Mr. BENNETT. The bill we are considering does not provide any funds for this year?

Dr. TERRY. That is right, sir; 10041 does not provide funds for

1965.

Mr. BENNETT. That is our chairman's bill?

Dr. TERRY. Mr. Harris' bill; yes, sir.

The CHAIRMAN. Would the gentleman yield?

Mr. BENNETT. Yes; I just wanted to get that cleared up.

The CHAIRMAN. As was thoroughly brought out during the course of the hearings when Secretary Celebrezze was here. When the administration sent up their bill first, it provided $150 million authorization for the total program. This amount was included in the budget.

Under the original proposal, $100 million was to go into the current Hill-Burton program, and $50 million was to be diverted to the new program for the modernization of facilities. Senator Hill objected strenuously to reducing the amount for the current Hill-Burton program. As it was developed during the course of the hearings with Secretary Celebrezze, I had what I thought was an understanding with Dr. Terry's organization that for the year 1965 we would carry the same program forward under the Hill-Burton program, and the total amount would be used for that purpose.

The following year, 1966, the total amount in the Hill-Burton program would be reduced and an amount set aside for the modernization. For 1967, more reduction in Hill-Burton and more for modernization, and 1968 and 1969 the same. For that reason, when the bill was introduced, it did not carry with it the transfer of $50 million for modernization for 1965 to be taken away from the Hill-Burton formula. Whether it has been brought out again this morning or not, I do not know, but I would say to the gentleman that under part of the bill providing for the continuation of the Hill-Burton program one formula is used for the allocation of funds. Under the new formula for the modernization program to be authorized, a different formula would be used, and the different formula would lean toward the urban areas more so than would the formula under Hill-Burton.

That is the reason that the change was made when the bill was introduced. I might say that I thought we had an understanding with the agency that the program set out in my bill would be acceptable. But when the Secretary came here, he brought his statement up in which he urged the committee to adopt the original recommendation that was made.

I took it up with him in the hearings to find out if we did have an understanding, and it developed that we did not have. He felt compelled to give the original program since that was submitted by the President and approved by the Bureau of the Budget and became the administration bill.

I hope that explains the situation. I still think that what is proposed in this bill would be satisfactory, too. Senator Hill had a different idea altogether and he didn't want to go along with the proposed new modernization program. He introduced the bill with a different kind of approach than we did here.

Dr. TERRY. That is correct. As a matter of fact, there is a provision in the bill introduced by Senator Hill whereby the State may

upon election, transfer up to a third of the new construction funds to modernization. In other words, there would be none specifically allocated for this purpose.

Mr. BENNETT. The money under Mr. Harris' bill for 1966 would go under a formula to the various States?

Dr. TERRY. Yes, sir.

Mr. BENNETT. Does a State not needing money for modernization have the opportunity to build a hospital?

Dr. TERRY. In Mr. Harris' bill there is a provision that if sufficiently high-priority modernization projects are not submitted to the State Hill-Burton agency, it could transfer modernization funds to the general funds for initial new hospital construction.

Mr. BENNETT. Who makes that decision?

Dr. TERRY. The State Hill-Burton agency makes the decision. Mr. BENNETT. As to whether they want to use it for modernization or whether they want to use it for new construction?

Dr. TERRY. Yes, sir. Basically it would be allocated to them for modernization, but if they felt that they did not have a sufficient number of projects for modernization of a sufficiently high priority, the funds could be transferred to the general construction program.

The CHAIRMAN. Would the gentleman yield further on that point for further clarification?

Mr. BENNETT. Yes.

The CHAIRMAN. The approach under this bill is to provide that the States may at their election have a total authorization for new construction up to $150 million each year. That is the way the gradual transfer would work.

Mr. BENNETT. I think it would be unfair to delegate a State money for modernization and upon finding they didn't need the money for modernization, they would have to give it back when they did need it for new construction. I am glad that is clarified.

Mr. ROBERTS. The gentleman from Michigan, Mr. Bennett.

Mr. BENNETT. I wanted to say, Dr. Terry, at the outset that I have always supported the Hill-Burton program, ever since I have been here and I think it was enacted in the term prior to my coming here, and I would like to support it again, and intend to support it again.

