curs because of the financial and cultural crisis of medical schools and because, at the same time, there are a substantial number of well trained young physicians with a high level of commitment to clinical excellence who would see the VA as definitely attractive for a ca reer. If, at this time of acute uncertainty in the academic world, the VA could show it continuing participation in a partnership with the medical schools, the result would be an increased confidence in the VA, improved morale and the acquisition of some able junior staff physicians. In view of this opportunity, it is intensely disappointing to see that events are likely to move in exactly the opposite direction. That is, in the proposed budget for the VA, the patient care portion of the budget is so restricted that instead of being able to increase the staffing pattern in VA hospitals, there almost certainly will be reduced staffing in VA hospitals. Senator CRANSTON. Do I interpret that that you are not too impressed by the VA testimony on these points of what they can do with all these lesser amounts of money? Dr. RICH. It is hard for me to understand how that would come about. I was not here this morning, Senator Cranston, but I have heard some of this testimony. The overall budget does go up a couple of percent, but the increase is smaller than the cost of salary increases, which are being absorbed within it; smaller than the general trend of the cost of living which hospitals share. As you know, the escalation of the price of medical care certainly is quite as rapid as any other price escalation in the country, and this occurs at a time when the VA hospital system is about to open five new hospitals, which will have to be funded by that same inadequate appropriation. Moreover, the VA also is establishing 15 to 19 new affiliations with medical schools around the country. These cost money because they involve the VA in supplying additional staff and to upgrading the research activities in these hospitals. All of these new expenses will have to come out of the budget that is increased only by about 2 percent altogether. It seems to me very unlikely that this can be achieved without having some of the new hospitals completely underdeveloped and some of the new affiliations at a standstill. Finally, although the quality of care is good in the affiliated VA hospitals, the nursing patterns and the professional support patterns are stretched extremely thin; there is no way that significant change in financing could occur without causing disaster in these affiliated hospitals. Senator CRANSTON. When you were giving all of those smallers, we might add a smaller rate of increase at a time there is a rise in demand from service-connected veterans, a rise in complexity of injuries. And the degree of treatment required, isn't that correct? Dr. RICH. I can add a few others. Senator CRANSTON. Add all you've got on the list. Dr. RICH. At the present time, we are seeing a large influx of veterans from the Vietnam war. The President's budget makes surprising little provision for the needs of these people. We, at Palo Alto, find that a large number of these patients are coming to the VA hospital in need of care. Second, the VA should provide comprehensive care other than episodic care. The failure to provide comprehensive care is not the fault of the leaders in the VA. They have been very anxious to develop programs that will allow eligible veterans to have comprehensive care, but have neither authorization nor funds. Senator CRANSTON. May I ask you one other thing related to what you said. What is the first year's startup cost of a new affiliation? Dr. RICH. I can provide more details-the new affiliation at Martinez. The figures I have indicated an on-going cost of $1.5 million for additional personnel and an additional $800,000 for temporary quarters for new research laboratories. There would be some additional amount for start-up funds for research. Senator CRANSTON. There are 19 new affiliations which cost $27.5 million, right? Dr. RICH. They could cost considerably more than that. Senator CRANSTON. You weren't giving an average figure, then? Senator CRANSTON. Could you give us a figure which could be an average figure? Dr. RICH. I would be glad to develop a figure for you. I think it would be very unreliable, if I did it right here. Senator CRANSTON. I don't want you to do it here. Include in that the cost of the research that would be connected with it. Dr. RICH. I would be glad to provide you with some data on that point. [Dr. Rich subsequently supplied the following information :] Question: What is the first year start-up cost for a new medical school affiliation? Include fund estimate for research. Answer: Estimated average cost based on VA experience: Patient care For upgrading staff and facilities-includes provisions for 100 full-time equivalent staff, $1,200,000. Education For stipends, space, minor construction improvement, supplies and equipment— includes 25 house staff, $525,000. Research For program support including initial equipment, $400,000. Dr. RICH. I would like to close then, with two examples which I have drawn from my knowledge of the medical school-VA relationship at Palo Alto. These illustrate, at the local level, how critical small amounts of money can be in providing for long range excellence in the professional programs of the hospital. The objective in our affiliation at Stanford and Palo Alto is to have the same quality of staff at the VA hospital and at the Stanford University hospital. Some services have largely achieved this at the present time. We and the VA are recruiting together for two key members of the staff of the Palo Alto VA hospital, the chief of the pathology service and the chief of the neurology service. One should bear in mind that the penalty of having a second-rate person to run a hospital service