and metropolitan planning bodies. Direct reports were obtained from 25 metropolitan areas each having more than 2,500 general hospital beds, and that is 2,500 in each area, and sample reports were received from 32 smaller metropolitan areas.

This study indicated a total cost of need for modernization of $3.6 billion. This figure was indicated to be approximately 20 percent of the total assets of hospitals in the United States. Obsolescence, I should point out, is not solely a matter of age; rapid advances in medical techniques have rendered many institutions inefficient despite their relatively recent construction.

We believe the Hospital Survey and Construction Act is a unique and highly successful demonstration of Federal-State relations at their best. It derives its real strength

* from the fact that it is Government and voluntary enterprise working together.

We believe that the following basic principles which were built into the program have had much to do with its success:

1. A demonstrated need, substantiated by study and survey.

2. Local decision of greatest need and priority for expenditure of funds.

3. Maximum administrative authority given to the States.

4. Joint financing by all parties concerned.

5. General coordination and supervision by the responsible Federal Government agency.

6. Requirement that there be assurance of local responsibility and intent for the operation of any facility.

7. A Federal council to review administrative procedures to insure that the Federal administrator does not act in an arbitrary manner.

8. A formula for the division of funds which recognizes the relative needs of different sections of the country and their ability to meet these needs.

9. Procedures which minimize political influence.

In conclusion and before Dr. Steinberg discusses the details of the bill, I wish to emphasize the belief of the American Hospital Association that the Hospital Survey and Construction Act is still urgently needed and should be continued for the provision of new facilities; and that various changes should be made in the act to improve its operation and that it should be restructured so that a major new addition in the form of a program for modernization of facilities is added to the act.

This completes my formal statement, Mr. Chairman. Dr. Steinberg will continue with the second part of our testimony.

The CHAIRMAN. Thank you, Mr. Nixon. I believe it would be appropriate for us to have the complete story from the association before we attempt any questions that members might have, so, Dr. Steinberg, you may continue.

Dr. STEINBERG. Thank you, Mr. Chairman. I am Dr. Martin Steinberg, having already been kindly introduced by Mr. Nixon. I would like to say a word, however, about our particular role in New York in this very pertinent field of renovation and modernization. I am the chairman of the Committee on Physical Facilities of the Hospital Survey and Planning Council of Southern New York, which encompasses an area of 14 counties, including in and around New York City, and

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our job is to study and know all of the hospital facilities in the 14 counties and to advise governmental, philanthropic, and other agencies with regard to these facilities and to study them completely.

We also are the local agency for the State hospital survey and construction authorities in Albany, N.Y., and so we have built up over many years a very intimate knowledge of some of the things in this bill. I thought I would give you an overview of that.

There are several provisions in H.R. 10041 in which the American Hospital Association has a particular interest. We are in general agreement with the intent of the bill. However, I will devote a major part of my comments to the area of modernization which is, we feel, the most important new subject set forth in the bill.

I will discuss in order the sections, titles, and paragraphs as they appear in the bill for your own ability to follow. I start with section 318, special project grants for assisting in the area-wide planning of health and related facilities.

We strongly support the need for area-wide planning of health facilities. The continued cost involved in the operation of health facilities demands that there be advance planning and control so as to avoid any unnecessary duplication of facilities and service within a given community.

Recently our association joined the United States Public Health Service in an extensive study of this subject and in the development of a basic document setting forth the principles which should guide area planning agencies. This document, called area-wide health planning for hospitals and related facilities, has been widely distributed and is considered as a fundamental guide. I have a copy of this text which I will be glad to leave with you, Mr. Chairman, if you desire. The CHAIRMAN. You say starting with section 318 in the bill. Dr. STEINBERG. Yes.

The CHAIRMAN. What page is that on?

Dr. STEINRERG. Page 2, line 1.

The CHAIRMAN. All right.

