Mr. WEINER. One final question. What would the opinion or the feeling of the panel be about having a formal procedure, such as having hearings prior to the issuance of regulations having such drastic changes? This procedure could be prior to regulations being put in the Federal Register so that HEW cannot do what they did here.

Concerning these regulations, for example, there was no public outery until these hearings in the Congress took place.

What about requiring HEW to hold public hearings before promulgating such regulations?

Mr. HALL. If the administration is intent on doing something, I am not sure it makes much difference. Perhaps this forum is better. Mr. DANSTEDT. I think the other factor you must remember, the industry is very fragmented, and perhaps this is the most feasible way to bring testimony.

If they have a game plan and they have time to work on it over a period of time, I think this type of forum is very feasible, just as a general forum. I think it has relative value.

Mr. WEINER. I do appreciate that, because if the intent is not there, no matter what forum they use, it will make no difference.

Thank you very much. From the House side, we certainly appreciate the long time you have been with us today.

Mr. HALAMANDARIS. We do thank you gentlemen for appearing, and we appreciate your coming here today.

DRAFTING FUTURE LEGISLATION

Mr. STERN. If I could make one additional statement, there is something which has made its cumulative effect apparent throughout this hearing today. We have heard talk of two levels of proprietarism. You gentlemen, and people before you, have indicated very clearly that there are "sharks" that one has to avoid "sharks" at all costs, and even when precautions are taken the laws may not get them all beforehand. But then there is the broader issue: can we address the question of "proprietarism" per se with our hearings? Here is where I think we can provide remedies to some of the questions, because some of the recommendations which you have made to the staff and to Congressmen and Senators will be considered in the drafting of future legislation. Hopefully, HEW will not do the same thing again. Even with all that has been said pro and con about proprietarism, we do have some interesting controversies. One is that of persons "whispering in the Government's ear." I think it comes to that. Who should the Government trust? Who should be the one, in effect, giving the advice to the Government and doing all but promulgating regulations? Because of your comments, we recognize the need to develop some equitable way of getting input from both proprietary and nonproprietary sources.

Mr. BYRNE. I think the issue that came up today showed that we have a big problem on our hands, and I think it fundamentally is based on the relatively limited standards thus far promulgated, and I think what we at the national association should work together with whatever parts of Government needs to work with to firm up these standards, before there is anything that really happens.

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As a volunteer group, we must look at the threat that is to come. We must look at our past history and we must consider essentially the threat to the aged by opening up the floodgates too quickly. We must not find ourselves in the position 7 or 8 years after, as in the nursing home field, in a terrible mess-one that takes years to correct. It would be my suggestion that we drag our feet, and that we get some principles set forth in a better fashion, representing the various current divices.

Mr. STERN. What about Upjohn-should they also be involved?

Mr. BYRNE. They have come to our board meetings and they can contribute. We have been doing some exploring with them and in about 2 weeks we will have another session. So I think we can certainly work together, the proprietaries and the nonproprietaries, but I just hope we can forestall any big changes right now.

Mr. HALL. I think you raised a very fundamental question-that there is confusion in talking about the profit motive and free enterprise. It is not free enterprise that we are talking about. Titles XVIII, XIX, and XX are exclusively Government programs. Allegedly, they are in very short supply of money and, depending on what you are talking about, I think one has to raise the question: If that is the case, where does the profit come from? In the free marketplace where Upjohn is operating-and the patient is able to make a choice, I suppose they could go anywhere they want. But when you are not dealing with a free marketplace, and titles XVIII, XIX, and XX are not a part of the free marketplace, then I think we have the right to require every provider, whether they are public, tax exempt, or taking profits, to meet standards.

Mr. SEMMEL. I think as was indicated earlier, this is not an area which the patient chooses the agency. It is an area where the doctor chooses the agency, and so the free market is really not operating. The patient's choice is really not operating at all in this area.

BUILDING UPON EXPERIENCE

Mr. TRAUTMAN. I believe we have some basic principles in the medicare certification process, as far as quality is concerned, and we should use that experience and build upon it.

