This, of course, raises a problem for us, particularly in an extremely sensitive community such as Newark, where the allocation of our resources has to be carefully watched.

Second, a troublesome though minor event has recently begun to take place, and that is forced cutbacks in research projects. Now, these cuts are very small in nature, but I think we are a little worried about the tendency and the trend that is indicated by this.

For example, in four research programs in hepatitis, drug abuse, and alcoholism there have been cutbacks of approximately $3,000 to $3,500. While this has only been in supplies and other items like that, it has put a crimp in some of the studies. These events in turn cause some fear and skepticism among members of the faculty assigned to the VA hospital as to what the future will hold for these types of research programs. I should note that all of the research programs involved have specific, definite, clinical applications, not only to the Veterans' Administration and the patients in that hospital, but nationally.

Thus, what worries us most are the tendencies, the trends for the future, for we don't see significant cutbacks at the present time in the East Orange Hospital.

We also worry about the 80,000 average daily census limit that OMB has imposed, because in order to meet that limit, you have only two ways to go: either you cut back on admissions and place people on a waiting list or you cut back on their length of stay.

Senator CRANSTON. What effect can that procedure have on the health of veterans?

Dr. BERGEN. I think it is hard to measure, sir. We are certainly hopeful of achieving more productivity and greater use of ambulatory care facilities, but I think the potential there is that patients would have to be either put on waiting lists or would have to be discharged early.

I would like to address myself in the next few minutes to the implications and importance of Public Law 92–541.

The State of New Jersey has for a number of years considered measures for a more equitable distribution of its resources for the education of health professionals, particularly physicians, and for the delivery of health care.

Now, when this bill was signed into law in October of 1972, we felt that it offered us an ideal opportunity to once again work with the Veterans' Administration on the development of a project to provide health care for the veterans in a quality institution, and at the same time allow the State to fulfill its commitment to expand opportunities for medical education.

Governor Cahill gave impetus to this program and has given strong support toward it since that time. We have made an extensive survey of the southern part of New Jersey and find that there is great need for additional health care personnel due to the advanced average age of practicing physicians and the maldistribution of physician manpower. In a few years from now there will be serious attrition from the ranks of physicians in that area.

Senator CRANSTON. How soon is enactment? How quickly could such a project be developed?

Dr. BERGEN. I think within 5 to 6 years.

We are particularly encouraged that the freeholders of one of the counties in South Jersey offered land for the development of this project, and that the appropriations act, mentioned in Senator Williams' statement, provides $3.7 million for planning and feasibility studies for the development of such a facility in the New Jersey/ Greater Philadelphia metropolitan region.

We are disturbed that the Administration has not requested any funds to implement Public Law 92-541 and that as yet no regulations have been developed. Because we do not have regulations yet, we do not know whether New Jersey could qualify. However, from what we have heard, we think we would qualify.

There apparently have been studies in the past which, we have been told, indicate the need for an additional VA facility in that general area of the United States. If a new VA facility were to be built in South Jersey, the State of New Jersey would move forward to develop an entirely new medical school.

The new VA hospital is critical to our plans because in our survey of the southern parts of the State, we find a great lack in the clinical facilities down there. Though there are many good hospitals in that area, many are small and lack residency or intern training pro

grams.

The VA hospital, with its commitment to full-time staff and graduate medical education would be an ideal partner for a new medical school. At the same time, we could help the hospital by the recruitment of faculty who would be eligible for faculty positions at the medical school.

We would hope that we could move forward with this project in the very near future. I think the State commitment is there. I think the confluence of these factors can be brought together to be successful to produce more physicians for the State and the Nation. And, of course, at the same time increase the numbers of allied health personnel.

I would be happy to answer any questions you might have, sir, or make any further comments about my prepared statement.

Senator CRANSTON. Thank you very, very much, and I deeply appreciate your giving such a very succinct but important statement so briefly. The full statement will, of course, appear in the record at the conclusion of your testimony.

You were present, I think, during most of the morning. In my opening statement, I said I was interested in finding where savings could be made in present budget items as well as where more money is needed.

Would you recommend any cuts in the fiscal year in the three categories of the Department of Medicine and Surgery or other VA programs, or in the rest of the Federal Budget?

Dr. BERGEN. I am not sure that I am equipped to make those judgments. I think that we are worried about the cutback in research as a trend, and don't like to see those negative aspects begin to infiltrate the budget.

Senator CRANSTON. Why don't you take a look and see if you can come up with any thoughts on it.

