fact is that we are saying they can't afford to do it. You are saying, "Well, they ought to be able to borrow money at higher rates."

Mr. YOUNGER. No, I didn't say that. I said at a higher percentage. Dr. STEINBERG. You mean a higher percentage of the total cost? Mr. YOUNGER. Yes.

Dr. STEINBERG. I am sorry, I misunderstood you. I think that that would be a helpful provision, yes. The closer they get to the full job, the easier we make it for them, the sooner we will have these modernized facilities. I would agree with you.

Mr. YOUNGER. I am not talking about the rate.

Dr. STEINBERG. I would agree with you, Mr. Younger, yes.

Mr. YOUNGER. For instance, you will have States where they are out of money. The State agency will say, "Here is a community that needs a hospital, but we have no money for a grant." Certainly, they ought to be permitted, even though they are a nonprofit institution, to be able to borrow on a 90-percent insured loan just the same as a proprietary facility.

Dr. STEINBERG. We certainly agree with you, absolutely.

Mr. YOUNGER. So your recommendation, with some adjustments, I think is very good. In my opinion, we will have to change this provision in the bill.

Dr. STEINBERG. Thank you.

Mr. YOUNGER. Thank you very much.

The CHAIRMAN. Mr. Moss.

Mr. Moss. Doctor, I want to thank both you and Senator Nixon for a very excellent statement.

On the matter of modernization of hospitals, where would the concentration of hospitals having the most critical need for modernization be? Would they be in urban centers, the larger urban communities, or the smaller communities?

Dr. STEINBERG. They would be in the urban centers. As a matter of fact, not exclusively, but certainly the larger need would be there. The study of the Public Health Service indicated, dividing the country into regions: Middle Atlantic, New England, and so on, indicated that the greatest concentration of need was in the Atlantic seashore, the Middle Atlantic States; that the second greatest area of need was the central lake region; and the third in order were the Pacific coast, California, and the Pacific coast States. But the greatest need was in the larger metropolitan areas, areas which had a concentration of beds of, let's say, 2,500 or more in one metropolitan area. There is where the greatest need exists.

Mr. Moss. In those areas, isn't it true that the very hospitals needing modernization serve far beyond their community?

Dr. STEINBERG. That is almost universally true; yes, sir.

Mr. Moss. And they provide facilities, highly specialized skills and techniques, unavailable even in the smaller and newer hospitals? Dr. STEINBERG. That is true.

Mr. Moss. As you have pointed out here, of great significance to the practice of medicine throughout the Nation, they undertake the training of the doctors who ultimately will go into the smaller centers. Dr. STEINBERG. Certainly.

Mr. Moss. So, we are concerned here, not only with the modernization of a plant to serve the large community, but, in fact, the modern

ization of plants which are called upon to provide the more sophisticated services to all communities in the Nation.

Dr. STEINBERG. I wish I could say it so eloquently, Mr. Moss. Mr. Moss. In New York, certainly, you receive patients from many sections of the country, who come to Mount Sinai Hospital, for example. I know that, in San Francisco and Los Angeles, the large hospitals there frequently take care of people from the rural areas where the specialties are not available, the very costly equipment is not available.

So it is not solely the question of the ability of these communities to underwrite this need, but it is one where they can legitimately seek the assistance of others in meeting needs from which others will also benefit.

Dr. STEINBERG. True.

Mr. Moss. I think the table on interest rates, related to cost per patient per day, attached to your statement, is most significant. The proposal for direct loans is in an area, is it not, where a hospital is faced with problems that are rather unique in attempting to finance expansion or improvements?

Dr. STEINBERG. That is true.

Mr. Moss. They haven't the ready availability of money, or it is not on terms which would be comparable to businesses or undertakings of more of a profit characteristic. I think the Secretary yesterday pointed out the average length of time for most of these mortgages goes between 12 and 14 years. So, this isn't an area where there is the large group of private financial interests anxious to undertake the writing of these mortgages. If Government entered in, it would not be, in a sense, the competitor that it might be if it decided to finance the construction of offices.

Dr. STEINBERG. That seems to be so.

