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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 VÅ 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 control is one example. Controls such as grade escalation hinder our ability to recruit and retain high quality personnel.

Senator CRANSTON. You were in the VA system for over 10 years, I know. Can you tell us what caused the reduction in the average daily patient census in late 1970 and early 1972 ?

Dr. Rich. I really can't give you information about the system, but I can find out. Our hospital didn't have a drop.

Senator CRANSTON. Would you find out and let us know? Dr. Rich. Yes. [Dr. Rich subsequently supplied the following information:] Question: What were factors that caused the drop in VA hospital census in 1971–72 ?

Answer. The drop referred to is the decline from the seasonal high average daily census of 87,667 during February of FY 1971 to 79,865 during June of the same fiscal year. This was followed by a census which increased to a peak of 83,662 for February in FY 1972.

During February of fiscal year 1971, average daily census allocations for FY 1972 were released to the hospitals. These were based upon the estimated census of 79,000 contained in the budget for FY 1972 submitted to the Congress. Consequently, hospitals' actions, in addition to the expected seasonal de cline, were to move downward toward the target for FY 1972.

Senator CRANSTON. Could you comment on the impact of a onetenth of a grade rollback required in fiscal year 1973? What impact does this have on hospital morale and on patient care, or in any other way?

Dr. Rich. The effect on morale is devastating in several ways. It interferes in an arbitrary and illogical way with selection of wellqualified people for many positions necessary for patient care and for management of the hospital.

Senator CRANSTON. What is the effect, in terms of patient care, of the grade rollback?

Dr. Rich. I can't comment on the effect of that rollback at our hospital. I will find out for you and add it to the record.

[Dr. Rich subsequently supplied the following informations:] There are basically four specific points.

1. The most important point is as mentioned in my testimony; namely, it does cause a general lowering of morale when employees cannot advance in grade commensurate with their skill and performance.

2. It causes a higher turnover, since employees who cannot be advanced in salary will leave and work elsewhere. This costs more money in the long run and is an expensive expedient.

3. As a consequence of grade deescalation, the better trained, more talented people, and long-term employees will leave and work elsewhere where they can get better pay. Thus, it forces us to lose our most highly trained and valuable people.

4. Because of grade deescalation the VA is forced to hire less well-trained and less-qualified individuals. Grade deescalation affects General Schedule employees, which in the Palo Alto hospital number 1,300, and primarily has adverse effects on the Nursing Service, since it involves nursing aides and assistants and a large number of professionals and non-professionals in Dietetics, Fiscal, Personnel, and Admitting.

Senator CRANSTON. How do you feel about the need for the VA to play a leadership role in continuing education?

Dr. Rich. I might say that everybody in medicine now is keenly aware of a tremendous need to upgrade continuing education. The need is generated by the tremendously increased rate of acquisition of knowledge that directly can be applied to care patients.

The VA is one of the major medical systems in the country and certainly ought to be very expensively involved. If the VA hospitals in their partnership with medical schools were to be involved, we could mount a very important postgraduate educational program.

Senator CRANSTON. There is an awareness, I think a widespread awareness, of the need for VA participation in continuing education. But how much is being done about it?

Dr. Rich. In those hospitals I know of, the staff of the VA hospitals participate along with their fellows in the faculty of the medical schools and makes a considerable contribution in that way.

Senator CRANSTON. How does a hospital doctor go about reducing the patient level when he is ordered to do so!

Dr. Rich. I don't have personal experience to report.

Senator CRANSTON. Could you look into that and find out what really happened?

Dr. Rich. I would be very glad to. [Dr. Rich subsequently supplied the following information:] Rarely, if ever, has our Hospital Director had occasion to achieve a lowered bed census. The level of operational beds is contingent on the "funded” beds set by Central Office. Funded beds may be reduced because of lack of demand, lack of funds, or increased efficiency, i.e., increased turnover due to better funding and increased staffing to do the job.

Senator CRANSTON. How does the staff ratio at the VA Palo Alto hospital compare with the ratio at the community hospitals and the ratio of staff at the university hospital?

Dr. Rich. The VA, nationwide, has approximately half the nursing staff of community hospitals. The Palo Alto hospital-I can provide you with exact figures later-has better staffing than the average for VA hospitals. On the other hand, it is much less well staffed as Stanford University Hospital. [Dr. Rich subsequently supplied the following information:]

Employees per San Francisco area :

patient bed O'Connor Hospital.

