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 qualified 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.

(The chart referred to is as follows:)

Utilization data, central medical group of Brooklyn, for 1951, 1952, 1953

1 Rate number of physician services per enrolled patient per year. 2 Routine yearly health surveys.

The CHAIRMAN. What you have said is very true. I was particularly interested in the factual figures that are attached to your statement and it does verify what you have said, and will prove very helpful to us in having this direct evidence from experience before the committee. And I was particularly interested in your reference to the work that has been accomplished, the detailed statement that you have made in that respect, by an organization such as yours, and which leads up to your endorsement of this bill H. R. 7700.

We thank you very much. That will be made a part of the record in full, so will the report of the HIP, which you submitted, Dr. Baehr. (The report referred to is as follows:)

A MESSAGE FROM THE CHAIRMAN OF THE BOARD AND THE PRESIDENT, HEALTH
INSURANCE PLAN OF GREATER NEW YORK

FROM THE PRESIDENT'S MESSAGE TO CONGRESS JANUARY 18, 1954
"The best way for most of our people to provide themselves the
resources to obtain good medical care is to participate in voluntary
health insurance plans. During the past decade, private and non-
profit health insurance organizations have made striking progress
in offering such plans."

The seventh year of operation of the health insurance plan was a year of consolidation and strengthening of its resources. After almost 12 months of study of the medical groups and their needs by a special committee of the board of directors under the chairmanship of Mr. William Reid, the board was convinced that an increase in premium rates was unavoidable if the 30 medical groups were to have sufficient capitation income to enable them to attract and hold qualified physicians of high professional caliber and to continue to provide X-ray, diagnostic laboratory, physical therapy, and visiting nurse services in a period of rising costs without any extra charges. HIP was the very last of the nonprofit health insurance plans to raise its premiums during the past 3 years of rising costs. It is gratifying to be able to report that the temporary decline in enrollment which was anticipated as a result of the rise in premium cost did

not occur. The year ended with an enrollment of almost 400,000 and with bright propects of substantial additions to enrollment during 1954.

The year has been devoted by the medical groups to upgrading their professional and technical staffs and to improving their physical facilities to meet the high standards of HIP's medical control board. During the past year the Montefiore Hospital medical group completed the required structural alterations and now occupies its entire building; the Central Bronx medical group has occupied its new center and the Clinton medical group has purchased a site for a new center near the Parkchester area of the Bronx. In Manhattan, the Washington Heights medical group moved into its new center on Upper Broadway; the Upper Manhattan medical group has erected one of the handsomest and most modern medical buildings in the city; the Metropolitan-Hudson medical group has remodeled part of the ground floor of the Peter Stuyvesant Hotel for its center; the Yorkville medical group has taken additional space in its present building and has also purchased a site on Second Avenue and East 79th Street for the erection of a new center.

In Queens, the Astoria medical group greatly enlarged and improved its present center by new construction, and the Forest Hills medical group completely remodeled a building which it had purchased in Flushing. The North Queens and Central Queens medical groups have agreed upon a merger to be followed shortly by the erection of a new medical center.

The major structural developments during the past year have been in Brooklyn, where the central medical group of Brooklyn completed and occupied the largest medical group center building in the city; the Empire, Eastern Parkway, and Midboro Medical Groups purchased and remodeled existing structures into centers; and the Brooklyn Medical Group purchased a building which it is remodeling for early occupancy. In addition, the Flatbush and Kings Highway Medical Groups have large new centers under construction in their sections of the borough which will be ready for occupancy in 1954.

During the past few years, the 30 HIP medical groups have invested or assumed financial obligations for new construction and equipment amounting to more than $6 million, an evidence of their faith in the future of prepaid group practice of medicine.

The medical groups are working closely with HIP's division of preventive medicine and health education. Preventive health examinations are being more widely extended. Over 100 health education meetings are being conducted annually for the benefit of subscribers. Health education bulletins from 29 medical groups reach into the homes of the insured families. Early disease detection is being facilitated by a drive to persuade the few families which do not as yet have a family physician to select their personal physicians. The effect of these efforts is reflected in a progressive rise in the utilization of physicians' services. by the insured population which now averages 5.4 doctors' services per personabout 2,200,000 physician visits per year. This does not include many hundreds of thousands of diagnostic laboratory procedures, physical therapy, and home visiting nurse services. In 1953, 78.7 percent of all doctors' services was given in the offices of the doctors or at medical group centers, 11.5 percent in the home, and 9.8 percent in hospitals.

The stability of the Health Insurance Plan of Greater New York is revealed in the financial statement on another page of this annual report. Its community value can be judged by the appreciation of the enrollee population, whose medical experiences are being continuously recorded and analyzed by HIP's division of research and statistics. The medical care experience of so large a number of families has never been recorded in such detail. The special study of this experience by a committee of biostatisticians under the chairmanship of Dr. Lowell Reed, president of Johns Hopkins University, is nearing completion after nearly 3 years of labor and will be ready for publication before the end of 1954. For the support of this study the Commonwealth Fund and the Rockefeller Foundation have made grants totaling $331,000.