is very great, since the service itself is thereby doomed to inefficiency, poor development and inadequate leadership over the period of time that such a person runs it. At the present time, we have outstanding candidates at the very top rank, nationally, for each of these two posts. However, in order to bring either of these persons to the hospital, we absolutely need to convert some space that is available, to research laboratories, at a cost of about $280,000. One part of this project, incidentally, is now under review in the central office and the other part shortly will be reviewed. I am not speaking about the outcome of that review, but describe it simply to illustrate that if the current minor constructions projects budget is inadequate; if we don't get those projects funded, the individuals who now are ready to join our staff simply won't do it. They won't come without research laboratories, they couldn't. If so, we will have to turn to less able people. This would doom these two key services in the hospital for one or two decades to mediocre leadership. Thus, a relatively small investment at this time in this hospital will have a major effect on the excellence of its programs for the next 2 decades. I am certain that there are many other instances of that sort throughout the Nation. In fact, the minor construction budget of the VA proposed in the 1974 President's budget is very small compared to the need. There is in the neighborhood of $60 million for this, VA wide. The backlog of projects is in the neighborhood of $330 million, so there is an enormous discrepancy. I would say that this kind of discrepancy in a system with many hospitals that are old and many hospitals that are in need of remodeling, is particularly disturbing. The other example concerns the department of psychiatry at Palo Alto Veterans' Administration Hospital. Unlike the rest of this hospital, which is totally affiliated, only 50 of the 300 psychiatric_beds at Palo Alto have been affiliated. There would be very strong advantage to the hospital to extend the affiliation to the entire service. At this time the staff in the department of psychiatry and the administration of the VA hospital are eager to do this. However, the cost is not neglible. In order to have this done in an effective way, there would have to be an increased numbers of nurses, resident physicians, staff physicians, and other support personnel. The on-going cost would be in the neighborhood of three-quarters of a million dollars a year, in addition to some initial remodeling expense. I give more detailed information about this project at the end of my testimony. The administration of the hospital and a central administration of the VA, both are most enthusiastic about this project. But because of the inadequate VA budget, it may be very difficult or impossible to achieve it. These two examples are drawn from experience of one hospital. I believe they illustrate the general point that the VA can improve its programs only if it is able to maintain or modestly advance its level of financial support. If the budget continues to be reduced and impounded, not only will these present opportunities be lost, but in my view, the gains of the last 25 years could be compromised. I say this because a group of able young physicians who represent the future of the VA system will not make or continue career commitments to an institution which periodically falters in providing first-class care and appropriate academic support. I will close by expressing my appreciation for this opportunity and hope that the subcommittee can aid in maintaining the VA budget at a level that will allow it to discharge its responsibilities in an appropriate way. I will be glad to respond if you have any questions. Senator CRANSTON. You will, as I understand it, submit some detailed information on other VA hospitals in California. Dr. RICH. I will do that, sir. [Dr. Rich subsequently supplied the following information:] VAH, PALO ALTO 1. Renal Dialysis Unit. We were promised an 8-bed Renal Dialysis Unit for FY 1973, but due to federal budget cuts, we are only being funded with enough construction funds in FY 1973 to put in two inpatient beds. We definitely need additional funding of $50,000 to at least get it to a 4-bed operating unit in FY 1974. 2. We have an approved project for $361,000 to up-grade our admitting and emergency areas. This is desperately needed for FY 1973 or FY 1974. To date this project remains unfunded. 3. We have an approved project for 2.4 million to construct a 16,000 net square foot outpatient building, but again, it is not funded. This is desperately needed just to keep up with our current projected outpatient load, even if no laws are changed expanding veteran outpatient care. 4. Research area in Building 7 for new Chief of Neurology-$98,000. 5. Neuroscience Laboratory. We have sent a request for $132,000, construction for the Neuroscience Laboratory, and we have not heard yet from Central Office whether we will be funded for this. 6. Reorganization of Psychiatry. This involves adding 231 non-affiliated psychiatric beds to the already 81 affiliated beds with Stanford here at the Palo Alto VA. We would have a total recurring funding cost of $478,958, one-time construction costs of $155,754, and one-time equipment costs of $50,000, for a grand total of $684,712. This does not include $344,000 per year for up-grading the Nursing Service of the Psychiatry Service, since this has been part of previous budget requests and is not part of the Stanford affiliation request. 