Well, I want to state for the record that I think the legislature did a very unwise thing in turning it down and I am satisfied that if most of the members of the legislature had understood what the problem was and what the answer to the problem was, they would not have turned it down. I don't want to turn this into a political forum at the moment other than to say that I think our distinguished Governor, who advised against it, made a very serious mistake and I think he will live and learn that he has made a mistake.

Now, after making that as a sort of nonpolitical statement, we will proceed with our hearing.

Gentlemen, Bill Oriol wants to make a contribution.

Mr. ORIOL. I want to note that several questions will be sent in writing because of our time problem this morning from the chairman and possibly from Senator Moss, too. So there will be additional questions.

Senator SMATHERS. Now, gentlemen, we are through with you. You did fine. You are not only good speakers, but you are good listeners. Dr. SILVER. Thank you, Senator.

Senator SMATHERS. Thank you.

Our next witness is Dr. William A. Nolen of Litchfield, Minn. He is going to testify with respect to the charges made for patients under medicare. We might later put his article about medical economics into the record.

Doctor, we are delighted to have you and you may proceed as you like.

STATEMENT OF DR. WILLIAM A. NOLEN, LITCHFIELD, MINN. Dr. NOLEN. Thank you very much for the invitation to testify, Senator.

Perhaps I better identify myself so that my remarks can be taken in the proper context. I am in the private practice of general surgery. I do the surgery for a clinic in a small town in Minnesota. I am the only surgeon in the county. I am a fellow of the American College of Surgeons and diplomat of the American Board of Surgery.

My coming here was precipitated by an article which I published in Medical Economics in February entitled, "Are Doctors Profiteering on Medicare?" 7

This stimulated some queries from your committee and some suggested questions and the suggestion that I might expand on this testimony or on this article a little bit in my testimony today. This is what I have done.

I will quote the questions and then testify with the answers that I have written.

Your article in the February 20 issue of Medical Economics was a forthright account of disquieting questions you are now asking about charges made to patients under Medicare. I would very much like to have you elaborate on the matters you discussed in that article.

My article in the February 20 issue of Medical Economics was written as a warning to my associates in the medical profession. I was

7 See p. 49.

and am afraid that doctors are going to take advantage of the medicare program to get as much money as they can from the Government. If this happens it will, I suspect, lead to increasingly strict control of medicine by the Government, an eventuality that no doctor engaged in the private practice of medicine wants.

This is, of course, my own personal fear. It is reflected in many of the articles that I read in the medical

Senator SMATHERS. Run that by me once more.

You said you are afraid that the doctors are going to do what? Dr. NOLEN. We are afraid that our medical practices are going to come further and further under the control of the Government and my purpose in writing this article was to warn my colleagues in medicine that if we do not use the medicare program with extreme discretion that we are apt to bring this down on our heads even more rapidly than we assume it will

Senator SMATHERS. If you don't use it with discretion you will bring what down on your heads?

Dr. NOLEN. Further Government control of medicine.

Senator SMATHERS. OK.

Dr. NOLEN. We doctors, like our patients, act as if the Government's money is nobody's money. If the patient isn't going to have to pay us for our services out of his own pocket then he doesn't care how much we charge and neither do we.

I realize that the Government will only pay 80 percent of our usual fee; but if the other 20 percent hurts the patient, we can always discount it.

As long as the Government is paying out money, let us get as big a share as we can. After all we're just getting back some of our tax money. I am aware of the fallacies in this reasoning; I am simply presenting what I conceive of as the doctor's attitude toward medicare.

EXPOSURE TO PHYSICIANS' ATTITUDES

Why do I think this is the attitude that dominates the thinking of the medical profession? From personal experience and my exposure to medical practices in various places.

When I was at Bellevue Hospital in New York City, as an intern and resident in surgery, I never worried about the expense incurred in caring for a patient. Neither did anyone else on the house staff. We knew the patients weren't going to pay for it. Money was never a factor. As a consequence we were, in retrospect, exceedingly wasteful. We ordered X-rays, laboratory studies, and medications many times when we didn't really need them. It was easier to order them and they might serve a purpose. There was certainly no financial reason not to order them. We didn't make any money for ourselves but we didn't worry about wasting the city's money.

Now, there are arguments that can be advanced to the defendant's position. We can say this is a training institution and that it is actually necessary for doctors to order these studies in order to learn that they don't need them.

This argument has been advanced in other articles. However, this argument to my way of thinking does not carry much weight because

if the economic situation were different you could learn in a much more rapid time some of the things that take 5 years to learn.

At this point, Senator, I was just expanding on this comment about wasteful ordering of X-rays and laboratory studies that went on at Bellevue. The justification that is presented for this many times in the medical literature and by those in teaching is that we allow interns and residents to do these things to order, probably considerably more than needs to be ordered, because they need to acquire the experience that the older man already has.

My argument is that this could be learned a lot more rapidly and it would be learned a lot more rapidly if the money for every one of those studies was coming out of the patient's pocket.

ATTITUDES IN PRIVATE PRACTICE

When I went into private practice, my attitude changed. Every time I ordered a laboratory test or an X-ray, I knew that the patient was going to have to pay for it, if not personally at least through his insurance premiums. I thought a little longer about what I was going to order and why.

The same philosophy prevailed in areas of medicine where I had some financial incentive. I might make $10 if I did a proctoscopy on a patient, $15 if I read an electrocardiogram, $20 if I burned off some warts. But the money was coming out of the patient's pocket and I made certain he or she needed the procedure before I ordered it. This was the philosophy that prevailed in dealing with private patients who were going to pay their own bills. Welfare patients, for whom the county picked up the tab, were managed in a different fashion.

