tion institutions. Take your whole low-income housing system. It is built upon exactly that. And in college construction and various higher education construction, principally dormitories, we are doing the same thing. Theoretically it would be a valid argument. Actually we have already broken through that barrier and realistically the guarantee techniques should only be employed where, unless you used it, nothing would happen. I think we will find that is true in hospital modernization. We simply will not have enough money ever appropriated on the grant or even loan basis. Certainly none of us, I think, are very excited about direct Government loans. I refer to the whole fluidity of the guarantee techniques. For example in the housing field, where it has been the most used, conceive of appropriating $80 billion, which is what the aggregate of housing guarantees I think now comes to. Perhaps more than that. Yet it shows the genius of this system, that you can do that, and not only never lose money, you make money. So I think that it gives us an added flexibility in an area in which we have already made the breakthrough. Mr. ROGERS. Do you think the loans, guaranteed loans, should go for new construction other than modernization? Senator JAVITS. I think they should go principally for modernization. I think modernization is so far behind and this will be such a magnet to attract modernization activity, that I think we have enough to do in that, without doing the other in the same context. Mr. ROGERS. Thank you very much, Senator. Mr. NELSEN. No questions. Mr. SATTERFIELD. No questions. Mr. KYROS. No questions, Mr. Chairman. The next witness this morning is our colleague from the full Committee on Interstate and Foreign Commerce and chairman of the Subcommittee on Commerce and Finance, the Honorable John E. Moss of California. STATEMENT OF HON. JOHN E. MOSS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. Moss. Mr. Chairman and distinguished members of the committee, I welcome this opportunity to appear before you to offer my views about the urgent need to expand and extend the programs which do so much to promote the construction and modernization of this Nation's hospital and other health service facilities. It is hardly necessary for me to point out the great importance adequate health services are to the life and well-being of the Nation. It is of national interest that the highest quality of health care be available to all citizens. Since its inception, the Hill-Burton program has served a significant role in the realization of this goal. It has been and continues to be an effective tool in meeting the changing and growing needs in the health care area. As introduced in 1946, the program authorized grants to states for assistance in constructing needed hospitals and public health centers. This legislation was in response to our recognition of the hospital shortage which had become increasingly acute by the end of World War II. In 1954 the program was broadened to provide specific grants for construction of special and long-term health facilities such as nursing homes, diagnostic or treatment centers, rehabilitation facilities, and chronic disease facilities. Another important alteration of the act occurred in 1964 with the authorization of a new grant program providing funds for the moderization of hospitals and other health facilities. While in the early years of the program the main problem was hospital shortage, by 1964 the main problem had become that of hospital modernization. The older hospitals in the Nation had quickly grown obsolete. At the end of fiscal year 1968, the Hill-Burton program had assisted in 9,549 projects, providing 413,797 impatient beds and 2,737 other health facilities. The cost of these projects totaled 10 billion dollars with the Federal Government paying $3.1 billion of that total. Of these projects 8,035 (333,518 inpatient beds and 2,334 other health facilities) are in operation, 1,373 (73,572 inpatient beds and 370 other health facilities) are under construction, and 141 (6,707 inpatient beds and 33 other health facilities) have been approved but are not yet under construction. This program has long served us well and we must continue, by extending and expanding the Hill-Burton Act, to meet effectively the ever growing needs of the health facilities of this country. The major needs in this area at the present time have dramatically changed. In a recent statement on the question of what are our present facility requirements, a spokesman for the Department of Health, Education, and Welfare observed: A better balance of facilities to eliminate the problem of oversupply in some areas and undersupply in others. This will call for mergers, conversions, or the phasing out of certain small hospitals unable to keep pace with the rapid changes occurring in the delivery of medical care. Modernization of nearly 3,300 general hospitals containing 263,000 beds and 4,850 long-term care facilities (including nursing homes) containing 208,000 beds. New construction in some areas to accommodate increased demands for services. Some 100 new general hospitals primarily in suburban areas plus additions to many existing facilities will be needed. These new facilities and additions should provide 75,000 additional beds. The construction of 2,000 new long-term care facilities plus additions to existing facilities which would provide 149,000 additional beds. The demand for facilities is expected to increase in view of the rising proportion of older persons in the population and the impact of Medicare and Medicaid programs. I am sure the members of this committee share with me the belief that it will be impossible for us to build and equip these needed health facilities in the years to come, unless more adequate funding is made available to State and local governments. The