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The Orkand report again points out that the ambulatory surgical concept is a viable alternative to health care. Also, what you have in the summary documents, I point out the summary of the Orkand report and I have also included not just the Orkand report but a task force conducted report which again from the Governor's office on down emphasizes ambulatory surgical facilities.

I have also included a study made by Rhode Island Blue Cross between two facilities and several hospitals, and where in that tiny State the study saved subscribers and Blue Cross $1.4 million.

There is one last point as far as comparisons are concerned. I circulated this bulletin to all of you and I would like to hold up this and I will submit some copies for the record.

I don't know if you are familiar with this but this appeared in every major publication from Time magazine to Sports Illustrated and this advertisement was put out by the health insurance companies of America. This booklet, along with it, where they are emphasizing the concept of ambulatory surgery.

I would enter into the record the fact that the insurance industry would not support a concept that was not cost effective for them or would not help their business or increase their profits.

Mr. RANGEL. Rest assured that this committee is not only familiar with the concept but has supported and passed this bill which extends into H.R. 3990. Because the bill has not come up before the full House this committee directed me to write the Secretary to make certain that she could explore ways of extending the coverage until the House and the Senate does act on H.R. 3990. So you already have us converted.

Mr. FAINE. We have had other members of our organization who are interested, and in fact we urged the implementation immediately. We are at a loss to understand the problems of getting legislation passed because we have been involved with it for many years but here is a concept which has proved itself, and the savings are there.

Mr. RANGEL. We have bumped into our fiscal budgetary ceiling. We know there are so many people in Florida who want us to balance the budget and the Congress took us a little too seriously.

Mr. FAINE. My only point is the fact that this is basically extending the reimbursement issue and not a funding issue. I indicated that in my talk and I know Dr. Reed has talked to you before.

Mr. RANGEL. It is quoted in the bill but there is no question that it is a question of saving funds, but our bill legislatively is unable to reach the floor until we get another budgetary resolution because the Congress has gone beyond our ceiling of spending.

But it is possible, we hope, that the Secretary might extend the demonstration pending the successful passage of this legislation. There is no question in our minds that it will be passed. It is not as though it was included in any controversial matters.

Mr. FAINE. We understand that, and I realize as I told one of your girls, it was very helpful with me in the last week or so with testimony, the fact that we want to be included in any legislation whether it be medicare or national health insurance and so forth, and we have been excluded. This is not a new thing, and we could go back to Congressman Rhodes back there in 1969, who had his bill for reimbursement. So I guess we are just feeling some of the frustrations over the

last 10 or 11 years. We want to help the Congress in any way because we know this alternative works and we have proven it and the Federal Government has proven it with the Orkand report demonstration. We invite you to visit any of our facilities around the country. We have some 150 throughout the country. As I alluded to earlier, the concept of keeping the patient out of the hospital is a great saving. We make inroads there; this is what this concept has done. [The prepared statement follows:]

STATEMENT OF JEFFRY C. FAINE

I would like to thank you for the opportunity to speak to you today. I am Jeffry C. Faine, a hospital administrator with advanced degrees in hospital administration and public administration, and have been a practicing hospital administrator in the South Florida area for the last ten years. I am one of the founders of the Ambulatory Surgical Facility of Hollywood and have assisted in the development of several other ambulatory surgical facilities across the country and in Florida. Today I represent the Ambulatory Surgical Facilities of Florida, the Ambulatory Surgical Facility of Hollywood, the medical community of Hollywood and ambulatory surgical facilities throughout the country. Gentleman and ladies, I am here today to ask your assistance to reduce health care costs. This can be done immediately by providing full benefits for Medicare patients in ambulatory surgical facilities by the passage of HR 3990 and providing full benefits for ambulatory surgical facilities in future health care legislation. Numerous Medicare patients could today immediately have the benefits of this cost saving health care delivery system by the continuation of demonstration under 92603 that was begun in 1974 and suddenly and abruptly cut off in December 31, 1979, which I will elaborate on later. I am sure I don't have to tell you that the unprecedented concern of health care in the past 25 years has created the second largest and fastest growing industry in the U.S., employing 6 percent of the national workers, gobbling up 9 percent of the gross national product and billing 1500 percent more than it did in 1950, while serving less than 50 percent of the population.

