Mr. YOUNGER. Doctor, will you turn to page 15 of the bill, please? Dr. TERRY. Yes, sir.

Mr. YOUNGER. On line 16, after "and," I propose to submit an amendment as follows, "and a majority comprised of representatives of consumers." In other words, let the consumers majority control that decision. Have you any reaction to that?

Dr. TERRY. At the moment, I don't see any objection to it, Mr. Younger. I have not had a chance to study it thoroughly but I don't see any objection immediately.

Mr. YOUNGER. Then a number of places where we have the proprietary views, to say proprietary or private, nonprofit, and include those both in the same category.

Dr. TERRY. No, sir. Private nonprofit and proprietary could not be included in the same category. When we speak of proprietary we speak of profit or potentially profitmaking organizations.

Mr. YOUNGER. This is in regard to the mortgage insurance.

Dr. TERRY. Yes, sir. But you could not put nonprofit institutions in with profitmaking institutions.

Mr. YOUNGER. Here is the theory. Unfortunately, it seems to me in this bill the proprietary hospitals and other facilities are given the privilege of having insured mortgages up to 90 percent.

Dr. TERRY. This is only nursing homes.

Mr. YOUNGER. Nursing homes and on hospitals also, they get in

surance.

Dr. TERRY. They get insurance?

Mr. YOUNGER. Seventy-five.

Dr. TERRY. Not proprietary hospitals.

Mr. YOUNGER. You mean no insurance at all for them?

Dr. TERRY. That is right, sir.

Mr. YOUNGER. In nursing homes, why should a nonprofit nursing home, if there are no funds available within the State, be denied the same rights that a proprietary nursing home receives?

Dr. TERRY. The program for proprietary nursing homes guarantees loans up to the 90-percent level. However, we feel that in a community project, whether it be a nursing home or hospital sponsored by a nonprofit type of organization, whether it is public or privately owned, that there should be enough support in the community to supply at least up to 25 percent of the total cost.

Mr. YOUNGER. That would be true, but if you have a nonprofit institution, and there are no funds available, there are no grants available, the funds have all been exhausted, why should they be denied insurance on the same basis that a proprietary nursing can secure?

Dr. TERRY. I think, basically, the problem arises here that you are dealing with different types of institutions in terms of your nonprofit as contracted with your proprietary.

Mr. YOUNGER. Certainly you are. But here is a nonprofit nursing home, for instance, that would be approved by your State agency, but the funds are all exhausted. However, they would like to build and get their mortgage insured. Why should they be limited to a degree more than the proprietary institutions?

Dr. TERRY. I think the question here is that if a nonprofit type of facility is to be built in a community and you can't get more support than that for it, it is in a very hazardous fiscal circumstance, in my

opinion, in terms of its long-range outlook. This is a community project in contrast to an individual or group business project.

Mr. YOUNGER. You are announcing a theory there, Doctor, that brings to my mind the reason why we should not shift this insurance from where it is at the present time to your Department. What you are saying is that if a proprietary group comes in and wants insurance, you give them insurance up to 90 percent, and that is all right.

They only have to furnish 10 percent. That is a perfectly good basis on which to insure. But if it is a nonprofit institution, then we have to have a whole lot larger basis in order to insure its continuance than a proprietary institution. Why?

Dr. GRANING. With Dr. Terry's permission, I would like to make two points in this connection, sir. The present 90-percent loan guarantee program of FHA is not a matter over which the Department of Health Education, and Welfare had any voice. We did not recommend a 90percent level for the Federal Government to give a loan guarantee to proprietary nursing homes.

We know that this is now an operating program at the 90-percent level. When one builds a hospital, for instance, we know in just 26 months the operating cost of the hospital tends to equal the cost of construction. If it is true that with reference to a nonprofit facility there cannot be marshaled enough community interest to put up 25 percent of the cost of building the facility, we do not believe it is in the public interest to encourage that area to build a facility.

We also do not think it is in the public interest for an institution to start operating with a very large indebtedness that has to be written off over a period of time. Our experience in hospital construction has led us to the conviction that when there is enough community support to put up their share the people feel involved in it and they want to make it successful, and this is why, sir, we have suggested that the maximum grant and loan to a nonprofit facility be 75 per

cent.

Dr. TERRY. Another point that might be mentioned in that respect, Mr. Younger, is that, in many of these instances where loans are involved for nonprofit institutions, there will also be grants involved for a portion of that 75 percent.

