Mr. Moss. You would have to amend the basic FHA act to permit them to undertake the role of insurer and insure under contract. We should explore, then, the cost that FHA might require to undertake the insuring of the mortgage insuring amounts, of $250 million the first year and $500 million each for 4 or 5 years. It is about $2.4 billion worth of additional insurance.

You are proposing to do it with a fund of $5 million the first year, $2 million the second. What is the ultimate fund, other than premiums paid, for the third and succeeding appropriation years? It boils down to a matter of economics, I would imagine.

Secretary CELEBREZZE. Mr. Chairman, under the present bill, under section 624, on page 42, line 16, dealing with administration, the language is:

With a view to avoiding unnecessary duplication of existing staffs and facilities of the Federal Government, the Surgeon General is authorized to utilize available services and facilities of any agency of the Federal Government in carrying out the provisions of this part, and to pay for such services and facilities either in advance or by way of reimbursement in accordance with an agreement between the Secretary of Health, Education, and Welfare, and the head of such agency.

A similar provision is in the present law also.

The CHAIRMAN. Of course, the difference is that you answered in the affirmative as to what would be included in this act. Mr. Younger asked you the question as to what the present law was today. Secretary CELEBREZZE. Yes.

The CHAIRMAN. That does make a lot of difference.

Are there any further questions?

Mr. Secretary, we have kept you much longer than we intended to. Did you have anyone else in your agency who wanted to give any statement or further information to us?

Secretary CELEBREZZE. No, sir; not unless the committee requests anything further.

The CHAIRMAN. You have been very kind and generous today, with not only your time but with your sincere desire to get this program underway. We want to thank you for it. I am sorry that we have detained you as long as we have, but this is a very important program. I know you are tremendously concerned with it and interested in it. We thank you for your appearance.

Secretary CELEBREZZE. Thank you, Mr. Chairman.

The CHAIRMAN. The committee will recess until 10 o'clock in the morning.

(Whereupon, at 4:20 p.m., the committee was recessed, to be reconvened at 10 a.m., March 10, 1964.)

EXTENSION AND REVISION OF HILL-BURTON
HOSPITAL CONSTRUCTION PROGRAM

TUESDAY, MARCH 10, 1964

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The committee met at 10 a.m., pursuant to recess, in room 1334, Longworth Building, Hon. Oren Harris (chairman of the committee) presiding.

The CHAIRMAN. The committee will come to order.

In continuing the hearings on H.R. 10041, revision and extension of the Hospital Construction Act, the first witness this morning will be Mr. Graham Nixon, director of the Arkansas Hospital Association. Mr. Nixon, we are glad to have you and we will be pleased to have your presentation at this time. Let me personally extend to you a cordial welcome.

I notice you have several associates with you. Perhaps you will identify them for the record.

STATEMENT OF GRAHAM NIXON, DIRECTOR, ARKANSAS HOSPITAL ASSOCIATION; ACCOMPANIED BY DR. MARTIN R. STEINBERG, DIRECTOR, MOUNT SINAI HOSPITAL, NEW YORK, N.Y.; AND KENNETH WILLIAMSON, ASSOCIATE DIRECTOR OF THE AMERICAN HOSPITAL ASSOCIATION

Mr. NIXON. That is right.

Mr. Chairman and members of the committee, my name is Graham Nixon. I am executive director of the Arkansas Hospital Association and a member of the Council on Government Relations of the American Hospital Association. I am also a member of the Senate of the State of Arkansas.

With me is Dr. Martin R. Steinberg, who is director of Mount Sinai Hospital in New York City. Dr. Steinberg is also a member of the Hospital Review and Planning Council of Southern New York. We are accompanied by Kenneth Williamson, associate director of the American Hospital Association.

On behalf of this association, I first wish to express our appreciation for the opportunity to discuss with you the operation and accomplishments of the Hospital Survey and Construction Act and our views with respect to H.R. 10041, the Hospital and Medical Facilities Amendment of 1964.

With your permission, we would like to divide our formal testimony into two parts. I will present the background information and the

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role of the American Hospital Association in the development of the program and its accomplishments, as well as the association's concern with the matter of modernization and steps which we have taken in that regard.

Dr. Steinberg will then discuss the detailed provisions of the bill and specific recommendations of the association concerning the legislation.

The American Hospital Association, which has supported this program since its inception in 1946, is a voluntary, nonprofit membership organization including within its membership the great majority of all types of hospitals, among which are 90 percent of the Nation's general hospital beds which in 1962 admitted more than 26.5 million patients and treated over 99 million in their outpatient facilities. Our primary interest-and the reason for the organization of the association-is to promote the public welfare through the development of better hospital care for all the people.

During the years of the depression and the years of the Second World War, which followed, there had been very little hospital construction in the Nation. Many communities throughout the country were without hospitals and other health facilities, and consequently, without doctors. To millions of Americans, there was very little sense in talking about the miracles of modern medicine because lacking hospitals they were deprived of the benefits of this new day in medicine.

Basic studies sponsored by this association, beginning in 1944, through the Commission on Hospital Care documented the problem and supplied the framework on which the Hospital Survey and Construction Act was built. We take pride in this, in having some of the background research that set up the original program. Throughout the 18 years since its enactment, we have followed the program closely. We have maintained continuous and close communication with the hospital field regarding the operation of the program. We have worked with the State agencies responsible for the operation of the program. We have worked closely with the Surgeon General and his staff.

Officers of the association have been members of the advisory council to the program. We have sponsored conferences throughout the country for the discussion of the program and its operation. We have consistently supported appropriations before the House and Senate Appropriation Committees.

