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What concerns us most in this whole matter is the intentions of the Administration for the future. The beneficial and fruitful relationships that have been established between the Veterans Administration Hospital system and medical education cannot survive constant, long term pressure for reductions in budget, decrease in staffing ratio and cuts in the patient census. We would urge that any attempt to follow this course of action be resisted to the fullest extent.

Finally, I would like to take this opportunity to bring to your attention what I believe to be a historic opportunity for the involvement of the Veterans Administration Hospital system in the development of new resources for the training of physician and allied health personnel. Three important factors have combined to create this unique opportunity.

First, in 1972, with the assistance and determined efforts of this Committee, the Congress approved and the President signed Public Law 92-541. This law authorizes monies to be appropriated for the purpose of making grants to assist in the establishment of new state medical schools at colleges or universities that are primarily supported by the states in which they are located if such schools are located in proximity to or operated in conjunction with Veterans Administration Medical facilities. The statute allows these grants to be used for the leasing to the institutions of land, buildings and structures under the jurisdiction of the Veterans Administration, for the alteration and remodeling of such buildings and, on a declining basis over a seven year period, for assistance in the cost of providing faculty salaries. These grants are made with the proviso that the State involved make a commitment to provide the proposed school with adequate financial support and that the school meet adequate professional standards.

The second signficant factor is found in the Appropriations Act for HUD, Space, Science and the Veterans Administration for the fiscal year 1973. In this Appropriations Act there is set aside 3.7 million dollars for planning and site acquisition for a Veterans' Administration hospital in southern New Jersey/ Philadelphia, Pa. metropolitan region.

Third, during the past year, at the request of the Governor, the College of Medicine and Dentistry has been conducting a feasibility study concerning the possibility of the establishment of a third medical school in the southern part of the State. This study has convinced us that there is indeed a strong need to produce additional physicians for the area, to provide more medical education opportunities for the residents of South Jersey and to make available to the entire southern portion of the State the benefits that would result from the establishment of a medical school in South Jersey including continuing education, recruitment and retention of housestaff, recruitment of highly qualified attending physicians and the general improvements in the quality of care that go hand in hand with the creation of a teaching environment.

Unfortunately, however, our feasibility study has created concern as to the ability of existing clinical facilities to provide an adequate clinical base for the establishment of a third medical school in South Jersey. While there are many excellent hospitals providing fine care to the residents of that part of the State, few have made the commitment of medical education in the form of graduate education for interns and residents that would be required to sustain a medical school. Thus, while the interest and the need are apparent, we remain concerned as to the feasibility.

The confluence of these three factors sets the stage for this unique opportunity for the Veterans Administration Hospital system to play a crucial role in the creation of a new medical school. A decision to proceed with the building of a new Veterans Administration Hospital in South Jersey area would substantially alter the long range situation with regard to clinical teaching facilities in that portion of the State and would make it possible for the College of Medicine and Dentistry of New Jersey to proceed with the development of a third medical school. Furthermore, the appropriation of monies under Public Law 92-541 and the assurance of the availability of these monies for the establishment of a South Jersey medical school would, in conjunction with a new Veterans Administration Hospital, assure the financial viability of the new medical school during its formative years and thus guarantee its rapid development as a full medical school.

I strongly urge this committee to support this unique opportunity for the Veterans Administration to make possible the establishment of an entire new medical school and urge you to do everything possible to assure that a Veter

ans Administration Hospital will be constructed in South Jersey and that sufficient monies will be appropriated under Public Law 92-541 to bring this project to fruition.

Thank you again for the honor that you have accorded me in inviting me to testify here before you today.

Senator CRANSTON. Our next witness is Dr. Richard P. Schmidt, dean of the College of Medicine, vice president for Academic Affairs, State University of New York-Upstate Medical Center, Syracuse, N.Y.

STATEMENT OF DR. RICHARD P. SCHMIDT, DEAN OF THE COLLEGE OF MEDICINE, UPSTATE MEDICAL CENTER, STATE UNIVERSITY OF NEW YORK, SYRACUSE, N.Y.

Dr. SCHMIDT. Thank you very much, Mr. Chairman.

Senator CRANSTON. Thank you very much for being with us.

Dr. SCHMIDT. I am honored to be with you, and in being asked to come. I have submitted a written statement. With your permission, I would like to summarize some of the points in there.

