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services in our out-patient clinics so that they function as group practice organizations in lieu of the presently over-specialized, fragmented services which are provided in these clinics.

Question 3 could be dealt with through an amendment to the Hill-Burton Law. As I understand it, the present law provides funds for the building of hospitals in areas where the number of beds available are deficient. It takes no account of the fact that in many areas, while the bed complement is sufficient, the physical quality of those beds is such that they all require replacement. An amendment which would provide Federal funds for the replacement of obsolete public general hospital beds would be a big help in speeding up the process of converting these general hospitals into physical facilities which would be acceptable to all income levels.

Question 4 may be answered by pointing out that it does not require screening facilities to provide routine physical examinations. Under Medicare it should be possible for a patient to visit a physician for a routine physical check-up at least once in each twelve-month period. The law might stipulate the minimum services that should be performed at such an annual check-up.

I regret that I was unable to appear personally at the hearing but I was busy chairing a session at the Surgeon General's Group Practice Conference in Chicago. I hope that I have answered your questions adequately.

Senator SMATHERS. Now our next group of doctors includes Dr. Martin Cherkasky, director of the Montefiore Hospital & Medical Center, and he is accompanied by Dr. Cecil G. Sheps, general director of Beth Israel Medical Center; Dr. George R. Reader, director of the comprehensive care and teaching program, Cornell Medical College; and Dr. David D. Thompson, director of New York Hospital.

Dr. Cherkasky will be the first witness to testify, and each of the other doctors has a statement.

All right, Dr. Cherkasky, we are very pleased to have you, sir.

STATEMENTS OF MARTIN CHERKASKY, M.D., DIRECTOR, MONTE

FIORE HOSPITAL & MEDICAL CENTER; CECIL G. SHEPS, M.D., GENERAL DIRECTOR, BETH ISRAEL MEDICAL CENTER; GEORGE G. READER, M.D., DIRECTOR, COMPREHENSIVE CARE AND TEACHING PROGRAM, CORNELL MEDICAL COLLEGE; AND DAVID D. THOMPSON, M.D., DIRECTOR, NEW YORK HOSPITAL

Dr. CHERKASKY. Senator Smathers and Senator Kennedy, we are delighted to have you here. Some of the solutions we hope lie in your hands.

Before I get on with my brief prepared statement, I must continue on where you left off with Dr. Brown. First of all, Senator Kennedy, I think that in response to your question about the doctors of New York compared with the doctors of California, I want to assure you that our physicians will be as aggressive and effective in pursuing fees under medicaid and medicare as the people in California ; you will not have to bow your head in shame in that regard.

One of the problems that we have in New York City is that there has been a great deal of foul-up in payment of doctors, and for that reason the evidence is not all in but I would point out to you that if someone wanted to devise a program to encourage a doctor to delinquency, to encourage him to think more about fees than about care, then medicaid and medicare were almost created with that view in mind.

As a matter of fact, the position of organized medicine in the State of New York, in my view, has been disastrously antisocial.

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Every attempt which has been made to link standards of quality to fees, has run into organized medicine's resistance.

The medicaid funds are spent on behalf of the most needy part of our population. They are the ones who have the greatest difficulty in finding thier own way through this complex business of getting medical care. Is it not reasonable that those who are responsible for these funds ought to see to it that the money is spent for appropriate kinds and quality of service?

Senator SMATHERS. Doctor, may I interrupt you right there because I am naive about a lot of this business.

Dr. CHERKASKY. I doubt that, Senator. Senator SMATHERS. I am. I would like to have you explain to me a little bit further why it is that you think that this program that we had hoped would be at least part of the answer to the problem of lack of medical care for the aged has not worked. In other words, you said you

could think of anything that had worked the wrong way, it was this program of medicare and medicaid.

Dr. CHERKASKY. I am talking primarily about the payment for doctors' services. I think the part such as the hospital part is excellent. I think the breadth of the medicaid program is superb, but I think that when we get to dealing with the payment of the doctors we don't do what is in the public interest; we respond to the enormously effective pressure of the medical lobbies.