We have had meetings on this issue and concluded that at this time we cannot support a move to go ahead without first looking at the certificate of need, State licensure, disclosure, and other controls which will be needed. When you are small, no one cares about you, and there are controls in being small. As more money becomes available, the potential for abuse increases proportionately. The faster home health grows, the potential for abuse is greater. The question is, what base do we want to work from, and what kind of controls should we have on this growth in home health?

Mr. STERN. Thank you very much.

Mr. HALAMANDARIS. Thank you.

We have a couple of other people in this room that have been very patient, and who have asked for a few minutes. We will hear from them now.

Mr. James Terence Prendergast and Mr. Fred Keeley.

Mr. Prendergast, if you will go first-I see you have given your card with your name to our court reporter, and if you could be brief, we would be grateful. You may proceed.

STATEMENT OF JAMES TERENCE PRENDERGAST, LEGISLATIVE COUNSEL FOR STAFF BUILDERS, NEW YORK, N.Y.

Mr. PRENDERGAST. Thank you very much.

Mr. Chairman, my name is James Terence Prendergast. I am the legislative counsel for Staff Builders, a nationwide organization which includes a division of medical services that is quite active.

In the past year I also represented 14 home health companies in the New York Legislature where we struggled over the same issues. I think that this whole issue has taken a tragic turn. I think it is unfortunate for people out there, the ones we all want to serve, that the proprietaries and the voluntaries are being pitted against each other.

I hope, Mr. Chairman, that the subcommittees will continue to review, in a serious-minded fashion, ways of utilizing all providers of services in home health care.

It has already been remarked, for example, that there is a talent for marketing-that there is a talent for promotion-that is possessed by the proprietaries which could be used in this field. You can help reach an accommodation with a powerful force for home health services in this country of ours, if you enlist the proprietary sector in advancing the totality of all home health services. We view this as our very real interest.

I come to you from New York City, where we are experiencing a tragic lack of funds, as you all know, because others have come here asking you to put up money. This is just the first symptom of what is going to be a national crisis: a shortage of public funds.

I think it is incumbent upon you to consider costs very carefully. When costs are considered carefully, we will wind up with a better program. We must try to return to competition, where possible, in the home health industry and in home health services.

I submit that one area which is totally appropriate for competition is home health services. I say that for a fairly good reason because, in an area where you only need a hospital with 250 beds, there is an enormous capital investment, that merits protection. But in the home health industry protection is not needed.

You can run a good home health agency serving an average of 100 cases a week from a headquarters the size of one-fourth of the space of this hearing room. It is a labor-intensive industry. It does not need a very large area, and it is easy to operate.

The major problem is delay in Government payment. One of your witnesses today, Dr. Etzioni, has called for a voucher system. Such a system would attempt to get some free market behavior. It can be done in this area. Remember one of the most useful points of regulation is the consumer and it would be relatively easy for the consumer to make changes in a free home health market.

We do have enormous problems with what Mr. Stern has described as the "shark." In the nursing home field that has been a problem.

That is not true in the home health care area. It is

simple matter to change the provider whenever the service is not satisfactory. You have a very simply alternative available to you: If you have competition, you have the search for profit, because they go hand in hand. The profit motive is what makes you compete.

I see one of the things that is apparent here. There is no basic ground for this controversy. It certainly was clear in New York State that the voluntary agencies need all the money they can get from their medicaid and medicare cases in order to cover other cases. I would also say that there must be an effective health planning system, one that would look at all aspects.

We have had a number of helpful agency letters. Some of them have testified today. Some of them-for example, the National Council of Homemaker Home Health Services-have a good, active certification programs to review standards.

There are proprietary companies that have been certified by them. They do have their place. I believe you do need the proprietary agencies.

Thank you very much. I think I kept it within 5 minutes.

Mr. HALAMANDARIS. Thank you. I have no questions. We thank you for a fine statement.

We now call Fred Keeley.