With welfare patients it was back to the Bellevue thinking, only more so. Let me make it clear we did not and do not skimp on care of welfare patients. On the contrary, we are more apt to overtreat them than undertreat them.

Here are some specific examples of what I mean.

If a private patient comes into my office with symptoms suggesting a lung infection I might examine him and start his treatment possibly without getting an X-ray, if I didn't feel an X-ray was imperative at the time. I would tell him to call me if he didn't improve or if he got worse, and I would explain to him that it might be necessary later to take a chest film.

With the welfare patient who present the same chest symptoms I would do as I did at Bellevue and order an X-ray immediately. Why worry about the expense. The patient isn't paying for it. It is easier and less time consuming to get the film right away.

Similar thinking might influence the prescription I wrote. For the private paying patient I might order a 5-day supply of medicine and ask him to check with me by phone when it was gone. If he needed more medicine I could prescribe an additional supply at that time. For the welfare patient, who gets his medicine "free," I might prescribe a 7-day supply immediately.

If there are 2 days of pills left over, well, so what.

But with the welfare patients, as opposed to Bellevue patients, another factor came into play-money. I didn't make any money when

I ordered a chest X-ray on a Bellevue patient. I might make money on the X-ray I took on the welfare patient. So, consciously or subconsciously, money might motivate me to order the X-ray on a welfare patient when it was not absolutely necessary.

EXPERIENCE WITH LABORATORY SERVICES

Let us take another example-laboratory studies. On welfare patients, before medicare, the county would pay us only $2 for an office call. Our charge to private patients was $4.

But the county would also pay us $1 for a hemoglobin determination and $1 for a urinalysis. So there was a temptation to order these studies whether they were entirely necessary or not. By ordering them we could at least break even financially, and we could hardly say ourselves whether we were motivated by money or just good, thorough, medical practice, when we ordered them.

Now if this has been the prevailing medical attitude toward financial matters where indigent and welfare patients are concerned, why shouldn't it be the prevailing attitude toward medicare patients? In my opinion it is-and in one respect it is worse.

With medicare we live in constant dread that at some point the Government is going to set rigid fee schedules for us. We fight constantly, therefore, to keep our "usual" fee as high as we can. If we are going to have our fees fixed let us have them fixed at what is, temporarily at least, a satisfactory level.

I would guess that this is the reason that in 1966, as was just reported, doctors' fees and hospital fees went up far above the anticipated level.

Senator SMATHERS. Let me ask if I get that straight.

Dr. NOLEN. Just before medicare came in there was a rise in doctors' fees and hospital charges. This was just testified to by the group here. I would guess that much of this was in anticipation of medicare. We didn't want to get caught with our fees outdated. Senator SMATHERS. Just too low.

Dr. NOLEN. That is right.

We wanted to be sure that we were at a decent level in anticipation of the fact that they might be frozen there and we might have to sit around bargaining to increase them.

Senator SMATHERS. You are not old enough to remember at the beginning of World War II when people who had apartments to rent suddenly realized that rents were going to be frozen and thought as a matter of good judgment and precaution that they had better raise their rents a little bit at that time, so that they would be frozen at what they figured was a level that would be able to return to them some profit over the course of an indeterminate number of years.

Now I gather what you are saying is that it is your feeling that one of the reasons that the doctors' medical fees have gone up this past year over 7 percent is not necessarily because they are spending more time on the patient or because they are actually doing more, but that it is a natural hedge against the eventuality they fear-and we all fear for that matter; I would not like to see this happen-they fear that their fees may be frozen.

If they are going to be frozen, they want to have them frozen at a good level.

Is that what you are saying?

ATTITUDES ON SURGICAL FEES

Dr. NOLEN. That is exactly it, yes.

I would like to talk specifically about surgical fees for a minute, since, as a surgeon, these are of some concern to me.

Before medicare, as I said in my article, I individualized in many cases-in all cases really. The philosophy of the doctors where I practice is to charge only what we think a procedure is worth and not to increase the charge just because the patient is wealthy.

I am sure you are aware of this philosophy, this "Robin Hood" idea that you charge more for the wealthy so that you can treat the charity patients for less. We have never subscribed to that and I have never subscribed to that.

Whether a patient makes $7,000 a year or $50,000 a year, I charge him $150 to take out his appendix. I never raise that fee.

But I would lower it. An old man who couldn't stand to pay $150 just paid what he could and I would write off the rest. But not since medicare. The Government pays, so everyone is charged the maximum.

This attitude stems, as I mentioned, partly from fear of future rigid Government regulations, but it also stems in part from experiences like some of those I've already had with medicare.

Let me give you one example. I operated on an elderly woman some months ago and I did a hysterectomy for cancer. My usual fee for this operation is $300 but this particular patient had had deep X-ray therapy just prior to operation and the postoperative care was much more time consuming and demanding than is ordinarily the case. So I sent her a bill for $350.

I got a letter back from medicare asking for an explanation of my increased charge. I had to dictate a letter justifying my charge to a layman somewhere who probably didn't know a thing about surgery. Now I realize that I may be wrong about this, very probably these things are scanned by doctors, but this is the way the letter comes to me and this is the way I react. I would have to take time to get the chart

out.

This sort of timewasting incident aggravates me and other surgeons. We resent having to justify to the Government any deviation from our standard fees. Maybe it shouldn't bother us, but it does.

ATTITUDES TOWARD HOSPITALIZATION

Before leaving the first topic I would like to say a few things about the attitude of doctors toward hospitalization and how it is affected by the patient's status-private or medicare.

Private patients want to get in and out of the hospital as expeditiously as possible, if for no other reason than a financial one.

Medicare patients, not all, but many of them, have no such desire. They are elderly, many of them come from nursing homes or from the homes of their children, and the break in routine that hospitalization affords them is a welcome one. The children with whom they live welcome the break, too.