Senator CRANSTON. That would be most helpful.

Dr. SCHMIDT. First of all, my own background. I have served both at medical schools and in the Veterans' Administration in various capacities. Before I became dean at Syracuse, I served for a little over 2 years as the chief of staff of the Veterans Hospital in Gainesville, Fla.

I am currently, I guess, outside of the VA again, but intimately involved. because across the street we have a Dean's committee VÀ hospital, with which we have an active and effective partnership in the area of medical and allied health education, and also in research.

First of all, I think the system of patient care in the VA is generally good. I think it is one of the most efficient systems that I have ever seen in my life. However, I think it is, at the present time, from my personal observation near the breaking point, whereby efficiency can breakdown with resulting collapse of the quality of

care.

I believe the VA to be underfunded from the standpoint of ratio of staff to the number of patients to maintain the quality of service which our veterans patients deserve and expect.

There has been some rather peculiar and odd things. First of all, I think those who were the architects of the partnership of the Medical Schools at the end of World War II should be commended. They have produced one of the most effective educational, research, and patient-care systems which has ever or will ever exist.

There are several aspects, however, which are perhaps out of touch with the times and for the future. One of these is that the emphasis is on the funding of a hospital care system and not a system of comprehensive care. It is my belief that the veterans medical care system should be that of comprehensive care to the eligible veterans irrespective of the modality of care, irrespective of the need for hospitalization.

I would oppose an arbitrary limit or an arbitrary ceiling being placed upon hospitalization, but I would be equally opposed to saying that the only way a patient can get care is to be eligible and to

need to come into the hospital as a horizontal patient in bed as opposed to a vertical patient receiving ambulatory care.

The improving efficiency of ambulatory care, has an additional side light in that it tends to increase the cost of inpatient care, although perhaps decreasing the number and increasing the efficiency. The patients in the hospital tend to be more acutely ill and demand more services, which causes the cost to rise. Also, new methods and new technology improve patient care but increase costs beyond that which we would expect by inflationary pressures alone.

There are really three missions of a medical school, and three missions of a veterans hospital. The first is patient care. We may see this in somewhat different light from the educational standpoint, but I think that no system, no hospital, no clinic, no university hospital, no veterans hospital can exist in any quality whatsoever unless this comes first, and is of high quality.

This interlocks with the educational function, and I do not believe that quality education could occur in an institution where quality care is not carried out. These are hand-in-hand.

You have had other witnesses today speak of the research. There has been a great deal of rhetoric concerning the rather abrupt drop in research funding, especially that for basic research and for research training. I personally feel that this is exceptionally shortsighted but the rhetoric can be supplied by others.

Dr. DeBakey, earlier this morning, eloquently illustrated the very marked reduction in the amount of research training and, hence, I believe, the benefits to mankind—both in terms of humanity and also in terms of economics.

We can point to some of the major economic savings that have occurred because of biomedical research. You heard some this morning that the VA was very instrumental in establishing the modern treatment of tuberculosis. The cooperative drug studies were done at the veterans hospitals and clinics. New hospitals were built for the patients, for care of patients with tuberculosis no longer had to be used for that purpose. Needless to say, this has been a major breakthrough, both in the treatment of patients from the standpoint of economy and humanity.

This break-through in treatment resulted in savings of millions and millions of dollars that would have been required to keep these patients in hospitals for 6 months, a year, 2 years or 3 years, as was the case when I was a medical student.

I have considerable fear, Mr. Chairman, that the care system in the VA, if it continues to have the constricted funding in the hospitals, if it is not funded as a comprehensive care system, will deteriorate so that it no longer can be used as a fine example for our students.

We already see them somewhat restive by comparing what they can do for their patients in the Veterans hospitals compared to the universities hospitals which are closely affiliated.

On the Syracuse hill where we work, we have hospitals under several different bureaucracies. One, our State university hospital, which is an instrumentality, of course, of the State University of New York.

The second, a private nonprofit hospital with about 500 beds, a county hospital of limited purpose, mainly for alcoholism, for kidney dialyses and a few other types of special programs, a psychiatric hospital under the State division of mental health of New York and the VA.

We have the trainees, residents, interns, and students who spend portions of their time in each of these institutions. They are now feeling very acutely the lack of assistance, the lack of their ability to deliver that which they believe to be the highest quality of patient care in the VA hospital.

