Mr. ENSIGN. Yes. This type of committee is required under the medicare law for medicare purposes. We rely not only on that but also on individual questionnaires from Blue Cross plans to physicians. We ask questions like, "Was this procedure necessary for the diagnosis of treatment which you reported?" That type of technique.

Mr. ROGERS. Do you recommend any steps be taken by hospitals where you think they are out of line?

Mr. ENSIGN. That varies depending upon where we feel they are out of line. Let me cite an experiment which is underway in the neighboring State of Maryland where a hospital cost containment program is underway. The approach being used in that situation utilizes a nonprofit agency in the State whose history has been to report and verify hospital costs to Blue Cross and to the State and to other agencies. In cooperation with the Blue Cross plan in Maryland, this agency is now applying what it calls a hospital cost containment program wherein hospital cost data, statistics, and other financial data, are published monthly, compared institution to institution, means taken, ranges established, and when one seems out of line, a discussion is held with the institution and its administrator, and in the ultimate a warning issued about the fact that above a certain line payment will not be made.

Now, this is in its early stages. It has been endorsed by the Social Security Administration as one of those experiments approved under the Social Security Amendments of 1967. We have other such experiments underway.

Mr. ROGERS. What to you seems to be the major factors of cost that perhaps something could be done about? Or maybe you could submit these for the record.

Mr. ENSIGN. I would be happy to submit them for the record. Obviously payroll as a part of total cost is a much more significant amount in the hospital setting than it is in industry. Frankly, we are gratified to see hospital employees at last receiving compensation that they deserve, so that the focus of attention in this area should be on the evaluation or reevaluation of the roles being played by the members of the professional team and the nonprofessional team within the institution.

I think there is a great deal of work to be done there with paramedical personnel and reorganizing the inside of the hospital operation. Other costs such as capital costs are something which this committee is addressing itself to and for that reason we endorse the bills being proposed.

(For the information requested, see letter dated April 22, 1969, - p. 195.)

Mr. ROGERS. Do you think patients are moved from acute beds to extended-care beds as rapidly as they should be as a general rule? Mr. ENSIGN. As a general rule I suppose not, simply because there aren't that many well-qualified extended-care facilities in a real close working relationship or proximity to acute beds.

Mr. ROGERS. This was my feeling. Do you think it would be wise to have some extended-care facilities within each hospital core?

Mr. ENSIGN. If not within each hospital core, then readily accessible, readily available in the community.

Mr. ROGERS. Well, haven't you had the experience that doctors hesitate to move their patients from an acute bed even across the street if they have to be moved in an ambulance?

Mr. ENSIGN. Yes. That is a factor.

Mr. ROGERS. This is what doctors tell me.

Mr. ENSIGN. Having been a hospital administrator, I am aware of that problem.

Mr. ROGERS. That is why the thinking of the committee here, which we want to explore we don't know yet what we want to do— that it be required that if they modernize or build a new hospital, to have such a section in the hospital itself.

Mr. ENSIGN. I would agree Mr. Chairman, I would agree with that suggestion if I could be sure that every acute institution is going to pay enough attention to the postacute patients or the concept of extended care within that new wing or within those walls.

Mr. ROGERS. If it is administering the care, I presume it would; wouldn't it?

Mr. ENSIGN. I merely make the statement that some institutions are heavily focused on acute care of patients and the interests of the nurses, the interests of the medical staff, the interests of all the people are on those acute cases that come in to the hospital in peril and leave in a restored condition.

Mr. ROGERS. I would hate to go to a hospital

Mr. ENSIGN. I would far rather see a well motivated board, administrator and staff of a postacute unit adjacent to, perhaps on the same ground with a corridor attached.

Mr. ROGERS. Well, I wouldn't mind the corridor attached so they can move them just by putting them on a stretcher right there, rolling them in, or something like that, or roll a bed, but what I am talking about is have them go through the process of moving them, moving all their records

Mr. ENSIGN. Certainly.

Mr. ROGERS. All this.

Mr. ENSIGN. Certainly the desirability to pack up the patient and his belongings and move him is thwarted by having to get him into an ambulance and out of your own

Mr. ROGERS. Not only that. I think the individual patient would hesitate to be moved out of the core hospital where all the services are there if he needs it before he is really ready to leave the hospital.