It might be pointed out that until recently, the great equation "elaborate health care equals excellent health care" held fast, but now the price of health care has become very unhealthy. Every segment of the economy from industry and labor to government and consumer groups is struggling to put caps on cost. Much of the inflation in health care costs simply reflects the expanded services. Hospitals now provide far more sophisticated and expensive care than they did even twenty years ago. The reason is two-fold: there has been a virtual explosion in diagnostic, surgical and therapeutic technology, which physicians can now call on to relieve illnesses which previously were intractable. And, secondly, 90 percent or more of the patients are now covered by hospital insurance and have been willing to pay higher costs for the added services. The magnitude of the cost problem is illustrated by the following statistics: From 1950 to 1979, hospital charges have sky-rocketed from 3.7 billion dollars to 80 billion dollars. The largest segment of health care cost is the portion of hospital care. The continuing increases in the cost of inpatient hospital care are visible and controversial. Most of the discussions in analyses of the American medical system revolve around alternatives to reduce the rate of increase. I might take the opportunity now to point out that ambulatory surgical facilities have been proven to be a viable alternative to reduce the cost of inpatient care. Numerous health care experts point out that shorter hospital stays would save money for patients and patients would be able to return to productive status sooner. Reduced costs would also arrest the steady rise in premiums that patients must pay for hospital coverage and relieve the pressure on taxes to pay for Federal and State health care programs. Accordingly, many of these experts point out that a one day reduction in the average hospital stay in this country would save between 3 and 5 billion dollars annually.

To further highlight, I must point out that ambulatory surgical faciliites are talking about saving the entire hospital stay and reducing hospital stays an average of 5 to 7 days. It is estimated that 20 to 40 percent of all the surgical procedures today can be performed on a same-day basis in facilities such as ambulatory surgical facilities. It is estimated that the concept of ambulatory

surgical facilities could save nationally between 10 and 20 billion dollars annually. The concept of ambulatory surgical facilities has made and can continue to make a significant contribution to reducing the cost to the Medicare recipients and the Medicare program. On a national basis, experience has shown that persons age 65 and over as a group require hospitalization more often for a longer stay. Persons in this 65 and over age group comprise approximately 25 percent of all hospital census days. Furthermore, in the south Florida area, these individuals comprise 60 percent to 70 percent of the hospital census days. I might point out that south Florida has 22 times the national average of Medicare age patients. Many of these individuals can and want to have surgery on a smae-day basis, but current regulations force these individuals into the acute hospital. Many of them are staying in the general acute hospital too long, and are having unnecessary tests and procedures, escalating the cost. You can see from these figures that the savings both nationally and especially in the south Florida area can be significant if we have full reimbursement for ambulatory surgical facilities.

The success of the free-standing ambulatory surgical facility is well documented over the past 10 years, with hundreds of thousands of patients being treated successfully in these institutions. For your information, we will basically define the ambulatory surgical facility as "a facility who has a primary purpose to provide elective surgical care and in which the patient is admitted to and discharged from said facility within the same working day, and which is not part of a hospital. Furthermore, the ambulatory surgical center is any public or private establishment with an organized medical staff of physicians with permanent facilities that are equipped and operated primarily for the purpose of performing surgical procedures with continued physicians services and registered professional nursing services whenever a patient is in the facility and which does not provide service or other accommodations for the patients to stay overnight." As I mentioned earlier, in 1974, Congress authorized through Public Law 92-603 that the Dept. of H.E.W. conduct a demonstration to determine whether free-standing ambulatory surgical facilities have a positive impact on the health care delivery system and we thank the Congress for that opportunity. The Dept. of H.E.W. conducted this demonstration between the years 1974 and 1977; this was known as the Orkand Report. These findings have been presented to you at previous hearings by Dr. Wallace Reed of the Phoenix Surgicenter of Phoenix, Arizona and Mr. Bernie Kershner representing Ambulatory Surgical Facilities from New Haven in Hartford, Connecticut. These gentlemen presented a summary for you in their testimony; but in essence, this study, which costs in excess of $600,000, showed that free-standing facilities have a favorable impact on the health care system. Specifically, the cost of delivering the surgical service was reduced without any reduction in quality of care and without jeopardizing the fiscal soundness of existing health care facilities.