2. 45 Stanford University Hospital.

3. 72 Alexian Brothers Hospital..

4.0 Sequoia Hospital.

2. 56 U.C. Medical Center, San Francisco--

4. 95 El Camino Hospital..

2. 9 Palo Alto VA Hospital--

1. 56 These figures, of course, are very hard to interpret in any but general ways, since these hospitals all have varying efforts with respect to emergency room care and outpatient care. Stanford, for example, no doubt has a larger OPD and emergency room proportionate patient census in terms of bed ratio than does the Palo Alto VA. Similar variations have occurred to the above-named hospitals and also would be true to any national average used. Nevertheless, even taking these factors into account, it is perfectly clear that the staffing patterns of the Palo Alto VA Hospital, compared to neighboring hospitals, are grossly less than the surrounding hospitals of Northern California.

VA budget projections for FY 1975 will provide a system-wide SR of 150 staff for 100 patients (1.5), but this is based on internal distribution of an average of 105 staff for each 100 patients in psychiatric bed sections, 163 staff for each 100 beds in medical bed sections, and 203 for each 100 patients in surgical bed sections.

There are three principal reasons why meaningful direct comparison of VA and non-VA hospitals cannot be made by use of SR's. They are: the methods for computing SR's differ; the needs of the patients served differ, and the administrative practices differ. For example, most community hospitals use the "total payroll" method. That is, all paid employees in FTE terms working in the hospital, regardless of function, are included in computing the SR for community hospitals. On the other hand, the VA includes in its SR computations only those employees (also in FTE terms) who are engaged in functions that either provide or support provision of care to inpatients. Thus, if both hospital systems would use the same method, the discrepancy in SR statistics would be lessened.

For example, in 1970 the VA made intensive comparison of the staffing ratios of one of its general medical and surgical hospitals with that of an adjacent community hospital. The staffing ratio of the VA hospital, by VA'S method, was 1.68 to 1. The staffing ratio of the non-VA hospital, by its method, was 3.27 to 1. In the VA's case, out of the total FTEE's of 1,647, only 987 were included in the computation. Using the non-VA method, as nearly as possible, the VA's SR rose to either 2.66 or 2.37 to 1, depending on whether the FTE was determined on the cost report basis or the cost distribution report basis.

Senator CRANSTON. So the veteran that has to go to the veterans' hospital for some reason is at an automatic disadvantage in anticipated quality of care for that one reason alone, let alone other reasons?

Dr. Rich. VA hospitals such as the Palo Alto VA Hospital have a very acute service involving many, very sick patients. Such services should have at least the community hospital staffing pattern.

Generally they run about 60 percent of that.

Senator Cranston. On the basis of your really great experience in and out of the VA system, do you have any thoughts to give us now or in writing later, as to where we might make some cuts in the VA budget?

Dr. Ricu. I would be glad to consider that and to communicate with you later.

[Dr. Rich subsequently supplied the following information:]

From the previously submitted information, I do not see how there could be any cuts. In fact, the cuts already made in VA/DM&S are very damaging. I do not have any special expertise on the other VA budget.

Senator CRANSTON. Do you have any thoughts on where else we should cut into the overall budget, to make room for the increases that are needed in the VA budget?

Dr. Rich. I don't believe that I am competent to make that kind of an assessment.

Senator CRANSTON. Well I think that every citizen is quite competent and has some ideas on the subject. If you get any ideas later, why

Dr. RICH. I will comment on that later.
[Dr. Rich subsequently supplied the following information:]

Question. What source of funds in the federal budget do you believe could be used to increment the VA/DM&S budget ?

Answer. In view of our recent withdrawal from a war in Vietnam and, particularly, considering the needs of a large number of veterans returning from this war, it would be entirely appropriate to use funds which would have gone to fight this war and which still are expended for war in Asia to improve the quality of medical care that the VA can provide to returning veterans in this country.

I comment below on questions asked in a letter of April 24, 1973.

Question. For the first time since World War II, there is a potentially reduced level of funding for VA medical research programs. In fiscal year 1973, the VA appropriation for medical and prosthetic research was $76.8 million and in fiscal year 1974, the requested appropriation amount is $71.0 million.

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