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THE FUTURE of hospital costs has become a subject of great debate. The most cursory search of newspaper headlines and editorials in hospital and medical journals over the past year attests to increasing demands for higher wages with concomitant predictions of skyrocketing costs. With the House Ways and Means Committee hearings on Medicare, the subject of the future of hospital costs has been given new life. Predictions of 20 to 30 percent cost increases in a single year are heard from many parts of the country. Projections of cost increases reaching as high as 60 to 75 percent over the next three to five years have been heard. In light of the changes many people see occurring in hospital costs, it becomes necessary to take a close look not only at the components of hospital cost and their effect on cost but also at the predictions of future costs as well.

The preceding paper provides a fairly concise statement of the factors which make up total hospital cost as well as the relative importance of each of these factors in influencing changes in cost. It is clear from this paper that it is indeed the cost per day which is the most rapidly changing component of total cost, and even more specifically, the salary component of cost per day.

As the paper points out, the prediction of increases in cost per day, even from the most complete fact base, is extremely difficult. With the best data, the path which future hospital costs will follow can only be predicted by choosing to accept some basic assumptions about the nature of the changes which we see occurring in hospital cost per day at the present time.

The paper provides six different projections of cost through 1970, each beginning on essentially the same fact base but each accepting a different assumption about the nature of current trends. The result is a spread of $11.23 between the lowest and highest projected cost by 1970. This is a spread of approximately 20 percent of the lowest cost figure estimated by that time. One would wish that predictions of the future could be more precise. Yet, in any case, it would appear that these projections do provide a key to both the minimum and maximum increase in hospital cost per day that we are likely to see by 1970. It is certainly unlikely that the rate of increase in hospital costs over the next few years will go below what we would expect on the basis of a trend computed from 1950 through 1965. It seems equally unlikely that the maximum change in hos

pital costs could exceed the projection made on the basis of the 1961 through 1966 trend.

The pressures for austerity are upon us. The Gorham report, A Report to the President: Medical Care Prices, is the first sign of this. It calls for a number of measures designed to curb the rising cost of medical care. Nurses and other hospital personnel have demanded and received significant and deserved pay increases. Where the demands have been met, the pressures have already begun to subside. But these pay increases themselves should act as an influence on the hospital administrator to hold down costs in nonwage

areas.

Perhaps the most realistic view of the change which has taken place in hospital costs is the view that these changes do represent a shift in the position of the basic trend of hospital costs. It is likely that this shift in position will not be as great as would result from the assumptions taken in this paper. Such salary changes on top of the normal expected salary changes which would be projected by the trend would come very close to putting hospital personnel above the level of similarly trained and educated people in the large

economy.

Even if the most extreme assumption taken in the paper were to hold, however, the future of hospital costs does not appear to be headed for increases much greater than an average of 9 percent per year in the foreseeable future. Moreover, salary increases of the magnitude discussed here are still only likely to produce long-term trends below 9 percent per year.

An objective look at the components of hospital cost and predictions for the future do not seem to support many of the cost increase predictions which have been made over the past year. There is, of course, the possibility that the future for hospital costs will be nothing like the past and that the assumptions contained in the preceding paper are completely invalid. If this be the case, however, it is highly likely that completely new factors will enter the hospital cost system in the near future, factors such as government controls, to hold down cost artificially if hospitals are not able to hold them down on their own.

WALTER J. MCNERNEY President

Mr. PREYER. This concludes the hearings scheduled for today, and the committee stands adjourned until 10 a.m. tomorrow.

(Whereupon, at 3:15 p.m., the subcommittee adjourned until the following day, Friday, March 28, 1969, at 10 a.m.)

HOSPITAL AND HEALTH FACILITY CONSTRUCTION

AND MODERNIZATION

FRIDAY, MARCH 28, 1969

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON PUBLIC HEALTH AND WELFARE,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
Washington, D.C.

The subcommittee met, pursuant to notice, at 10 a.m., in room. 2212, Rayburn House Office Building, Hon. Paul C. Rogers presiding (Hon. John Jarman, chairman).

Mr. ROGERS. The subcommittee will come to order, please.

This morning we will continue the hearings on bills relating to the Hill-Burton program.

