The CHAIRMAN. What do you mean by establishment?
Secretary CELEBREZZE. Pardon?

Mr. ROGERS of Florida. I think the question was, what do you mean by establishment?

Secretary CELEBREZZE. We spend $12 million the first year for planning, and then we convert that planning into the operational, which means the renovation, construction, and the operation.

The CHAIRMAN. That is what I was trying to get from you, whether or not it is intended that part of this $37 million would be for some rehabilitation of presently existing facilities. Is that right?

Secretary CELEBREZZE. That is correct.

The CHAIRMAN. That is what I was trying to find out.

Secretary CELEBREZZE. As a matter of fact, under the Senate bill as it is amended, it would all have to be for renovation. You couldn't use any for new construction.

Mr. ROGERS of Florida. For renovation, and not new construction? Secretary CELEBREZZE. That is the Senate bill, nothing for new construction.

Mr. ROGERS of Florida. And so in your plans, how much would you say would be allocated for new construction as well?

Secretary CELEBREZZE. Total construction and renovation for the first year we estimate at about $1 million.

Mr. ROGERS of Florida. $1 million?

Secretary CELEBREZZE. Yes.

Mr. ROGERS of Florida. Is that out of each of those grants of $42 million, or is that the total amount you would expect for new construction?

Secretary CELEBREZZE. That is for each of the

Mr. ROGERS of Florida. Of the $42 million?

Secretary CELEBREZZE. Eight complexes; that would then be reduced under the bill. The $1 million would be reduced to $900,000 because under the terms of the bill, there has to be 10-percent matching.

Mr. ROGERS of Florida. So of the eight complexes, about $8 million would be spent for new construction under your present thinking? Secretary CELEBREZZE. We don't have it broken down that way. We have construction and renovation all in one.

Mr. ROGERS of Florida. So about $1 million out of $42 million would go either for renovation or new construction?

Secretary CELEBREZZE. That is right, in the first year.

Mr. ROGERS of Florida. Yes.

How much would go for salaries?

Secretary CELEBREZZE. Total central administrative costs would run about $200,000 per year.

Mr. ROGERS of Florida. Per complex?

Secretary CELEBREZZE. Yes. That is the complex, the whole framework of the complex. That is the administrative costs.

Mr. ROGERS of Florida. What I was thinking of was I presume that you may have to supplement salaries or provide instructors or training people.

Secretary CELEBREZZE. You will have equipment costs, too.

Mr. ROGERS of Florida. It might be easier if you would just break down one of these complexes, the $42 million. It might give a good picture.

51-959-65--4

Secretary CELEBREZZE. In construction and renovation, you would have equipment costs, and it is our estimate that the total equipment cost per year would be $750,000, of which the Federal share would be 90 percent, or $675,000.

The administrative cost, that is, the cost of administering the complex framework—that is the staff, office expenses, travel, indirect cost, or rental-would run about $200,000.

The continuing education and training, that is, the medical center support of a continuing education program, administered by the medical center, would run about $400,000.

The categorical research center, that is, advanced training for specialists in this complex, would run about $100,000; the diagnostic and treatment stations, which will be four, continuing education and local level administered through these stations, $100,000.

Support of residency training including stipends and all components would be $300,000.

So that the total for No. 4, which is continual education and training, would be approximately $900,000.

Then you have support of patient care costs, and, as you recall, Congressman Rogers, in my opening statement I made the distinction that we do not pay for patient care costs unless we are using them in a specialized field, as we do now, so support of patient care costs incident to research, teaching, and demonstration would run about $450,000 a year.

Six, support of full-time staff, that is, physicians, other professional staff, technicians, research assistants, and nursing staff, would run approximately $950,000.

Mr. ROGERS of Florida. May I ask at this point how many personnel you anticipate will be involved in one of these medical complexes? Secretary CELEBREZZE. I will have to furnish it for the record for you, Mr. Rogers.