We know from previous experience, Senator, that fee-for-service produces unnecessary utilization. The woods are full of figures and facts from the United Mine Workers program, from all kinds of studies, that the fee-for-service arrangement produces unnecessary services and surgical procedures.

Senator SMATHERS. I can ask you right there: Then as far as I gather from what you are saying, your criticism is not directed at the program per se of medicare or medicaid; you narrow your criticism down to the fee-for-service, to that particular section of it?

Dr. CHERKASKY. That is one of my criticisms with regard to that program, but of course you know

Senator SMATHERS. Can I just stay on that a moment because Senator Kennedy said we might be able to do something about that particular facet of the medicaid program. What is it right in that field that you object to so much?

Dr. CHERKASKY. I think that when we set up money arrangements, we have to examine what direction that money leads to, and I think we have got to be very hard and tough about it and not depend upon the so-called ideals of any profession or any group.

FEE-FOR-SERVICE MECHANISM

I used to believe, once upon a time, that everybody did right because it was right, but you and I know it does not always work out that way. When you set up a fee-for-service mechanism, you are encouraging the practioner to provide more services and to collect more and higher fees, and I would say to you the fact that in the last 2 years doctors' fees have gone up more than in many years before, about 15 percent is a very simple response to the fact that there is medicare legislation

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and medicaid legislation which means that while they knew before these people could not pay those fees, now there is somebody who can pay these fees so you are going to have higher fees and you are going to have more fees.

I would not mind that so much but I don't think we are getting our money's worth.

Senator SMATHERS. In other words, you are saying that there was a catchup feature as Dr. Brown testified that was needed originally, or are you saying, and as you suggested, that because somebody could pay, it was possible for them to get a maximum amount of money even though they were not deserving of that high a fee?

Dr. CHERKASKY. You know, Senator Smathers, the American Medical Association told its physicians under medicare not to accept assignments. By an assignment the doctor would then agree to accept what is the reasonable fee in his area. Say it is a $10 fee, the Government would pay $8 and the patient would pay $2. By not accepting an assignment, and they say they don't accept assignment because of some so-called hallowed relationship between patient and doctor, how that is favorably affected by squeezing a fee out of a patient I have never understood; but by not accepting an assignment, they can charge the patient anything—$20. The patient will only recover $8 and have to pay the difference.

In addition, we are talking about older people. One of the reasons we have medicare is because they don't have the money with which to buy these services. By refusing assignments the older patient's limited income is required to pay the doctor and then recover from the Government; this is a severe burden.

Senator SMATHERS. Now then, my final question on that point would be: Does the fault lie with the legislation or does it lie with the doctors?

Dr. CHERKASKY, I think it lies with the legislation. I think we have to take into account some of the realities of life, and I think we have to set up our money to produce the kinds of qualities and the kinds of relationships between patients and doctors that we want to foster.

You know, in response to the question that you ask and that Senator Kennedy asked, too, I would like to say a further word about the doctors. I agree with Dr. Brown that one of the fundamental things that we have not done is reorganize and restructure our medical care services in some logical fashion so that we then could pour money into a reasonable structure.

What we have really done is taken a structure in medicine in this city and in this country so chaotic that in my view it is almost hard to believe that it happened accidentally, and all we have done is to pour huge additional amounts of money into this chaotic structure.

In my view, the key to this is still the physician. I think we need a new structure, but I would also tell you I think we need huge additional numbers of doctors. I think we need more doctors because I don't think there are enough doctors to go around and do the job. I also think that we need enough doctors so that we are going to be able to deal with them in some kind of a reasonable fashion.

I might say to you that I had not intended to do this but I have a quite specific proposal for you. We have about 100 medical schools in this country turning out about 9,000 doctors or a few less than that annually. As you probably know, to fill out our inadequate number of doctors in this country, to keep the present adequate ratio of doctors to a growing population, 20 percent foreign-trained physicians are licensed every year. In other words, the United States is a debtor nation with regard to physicians.

Senator SMATHERS. Do you think that doctors of the Medical Association of New York would allow these foreign doctors to come in and practice?

Dr. CHERKASKY. Well, they do in the State of New York because if we didn't we would be in real bad shape.

