21 Summary Mr. Chairman, I have reviewed key factors which are involved in hospital cost increases and indicated this Association's strong opposition to S.1391. I have also pointed out a series of alternatives, some of which are already under way and can be strengthened, as well as others which can be initiated, to address the issue of health care cost increases. I thank you for the opportunity to present the position of the American Hospital Association and will be pleased to respond to your questions. Senator KENNEDY. Next we will have Mr. Charles O'Brien, the administrator of the Georgetown University Hospital. I will ask him to summarize his testimony. You have all been very patient. We won't be much longer. Mr. O'Brien, we want to thank you very much, you have been enormously helpful to this committee in terms of setting up these hearings. It has been a very valuable hearing for all of us. And I think, as I mentioned earlier, it is the tradition of a great university's search for helping the people understand public policy questions better and we want to thank you very much, for the record and personally. We look forward to your testimony. STATEMENT OF CHARLES M. O'BRIEN, JR., ADMINISTRATOR, Mr. O'BRIEN. Thank you very much, Mr. Chairman. For the record, I will submit the testimony that we had prepared, but, in the interests of time, which I think has been very well spent, very interesting certainly for us this morning, I will defer that written testimony. The point of view that we would like to put across today is so different from the other three witnesses this morning-and that is the nitty-gritty kinds of issues that are raised by a public policy issue of this nature. And I think the other three spokesmen were certainly eloquent in the positions that they took. But I think, as a public policy issue, it might be appropriate to just dwell on a couple of points, and then make some conclusions. First of all, I would like to introduce myself. I am Charles O'Brien, administrator of the University Hospital. I would like to welcome you all, and all the witnesses, to Georgetown. To describe briefly the Georgetown Hospital, we are a 450-bed facility which serves as a primary clinical arm of the Georgetown University Medical Center, and through such we have a central role in both the educational as well as the clinical delivery of care in this metropolitan area. We specialize in tertiary care and we provide clinical experience for undergraduate students, for graduate medical education students, and for continuing post-graduate education of the allied health sciences and for practicing physicians. There are a variety of factors that have impacted on hospitals that are external to the control of hospitals, and I was interested to listen to the discussion back and forth relative to the issue of passthroughs. I would like to just point out one specific instance in the life of Georgetown University Hospital. A year ago we were notified that our professional liability premium would increase from $350,000 per year to $3 million; that is an average cost of $26 per day per patient. We felt that increase in the middle of our last fiscal year. We felt that we had-and insurance experts have told us that our professional liability experience in the past is excellent; it is reflective of the type of institution we are, which is one where the latest advances take place. So it was a surprise to us and it certainly was a substantial increase in our cost; in fact, it caused us to have to inflate our patient per diem rate by that amount. Another aspect of a hospital such as Georgetown is the type of hospital that we are. As a teaching institution, we get involved in a variety of programs that are, I would say, in the forefront-not just Georgetown, but all the university hospitals-of clinical__breakthroughs. The two that I would like to point out today—I would like to point out in terms of, they are programs that are in the expanding mode in Georgetown, and an impact of an arbitrary cap, a single cap applied nationally, could be, in my judgment, detrimental. And if I could just get into that section a little bit, I think I can make my point. As the demographics of the American population change, the health care institutions are providing service to patients with so-called degenerative illnesses such as strokes, cardiovascular disease, cancer, and the like. The treatment of these disease processes requires substantial health-care professional man-hours and the increased use of highly technological equipment. In earlier decades, advances in health care dealt with infectious and communicable diseases, resulting in dramatic shifts in morbidity and mortality tables when breakthroughs were found. In delivery of health care today for the degenerative diseases, the impact on mortality rates and morbidity comes more slowly. However, in terms of prolonging life and alleviating suffering, the continued aggressive programs by the health care establishment is the standard desired by every patient, family, and friends in time of health problems. As a university hospital, we have a variety of programs which deal with degenerative diseases. I am going to pick the two that are the most in our minds at this point in time. And the first is our cancer program. We are 1 of 19 designated comprehensive cancer treatment centers in the United States. Over the last several years an imposing array of dedicated multidisciplinary health professionals has been recruited to Georgetown for an attack on this deadly killer. One out of every four Americans now living will be touched personally by cancer. The community of cancer specialists believes that in order to have an effective cancer treatment and research program, it is necessary to have centers of highly concentrated resources of both personnel and facilities. This approach requires that not only the medical needs of the patient must be considered, but also that the psychosocial treatment of the patient and family likewise be considered. The clinical treatment of patients involves the close coordination of the medical/surgical, radiation oncology, and multiple other disciplines within medicine and other allied health sciences. While no overall cure for cancer has yet been found, there is good data suggesting that with proper treatment such cancers as Hodgkins disease, vesticular cancer, and numerous other cancers can be treated successfully with no recurrence over a 10-year period. This was not possible a decade ago. Further successes with the use of chemotherapy and surgery in other areas of cancer treatment can be expected, but only if continued resources in the research, experimentation, and patient care in cancer are forthcoming. Enactment of the proposed legislation with single limits in any hospital would limit-would halt the enhancement and development of additional cancer therapy 