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Mr. HINSHAW. No, it is not bad, except it is bad when you get charged $50 for it.

Mr. YOUNGER. I have nothing except to express pride coming from the district next to Palo Alto. I take pride in having you here.

Dr. LEE. Thank you, Mr. Younger. We met last in one of these health ventures that we are both interested in.

Mr. YOUNGER. That is right.

Mr. Hale. Doctor, you said earlier in your testimony that you thought that this type of group practice should be in relatively small regions, and that no attempt should be made to put it on a nationwide basis, is that right?

Dr. LEE. Yes, I think each of these plans should be regional in its organization, and tailored to the needs.

Mr. HALE. How big a region did you have in mind ?

Dr. LEE. That would vary, both by reason of the population, and the geography. For instance, the whole of Detroit practically is an auto-workers area, and that would be one area. It is quite different from rural medicine in Michigan, which would be a different region. In California, San Francisco, they have different problems. San Francisco should be a region, and the rest of the area could be another region.

Mr. HALE. You would not put the region as high as the State!

Dr. LEE. Only in the case of a few small States, perhaps Rhode Island, and the region and a State could be the same, but certainly it would not apply to California at all.

Mr. HINSHAW. We are glad to have had your testimony, Dr. Lee, and thank you very much for your presentation.

Dr. LEE. I appreciate the opportunity to come here, very much indeed. (The following information was later received from Dr. Lee:)


Palo Alto, Calif., February 23, 1954. Hon. Chas. A. WOLVERTON, Chairman, Committee on Interstate and Foreign

Commerce, House Office Building, Washington, D. C. DEAR MR. WOLVERTON: I am sending along as requested the copies of the specimen contracts which my organization executes with groups and individual subscribers. These two groups, as existing at the present time, are with the students of Stanford University and with the professors and employees of Stanford. Experience with the students goes over a period of 8 years and constitutes, I am sure, the best method of handling the student health problem. We have a contract with the university where for $9 per quarter per student we supply complete medical care to the students. There are no exceptions of any kind nor limitations on time as long as the student is registered in the university. The students have been delighted with this service, the university entirely pleased with it; and it has proven to be an exceedingly economical way of handling the situation. I think it should be followed in universities elsewhere.

The family medical-care plan for the professors, their dependents, and employees of the Stanford University has had very short history, just being started on the 1st of January 1954 after a period of a year of negotiation with the county medical society. It, however, so far has given complete satisfaction to all concerned and seems to be at this writing successful. Certainly the patients who are covered by it are tremendously appreciative; and the others in the town who have not been able to get such coverage are asking us when we will make it available to the population of the town generally. This we hope to be able to do sometime.

I am also inclosing herewith my comments upon H. R. 7700 as a separate document.

Let me congratulate you upon the excellent work your committee is doing. I think this is one of the most sensible and intelligent, forward-looking efforts that has been made in behalf of improvement of health care for some time; and I am certainly gratified to see a committee of the stature of yours taking this problem in such a serious manner. If I can be of any further assistance, I should be only too happy. Sincerely,

RUSSEL V. LEE, M. D. Incls as indicated.


This agreement, made this -- day of

19_-, by and between the BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, of Santa Clara County, California, hereinafter designated “University", and the Palo ALTO CLINIC, a copartnership of physicians and surgeons, of the same county and state, hereinafter designated "Clinic";


Whereas the University is desirous of furnishing to all students registered therein complete medical and surgical care and of employing the Clinic to furnish such care upon a fixed fee basis :

Now, therefore, the parties hereto mutually agree as follows: This agreement shall be for a term of seventeen months, beginning with the day of --19--, and ending on the

day of 19.-, and shall be on the following terms and conditions, to wit:

1. The Clinic shall furnish to all students covered by this agreement complete medical and surgical diagnosis, treatment, and care of any and all illnesses contracted or injuries sustained by them during the term of this agreement, except as otherwise herein provided.

2. The University shall provide at no cost to the Clinic, such office space, treatment rooms, and laboratory facilities upon the Stanford Campus as may be reasonably needed for the examination, care, and treatment of the University students and shall furnish complete janitorial service, heat, light, and telephone service in connection therewith. The Clinic shall furnish all equipment and supplies for said facilities, it being understood and agreed that all equipment and supplies shall be regarded as personal property and may be removed by the Clinic at the expiration of this agreement or any extension thereof.

3. A Director of the University Health Service will be appointed by joint agreement of the University and the Clinic. If he at any time is not acceptable to either party, his contract will be terminated. The direction of the Health Service will be his major responsibility and he shall have professorial status for the duration of this contract. He will receive a salary of $12,500 a year from the University, of which $2,500 per year shall be paid from general funds and $10,000 per year from funds deducted from the Health Service fees payable by the University to the Clinic.

4. The University shall pay to the Clinic the sum of $6.50 quarterly until August 31, 1951, and thereafter the sum of $7.50 quarterly for each student registered for study upon the Stanford Campus in Santa Clara County, who pays the Health Service fee; said sum to be paid as follows: The initial payment, covering students registered during the first ten days of the quarter, will be made three weeks after each regular quarterly registration day (or days). Final payment, covering students registered after the first ten days of the quar. ter, will be made eight weeks after each regular quarterly registration day (or days).

