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We have in Springfield a city government which is efficient, but which is willing to streamline itself, reorganize itself, and do what is necessary to progress in step with the 20th century.

As Dr. Hertz mentioned, we have a citizen's committee which is ready to work with government to move to meet these pressing problems. Not the least of our positive factors is the air of optimism which pervades our community at this point.

I might point out that the Rockefeller Foundation has recently, or about a year ago, made a grant to the National Urban League which has established leadership development projects in 10 cities throughout the Nation to develop Negro leadership. Springfield is 1 of 10 cities in the country participating in this program.

We have a very active urban renewal committee which makes our urban renewal planning more realistic. We are fortunate in that we have complete cooperation between county and city in our planning efforts. We have a regional planning commission.

We have undertaken the making of a transportation plan to attack the problems of transportation in our community. We have, as I said before, taken advantage of the Economic Opportunity Act of 1964. We have cooperation between city and county governments and between our governments and school organizations. We have many active community organizations in our city. There are efforts presently being undertaken in Springfield to improve our existing social welfare agencies. We have attention being given to proper hospitalization in Springfield. We in government have taken an in-depth approach to the relocation of minority families in our urban renewal areas, and we have strong assistance and strong support in these efforts by our local real estate board which is a noteworthy accomplishment, I think. We have efforts being taken to improve our public school system and last, but certainly not least, we have one public housing project in existence which is beautifully designed and is filled with people. It consists of 210 units. We have two more planned public housing projects for our city, one regular and one for the elderly.

Therefore, I would summarize by merely saying this: We in Springfield and we in Springfield's government are willing to attack these problems. We are going to face them regardless of what happens. We may succeed in solving the problems, but we will stand a much better chance with massive Federal assistance with the kind of guidelines envisioned in this legislation rather than with specific require

ments.

I thank you for the opportunity to appear before the subcommittee.
I thank you for making it possible for us to be here.

I would point out that Dr. Hertz, I, or Mr. Norman would be happy
to entertain any questions that the committee might have.

Mr. BARRETT. Well, thank you, gentlemen. I have no questions
because your statement is very complete and fully explanatory. Your
views will help us when we mark up the bill and we will certainly try
to give cities such as yours the legislation they need. Mr. Harvey?
Mr. HARVEY. Thank you, Mr. Chairman. I just have one question
here and I am not sure whom I should direct it to. Maybe the city
manager can best answer it.

It is the same question I have asked all the other managers and mayors who have been here.

Can you tell me what the needs of Springfield are in terms of dollars?

Mr. CAPLINGER. I think we can answer that question. I would like to have Mr. Norman, our urban renewal director, respond to it if that would be acceptable, Mr. Chairman.

Mr. HARVEY. Can you very succinctly-you may not be prepared at this time to give a specific answer. Are you talking about $100 million? Is it $1 million or $2 million or what sort of figure, so that we have a round number of figures of what we are talking about. One of the problems of this subcommittee and the administration is going to be the sort of overall program we are talking about across the country. There are some 700 cities across the country and I know all of them have an interest in being a demonstration city. Actually 70 are going to be selected. The top 70 will be selected, maybe. We have to establish an overall figure. So I am interested in what a city the size of Springfield, in your judgment, would need.

Mr. NORMAN. Within the scope of the message, we would say between $30 million and $40 million.

Mr. HARVEY. Thank you very much. I have no further questions. Mr. BARRETT. Thank you, Mr. Harvey.

All time has expired.

Gentlemen, we are certainly pleased to have had your testimony this afternoon. You make a very splendid presentation.

The committee will stand in recess until 10 o'clock tomorrow morning.

(Whereupon, at 3 p.m., the subcommittee adjourned, to reconvene at 10 a.m., Friday, March 11, 1966.)

the ca

FRIDAY, MARCH 11, 1966

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON HOUSING OF THE
COMMITTEE ON BANKING AND CURRENCY,

Washington, D.C.

The subcommittee met, pursuant to recess, at 10 a.m., in room 2128, Rayburn House Office Building, Hon. William A. Barrett (chairman of the subcommittee) presiding.

Present: Representatives Barrett, Mrs. Sullivan, Widnall, Mrs. Dwyer, and Harvey.

Mr. BARRETT. The committee will come to order.

Our first witness will be Dr. Harvey Renger, Hallettsville, Tex., representing the American Medical Association.

Doctor, I want to tell you that we are very much pleased to have you here this morning. Of course, we are desirous of making you feel as much at home as we possibly can-you and your associate, Mr. Harrison, and if you desire to complete your testimony you may do so and we may ask you one or two questions after you have completed your testimony. We will abide by whatever is suitable to you.

Dr. RENGER. Thank you, sir.

Mr. BARRETT. You may start your testimony.

STATEMENT OF HARVEY RENGER, M.D., REPRESENTING THE
AMERICAN MEDICAL ASSOCIATION; ACCOMPANIED BY BERNARD
P. HARRISON, DIRECTOR OF THE AMERICAN MEDICAL ASSOCI-
ATION DEPARTMENT ON LEGISLATION

Dr. RENGER. Mr. Chairman and members of the subcommittee, I am Dr. Harvey Renger, a physician practicing in Hallettsville, Tex. I am appearing today on behalf of the American Medical Association, which I serve as a member of the AMA Council on Legislative Activities. With me is Mr. Bernard P. Harrison, director of the AMA Department of Legislation.