In more recent years, we have worked closely with the Surgeon General in regional planning studies. Throughout the years, as there have been hearings before congressional committees, we have appeared and presented our views with respect to the program and our recommendations for its continued improvement. We have been gratified that the Congress has in most instances accepted our recommendations.

Under the Hospital Survey and Construction Act, hospitals have been built in several hundred communities where hospital care had not previously been available. Doctors followed the building of the hospitals and thus were brought into these communities.

In a total of 7,061 projects, which were approved as of June 30, 1963, 271,478 hospital beds have been built or are under construction, 28,864 nursing home beds, 974 public health centers, 588 diagnostic

and treatment facilities, and 280 rehabilitation facilities have been completed or are under construction.

Despite the encouraging progress, however, much still remains to be done. There appears to be a continued race between obsolescence of existing facilities, increased need for care, and population expansion.

It is our belief that the Federal Government through this act is doing much more than providing dollars for construction. The Government through the program has become a major force in shaping the kind of health services we are to have in this country. It is thus influencing the cost of care, the quality of care, and the quantity of care to be made available.

Since the time the Congress first enacted the Hospital Survey and Construction Act, there have been many changes in patterns of care and needs. For years relatively few hospitals provided emergency services. This has now become a nearly universal practice.

However, a definite change has taken place. The public is now coming to hospitals in tremendous numbers as ambulatory patients seeking a wide range of medical care and not just emergency care.

This past year, 99 million such ambulatory patients received care in general hospitals. A broad spectrum of diagnostic and treatment facilities is needed. One particular example is in respect to the treatment of mentally ill patients.

The change that has taken place in medicine and in hospitals is seen most forceably in the fact that 18 years ago 65 to 75 percent of the total area constructed in hospitals went into patient bed areas. The balance of the space went to meet all other service needs. Today perhaps 20 percent of the total area constructed goes to patient beds and the balance for diagnostic and treatment facilities and service areas needed to serve the patients.

You are well aware of the fact that the cost of care has increased greatly. This cost involved medical progress and change, facility and equipment costs; but most of all, personnel costs. This latter is perhaps 75 percent of the total. Personnel needs have gone from 1.5 personnel per patient 18 years ago to 2.8 personnel per patient on the average today.

Though great improvement has been made in the salaries of hospital personnel, there is still considerable need for further improvement to make these salaries comparable to the education, qualification, and responsibility of the individuals involved. This is going to take a lot more money.

The original cost of the hospital is its least cost. The year-by-year cost of operation is the really big factor. Empty and unused beds are wasteful and increase the cost of care to patients who are occupying beds. This is a serious problem for smaller hospitals since many of them run an occupancy rate of well, well below what is considered to be an economic level. Even greater care must be taken that we do not construct unneeded hospital facilities and that we avoid wasteful duplication of both facilities and services. Better planning and greater cooperation and control are an absolute necessity.

Great pressure is being exerted both from within and without the health field for higher standards of care. Higher standards and improved quality generally mean higher costs. Higher quality of health

care will require more and better, larger hospitals and a greater concentration of very costly diagnostic facilities together with the most efficient use of highly skilled personnel who are in short supply. It also means higher standards of care in small facilities and stricter adherence to limiting the care undertaken in such facilities to relative levels of ability.

As the diagnosis and treatment of patients becomes ever more intricate and specialized, it behooves us to concentrate facilities and services and strengthen the ability of such centers to perform.

There is ample evidence of the necessity for basic changes ofemphasis in facility planning and construction, and for the kind of thorough reappraisal of the Hospital Survey and Construction Act and the role of the Federal Government which you have arranged before this committee.

The voluntary health system of the country is unique. It has enormous potential for the future. To move ahead in some area of need we must have the help of Government. We most earnestly urge that the Federal Government now plan to assist the country to move ahead in this area of serious neglect; that of modernization of existing hospital plants.

To do this may require a reappraisal of Government expenditures for totally new facilities, but we do hope also with a resulting decision to provide substantial new financing. We have some specific recommendations in this regard which Dr. Steinberg will discuss with you.

In 1958, when we appeared before the committee, the cost of construction of hospitals averaged somewhat in excess of $17,000 per bed. The cost today is over $20,000 per bed. Thus the delay in meeting needs becomes ever more costly.

In 1958 we appeared before this committee and outlines the situation with respect to hospital construction. I wish to quote the following statement presented at that time:

While the Hospital Survey and Construction Act has accomplished a great deal to improve the Nation's hospital plant, it has done this primarily in terms of new construction and has left largely untouched a serious and rapid growing need for renovation and modernization of our older hospital facilities. The channeling of these funds so largely into new construction rather than renovation, together with the emphasis which the act places on rural areas, has produced in many cases a pattern of modern and efficient small hospitals in regions surrounding metropolitan areas, while the metropolitan areas themselves are served by institutions many of which are far from being either modern or efficient. The plight of these urban hospitals and the growing deficiency of their physical plant are important to the total health picture, not only because of the large population served by these hospitals, but because as centers of both medical research and professional training they exert influences which are felt throughout the Nation.

The picture has not improved; it has simply become worse.

In 1956 the association conducted a survey, in collaboration with the U.S. Public Health Service, of the modernization needs of hospitals. This study indicated at that time a total need of well over $1 billion. Of the 2,634 hospitals covered by this survey, 435, or one in six, were more than 50 years of age.

There are obsolete facilities in every section of the country. In 1960, the Public Health Service, in a further effort to determine the magnitude of the problem of modernization, undertook a nationwide study in cooperation with the State hospital construction agencies