asking for the substantial provisions in this bill to start the systems analysis and research that is necessary to bring a greater degree of productivity and efficiency in the health industry.

Mr. KORNEGAY. The Federal Government has increasingly put more money into health, health education, and health facilities in this country. Of course, I can recognize that this may be very superficial, but it appears to me that the more money that the Federal Government or government itself, public money that goes into health care the greater the cost becomes to the private citizen, which is somewhat of a paradox in a sense.

I can appreciate the fact that you have this research going on in various phases, but at the same time it seems to me that somewhere, somehow we ought to dig into this problem; because I think it is one of the biggest problems facing the medical community today and facing the people of this country. The average person wants to be able to pay his own way, pay his own doctor and hospital bill, but if something isn't done within-I used to say 20 years, but after the hearing this morning I am going to hold my figures to 10 years and say if something isn't done by 10 years, all the hospitals will be owned by the Government and all the doctors will be working for the Government, and it will be just like the school systems. I am afraid we will come to that, if something isn't done.

Mr. COHEN. I certainly agree with you on the importance of our finding some practical solutions to these cost efficiency problems. I think they are going to take vast changes in the way we organize and deliver services, but I don't think we need to make any change in the fundamental way we are operating; that is, the private practice of medicine and the voluntary hospital system of this country which are essential to what we are doing.

But I do think that we are not delivering the highest quality medical care in the most efficient way that would be possible, Mr. Kornegay. And that is going to be the real problem in the next decade, how to find out what is that most efficient system that is compatible with decentralized voluntary private practice of medicine.

I don't have the answer. I don't think anybody has the answer. Mr. KORNEGAY. I am not faulting you for not having it. I don't know the answer either, but I think you ought to give it a lot of consideration, trying to find out what can be done.

Mr. COHEN. I think you are making a better argument than I have made for section 3 in the bill. I think section 3 of the bill is the essence of what you and I are talking about.

Mr. KORNEGAY. If section 3 will do what you and I are talking about, I certainly am for section 3.

Mr. COHEN. It would certainly go a long way. I can assure you of

that.

Mr. KORNEGAY. Thank you very much.

Thank you, Mr. Chairman.

Mr. ROGERS. Mr. Brown?

Mr. BROWN. Mr. Cohen, I am interested in the criteria that are established in the language on page 2. It says that the grant shall be made in accordance with, and I quote "criteria which the Secretary determines will meet the needs of the State for health care facilities, equipment, and services without duplication and otherwise in the most efficient manner..."

Are these Federal criteria to be written first by the Federal Government or are they going to remain sort of anonymous and the judgment will be made on the basis of each individual application?

Mr. COHEN. I think that we would have to work very closely with the States in developing these criteria. We don't have them written out now, but I do think that they would have to deal with the kind of problems we were talking about earlier. Not every hospital would have every piece of equipment or every type of service that would duplicate others in a given community, and try to set up some type of elements that would assure that communities would have all of the services but not necessarily every facility having all of the services.

Mr. BROWN. Let me phrase the question a little differently and then we can go ahead and pursue this, perhaps. Do I understand the language of that section to mean that the criteria will vary from State to State?

Mr. COHEN. I would not think the criteria would vary from State to State. I think the criteria would be national, but broad enough to permit variations in the State, including such matters as the difference in rural and urban concentration, the per capita income, and how they proceed toward the plan from wherever they were. But I would think the criteria would have to be broad, general, national, and set out the major elements.

Mr. BROWN. Is it possible to write up such criteria? That really is my question, because it seems to me that you get into the same problem that you would have, and that we have heard mentioned here this morning by a couple of people, on the school grants.

The complaint is that the Federal criteria are so vague that what will be accepted in one community in one State will not be acceptable in another community in another State, or even in two different communities in the same State, because two different people at the Federal level make the judgment or else the judgment is being made differently in each instance.

I understand that if you are talking about Mississippi and New York City you have different medical problems that you are trying to meet. But is it possible to write the criteria in such a way that this can be covered in advance, so that somebody in rural areas knows what to measure it against?