Dr. BERGEN. Surely, I will be happy to submit that to you sir.
[Dr. Bergen subsequently supplied the following information:]

INFORMATION SUPPLIED BY DR. BERGEN

We do not believe that we are best equipped to make judgments concerning which specific program areas, if cut, would do the least damage to Veterans' Administration Hospital Programs. We would urge, however, that if cuts are made, they be made in a lump sum manner giving greatest flexibility to the local hospital administrator to utilize funds according to his own priorities.

Frequently, when it becomes necessary to economize, there is a tendency to think only in terms of the short run and emphasize the obvious ingredients of patient care such as patient staffing ratio or average daily census and to cut back on areas such as research and medical education because their link to quality of care is less obvious. To take such a tack, however, is penny wise and pound foolish. Medical education and the relationship to medical schools is a fundamental ingredient that enables the Veterans' Administration to recruit excellent highly qualified staff for its facilities. Graduate medical education provide the interns and residents so vital to the twenty-four hour functioning of V. A. Hospitals. Clinical research is fundamental if future costs are to be reduced or avoided-one need only think of what present costs would now be had effective therapy for tuberculosis not been developed through research supported by the Veterans' Administration.

Therefore, I would urge that if cuts need be made that they be made in a manner designed to give greatest flexibility to the local administrator who is in the best position to judge how to maintain the overall quality of his institution both in the immediate future and over the long term.

Senator CRANSTON. Because we are going to be living within a spending ceiling, which I think is very appropriate, we have to always be looking for cuts to offset increases that we feel are neces

sary.

What do you estimate will be needed in outlays under Public Law 92-541 to get a new medical school started if a new VA hospital were constructed in South Jersey?

Dr. BERGEN. Well, of course, the 3.7 million dollars that has already been specified in the Appropriations Act for fiscal year 1973 would get things started right away. That would be for the acquisition of land in the development of the site, the development of architectural drawings.

I think, then, depending on the size of the facility, builders, of course, would determine the amount of money that would be needed. I think that probably the cost to build an institution of 300 to 350 beds with a strong educational component would probably be somewhere within the 40 million to 45 million dollar area.

Now, of course, added to that within Public Law 92-541, is the salary support that goes to faculty with the State assuming a growing share of the cost over a period of 6 to 7 years at which time all Public Law 92-541 support would cease.

Senator CRANSTON. I have already asked you about this, but do you have anything to add to what you mentioned in your prepared statement with regard to the consequences of an enforced cut to an 80,000 average daily patient load?

Dr. BERGEN. As I noted, I think that the problem here is that this places in an artificial ceiling on how many days of patient care or how many patients you can have in a hospital. While I certainly subscribe to the concept of keeping patients out of the high cost area of inpatient care and using the low cost area care of ambulatory care as much as possible, I am not sure that this should be dictated by any ceiling that is imposed, but rather by encouraging through certain incentive mechanisms the use of ambulatory care facilities instead of putting them in as inpatients.

Senator CRANSTON. Don't you think it was indicated that there is a discussion of an arbitrary ceiling, regardless of what can be done with ambulatory care, regardless of how many people really need inpatient care?

Dr. BERGEN. I think there is, yes.

Senator CRANSTON. I discussed our regional medical educational center provision in the VA health manpower law earlier. I believe that continuing education is terribly important and we should not delay in getting on with implementing that new law. I trust you agree?

Dr. BERGEN. I certainly do, sir. At least from our point of view there has been a great confusion in this area. There has been some indication over the last year or year and a half that the regional medical program would assume this roll. At the same time, there has been some indication that a separate program, health education centers would be developed, and there is also this part of Public Law 92-541 that has not been implemented.

We think the concept is very sound, but we feel it is important for a decision to be made as to which element of Government is going to implement the program. Now, we think the VA system is eminently qualified. What it is already doing with its large number of facilities, its joint programs, and with many educational institutions in addition to medical schools, and dental schools, make it eminently qualified to be a focal point of development of such educational centers.

Senator CRANSTON. Thank you very much. You have been very, very helpful.

Dr. BERGEN. Thank you sir.

[The prepared statement of Dr. Bergen follows:]

STATEMENT OF STANLEY S. BERGEN, JR., M.D., PRESIDENT, COLLEGE OF
MEDICINE AND DENTISTRY OF NEW JERSEY, Newark, N.J.

It is a privilege and an honor to appear before you today to testify about the College's many joint undertakings with Veterans Administration Hospitals in New Jersey, and to relate to you our hope and intention that the College may have the opportunity to substantially expand these beneficial relationships through the creation of a third medical school in South Jersey in conjunction with the construction of a Veterans Administration Hospital in that part of the State.

