The first suggests the need for added benchmarks on quality to assure the public that as costs are affected, quality will remain high. The second suggests that we need to have a more conscious relationship among standards and other controls such as that, for example, between State agency certification of hospitals under Medicare and accreditation by the Joint Commission on Accreditation of Hospitals.

THE EXPANDING ROLE OF HEALTH PREPAYMENT

In its early years, health prepayment focused to a great extent on making medical services available to people who otherwise would not be able to purchase them, and correspondingly making it possible for providers of care to render service by insuring a stable financial basis. These objectives are still valid. However, if there has been a major change in the role of health prepayment plans, it is that they must increasingly accept a responsibility to participate in affecting the way service is rendered. That is to say they must participate in the development of visible instruments in the health care system which demonstrate to the public that health care dollars are being effectively spent.

With this in mind those of us who are involved in health prepayment have given and are continuing to give increasing attention to such programs as the following:

(1) Participation in areawide planning. Most Blue Cross Plans participate in this important community-wide activity. A few Blue Cross Plans have experimented with relating participating status of institutions to their status in an areawide plan.

(2) Accreditation and licensure. Among some Blue Cross Plans reference is made to these as a condition for full participating status as a Blue Cross member hospital. In nursing home coverage Plans are considering voluntary accreditation and Medicare certification as important criteria.

(3) Utilization review. Inside and outside Medicare there is growing insistence on the need for the hospital to monitor its use from an economic as well as a clinical point of view and a growing determination by Plans to provide data and other assists to make this possible.

(4) Claims administration. The claims review process provides information that makes it possible to develop parameters of use to select cases falling outside these parameters for discussion with physicians and other providers of care.

(5) Reimbursement. Ways are being sought to make the payment in itself an incentive for more efficient care. This can come about through spirited negotiations on the cost formula or built-in incentives of an economic nature. Let me say here that I feel that such devices as deductibles and co-payment, intended to serve as consumer-related incentives for appropriate use of services, have very little application in the payment of health care expenses. They are particularly inappropriate among the elderly, where their potential effectiveness in deterring overuse is overweighed by their potential promotion of underuse. These are devices which should be reserved in prepayment for the small repetitive expenses where the cost of administration could otherwise become excessive.

(6) Breadth of benefits. Yearly, the range of benefits available to all segments of the population is growing significantly. This growth increasingly serves to protect individuals, among them elderly persons, against financial hazards of illness. Also, broader benefit patterns that include coverage for services outside the hospital take the pressure off the physician to concern himself with his patient's personal financial situation before prescribing desirable although expensive services. Therefore, such patterns act as an encouragement to early diagnosis and treatment at the same time providing alternatives and other reasonable approaches to post acute care. Here, I should like to take special note of drugs. They are a considerable expense to the average older pension. Fortunately, they are now beginning to be covered under Title XIX programs where such exist. What is needed immediately is more activity in the drug benefit area in the private sector. Here again, however, we must face up to the problem of control. What about the pros and cons of generic vs. brand name drugs? Can exploitations of various kinds be dealt with effectively? There are many hard decisions to be made. Most importantly, however, we should make the benefits available, and then address ourselves on a continuing basis to the issue of professional, fiscal or legal controls in the public interest.

ORGANIZATION OF HEALTH SERVICES

While it is important that prepayment agencies continue to pursue these objectives and to enlarge their role, other areas must also be taken into consideration. There remain some problems outside the scope of what I have discussed thus far that need the attention of our health statesmen and our legislative bodies. Too many health care facilities dealing with chronic illness are anachronistic and geographically remote. There is a significant need to update the capacities of nursing homes, certain chronic disease hospitals and rehabilitation institutes, and to relate them more effectively to the general hospital and the balance of the health community. Whereas the purchasing power of private prepayment and government programs is reaching out in these directions, special appropriations are needed to stimulate the proper capital growth of the structures required. The total result is important on a community-wide basis. If we are to achieve the proper relationship of private practice to hospitals, to health departments, to post-acute care, etc., there must be in each State an overall planning mechanism concerned with program and facilities. Thus the sensitive implementation of PL 89-749, with proper roles and representation for community health services and organizations, becomes important.

A major need is for prepayment agencies among others to evaluate various organizational forms of rendering health services. At the present time, there exists a wide band of practices in the provision of personal health services. For example, one finds physicians practicing in a solo capacity; others in solo practice but sharing joint office facilities; still others sharing income as well as office facilities; some groups constituting a hospital staff such as at Henry Ford Hospital in Detroit; and others in groups some of which are related and others not directly related to a hospital.