Dr. STEWART. I think it is, Mr. Brown. First, there is a body of information existing in the country. New York State, for example, has had the statewide planning in the regional councils in a sense doing this for several years. Many of the areawide planning hospital councils have developed criteria in this area, too. I think what we are really talking about is establishing criteria in such way as to enable us to determine the need for a certain kind of operating room in an area on the basis of population density or some other measure which reflects the rural nature of an area.

This is the kind of criteria we are talking about. We are talking about criteria which allows one to have some idea of what kind of distribution of equipment and types of services are necessary to serve people in whatever the area described with the best in medical care. It is to try to get around the problem that we have now, where the planning is done within the hospital and they may be adding expensive equipment or an expensive extension, or something else, without re

gard to the fact that there is another hospital in the same community that just made a similar innovation this last year.

Mr. BROWN. I appreciate that.

Dr. STEWART. I think we ought to develop criteria related to population density which is general enough, I think, which gives the criteria which then the State agency can take and apply to all the variations that they have within the State.

Mr. BROWN. Is it your intention to write such criteria?

Dr. STEWART. We would try to develop these criteria for the Secretary to write and put out, and we would, in developing these, certainly consult with all the area planning groups in the country that have been carrying this out.

Mr. BROWN. Has any action been taken on doing this?

Dr. STEWART. Yes. I don't know whether it is the first or not, but one of the earliest attempts at this was the Rochester, N.Y., Hospital Council in which they were faced with the problem of several hospitals asking for fundraising to add beds to their hospitals. A survey under the auspices of the council indicated that there actually wasn't a shortage of beds in the community.

Mr. BROWN. You are talking about an individual instance in Rochester. I am talking about the question, are any Federal criteria in preparation at this moment in connection with this program.

Dr. PETERSON. Mr. Brown, staff has been at work on development of regulations for 314(a) and 314(b) along with representatives from State and local planning agencies. These procedures, regulations, and policies will be submitted to the participating agencies for their review and comment prior to the time that they would become effective. Mr. COHEN. I am not aware, Mr. Brown, of any criteria that have yet been prepared under this new subsection.

Mr. BROWN. These would presumably be prepared after legislation has been passed by Congress.

Mr. COHEN. Yes.

Mr. BROWN. And if the criteria are not satisfactory to the Congress, what recourse has the Congress at that point?

Mr. COHEN. We would only develop these criteria in accordance with the provisions of the existing statute that they have to be developed after consultation with the State health planning agency, SO that I would presume that they would, in the course of time, be more or less in agreement with them.

Is that your concept, Dr. Stewart?

Dr. STEWART. This is correct.

Mr. COHEN. You could indicate that the criteria have to be consistent with the provisions of section 3.

Mr. BROWN. I don't mean to belabor this, but I think it creates a problem certainly perhaps not as great as in education; but there is still difference in opinion in the medical profession as to whether or not the payment principle is the sound one, and this may present some very serious problems. You may get a lot of howls coming up over the country that these criteria which we are enacting in this legislation blindly are not appropriate to the medical profession throughout, or not satisfactory to the medical profession.

I think you have the same problem involved in this as you do in our approval of the criteria for interstate medical laboratories without knowing what these criteria are going to be. Somebody else raised

the question about the size of areas intended to be served, and that of course occurs to me.

Mr. COHEN. I think I see your point there. We might give some further consideration as to whether that couldn't be spelled out in a little more detail.

Mr. BROWN. I was going to ask the same question that Mr. Rogers started to ask, and if I can pursue it just one step further, where do you anticipate the funds for section 4 emergencies will come from? Did I miss your explanation of that?

Dr. STEWART. These funds in the past have come from reprogramed funds. If the amount became substantial, then we would have to seek recourse in the Appropriations Committee.

Mr. BROWN. In other words, you will borrow them from some place else within the Department?

Dr. STEWART. If it were a small disaster which was over in 3 hours, it wouldn't make much difference. But if the service we provide is one that takes a great deal of equipment and supplies, we would have to seek reimbursement.