Dr. STEINBERG. At the time the Hospital Survey and Construction Act was initiated, we all had a vision that the program would gradually work toward coordinated planning and operation of health facilities. We have not as yet moved very far in this direction. However, it seems to us ever clearer that we must now begin to take such steps. We believe that area-wide planning is the best mechanism to bring this about.

We have for several years recorded our support of the Federal Government providing "seed money" to develop areawide planning and to assist in demonstrations which would provide experience and guidance that is needed. Through the research and demonstration funds provided under the Hospital Survey and Construction Act, a good start has been made. However, we have not felt that Government support should be provided for the continued operation of such endeavors beyond the initial stages of development.

These areawide planning agencies are intended to be voluntary community organizations, and we believe that their support should come from voluntary sources.

The proposal in the bill, which suggests continued financing of areawide planning agencies for the full period of 5 years, may well carry

such support beyond the point of initiation and demonstration and, in essence, might become continued Federal financing for their operation. We would suggest, therefore, that the proposal be amended to limit such support to a 3-year period for any given project. This should have the further advantage of providing the means to assist a greater number of projects than would otherwise be possible.

TITLE 6, SECTION 600-ASSISTANCE FOR CONSTRUCTION AND MODERNIZATION OF HOSPITALS AND OTHER MEDICAL FACILITIES

With the exception of two new provisions, the remaining provisions of this section are generally those which have existed in the past under the Hospital Survey and Construction Act. The two provisions are those providing for proprietary nursing homes and for modernization of facilities.

We look upon the inclusion of proprietary nursing homes in the program with considerable misgiving. The association strongly supported the passage of legislation providing for guaranteed mortgage loans to proprietary nursing homes under the Housing Act.

At that time, we urged an amendment to the legislation which was accepted. Our recommendation was that determinations as to the need for proprietary nursing homes in a given area should be certified to by the United States Public Health Service on the basis of criteria developed under the Hospital Survey and Construction Act. We felt that such determinations were necessary to make sure that the Federal Government would exercise some control over the construction of both nonprofit nursing home facilities and proprietary facilities.

It seemed to us that, with such certification by the health arm of the Government, it was quite satisfactory that the administrative and banking aspects of the program were handled by the Federal Housing Agency which was already staffed and knowledgeable in such matters. To the best of our knowledge, this has worked satisfactorily. We have serious doubts as to the wisdom of mingling nonprofit facilities and proprietary facilities in the same program.

We are particularly pleased that the bill does include the encouragement toward new developments and improvements in health facilities and their planning by the provisions for demonstration and research. We have always supported the need for Federal financing for medical research, and we believe it is highly essential that this move ahead, hand in hand, with research pertaining to health facilities and their administration.

SECTION 601-AUTHORIZATION OF APPROPRIATIONS

We fully support the expanded funds proposed for construction of long-term care facilities and the combining of the previous separate categories of chronic disease and nursing homes. The unmet need for such facilities amply supports the proposal for a substantial increase in the funds to be made available.

The bill proposes to continue grants for the construction of rehabilitation facilities. We support the need for Federal assistance to provide such facilities. However, we were pleased that the Congress amended the Hospital Survey and Construction Act in 1961 to assure

that encouragement would be provided for the development of such. facilities on a broad basis. We recognize the special need of "comprehensive" facilities which involve services other than purely medical services; that is, vocational and social guidance.

However, we feel that encouragement should be given for the widest possible development of rehabilitation facilities even though they notbe comprehensive in character. Therefore, we oppose the provision that would practically limit rehabilitation facilities to university centers. We feel this provision will make for less facilities than are clearly needed throughout the country.

The CHAIRMAN. I don't like to interrupt you, but will you makethat statement over again. You said it a little different from what we have in our prepared statement. Let me see if you said the same thing in a different way.

Dr. STEINBERG. Good. I will read it again and then I would like to say a word about it. Therefore, we oppose the provision that would practically limit rehabilitation facilities to university centers. We feel this provision will make for less facilities than are clearly needed throughout the country.