I believe our veterans are getting very good care, and that we have an excellently managed system. I think that the leadership in the VA, the Department of Medicine and Surgery, and the leadership in the hospital is superior. But I think we are at the border line of this falling apart, where the high quality care cannot be delivered, where we will not be able to have the same high quality of teaching.

Secondarily, because of that, we are going to have greater restiveness of young physicians who might come in and serve the system.

Senator CRANSTON. I wish that the people responsible in all the VA hospitals could give the same pleasant report about the current state of the care, because there are many, where the inadequate funds have already caused real, real problems in the quality of care.

Dr. SCHMIDT. We in Syracuse are rather lucky because there is a great deal of patient care that the Veterans' Administration does not pay for. We don't object to this. We pay quite a few salaries of people who spend significant portions of their time at the VA in research or in patient care.

We also utilize the VA hospital as a major resource for our educational program. I think the ratio, however, of the employees to the numbers of patients we have, and the mission is right at the verge of collapse. Our house staff is a little more militant perhaps than I tend to be. Which, speaking of militancy, I would not have burned my draft card if I were the proper age, I might have boiled it.

They are getting rather restive of what they feel to be their lack of ability to get things done as fast as they think it should be.

Senator CRANSTON. What does your house staff say in reference to this militancy about staffing?

Dr. SCHMIDT. They feel there should be more nurses, there should be better staff in the ambulatory program. They feel this to be true in the special programs, including intensive care.

At the present time they are on our backs. These are young people who work 68 hours a week. They are on our backs about the night staffing pattern, the pharmacy, the wards, and the various clinics. The Administration there is responsive to their needs, but has a limit beyond which it can not go further.

Senator CRANSTON. Do you have more to say on your own views on staffing needs?

Dr. SCHMIDT. No, sir.

Senator CRANSTON. Do you have any recommendations on the cuts that might be possible in the budget?

Dr. SCHMIDT. I have difficulties seeing how, but I have to look at it from the microsome in Syracuse. I would have great difficulty in

seeing how we could make significant cuts and maintain any semblance of quality.

Senator CRANSTON. What about elsewhere in the budget, the VA budget?

Dr. SCHMIDT. I don't think it could come out of research. I think it is another of the decisions about benefits to the veterans other than those of medical care. I don't see that this is a fat budget at all.

Senator CRANSTON. If we have to make some cuts somewhere else in the budget to permit us to do what we need to do for veterans within the spending ceiling, which means no taxes, no deficit and no inflation, where would you make those cuts?

Dr. SCHMIDT, I think you pointed out some of these this morning, and I would very much agree with what you said in your opening

statement.

Senator CRANSTON. Thank you on that point. I have some more questions.

In your written statement, you say "it is my perception that veterans hospitals are funded largely on the basis of hospital bed occupancy." It used to be so, now a mixed formula is used that takes into account outpatient care. Has there been a noticeable effect on the ability of the hospital with which you are associated to provide quality care to veterans in the face of the average grade reductions of VA staff mandated by OMB?

Dr. SCHMIDT. We have not begun to feel this effect yet, but I think we will.

Senator CRANSTON. Well, the last question, I will repeat it, was— has there been a noticeable effect on the ability of the hospital with which your university is affiliated to provide quality care to veterans in the face of the average grade reductions of the VA staff that have been mandated by OMB?

Dr. SCHMIDT. We have not seen this effect as yet, to my knowledge. I know that we are concerned about it, and expect this effect not to be good.

Senator CRANSTON. If you could amplify in writing to us what you feel would happen if that happened, it would be helpful.

Also, in your statement you refer to legal barriers impeding the improvement of the VA medical care system. What legal barriers are you referring to?

Dr. SCHMIDT. Dealing in part with eligibility and the modality and the delivery of services. Theoretically, at least, under the current legal authority as I understand it, provision of care for nonservice-connected illness centers depends upon need for hospitalization. He may be given ambulatory treatment under the classification of pre-bed care and, of course, may be continued ambulatory treatment after an episode of hospitalization. It is called posthospital care.

It is my belief that if the veteran is eligible for care he should be eligible for care, period. It should not require the expectation for hospital bed occupancy to occur. The services that should be delivered are comprehensive in accordance to need, and in the setting where that need is most appropriate.

These have been imaginative approaches toward modernization of the system, but as I understand it the laws still revolve around the

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