best way to provide this needed additional funding, of course, presents us with a significant challenge. To some degree, we can, no doubt, improve the program by increasing the authorizations for the direct grants now made to the States in the form of allotments. But other sources of revenue will be needed, and perhaps a program of federally-guaranteed loans with appropriate interest subsidization features is worth serious consideration. I am pleased to find that some of the proposals now before the committee incorporate both of these approaches in coming to grips with the ever-increasing problem of financing health-care facilities. I also feel, however, Mr. Chairman, that a new emphasis and concern with the problems of the hospitals and other health facilities which are located in our large urban and industrial centers must be incorporated into whatever legislation this committee recommends to the House. As we all know, the hospital facilities located in large metropolitan areas have not escaped the general deterioration which now blights urban America. Local governments and the States lack the necessary revenue to reverse these tragic developments. Improved financing is part of the answer, but a new system of priorities in allocating what resources there are available to the urban centers must also be carefully weighed. At the time Congress moved to provide Federal assistance in the construction of health service facilities, the most pressing problems, as we all know, were found in rural America and in small towns throughout the country. It has taken us nearly 20 years of intensive effort to deal with these needs in a meaningful way. Today, our problems-in health as elsewhere-are increasingly urban in character, and I now feel that the Congress should revise the priorities now contained in the act to shift some of the previous emphasis in the program's system of priorities in this direction. The bills which you, Mr. Chairman, and other members of this committee have introduced, I believe do recognize this need. I can assure you that legislation which this committee recommends to the Congress along these lines will have my complete and total support. I hope the committee will soon present us with their views on this much-needed legislation. Mr. JARMAN. Thank you, Mr. Moss, for bringing your views to us this morning. Mr. Moss. Thank you, Mr. Chairman. Mr. JARMAN. Our next witness is from the State of New Hampshire, the Honorable James C. Cleveland. Welcome, sir, proceed as you see fit. STATEMENT OF HON. JAMES C. CLEVELAND, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW HAMPSHIRE Mr. CLEVELAND. Mr. Chairman, I am pleased to have this opportunity to testify before your subcommittee concerning my bill, H.R. 9604, and other related bills concerning the construction and modernization of hospital and medical facilities. I am also pleased to submit for the record the statement of my good friend William Wilson, who is the administrator of the Mary Hitchcock Memorial Hospital located in Hanover, N.H. I would like to highlight a few points in relation to his testimony. A year ago, the Mary Hitchcock Memorial Hospital started a major expansion program to modernize and improve its facilities. The decision was made at that time not to wait for Congress to pass new legislation qualifying the hospital for Federal assistance in the form of loan guarantees and interest subsidies. The reasons for that decision will be explained further in Mr. Wilson's statement but one of them was the fact that any possible gains made by waiting for Federal assistance would have been more than eaten up by the rising cost of construction. So the decision was to go ahead, and construction of that $11.5 million project is now underway. However, the completion date for the construction is not due until the fall of 1970, and final activation of the hospital's long-term financing will not be made until that date. 28-236 0-69 -6 Thus, we find the Mary Hitchcock Memorial Hospital in a rather unique situation. The project has begun before the anticipated effective date of this act, which is July 1, 1970, but will be completed afterwards. The Mary Hitchcock Memorial Hospital is basically a metropolitantype hospital located in a rural area. It boasts of having one of the finest medical staffs in the country and indeed the world. It supports an undergraduate medical education program in conjunction with Dartmouth College, which is just about to expand its graduate medical school into a full 4-year program. It also conducts a nursing-training program, as well as programs in medical technology. There is simply no question that the services of this hospital is of enormous value, not only to the immediate area in which it is located, but to a great number of communities beyond. People come from all over northern New England and even Canada for treatment at this hospital. It is my belief that a hospital of this type should be eligible for the loan guarantees and interest subsidies under this bill. It may be that the Mary Hitchcock Memorial Hospital would already be covered in Mr. Staggers' bill H.R. 6797 or your bill, Mr. Chairman, H.R. 7059, but may I ask the committee to check this fact. If you find that this is not the case, I respectfully urge the committee to consider adding language similar to that found on page 21, subparagraph (g) of my bill H.R. 9604. May I point out, Mr. Chairman, that this would not cost the Federal Government a single penny more than it would cost otherwise. It is my understanding that the money under this act would be allocated in varying amounts to the State agencies involved, and it is up to the State to decide which programs it will subsidize. The program at the Mary Hitchcock Memorial Hospital would still need State approval. Thus, since my proposal does not mean any additional money going to the