I 30o8 8 10
3
E. VAYDA
E.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ VAD

one field, is now a common procedure. It is increasingly difficult to find

a physician who has not established some real working relation with
other physicians. However informal these relations may be, this develop-
ment provides the patient with a broader range of services. A group of
physicians who practice together as a team is the essence of group
practice.
The Community Health Foundation has been the beneficiary of
more than 20 years of experience and evolution in other prepaid group
practice programs. This experience has developed a series of basic
principles which clearly identify and characterize both prepaid group
practice and our own program. Although each community will have
its own problems and new programs will be produced with their own
local flavor, we feel that adherence to this genetic code has the potential
to produce a viable plan.
i) Nonprofit structure of the prepaid medical care program. It is
essential that all the funds collected from the population served be
returned to them in medical care. This does not preclude teaching or
research or other activities which may result in ultimate benefit. The
beneficiaries of the program must be its members. Exploitation of them
will quickly impair the quality of services and ultimately destroy the
program.
2) A fimmcially self-sustaining program. The health plan must meet
all of its expenses from the premium income. Subsidy and charity
produce an Alice in Wonderland setting which leads to insecurity and
instability. Medically indigent persons may be cared for in such a
program but premiums paid on their behalf must reflect the actual cost
of providing comprehensive services. During the planning period "seed
money" to develop the program is essential, and this money is not re-
coverable in the premium structure. The lack of such money with no
strings attached has been a major deterrent to the development of group-
practice programs.
3) Dual choice. Each person joining a prepaid program must do so
voluntarily. There should be freedom of choice in selection and periodic
opportunities to switch from one plan to another. A captive membership
is untenable. The concept of dual choice is supported by the Larson
report adopted by the American Medical Association in i959. It is
imperative that each individual make his own choice. Medical care is a
highly personal matter, and a voluntary choice of systems of medical
Bull. N. Y. Acad. Med.
 COMMUNITY HEALTH FOUNDATION OF CLEVELAND 13 0 9

care is essential. A majority vote of a group which then compels the

minority to join a health plan involuntarily produces dissatisfaction and
chaos. Neither can the leaders of a group make an enlightened but
arbitrary decision for their members. The Federal Employees Health
Benefit Program is a model of dual choice; it develops basic standards
for all eligible carriers. Its principles should be adopted by all em-
ployers to guarantee high standards of health insurance coverage while
providing a wide range of alternatives to beneficiaries.
4) A broadly based membership representative of the entire com-
munity. A prepaid health plan cannot be a union plan and it cannot be
a management plan. It must have representation from as many different
groups as possible, and it must be a true reflection of its community.
Dependence on a single industry or union may produce financial insta-
bility if there is a recession or a strike. Limited plans may survive in
isolated communities where there is one large employer but not in
urban communities that offer many alternatives. Medical practice con-
sists ideally of patients from different socioeconomic groups, and few
physicians will make career commitments to a program which does not
provide this diversity.
5) Medical care to be rendered on a strictly professional basis,
not controlled, directed, or interfered with by the health plan. This
can be accomplished best if the physicians are not employees of the
health plan or its board. The physicians can be organized as a partner-
ship, corporation, or association. The health plan and the physicians
can then be independent contracting parties who respect each other
in a common effort. The leaders of the physicians' group should derive
their authority from the physicians, whose recommendations should
not be superseded by the health plan. The medical group in turn should
be organized with full-time physicians who are not involved in divisive
competition for fees with each other. All medical income must be
pooled and distributed fairly by the elected leadership of the group.
The health plan, because of its responsibility to the consumer, needs
contractual assurances that the physicians will assume responsibility to
provide or arrange all necessary medical services for the membership.
The assumption of responsibility can be burdensome; in an affluent
society its avoidance is commonplace.
6) Hospital-based program. In order to realize maximum efficiency
and provide continuous comprehensive care the program should be
Vol. 44, No. 11, November 1968
 I3I0
1310
E. VAYDA

hospital-based. The hospital can be owned or controlled by the health

plan, or a mutually satisfactory working agreement can be developed.
In addition, neighborhood family-practice centers should be developed
as satellites of the central hospital health-center facility. Membership
in a program grows as neighborhood centers are located in established
residential areas. People will travel long distances for subspecialty
services but they want day-to-day care nearby. Our group functions
in six community hospitals, and this circumstance has created a major
problem. Services which are so well integrated in ambulatory facilities
are much less coordinated when the patient needs them most-when
he is seriously ill and needs hospitalization. Despite this our hospital
utilization is less than one half of that for Blue Cross in the northeastern
Ohio area.
Community hospitals are logical places around which group prac-
tice programs could develop. This would avoid unnecessary duplication
of inpatient facilities and allow hospital-based prepaid programs to
develop without the crushing financial burden of hospital construction
and operation. The hospital would benefit by its association with a full-
time medical staff having goals in common with the hospital. The hos-
pital's assumption of responsibility for a defined population has impor-
tant implications for rational planning of its services based on predict-
able needs.
7) Comprehensive service benefits. The range of services should
be broad enough to cover preventive, diagnostic, and therapeutic ser-
vices in the office, home, and hospital. The premium should be ade-
quate, so that additional service charges which serve as a barrier to
utilization will not be necessary.
The key person in a medical group engaged in family practice is
the "personal physician" who coordinates the comprehensive care given
by the entire health team. A balanced team is needed to provide medi-
cal care. It is of questionable benefit to have many specialists available
unless each patient can have a personal physician: one who is alone
responsible for his medical care and provides much of it himself. Unless
such a physician maintains continuous responsibility the patient will be
just as confused by group practice as he is by the maze of specialists
with which he is now confronted. The group is ideally organized with
a broad base of personal physicians and limited numbers of specialists
and subspecialists who can be utilized as needed. The need to provide
Bull. N. Y. Acad. Med.
 COMMUNITY HEALTH FOUNDATION OF CLEVELAND I 3 I I

comprehensive services provides motivation and a framework for ex-

perimentation with nonphysician health professionals as members of a
health care team.
The personal physician for adults is the internist; for children, the
pediatrician. Fifteen of the 25 physicians in our group thus serve as
personal physicians and provide 67 per cent of all ambulatory services
(64,000 of 97,000 services). This correlates well with the experience
of other prepaid programs. None of the internists and pediatricians
were specifically trained as personal physicians. They are practicing
this way in spite of their training, not because of it. The failure of
graduate and postgraduate medical education to train such physicians
is a limiting factor in their assumption of responsibility for compre-
hensive care. It also produces dissatisfaction in the physician in regard
to his career, since internists and pediatricians are trained to work in
hospitals but spend almost all of their professional careers in ambulatory
settings.
The Community Health Foundation of Cleveland began in i964.
We have operated during a period of unprecedented escalation in medi-
cal-care costs. We have established a program which conforms to the
genetic code which I have enumerated. Our major problems have been
undercapitalization, understaffing, and the lack of a single hospital base.
Despite these difficulties our membership has grown from 9,oOO to
32,000 members who come from over i 6o different community groups.
Our turnover of physicians has been small. We have avoided publicity
and public controversy, and have focused our efforts on the delivery
of health-care services. Our growth and limited success are indications
of the fact that prepaid group practice has a place in the pluralistic
uncoordinated systems that today characterize medical care in the
United States.

Vol. 44, No. 11, November 1968