Mr. WHEELER. Ours are all on the outside. Mayor DILLARD. We are a new city, more or less, to Virginia. Senator DOUGLAS. If you had inner scruples, you have conquered them? Mayor DILLARD. Yes, sir. We couldn't say that 10 or 12 years ago, Senator. Senator DOUGLAS. In other words, this is the new Virginia? Mr. WHEELER. We still have a heritage we are proud of. Mr. WHEELER. We are moving forward. Senator DOUGLAS. Your faces are turned toward the rising sun? Mr. WHEELER. The new Jerusalem. Senator DOUGLAS. Even in the western part of Virginia you look toward the rising sun? Is that correct? Mr. WHEELER. The future of Virginia lies in the southwest. I will tell you that. Mayor DILLARD. We are within, Mr. Chairman, about 35 or 40 miles of the line of the Appalachia area bill, if that helps. And this civic center would serve a lot of those people. Senator DOUGLAS. Senator McIntyre. Senator MCINTYRE. No questions. I just welcome the distinguished mayor and vice mayor. Mayor DILLARD. Thank you. Senator DOUGLAS. We are very happy to have you here. You come under the auspices of our well-liked chairman of the committee. We are very glad to have you. (The following resumé was subsequently submitted for inclusion in the record :) RÉSUMÉ OF THE RELOCATION AND HOUSING OF FAMILIES IN CURRENT Commonwealth redevelopment project (project UR VA. 7-1).—Began in 1956; total families and individuals relocated, 395 (1956-58). Kimball project (project R-46).-Total families and individuals, 305; anticipated date of displacement beginning in June 1967. Downtown East project (project R-42).-Total (individuals only), 65; anticipated date of displacement beginning in February 1967. Housing built and planned for construction by the city of Roanoke Redevelopment and Housing Authority.-Six hundred units of low-rent public housing already built and occupied: 105 units of low-rent public housing (site selected and architectural planning underway). A contract between this authority and Public Housing Administration will be executed during May 1966. One hundred and ninety-five units of low-rent public housing under program reservation (site selection for locations currently being studied). By private developer.—One hundred and eight units of section 21D (3) FHA housing site cleared and construction to be started immediately. Senator DOUGLAS. The next witness is the Honorable Wilbur Cohen, Under Secretary of Health, Education, and Welfare. Mr. Brownstein, would you come forward at the same time? STATEMENT OF WILBUR J. COHEN, UNDER SECRETARY OF HEALTH, EDUCATION, AND WELFARE; ACCOMPANIED BY DR. PHILIP LEE, ASSISTANT SECRETARY FOR HEALTH AND SCIENTIFIC AFFAIRS; DR. HARALD GRANING, PUBLIC HEALTH SERVICE; AND PHILIP N. BROWNSTEIN, ASSISTANT SECRETARY FOR MORTGAGE CREDIT, AND COMMISSIONER, FEDERAL HOUSING ADMINISTRATION, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Mr. COHEN. Thank you. I'm accompanied by my colleagues here, Dr. Philip Lee, the Assistant Secretary of Health and Scientific Affairs of the Department; Dr. Harald Graning of the Public Health Service; and Assistant Secretary Philip Brownstein of the Department of Housing and Urban Development. Senator DOUGLAS. Thank you. Mr. COHEN. It is a pleasure to appear before this committee today to express the Department's strong support for S. 3215, introduced by the distinguished chairman of the subcommittee, Senator Sparkman. This bill is identical to H.R. 9256, introduced by the distinguished chairman of the House Banking and Currency Committee. Hearings have been held in the House on this bill. This bill would amend the National Housing Act to provide mortgage insurance and authorize direct loans by the Department of Housing and Urban Development to provide financial assistance for constructing and equipping facilities for the group practice of medicine. Assistant Secretary Philip Brownstein of the Department of Housing and Urban Development will speak on the financing aspects of the bill. President Johnson expressed the need for this legislation in his March 1 message on domestic health and education, when he stated: As medical practice becomes more complex, specialization becomes more common. The number of general practitioners is declining-66,000 today compared to 95,000 15 years ago. In 1950 there was 1 family physician for every 1,600 Americans. Today 2,900 Americans must depend on 1 family doctor. Group practice benefits both physicians and patients. It makes expert health care more accessible for the patient. It enables the physician to draw on the combined talents of his colleagues. High initial capital requirements and a shortage of long-term financing have restricted the development of this form of medical and dental practice. The President recommended that the Congress consider legislation to assist voluntary associations in the construction and equipping of facilities for comprehensive group practice. Mr. Chairman, we do not want any person in this country to be denied access to the best medical care possible. Our population is growing. The demand for medical services is increasing. And to meet this growth Congress has inaugurated new programs under the Health Professions