The College of Medicine and Dentistry of New Jersey is composed of the New Jersey Medical School located in Newark, the Rutgers Medical School located in Piscataway, and the New Jersey Dental School located in Jersey City. The College is responsible for the operation of several health care facilities including Martland Hospital in Newark, Raritan Valley Hospital in Greenbrook and the Institute of Mental Health Sciences in Piscataway. In addition, the College has numerous state-wide responsibilities including continuing education, strengthening of graduate medical education training programs and the development of models for health care delivery.

The affiliation of the College with the East Orange Veterans Administration Hospital has been extremely beneficial for all concerned. The Veterans Administration Hospital system provides a number of natural advantages for medical education. It provides an important source of patient material for the teaching of medical students. Approximately one-third of the second, third and fourth year classes receive a portion of their training at the East Orange facility. Equally important, the orientation of the Veterans Administration system toward full-time staff appointments and toward delegation of responsibility particularly to house staff has been of great assistance in permitting the East Orange Veterans Administration Hospital to function well in the medical edu

cation framework. As a result, the integration of programs between the East Orange facility and the New Jersey Medical School has been more intensive than at other affiliations of the College.

In return, the Veterans Administration Hospital receives numerous advantages as a result of its participation with the medical school. Prior to its affiliation with the College the East Orange Hospital had no intensive care unit, no coronary care unit, no dialysis unit, nor any vascular caterization program. In large part these deficiencies were due to the difficulties experienced by the Hospital in attracting adequately trained staff. Furthermore, the hospital had difficulty attracting sufficient housestaff to meet its needs.

The affiliation with the medical school has substantially altered the picture. The assurance of faculty appointments and the stimulation involved through participation in a teaching environment has greatly enhanced the ability of the Veterans Administration Hospital in East Orange to attract highly qualified and in some cases nationally known individuals to its staff. It has also been of great assistance in attracting housestaff.

These remarks are not intended to imply that no problems exist with our affiliation. Clearly, certain difficulties persist, particularly the fact that the Veterans Administration population continues to be made up almost exclusively of adult males, thus, circumscribing its usefulness as a total teaching environment. Nonetheless, our experience with the Veterans Administration Hospital in East Orange provides convincing evidence of the value of this sort of relationship between a medical school and a hospital in the Veterans Administration system.

It should also be noted that historically the East Orange Hospital played a crucial role in the continued survival of the New Jersey Medical School. In 1966, a time of considerable turmoil in the history of this institution, the school encountered a situation where its core teaching facility was no longer available to train medical students. Had it not been for the willingness of the Veterans Administration Hospital in East Orange to take us in, to provide space for the erection of certain facilities and to act for a period of three years as our primary affiliate, it is indeed possible that the New Jersey Medical School would have ceased to function as a four year medical school. Therefore, not only does the College wish to maintain and strengthen its present relationship with the East Orange Hospital, but it also acknowledges a deep sense of gratitude for the crucial role that that institution played in the survival of the New Jersey Medical School some years ago.

Despite the excellent present relationship with the East Orange Veterans Administration Hospital, I would be remiss if I did not mention some of the more disquieting implications of the fiscal year 1974 budget and other actions taken by the Administration. For example, the 1974 budget contains a mandated reduction to 80,000 in the average daily patient census. We are informed that this is to be made up through more rapid patient turnover. We are fearful, however, that the result will be a reduction in the quality of patient care or a forced reduction in demand for care or perhaps both.

In the research budget as well we notice some reductions from last year's funds. In part this is to be made up through carry-over monies generated through forced savings in this year's research budget. At the present time several research programs of great importance are underway at the East Orange facility, including studies concerning hepatitis, which affects many drug users and individuals who have found it necessary to receive blood transfusions, studies on the affect of smoking on animals, and studies on portal hypertension, the most common cause of death among individuals with liver disease resulting from the abuse of alcohol. We are concerned that not only will present efforts be curtailed, but that future research efforts of importance not only to Veterans Administration but to medical science in general will not be undertaken.

We are concerned about the staffing ratio of 1.59 at the East Orange facility and its affect on patient care. We are concerned that maintaining the same system-wide staffing ceiling into next year while at the same time opening additional facilities will cause further deterioration in an already unsatisfactory level of staffing. Furthermore, the forced reduction in grade among general schedule personnel at the Veterans Administration Hospital may well result in the hiring of less qualified personnel and a reduction in the ability of the East Orange facility to compete with neighboring institutions in the hiring of needed staff.