Further, one finds a wide range of payment mechanisms employed in paying for physicians' services. Some of the various patterns mentioned above receive payments on a traditional fee for service basis. Some are paid through a prepayment mechanism tied directly to the group of physicians and their services such as HIP in New York, and some represent combinations or variations of each.

There are those who feel that a comprehensive prepaid group practice pattern is highly productive and effective. Others feel that more informal organization and more traditional methods of financing are desirable. In all probability, some practitioners will always prefer one type of practice to another. Some may be better suited to one type of organization than to another. However, in a decade when the need for productivity is so compelling, it is extremely desirable to weigh the advantages and disadvantages of various prototypes. What are, in fact, the use, cost and professional strengths and weaknesses of various organizational patterns of medical practice? If there are quantitative or qualitative advantages to any given form, the public has a right to know about it. I have called previously for objective studies of the situation by leading associations such as the American Medical Association and the American Hospital Association. I call for them again. Further, I think any laws which artificially prohibit associated practice on the part of physicians, wherever it may be along the scale, should be struck down unless they can be directly related to either moral or ethical considerations inimicable to the best interests of the public.

At the moment, we are in a position where the whole topic of associated action by physicians is overcharged emotionally. This bears in turn upon a lack of definitive information. With costs and delivery of health services now a matter of major public policy, such information is essential if we are to avoid precipitous actions or pursuit of avenues which could lead to underfinancing or under

care.

PROGRAMS FOR THE ELDERLY

Specifically in regard to the elderly, I feel that Medicare is performing a great service. Title XIX programs, as they develop, stand to add considerably more assistance. With complementary coverage in the private sector for those with adequate purchasing power, the capacity of Titles XVIII and XIX, properly administered and implemented, can solve most of the major financing problems of older persons. We must change Public Law 89-97 on the basis of experience. I have testified elsewhere regarding the need to simplify the benefit structure under Title XVIII and various administrative considerations under Title XIX, and I feel these changes will take place if not this year, next. Many carriers

are offering highly useful benefits on a complementary basis and the enrollment has been impressive. For example, under Blue Cross, we have already enrolled almost 90% of the number of senior citizens that were enrolled before Medicare began. However, we see again some grandiose claims made by a minority of carriers regarding benefits which are not as substantive at the time of illness as one may have believed.

Finally, I think that we find the elderly in a better situation than before July 1, 1966. In fact, encouragingly so. We need, however, to push forward along the lines I described if we are to avoid losing the gains made for them as well as for the rest of the population.

Mr. MILLER. I have one question of Dr. Roemer related to this question of group practice and the need for Federal subsidy through grants for the establishment of group practices.

Is there any evidence of serious inability of physicians who desire to enter together in a group practice to obtain loans and financing? Dr. ROEMER. There is evidence of an extremely slow growth of multispecialty group practice. I have seen data from the American Medical Association which give the latest counts on group practices organized throughout the country, since the last previous national survey which was in 1959.

The trend of the last 8 years has been one in which a great many partnership groups of doctors in the same specialty have been formed-for example, three or four radiologists coming together or two or three obstetricians coming together. This has occurred at an impressive rate.

This is convenient for the doctor, but it makes little advantage for the patient. The multispecialty groups have hardly grown at all, as a rate, over the last 8 years and this would suggest that some assistance might accelerate the growth of multispecialty groups.

Mr. MILLER. My question, however, is directed to the need for such assistance taking the form of loans or grants to the physicians. It would appear to me that a group of physicians would be regarded by most lending institutions and other private sources of money as a preferred risk.

Dr. ROEMER. Yes; I think that is true. I did not say the loans or grants should go to the physicians. I said they should go to assist in the organization of group practice and prepayment.

Mr. MILLER. The combination?

Dr. ROEMER. The combination, I think, is most important, but even perhaps group practice alone could be facilitated by the availability of an administrative person to help in working out the very thorny details of bringing together a group of specialists under one roof. There are problems of professional relationships, of real estate, equipment, and so on. This has become almost a technical specialty, the task of administering and organizing a group practice organization. Mr. MILLER. With relation to the prepayment aspect I would gather your point might be a little different from that of Mr. McNerney in view of Mr. McNerney's role for the Blue Cross and Blue Shield type of prepayment approach.

Dr. ROEMER. I have not seen the statement but I believe the combination of prepayment with group practice provides still greater advantages than group practice alone.

Dr. JAMES. Actually, these groups work in some areas, with Blue Cross, the health plan in New York. Kaiser, of course, has its own hospital program.

