Statement of the Illinois Hospital Association

before the

Subcommittee on Health, House Ways and Means Committee

February 4, 1994

Good morning. I'm Ken Robbins, president of the Illinois Hospital Association. It is a pleasure to join you here today to support a cause that has long been a cherished goal of Illinois hospitals.

Illinois hospitals are deeply committed to comprehensive health care reform. There are still potential pitfalls and traps along the road to reform, and we would like to share with you today some of our concerns, as well as our goals. Our views are set forth in "A Healthy Future for All Illinoisans," the report of the Illinois Hospital Association's Chairman's Task Force on Health Care Reform. This blue-ribbon panel spent a year developing a comprehensive blueprint for health reform that will work for the citizens of Illinois.

We support many of the principles of President Clinton's plan. Like the President, we believe that there can be no reform without universal coverage. Like the President, we believe that rational competition between accountable health plans will achieve greater efficiency while preserving consumer choice, high quality, and innovation.

Our views are very congruent with the approach of the American Hospital Association. Like the AHA, we believe that it is impossible to achieve universal coverage and keep costs under control unless the delivery system is fundamentally reorganized. We believe that integrated networks of hospitals, physicians and other providers, paid on a capitated basis, are the key to a restructured health care system.

But we have serious concerns about certain aspects of some health care proposals.

One issue that is of vital importance to us is global budgeting for health care. A formuladriven cap on health care spending linked to an unrelated factor such as the consumer price index is simply bad policy. Health care spending should be linked to the actual need for health care services.

Global budgeting implies that all health care costs are in the control of providers. It ignores such factors as labor costs, technology costs, social problems such as poverty, violence, and drug abuse, and medical disasters such as AIDS.

Global budgeting implies that if health care budgets become strained, Americans should be deprived of health services. We in Illinois are painfully aware of how irrational and dangerous that strategy can be. Because our state is facing a huge shortfall in its Medicaid budget, it intends to reduce hospital reimbursement by $200 million during the next 18 months. That may balance the budget in the short run, but it does not address the real causes of escalating Medicaid costs. Instead it will force hospitals to reduce services, to shift more costs to privately insured patients, and possibly to close their doors.

Lowering payments to providers is not the way to change the root causes of escalating health care costs. Health care costs are already moderating as providers respond to competitive pressures. Medical prices rose 5.4 per cent in 1993, the smallest increase since 1973.

We believe that costs can best be restrained by changing the incentives that determine how care is provided and used. For example, providers in organized delivery systems paid on a capitated basis will conserve health resources while keeping people healthy. We also believe that an independent national commission responsible for recommending a budget for publicly subsidized health care can help to maintain the correct balance between people's needs and the funds available to meet them.

Universal access is meaningless if we can't pay the bills for care. That is why we are deeply concerned by another element of the President's proposal: restraining projected Medicare spending by $125 billion over five years. Funding universal access through Medicare cuts could threaten access to care by endangering hospitals with large Medicare populations.

We support an adequately funded Medicare program, with incentives for Medicare beneficiaries to join capitated delivery systems.

Illinois hospitals support the idea of purchasing cooperatives for small businesses and individuals, but we have serious reservations about the size and structure of the health alliances proposed by the President. We recommend that they be limited to an administrative rather than a regulatory role.

We are also concerned that a sudden influx of new patients into the current system could lead to an explosion in costs that will trigger rigid budget caps. We advocate a six-year period for phasing in universal coverage as new incentives bring providers into integrated delivery systems and as new efficiencies are realized.

In closing, let me summarize four basic principles that Illinois hospitals support.

First is universal coverage health care benefits.

a guarantee that all citizens will have access to essential

Two: Responsible health care financing, with requirements for employer and individual participation, government subsidies for low-income citizens, and a continuation of Medicare, but with some new incentives.

Three: Insurance market reforms making coverage affordable and portable, with purchasing cooperatives for individuals and small businesses.

And four: A restructured delivery system based on community care networks. Without this fourth goal, none of the other reforms will work.

Illinois hospitals accept the challenge of comprehensive health care reform, because we believe the goal -- better health for all Americans - is worth it. We look forward to working with you to reach that goal.

Chairman STARK. Dr. Champion.