Mr. YOUNGER. I am giving you an example where there is no grant and there are no funds available, but it is an institution that is approved by the State. To go back to your argument, you have already testified that the program of insurance up to 90 percent which is now going forward with the FHA has been successful.

You have already testified to that. Now are you saying that it is not successful?

Dr. TERRY. No, sir. To be exact, Mr. Younger, the thing I said related to the administration of the program in FHA. Insofar as I knew the administration had been satisfactory. That was the term I used.

Mr. YOUNGER. That is right. As far as you know there have been no claims made on the Government as far as the insurance is concerned.

Dr. TERRY. I am not sure about that at all. I don't know.

Mr. YOUNGER. You don't know.

Dr. TERRY. I don't know positively or negatively on that question. Mr. YOUNGER. That is all, Mr. Chairman.

The CHAIRMAN. Mr. Pickle.

Mr. PICKLE. Doctor, section 644 of this bill provides grants in the field of research, experimentation, and design of hospitals. It further provides that no one grant would exceed $500,000, or in some instances not to exceed over 50 percent. I am assuming that wherever there has been a grant made by a previous Congress, or where a program is underway for the design of a hospital, you don't intend to

cut that out.

To be more specific, there was an appropriation made last year for the design of a new hospital at Georgetown University. This has been advanced to a point where I think they are getting underway

now.

Dr. TERRY. This would certainly not affect obligations which have already been made under current law.

Mr. PICKLE. It would not affect that?

Dr. TERRY. It would not affect that.

Mr. PICKLE. In other words, you would accept language that would exclude grants already made by the Congress?

Dr. TERRY. Yes, sir. I would doubt that the language is even necessary, but if the committee felt that it was, I would see no objection to it.

Mr. PICKLE. That is the only question I have now.

The CHAIRMAN. Mr. Long.

Mr. LONG. I have no questions, Mr. Chairman.

The CHAIRMAN. Does anyone else have any questions?

If not, Doctor, thank you very much for your appearance here this morning. Doctor, we brought you back, and your associates with you that were here before with Mr. Celebrezze, in order to get as fully acquainted with the proposed program as possible. We just have à different quarterback this morning.

Mr. LONG. Mr. Chairman, I think it might be in order to compliment the associates that Dr. Terry has with him on their ability to furnish him information rapidly and unobtrusively.

Dr. TERRY. The Surgeon General of the Public Health Service, with the multitude of responsibilities he has, would be a dead duck if he did not have a fine staff backing him.

Mr. LONG. You certainly do.

The CHAIRMAN. They should be all good, because they have had practice before. This is the second round within recent days.

This will conclude the hearings, and we will permit 5 days for any additional information to be filed. Now, we did the same thing when we concluded the hearings before and announced at that time that it was our intention to try to get this bill considered by the committee prior to the Easter recess, and then these other developments occurred. In doing so, I did inquire, Doctor, of your group about the record, and I learned that the transcript had not been returned and we did not even have a galley proof. I know you have a lot of work just like we do here. All of us have a lot of work. We will be unable to take this up until we do get all the record together.

Mr. BENNETT. I hope, Mr. Chairman, that we will be able to have the record printed before we take the bill up in executive session.

The CHAIRMAN. We will proceed with the record just as fast as we can and getting it printed, as we always do. It is going to be my intention to call the committee together in executive session on this the week of April 13. That should give plenty of time for everybody to get their material in and get the record printed.

Mr. BENNETT. If you give them 5 days from now, it will be plenty of time between then and the 13th to get the record printed.

Dr. TERRY. Mr. Chairman, I was not aware that this transcript was not back. It is in the Department, if it has not been sent back, and I shall certainly see that this gets right back.

The CHAIRMAN. It may have gotten back in the last day or two. At the same time there was to be supplied certain information, and one was a comparison of the costs in table form.

I want copies of that table for each member of the committee. I am trying to outline to you something of our problem. We need the information enough in advance to be able to study it to help us decide what to do. I am trying to announce a schedule far enough in advance so that everyone can prepare for it and be ready.

This is going to be another record this morning. It would be very helpful to the staff in getting the record together and to the Printer for printing, if you could have someone get this back just as soon as your time and convenience will permit.

Dr. TERRY. Mr. Chairman, after your pointed remarks, I can assure you there will be no delay in getting the copy back to you.

The CHAIRMAN. Thank you very much. Again, we are glad to have you back with the committee. I hope you enjoyed your experience in Geneva with the World Health Organization, and I am sure you contributed a lot to it as well as got a lot out of it.