The point there is that we, of course, want the most comprehensive rehabilitation facilities and we recognize that these can best be constructed in the university centers. We are concerned, however, in a practical situation that there just aren't enough university centers: to furnish the rehabilitation needs of the country and we would hope, therefore, in addition to these, that latitude be given for the development of complimentary centers which are not as comprehensive.

We are talking now about the relatively small number of university centers. We are not arguing against quality here. What we are. saying is that we would hope to complement the best of quality with perhaps less comprehensive centers in areas other than university hospitals.

The CHAIRMAN. Doctor, as I said, I did not want to interrupt you, but when we need a clarification I think interruptions are justified. You have just said that the provision in the bill as you interpret it would limit the development of such facilities to university centers. You said in your statement that the bill would establish a priority for rehabilitation facilities in university centers.

To me those are two different things. Which do you understand to be the fact? Does it establish a priority, or does it limit the development to university centers.

Dr. STEINBERG. It establishes priority, and in the sentence I said, "would practically limit." We feel that in practice it would be very difficult to supplement these. It is a matter of degree.

The CHAIRMAN. All right; just so we have it clear.

SECTION 601 (B) MODERNIZATION OF HOSPITAL FACILITIES AND OTHER MEDICAL FACILITIES

Dr. STEINBERG. As Mr. Nixon has already stated, the Hospital Survey and Construction Act has since its enactment in 1946 made a substantial contribution to the development of needed health facilities in the Nation. At the time the program was started, it was essential that first priority and particular attention be given to areas of the country

which were without hospital facilities, and therefore, where the public was not likely to have available to them the benefits of modern medical advances.

It was further sensible to direct the program toward providing new beds. The picture today is vastly different. Though a considerable need still exists for additional beds and other health facilities, the urgent need of rural areas has been met in substantial part in most sections of the country. We believe we are now at the point where the great unmet needs of our large urban population centers must be cared for. We consider the surmounting and major problem of health facility needs in the Nation today to be that of the older outmoded hospital and with inefficient and often unsafe plants. This problem, though it exists in large part in metropolitan centers and in the older cities of the country, also exists to an appreciable extent in older small facilities in small cities and towns.

As Mr. Nixon stated, a growing awareness of the problem induced the association to make a nationwide questionnaire study. This revealed a need for modernization of over $1 billion and a later and more comprehensive study made by the U.S. Public Health Service indicated a figure of $3.6 billion was needed for modernization.

Since that time, several areas have undertaken regional or metropolitan studies. In the city of New York a project was underwritten whereby a team of architects and engineers visited individual hospitals and developed detailed figures on the basis of on-the-spot surveys. For that city alone, it was determined that the modernization of existing hospitals would require an expenditure of $250 million.

This study in New York serves to validate the opinion of many experts that the nationwide figures have understated the size of the problem. In New York it was found, for instance, that the expenditure of $120 million was necessary merely to replace non-fire-resistant facilities, and I tell you that the $250 million figure is really understated because by the time we reached that figure we were trying to get up the needs so that we could mount a capital fund drive among the population and corporations in New York, and when we reached the $250 million things slowed down. There was just no use in going on. We never did have the drive.

I might say even among the few very large hospitals in New York right now there are two hospitals there, the Cornell and Columbia teaching centers, Presbyterian and New York Hospitals, which have surveyed their own plants and would need about $30 million, two of them, just to bring their plants up to what they would consider the modernization standard.

Mount Sinai, which I represent, would need about $11 million if we were to do all of the things that we think are necessary.

I do want to say at this point one thing, Mr. Chairman, and that is that when we talk about modernization, we must deal with it in statistics, of course, but actually to the administrator and the staff of a hospital these are terribly important things because the business of good transport, of efficient facilities, is actually a very important incident in the health of our patients. We really feel that they are being compromised unless we can do this well, and there is another and important point and that is really an economical one.