If I may highlight a minute, in summarizing from this report, "overall surgical costs by procedure were found to be significantly lower in free-standing ambulatory surgical facilities. The quality of care in ambulatory surgical facilities was found to be at least as good as any other alternative setting." In looking at the process quality, this study pointed out that the free-standing ambulatory surgical setting appears to place the fewest demands on the patient, for the amount of time and the number of interactions with the facility prior to admission for surgery. In looking at the outcome quality, the report summarizes that the ambulatory surgical setting had an excellent record of quality of patient care and safety; in this regard, the free-standing ambulatory surgical setting appeared to be at least as safe as the hospital-based ambulatory surgical setting, or as the hospital in-patient setting. Finally, in the area of surgical demand, and utiization, the introduction of ambulatory surgical facilities did not increase the utilization of surgery or the surgical rates in the areas studied. As I pointed out earlier, the cost of this report, which was an independent study conducted on six ambulatory surgical facilities and other alternative settings throughout the country, showed that ambulatory surgical facilities had a favorable impact on the health care system. Specifically, the study showed that the cost of delivering the surgical service was reduced without any reduction in the quality of care and without jeopardizing the fiscal soundness of existing health care facilities. The Orkand Report is not the only report that points out the significance of this alternative setting. I might refer you to the report of the Task Force on Ambulatory Surgical Programs conducted by the Commission on Hospital and Health Care in the State of Connecticut.

I have enclosed a copy of the summary findings from this report, which recommends and encourages ambulatory surgical facilities and encourages full reimbursement for ambulatory surgical facilities as an outstanding method for providing health care while reducing the cost of health care. You may refer to that summary. I also refer you to another exhibit which I have included which shows a study done by Blue Cross of Rhode Island from 1975 to 1978: two local ambulatory surgical facilities and various hospital facilities were studied. It was found that the concept of ambulatory surgical facilities saved Rhode Island Blue Cross subscribers during this study $1.4 million. This is another example of the cost savings and actions taken by other intermediaries strongly supporting ambulatory surgical facilities. I could go on and on with this documentation but I have a limited amount of time to make our presentation. There are numerous examples of this entered into the Congressional record and also as presented by some of my colleagues in ambulatory surgical facilities which I have previously alluded to. As far as savings are concerned, I would like to make one final documentation and then make some closing comments. I hold up a copy of an advertisement that was in every major publication over the last several months which was put out by the Health Insurance Institute, an organization of the health insurance companies of America. This advertisement strongly supports ambulatory surgical facilities. I have brought along a copy of the blurb that goes with this and I might point out the insurance industry is in the business to make a profit; they would not support a concept that wasn't cost-effective for them to make a profit. I think that this material speaks for itself.

As I discussed earlier, I urge the following actions: immediate reimbursement for Medicare patients for surgery in ambulatory surgical facilities, both by passage of the appropriate legislation and by extension of the demonstration project, which is basically not a funding program. A lapse of this demonstration has caused inconvenience to patients, surgeons and participants in the demonstration. It was a reimbursement program in which Medicare beneficiaries and the Department were receiving good measure for payment made. It would make good sense to continue this demonstration until the legislation is passed. This would provide for an orderly transition from demonstration to implementation, thus saving the Medicare patients much inconvenience and the government a fair amount of money. I think that the facts speak for themselves, and those of us who have been involved with the concept of ambulatory surgeon and participated in the demonstration study have established in the validity of this concept as a means of reducing the cost of health care. We now appeal to this committee to provide legislatively in all appropriate bills dealing with Medicare, Medicaid, National Health Insurance, and incentives in the private health sector for reimbursement for services provided in ambulatory surgical facilities. We urge this so that the patients of this country will not unnecessarily be forced into the hospital for elective surgical procedures. We further urge any legislation passed reimburse ambulatory surgical facilities in the same manner as if the patient was hospitalized. Numerous states have enacted such legislation, such as Florida, Missouri, Arizona, and Minnesota, to name a few. And, finally, in the interim, until such legislation is enacted, we request that this committee direct the Dept. of H.E.W. to continue its demonstration project, which has been so successful with the participating facilities. I would be happy to answer any questions that the members of this committee might have. Thank you.