Mr. Moss. If you were able to get the money at the average rates the Treasury pays for the funds borrowed by our Government, it might give you a 1 percent advantage. In looking at your table, I notice that the difference between, say, 4.5, which might be the effective rate if the average Government rate were used, and 6.5, which could well be the rate if private financing were used, amounts to approximately $1 per day per patient.

Dr. STEINBERG. True.

Mr. Moss. If we go to the contemplated rate mentioned in the bill, of 5 percent, plus the half percent for services and mortgage insurance funds, there is a 50-cent differential per patient per day. So, it is of significance in the budget of the average patient; yet, it would not add materially to the cost of Government in undertaking to use its credit to enable the hospitals to finance their improvements at a rate that is less than the open market would provide.

Dr. STEINBERG. That is very true.

Mr. Moss. I think you have given us a great deal to think about, and I share your concern over the need for some very firm answers in meeting the problem of modernization. Thank you.

The CHAIRMAN. Mr. Keith.

Mr. KEITH. No questions, Mr. Chairman.

The CHAIRMAN. Mr. Dingell.

Mr. DINGELL. Gentlemen, I was not able to be present when you gave your statement, but I have read it with a great deal of interest. I believe it will be a very helpful statement to the committee, and I commend you for it.

You have discussed several points which I think deserve particular attention by the committee. First is the problem of modernization of existing plants. I assume you gentlemen strongly endorse, as I note in your statement, the principle that the Federal Government should revamp the Hill-Burton program to provide for substantial expenditure of funds on the Federal-State cooperative level on existing plants. Am I correct on this?

Dr. STEINBERG. You are entirely correct.

Mr. DINGELL. I note that you give comments as to the method of expenditure of these funds. Am I correct in infering that you believe that there should be a higher level of expenditure of funds than that which is provided in H.R. 10041?

Dr. STEINBERG. That is what we ask for.

Mr. DINGELL. I believe your statement points out the level of funds expended for this purpose which you gentlemen feel is necessary; am I correct?

Dr. STEINBERG. That is true.

Mr. DINGELL. Could you give us, either at this time or by submitting additional information to the committee, an understanding of what percentage of the real needs for modernization would be met by the committee bill, H.R. 10041, and by the administration proposal, and also by the proposal which you discussed this morning, which I believe is substantially the same as the administration's proposal-am I correct?

Dr. STEINBERG. I believe it is. We talked in terms of $420 million over the life of the bill, as compared with $160 million, which is written into the present bill.

Mr. DINGELL. And I believe the administration proposal is $380 million.

Mr. WILLIAMSON. $340 million.

Mr. DINGELL. Would you give us your best estimate, if you could, gentlemen, of the amount of revamping and modernization of the hospital structures of this Nation, in relation to the need that would be accomplished under these three different proposals?

Dr. STEINBERG. I said in the statement, Mr. Dingell, that if we, indeed, were to go to $420 million, this would really supply an effective beginning; and I said that advisedly. This is our position. The latest full study which was conducted by the U.S. Public Health Service, in association with our association indicated that $3.6 billion would be necessary to meet the modernization needs. Mind you, this does not add any beds or any new facilities, or new types of facilities. This is just to replace or to modernize existing facilities which are needed. Therefore, we are talking in terms of $420 million.

Mr. DINGELL. It would be about one-tenth of the facilities, then. Dr. STEINBERG. And that is over a period of years. I must call your attention to the fact that, as each year goes by, the bill gets bigger. One hundred million dollars a year, it seems to us, as we looked atand I am not sure of the statement-was just about the rate of obsolescence. On the basis of the $3.6 billion estimate of nationwide needs

for modernization developed by the Public Health Service, it would appear that, using a 50 percent average matching grant, the proposal of the American Hospital Association would result in meeting 23 percent of the national need over a 5-year period. The administration's proposal would meet nearly 19 percent of the need, and H.R. 10041 would meet less than 9 percent of the need.

Mr. DINGELL. I think this is so, and, of course, I am in complete sympathy with your viewpoint on this. I would like to treat, if I may, very briefly, a couple of other things that concern me.

You state that you look upon the inclusion of the proprietary nursing homes with considerable misgiving. You are aware that this is a transfer of a program, which has previously been administered by FHA, over to the administration by the U.S. Public Health Service. I think you gentlemen, and the fine organization which you represent, would not view this with great concern. Am I correct?

