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cians to associate themselves in medical groups. The Upper Manhattan Medical Group is a medical facility as defined in section 702 (G) H. R. 7700. As the medical director of this group I wish to be recorded in support of H. R. 7700, because it will aid in the establishment of similar facilities, improve the health of the people, and bring the cost of medical care within their means.

My support of this bill is in no way related to any benefit that might be derived by our group from its provisions. The purpose of this statement is to relate to the committee the difficulties we had to overcome in establishing our group, and to point out how this bill would solve these problems for others.

The highly specialized fields of medicine require coordination for efficient rendering of services to individuals. The formation of medical group teams supplies the organization demanded by the high degree of specialization in modern medicine.

This fact has been apparent for many years, yet relatively few physicians have taken this logical step. I am convinced that the reason for this is to be found in the attitude of lending institutions toward medical facilities. Specialty buildngs of the type necessary for group practice are considered poor mortgage risks, and this in spite of the accumulating evidence throughout the country to the contrary. Most banks and insurance companies are not interested in this type of loan. They feel that buildings of this type can serve only a single purpose and would be a total loss in the event they had to be taken over in default of the loan. Construction costs are higher than in more conventional buildings. The few institutions that have made such mortgage loans have provided only a small percentage of the cost.

As long ago as 1938, several of the physicians in our group attempted unsuccessfully to organize a medical group. The failure was due largely to their inability to obtain loans to finance the initial capital investment.

The Upper Manhattan Medical Group was organized in 1948, for the purpose of becoming affiliated with the Health Insurance Plan of Greater New York.

The group now occupies a modern group center, built and equipped at a cost of $450,000. A total of 10 banks and 2 insurance companies refused mortgage loans on the building. Our difficulty in obtaining financial assistance delayed by at least 2 years the erection of our center. We were finally able to obtain from a bank a mortgage loan amounting to only 24 percent of the cost of the building. Even this small loan required personal security of each physician. For a full year all of our earnings from the health insurance plan, and for an additional 32 years 50 percent of our earnings from the plan, were placed in the building fund.

This financial burden seemed at times too great to bear, but it indicates the kind of sacrifice physicians must make in order to organize a medical group and provide a proper diagnostic and treatment center. While we were able to accomplish our objective, I don't think many physicians would or should be expected to make such a sacrifice. The provisions of this bill would remove this financial barrier, and make it possible for physicians to borrow the necessary funds to establish themselves in a modern group center.

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The geographic area served by the Upper Manhattan Medical Group is populated largely by families with low incomes. Most of these families in the past had a family physician in name only, whom they called on in emergencies or visited sporadically for minor illnesses. Most of their medical care was received through terribly overcrowded municipal facilities.

Our group now serves some 11,000 of these individuals on a prepayment basis, through the Health Insurance Plan of Greater New York. Our 27 general physicians and specialists take care of all of their medical needs. Seventy-five percent of the required services are rendered in the group center or the offices of general physicians, 12 percent in the home, and 13 percent in hospitals.

Ambulance service to the hospital is provided when needed and the services of a visiting nurse in the home are available. Specialist care not included in the 12 basic specialties provded by our partners is provided by a panel of super specialists at no additional cost to the subscriber.

A continuing health education program is carried on through the medium of a regularly issued bulletin and a series of lectures. Periodic health examination for the early detection of disease is encouraged. I have practiced in this area for almost 20 years, and I speak with conviction when I say that both the quality and quantity of medical care provided by our group of 11,000 individuals is far superior to that which they have received in the past.

The payment of medical bills, when aided by prepaid health insurance, comes within the means of even low income families. The amount of the premium can be budgeted, and paid in small monthly installments. Premium contributions by employers or union welfare funds further ease the payments. Medical expense handled in this manner for services provided by a medical group makes an ideal combination. The advantages of group practice are provided at relatively low cost in a manner permitting emphasis on early detection of disease and preventative medicine.

The provisions of this bill, if enacted into law, will encourage physicians to associate themselves in medical groups and will make available the necessary capital for proper diagnostic and treatment centers. Since medical groups afford a method of providing a higher quality of medical care, and since prepayment medical service insurance provides a means for bringing the cost of medical care within the means of low income families, the combination of the two provides an ideal method of improving the health of the people at a cost they can afford. I, therefore, strongly urge favorable consideration of H. R. 7700.

The CHAIRMAN. Dr. Carey, we certainly appreciate your statement. It is a very strong and forceful one, toward the objectives of this bill, H. R. 7700, and we appreciate your attendance today.

STATEMENT OF DR. KARL PICKARD, M. D., F. A. C. P., MEDICAL ADMINISTRATOR, CENTRAL MEDICAL GROUP, BROOKLYN, N. Y.

Dr. BAEHR. Mr. Chairman, if you could I would be glad to have you hear Dr. Pickard.

The CHAIRMAN. Dr. Pickard. Dr. Pickard is a physician who has been practicing as internist and medical administrative group asso

ciated with the Health Insurance Plan of Greater New York. Dr. Pickard.

Dr. PICKARD. As a physician who has been practicing as internist and medical administrator of a group associated with the Health Insurance Plan of Greater New York since its inception, I urge support of the Wolverton bill, H. R. 7700.

This committee is already well aware of the operation and purpose of prepaid medical care programs throughout the country. In previous testimony before the committee, many general statements have been made concerning cost of medical care, preventive medical aspects of prepaid programs, the philosophy of group practice and its advantages to patient and doctor, as well as the problems encountered by physicians who are seeking to establish themselves in this form of medical endeavor. The passage of the Wolverton bill, H. R. 7700 would do much to help these doctors establish proper facilities so that more people could benefit from additional comprehensive prepaid medical care programs.