7. Research Budget. In FY 1973 our research budget for supporting individual investigators, mostly involved in patient care here at the station, was $993,000. In FY 1974 we were given as our target allowance $857,000, 14% less. Unless we can receive more money for research in FY 1974, we, in effect, will be forced to cut the level of research support of all current investigators by 20% over their funding level of 1973 and not 14% because new staff currently unfunded will also need support. This will have a potentially deleterious effect on our patient care program here, since one of the very attractive features of the VA, as mentioned earlier in this letter, is the ability to provide research funds for the physicians. This cut is all the more serious for this station at this time, since the Palo Alto VA is in the process of recruiting a Chief of Pathology, which has been vacant for a year due to lack of research space, a Chief of Neurology, and a Chief of Surgery. In order to recruit men of high caliber, it will be necessary to provide them with some research support, which will come to approximately $90,000 for the three. Without this we could not recruit the caliber of individual which would equal the current physicians at the Palo Alto VA. 8. It is urgent to pass your bill, Senate No. 59, vetoed by the President last year, for expanding outpatient service care of the VA. 9. There is need for a unified wage rate schedule to eliminate the conflict between the multiple salary systems. Specifically, an unskilled person with no preparatory training or experience working in housekeeping or food service under the Federal Wage System receives approximately the same salary as a college graduate entering the Federal Service at the GS-5 level. We have 16 non-professional dietetic service employees whose salaries exceed our GS-9 professional dietitians. We need night differential for our nurses and provision for additional compensation of staff nurses who assume head nurse responsibility. 10. Grade deescalation. Imposing arbitrary grade ceilings is very damaging to the quality of care that we can give our patients. Hospitals are much more sensitive and require people of certain professional skills that can only be obtained by maintaining an average grade level that would be higher than for a non-patient care institution and other Federal agencies. VAH, MARTINEZ 1. Need for ambulatory facilities for veterans in the Sacramento, California, area. There are approximately 130,000 veterans in the Sacramento, Yolo, and Solano Counties who do not have ready access to outpatient or inpatient VA medical care facilities. The nearest existing VA Hospital is at Martinez, California, approximately 60 miles southwest of Sacramento. There is no public transportation available between these two points. The VA Hospital at Martinez has now become officially affiliated as a Deans Committee hospital with the School of Medicine, University of California, Davis. The School of Medicine is cooperating with the VA in the development of a proposal for an outpatient facility on land which would be donated by the University. Such a facility could become operative in temporary rented buildings for about $800,000 in the first year with an additional 1.5 million dollars for first-year salaries. This facility would be of enormous benefit to the veteran population of that region. It might also be the forerunner for the development of additional VA medical care facilities that would be available for veterans throughout the most northerly part of California. Funds for this purpose are strongly recommended for availability in early Fiscal Year 1974. 2. Funding for Public Law 92-541. PL 92-541, which was enacted in the last session of Congress, awaits appropriation. No funds are available from other sources for the legislation at present. It is urged that an appropriation be made available for grants to affiliated medical schools authorized in subchapter 2 of this law. Such appropriations would make possible cooperative developments such as the proposed Outpatient Clinic to be operated jointly by the VA Hospital, Martinez, and the University of California School of Medicine in the Sacramento area. 3. Funds for strengthening medical care programs at newly affiliated VA hospitals. The VA policy of affiliating its hospitals with medical schools has been the major factor in developing high quality patient care programs in the VA Hospital system. Wherever there are strong partnerships between the VA and the medical schools, the veterans have received the direct benefit of the enhancement in their care through the strengths and resources of both institutions, which complement and support each other and help avoid the duplication of expensive specialized facilities. The links between these institutions in their training programs, research and patient care are essential to the maintenance of such high quality medical care of the veterans. At present newly affiliated hospitals, because of budget limitations, are unable to identify or obtain the necessary funds for the development of such programs. It is urged that special funds be made available and/or additional appropriation developed for Fiscal Year 1974 to meet such needs. At the VA Hospital, Martinez, it is estimated that the first year would require for all departments of the hospital additional equipment valued at $832,975, 112 additional FTE positions at a cost of $1,456,000, and 23,644 square feet of additional space at a cost of $189,152 for temporary facilities, totaling $2,478,127. VAH, SAN FRANCISCO 1. Limitations on construction and minor improvement projects. More flexibility is required. The $25,000 limitation on non-annual projects for minor improvements and alterations should be raised to at least $50,000 to permit funding on a scheduled basis of the smaller CofH&DF (Construction and Hospital Domiciliaries and Facilities) projects. The $2,000 restriction on formal contracts should be updated and raised to a more realistic figure such as $5,000. 2. Controls on spending our budget. More flexibility in spending our budget is desired. The elimination of personnel ceiling control in favor of dollar con |