With considerable satisfaction we call attention to the steady decline in the administrative costs of the plan which now constitute 11.2 percent of premium income. Included in this item is 3.1 percent for medical care supervision, preventive and health education services, and research which, for the most part, are not the responsibility of other nonprofit health insurance plans. Also, 4 percent has been set aside for statutory reserves as required of all insurance plans by the State superintendent of insurance.

Eighty-five percent of all premium income during 1953 was directly expended for medical services during the year. This is a far larger ratio (about 15 cents

more of the premium dollar) than was paid out for medical care of subscribers by any other nonprofit medical insurance plan in the city.

The admitted assets of the plan on December 31, 1953, as reported to the New York State Insurance Department, amounted to $4,376,345 as compared with $3,588,315 at the end of 1952. Surplus and legal reserves at the end of 1953 amounted to $2,864,842, of which $555,500 represented noninterest bearing loans. The year ahead looks bright for the plan. In fulfilling its role as a community enterprise, the plan and its affiliated medical groups will endeavor to improve the benefits it offers its subscribers and keep pace with the advances that are constantly being made in the profession of medicine.

GEORGE BAEHR, M. D.,

President and Medical Director
DAVID M. HEYMAN,

Chairman of the Board,

HIP's medical group centers vary in construction and appearance. Those constructed recently and the few remaining ones to be built this year represent the latest in functional design. In addition to the offices of HIP doctors, they contain facilities for laboratory tests, X-ray equipment, and physical therapy. Twenty-seven group centers are located in the five boroughs of New York City and Nassau County.

Health insurance plan of greater New York-summary of financial condition Dec. 31, 1953

(In accordance with report to the New York State Insurance Department)

Due to medical groups (capitation fees) –

968,287.16

Trust funds held under agreement with medical groups-
Premiums received in advance__.

57,331.51

222,594.87

Other liabilities_

181,789.46

Reserve for claims (including deferred maternity benefits).

81,500.00

NOTE. Unassigned surplus includes noninterest bearing loans of $555,500 which, under the provisions of the New York State insurance law, are not a legal liability of the plan. They are repayable only out of unassigned surplus and only with the approval of the Superintendent of Insurance

WHAT HIP IS AND HOW IT FUNCTIONS

HIP is a prepaid, community-sponsored, medical-care plan which serves its subscribers through group practice and teamwork medicine. Prepaid group practice is the effective way to provide comprehensive medical care to insured families at a reasonable premium cost. The services are provided by 30 medical groups which occupy centers located strategically throughout the metropolitan

area and Nassau County. Each of HIP's medical groups includes general physicians and specialists in all 12 basic fields of medicine. Provision is also made for specialist treatment of rarer ailments requiring unusual experience or skill. X-ray, diagnosis and treatment, physical therapy, and even visting nurse service in the home and private ambulance service are provided without extra changes. Under HIP the financial barrier between physician and patient is eliminated. The person physician selected by the subscriber assumes responsibility for his overall good health. He records the subscriber's medical history, gives him physical examinations regularly, and arranges for specialists' services when necessary. The family physician is visted at his office or at the medical center. He visits the home when necessary. He and the group of specialists provide care at the hospital and at the specialist's office.

All physicians added to an HIP medical group must be approved by the HIP medical control board. This board, composed of outstanding physicians, has set high standards for training, experience, and hospital affiliations. The medical groups are self-organized. Every specialist affiliated with an HIP medical group must have a certificate from an American specialty board, hold an appointment in his specialty on the staff of a hospital approved by the American Medical Association for resident training, or have equivalent qualifications.

HIP, in addition to its in-area benefits, has on out-of-area plan. This plan offers a wide range of medical services to employees and their dependents who live outside the area served by HIP medical groups. Liberal cash payments are made for major and minor surgery, including X-ray, laboratory examinations and ambulance service. The out-of-area plan is an indemnification arrangement.

By paying all or half of the premium, the employer helps to bring HIP's allaround coverage within the financial reach of all his employees. He makes it possible for every employee, regardless of earnings, to enjoy the benefits of comprehensive care.

Premium rates for out-of-area indemnity insurance are the same as base rates regardless of income classification.

These rates do not include hospitalization insurance. HIP subscribers should carry hospitalization insurance in order to round out a comprehensive healthinsurance program and so enable families to budget virtually all the costs of their medical and hospital care throughout the year through prepayment.

Rates for family contract under a contract covering employees and their dependents the combined cost is

NOTE.-Under special conditions, HIP will accept contracts covering employees only. Rates will be quoted upon request. A $2 charge is permitted for home calls requested and made between 10 p. m. and 7 a. m.

HIP's medical groups are self-organized. They are medical partnerships composed of general practitioners and specialists who provide comprehensive medical care to HIP subscribers and their families. In order for a group to become affiliated with HIP, the qualifications of its medical staff and the adequacy of its physical facilities must be approved by HIP's medical control board.

The CHAIRMAN. Now, I regret exceedingly that we have to suspend. I have tried to make it plain what our difficulty is and how much we regret it, but I do hope that if occasion requires we may have the opportunity of hearing you, having you before us again, when the committee will be given an opportunity to ask you questions. I am certain it would like to do that.

We will adjourn until 10 o'clock tomorrow morning.

(Thereupon, at 11:20 a. m., the committee adjourned to meet the following morning, Friday, April 30, 1954, at 10 a. m.)