Mr. WILSMANN. Certainly, yes; and I testified to that in your absence. No question at all. The State of New York, which has the licensure law covering only not-for-profits, if this regulation were to become final, I could not be a certified title XIX provider in the State of New York. Representative PEPPER. How do you determine when you are going into an area? You said heretofore you have been certified in nine States. Mr. WILSMANN. In our company operations we make the determination. I make the determination, as the chief executive officer, depending upon how many dollars I can free up within Upjohn's budget for expansion. We started, if you can imagine, at the time of the merger with Upjohn, November 6, 1969, with only two companyowned operations. Today that figure is up to 123 company-owned operations, in just a matter of 5 short years. We did not open one from scratch until July 1970, so it is just a little over a 5-year period that we have opened them. Representative PEPPER. You are just like any other business concern-you go where you think you can make a profit? PRIVATE POCKETBOOK OPERATION Mr. WILSMANN. We know, operating the way we are, out of the private pocketbook-because basically the 17 million hours of service we delivered last year all came out of the private pocketbook, dealing at prices generally below those for comparable services in the same market, charged by the nonprofit people that we can make a profit in those areas by providing appropriate care, being available 24 hours a day, 7 days a week. Health care does not run 8 a.m. to 5 p.m., 5 days a week. We go in and fill the void. The void that has been created from a lack of service availability in those particular markets. Representative PEPPER. When you go to a representative of a State agency to tell him that you want to get a contract to render home health services, how do you do it? Mr. WILSMANN. No, we go in without any of that, because most of the States do not have licensure. I select an area, we train up a manager, we put him in there; he trains his in-office staff, we hire field employees who are qualified because of prior experience; we train new employees who do not have experience, we supervise them very carefully. We serve the people who are outside of titles 18 and 19. Representative PEPPER. Who gives you authority to serve the people, and to assure that you will receive money for doing so from a public source? Mr. WILSMANN. We do not get any money from a public pocketbook in those places, sir. We served 17 million hours, and we did not get any Federal funds anywhere along the line. Representative PEPPER. I thought you were talking about operating under medicaid? Mr. WILSMANN. That is these regulations now clarify the original title XIX regulations, which the States were administering as though it were title XVIII, and would not allow us to be provided under title XIX. Representative PEPPER. You were not certified under medicare heretofore? Mr. WILSMANN. We have not been permitted. Representative PEPPER. Now under this proposed regulation, you will now be able to serve under medicaid? Mr. WILSMANN. We will be allowed. Representative PEPPER. Speaking for the future, when you say you want to come into Miami, Fla., you are not there now? Mr. WILSMANN. I certainly am; I have been there since 1967. Representative PEPPER. Now, up to now, have you been able to serve under medicaid? Mr. WILSMANN. Not at all. GETTING OPPORTUNITY TO SERVE Representative PEPPER. What do you do to get the opportunity to serve? Mr. WILSMANN. We have to go to a single State agency, which has to do with medicaid certification for the State of Florida, and apply for certification for that Miami office; if they accept us, we are in business. Representative PEPPER. I see. Mr. WILSMANN. If they reject us and they say we have got to do something to get ready for it, then Representative PEPPER. Does the patient of a nonprofit agency or does a Government agency decide to contract for your services? Mr. WILSMANN. No; the patient and the doctor. The doctor will, first of all. Representative PEPPER. So you are just certified as being eligible to render these services, and you have to have an advertising campaign to sell to the public that you are the one to call to render the service? Mr. WILSMANN. You do not advertise it to the public. You advertise to the referral sources. This is health care. You can do all of the advertising you want to the general public and never get 5 cents worth of business out of it. Health care is developed by referral sources. Representative PEPPER. And on what do you base your appeal to the public, and those who make references, to select you instead of another proprietary, or instead of a nonprofit agency in the same area? THREE REASONS FOR PUBLIC APPEAL Mr. WILSMANN. No. 1: The quality of care. Check our track record. You cannot serve 500,000 people, paid for out of the private pocketbook, unless you are delivering quality care. No. 2: Availability of service, 7 days a week, 24 hours a day. 70-652-76— 7 Those are the three things that health care depends upon : quality first of all, availability No. 2, and No. 3, the price you will pay, and if 500,000 people chose us, we have something to offer. I am very proud of the fact that 500,000 people last year chose to have the service they needed delivered by us. Representative PEPPER. 500,000 people where, in the United States? Mr. WILSMANN. In the United States alone. Representative PEPPER. Out of some 20 million elderly people? Mr. WILSMANN. Out of some 21 or 22 million elderly, and today we are talking about a plan to at least open up health care to 5 million. Representative PEPPER. What percentage of the business do you have in the metropolitan areas? Mr. WILSMANN. I normally have the lion's share of that which is paid for out of the private pocketbook, because they choose to have us serve them. No GOVERNMENTAL SUPPORT I cannot get one penny's worth of business out of governmental programs, because I have not been allowed to be certified under titles XVIII and XIX, in the bulk of the States. Representative PEPPER. Now, do you take account of the rates being charged by nonprofit agencies, who try to render a better service at a cheaper rate? Mr. WILSMANN. Sir, our rate is built on a retail base, starting with what we pay the individual, the going rate in the community for a home health aide, nurses aide, whatever the level. Piled on top of that, all of our direct costs; I am talking about our social security costs, our