The doctors do not prefer to be employees of the hospital, and I think that they have advanced quite a logical argument in that area. You wouldn't object to the bill, though, if it wasn't in it? It isn't of great enough significance that the bill should be defeated, in your opinion?

Miss THOMPSON. I don't think the bill should be defeated but I do think it is significant, because this pattern could develop as far as other health insurance programs are concerned for persons other than the aged as services are negotiated under other health insurance programs.

Senator CURTIS. Well, now, isn't it true that these services are billed by the hospital and handled that way for accounting in many instances where they are not at all employees of the hospital, isn't that correct? Miss THOMPSON. Yes, the charges are billed through the hospital. Senator CURTIS. Yes. And that could still be done in either event. That is all, Mr. Chairman.

Senator HARTKE. Miss Thompson, as I understand, what you are trying to state here is that it is your belief that the method of billing is going to have an effect upon these individuals placing themselves in a position to become recipients of this treatment; isn't that what you are saying?

Miss THOMPSON. That is right.

Senator HARTKE. Basically, and let's go back to your history on this legislation, you have been as an association actively in support of the so-called medicare or hospitalization care for many years; isn't that true?

Miss THOMPSON. We have been supporting the principle of using the social security mechanism for the provision of health care services. Senator HARTKE. That has been for a number of years. You are not just a recent convert, are you?

Miss THOMPSON. No.

Senator HARTKE. All right.

I would like to ask you one question which bothers me, and I think bothers maybe a lot of us. Are there enough nurses really to take care of the people now? Will there be a tremendous additional burden as a result of passage of this legislation?

Miss THOMPSON. I would say that we do not have as many nurses now as we should have to perform the services that are required. There are movements, however, to correct the situation. Congress passed legislation last year which would provide funds for construction of nurses' facilities which would increase the capacity of the schools so that more students could be enrolled. We participate in a recruitment program, and we are hoping that we will be able to extend the present supply of nurses sufficiently to take care of the persons that will be requiring services. I am sure there are going to be additional burdens placed on all facilities and personnel in the health occupations until we can furnish more personnel. We do have a large reservoir of nurses who are unemployed and many of these nurses are unemployed because they do not feel they can afford to work because the salaries are not sufficient to provide for care of families or households when they do return to work.

Senator HARTKE. When I was dedicating the Children's Variety Hospital in Miami this summer, I was informed by the hospital administrator that one new wing of the hospital was not being used

because of the unavailability of nurses to staff it. Is this a common occurrence?

Miss THOMPSON. It does occur periodically.

One of the reasons for this is that buildings are erected without consideration for availability of personnel or plans made for personnel along with the building. Perhaps these plans could be made concomitantly rather than waiting until a facility is completed and then begin seeking personnel.

If there are persons available in communities that could be called upon to come back to work, if they had some refresher courses this would help to provide personnel for the facility.

Senator HARTKE. In the long run do you visualize this legislation as putting a greater drain on the utilization of nurses and creating an even shorter supply or do you feel that this will make it possible for additional people to pay for the nurses' services? Which is your view? There is a difference.

Miss THOMPSON. I don't understand the last part of your question. Senator HARTKE. In other words, will the so-called supply of nurses be drastically curtailed even for additional services or do you feel that the fact that there is going to be a method of paying some of these bills that this, in turn, will encourage a greater influx of nurses into the field and possibly some of them coming back who have temporarily dropped out of the active nursing field?

Miss THOMPSON. I can only speculate, but I would assume that with more hospital bills paid that the hospital revenue would be increased and it would be possible to pay the nurses more and, therefore, attract more back into the field.

Senator HARTKE. Maybe I can have the American Hospital Association give a commitment for you.

In this question of additional nurses, do you feel that the passage of this legislation possibly will result in additional requests for additional Federal participation in providing further financial aid for buildings and for nurses training or do you think the present legislation is sufficient?

Miss THOMPSON. We didn't think that the present legislation was sufficient when it was passed. However, it was a beginning. It will need to continue for some time to assist in creating an adequate supply; and there will be need for amendments to the present legislation. Senator HARTKE. In other words, you are thankful for small favors, is that what you are saying?