STATEMENT OF HOWARD R. CHAMPION, M.D., PRESIDENT, COALITION FOR AMERICAN TRAUMA CARE, AND DIRECTOR, TRAUMA POLICY AND RESEARCH, THE WASHINGTON HOSPITAL CENTER, WASHINGTON, D.C.

Dr. CHAMPION. Mr. Chairman, I am a specialist in trauma surgery. Unlike other kinds of surgical specialists, as a trauma surgeon, I have been delivering extensive amounts of pro bono care to injured Americans. I have been in the Baltimore-Washington area doing the same for the last 20 years. I am the founding president of the Coalition for American Trauma Care and secretary of the American Trauma Society; and on behalf of those organizations, I want to thank for this opportunity to testify.

I also want to thank you, Mr. Chairman, for your longstanding support for efforts to improve the delivery and financing of trauma care services for seriously injured Americans.

The Coalition's specific comments on the Health Security Act are contained in our written statement and I will comment on the main issues. To do that appropriately, it is important to place serious injury in the public health context.

Injury is the leading cause of death for Americans from birth through age 44. For every death there are at least three or four permanent disabilities. Injury is also the leading cause of years of lost productivity-more than cancer and heart disease combined. Since it affects the young in the workforce, injury is also our most costly disease-estimated at $180 billion in lifetime costs in 1988. The Coalition has worked to address this public health problem on many fronts. This includes community-based injury awareness and prevention efforts and university-based injury research programs. Unfortunately, even in the most effective public health models, injury can never be entirely prevented. Thus, we must focus on mitigating the consequences of injury to the greatest extent possible.

Practice guidelines for trauma care are designed to provide costeffective secondary and tertiary prevention services so that when serious injury does occur, death and disability are prevented. When disability cannot be fully prevented, then every effort is made to restore as much function as possible.

The Coalition believes strongly that organized, regional system of trauma care are a model for reform of costly, specialized tertiary care services. The components of a trauma system are described more fully in our written statement. Let me just mention that they include prevention, 911 access, prehospital care, triage or transfer decision making, specialize acute hospital care in a trauma center, and rehabilitation.

Despite the clear benefits of a regional or State trauma system, the Health Security Act does not provide any recognition of trauma care, trauma centers, or trauma systems. The Coalition believes that individuals with life-threatening injuries must not be denied access to qualified trauma care. This must be recognized in health care reform policy.

There is a concern that too much emphasis on State-based purchasing alliances could have a detrimental effect on trauma and

burn centers that have catchment areas across state boundaries, as is the case in every city along the Mississippi River, leading to Balkanization of existing and effective regional trauma systems.

The Coalition is aware of instances in many areas of the country, even those with fully developed trauma care systems, where some third-party payers currently refuse appropriate transfer to a trauma center for patients subsequently determined by community hospital physicians to need the services of a qualified trauma center. Other payers have inappropriately placed financial pressures on family members for premature transfer out of a trauma center. These concerns can and should be corrected in health system reform by applying uniform treatment standards for reimbursement for qualified trauma care services.

I hasten to add, for the record, that there are many payers that specifically contract with trauma centers throughout the Nation. We need to provide an appropriate and positive environment for the growth and development of middle-aged trauma care which is extremely cost-effective, particularly when the total costs of care are assessed.

As you know, Mr. Chairman, over 100 trauma centers across the country have closed their doors since 1985, a majority of them due to chronic underreimbursement.

It has been stated to us that trauma will get relief from the burdens of uncompensated care with health care reform, but we must respond that it depends on two factors-that universal coverage proceed in concert with and not after implementation of further cuts in Medicaid and Medicare; and two, that health plans be required to contract with qualified trauma centers. Unless these things happen, we predict that further trauma center closures will occur causing further compromise to the public's access to the lifesaving services of qualified trauma centers.

The Coalition strongly feels that Americans expect good care when they dial 911. Excluding critically injured Americans from qualified trauma would, in fact, violate the clinical standards of medical care and would likely result in much more completely unnecessary disability, costing State and Federal treasuries millions of dollars in lifelong support payments.

Thank you for the opportunity to share our views with the subcommittee today. The Coalition for American Trauma Care_looks forward to working with you in recognizing these principles in health care reform legislation.