STATEMENT OF FRED KEELEY, HOME-KARE, INC., CAMPBELL,

CALIF.

Mr. KEELEY. Mr. Chairman, honorable committee members, it is indeed an honor for me to testify before this honorable committee relative to home health services.

If it pleases the chairman, I will restrict my comments to a discussion of the issue of whether or not proprietary home health agencies should be allowed to provide home health services to medicaid patients in States which do not have licensing statutes.

Home-Kare, Inc., is a proprietary home health agency with offices throughout California. During fiscal year 1974-75, Home-Kare, Inc., medical personnel provided over 70,000 home health visits at an average cost per visit of $18.55. This average cost is less than the $19.35 per visit reported by Blue Cross North, a fiscal intermediary representing hundreds of nonprofit agencies in California.

While Home-Kare, Inc., has kept a low average cost per visit figure, we have not sacrificed patient care in so doing.

In fact, we maintain probably the highest standard of patient care in the State through a supervisorial system that monitors the services being provided to medicare or medicaid patients. Our supervisorial ratio is 1:4-one supervising public health nurse; four public health nurses/registered nurses in the field.

Supervision means more than mere scheduling and occasional case review. Our supervising public health nurses make regular visits in the field to verify that a patient is receiving the level of care indicated by his or her attending physician; regular and frequent case conferences are held by the nursing team, supervising public health nurses and medical director; and utilization review meetings are

regularly scheduled at which time two physicians, persons from the community, and supervising PHN's discuss cases in terms of adequate and appropriate levels of care and treatment.

In addition to such case supervision, each infield nurse is constantly supervised and evaluated in terms of performance, attitude, attention to patient needs, inservice education, and professionalism in the performance of duties.

While this level of supervision exceeds that mandated by the State and Federal Governments, it has always been the practice and policy of Home-Kare, Inc., to insure, through supervision, high-quality patient care. We are in total agreement with a California health association. They stated:

It has been agreed that a significant component of quality care is the caliber of patient management-professional supervision of both staff and patients helps to insure high quality. In the absence of such supervision, not only is the quality in jeopardy, but the determination and utilization of appropriate care will not occur. At the same time, maximum utilization of other community services and resources can be accomplished through coordination and patient care planning carried out by professional staff members. Professional patient management is not only more effective from a treatment standpoint, it may also be less costly.

GOAL: HIGH-QUALITY PATIENT CARE

Home-Kare, Inc., while being a for-profit corporation, is not solely driven forward by the profit motive. Our goal and direction is toward high-quality patient care. That goal serves us well because in so doing we establish a reputation that causes more referrals and business to come our way.

However, in order to substantiate that claim, I would like to quote from a letter of reference authored by Dr. Lois Lillick who is currently serving as legislative liaison for the California State Department of Health, and is a life member in the California Association for Health Services at Home, and former director of the licensing and certification section of the California State Department of Health. She says about Home-Kare, Inc.:

Home-Kare, Inc., has established a reputation for integrity and for the provision of high-quality services, both through home health and homemaker services. Clearly, Home-Kare, Inc., has placed quality above profit as a principle of operation, and yet has succeeded where nonprofit agencies have failed. To Home-Kare, Inc.'s, credit must be mentioned the fact that throughout all the vicissitudes of medical payments, Home-Kare continued to care for Medi-Cal patients when others have refused on the basis of too little reimbursement. Home-Kare, Inc.'s concern for the patient is foremost in their dealings.

It is, therefore, our contention that the corporate structure of our agency, or any other agency, is a guarantee of neither the quality nor the cost of home health services. While specific cases in both the profit and nonprofit sectors may be cited as proof of integrity-or lack of it-it is our contention that all that can be proven at this point in time is that any argument based on corporate structure is arbitrary and general.

With reference to the Department of Health, Education, and Welfare. Social and Rehabilitation Service, Medical Assistance, Home Health Services proposed rules published in 40 FR 163, Thursday, August 21, 1975, relative, in part, to the provision of home health