You see, prepayment is extremely important for many things I have tried to say because it permits people to come for care before they have serious symptoms. It is a treatment program for the total individual at all times and encourages his coming for the so-called preventive type services.

Mr. MILLER. Would it not then perhaps be more proper to voice the recommendations as a recommendation for subsidized loans or grants to group practice prepayment plans?

Dr. JAMES. It would be a higher priority. Perhaps group practice without prepayment might be an interesting evolutionary step along the way.

Mr. ORIOL. We now have about seven cities or eight cities that again have group practice, isn't that then about the total?

Dr. JAMES. Very few.

Dr. ROEMER. I recall a situation in a county of West Virginia some 20 years ago where a group of physicians attempted to organize a private group practice. This was not with prepayment, simply a group practice.

The difficulties were tremendous. There was objection by the other physicians in the community. There were difficulties in acquiring a building. There were difficulties in recruiting physicians, and so on. The mere tasks of organizing this group practice, which, after some years, did take shape, could have been aided by the services of a person who could work on these problems. Physicians are busy. They don't have the time and they don't know many of the details of business management. It is this kind of service that I think can be of assistance.

Mr. MILLER. What was the focal point of the organization of this particular group?

Dr. ROEMER. A surgeon and a pediatrician and a few others who. wanted to get together to organize a clinic. I recall a similar development in my hometown in New Jersey.

PUBLIC INTEREST IN GROUP PRACTICE

There are simply technical problems along the way. If we regard the rendering of medical care as something with great public interest, something that affects the welfare of people, I think it quite reasonable to invest public money in improving quality through group practice, just as we invest in improving medical education or improving the quality of hospitals.

Mr. MILLER. The inability to get a building and similar technical difficulties, however, does not relate to their inability to have obtained money, if the other problems are resolved. This, I think, is essential to the question I am directing.

Dr. ROEMER. You may be right. It is not just a question of money; it is a question of technical expertise. I would not want to imply, however, that the nonprepaid group practice is as important as the prepaid type.

It seems to me that prepaid group practice has numerous additional advantages, and that certainly requires organizational assistance.

Mr. ORIOL. With two such knowledgeable witnesses it is tempting to keep up the questioning. I am looking at the clock. We now have an hour and a half before we must cut short this hearing.

I would like to note for the record that several written questions will be submitted to the two witnesses. For example, Dr. James, you mentioned the growing numbers of older people in the central city area. Father Cervantes has in his testimony a reference to the central city burden. The question that we will put to both of you is, how can we get the kind of special attention that such areas require?

Another question, perhaps I can get a word of comment from Dr. Roemer now, you refer to a vast jungle of medical care plans and agencies. Now this was when you were talking about the kind of organization you see for the future.

I take it that you don't mean that we scrap existing private agencies. I am impressed with the Project Well-Being in Detroit and how a private agency with Federal help and assistance from all over the community organized an effort.12

Dr. ROEMER. Yes, I think it is a task of articulation among the agencies. We have roughly 100,000 voluntary health agencies in the United States, according to Dr. Hamlin's study a few years ago from the Harvard School of Public Health. There is great duplication among them; there is extravagant use of administrative funds, and

so on.

In the health insurance field there are well over 1,000 separate organizations. If the energies and dedication of these people could be mobilized and coordinated, I think we would get a much better product for our dollar.

Mr. ORIOL. Another question which will be asked is whether medicare and medicaid are encouraging or perhaps putting obstacles in the path of the reorganization you would like to see.

Dr. ROEMER. It seems to me that the design of the medicare legislation is rather effective at this stage in building its program into the existing structure; that is, the existing insurance programs, especially Blue Cross and Blue Shield, have been incorporated into the operation of the system so that their skills have not been lost, but have been mobilized.

The provision of financial support for hospitals and extended care facilities and home health agencies has certainly been a boost to their availability and the improvement of their quality.

Dr. JAMES. I believe very strongly that where Government funds are used to support medical care, the Government has a responsibility to insure that these funds will be used to improve the quality of that

care.

Mr. ORIOL. Again, I would like to thank you.

Dr. Roemer I would like to mention that Senator Williams of New Jersey hoped to be here to say "hello" to an old constituent. He is on his way and will be here shortly.

Thank you again for your testimony.

I would like now to call Father Lucius F. Cervantes, S.J., Ph. D., professor of sociology, St. Louis (Mo.) University, and assistant to the mayor of St. Louis.

I would like to note for the record that we have a letter here from the mayor of St. Louis and it will be put into the record at this point. (The letter follows:)