Our first witness this morning will be Dr. Thomas Bryant, Assistant Director of the Office of Economic Opportunity for Health Affairs (acting). We are pleased to have you with us, Dr. Bryant. If you will introduce your associate.

STATEMENT OF DR. THOMAS BRYANT, ASSISTANT DIRECTOR OF THE OFFICE OF ECONOMIC OPPORTUNITY FOR HEALTH AFFAIRS (ACTING), ACCOMPANIED BY DANIEL ZWICK, ASSOCIATE DIRECTOR, COMMUNITY ACTION HEALTH PROGRAM

Dr. BRYANT. I have with me Mr. Daniel Zwick, Associate Director of the Community Action Health Program.

Mr. ROGERS. I might say the committee appreciates your appearing on such short notice. We apologize for not giving you more notice, but we are trying to conclude our hearings today. We are anxious to hear what ŎEO is doing in the health field and the effect it may have on this entire program.

Dr. BRYANT. I have put together a brief statement, Mr. Congressman, which I would like to read from, if I could.

Mr. ROGERS. Fine.

Dr. BRYANT. First, I would like to thank the committee for the opportunity to appear before you today to discuss what I think is one of the most exciting programs in the whole health field todayOEO's comprehensive health services program.

This is a program that has generated a great deal of interest in both the health-providing professions and the people who are being served. Since it is a program directed toward the needs of the poor, let me first outline some of the reasons that make a program like this necessary:

Ill health and poverty reinforce each other. The poor live in conditions which undermine physical and mental health-we find residents

of poverty areas struggling with malnutrition, crude and unclean housing, inadequate heating and sanitary facilities, substandard working conditions, and poor provisions for personal hygiene.

Illness generated or exacerbated by these conditions prevents or handicaps many of the poor from making use of the educational, training, and employment opportunities which could lift them out of poverty. The limitations this imposes on the poor are compounded for their children.

Despite the marvelous achievements of modern medicine, our country has a long way to go in bringing adequate medical care to those living in poverty. At this moment the United States stands 14th among the nations of the world in infant mortality rates. Our standing would improve greatly if the more than 20 to 25 million who are poor were not included in the count.

An infant born to poor parents has twice the chance of dying before reaching his first birthday. Should he survive the first year of life, his chance of dying before reaching the age of 35 is four times greater than that of the rest of us.

Poor families have three times more disabling heart disease, seven times more visual impairment, and five times more mental illness. Among those who are fortunate enough to work, one-third have chronic illness that severely limits their job capacity. The "killer diseases" of the poor continue to be tuberculosis, pneumonia, and influenza.

In 1967, we found that 50 percent of poor children have still not had adequate immunizations. Sixty-four percent of poor children in this country have never seen a dentist, and 45 percent of all women who have babies in public hospitals are delivered without prenatal

care.

A significant amount of the mental disease and retardation found in this country is directly attributable to poverty. Experience with poor families has shown us that a large percentage of the mental retardation we are experiencing can be prevented. Its incidence among children born to poor parents is roughly twice that among children born into the middle or upper class.

This occurs as a result of a variety of environmentally conditioned factors: poor prenatal care, inadequate counseling for family planning, low rates of immunization, and poor nutrition. Given a level of medical care available to that in the middle class, given proper food and necessary family planning information, there is no reason why we cannot reduce the number of retarded children born every day among the

poor.

To summarize, medical care presently available is inadequate, often inaccessible, impersonal, fragmented, lacking in continuity, and of poor quality.

A few years ago, Dr. Alonzo Yerby, then commissioner of hospitals for the city of New York, told a White House Conference on Health:

The pervasive stigma of charity permeates our arrangements for health care for the disadvantaged, and whether the program is based upon the private practice of medicine or upon public or nonprofit clinics and hospitals, it tends to be piecemeal, poorly supervised and uncoordinated. In most of our large cities the hospital outpatient departments still retain some of the attributes of their predecessors, the 18th century free dispensaries. They are crowded, uncomfortable, lacking in concern for human dignity and to make it worse, no longer free. Dr. Yerby concluded his address with a call for action which is hard to ignore. He said that America must learn to organize its health

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