Senator SMATHERS. I regret to say that in my State of FloridaDr. CHERKASKY. Well, they are tougher.

Senator SMATHERS. They just won't let them come in. We need them badly. They are Cubans who have been run out of Cuba by Castro and are very well qualified doctors, but the medical profession just adamantly stands there and says, “You cannot practice here.”

100 ADDITIONAL MEDICAL SCHOOLS PROPOSED

Dr. CHERKASKY. I think, Senator, that obviously qualified people ought to be encouraged to come here from any place. We think we have the best medical education in the world and for us to be a debtor nation and to be short of doctors is, in my view, a national disgrace.

We have heard about various solutions. First of all, some people don't want to face up to it and they talk about training subprofessionals and about all other ways of doing it except adding more doctors and more nurses. I believe we need subprofessionals. I believe we need to use doctors and nurses much more effectively, but I also believe we need huge additional numbers of doctors and nurses.

My own thought is that we ought to, in the next 10 to 15 years, create 100 additional medical schools, increase the numbers of physicians that we turn out from 9,000 to 20,000. We need to subsidize those people who go into medicine, because, as you know, one of the reasons for the characteristics of medicine is, 50 percent of all the physicians come from the upper 12 percent of the economic population, which means that this profession is really not representative of the society as a whole.

We have magnificent talent in the underprivileged areas of this country who could make a contribution to medicine if medicine was a profession which they could even hope to enter, but you know what an obstacle course it is educationally and financially. I believe that everybody who goes to medical school ought to be fully subsidized.

Senator SMATHERS. Do you mean fully subsidized while he is in medical school?

Dr. CHERKASKY. Yes.
Senator SMATHERS. And while training?
Dr. CHERKASKY. Yes.

Senator SMATHERS. The subsidy stops once he finally finishes his training?

Dr. CHERKASKY. Right.
Senator SMATHERS. All right.

Dr. CHERKASKY. I have done some very crude figuring on this. It is my estimate that if we were, when the program is in full swing, to spend a billion dollars a year, with that billion dollars we would create medical schools, create the teaching staffs that are necessary for those medical schools, subsidize every single student in medical school in the United States, change the character of medical education to produce physicians more in keeping with the social goals of the society and really solve this problem.

I must say to you we have a lot of other things that we need to dolegislative changes and so forth. In my view, if we don't get to that core problem, I don't think we are going to have the medical care not only for older people but there is much to be desired in the care that is given to people who pay their own way.

Senator SMATHERS. You go ahead with your statement. We have some other questions I want to ask you but we also want to get that in because it is an actual statement.

Dr. CHERKASKY. It is brief.

I appear before you today as a long-time proponent of the financing of health care for the aged through the social security system. What I say here should in no way imply that I do not consider this legislation seminal and revolutionary. At long last we have a commitment of social policy on the part of the Congress that at least for the aged, the Federal Government has a crucial role, to play in the financing of health care services. This achievement is not to be underestimated. This is not to say, however, that all is going well with this program; this is not the case.

I might say initially that part A of title 18 has been the most successful component of this multifacted program. Hospital care is being rendered to the aged of our community as a right and has relieved those persons from a terrifying burden. On the whole, hospitals are now on a firm, viable financial footing for the first time in their history.

The program has had a salutary effect on standards of hospital care, especially in its insistence on utilization committees and review. In our own institution, we are expanding the function of the Utilization Review Committee to encompass the whole area of medical audit and quality control-something we have long wished to do.

INADEQUACIES OF Part B-MEDICINE I would be less than honest-which I never am-if I did not indicate that my early uneasiness about part B of title 18 unfortunately has been confirmed by experience with it. I am convinced that in the vital areas of quality, utilization, and costs, this aspect of the medicare program has significant inadequacies.

Members of this subcommittee, I am sure, realize that this is an open-ended program with no quality controls.

By the way, Senators Smathers and Kennedy, it is interesting that Senators fought tooth and nail; we finally did something about laboratories but only with great difficulties, Senator Kennedy.

There is very little control of utilization and, as it has developed, insignificant control over charges and costs. You know the figures on increased physician charges as well as I do. The program is fragmented,

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