Mr. ROGERS of Florida. All right.
(Information referred to follows:)

ESTIMATED NUMBER OF PERSONNEL INVOLVED IN A PROJECTED MEDICAL COMPLEX

The figures represent an estimate of those personnel whose salaries might be paid through the grant for the operation of a medical complex. It should be emphasized that the figures given below are tentative estimates which do not have the benefit of any of these regional planning. The detailed planning of a regional medical complex will be done at the regional level. The bill provides the flexibility that permits a locally derived plan of operation to be devised which is particularly suited to the needs and resources of each region. The particulars might vary considerably in actual complexes. These figures are to be considered, therefore, as an order of magnitude. It should also be noted that many physicians and other professional staff might be involved with the activities of a complex on a part-time basis while continuing to engage in their other professional activities, Since the major objective of the complex is the improvement of patient care, these figures cannot be considered as a diversion of professional personnel from patient-care activities.

Secretary CELEBREZZE. The cost of data gathering and recordkeeping system and other communications system we estimate at $250,000, so on the total regional complex-while we ask for $50 million, which is the authority, our actual budget is just below $50 million; there would be a difference there the total regional complexes we estimate at $4,480,000 for one.

The eight regional complexes will come to a total of $35,840,000, and when you add the planning grants of $12 million, we estimate the total expenditures or appropriations for the first year would come in the neighborhood of $47,840,000.

Mr. ROGERS of Florida. Thank you.

Secretary CELEBREZZE. We are asking for the authorization for $50 million.

Mr. ROGERS of Florida. What do you anticipate is your total need for the next 2 years, if you could give us that?

Secretary CELEBREZZE. Let me put it in round figures.

Mr. ROGERS of Florida. Yes.

Secretary CELEBREZZE. For example, we said in the first year the authorization under the bill is $50 million, the authorization, and I am following the Senate recommendations here, because we had no figures.

We said such other sums as are needed after the first year. In the first year you would have 40 planning grants, and 8 operational grants, the first year. In the second year we expect to have 10 more, or a total of 18, then.

You must recall that part of your costs will lap over into your second year because they are operational costs.

We ask for authorization for the second year of $100 million. The third year we estimate that there will be 7 more, and we will be up to a maximum of 25, and we ask for an authorization of $200 million. In the fourth year we hit the 30 mark, and we ask for an authorization of $300 million.

Mr. ROGERS of Florida. What is the operating cost estimated to be each year for one of these centers after the original establishment? Secretary CELEBREZZE. We estimate the first year the figure I gave you, of approximately $42 million.

Mr. ROGERS of Florida. Yes.

Secretary CELEBREZZE. In the second year, according to Dr. Dempsey, it will be approximately $5 million, because you are getting into your overlapping.

In the third year we estimate that there will be $8 million, because you will have 25, and again you have the overlapping.

And in the fourth year we estimate 30 centers, at approximately $10 million each.

Mr. ROGERS of Florida. The operating the fourth year is about $10 million, and you anticipate that will be about the peak?

Secretary CELEBREZZE. I think that is about the peak, at $10 million. Mr. ROGERS of Florida. Thank you very much, Mr. Chairman. Thank you, Mr. Secretary.

The CHAIRMAN. Mr. Keith!

Mr. KEITH. Thank you, Mr. Chairman.

Mr. Secretary, I had a visit yesterday from a representative of Dr. Welch of the Massachusetts Medical Society, representing, as I do, towns on the outskirts of Boston medical complex.

They are very much concerned about the effect that this bill will have on what they now consider to be their responsibility, the kind of operation that you have set for the goal on a nationwide basis. Dr. Welch, president of the Medical Society of Massachusetts, has asked, Mr. Chairman, that I talk with our committee staff for an opportunity to testify on Friday on this bill.

I am sure you welcome the questions that are in their minds and the contributions that they may make.

I won't take too much time today, but I would like to ask one or two questions.

You projected a few minutes ago the millions of dollars that were going to be spent in construction the first fiscal year of this program. Secretary CELEBREZZE. Primarily modernization.

Mr. KEITH. Primarily modernization?

Secretary CELEBREZZE. Yes. As I said earlier, we asked for construction funds. The Senate bill took it out.

