On the second point I would agree with Mrs. Dwyer very much that we didn't do enough work in helping to train far more doctors and nurses than we did. I think this should have been stepped up tremendously and I think it is going to have to be. But our point here in our testimony is, that the impact for these plans is literally to sharply reduce the hospital utilization rate and to the extent that they expand, people can be well taken care of without having to spend anywhere near as much time in the most expensive type of care without demanding the most professional personnel.

Mrs. DWYER. You are really talking about preventive care?

Mr. VOORHIS. Yes, indeed I am. I have just gone through some of it myself.

Mrs. DWYER. Thank you.

Mr. DOHERTY. We would like to thank Mr. Voorhis for answering the questions. We agree with him wholeheartedly.

Mr. BRINDLE. I would like to make an additional statement.

We don't see this bill as the answer to many of the problems of adequate medical care for the American people, certainly not to the shortages Mr. Voorhis indicated.

But the more effective organization of these group practice prepayment plans has demonstrated they can reduce hospital utilization-one step toward ameliorating some of the problems we are going to run into.

Mr. BARRETT. Mr. Shoemaker, do you want to comment?

Mr. SHOEMAKER. I think we can see group practice as one way to meet the volume demand that will be developing out of medicare legislation. We certainly realize that this is not the only answer, but certainly one of the answers.

Mr. BARRETT. Mr. Harvey?

Mr. HARVEY. Mr. Chairman, I would just like to address this collectively, if I could, just to see if I understand this now in relation to the other testimony this morning.

As I understand it, the doctors themselves have no difficulty financing group practice or clinics when they do it themselves. But the difficulty that you are reciting here this morning is the difficulty encountered by the nonprofit corporations which themselves are conducting the group prepayment plan, or whatever you want to call it. But that the distinction-that is the distinction, is that correct? The difficulty that Mr. Kingren, for example, encountered with the $400,000 unit with 10 doctors in it was the difficulty being encountered by that particular nonprofit corporation. Would you agree with me, and am I correct, however, that the 10 doctors themselves could undoubtedly go to the bank and borrow the equivalent of $40,000 apiece to finance that particular unit?

Mr. KINGREN. In speaking for the Kaiser Foundation Health Plan, I have to be a little apart from these other gentlemen because our organization is a little different. We have a totally integrated program, including hospitals and outpatient facilities.

We don't pay doctors a salary. They are organized into partnerships and they are paid on a capitation basis; that is, they are paid so many dollars per health plan member per month. Part of our contract with the medical groups is to provide them with equipment

60-878-66-pt. 2 10

and facilities. So it is not the doctors' responsibility to finance the facilities in our program.

Mr. HARVEY. Do not misunderstand me. Correct me if I am wrong. What I am saying is, the doctors themselves could go to the bank and finance themselves. Have you had any letters from doctors saying they have been unable to finance this particular program or— doctors or dentists that have been unable to borrow money?

Mr. KINGREN. Doctors cannot finance the kind of organization we have. They cannot get that kind of financing.

A single doctor or group of doctors, in individual practice or group practice, can get financing for an office and equipment. They are good credit risks-consequently, they have few credit problems. But if you are organizing total medical services, including outpatient, inpatient. and specialized care, it is impossible for doctors to get that kind of financing, nor do they try to finance or organize total medical care.

Mr. BRINDLE. When you say physicians and other health practitioners can get equipment and get loans for equipment and for facilities, to get into practice, I think this is generally true. The American Medical Association testimony has indicated this and you don't have any great need for a general program.

As Mr. Kingren indicates, when you want to get and remember that in all these plans physicians are involved. We have heard vociferously from physicians in group practice, with a very broad range of benefits, and these arrangements for a new organization, we have constant pressure from the 1,000 physicians involved in our program to help them upgrade and update their facilities or to help them build new facilities. The last time we tried to extend into suburban areas we found that it was absolutely necessary to develop the kind of very complex and expensive facilities that were needed to develop a comprehensive group-practice plan.

I would also say this, and I was talking to the commissioner-the former commissioner of health in New York City the other day and to the dean of the school of Public Health of Columbia. They are very concerned about the fact that the normal commercial arrangements which the doctors can make to go into practice operates good on a nationwide average basis, but when you talk about getting an adequate medical center with a good range of specialties into a place like Harlem or Bedford-Williamsburg, they just don't have that kind of ability. So that I would say even prepayment aside, this kind of program would encourage groups of private physicians who are going into a fee for service practice, it would help them get into some of these relatively tough areas. In Harlem and in Bedford-Williamsburg we have worked out cooperative programs with the city to carry part of their public load of medical care, and to carry some of the other programs and this is true for Gouverneur Hospital which is a joint city, private venture and this kind of financing would facilitate bringing even fee for service practice into tough areas in the city. These are new areas of shortages of adequate physicians' services.

Mr. HARVEY. Well, speaking of these shortages, I agree. But yesterday, I will tell you, our Interstate Commerce Committee reported out an international health bill and I voted for it. But here we are taking hundreds of doctors a year and sending them abroad. This is despite the fact that we have shortages in this country. It amounts to

thousands actually that we are going to take out each year and send abroad to various places and give them additional stipends to what they would be earning here. I have a question I would like to ask Mr. Doherty.

Does the AFL-CIO or maybe in your knowledge any other organized labor association have any program of loans for this particular thing? I have been reading where the labor unions make substantial loans of money to lend and money to investment purposes. Have they invested in any of these group practice clinics? Do they have any provisions for such loans?

