personnel as they engage in direct patient care in individual practice, group practices, hospitals and their clinics, nursing homes, official health agencies, and the patient's own home. The whole development of alternative methods of care, so that we don't use the most costly form of medical care but rather the least costly consistent with the medical needs of the patient is one of the most important areas for further research and development.

Second, instrumentation and automation of medical and other health services; the rapidly increasing use of electronic and other equipment to assist in diagnosis, patient monitoring and therapy, medical record handling, and overall control of medical care processes. I think all of you who have been to hospitals and medical facilities recently are aware of the tremendous increase in technical equipment and automation that is going on, and I am sure in the next decade that is going to proceed at even a faster rate than ever before.

Third, the area of facility design, organization, and operation of hospitals and other medical and health care facilities and their organization and administration. Certainly there is a great deal to be learned about how these facilities can be built more efficiently, how they can be operated more efficiently, and how the unit costs can be kept from rising as fast as they have been.

The next area is health economics: the analysis of the role of the health industry in the economy as a whole as well as cost of benefit and other studies of the efficiency and effectiveness of specific programs and systems. As I pointed out, with nearly $50 billion shortly going into the whole health system of the country, we have to be more concerned about the efficiency of every dollar that is increased in this whole field.

Social analysis: the study of social and psychological factors influencing individuals and groups in their health habits and their use of available services, and the understanding of factors which affect the operation of health institutions and programs. There is still a lot to be learned, Mr. Chairman, as to why utilization rates for hospital care and utilization rates for physicians and home nursing and home health services differ so widely in various parts of the United States. What are the different patterns of care that are given, and how are the most efficient ones to be used throughout the country?

Finally, general systems analysis, organization, and planning: the application of systems analysis to the health industry as a whole and to its components, giving attention to the processes of health planning and organization in entire communities from a research and developmental viewpoint.

These six areas that I have outlined span all of health services. Obviously they cover an enormous network of scientific, technical, and behavioral activities. To work on one, or only a few of the elements would be futile-each aspect of the problem affects the other.

This is a research program in which private industry and operating service programs have much to contribute, as do the universities, the medical, the public health schools, and other health professional schools, and the nonprofit research agencies. The Department and the Public Health Service will spare no effort to enlist the best thought, the most vigorous individuals and institutions, and the best adminis

trative methods in this cause, Mr. Chairman, of bringing a greater degree of efficiency and productivity and more coordinated organization to the whole health industry.

CLINICAL LABORATORY IMPROVEMENT

I would now like to turn to section 5 of the bill. Section 5 of the bill is entitled the "Clinical Laboratories Improvement Act of 1967," and was recommended by the President in his message to the Congress on consumer interests. It would authorize the Secretary of Health, Education, and Welfare to regulate by licensing clinical laboratories which operate in interstate commerce.

Every day the lives of thousands of people depend upon the accuracy of the tests performed in such laboratories. I think many of you who read some of the press statements and statements before other committees were as shocked as I was when studies by the National Communicable Disease Center, and others, indicate that unsatisfactory performance is demonstrated by 10 to 40 percent of laboratories in bacteriological testing; by 30 to 50 percent in various simple clinical chemistry tests; by 12 to 18 percent in blood grouping and typing; by 20 to 30 percent in hemoglobin measurements; by 40 to 80 percent in differential characterization of blood cells; and by 20 to 30 percent in measurement of serum electrolytes. There also exists considerable variation in results from laboratory to laboratory. This information indicates that erroneous results are obtained in more than 25 percent of all tests analyzed by these studies. Clinical laboratory testing is a large and rapidly growing industry. Virtually every person who seeks medical attention uses-directly or indirectly-laboratory services.

A significant share of those services is provided by laboratories which send both reports and materials across State lines at distances remote from the physicians requesting the analyses.

The problem of regulating the interstate operation of clinical laboratories is one which the States alone are unable to cope with effectively. In most States, there is no effective regulation, even of those laboratories which operate wholly within the State. The interstate clinical laboratory industry is potentially either a major resource for the improvement of our Nation's health, or a national health hazard, depending upon its performance and reliability.