Only students whose registration cards indicate payment of the Health Service fee shall be entitled to the benefits of this agreement.

In the event any student registered in the University chooses to employ the services of any physician who is not a member of the Clinic, he may do so. For each student who elects to be attended by a physician not a member of the Clinic, there shall be deducted from the fee paid by the University to the Clinic, $6.50 per quarter until August 31, 1951, and thereafter $7.50 per quarter.

5. Each student shall be entitled to the services herein provided from the date he is required by the University to be on campus for registration and activities prerequisite to his registration, to and including the date of his last examination in the then current quarter, provided, however, that should any student be hospitalized prior to the taking of his last examination in any quarter, he shall be entitled to medical and surgical care while in the hospital for a period of not exceeding 100 days of continuous hospitalization. Withdrawal from the University during a quarter shall terminate a student's benefits under this agreement, except in the case where a student withdraws while hospitalized and in that event he shall be entitled to medical and surgical care for a period of not exceeding 100 days of continuous hospitalization. If a student remains on the University Campus between quarters and has registered for the quarter immediately preceding, he shall be entitled to the benefits under this agreement until the next quarterly registration date.

6. The medical and surgical care to be furnished by the Clinic shall, except as otherwise herein provided, include physical examination of entering students, medical and surgical treatment and care, surgical procedures, appropriate immunizations, and when ordered by the attending physician, laboratory tests, X-ray examinations, physiotherapy treatments, dressings, splints, and professional consultations; provided, however, that while students are hospitalized the Clinic shall not be required to furnish or pay the cost of laboratory tests, X-ray examinations, physiotherapy treatments, dressings, splints, or drugs. Professional consultations other than those requested by the Clinic staff shall be at the expense of the individual students.

7. It is mutually understood and agreed that students sustaining injuries as a result of the negligent act of another will be furnished medical and surgical care by the Clinic staff; provided, however, that in the event the student has an enforceable right of recovery of damages against the person or persons legally responsible for his injuries, the Clinic shall have the right to bill the student for services rendered in connection with such injuries.

8. Medical and surgical care under the terms of this agreement shall exclude the following:

(a) Treatment of or of the result of tuberculosis, insanity, chronic alcoholism. drug addiction, or attempted suicide, except for emergency treatments and diagnosis of the same, or treatment of or of the result of poliomyelitis beyond 21 days.

(b) Dental care, attention, or X-rays. (c) Refractions for eyeglasses.

(d) Medical or surgical care ordered by anyone other than a member of the Clinic staff.

(e) Nursing care, sick-room furniture, crutches, wheelchairs, orthopedic appli. ances, eyeglasses, blood or plasma for transfusions, radium, X-ray therapy, prophylaxis for venereal diseases, or the dispensing of drugs or medical or surgical appliances or contrivances, except as otherwise herein provided.

(f) Injuries covered by the provisions of the Labor Code of the State of Callfornia relative to Workmen's Compensation.

(9) Disabilities resulting from or connected with military service.
(h) Injuries incurred while participating in intercollegiate athletics.

9. The Clinic shall furnish 24-hour service to all students covered by this agreement and shall furnish to the University authorities daily information as to the physical status of all students under its care who are unable to attend classes on account of illness. Hospital or house calls shall be made only within a radius of ten (10) miles from the Administration Building of the University.

10. The Clinic will hold the University harmless from any and all claims or suits for workmen's compensation, malpractice, or public liability arising out of and in connection with this agreement, and will furnish to the University certificates of insurance as evidence of its coverage therefor.

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals the day and year first above written.




(Chairman of the Erecutive Board).

EXTENSION AGREEMENT This agreement, made and entered into this 1st day of October 1953, by and between THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY (hereinafter referred to as University) and the PALO ALTO CLINIC (hereinafter referred to as Clinic);

WITNESSETH Whereas by Agreement dated March 16, 1951, and further extended and amended by Agreement executed December 22, 1952, the University is desirous of furnishing to all students registered therein complete medical and surgical care and of employing the Clinic to furnish such care upon a fixed-fee basis.

Now, therefore, the parties hereto mutually agree to further extend said Agreement and Extension and Amendment to said Agreement for a period of twelve (12) months commencing as of September 1, 1953 and ending on the 31st day of August, 1954.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.



Business Alanager.

By-(Chairman of the Executive Board).

(NOTE.—This plan was formulated and developed by the Stanford Chapter of the American Association of University Professors, and it is the understanding of the Palo Alto Clinic group that any person enrolling under this plan does so voluntarily. Because it has never been the intention of the Palo Alto Clinic to monopolize medical services to the Stanford community, and because the Clinic is in complete accord with the tenet of free choice to both patient and physician, the Clinic recognizes the right of any eligible employee of Stanford University to choose as his personal physician a doctor not a member of the Clinic group. Further, the Clinic encourages the Stanford Chapter of the American Association of University Professors to explore with the doctor so selected the possibilities of working out a mutually satisfactory arrangement for comparable benefits at comparable fees for prepaid medical care.)

