Group Health Cooperative's Acting Board of Trustees votes in principle to purchase Medical Security Clinic on August 14, 1946.

  • By HistoryLink Staff
  • Posted 8/22/2005
  • Essay 7448
On August 14, 1946, Group Health Cooperative's Acting Board of Trustees votes in principle to purchase Medical Security Clinic (including a 50-bed hospital). The Medical Security Clinic is a prepaid practice, unusual at the time, owned by a group of idealistic doctors who believe in the new idea of preventive medicine. Group Health Cooperative is a recently formed non-profit corporation that will soon have a member-elected board of trustees (the inaugural membership meeting will take place in three weeks). Creation of Group Health (which at this early point has members but no doctors) was inspired by Dr. Michael Shadid (1882-1966), a crusading Lebanese-born physician who had established America's first cooperative hospital in Elk City, Oklahoma. The marriage of the two organizations, giving the doctors patients and Group Health members doctors, will proceed with difficulty due to the opposition of Dr. Shadid.

Group Health's First Membership Meeting

Group Health's first formal membership meeting was held on September 4, 1946, on the fourth floor of Seattle's County-City Building (later King County Courthouse). The members passed the founding bylaws, and Group Health's lawyer, Jack Cluck, rose to describe the purchase contract for the Medical Security Clinic. According to founding board member Addison "Ad" Shoudy (1900-1993), a woman rose to denounce the deal, saying she'd been corresponding with Dr. Shadid, in whose view the Medical Security Clinic's director was "a big bag of wind." Dr. Shadid felt that under no circumstances should Group Health do business with the Medical Security Clinic. He objected to the cost and to the organizational form in which the medical staff would retain autonomy and direct its own affairs.

This founding membership meeting did vote to purchase the clinic (including its hospital and its doctors), but ran out of time before electing a permanent board of trustees. Thus the opposition to the merger of the two organizations had time to ferment. The merger could be defeated if at subsequent meetings members voted for a board of trustees that opposed it.

Dr. Shadid sent a long letter in adamant opposition, which soon became the main ammunition of a membership-group calling itself "The Committee," organized to oppose the purchase of the Medical Security Clinic. The Committee sent a copy of the letter to the entire membership and Group Health members swamped the acting board of trustees with calls and letters.

The Two Sides Face Off

Both sides rallied forces for the next membership meeting, which took place at the Broadway High School auditorium on Capitol Hill at 8 p.m. on October 17. Backing the founding board of trustees were the original founding organizations: the Grange, the powerful union of Boeing machinists -- International Association of Machinists (IAM Lodge 751) -- and organizations that were part of the cooperative movement. This block was unified and adamant, believing that buying the Medical Security Clinic would be Group Health's last shot at launching a real medical cooperative.

Yet the opposition had legitimate reasons for anxiety. It was a major expenditure for a new organization, involved the purchase of an aging and rather decrepit hospital (St. Luke's on Capitol Hill), and would establish a mongrel organizational form, "a hodge-podge of dubious capitalism and adulterated consumer's cooperation," according to one opponent, that did not conform to a purely cooperative ideal (Crowley, 41).

At the meeting there was a warm discussion and several votes were taken, but ultimately the acting board won. However, the final detail, electing the acting board as the permanent, member-elected board, could not be achieved. The evening grew late and the Broadway High School janitors extinguished the lights and insisted that everyone go home.

The final round occurred at the membership meeting of October 24, 1946. The issues were thoroughly rehashed, and in the end the permanent board of trustees, the original founding group that supported the merger, was elected.

The Pioneering Board of Trustees

Group Health's first elected board of trustees comprised:

  • Alfred Annibal (a leader of the postal workers' union)


  • Charles Berger (a leader of the boilermakers' union)


  • Tom Bevan (president of IAM Lodge 751, the powerful union local representing most of Boeing's wartime workers)


  • Addison "Ad" Shoudy (raised in Ellensburg, longtime organizer of cooperatives and manager of Puget Sound Cooperative, a consumer-owned grocery store in West Seattle)


  • Sid Schaudies (businessman and property owner in Renton)


  • Bob Scott (former president, Student Co-op Association, University of Washington)


  • Bob Wells (businessman and leader in the Rainier Co-op)


  • Ella Williams (teacher and farmer, secretary of the King County Pamona Grange)


  • Fred Nelson (Orilla dairy farmer and former State Grange Master)
The Medical Security Clinic and Group Health merged, and Group Health Cooperative formally began offering medical care on January 1, 1947, at St. Luke's hospital. St. Luke's was renamed Group Health Hospital in July 1948.

Sources: Walt Crowley, To Serve the Greatest Number: A History of Group Health Cooperative of Seattle (Seattle: GHC/University of Washington Press, 1995), pp. 32-41.

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