This legislation is designed to assure both physicians and their patients that the work done by a laboratory of their choice will be consistent, performed under responsible supervision, and within established clinically sound procedures.

I hope very much, Mr. Chairman, that the committee will see fit to endorse and enact section 5 of the bill dealing with the clinical laboratories improvements, which we think is extremely important. There are a number of other provisions in this bill. Dr. Stewart now is going to deal with them.

I want to thank you again, Mr. Chairman, for the opportunity to appear before you today, and I certainly urge your committee's early and favorable action on this important bill.

Thank you.

(The material referred to in Secretary Cohen's testimony follows:)

OUTLINE OF PROVISIONS OF H.R. 6418, PREPARED BY THE DEPARTMENT OF
HEALTH, EDUCATION, AND WELFARE

Section 1. Short title: "Partnership for Health Amendments of 1967." Section 2 extends and revises authorities for grants for comprehensive health planning and public health services:

Section 2(a) (1) extends authority for comprehensive planning grants for 4 additional years (through FY 1972) and increases 1968 authorization from $5 million to $7 million.

Section 2(a) (2) adds to the State plan requirements a provision for State assistance to health facilities in the State in the development of a program of capital expenditures.

Section 2(a) (3) provides a 75% limit on the "Federal share" of Statewide planning costs after FY 1969.

Section 2(b) extends for 4 additional years the authority for project grants for areawide planning.

Section 2(c) extends for 4 additional years the authority for project grants for training, studies, and demonstrations relating to comprehensive health planning.

Section 2(d) (1) extends for 4 additional years the authority for formula grants for public health services and increases the authorization for FY 1968 from $62.5 million to $70 million.

Section 2(d) (2) adds a requirement that, after FY 1968, at least 70 percent of a States' allotments shall be available only for the provision of services in communities in the State.

Section 2(e) extends for 4 additional years the authority for project grants for health services and increases the authorization for FY 1968 from $62.5 million to $7 million.

Section 2(f) extends for 4 additional years the authority in sec. 309 (c) of the PHS Act for grants to schools of public health.

Section 3. "Research and Demonstrations Relating to Health Facilities and Services".

Section 3(a) replaces the obsolete language of sec. 304 of the PHS Act with a consolidated and somewhat broadened authorization for grants and contracts to support research and demonstrations relating to the delivery of health services, with a FY 1968 appropriation authorization of $20 million. Also provides that not to exceed 1 per centum the amounts appropriated shall be available to the Secretary for the costs of program evaluation.

Section 3(b) repeals sec. 624 and parts of sec. 314(e) of the PHS Act, since their provisions would be incorporated in the new sec. 304, and makes other conforming and transitional amendments relating to the consolidation of authorities in the new sec. 304.

Section 4 adds a new subsection (c) to section 311 of the PHS Act to clarify and strengthen existing authorities for assistance to States and localities in coping with health emergencies and disasters.

Section 5. Clinical Laboratory Improvement

Section 5(a) adds a new section 353 to the PHS Act which would authorize the Secretary of HEW to license and regulate certain clinical laboratories operating in interstate commerce—

Section 353 (a): Definitions.

Section 353 (b): Requirement of licensures.

Section 353 (c): Scope of licensed activities.

Section 353 (d): License conditions, terms, and fees.

Section 353 (e): Conditions for revoking, suspension, or limitation of licenses.

Section 353 (f): Temporary suspensions of licenses.

Section 353 (g): Appeals and review of license suspensions or revokations.

Section 353 (h): Penalties.

Section 353 (i): Exemptions from licensing regulation.

Section 353 (j): Utilization of services and facilities of other agencies

in the administration of the regulatory program.

Section 353 (k): Disclaims re powers of States to enact and enforce regulatory laws.

Section 5(b) Effective dates.

Section 5(c) Short title of section 5, "Clinical Laboratories Improvement Act of 1967".

Section 6. Volunteer services: Adds new section 223 to PHS Act to authorize the Secretary of HEW to accept uncompensated services of volunteer workers in the operation of Departmental health care facilities.

