covering many services, it is true, but not covering others. The increased physician charges plus lack of comprehensiveness, capped by deductibles and coinsurance, have vitiated the impact of this program for the aged patient.

A recent report from the Social Security Administration indicates. that in a random sample, only 52 percent of the costs incurred for medical services covered under part B is potentially reimbursable to the aged.

You know, all of us, and you talk to the older people, thought that part B was going to pay for medical costs, for doctors' costs. When one considers the hospital benefit deductible and coinsurance, the lack of coverage for drugs and dental care, it is safe to say, I believe, that less than 50 percent of the total medical-care costs incurred by the aged are being covered by title 18, parts A and B. This is a far cry from what we thought we were doing with this legislation.

The main message, however, that I wish to bring to your attention this morning is one of principle and concept. Structurally, the fundamental defect in title 18 is the separation of part A and part B. This separation is unfortunate not only because of its administrative difficulties which have turned out to be legion but because it has tended to freeze existing modes of medical practice and prevented major innovative developments in the delivery of health services.

We at Montefiore Hospital believe that medical care is a continuum; that the hospital should be the core facility for the delivery of health services to the community-preventive, treatment, rehabilitative, for both the vertical and the horizontal patient. Ambulatory services should be physically or functionally related to the hospital on the basis of prepaid group practice.

Dr. Brown said something that was so true: The cost of hospital care is escalating and is going to soar even more. Our costs at Montefiore will be higher in 1967 than they were in 1966, and in 1966 they were 15 percent higher than they were in 1965. One of the reasons they are higher is because medicare and medicaid have poured huge new amounts of money into a medical establishment with the same number of personnel. We had a radiologist who in January 1965, 20 months ago, was receiving $14,000. I now pay him $29,000 because I have to pay him that or I can't keep him.

Senator SMATHERS. Does that not result from the shortage of radiologists?

Dr. CHERKASKY. A lot of money and not enough people. That does it in every economic area.

Ambulatory service should be prepaid group practice. That is one method we know cuts down on hospital cost because it cuts down on hospital groups. We have a medical group that provides care for 20,000 people. Those people use 20 percent less hospital days than if those same people are cared for in this town by doctors who are on feefor-service.

We have $350 million Blue Cross in this town. One-fifth of that, $70 million, is not hay, and that is the kind of reward that we could expect of all practice in New York City on an organized basis. That is the only way for modern medical care to deliver.

Senator SMATHERS. May I ask you a question there, and I agree with that. How do you get these doctors to participate in this? That is what I don't understand.

Dr. CHERKASKY. This is one of the things I am talking about when I talk about doctors in sufficient supply so we can deal with them. I say to you, when you have a profession that is in such enormous demand and where the supply is short, they are not very susceptible to the needs and desires of the society. I don't think we can afford that any longer.

A SPECTRUM OF FACILITIES

We also need, as a part of this whole spectrum, extended-care facilities, nursing-care, home-care programs; all should be coordinated and integrated in the hospital. We don't just talk about this in philosophical terms. The Montefiore Hospital, while we have not gone as far as we would like, has a group-practice unit, has a home-care program which it pioneered over 20 years ago; it has a nursing home, it has a recreational facility, it has relationships with nursing homes around us where we provide medical supervision. We are the institution that you refer to that created the OEO program that you are going to be seeing this afternoon.

So the things we are talking about, coordinated medical care centered around the hospital, is not a figment of the imagination despite the fact that we have had to piece the moneys together from a thousand different sources we have it in operation. It can be done. If we set up our money in a way to encourage this, I think you could have this all over the country.

It is our firm conviction that this concept of hospital care is the best method of insuring high-quality, comprehensive service to the aged and to the population as a whole, while at the same time it shows the most promise for moderating or controlling medical-care costs.

The separation of doctors' services from hospital services, the support which part B-by the way, the way it is set up, our group practice is in jeopardy. I won't go into that with you now. Our group-practice activities are being menaced by this particular undertaking because it is set up in such a way that it is going to pay us to go to fee for service. Senator SMATHERS. This would be radical if we ever did this and I am just merely throwing it out to get your thinking: Should weSenator Kennedy and I and other legislators-change the law to say that there would be no doctor who would be eligible to receive a fee unless he participated in group practice?

Dr. CHERKASKY. I would say to you, if you do that at the momentyou would not have any care. There are realities we must face. I would say to you, while I think it is possible with ingenuity to reward the kind of practice which is going to accomplish our goals, we are not doing that.

Senator SMATHERS. Can you tell us what that ingenuity would be? We are looking for that.