But I do have some questions to ask you in reference to the scope of the program, but also in reference to some of the new phases of the program that you have suggested we enact. As I understand it, this bill calls for an overall authorization of $1,385 million for 5 years. That is the Harris bill.

Dr. TERRY. I believe, if I may, the total of the Harris bill for 5 years is $1,397,500,000.

Mr. BENNETT. In the last 15 years, is it correct that we have spent under Hill-Burton $1,900 million?

Dr. TERRY. That is roughly correct. I believe it is $1 billion 8 hundred-odd million.

Mr. BENNETT. How much have we spent in the Hill-Burton program in the last 5 years?

Dr. TERRY. I would have to total that, but I can give it to you by years, if you like, sir. In 1964, $220 million; 1963, $220 million; 1962, $209.728 million; 1961, $185 million; 1960, $185 million. So that the scale has been from $185 million in 1960 up to a total of $220 million available in each of the last 2 years.

Mr. BENNETT. This authorization doesn't include any money that has been provided for under H.R. 12?

Dr. TERRY. No, sir.

Mr. BENNETT. Nor under the mental health?

Dr. TERRY. That is correct.

Mr. BENNETT. When he was testifying here, Dr. Wright of the American Medical Association, said in his opinion the original objective of the Hill-Burton Act was mostly achieved. What is your opinion about that?

Dr. TERRY. I think we have made substantial progress, Mr. Bennett. If one looks back in terms of the estimated need and what was actually available, we have risen over the past few years in the general hospital bed category to about 83 percent of the general hospital beds needed today. That compares with meeting only 59.4 percent in 1948. We have made some real progress-1948 was the first year of the actual operation of the Hill-Burton program.

Mr. BENNETT. If 83 percent of the needs have been met, why do you need the same amount of money for the next 5-year period?

Dr. TERRY. There are several factors that are involved. In the first place, even though 83 percent of the need is met at the present time, the remaining 17 percent consists of a very large number of beds. In addition to that the expanding population requires an increase in the number of general hospital beds.

Mr. BENNETT. When do you anticipate the need will be met 100 percent? Do you anticipate that time will ever come?

Dr. TERRY. I wonder if we will ever reach the 100-percent stage. Certainly it is not anticipated that we will be at that level within the authorization proposed in this bill for the next 5 years.

Mr. BENNETT. You have three new parts to the program that have been added. Two other parts have been combined. I want to ask you a question about those.

Dr. TERRY. Yes, sir.

Mr. BENNETT. Ás I understand it, the chronic disease hospitals and nursing homes under the proposed legislation have been combined in a category called long-term facilities.

Dr. TERRY. Yes, sir.

Mr. BENNETT. You are going to spend the same amount of money for the program but just giving it a different name?

Dr. TERRY. No, sir; that is not correct. The proposal is that the amount of money would be greater than the combined nursing home and chronic disease hospital authorization for this year. In other words, the present authorization is $20 million for nursing homes and $20 million for chronic disease hospitals. The proposal here is that we combine these into one category called long-term care facilities and increase the ceiling to $70 million. This would be an increase of $30 million above the present $40 million authorization.

Mr. BENNETT. That is almost doubling the present rate of spending. What is the reason for that?

Dr. TERRY. Our problem is this: Our program has over the years supplied larger numbers of general hospital beds than chronic disease or long-term care facilities. In addition, every year a larger proportion of our population is getting into the elderly group which requires the long-term care type of facilities.

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We are much less adequately prepared in this area than we are with general hospital beds. Consequently, it is our feeling that we need to place great emphasis on the construction of long-term care beds and facilities.

Mr. BENNETT. This legislation also provides for loans to profitmaking or proprietary type nursing homes, does it not?

Dr. TERRY. That is right, sir. It provides for the transfer of this program, which is in existence in HHFA at the present time to the Public Health Service.

Mr. BENNETT. Does that also include chronic-disease type hospitals? Dr. TERRY. Yes, sir.

Mr. BENNETT. I mean under the loan provision.

Dr. TERRY. It is not in the $70 million that I was talking about. This is a proposed grant program.

Mr. BENNETT. I understand that. I understand you are going to spend $70 million in grants. That is for nonprofit public type nurs

ing homes and chronic disease centers.