Mr. KEITH. In what area do you anticipate making this?

Secretary CELEBREZZE. There are many areas in this country in which they do not have any facilities. They don't have a medical school. Some areas in this country don't have hospitals.

When you build a complex in those areas, you may have to begin partly with construction funds.

In many of the other areas, particularly in the eastern part, as in your area in Boston, they have these complexes now. They have the physical structure. And we intend to use those physical structures, that is, we are bringing them together.

There will be no buildings built, but there are areas, vast expanses in this country, in which there are not these medical services, so we thought we had to remain just a little flexible and have authorization for construction funds, rather than being limited to merely renovation. Mr. KEITH. You have in mind, then, modernization of the complex that we have in, say, the New England area, rather than a brandnew building?

Secretary CELEBREZZE. Yes.

Mr. KEITH. Under the program that has been outlined in the proposed legislation, it says that fees would not be charged for services rendered in those cases which are being studied in these new complexes. What would be the effect of this kind of operation on the staffs and the hospitals of the area where they have been charging fees for these services?

Secretary CELEBREZZE. Congressman, again you have to draw a distinction, and we are not doing anything different under this bill that we are not doing now.

For example, if we take a cancer patient into NIH today, a special type of cancer patient on which we are conducting research, all the facilities are used. There are no charges there. Likewise, in these complexes, where they take the individual in because it is a case that they want to study, in which we want to determine some of the answers, there will be no charge. In all other areas they will be operated on the same basis as you do now in the hospital.

Mr. KEITH. What is concerning, naturally, the medical association in Massachusetts is that they have been studying these cases. They have been having their seminars. They have been disseminating this

information. They have been charging fees for this, and if there is established an organization within the immediate area where these similar objectives are currently in operation, what is it going to do to the established procedures and payment of costs in these hospitals that are currently giving this service, if there is in effect a very highly recommended organization which is in reality competing?

Secretary CELEBREZZE. Let's take the situation where the normal fees are charged or received by the institutions comprising the medical complexes for services rendered. As I understand you, even the individuals that come into these hospitals for study purposes-I don't want to use the word "experiment," because we don't experiment— study purposes, that these hospitals actually charge that individual, though it is something they are basically concerned with. We in NIH do not charge.

Mr. KEITH. If you have small NIH's all over the country, imposed upon existing medical research institutions like Children's Hospital in Boston, what would be the impact on the medical fraternity and the payment of fees, and the payment there will be for the services rendered by the hospitals in the operations of those hospitals which are after all the backbone of the medical services that are rendered?

Secretary CELEBREZZE. With your permission, I would like to refer that to Dr. Dempsey and let him answer.

Mr. KEITH. Yes.

Dr. DEMPSEY. The provisions of the bill and the purpose of the plans have an overriding principle. That principle is, we do not propose to interfere with existing mechanisms for provision of services, payment for care, or any other kind of activity carried on in the institutions participating in this program.

Included in the latter part of this statement is the fact that a preexisting program would not qualify for support under this legislation except insofar as it might be expanded and improved. Therefore, there would be no intent to interfere with the programs carried on by the Massachusetts Medical Society or by the hospitals or with the ways in which they finance these.

However, it would be possible for these programs to be assisted through the medical complexes to provide more than they can presently.

Mr. KEITH. Is there available to your staff, and has your staff analyzed it if it is available, the probable or the projected impact of the imposition-and I mean that in a connotation of not imposing upon, but adding to-of one of these complexes upon a currently existing research center like Massachussetts General, Children's Hospital, and others that are in the Boston area, Harvard and Tufts Medical Schools, and the established means that they have of charging fees to pay the costs of their hospital operation?

Dr. DEMPSEY. There are not only estimates of this, Mr. Keith, the National Institutes of Health have considerable experience. The National Institutes of Health have had to maintain clinical research units, and clinical research centers, and desire the ways whereby the funds for these units and centers may be used to augment the funds of the hospital in order to contribute toward their common goals.

The second thing I would say about that is that Dr. Shannon and his staff are, as he indicated earlier, carrying on very active conversa