Mr. ENSIGN. Make no mistake, Mr. Chairman. I heartily endorse the expansion of the hospital concept to reach out and do these things However, to make it a mandatory provision, requiring that every institution benefiting

Mr. ROGERS. If they modernize and use government funds to modernize, that is what we are saying, or to construct.

Mr. ENSIGN. I would encourage it, certainly.

Mr. ROGERS. Thank you.

Dr. Carter?

Mr. CARTER. Mr. Chairman, on that very thing, I should think that the facility adjacent to a hospital certainly would be all right for convalescent care and for rehabilitation. I see no objection to taking that patient by ambulance and I feel that they would receive in the convalescent home or rehabilitation center the care that they needed.

And, of course, the nearness of the hospital helps their mental attitude, and so on.

With due respect to the chairman, I beg to disagree on that.

Now, I am impressed by something else which you have mentioned here on page 4 and that is this. "Too much of the recent increases in health expenditures are absorbed by price changes as opposed to service increases," which means that for the increased price of hospitalization, we have not had a corresponding increase in services. Is that it?

Mr. ENSIGN. Increase in productivity, that is correct, Doctor.

Mr. CARTER. Increase in productivity. I think these two go hand in hand, with increased price changes. Of course, we should have increased services or improved services, I should think, increased productivity as you put it.

You spoke of diagnostic centers and you speak of satellite groups from hospitals. Now, I have heard this phrase recurring time after time.

Who is going to staff these satellite centers?

Mr. ENSIGN. Well, Dr. Carter

Mr. CARTER. Diagnostic centers.

Mr. ENSIGN. The concept of satellite units as mentioned in our statement refers more to the fact that at the moment there are thousands of individual hospital corporations overlapping in their service areas, attempting to do the same job in some communities or leaving part of the job undone. The concept of satellites as I view it is one where some of these existing institutions may well associate themselves, either in a corporate sense or in some other coordinated way, with a central facility which has central administration, which has perhaps the ability to operate the computer serving all of these institutions, does the purchasing for these institutions, provides other management functions and services, laundry and a number of other things, which would not only bring more economy to the system but make more systematic the way in which these institutions face the community and its health needs.

Mr. CARTER. Let's take your plan there and apply it throughout the United States. We would have hospitals throughout our country with clinics medically connected with them and as you say, perhaps part of the corporate structure throughout all the areas.

Where would there be left a place for the private practice of medicine and surgery?

Mr. ENSIGN. I don't mean in my remarks, Dr. Carter, to be addressing myself to the private practice of medicine or its disappearance. What I am suggesting is that whether in its solo practice, group practice, or whatever, one central facility with an organized medical staff of solo practitioners, perhaps, in a building where they share common facilities and services, serving a number of institutions, perhaps some of which have their own medical staffs or nearby physicians, is one approach to fragmentation problems.

From an administrative and management point of view, it might bring economies and efficiencies and effectiveness.

Mr. CARTER. Then you would approve of a system which would centralize our medical system and hospitals throughout the country with satellite diagnostic centers and health centers throughout the area. Mr. ENSIGN. I am not

Mr. CARTER. And if we followed your conclusion to the ultimate, we would have only hospitals with their satellite groups.

Mr. ENSIGN. Dr. Carter, I am not advocating the countrywide adoption of a satellite system with every institution ultimately linked to every other one. What I am saying is that there are examples in our country of some statellite operations with solo practice which have demonstrated this concept successfully. The Greenville, S.C., system of hospitals is a good example where the physicians are in private practice, where the Greenville General Hospital is the operating hub for a number of institutions, one of which is an extended care facility, one of which is a mental health center, and other types of facilities in and around an area where the medical staff of these institutions feels more identified with the community's total concerns and needs than with perhaps just one small part of the community. Mr. CARTER. Well, for your information, such system already exists. Such a system already exists based upon private enterprise. Physicians in clinics have diagonstic centers.

Mr. ENSIGN. Yes.

Mr. CARTER. Throughout our country. And over the years they have had pipelines to hospitals. They take their patients there. They serve as members of staffs on these hospitals. And by and large many of them finaced the construction of their own clinics.