Miss THOMPSON. Yes.

Senator HARTKE. Let me ask you this: are you fearful if there is an extension of this program that the Federal controls will be of such a nature that it will socialize the nursing profession?

Miss THOMPSON. We believe there are sufficient controls written into the legislation to prevent this from happening.

Senator HARTKE. I have no further questions.

I want to thank you for coming and I want to say that the nurses association has always been one of the finest witnesses that I have ever had in front of me in any committee.

Miss THOMPSON. Thank you.

Senator HARTKE. The next witness is Mr. Joseph Terenzio, from the American Hospital Association.

Mr. TERENZIO. Good morning, sir.

Senator HARTKE. We are delighted to have you with us this morning. I do notice you have a rather lengthy statement. I do not want to preclude you from presenting any testimony that you feel should be presented but we are operating under somewhat of a restricted level and hopefully that you will do the best you can to summarize those portions which you can and still present your case in the manner in which you think it should be done."

Mr. TERENZIO. Yes, sir.

Mr. Chairman, we don't plan to read the entire statement. We would like to have it recorded in the record, however.

Senator HARTKE. The part you skip in your oral presentation will appear as if you actually read it so as to preserve the continuity of

your statement.

STATEMENT OF JOSEPH V. TERENZIO, EXECUTIVE DIRECTOR, THE BROOKLYN HOSPITAL; ACCOMPANIED BY DR. DAVID B. WILSON, DIRECTOR OF UNIVERSITY HOSPITAL, JACKSON, MISS.; AND KENNETH WILLIAMSON, ASSOCIATE DIRECTOR OF THE AMERICAN HOSPITAL ASSOCIATION

Mr. TERENZIO. Mr. Chairman and gentleman, I am Joseph Terenzio, the executive director of the Brooklyn Hospital, a division of the Brooklyn-Cumberland Medical Center, Brooklyn, N.Y., and a member of the American Hospital Association's Council on Administration. With me are Dr. David B. Wilson, director of the University Hospital, Jackson, Miss., and chairman of the association's council on government relations, and Kenneth Williamson, associate director of the American Hospital Association.

The American Hospital Association is a voluntary, nonprofit membership organization including within its membership the great majority of all types of hospitals, among which are 90 percent of the Nation's general hospital beds. These hospitals in 1963 admitted more than 27.5 million patients. Our primary interest-and the reason for the organization of the association-is to promote the public welfare through the development of better hospital care for all the people. Much of our testimony today is in support of the provisions of H.R. 6675 which are of special interest to hospitals and in which we are in agreement. There are, however, a few provisions in the bill on which we are not in agreement, and it is to these points that we should like to direct your attention first.

TITLE I. HEALTH INSURANCE FOR THE AGED AND MEDICAL ASSISTANCE

PART A. EXCLUSION OF MEDICAL SPECIALISTS' SERVICES

Page 64, paragraph 4:

A provision in H.R. 6675 which gives hospitals great concern is the exclusion of those almost universally accepted services of radiologists, pathologists, anesthesiologists, and physiatrists as an integral part of hospital services. This exclusion we are sure would be very damaging to the program for a number of reasons which we shall try to point

out.

In the first place, it seems most inconsistent that these services be excluded in the hospital insurance part of the bill and included in the public assistance medical care part of the bill. Also, the exclusion is contrary to the provisions of S. 1 and to the provisions incorporated in S. 2782, the Social Security Amendments Act of 1964, passed by the Senate on September 25, 1964.

Over the years the services of these specialists departments have been developed in hospitals as an integral part of hospital services. This was essential in order to make readily available such services which were generally needed by all patients and which are absolutely essential to maintaining high levels of medical practice in hospitals. Except in only a few instances, all of the facilities required for the rendering of these services are provided by hospitals and are a part of the hospital facilities which communities themselves have furnished. There is no question involved as to the full recognition of these physicians as fully qualified physician specialists, and there is full recognition as to the professional nature of the interpretative, diagnostic, and therapeutic services rendered by these physicians.