Dr. CHERKASKY. I will tell you, for example, that we now have in our group something like 4,000 people over 65. If the mechanisms were worked out whereby we would be able to receive what we need for the care of those patients by an overall payment rather than by a fee-forservice arrangement, we would jump at it and it would, in my view,

still be less money than you would pay us for the care of these 4,000 patients if we go on fee for service.

We can get the money we require and more for fee for service, but we cannot get the money by capitation, which means, in fact, you are going to drive people who want to be in prepaid group practice out of it.

I would say to you that I think that every place where you could provide payment on an annual-premium basis, the Government would get more care for less money without any question.

The lack of comprehensive care under part B, the difficulties which group practices like ours have in maintaining the capitation system of payment for doctors-all have the effect of preventing the movement toward the creation of the hospital as the central resource for the delivery of health services in the community and hold back the development of group practice.

DIFFICULTIES IN EXPERIMENTATION

It would be wrong to assert that it is impossible to develop such a program under the existing legislation. My point, however, is that the existing legislation makes it extremely difficult to experiment with new methods of delivery of health services.

We went to Social Security before the medicare law was in effect and said, "Why don't you provide for overall payment to provide for home care, doctors' care, diagnostic care, nursing-home care, and let us experiment and see how, by using these various interrelated facilities, we can come up with the best package of care at the least possible cost?" They were unable to do this.

I understand that now hopefully some of the changes which are being contemplated will not force us to do what we have been doing so long so wrong but will enable us to begin to experiment in these new ways of bringing services together.

Just a word about medicaid. Ironically this program has the potential to provide significantly more comprehensive service to the aged than title 18, as you know, with general care and drug coverage and things of that sort. Practically speaking, however, our experience in New York City with this program up to now has not been a happy

one.

First and foremost, there have been no quality standards for doctors. Every time we wanted to talk about that, the doctors wanted to talk about fees. Secondly, there has been little control, if any, over doctors' fees and services under the program. And as yet, we have not seen any significant improvement in ambulatory services of hospitals, both municipal and voluntary, as a result of a vast infusion of new

moneys.

I do not presume to say that this improvement will not come. However, at the present time my impression is that medicaid has meant more money for doctors and more money for hospitals without any significant improvement in the quality of service to the public. Senator SMATHERS. All right, sir. That was a strong, hard-hitting

statement.

(The chairman addressed the following questions to Dr. Cherkasky in a letter written after the hearing:)

1. On page 39 of the transcript you said that Medicare should help "produce the kinds of qualities and the kinds of relationships between patients and doctors that we want to foster." Later you and Dr. Sheps touched upon the need for quality controls under Medicaid. I would appreciate your giving me an additional statement on: (a) your suggestions for legislative changes that would improve the quality of care and (b) specific information on the way in which quality standards could be imposed.

2. Your proposal for 100 additional medical schools for fully subsidized students also calls for additional discussion. Would you care to give a supplementary statement on the need for such action and on the details of your proposal?

3. You say on page 1 of your statement that Part A of Title 18 has helped put hospitals "on a firm, viable financial footing for the first time in their history." Are you in agreement, then, with current reimbursement policies to hospitals under Part A?

4. Your comment about the need for "coordinated medical care centered around the hospital" leads me to ask for your suggestions on Federal action intended to encourage development of such coordinated services. Your complaint about having "to piece the monies together from a thousand different sources suggests that you now encounter grave difficulties. Will the "Partnership for Health" legislation be of help in this area?

5. May we have additional discussion of your proposal (p. 49 of transcript) for payment on an annual premium basis, and the likely effect such an arrangement would have in helping you to experiment with new methods of delivery of healthy services?

(The following reply was received :)

In response to your letter of October 27, I am pleased to provide further amplification of my views on certain matters which I brought up in my testimony before the hearing of the Subcommittee held in the Bronx on October 19, 1967. Question 1: You asked for suggestions concerning legislative changes that would improve the quality of care to patients through Medicare or Medicaid and also, specific information as to the way in which quality standards could be imposed.

The main thrust of my testimony I believe was that it is difficult to deal with the problems of quality care in the community with the existing open ended fee-for-service system under Part B, and for the most part under Medicaid.

As I see it, in New York City and New York State, legislation and regulations as now exist provide absolutely no quality or utilization control that government can exercise under Part B of Medicare. The only requirement for rendering medical care is for a physician to be licensed.