The purpose of my testimony is to present answers to questions often raised regarding the usefulness of a voluntary prepaid medical care plan such as HIP:

Does the patient get comprehensive medical care?

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Does the single yearly premium pay for operations when necessary Are the mothers delivered of their babies without additional cost? Do the doctors take care of the entire family in the home as well as in the office?

Does the patient get X-ray and laboratory work when he needs it? Can the patient call on the doctor any time of the day or night? Does the patient get physical therapy, electrocardiograms and basal metabolism tests when necessary?

These questions and many others related to comprehensive medical service can be answered affirmatively. However, factual data has been collected in the Central Medical Group of Brooklyn, especially during the past 3 years, which supports that answer.

The data concerns itself only with numbers-number of services rendered by each physician in the group and by the nursing and technical help employed by the group. These numbers can easily be interpreted in terms of value and quality of service. I have prepared a chart for the years 1951-1952 and 1953 which is attached to this report. May I discuss those facts and figures accumulated for the year 1953 at a time when the Central Medical Group of Brooklyn had approximately 32,000 patients on its roster. During that year over 200,000 services were given by the 39 doctors on the staff of the group and 8,409 services by the nurses and technicians associated with these doctors making a grand total of over 208,000 services.

If we were to project this figure for all the patients enrolled in HIP we would readily see that over 3 million services were given. Each patient of the Central Medical Group received an average of 6.4 services during the year 1953. Of course some patients had no occasion to call upon the doctor even though they were urged to do so for routine preventive examinations. Others used the physician's service. only once during the year while still others, with serious medical complaints, had occasion to receive 30 or 40 services. As the chart shows, approximately 73 percent of these services were rendered in the doc

tor's office, 11 percent at the home of the patient and, in our medical group, 16 percent in the hospital.

Approximately 54 percent of the services were given by specialists other than pediatricians, approximately 14 percent was by the pediatricians, while the remainder or 35 percent was given by the general physicians. The fact that so much of the service was given by specialists is an indication of the high quality of service offered the patient in a group practice prepaid program.

A great deal has been said of abuses which would result from the prepayment of medical care when provided comprehensively without deterrent extra charges. The low figure of 11 percent for home calls would certainly indicate such statement to be fallacious. The fact that a percentage of patients did not appear for routine physical examinations, even though they were urged to do so through health bulletins and health education lectures, also shows that patients have little tendency to abuse medical care just because they do not have to pay for each service. It is of importance to the preventive health aspects of the program that our medical group gave almost 15,000 health examinations during 1953.

Here are other pertinent figures: During 1953, 450 new babies were delivered by the obstetricians of the group. There were 402 major surgical operations and 4,164 minor surgical operations done by all the surgeons in the group. Because of the close association of the medical and surgical departments within the group, all these patients received complete medical preoperative and postoperative care by the department of internal medicine.

Approximately 21,000 services were given in the X-ray department and in the laboratory. This is about 10 percent of all service given. It is a rather impressive figure and shows that no corners were cut either in diagnosis or in treatment. In order to give these technical benefits to our patients as well as the extra services already mentioned, which include electrocardiograms, basal metabolisms, physiotherapy, etc., the group had to obtain the newest in equipment and to hire well qualified nursing and technical personnel.

An attempt was made to estimate the cost to the patients for all services received in 1952. To each service whether it was an office visit, a home call, a delivery, an operation, an electrocardiogram or a heat treatment, we have allocated the amount of money that the patient would have had to pay in the New York area had he not belonged to the health insurance plan. The total cost would have been $1,836,525. The 32,000 patients enrolled with the Central Medical Group had a premium cost of $870,000 half of which was paid by the employer. Thus the patient received his medical care under this program for less than 25 percent of what is might have cost him. We must also remember that over 50 percent of these patients, earning less than $4,000 yearly as a total family income, probably could not have paid for any medical care and would have had to resort to care in "free clinics" or go without medical care.

In brief, then, the overall answer to the questions I cited to you is this:

Prepaid medical care as practiced by the medical groups affiliated with the health insurance plan does provide the patient, for the yearly premium, fully comprehensive modern medical services in

cluding home calls by physicians and treatment in physician's offices and in hospitals; including delivery of babies, including surgical operations, including services of laboratory technicians, X-rays, electrocardiograms and the like—and including the services of quali.fied specialists as well as general physicians. The patient and his family are really insured against the total cost of all illness.

The Central Medical Group of Brooklyn started as the first group under contract with HIP in March 1947. At that time it had 17 physicians and only 69 patients. Its group center had a total of 4,500 square feet of space in which to treat patients. Since then it had grown very rapidly so that at present it has approximately 32,000 patients and 39 specialists and general physicians. In March 1953 it opened a new medical center with 24,000 square feet of space. This project cost the doctors of the group $900,000 for the land, building and equipment. For this purpose they had put aside a percentage of their income each year. They were able, in this manner, to accumulate about 50 percent of the moneys needed, the rest had to be obtained through bank and insurance company loans. The group requires a hospital in conjunction with its medical center. This it intends to obtain in the future.

Such a hospital, of course, will cost more money than a small group of young doctors can accumulate by themselves. The aid proposed by H. R. 7700 would make it possible not only for the doctors of the central medical group to go ahead with the completion of their project, but for other physicians throughout the country interested in group practice and in prepaid health insurance to establish the facilities needed to give good medical care.

H. R. 7700 can do much to allow the people of this country to meet the cost of medical care in the American way. I, therefore, urge its passage.

There is also a chart which is attached to this report, which if you will think of in terms of data collected day by day, by every physician-32 in number-within the central medical group, put together monthly and completely for a 3-year period, you will see that they are facts, and that those facts mean not only the number, but the availability of and quality of service rendered. I will let that speak for itself.

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