Dr. STEINBERG. We are concerned about the implications and what this might bring. We think they are doing pretty well. We were indeed among those that advocated that they do get mortgage insurance, because we recognize that there will simply have to be more nursing homes and there are not enough volunteering. Proprietary will have to be in there. We felt this could be adequately handled, as it has been, according to the best of our knowledge, by another agency. If we get them into the same kind of a bill, the same kind of a program as the nonprofit people are in, you begin to mix two kind of things, such as oil and water. They don't mix. What we are concerned about is that either the nonprofit will suffer or the proprietary will begin to get some of the considerations that they are not entitled to.

This is not just a dog-in-a-manger attitude. What we are saying is, on the one case we are talking about agencies who have a communal job to do and do it on the basis of need. On the other hand, you have a group who are doing a job, which is useful, but who do it on a profit basis. We think that the two don't mix. We are concerned about what is going to begin to happen if you mix them under a program. We feel it is not particularly necessary.

Mr. DINGELL. I note there is no mixing under the program provided for in H.R. 10041. They are simply all brought under the same bill and all brought under the administration of the same agency. I am sure that you will agree that FHA has less understanding of hospital and health problems than does the Public Health Service.

Dr. STEINBERG. They do, except with regard to the financing of the mortgages. That is the only part we are discussing now.

Mr. DINGELL. I am sure that the understanding of the two agencies with regard to financing would be approximately equal. a fact?

Isn't this

What we

Dr. STEINBERG. I am not sure that this would be a fact. are concerned about is that once you get them under the umbrella of an agency, such as the Public Health Service, which is thinking in terms of an enormous bill, an enormous job, and how it is to be done by the institutions which are nonprofit institutions, that in order to now begin to think in terms of proprietary hospitals, except with regard to the financing of mortgages, would be, we think, an unnecessary complication. We would hope that they would not be brought

in. We don't see the value of bringing them in when they apparently are getting their mortgage financing through another agency. As far as we know, it is being done all right.

There are points at which we disagree very few, I am glad to say. Mr. DINGELL. Gentlemen, I do appreciate your appearance this morning and your very fine statement.

Thank you.

The CHAIRMAN. Mr. Broyhill?

Mr. BROYHILL. No questions, Mr. Chairman.

The CHAIRMAN. Mr. Rogers.

Mr. ROGERS of Florida. Thank you, Mr. Chairman.

As I understand from your statement, Doctor, or perhaps it is something that Senator Nixon has covered, the largest cost now is because of personnel.

Dr. STEINBERG. Right.

Mr. ROGERS of Florida. And this is reflected in the room charge, I presume?

Mr. NIXON. Not necessarily. The room charge many times is identified as cost, but it can't be a key always to it. This is the total cost. Mr. ROGERS of Florida. There are two or three statements that I wish to go into, if I may.

As I understand it, you say your organization does not have the facts necessary to give the committee as to the actual need for hospital beds. Mr. NIXON. That is correct.

Mr. ROGERS of Florida. Is this a function of your organization to try to keep up with this?

Mr. NIXON. This is an area we are moving into, more and more, and more concerned with than the planning program. But, generally speaking, the association concerns itself and its program primarily with the operation.

Mr. ROGERS of Florida. With the operation?

Mr. NIXON. Right. But it is concerned with it because of community interest.

Mr. ROGERS of Florida. Let me ask you this question. Do you think there should be included in this bill for any hospital which receives aid under the bill, a provision saying that for any patient recommended by a doctor to be admitted to such a hospital, admittance shall not be predicated in any way by the financial status of that person? I don't know whether this happens often or not, but I hear reports now and then of people who say "I went to the hospital, but before I could get in I had to fill out a financial form. Here I am ill, and so forth, and all this had to be done before I could be admitted."

And some people will say, "Well, I was turned away, because I couldn't get in, I couldn't put up a deposit."

What is your feeling on that?

Mr. NIXON. My feeling is, and I think this is generally true, there may be cases-and generally there might be a case of not having beds available that the hospital provides care for the man who comes there. H.R. 10041 contains a provision under general regulations, section 603, that the State plan shall include adequate hospitals, and other facilities, to furnish needed services for persons unable to pay, therefore. The regulations may also require "there will be made available in the facility for a portion thereof to be constructed or modern