Dr. TERRY. That is right.

Mr. BENNETT. In addition to that there is also a program to make loans to profitmaking nursing homes. I don't know whether that goes to chronic disease centers or not.

Dr. TERRY. Actually, the character of those beds would be what we would refer to as long-term care beds. It is a separate program, as you indicated, and would be supported from our standpoint on a guaranteed loan basis rather than a grant.

Mr. BENNETT. It is financed in a different way, but it is the same type of facility once constructed.

Dr. TERRY. That is right.

Mr. BENNETT. It fulfills the same need.

Dr. TERRY. That is right, sir.

Mr. BENNETT. In spite of authorizing loans to proprietary profitmaking organizations to build nursing homes, you are almost doubling the amount you have heretofore spent on grants. Do you think that is justifiable?

Dr. TERRY. I have no question in my mind but that it is justifiable. I think this is one of the greatest needs in the whole facilities program, that is, in the construction of adequate facilities to care for the long-term patient. I think this is particularly true, Mr. Bennett, when you take into consideration the heavy needs that exist and the ones that are going to accumulate, so to speak, over a period of time. If we don't make provisions for such facilities we are going to get into a situation where many of our more expensively constructed and expensively operated hospital beds will have to be used for the long-term care patients who could be cared for in chronic disease. facilities.

The States report as of this time, a combined report from the State agencies, that there is an additional need for 530,000 beds in this category.

Mr. BENNETT. You gave us the percentage of the need that has been met in hospital construction. Do you have the percentage of the need to be met in nursing home construction?

Dr. TERRY. Yes, sir. We estimated that as of 1963, we were meeting 34.5 percent of the existing need for long-term care beds.

Mr. BENNETT. What about now? Is that a year ago?

Dr. TERRY. Yes, sir. Those are the latest figures we have. It is based on reports from the States in terms of the number of facilities in existence and what they felt they needed at that time.

Mr. BENNETT. You anticipate with this expanded program of grants for nursing homes, plus the loan program, that there will be some overlapping and duplication of these types of facilities in communities. What plans do you have in that regard.

Dr. TERRY. No, sir. As a matter of fact, I think this legislation does two things to help prevent that, Mr. Bennett. One is a provision in the bill to encourage and to support areawide planning, which would include all types of facilities in a given area.

The second thing that I think is important is that in bringing this guaranteed loan provision for the proprietary or profitmaking nursing home in the same shop in the Public Health Service, so to speak, with the nonprofit nursing home program, and working through the State agencies we will get the best coordination possible.

I think both of these provisions will actually result in some improvement in this respect.

Mr. BENNETT. You already have the loan program in part?

Dr. TERRY. We have a loan program at the present time where loans can be made available by the State if the institution does not wish to accept a grant. A loan may be made in lieu of that grant.

Mr. BENNETT. What authority do you have in having the loan approved?

Dr. TERRY. I am not sure I understand that question.

Mr. BENNETT. Do you have some control or some jurisdiction over the loan program for nursing homes? What kind of jurisdiction is that?

Dr. TERRY. We do not have any jurisdiction over the present proprietary loan program which is administered in HHFA. We do consult with them in overall terms, but we have no real jurisdiction.

Mr. BENNETT. If the Public Health Service objects to a loan for a nursing home, can the HHFA make a loan anyway?

Dr. TERRY. Actually, we do not review the individual projects that come to HHFA. It is on a broader basis that we consult with them— in terms of standards, needs, and so forth.

Mr. BENNETT. I understand that they insure the loan and not make the loan. I understand that to be the case. I misspoke in saying that the Government is making the loan. Actually, as a practical matter they are making the loan when they guarantee up to 100 percent because they are responsible for it if the borrower doesn't pay.

My concern is mainly why did the Public Health Service get itself involved in a strictly financing of loan-type program that is already, I think, adequately administered by the type of agency that is well suited for that purpose?

Dr. TERRY. Mr. Bennett, in the first place you should take into consideration that this bill also provides for guaranteed loans to be made to nonprofit health institutions and facilities. I think it is perfectly natural and realistic, whether the Federal Government is loaning money or guaranteeing loans of money to proprietary or to nonprofit institutions in the field of health and medicine, that the two should be