Mr. COHEN. If a program involves a substantial sum of money, we advise the Appropriations Committee. But it might well be that we give consideration to ask the Appropriations Committee for a separate item to take care of that, because our major argument about reprograming is that it does set back the program for which the Appropriation Committee gave the money. By the time you get it all going again, you have disrupted a program. And I think my own preference would be, at least within some margin of error, to ask for a modest appropriation from the Appropriations Committee.

Mr. BROWN. Let me move to item (2) on page 10, "Definition of interstate commerce in the laboratories." If I live in Arlington, Va., and am being treated or analyzed by a laboratory in Washington, D.C., am I to presume that if I take a biological specimen at my home in the morning in Arlington and bring it to the laboratory in Washington, D.C., that that laboratory qualifies in interstate commerce? Dr. STEWART. Yes, sir. That is correct.

Mr. BROWN. If I were in Arlington, however, and went to Richmond, Va., it would not be; is that correct?

Dr. STEWART. That is correct.

Mr. BROWN. If the laboratory is in a hospital, does that put it also in interstate commerce?

Dr. SENCER. Not necessarily, sir.

Dr. STEWART. Not just the fact of being in a hospital.

Mr. BROWN. If the hospital treats people from out of State?

Dr. SENCER. The laboratory has to receive specimens from out of State.

Mr. BROWN. If it treats people from out of State? Let's put the example in a different way. If we have an accident case in a hospital on an emergency basis and the people come from out of State, and we have to send back and perhaps get some laboratory information from the persons' home for analysis in the laboratory where they are being treated on an emergency basis, does that put the laboratory in interstate commerce?

Dr. STEWART. I think, Mr. Brown, the best explanation would be. that if a specimen is transmitted across a State boundary to the laboratory, that comes under the definition.

Mr. BROWN. Let me phrase the question. I think you are in a difficult area here, and I am trying to feel my way through it. I don't want to take the time of the committe in too much detail, but let's presume that we have a university with a university hospital and a student from out of State in that university hospital and the student goes home for the holidays and is asked to send a biological specimen to the hospital for the continuation of a series of tests. That puts the hospital laboratory in interstate commerce; is that correct? So that the laboratory never really knows when it may come under the classification of interstate commerce, because it treats people who may in effect move out of State or be residing temporarily out of State who have to continue a course of biological analysis.

Dr. SENCER. I think many of these university laboratories would qualify as being in interstate commerce for other purposes. Many university laboratories accept specimens that are for analysis that will not be readily available in their laboratories in the area.

As a physician, I know that I can send a specimen to the University of California.

Mr. BROWN. What about the clinic that does not have a hospital and the doctor does some of his own analysis and gets a specimen from a youngster who has gone home for the Christmas holidays?

Dr. STEWART, A physician taking care of his own patient is not covered.

Mr. BROWN. A group of physicians?

Dr. SENCER. That's exempted in this legislation, sir.

Mr. BROWN. Where do you draw that line?

Dr. SENCER. If in a laboratory a physician is taking specimens to use for the treatment of his patient and doing the examination under his own control in his own laboratory.

Mr. BROWN. Suppose you have a cooperation of several physicians and one does the analysis but another treats the patient?

Dr. SENCER. I think that our definition in the bill would include group practice or clinic-type practice. We are not trying to say that they automatically come into interstate commerce.

Mr. BROWN. It is a thorny area.

Dr. SENCER. Yes, sir.

Mr. BROWN. And without standards so that nobody really knows whether he is covered.

Dr. SENCER. I think there is a 13-month leadtime in which standards would be developed, would be published and would be reacted to. Mr. BROWN. After the enactment of the legislation?

Dr. SENCER. As Mr. Cohen said, we will be glad to submit for the record the tentative standards that would be used here.

(See p. 41 for standards requested.)

Mr. BROWN. One final question. I have heard figures extended over a period of 2 or 3 years. What provision is there for the State to take over any of the financing of these grant programs that the Department has in mind here for demonstrations? Is there any thought given to that?

Dr. STEWART. Under the formula grant 70 percent of the money must be spent for local services that we talked about earlier. Thirty percent can be retained by the State.

Mr. BROWN. You are missing my point altogether, I think. What provision is there for the State to take over self-financing of some of

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