insurance costs of all sorts, and on top of that, without building in any administrative costs, we take a mark-on like a retailer does when he sells you a suit of clothing, and we hope by being able to develop volume to be able to cover our overhead. But, we have structured our overhead in such a manner, that in operating 200 offices, we have 71 administrative centers. We do not duplicate those things. Representative PEPPER. Has any public agency supervised the fees you charged? Mr. WILSMANN. None whatsoever. We have the best kind of regulation-what the customer is willing to pay us. There is no better way. Representative PEPPER. I say, does any public agency look over or supervise the fees you charge to determine the reasonableness? Mr. WILSMANN. Not in the private marketplace, no, sir. We have absolutely no regulations. Representative PEPPER. What about if you are going to get money from medicaid? Mr. WILSMANN. Then I will be subject to the 65 pages the fellow was waving this morning-the same that will apply to others. Representative PEPPER. Will that take into consideration your overhead? Mr. WILSMANN. They will look at all of my costs. They have a perfect right to audit not only that location, but all the way back up, through and including my home office in Kalamazoo. Representative PEPPER. We heard this morning from the gentleman from California who told how a private supplier of services, in that State, has as a part of his overhead, trips to Washington, and to Honolulu, and to the cigar store, the tobacco store, and to the liquor store. Is any such abuse of that sort possible in your company? Mr. WILSMANN. If there were such abuse within the Upjohn Co., I would not be sitting here today talking to you, sir. The first one to control, that would be the Upjohn Co. I flew here in the back of the airplane. I do not fly first class. All right. We have our own corporate set of "what is right and what is wrong," which is more stringent than anything I have ever seen imposed by any governmental regulations anywhere down the line. Representative PEPPER. Now, you are then on the competitive basis for medicare compensation reimbursement, with all of these other nonprofit agencies, and any other proprietary that might be operating in a given area? Mr. WILSMANN. Absolutely. Representative PEPPER. We know what competition is in private business, and in most areas we encourage it, because it ordinarily provides better service and cheaper services for the consumer. On the other hand, you are a subsidiary of a big, powerful company, and you are competing with nonprofit organizations which have very little money ahead. OUTBIDDING THE NONPROFIT COMPETITION? It is entirely possible, it would seem to me, for you to go into a community, and in a little while outbid all of these other people rendering nonprofit services, or smaller competitors than you, and in a little while, you would have run everybody else out of the market, and then you could charge what you wanted. Mr. WILSMANN. Sir, he has been chasing me ever since 1966. [Indicating Mr. John Smith from Medical Personnel Pool.] Nature abhors a vacuum. He would fill it, and 10 more like him. Representative PEPPER. Is there any safeguards against that possi bility? Mr. WILSMANN. No. 1, we do not compete with the nonprofit people. They usually pick a niche within the health care field, and usually serve it pretty well, all right, and we go around the niche they have selected for themselves. The VNA, if they will send somebody out to administer a shot, they will spend 2 hours on the road, 20 minutes on the job, and we are happy to have them do that sort of thing. Representative PEPPER. Do you have a Washington lobbyist? Mr. WILSMANN. No, I have a consultant in Washington. Mr. WILSMANN. Yes Representative PEPPER. How much does he make a year? Mr. WILSMANN. I pay him on a per-day basis, when I am using him. Representative PEPPER. Well, am I correct in the information I have, that he receives $75,000 a year? Mr. WILSMANN. Sir, I do not receive $75,000 a year. Mr. WILSMANN. I do not receive $75,000 a year. Representative PEPPER. I am talking about your Washington representative; does he receive $75,000 a year? Mr. WILSMANN. You have been misinformed. $350 PER DAY Mr. WILSMANN. He receives $350 per day for his services and his staff, the days that I use his services. Representative PEPPER. At what level are your executives ordinarily paid? Mr. WILSMANN. At what level? Representative PEPPER. Yes. Mr. WILSMANN. I am being paid right now at the rate of about 20 percent below what I was earning as a public accountant in my own practice in Joliet, Ill., and in Oak Park. Representative PEPPER. About what is that? Mr. WILSMANN. I have not yet hit the $50,000 level, and I am the president of the company. Representative PEPPER. $50,000? Mr. WILSMANN. Yes. Representative PEPPER. Mr. Wilsmann, I would just like to say that there is no reason why private entrepreneurs should not be permitted to render service. On the other hand, what we are talking about is similar to our experience with nursing homes. I ran into a case in Providence, R.I., where a nursing home had both a Mercedes-Benz car that was part of the cost of doing business, and other abuses. You can get along over the ground without having a Mercedes-Benz to ride in. Our concern is only to be sure that the quality of care to be received by the people who need it so badly is not impaired by any kind of an improper motive, the profit motive, or incompetence on the part of the groups that furnish the service. Incidentally, $350 per day times 240 working days would be a rate of over $80,000 per year. Well, thank you very much. Mr. HALAMANDARIS. With your indulgence, Mr. Chairman, I would like to send Mr. Wilsmann the questions Senator Moss would have asked, and not take up the time of the subcommittees. Mr. Wilsmann, if you would answer the questions from Senator Moss in full, we would appreciate it. Mr. WILSMANN. I would be happy to do just that. [Questions to be answered follow:] QUESTIONS SUBMITTED TO MR. WILSMANN1 1. How many home health agencies do you represent, and in which States? What is your average number of home health visits per patient? 2. What standards for home health agencies do you feel should be set up-State or national? 3. Proportionally, how many paraprofessionals (aides, and LPN's) do you hire to perform home care services? 4. How many visits, proportionally, are made by paraprofessionals? 1 No response received as of time of printing. |