To me this is something certainly to be wished. Are we going to do away with private initiative, with people who would build their own clinics, and establish their own relationships with hospitals? That has been done for many, many years, and it is continuing to be

done

Mr. ENSIGN. But, Dr. Carter

Mr. CARTER (Continuing). Under the Medical Programs Act which we have now. We have, of course, central hospitals, a university usually, and with arms radiating to the various communities in parts of States, who have close cooperation with these areas. We get telephonic reports of EKG's, also radioactive scannings, and the professors from the universities come out and teach our groups. We have 17 of these programs going at the present time and I understand about 50 of them have applications in. But I believe if your program was carried to its ultimate, we would have all of the medical practice throughout our country controlled by just groups of hospitals which may or may not be all right, but would mean physicisns on salaries with all the ills that people working on fixed salaries are subject to. To see evidence of the bad features of this, you have but to go now to many of our installations in this country, and I regret to say some of our hospitals here in Washington under the military, and certainly if you ever saw people treated like numbers, they certainly are. They go ahead and receive certain diagnostic treatment from the very best hospital, supposedly, in the United States very casually and off they go. I don't want to ever see that come to pass. I want to see the private physician who is interested in the patients and who puts the good of patients before himself. I want to see that continue and we are not going to see that continue unless we see people paid when they do more work for that extra pay.

That is the system that has made our country great and when we do away with it, God help us.

Mr. ENSIGN. Dr. Carter, may I clarify my position on this point? There is nothing in my statement, sir, which suggests the abolition of the solo practice of medicine.

Mr. CARTER. I have seen this trend from one end to the other through almost every statement I have read today and I regret this is true. I recently was in England where I studied the hospital program over there and I am not too impressed with it, to be perfectly frank, and I hope that never will we ever get to the time when a doctor will lose the real doctor-patient relationship.

Mr. ENSIGN. Dr. Carter, the prime example of satellite hospitals has been developed in the private sector through private initiative. Solo practitioners relating together in medical staff organizations.

Mr. CARTER. That is just what I told you, that this is in existence today and has been for many years.

Mr. ENSIGN. That is right. That is what I have in my statement. Mr. CARTER. Thank you, sir.

Mr. PREYER (presiding). Thank you, Mr. Ensign. We appreciate your being here today and your testimony is very helpful.

Mr. ENSIGN. Thank you, sir.

(The following letter and attachments were received for the record.)

BLUE CROSS ASSOCIATION,
Chicago, Ill., April 22, 1969.

Hon. PAUL G. ROGERS,

Subcommittee on Public Health and Welfare,
Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D.C.

DEAR MR. ROGERS: At the time of my testimony before the Subcommittee on Public Health and Welfare, you asked if I would be able to provide you and the committee with several documents for your further review and study. Enclosed you will find the items which I promised to provide. I have listed these in the order in which they arose during the question period following my presentation. 1. Copy of the annual report of the Commission for Administrative Services in Hospitals (CASH).

2. Report of CASH to the California Legislature.

3. CASH Registered Nurse Availability Survey, 1966.

4. A CASH chart illustrating the overall impact of CASH on labor productivity based on best estimates to date.

5. American Hospital Association Nursing Activity Study, 1968.*

6. Statement by Walter J. McNerney titled, "Improving the Effectiveness of Health Insurance and Prepayment."*

7. Report of the Secretary's Advisory Committee on Hospital Effectiveness.* 8. Report on Blue Cross Association Survey on the Participation of Blue Cross Plans in Areawide Planning, 1968.

9. Blue Cross Reports, March, 1966, "Utilization Review and Control Activities in Blue Cross Plans."

10. Blue Cross Reports, June, 1967, "Hospital Cost Trends."

First you requested that we provide you with information concerning studies and recommendations made by the Commission for Administrative Services in Hospitals. The first four documents listed above will, I believe, give you a fairly comprehensive picture of the nature of the Commission and its activities together with some selected examples of the results obtained from the use of the CASH system. In addition, I have furnished you a copy of the recently published AHA Nursing Activity Study which you requested.

Closely following our discussion concerning studies of nursing activity, you asked if we had any specific recommendations as a result of our experience in developments to improve effectiveness and efficiency in the hospital setting. As item #6 listed above, I have included a statement by Walter J. McNerney, Presi

"May be found in the committee files.