Education Assistance Act of 1963, and the Nurse Training Act of 1964, to increase the supply of available manpower. To provide the manpower and the facilities, and the financial resources to meet the demands which now exist and the demands we foresee the President also recommended legislation this year to deal with three major areas of need: providing increased numbers of highly trained medical technologists, modernizing obsolete hospital facilities, and strengthening the resources of the States to provide health services on a broad scale. It is in this total context, as one important part of an overall effort, that we urge the enactment of legislation to assist the formation and expansion of group practices. We must make possible the expansion of those forms of medical organizations which are designed to deliver high quality health care services to our people. Group practice is one such form. It is an efficient and an effective way of delivering highquality medical care. Group practice now exists in almost every State of the Union. Some offer comprehensive prepayment plans; others are on a fee-for-service basis. Group practice has worked in many different parts of the country. The Kaiser-Permanente program and the Palo Alto Medical Clinic are examples of both forms on the west coast. In Oklahoma there is the Glass-Nelson Clinic in Tulsa; in New York City the Health Insurance Plan of Greater New York, with 29 medical groups, is one of the largest prepayment plans. There are group practices in Fairfield, Ala.; Bessemer, Ala.; a good many in Chicago, Ill.; Carbondale, Ill.; Princeton, N.J.; Bellaire, Ohio; the very well known Hitchcock Clinic in Hanover, N.H.; Middleboro, Ky.; Marshfield, Wis. ; and Seattle, Wash. These are only examples. In 1959 we published a directory of medical groups in the United States which shows that they exist in the largest cities and in smaller communities as well. There is some question as to the exact number of group practices in the country at this time. That does not, however, diminish the need as we see it to encourage group practice as a sound development to meet the needs which are emerging in the changing health care picture. The last detailed survey of group practice in the United States was conducted by the U.S. Public Health Service in 1959. It showed then that there were at that time about 1,550 group practices in the country. There are undoubtedly more today. One of the chief obstacles to the development of prepaid medical care plans and the group practice of medicine and dentistry has been the difficulty in securing financing on reasonable terms to meet the cost of constructing facilities needed for group practice and the cost of providing the equipment needed for essential services, such as laboratory and X-ray services. Some physicians who wish to establish a group practice arrangement are able to obtain the necessary loans for doing so. This may be the case when the physicians are well-established in the community. Most often, and especially for groups associated with prepayment plans, there is no such history, and the lack of adequate long-term financing may prevent a community from obtaining the benefits which accrue from group practice. While no one may know the exact dimension of the need, I think we are clear that the need is there. It was demonstrated when Mr. James Brindle testified before the House subcommittee on behalf of the Group Health Association of America in support of this legislation. He incorporated as exhibits to his testimony telegrams from that association's members showing an immediate need for financing over $18 million of group practice facility construction. Even the largest group practices have had difficulties at one time or another in obtaining financing. The Kaiser Foundation Health Plan, with more than 1,300,000 members in the Western States, testified in the House hearings that over the years since World War II: Even with an excellent banking relationship (they) were often unable to finance facilities rapidly enough to meet the demand for health plan coverage, and membership in the plan was often closed to new enrollment. As the health plan has grown and proved its financial soundness, it has become easier to secure conventional financing but (they) are unable still to obtain much of the necessary capital required to meet the steadily increasing demand. Both physicians and patients benefit from the specialized services and joint recordkeeping by the sharing of staff, equipment, and administrative expenses among physicians. Experience with the Federal employees health benefits program, Mr. Chairman, has shown that hospital utilization rates are substantially lower among those who have selected group practice on a prepaid basis than with all other methods of practice. Also, doctors sharing their practice are able to see more patients per week than solo practitioners. Hospital costs have been increasing 5 to 7 percent a year in the past 20 years. The average cost of general hospital care in the United States today is approximately $42 per day and still going up. Senator DOUGLAS. Last year we were told it was $40 a day. Mr. COHEN. Yes, sir. It