Chairman STARK. Thank you very much. [The prepared statement follows:]

STATEMENT OF HOWARD R. CHAMPION, M.D.

PRESIDENT

THE COALITION FOR AMERICAN TRAUMA CARE

Mr. Chairman, and Members of the Subcommittee, I am Dr. Howard Champion, Director of Trauma Policy and Research at the Washington Hospital Center here in the District of Columbia. I am also Secretary of the American Trauma Society and the Founding President of the Coalition for American Trauma Care. The Washington Hospital Center's MedSTAR trauma unit is a Level I trauma center which serves the residents of the District of Columbia and seriously injured residents in a six state area.

On behalf of the membership of the Coalition for American Trauma Care, I want to thank you for providing our organization an opportunity to testify before the Subcommittee on the vitally important issue of health care reform and how trauma care relates to this reform. We especially appreciate, Mr. Chairman, the support you have shown over the years for efforts to improve the delivery and financing of trauma care services.

The Coalition for American Trauma Care is a national, not-for-profit organization whose membership includes physician directors of trauma care, leading trauma center institutions, and national organizations with a commitment to improving the delivery of trauma care services to seriously injured individuals and a strong commitment to injury prevention. The mission and goals of the Coalition are to improve trauma care services to seriously injured individuals through universal implementation of organized regional systems of trauma care, through improved basic and clinical trauma related research, through improved reimbursement for trauma center institutions, and to improve injury prevention activities at all levels of government.

The Coalition has worked closely with the Congress, including some members of this Subcommittee, on re-authorization of the Trauma Care Systems Planning and Development Act (P.L. 101-590), on enactment and efforts to fund the trauma center grant program to assist trauma centers fiscally stressed due to drug related violence (Title VI,

P.L. 102-321), on enactment of the trauma provisions in legislation re-authorizing the National Institutes of Health which will develop a national plan for basic and clinical trauma care research (P.L. 103-43), and in support of the newly established Center for Injury Prevention and Control and the Centers for Disease Control and Prevention.

The Coalition is now pleased to comment on The Health Security Act,, President Clinton's plan to reform the nation's health care system.

I would first like to state, for the record, that the Coalition genuinely applauds President Clinton and First Lady Hillary Rodham Clinton for their leadership in bringing this very important, but very difficult and complex issue, before the American people and the Congress. There is much in the President's bill that the Coalition can, and will, strongly support.

But before I discuss specific provisions in the bill, I want to place the issue of injury and the work of our Coalition and other factions of the trauma care community in an appropriate context.

Injury is the leading cause of death for Americans from birth through age 44. For every death there are at least three to four permanent disabilities. Injury is also the leading cause of years of lost productivity -- more than cancer and heart disease combined. Since it affects the young and the workforce, it is our most costly disease -- estimated at $180 billion in lifetime costs in 1988. In my opinion, injury is the nation's most important public health and social issue.

The Coalition has worked to address this public health problem on many fronts. This includes community-based injury awareness and prevention efforts and university-based injury research programs. Unfortunately, even in the most effective public health models of prevention, injury can never be entirely prevented. Thus we must focus on mitigating the consequences of injury to the greatest extent possible. The Coalition, and other members of the trauma community, have promoted organized, regional systems of trauma care which are designed to provide cost-effective secondary and tertiary prevention services so that when serious injury does occur, death and disability are prevented. When disability cannot be fully prevented, then every effort is made to restore as much function as possible.

The Coalition believes strongly that organized, regional systems of trauma care are a model of reform costly, specialized, tertiary care services. The regional and state programs that have been established i United States go through a rigid professional and quality assurance process.

The first step in establishing a trauma system is to determine need. This is done in conjunction wit state officials, health policy experts, and public input. Basing the trauma system on need limits the number of specialized centers that will be established within a region. The next step is to enact enabling legislation authorizing the state, or other entity, to establish the trauma system which includes designating trauma centers. The third step is to use professionally established guidelines of care in designing all components of the trauma system.

Once these steps have been taken, the authorized entity -- usually the state emergency medical service agency -- typically then allows all hospitals to participate in the designation process, recognizing that o a few will be chosen based on need, including geographic considerations, and ability to meet professic guidelines. The applications are reviewed and verified on-site by a professional review team, ideally