As we understand it, H.R. 9256 would amend the National Housing Act to provide mortgage insurance or direct loans to a "group practice unit or organization" for the construction of new structures, the acquisition of existing structures and the expansion, remodeling, and improvement of same, as well as the cost of equipping any such facilities. The term "group practice unit or organization" is defined in section 1007 (4). While this bill provides a wide latitude as to the groups for which mortgages may be insured or to which loans may be given, the bill establishes the priorities of such parties, and provides discretionary power to the Federal Housing Commissioner and the Housing and Home Finance Administrator to determine additional priorities as they may deem appropriate.

H.R. 9256 is basically similar to H.R. 2957, 89th Congress, upon which the AMA testified before the House Interstate and Foreign Commerce Committee in March 1965. Our objections to H.R. 2987 went to the substance of the bill. While we believe that this proposal, concerning itself as it does with mortgage insurance and direct loans, is more appropriately before this committee, we find that there has not been sufficient change in the legislation or in the circumstances on which our objections were based to warrant a change in our position. Accordingly, not persuaded that this legislation is advisable or necessary, we appear here today to again voice our opposition.

At the outset it should be clearly understood that the American Medical Association does not oppose group practice by physicians. It is recognized that such practices may afford some advantages to both the physician and the patient, and that the number of group practices is constantly increasing. It should be also recognized, however, that this type of practice is neither feasible nor desirable for all of the physicians of our Nation.

Šince there are different types of group practices, we should keep before us the intent of this bill with respect to the type of group prac tice which it would foster. It is our opinion that H.R. 9256 is designed primarily to provide for the construction of prepaid closed-panel group practices. I will speak more to this point, shortly.

Our reasons for objecting to the measure pending before this committee may be briefly categorized. First, physicians do not have difficulty in obtaining conventional loans. Second the number of group practices is increasing without Federal financing. Third, direct loans by the Federal Government are unwarranted. Ånd fourth, the bill is discriminatory in the priorities granted to applicants.

PHYSICIANS ENJOY GOOD CREDIT STANDING

Physicians enjoy a high credit standing in their community. It is generally recognized that the physician has a high potential earning capacity. That this potential is usually realized may be seen from surveys which have compared the M.D. to other professions or to the businessman and have found the physician to be at the top of the earnings or net income ladder. And when a physician participates in a partnership or in a group practice, his personal income tends to be still greater. As far as we know, there has been nothing shown which would indicate that physicians require any special or unconventional form of assistance when financing the construction of their offices or the equipping of them.

THE NUMBER OF GROUP PRACTICES IS INCREASING

One might suppose from the emphasis stemming from the bill that a need for group practice is not being met. The implication is there that growth in group practice is being stifled and that special assistance is needed. This is not so.

Three surveys with respect to group practice are significant. In 1946 a survey conducted by the Public Health Service, with the cooperation of the AMA, revealed the existence of only 368 group prac tices. A second survey conducted by the PHS in 1959-60, in which the closely cooperated, showed there were 1,546 group practices.

In earlier testimony before this committee, on March 1, the Under Secretary of the Department of Health, Education, and Welfare stated that "today, group practices number nearly 2,000." Unfortunately Mr. Cohen did not have the benefit of our latest survey. Just last year, the AMA undertook a direct mail inquiry of all physicians. Responses show that there are now 5,450 group practices with approximately 26,000 physicians participating in such groups.

This remarkable growth of group practices, an increase of 350 percent in 5 years, has taken place without Federal subsidization.

DIRECT LOANS UNWARRANTED

Title II of H.R. 9256 would authorize the Housing and Home Finance Administrator to make loans to any group practice units or organizations to assist in financing the construction cost of group practice facilities. We see no justification for this provision. We have already shown that physicians, perhaps more so than any other group, are able to obtain financing, through usual channels, to meet the cost of constructing facilities.

H.R. 9256 is not primarily concerned with physician owned and operated group practices, but is intended to provide preferential assistance to prepaid closed panel group practices, particularly those which may be established by agencies or organizations. We see no justification for such priority.

DISCRIMINATORY PREFERENCES

Our fourth reason for opposing certain provisions of H.R. 9256 concerns the discriminatory nature of this bill as evidenced by the priorities established. In this respect let us examine pertinent provisions of the bill.

H.R. 9256 provides that mortgages may be insured or loans given to the following (sec. 1007(a)):

(A) A private agency or organization (including a medical or dental group) undertaking to provide, directly or through arrangements with a medical or dental group, comprehensive medical care or dental care, or both which may include hospitalization, to members or subscribers primarily on a group practice prepayment basis;

(B) A public or private nonprofit agency or organization established for the purpose of improving the availability of medical or dental care in the community or having some function or functions related to the provision of such care, which will, through lease or other arrangement, make the group practice facility with respect to which assistance has been requested under this title available to a medical or dental group for use by it; or

(C) A medical or dental group.

The bill requires certain priorities. Section 302 (a) requires the Federal Housing Commissioner and the Housing and Home Finance Administrator to establish jointly criteria determining priorities in insuring mortgages and making loans—

which criteria shall give preference in the case of applications involving facilities to be located in smaller communities and in the case of applications of agencies or organizations described in subparagraph (A) or (B) of section 1007 (4) of the National Housing Act which are public or nonprofit organizations as defined in section 1007 (5) of such Act, and in such other cases as they may deem appropriate and consistent with the purpose of this Act.