Section 7 adds a new section 328 to the PHS Act to clarify and strengthen the authority of the Secretary of HEW to enter into agreements with health schools, hospitals, and other health care or training facilities for the interchange or cooperative use of "specialized health resources."

Section 328 (a): Definitions.

Section 328 (b): Scope and terms of agreements and arrangements, including reimbursement payments.

Section 8 amends three PHS grant authorizations to provide that not to exceed 1 percentum of the grant funds appropriated shall be available to the Secretary of HEW for the costs of program evaluations.

Section 8(a) amends section 314 (d), the authorizations for formula grants for comprehensive public health services.

Section 8(b) amends section 314 (e), the authorization for project grants for health services.

Section 8(c) amends section 309 (c), the authorization for grants to schools of public health.

Section 9 amends section 301 of the PHS Act to extend, without time limitation, the present authority for research contracts (expires June 30, 1958).

Section 10 amends section 324 of the PHS Act to repeal the existing authority for medical care for civilian field employees of the Service and replace it with authority to provide care, on a reimbursable basis for Federal employees and their dependents at remote stations where other medical care is not available. Section 11 contains four minor or technical amendments to the PHS Act. Section 12 deletes the provision in section 843 (f) of the PHS Act which now authorized the Commissioner of Education or accredit schools of nursing for purposes of participation in grant programs under the Nurse Training Act (title VIII of the PHS Act).

Section 13 defines the term "Secretary," as used in the amendments contained in the bill, to mean the Secretary of Health, Education, and Welfare.

Summary of Public Health Service formula grant programs now included in section 314(d) of PHS Act as amended by Public Law 89-749

Summary of Public Health Service project grant programs now included in section 314(e) of PHS Act as amended by Public Law 89-749

1 This program was transferred to the Department of Interior in 1966.

The CHAIRMAN. Thank you, Mr. Cohen. We appreciate your view of

the bill and we will now hear from Dr. Stewart.

I have some questions I would like to ask you later, but I will put this off until we have heard from Dr. Stewart.

Dr. STEWART. Mr. Chairman and members of the committee, Mr. Cohen has outlined some of the major provisions of H.R. 6418 for you and described its importance to the future development of health programs in the Nation. I will address myself to others.

Mr. Chairman, the Public Health Service has moved to implement the comprehensive health planning provisions of last year's legislation.

Final action on Public Law 89-749 came on October 23, 1966. Within 60 days the Office of Comprehensive Health Planning had been established in my office under the direction of Dr. James H. Cavanaugh. We organized a staff nucleus drawn from the programs most affected by the new policy and philosophy established by the legislation.

Today, I can report these benchmarks in carrying out Public Law

89-749:

Regulations implementing sections 314(a)-the statewide planning agency grants have been drafted and submitted to the designated State agencies for comments. Within the next 30 days, I expect the comments to be in our office and reviewed. The law calls for conference of designated State agency delegates to discuss the regulations, and the conference is to be called early in June.

Policies and procedures to implement area wide planning and training, studies, and demonstration projects under section 314 (b) and (c) have been sent out to the interested public for comments and suggestions.

Regulations for awarding the formula grants under section 314(d) have been submitted to the Association of State and Territorial Health Officers and Mental Health Authorities for comment. I expect these regulations to go to the Federal Register in June.

And the regulations governing awards of project grants authorized by section 314(e) are in the final states of development and will be submitted to interested groups for comment within the near future.

We have moved rapidly to carry out congressional intent in adopting this legislation. I am pleased to report to you that if the Congress approves the supplemental appropriation requested for a conference of State agencies as required by law, we will be ready to award planning grants under section 314 (a) to some of the States before June 30.

COOPERATION WITH STATES IN EMERGENCIES

I would like to turn now, Mr. Chairman, to section 4 of the bill which authorizes Public Health Service hospitals and related units to participate in the development and execution of community or areawide disaster preparedness plans.

The section also broadens and amplifies the existing authority of the Secretary of Health, Education, and Welfare to render temporary assistance to States and communities faced with health emergencies, and would authorize the provision of such services on a reimbursable basis.

The purpose of this language is to bring Public Health Service facilities including hospitals-into local plans for meeting emergency