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The History of Skiff: Part III

Published: Monday, Oct. 21, 2013 11:26 a.m. CDT

Physician training, hospital facilities and medical technology were in a period of rapid transformation when Skiff Medical Center was formed in the 1920s.  

By the 1930s, vaccines had been developed for tetanus and typhoid, insulin had been discovered as a treatment for diabetes, blood transfusions were becoming commonplace, and penicillin was widely used in the treatment of infections. 

X-ray machines were installed in most hospitals, electrocardiographs (EKG) were beginning to be used, blood pressure meters had been developed, and clinical laboratories were providing ever deeper insights into the chemistry and anatomy of the body.

These advancements led to an increasing use of medical services and, not surprisingly, increased costs. As individuals found it ever more difficult to afford medical care, the concept of health insurance began to develop.

The first recorded health insurance plan in America was developed in 1929 by Baylor University Hospital in Dallas, Texas; less well known is that in 1930, the Maytag Corporation developed the “Maytag Relief and Benefit Association.” 

This program paid the hospital bills for Maytag employees who received their hospital care at Skiff.  In exchange for guaranteed payment, Skiff agreed to a 25 percent price reduction.

This program became one of the first employer-based health insurance plans in America.  That’s right, our community was at the forefront in health insurance!

Due to the proliferation of hospital insurance plans in the 1930s, in 1939 the American Hospital Association created the “Blue Cross” designation for health-care plans meeting certain criteria and providing coverage of hospital care.

Several years later, similar plans were developed to cover physician services and were designated as “Blue Shield” plans.  These organizations merged in 1971 to form what we now know as “Blue Cross and Blue Shield,” or “Blues” plans. While these organizations were considered non-profit, other for-profit commercial health insurance plans began to develop as well. 

From the 1930s to the 1950s, the “Blues” charged the same premium rates to all who applied.  In contrast, commercial plans developed the idea of charging premiums according to relative risk, thus older people and those with a history of a medical condition were charged more, while younger, healthier people were charged less.

This led to young, healthy people purchasing insurance from commercial plans, leaving the “Blues” plans with a more expensive population of older and sicker beneficiaries.  In order to remain viable, the Blues eventually moved to the risk-based premium system which has existed relatively unchanged until the implementation of the Affordable Care Act.

In the midst of all this change came the war.  World War II was all-consuming for our state with more than 225,000 Iowans serving our country in the military.  The war saw a transformation in Iowa in the area of food production where increased mechanization and the use of hybrid seed corn resulted in production values more than doubling from 1940 to 1945 and the manufacturing base tripling during the same period.

When the war ended, service men and women returned home to a very different society and set of circumstances than they had left.  Urban jobs now outnumbered farm jobs, the GI bill made a college education more accessible than ever before, and the baby boom began.

At Skiff, 152 babies were born in 1940.  By 1952, this had increased to 537 babies!

The baby boom, the increasing size of the city (Newton’s population tripled between 1920 and 1960), and long lengths of hospital stays, led to frequent overcrowding at Skiff by the early 1950s.

The hospital, which had not expanded since its construction in 1921, had a capacity of 56 adults and 12 newborns, but patients were frequently kept in beds in corridors, leading to significant difficulties, especially in times of widespread sickness.

In late 1953, Dr. R.W. Wood led a campaign to raise funds for a 45-bed expansion of the hospital.  The fundraising efforts resulted in the collection of $307,000, due in no small part to the members of the Skiff Auxiliary, a group formed in 1951 to provide volunteer services and funds to the hospital.

A 50 percent match to these funds was provided from the federal government’s Hill-Burton program.  This program had been established by the Hill-Burton Act of 1946 and was intended to improve and expand access to medical care in America by building more and bigger hospitals. 

Interestingly, the Hill-Burton program was one of two potential plans under consideration nationally at the time with a goal of improving access to health care.  The other was the Truman administration’s proposal for a national health insurance program.  And we think health-care reform is something new …

The nearly half-million dollars which had been raised from contributions and the Hill-Burton program provided for the construction of the 45-bed east wing.  Concurrently, the 1921 hospital building was renovated with funds provided by the city per the original 1919 agreement. 

When construction was finished in 1956, Skiff had a capacity of 101 patients served by 65 employees and 16 physicians.  Of interest is that prior to beginning construction, the hospital Board of Trustees learned that the transfer of the real estate and other assets from the Newton Hospital Association board to the city hospital board back in 1928 had been flawed, thus, the Newton Hospital Association was resurrected for one day and the correct paperwork was completed for the transfer.

The 1950s was an era of increasing prosperity in America and in Iowa. Medicine was advancing quickly and saw the introduction of acetaminophen and chemotherapy in the late 1940s and the use of ultrasound machines, heart-lung machines and pacemakers in the 1950s. 

Jonas Salk developed the first vaccine for polio in 1952 and the first kidney transplant was completed in 1954. These advancements were welcomed by a population increasingly insured for medical expenses through their employers.

Employer-based health insurance had begun in the 1930s but gained speed during the years of WWII when the government passed legislation resulting in price and wage controls. 

The inability of employers to compete on wages led to the development of ever more comprehensive health plans that served as an incentive to hire workers.

The employer-based structure for American health care was firmly established in 1954 when congress reformed the tax code to exclude employer contributions to health insurance from taxes, essentially providing a government subsidy for these plans.

At Mary Frances Skiff Memorial Hospital, the 1950s were a decade of continued growth, the east wing was open and the front entrance of the hospital had moved from the west side to the south side.  The first dictation machine for doctors was installed in 1957 and the labor and delivery area was the first section benefiting from air conditioning.

In 1958, the physical therapy department was established and the first non-emergent outpatient services were offered at the hospital.

Interestingly, board minutes from 1959 note continued support from the city for maintenance and upgrade to the original building, as well as significant discussion by the administrator, Mr. Koss, of legislative issues pending before congress that could have an impact on the hospital.  Though they could not have known it at the time, a move was on at the federal level to introduce legislation that would impact the health-care industry in ways no one could have predicted.

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