Mr. DOHERTY. I will let Mr. Shoemaker answer.

Mr. SHOEMAKER. I think we have to realize that health, welfare, and pension plan money is very conservative money and that, generaly speaking, investment of these funds is through a fiduciary trustee such as an insurance company, bank, or trust company, so you come around to the same thing. Ninety percent of these plans are actually administered by employers. So, generally speaking, we actually don't have any control over the use of these funds for this purpose.

Mr. VOORHIS. I would like to say this. I would like to point out that in the case of investments out of welfare and pension funds, labor unions or churches or other groups like this, that these are very strictly controlled and that the guarantee involved in this legislation would present them with quite a different picture and opportunity and I would guess that there would be many instances where, with a guarantee such as this bill provides, it would be possible for the first time for some such funds to extend financing for these purposes, legally and properly, whereas they couldn't do it before.

Then, I would also like to comment briefly on your original question, if I might just by pointing this out, that our major concern, Mr. Congressman, is the one that you pointed to, at least mine, is with the plan itself, which is a nonprofit agency and therefore cannot offer the hope and expectation of substantial earnings as a means of backing up its request for a loan.

I would agree with you that there are cases where groups of doctors who are in business to make money, and who do, have got a different situation than a nonprofit plan and where the need is probably less. But I would second very earnestly what Mr. Brindle had to say and point out that if a group of doctors, even though they are not in one of the plans we represent, are willing to go into a community that has great need, I think they should be encouraged.

Finally, I would like to point out that in the case of a number of our plans, the doctors personally have been asked to sign notes against their personal credit in order to help get some of the most essential financing for some of these plans and that we don't think they ought to have to do that and under this bill they wouldn't any longer have to do that. They have to pledge their personal credit which in some of the plans they have actually done.

Mr. HARVEY. I do not know how it would fit into this plan. I do not know anything wrong with doctors pledging their personal credit any more than I do with other businessmen such as lawyers or other businessmen. This is one of my concerns in this bill, that you are taking the FHA, which has been a revered organization in American

history for the last 30 years and which has one of the finest records that I know of, but you are taking that organization and making a complete departure and you are not only insuring real estate, but now you are insuring loans on equipment as well. This is something that I do not know, whether it is good or bad. I have not really thought it through myself.

But I do recognize it is a complete departure from what we have been doing with the FHA in the past.

I have no further questions.

Mr. BARRETT. Mrs. Sullivan?

Mrs. SULLIVAN. I have no question, Mr. Chairman, but I do want to tell these gentlemen that they have added much to these hearings with the information they have brought us. This is a big problem and we need some good solid thought on it.

I joined one of the first group health plans in the country when it was opened in St. Louis, back in the late 30's. I was not in it very long because I married a Congressman shortly afterward and we spent practically 12 months a year in Washington during those war years. But I have always felt these plans are a good idea.

Thank you very much.

Mr. VOORHIS. We are very glad Mrs. Sullivan left town for the reason she did.

Mr. BARRETT. Gentlemen, all time has expired and I am quite sure the committee appreciates your splendid presentations here this morning. You have been a splendid panel and a very knowledgeable one and extremely helpful to us.

Thank you very much.

Mr. BRINDLE. Thank you very much.

Mr. BARRETT. The subcommittee will stand in recess until 10 o'clock on Monday morning.

(Whereupon, at 12:30 p.m., the subcommittee adjourned to reconvene at 10 a.m., Monday, March 14, 1966.)

DEMONSTRATION CITIES AND URBAN DEVELOPMENT

MONDAY, MARCH 14, 1966

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON HOUSING OF THE
COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The subcommittee met, pursuant to recess, at 10 a.m., in room 2128, Rayburn House Office Building, Hon. William A. Barrett (chairman of the subcommittee) presiding.

Present: Representatives Barrett, Mrs. Sullivan, Moorhead, St Germain, Reuss, Widnall, Mrs. Dwyer, and Harvey.

Mr. BARRETT. The meeting will come to order, please.

Our first witness this morning will be the Honorable Thomas G. Currigan, mayor of Denver, Colo.

Mr. Mayor, if you will come to the witness table, we will certainly be glad to give you an opportunity to offer your testimony in any way that you desire.

Mr. CURRIGAN. Thank you.

Mr. BARRETT. Mr. Mayor, we do want you to feel at home here, feel completely relaxed. Certainly if you desire to offer your testimony in full, we may ask you one or two questions after you complete your testimony. If you desire to submit it in any other fashion, you may do so. We will leave this entirely up to you.

You know, Mr. Mayor, I do want to take advantage of this opportunity. We have here, and I am quite sure you know Colorado has sent us one of the ablest Members that has ever been in Congress. He has proved to be one of our top legislators in the House. And I am quite sure he would like to introduce you here this morning. I am first going to recognize my good friend Byron Rogers from Colorado. STATEMENT OF HON. BYRON G. ROGERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO

Mr. ROGERS. Thank you, Mr. Chairman. It is always a pleasure to appear and cooperate with you and your subcommittee considering housing and urban renewal.

We in Colorado, and particularly in Denver, are proud of the fact that we have an outstanding young mayor, by the name of Thomas G. Currigan. He is no stranger to municipal affairs. Prior to the time that he was elected mayor in the city and county of Denver in 1963, he was the city auditor for 8 years. He has been active in the public affairs of the city and county of Denver for many years.

During this period of time, he demonstrated an intense interest and knowledge of the housing problems in the city and county of Denver, and particularly the blighted area.