It is most essential that there be a clear understanding as to the distinction between the professional nature of these services and the economic factors involved. To all intents and purposes, these physician specialists have maximum control of their services in hospitals. There is limited physician-patient relationship. Their services are requesed by other physicians; not by patients.

As these services have developed, a variety of patterns of relationship have also developed as between the hospitals and the physician specialists involved. It is believed that upward of 60 percent of the pathologists are employed as salaried physician specialists receiving their compensation directly from the hospital. Approximately 25 percent of radiologists are in a similar salaried relationship. The great majority of the remaining pathologists and radiologists work through contractual relationships by which they receive an agreed percentage of either the gross or the net proceeds from their depart

ment.

Of particular significance is the fact that the arrangements in every instance are worked out locally between the individual physician specialists involved and the individual hospital. We feel strongly that it is totally out of order for the Federal Government, through the present language in this bill, to dictate one nationwide pattern of relationships between hospitals and these physician specialists.

This provision, we wish to point out, is totally contrary to the statement assuring "noninterference" which appears in the bill.

The bill proposes to separate services of the physician specialists in radiology, pathology, anesthesiology, and physiatry from those services and costs involved in the provision of these services by hospitals.

The American Hospital Association has for a great many years clearly expressed its belief that the services of radiologists, pathologists, anesthesiologists, and physiatrists were hospital services and that the reimbursement to the physicians involved should be worked out locally. This policy became particularly important at the time the association joined with hospitals and others in the development of the nationwide Blue Cross plan movement and has played a most important part in shaping the benefit structures of Blue Cross plans.

S. 1 and H.R. 1 specifically provided that as long as services were billed through the hospital they would be considered hospital services and would be included as hospital benefits under the program. We accepted and supported this provision in S. 1 and H.R. 1.

I should now like to discuss a number of specific problems which we believe will result from the exclusion of these physician services as set forth in H.R. 6675. At the outset we wish to stress that in numerous ways both the aged beneficiaries of this program and the public generally will suffer, and it is upon these effects that we primarily direct your attention rather than to the difficulties which will be encountered by hospitals.

1. We have emphasized that the provision of these physician specialists' services is inseparably involved in the efforts of physicians and hospitals over the years to improve the quality of patient care. The removal of these physicians' services is a backward step, and one which may well jeopardize continued improvement in the quality of patient care in hospitals.

2. The quality of care in smaller hospitals has been markedly improved in the past by arrangements with these physician specialists visiting the hospitals at periodic intervals under a "circuit rider" arrangement. These arrangements, by which hospitals have guaranteed payment, have provided essential financial incentive and assurances to physician specialists which are necessary to their being willing and able to provide their services to smaller hospitals. If these hospitals are forced to withdraw their guarantees to such specialists and leave to the specialists the uncertainty of handling their own collections on a wide range of individual service items, it is believed the results may force such physicians to withdraw any assured provision of their

services.

3. It is believed that the removal of the costs of these physician specialists' services as part of hospital services will tend to increase the overall cost of care to aged people. It will further set in motion a process that will increase the cost of care not only to the aged but to the entire population.

For the most part, the patient has little, if any, choice in the selection of these medical specialists nor can he bargain in any way on the charges to be rendered under existing practices. The hospital governing body exerts, through employment or through negotiations, a certain measure of control over the charges and is, of course, definitely concerned about the quality of practice. The governing board has the legal obligation to protect the patients' welfare. It would be a great disservice to the entire public for hospitals to be forced to lose these checks and balances which have worked so well for so many years.

4. The language in the bill interferes with existing relationships which have been established and will force a nationwide renegotiation of contracts between these physician specialists and hospitals. Particular problems will arise in respect to the large number of physician specialists who maintain a salaried relationship with the hospitals. In addition, widespread renegotiation between hospitals and Blue Cross plans seems inevitable. This, in turn, will require substantial changes in Blue Cross plan benefit programs with contract changes for millions of individual subscribers.