FAMILY MEDICAL CARE PLAN For such medical care as provided in this agreement, which I may require, in the event of an illness or injury, I select the doctors of the Palo Alto Clinic to be my personal physicians, and request Stanford University to submit to the Palo Alto Clinic my name and the names of the eligible family members listed in my application as persons eligible for care under this plan. I direct Stanford University to deduct from my salary or other compensation, and to pay to the Palo Alto Clinic in my behalf, the fees for such medical care at the rate of $5.00 per month for myself, $2.50 per month for the first eligible family member, and $1.00 per month for each additional eligible family member up to but not in excess of three. There shall be no additional charge for coverage of more than five eligible family members, including myself. I agree to pay the fees for, and to list in my application all eligible family members, unless they are entitled to care by the Student Health Service at Stanford. The extent of coverage and other provisions incorporated in this agreement_following my signature are accepted by me as a part of the agreement. The Palo Alto Clinic, by accepting the monthly fee and the names submitted through Stanford University, accepts this agreement and agrees to furnish the medical care set forth in the agreement.


1. As long as this agreement remains in effect, and the payments for coverage are made, the person signing this agreement and the eligible family members named in his application, shall be entitled to receive such medical and surgical care as his case may require in the judgment of the attending physician.

2. Coverage shall include medical and surgical care in the physician's office, Clinic laboratories, the patient's home, a hospital, or elsewhere, except that care required at a distance of more than 10 miles from the main Palo Alto Clinic building located at 300 Homer Avenue, Palo Alto, California, will be provided

only if specifically agreed to by the attending physician. Patients may choose any of the physicians of the Palo Alto Clinic as their personal physician. In addition all the physician members of the Palo Alto Clinic's professional staff are available in their respective specialties to the person signing this agreement and his eligible family members for consultation and medical and surgical care, at the request of the patient's personal physician.

3. Coverage shall include X-ray, clinical laboratory tests, physical therapy, dietetic services, and other services at the Clinic offices and laboratories when required and at the request of a physician of the Palo Alto Clinic.

4. Medical care and service to the person signing this agreement and to eligible members of his family does not include:

(a) Medical and surgical care for disability covered by the provisions of the Labor Code of the State of California relative to Workmen's Compensation;

(b) Care of cases involving service-connected disability for which the patient is entitled to care and treatment by a governmental agency;

(c) Long term care of cases involving mental illness, alcoholism or drug addiction ;

(d) Long term care of tuberculosis;
(e) Hospitalization, sanitarium or rest home, ambulance service;
(f) Drugs, medicines, oxygen, and blood or plasma for transfusions;
(9) Apparatus such as crutches, artificial limbs, etc.;

(h) Dental care; refractions, eye glasses, cosmetic surgery, anesthesia when hospitalized; and services on well patients not authorized by the patient's personal physician.

5. Maternity care will be provided only where the patient has been enrolled under the Plan for at least ten months immediately prior to the expected date of normal delivery.

6. Patients who receive care for injuries under the provisions of this agreement who subsequently enforce a claim against third persons, who might be liable for such injuries, shall upon collection of damages or the settlement of any claim, reimburse the Clinic for the reasonable value of services rendered on said account.

(NOTE.—This plan does not cover hospitalization. All persons signing this agreement should be members of Blue Cross or a similar hospitalization plan.) Period of coverage and terms of payment

1. Except for the initial sign-up period for this plan, for which special provisions have been made, applications for coverage must be received by the Controller's Office of Stanford University by November 20 and May 20 for coverage beginning December 1 and June 1 respectively.

2. The amount deducted from the salary or other compensation of the person signing this agreement, and paid by Stanford University to the Palo Alto Clinic, shall constitute the prepayment of fees for all medical care covered by this agreement for the month following the period in which the deduction was made.

3. If the family status of the person signing this agreement changes during the course of this agreement, such additions or deletions to the family group must be reported to Stanford University by the 20th of each month for coverage beginning the first of the following month.

4. Coverage under this plan may be terminated, modified or revised, and the schedule of fees may be revised, by notification in writing by the Palo Alto Clinic to the president of the Stanford Chapter of the American Association of l'niversity Professors as the duly appointed representative of those persons signing this agreement, with a copy of such notification to the Controller's Office, Stanford University, provided such notification is sent at least sixty days prior to the effective date of such termination, modification or revision.

5. Coverage shall terminate upon the severance of employment by Stanford University of the person signing this agreement, unless such severance shall be by reason of a leave of absence approved by the University or by reason of normal retirement. Retired personnel not receiving a payment directly from the University may continue coverage or be covered initially by making arrange ments to pay six months fees in advance. Such fees shall be due semiannually on November 20 and May 20. For periods of coverage between the date of retirement, or the initial sign-up and the next succeeding December 1 or May 1, the fees shall be paid in advance for the applicable number of months. If such fees are not received within a fifteen day grace period from the date due, the coverage will automatically be terminated.

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