Dr. TERRY. I did, Mr. Chairman. Before you came in, I remarked to the members of the committee about how happy we were to have two members of this committee as our congressional advisers this year. I think they did an outstanding job and we were grateful to have them. The CHAIRMAN. I am glad two members of the committee could be with you. We already have had some reports from them and we expect more.

This will conclude the hearings on this bill as announced.

Thank you very much.

Dr. TERRY. Thank you, sir.

(The following material was submitted for the record:)

TESTIMONY OF THE BLUE CROSS ASSOCIATION ON H.R. 10041 HOSPITAL AND MEDICAL FACILITIES AMENDMENT OF 1964

My name is Walter J. McNerney. I am president of the Blue Cross Association. The following statement is made on behalf of the member plans of the association which together provide health benefits to approximately 59 million citizens.

Blue Cross plans feel that the Hospital Survey and Construction Act, built on Federal, State, and local cooperation, has served several useful purposes. It introduced on a broad scale a concept of areawide planning and it stimulated the growth of needed facilities and programs. This stimulation was and is important. The public will not and should not have to tolerate unwarranted delays in the translation of advances in medical sciences into concrete and reasonably available services.

Blue Cross feels that the act should be extended, but wishes to underscore several considerations. In conjunction with construction and programing emanating entirely from voluntary sources, the act has involved the Government in

the construction of beds based on varying concepts of need; it has contributed in some part, through focus on acute inpatient facilities, to the imbalance existing among preventive, acute, subacute, and rehabilitative services; and it has put at times excessive emphasis on small hospital construction in areas where fewer and larger hospitals, with the existence of ever-improving transportation, would be more productive.

These rough spots are to be expected in programs that blaze new trails. It is important, however, to correct them on the basis of experience.

A matter of prime importance is the development of better planning criteria. In some sections of the country bed-need formulas call for almost twice as many acute beds per thousand population as in other sections. The proportioning of resources among types of facilities and services, such as general and specia hospitals, nursing homes, and ambulatory services, varies greatly also. Whereas the needs of the public differ somewhat by area, a broad range in measuremen cannot be defended.

Also of major importance is the need for discipline in the modernizing of o: expansion of old facilities and in the building of new facilities. Throughou the country there should be planning agencies that develop construction pregrams, based on the best information available, and that proceed, in every waj possible, to relate major building changes or new building to areawide plan. Presently a few urban areas through voluntary planning councils are doing a highly commendable job backed up by State agencies; some State agencies, lin.ited largely by the influence of Government money, are attempting to promote continuity of care through a concept of regionalization; but, in fact, many areas of the country, while they might have paper plans, have little more. Ways must be found to increase the number of metropolitan planning councils, to enlarge their geographical scope, and to tie them together into State or, where appropriate, multi-State units. The council should concern themselves not only with acute general hospital care, but also with a broad range of health services. it is an established fact that once a hospital bed is provided there is a strong tendency for it to get used and, as a result, to increase the community health bill. On top of initial capital costs follow years of operating costs. Given the grow

ing costs of hospital and other health care and the growing percentage of personal consumption expenditures needed for proper health care, effective action should not be delayed.

Amendments to the Hospital Survey and Construction Act should make firm provision for the development of planning criteria so that concepts of need are not so widely variable. Strong support should be given to the development of voluntary planning organizations on market trading area and State levels. These should work in cooperation with State agencies and provision should be made for experimentation with several patterns. Also funds should be conditioned on responses to planning needs to a greater degree. Without the checks and balances of coordinated planning, which should involve the public extensively, as well as providers of care, the degrees of Federal and State participation should not be uncritically liberalized.

Recognizing that the way money is spent affects the quality and effectiveness of care, our stress, in essence, is upon the need to assure the consumer that the provision of care is related to need not only in total amount but in kind.

Blue Cross shares with the American Hospital Association and other groups grave reservations about including proprietary nursing institutions in an act which utilizes public funds in the implementation of community programs.

Hon. OREN HARRIS,

CONGRESS OF THE UNITED STATES,

HOUSE OF REPRESENTATIVES,
OFFICE OF THE MAJORITY LEADER,
Washington, D.C., April 1, 1964.

Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: There is enclosed a copy of a letter which I have received from the Oklahoma Hospital Association, Inc., stating its views and recommendations with respect to H.R. 10041, the Hospital and Medical Facilities Amendment of 1964. It will be appreciated if this can be made a part of the record. The association's major complaint, of course, has to do with the modest

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