is going up about $2 to $3 a year on hospital costs. As the Senator knows from the hearings that he participated in the Senate Finance Committee on the medicare bill, the estimates made for the medicare program assume a continuation of that cost for quite some period of time. I think it is one of the fastest growing elements in the cost-of-living index that there is. Now, recognizing that, I think it must be our goal to prevent, whenever possible, unecessary and costly utilization of hospital services. We are constantly searching for ways to do this. We must find ways so that everyone who needs hospital care gets it but that no person uses hospital care when other services are medically appropriate, such as hospital outpatient diagnostic care, home health services, or ambulatory care in a physician's office. But even as we improve our existing capabilities and develop new alternatives, we must also move to take advantage of ways and means with which we are already familiar, such as group practice, to reduce unnecessary hospital utilization. Mr. Chairman, we believe that by making Federal assistance available to encourage the long-term financing of group-practice facilities, a major obstruction to the initiation of group practice will be removed. It is with this background-a growing population and increasing demands for health care, rapid advance in medical techniques, and an increasingly complex technology in medical diagnosis and treatment; increasing specialization and a declining number of family physicians; increasing hospital costs, and a shortage of good facilities-it is with this total background that the demonstrated shortages of long-term financing for group-practice facilities make the need for this legislation clear. Another reason we urge you to enact this legislation, Mr. Chairman, is our hope that it will be one factor in bringing better medical care to small towns and rural areas. As you know, the President in his message on rural poverty has expressed his concern that we are not providing sufficient incentives to attract medical students to settle in rural medical practice. He has proposed to extend full student-loan forgiveness at an accelerated rate to medical students who choose to practice in poor rural areas. Moreover, this bill before you today, as stated in the enacting clause and in section 302 (a), would give priority to group practices in smaller communities-a very important point, I believe. These two incentives loan forgiveness for student financial aid and mortgage insurance for the construction of modern group-practice facilities-could work together to improve the adequacy and availability of medical care in rural areas. However, I do not want to be too optimistic, because I believe much more will have to be done to bring the miracles of modern medicine within the financial ability of our people in smaller and medium-sized communities adjoining rural areas. Beneficial byproducts of the legislation would be the stimulation of additional valuable prepayment plans under which high-quality comprehensive medical or dental care or both would be made available at premium cost within the means of persons with moderate incomes. Consumer groups wishing to organize such plans, instead of having to depend on extensive fundraising programs in advance of enrollment of member in the plans could, under the bill, borrow funds for capital outlay on terms that would permit them to repay the principal and interest out of current premiums. In brief, title I of this bill would authorize the Federal Housing Commissioner to insure mortgages secured for the purpose of financing the consrtuction costs of group-practice facilities. Title II of the bill would authorize direct loans for this purpose if funds are not available from private sources on terms and conditions as favorable as those applicable to loans insurable under title I. The bill also provides that the Federal Housing Commissioner and the Housing and Home Finance Administrator-now the Secretary of Housing and Urban Development-should utilize the available services and facilities of other Federal agencies in carrying out the provisions of the act. Specific provision is also made for consultation with the Surgeon General of the Public Health Service with respect to any health or medical aspects of the program which may be involved in prescribing regulations. The provisions provide the basis for an effective working relationship between the two Departments which insures that the competency of each is used most advantageously. Under such arrangements the Public Health Service would paticipate in the development of regulations establishing standards for the organization of professional groups, and will assist in reviewing applications for the purpose of determining that all professional elements of a group practice exist and that projects are feasible. It is our sincere conviction, Mr. Chairman, that this bill will serve as an additional stimulus to the development of the group practice of medicine and dentistry. This bill will contribute to the improvement of medical care by bringing to more people the well-established advantages of group practice. |