State of New Hampshire, the cost is the same for the Federal Government. Thank you, Mr. Chairman, for this opportunity to present my views. At this time I would like to submit Mr. Wilson's statement for the record. (The statement referred to follows:) STATEMENT OF WILLIAM WILSON, ADMINISTRATOR, MARY HITCHCOCK MEMORIAL HOSPITAL (OF THE DARTMOUTH-HITCHCOCK MEDICAL CENTER), HANOVER, N.H. Mr. Chairman, members of the Subcommittee, my name is William Wilson, and I am the Administrator of the Mary Hitchcock Memorial Hospital in Hanover, New Hampshire. I am testifying in behalf of the Hospital, the Dartmouth, Hitchcock Medical Center, and the health field in general. SUBJECT This statement is in support of Public Health Service Act amendments proposed in HR-6797, but further amended in provisions of HR-9604. Unqualified endorsement and support are accorded the proposals in HR-6797 introduced by Mr. Staggers. Particular attention is drawn to the additional provision in Mr. Cleveland's HR-9604, Page 21, sub-paragraph (g) lines 12 through 20. This provision would establish eligibility for loan guarantee and attendant interest assistance of certain non-profit hospital construction and modernization projects begun before July 1, 1970, and completed after that date. There has been submitted ample Congressional and other documentation in support of the need for Federal assistance to construction and modernization for hospitals and related medical facilities. This statement is related to the need of projects on which construction began prior to July 1, 1970, and on which con struction will be completed after July 1, 1970. Specifically, this statement relates to the construction and modernization project at Mary Hitchcock Memorial Hospital, Hanover, New Hampshire, begun in January of 1968; and scheduled for completion in the fall of 1970. This project is an example of the type of project, begun before the effective date of any applicable legislation, believed to be worthy of eligibility for assistance. The Mary Hitchcock Memorial Hospital project provides essential hospital construction and modernization in support of need for patient service; medical nursing and other allied health education; and additional area-wide health needs. Significant features detailed in the text which follows are: (1) The hospital is a regional referral center serving a wide area of northern New England (a metropolitan-type hospital located in a rural area). (2) Comprehensive medical staff coverage is provided by specialists in all major branches of medicine and surgery. Medical staff consists of: (a) Members of the Hitchcock Clinic, a well-known medical group practice organization, and (b) Clinical faculty members of Dartmouth Medical School. (3) The hospital is heavily committed to education of health professionals: (a) Supports the undergraduate medical education program of Dartmouth Medical School. (b) Conducts graduate medical education for over eighty interns and residents. (c) Conducts essential education programs in professional nursing, practical nursing, and several branches of medical technology. (4) Project cost: $11,656,000. (5) Project financing: (a) Public campaign, other giving, depreciation funding, etc.: $4,156,000. (b) Long-term borrowing: $7,500,000. (6) Federal grant funds in New Hampshire are unavailable. (7) Decision to proceed with construction project in 1968 (for late 1970 completion) will save an estimated $3,190,000 over not waiting until summer of 1970. This estimate is in accordance with the public information available on past and future escalation of hospital construction costs. (8) Maximum interest assistance over a 20-year period of the mortgage loan at seven percent, as provided for by H.R. 6797 and Ĥ.R. 9604, would approximate $2,750,000. (9) The project would be handled routinely by the designated state agency within limits of funds regularly made available to the State of New Hampshire. The project uniquely fills the apparent intent of the proposed legislation. It should be emphasized that eligibility of this project will not involve any costs in excess of those regularly provided by terms of the proposed legislation. THE SUBJECT HOSPITAL Mary Hitchcock Memorial Hospital, Hanover, New Hampshire, was incorporated in 1889 and first opened for the care of patients in 1893. Its growth and development throughout the years as a regional referral and teaching hospital has established it also as the hospital component of the Dartmouth-Hitchcock Medical Center, which includes the Hitchcock Clinic (a medical group practice organization representing full-time coverage of all major medical and surgical specialties) Dartmouth Medical School and the Veterans Administration Hospital in nearby White River Junction, Vermont. A 263-bed hospital from 1952 to 1967, it was increased to 307 beds with the opening of new Mental Health and Intensive Coronary Care facilities in 1968. A current construction project will result in a 450-bed inpatient capacity in the fall of 1970. Almost 9,000 inpatients were admitted in fiscal 1968, and in addition, the Hospital facilities accommodated approximately 100,000 ambulatory patient visits to the hospital-based offices of the Hitchcock Clinic and the Hospital's Emergency Department. The area served is the entire central portion of the states of New Hampshire and Vermont, as well as many communities even farther distant. Ninety percent of the Hospital's clientele is referred by family physicians, community hospitals, and health agencies throughout the area. Detailed statistics are contained in the Hospital's 1968 Report to its Corporation membership. Mary Hitchcock Memorial Hospital provides approved graduate medical education opportunities each year for more than 60 resident physicians and 24 interns, conducts a number of schools and educational programs for professional |