95-19577 - pt. 1 - 14 modalities, as well as prevent the expansion of current capabilities to additional patients. And by this statement, I am not implying that they are saying that there is no way that you can expand, but under the tables that they have proposed in Senate bill 1391, the range of costs that they permit become very difficult to operate a cancer program which in and of itself is a very labor-intensive type and high-technology type of a service. In the area of both cancer and stroke treatment, to get into the area of technology, the CT scanner, which has been mentioned today as a potential source of increased health cost, was developed at Georgetown. While CT scanning is a proper concern in relation to potential escalation of costs, we have witnessed at Georgetown significant changes in the diagnosis and treatment of patients as a result of its use. And I should state right here that, in preparing testimony last night, I did talk to some of the people on our medical staff, and this is where I got some of the information related to the way they felt the instrument was used, and the fact that the studies, the documentation that I think there is a dispute over what the value of an active scan or CT scanning is, will take some time, because it is a new instrument; it will probably take 3, 4, or 5 years for the documentation and data to be developed. But these are some anecdotal items which I think bear considering in discussion of public policy. Studies of the brain at one time were accomplished mainly by means of injecting air into the artery. This method is not without risk. With the development of CT scanning, it is now possible for a hydrocephalic child, for example, to be diagnosed on an outpatient basis without the painful and risky air injections on an inpatient basis. Additionally, CT scanner has allowed for improved accuracy in the detection of changes in tumors related to cancer treatment which patients are already undergoing, so it enables the medical or the surgical or the radiation therapy staff to get an idea of what impact their therapy is having on the condition of the patient. Another major program at the Georgetown University Medical Center has been the endstage renal disease program. Georgetown has long been in the forefront of the treatment of renal diseases, both medically and surgically. By June 30, 1977, we anticipate completing 12 renal transplants. Prior to the announcement of Senate bill 1391 cost-containment procedures, transplantation for at least 30 patients was planned for 1977-78. There are now 78 patients in a pool who have been worked up for transplantation. They currently are awaiting only donor kidneys and the time when the operation can be done. The current proposed guidelines imply a limit in terms of numbers of cases, which is related to last year's volume; in other words, this last fiscal year's volume, so if you are talking about a new program-and the transplant program, while not a new program, is certainly an expanding program within our context at Georgetown, it is a difficult decision that is going to have to be made related to program priorities. Obviously, operating a kidney program involves highly specialized teamwork, with professionals in multidisciplines such as nephrology, immunology, social work, dietetics, nursing, et cetera. These are only two of the many various programs we have at Georgetown that we believe, along with others-not only medical centers, but also hospitals throughout the country-are in the forefront of developing new knowledge. We certainly realize that these activities are expensive, that the social concern of the escalating health costs cannot be overlooked. We also recognize that as public policy planners you have a difficult job weighing the testimony of those who are for the regulations as proposed and those who either are against them in total or against them in part. We do have certain concerns regarding the mechanics of the proposed regulations. It is our understanding that the current regulations use as a base year starting point the fiscal year ending in 1976. In our case, that is our fiscal year that ended June 30, 1976—and, in fact, is over a year away. During that period of time we did open a new treatment facility which was over 10 years in the planning, and which had obtained all the proper planning agency approvals. Because of the overhead associated with a new facility, the appreciation, et cetera, the percentage increased cost to Georgetown is more than the 15-percent carry-through that is allowed for the base period add-on. In addition, our fiscal year starts in July and runs through June 30. Under the proposed Senate bill 1391, the Secretary would not announce the total factor, the deflator factor, until sometime between July and October, so we would be in the process of being into our fiscal year for 3 months before we knew precisely what the last 9 months of our budget target was going to be. I won't go into some other details, because I think they are covered in the record relating to the accounting processes involved in keeping detailed track of your exact mix of commercial insurance, Blue Cross, medicare-medicaid, because the mix of patients can shift from time to time-and when you are mixing cost-base reimbursement, charge-base reimbursement, programs, it can become an administrative difficulty-certainly not impossible; nothing is impossible. În terms of alternatives that we would like to suggest, we believe that healthwide planning, areawide planning, is the major instrument for effective limitation on health care cost. Just as an example, the metropolitan area in which we reside right now is a jurisdiction where planning will be done by three separate States and four separate planning bodies. It is our contention that in a multi-State jurisdiction involving a metropolitan area, that at least the tertiary types of care by "tertiary types of care" I mean the kidney transplant programs, the open-heart surgery-ought to be done on a metropolitanwide basis, as opposed to a strictly political jurisdiction basis. realize the political implications of that; individuals in the various States would have good reason to be jealous of their political rights in surrending that to a larger group over which they have really no political control. But I think to do a rational job of health planning, that is imperative, particularly for the tertiary types of care. I think the primary types of care can best be done planningwise in the local communities. But when you are talking of a metropolitan area such as Washington, there are also about 19 other such metropolitan areas. We believe that if a single limitation is to be provided, that it certainly should not be retroactive, and that it should take into consideration the facilities and programs which have already been approved in a specific institution. |