STUDY INDICATES SAME DAY SURGERY CENTERS CUT COSTS

A four-year study of same-day surgery programs in Rhode Island found that two such centers saved $1.4 million in health care costs during that period. Blue Cross of Rhode Island has released a report believed to be the first major study on whether same day surgery can save money. The 1975-78 study, commissioned by Blue Cross was performed by Rhode Island Health Services Research, Inc., a non-profit organization based in Providence.

The Rhode Island Hospital ambulatory center, which opened in September, 1975, was studied, as was a free-standing ambulatory surgery center, the Blackstone Valley Surgical Center, which opened in April, 1976. Both locations have fully equipped operating rooms and recovery rooms where patients who have had general anesthesia can rest for two to five hours before being discharged.

There had been supposition that an ambulatory surgery center in a hospital wouldn't really save money, because the amount of minor elective surgery would go up while operating rooms stayed just as busy. But the Rhode Island Hospital unit apparently was able to displace a large amount of surgery from its inpatient facilities to its new ambulatory surgery unit.

Common procedures include tonsillectomies, bilateral hernia repairs in children, vasectomies, circumcisions, removal of cysts, and D & Cs. The hospital unit treated an average of 3,000 cases per year, and the free-standing unit, 850. The major savings mentioned in the report stems from avoiding inpatient room charges. In 1977, the average cost of a tonsillectomy for a child under 12 was $528 for a hospital patient. That sum includes surgeon, anethesia, and facility charges. At the Rhode Island Hospital surgery center, the cost for the operation was $392. The average cost for a bilateral hernia repair was $1,537 if the patient was admitted. At the center, it was $656. At the free-standing Blackstone Valley Surgical Center, the 1977 average cost for a fallopian tube ligation as $698, compared to the inpatient average of $1,379.

The study confirms that certain types of surgery on well-screened patients can be safely and economically done without hospitalization, and indicates more ambulatory centers could reduce health care costs, Blue Cross officials reported. [From the News Digest November 1979]

IN RHODE ISLAND, STUDY DETAILS SAME-DAY SURGERY CENTERS' SUCCESS A first of its kind study, commissioned by Blue Cross of Rhode Island, shows that from 1975 through 1978, two local Ambulatory Surgical Facilities produced subscriber savings conservatively pegged at $1.4 million, by eliminating overnight hospital care. The Rhode Island Hospital Ambulatory Patient Center in Providence and the Blackstone Valley Surgicare center in Pawtucket were analyzed in detail by Rhode Island Health Services Research, Inc., a non-profit, scientific survey firm. The report is believed to be among only a few serious analyses of an entire health care subsystem, from planning through the first years of operation. Blue Cross of Rhode Island currently provides coverage for surgery at the two ambulatory surgical centers on an experimental basis, pending further action by the Blue Cross board of directors.

TEAMSTERS TAKE LEAD WITH RECORD HIGH BENEFIT

Teamsters Local 251-which historically has led groups in obtaining the latest and best health coverage this month became the first group in Rhode Island to be protected by a $1 million Major Medical benefit. The Teamsters' Health and Welfare Fund trustees requested the increase from $250,000 in Major Medical protection to $1 million to "make sure that Teamsters and their families are never swamped with expensive medical bills," according to the union's chief executive officer, Alexander J. Hylek.

A. T. CROSS PROVIDES DELTA DENTAL COVERAGE TO EMPLOYEES AND DEPENDENTS

Effective Dec. 1, the 100 employees of the prestigious A. T. Cross Company of Lincoln and their families will be covered by Delta Dental of Rhode Island, a comprehensive program administered by Blue Cross of Rhode Island. The worldfamous pen manufacturing firm chose Delta Dental after a comparative selection process, and opted to provide company-paid benefits. Under an agreement with 95 percent or area dentists, Delta Dental pays 100 percent of customary and reasonable charges for oral examinations, X-rays, cleanings, fillings, root canal therapy, extractions, denture repairs, biopsies and emergencies. As of October, 173 groups representing about 52,000 subscribers were enrolled with Delta Dental. Membership is currently outstripping expectations.

MCINTOSH BACKS PLAN TO REDUCE NUMBER OF HOSPITAL BEDS

Blue Cross and Blue Shield President Douglas J. McIntosh backs some basic proposals of a preliminary state health plan which calls for the elimination of 855 hospital beds by 1983, according to The Providence Sunday Journal.

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