Medicaid, or Title 19, gives the individual states considerable leeway in establishing the quality controls. In New York State there is apparently some control over specialty practice but at the present time there is very little or no control over the private practice of medicine on a general practice level. Some kind of continuing education for the physician will be required around the middle of next year.

The entire matter of quality of medical care especially in physicians' offices is an extremely complex one. In fact, one of our initial tasks should be to further study how we can check on the medical quality in doctors' offices.

QUALITY EVALUATION TECHNIQUES AVAILABLE

There are now at hand very adequate techniques to check on the quality in organized systems of care, i.e., in hospitals, nursing homes and other such institutions, in outpatient departments and in group practices. There is, however, no reasonable technique which would enable us to know of all that goes on within the doctor's office. Yet this is where the bulk of medical care services in this country takes place.

We do not, however, have to wait for the development of new techniques to bring institutional and organized medical care under appropriate continuous audit. As a matter of fact, since there is a great interplay between office and institutional practice, if we were to bring our institutional practice standards up to an acceptable level, we would have a greater impact on practice in the doctor's office. I will only touch on some of the steps that might be taken. To cover this adequately I would have to write a book.

The basis for quality care is related to the specialization which has occurred in medicine in the past 35 years. While specialization has created some problems of fragmentation of patient care, it has clearly enabled us to bring to bear on the patient a level of scientific skill of a very high order. If we were able to secure for every person in the United States the services of a Board qualified specialist to deal with the major medical events in the patient's life, we would have enormously improved the quality of medical care, at least with regard to serious illness.

How can this be reflected in legislation? Provisions for payment could require that major surgery only be paid for if carried out in an institution fully accredited by the Joint Commission on Accreditation and carried out by a surgeon who is either Board qualified or Board eligible. This should be a federal requirement with the provision that if local circumstances make it impossible to fulfill this provision in one specialty or another, the states would have the right to waive. There also should be quite different payments where waiver has been found necessary. In other words, a gall bladder removal by a qualified specialist should be paid for at a significantly higher rate than by a general practitioner. That these standards have practical consequence can easily be demonstrated. It has been reported that not fully qualified people operating on cases of cervical cancer produce a 50% cure while such cases, operated on by fully qualified gynecologists, produce an 80% cure. Can we afford to allow for that 30% difference in life? Incentives could be further built in to help and encourage communities which now have surgery by not fully qualified surgeons to move in the proper direction. Where a person whose medical care is paid for by federal funds, in whole or part, has a major diagnosis of heart disease or cancer or diabetes, or a whole host of other serious illnesses and where the physician who cares for this patient is not, by his training, fully qualified, a consultation with a qualified specialist should be required.

One of the serious problems we have in maintaining the quality of medical practice is that many physicians have either no hospital appointment or have appointments in institutions which, while they are called hospitals, do not have any of the hallmarks and the institutional regulations which would limit the doctor to doing those things of which he is capable and which would also act as a source of continuing education for the physician. In due course, federal funds should only be paid to those physicians who have active appointments at hospitals which have the hallmarks which I have noted above.

If you require any evidence that practicing physicians, both within their offices and within the institutions that many of them work, practice medicine unacceptable in the light of our present scientific knowledge and capacity, we can document this from our own experience at the Teamster Center at Montefiore Hospital and in the two surveys of Teamster quality medical care carried out by the Columbia School of Public Health and Preventive Medicine.

In the long run I believe that the solution to quality in medicine must be achieved in another way. We must have a network of interrelated community hospitals, teaching hospitals and medical schools. These hospitals must have community rather than institutional goals. The area of hospital responsibility would not be only to the inpatient but must also include broad responsibility within a geographic area for the medical care of the community. All doctors within this area should serve the community as part of the hospital staff. In this way, we would have a structured mechanism whereby the doctor, under supervision and with accountability, does only what he is fully qualified to do and the patient does not suffer because of the limitations of any single doctor since there is available for his immediate care all of the institutional and extramural resources he requires. I am attaching a copy of a paper I gave at the New York Academy of Medicine which provides a schematic proposal for organizing urban medical care. Question 2: The overwhelming need for additional physician manpower is now generally recognized by all students of the problem. The American Medical Association until recently resisted this conclusion. Now even they are convinced that there is a serious shortage of physicians serving the community.

It is my conviction that we need double the number of physicians we now have. At the present time there are in the country roughly 300,000 physicians, or a ratio of 153 per 100,000 population. It should be noted, however, that roughly 50,000 of these physicians are inactive or in hospital administration, teaching and research. Moreover, almost 20% of the doctors we license each year are foreign trained. It has been estimated by the American Medical Association that 13%,