A Brief History of Group Practice
The Palo Alto Medical Clinic was one of the nation's first large multispecialty clinics. To understand its organizational structure and success, it helps to first know something about the history of group practice in general.
The Medical Group Management Association, which today represents thousands of U.S. physician groups, defines medical group practice as a "formal affiliation of three or more physicians who share income, expenses, facilities, equipment and support staff." Group practices can either be organized around a single medical specialty, such as cardiology, or encompass physicians from multiple specialties. The Palo Alto Medical Clinic falls into the latter category.
It is generally agreed that the group practice movement in America started in Rochester, Minnesota, home of the Mayo Clinic. Founded in the late 1800s, the Mayo Clinic had 386 physicians and dentists by 1929, and was already world-renowned. As Mayo-trained physicians spread throughout the country, some set up their own groups. By 1932, there were approximately 125 group practices in the country, with nearly a third of them located in the Midwest. "There were more group practices in Minnesota than there were in Colorado. There were more in Colorado than there were in California. There were very few back East, but if you went west from Mayo, the number of practices was related to how close you were to Rochester. So their training played a huge role in preparing people to practice in a group setting," said Dr. Philip Lee, one of Russel Lee's sons and a former Palo Alto Medical Clinic physician.
What catalyzed the group practice movement? In part, it stemmed from increasing medical specialization. With the proliferation of new drugs and technologies, it was no longer possible for the independent practitioner to provide everything his patients needed for good health. Early leaders of the group practice movement realized that bringing doctors from different disciplines together, along with new diagnostic services such as radiology and laboratory testing, would be a better way to provide comprehensive care to a community.
The Palo Alto Medical Clinic was one of California's first medical groups. Dr. Russel Lee was a firm believer in the value of multispecialty practice, though he described that belief by saying that the group had been born of his "incompetence" in areas such as obstetrics and surgery. Dr. Lee admitted freely that he had used Mayo as a model – but the Palo Alto Medical Clinic was in one way fundamentally different. The Mayo Clinic was primarily a referral center, a collection of specialists who treated patients sent to them from outside the community for advanced care. Dr. Lee's goal, however, was to provide comprehensive care to the Clinic's own community first, creating long-term relationships with its patients in both primary and specialty care areas. This model of community-based care was rare at the time.
"When we first began, group practice was almost entirely limited to the Mayo Clinic pattern of providing expert diagnosis and surgical care for people who could not get them in their home areas. Similar centers that sprang up in the Midwest existed for ‘episodic' medicine only. Although in time we did attract a good many patients from out of town, our first concern was always to provide complete medical service so that our patients wouldn't have to go elsewhere for anything," Dr. Lee said. Over the years, as the community-care orientation became more common, the Clinic served as a model for other nascent medical groups. Indeed, Dr. Lee claimed that the first partnership agreement of the Permanente Medical Group – one arm of the now far-reaching Kaiser Permanente system – "was worked out in my living room right after the war."
Multispecialty group practice offers many benefits to both physicians and patients. Doctors have easy access to colleagues from different disciplines for advice and referrals; freedom from administrative responsibilities such as billing and purchasing; a shared schedule for on-call and weekend duties; a close-knit community of friends; and a stable salary and lifestyle. The group can use its collective resources to acquire state-of-the-art technology while cutting costs through economies of scale and other efficiencies. Group practice encourages physicians to share best practices and create standardized guidelines that improve medical quality. Above all, it provides patients with coordinated, collaborative and comprehensive care. "Somebody comes in with a very difficult problem and gets taken care of by the internist and the surgeon and the radiologist and anesthesiologist, all of whom know each other, work together, eat lunch together," said Dr. Maurice Fox, a retired Clinic endocrinologist.
However, not everyone sang the virtues of group practice in the early years. Organized medical societies that represented individual doctors – from the national American Medical Association down to local organizations – were wary of physician groups, branding them as "medical Soviets." Independent practitioners resented the implication that multispecialty groups provided better care and saw their business threatened because the groups could offer more consistent coverage on nights, weekends and holidays. At one point, a resolution was introduced in the Santa Clara County Medical Society barring any Palo Alto Medical Clinic physician from membership. The move was a reaction not only to the Clinic's growing presence in the community, but also to its 1946 agreement to provide all medical care to Stanford University students for payment received in advance – an unusual arrangement at the time and one that many independent physicians saw as unfairly excluding their practices.
"When I vigorously pointed out the immorality and illegality of such a suggestion, the resolution was dropped. But when our practice reached two-score members, the local wit among our opponents referred to us as ‘Ali Baba and the 40 Thieves,'" Dr. Lee said. He likely took some small measure of vindictive pride when several years later, his son Dr. R. Hewlett Lee (now a retired Clinic physician) became president of that same county medical society.
Group practice can be a difficult mindset for physicians. Along with its many benefits come many responsibilities: sharing patient care and on-call duties; helping colleagues when asked; abiding by majority opinions; participating in clinic governance; and recognizing that revenues and other resources will be distributed in some equitable way among the partners. "It has often seemed to me that it takes a certain personality to be happy in a group practice. The hard-driving entrepreneur who wants to create an empire doesn't get along very well here. A person who wants to always have a minority opinion doesn't get along very well here. A person who doesn't like to discuss issues, negotiate and compromise doesn't get along very well here," said Dr. Harry Hartzell, a retired Clinic pediatrician.
The Clinic's 1962 physician manual explicitly spelled out the expectations of group practice for new doctors, noting, "The group practice of medicine requires conscious effort on the part of each partner to subordinate his personal desires and ambitions to the welfare of the whole. If this is not done, any clinic will deteriorate into a mere association of practitioners. Physicians who cannot develop this intellectual humility will be happier in solo practice and will make more money. If money is an overriding consideration, no physician should join or remain in a group such as the PAMC."
Retired radiologist Melvin Stevens added, "It's important that when people come here, they buy into the fact that they're not just practicing individually, that this clinic, with all its capability, is bigger than any one of us, and that cooperative practice with those who know more than you do is to be valued."
Back to top