The reason I have done that is a matter of economics in our State. We have only a population of less than 400,000. We have 100,000 square miles so you can see what we have in our State.

The health system agency already spent about $22,000 of its budget of $175,000 for travel. So this is why I have not added additional people. It is a matter of economics.

Another problem that we have on this particular situation is the trying to find people to serve on this committee. Many are, as you know, required to be consumers and providers and many of those consumers and providers are self-employed and we find it very difficult to get people to keep any interest in this by having to attend. at least two meetings a month and travel great distances. So actually only the larger health care providers, the rich, I suppose, or the retired tend to accept these nominations and appointments to SHCC or HSA.

One of the other burdens we have is I am able to appoint 40 percent of the people to SHCC and 60 percent come from HSA. If we follow this line of reasoning, it creates antagonism, I suppose, to the State.

So basically I would urge the committee, if it will, to recognize either that we should be able to get a waiver under 1536 or to have two HSA's. I will leave the balance to your questioning, sir, if you have any questions, and I will leave my prepared statement with you for the record.

[Governor Herschler's prepared statement follows:]

STATEMENT OF HON. EDWARD HERSCHLER, GOVERNOR, STATE OF WYOMING

Mr. Chairman, My name is Ed Herschler. I am the Governor of the State of Wyoming. I am grateful for this opportunity to testify on our experience with the National Health Planning and Resources Development Act of 1974. Let me preface my remarks by stating that Wyoming has a single statewide health systems agency. Consequently, my statements will be directed toward this type of structure.

I am deeply concerned about the interrelationships among the Health Systems Agency, the State Health Planning and Development Agency, and the Statewide Health Coordinating Council. In a system with a single statewide health systems agency, the relatively complex interaction among the various agencies as contemplated by the federal Act becomes seriously imbalanced.

In effect, the Health Systems Agency assumes the roll of a state-level agency with authority exceeding that of the state agency. Since there is only one health systems plan, the state agency need only add those programs totally financed by the state in order to have a complete state health plan. Proposed revisions are unlikely to be approved by the Statewide Health Coordinating Council since the executive committee of the Health Systems Agency is the Council. This incestuous relationship is carried to the point where the same person is the chairman of both organizations. The net result of this structure will be a wasting of finite health planning resources due to the nearly total duplication of efforts and the unproductive conflict that has been created.

The duplication does not end in the planning phase but continues throughout the review process. In those states with several health systems agencies, this overlapping of functions serves as a useful coordinative mechanism. However, in a state with only one health systems agency, there is little need for coordination. Thus, the only effects of the additional reviews are an increase in the bureaucratic burden placed on the citizenry and the creation of conflict between the two planning agencies.

The one major function of the health systems agency which is not duplicated in some manner by the state agency is the annual implementation plan. This

document becomes a statewide policy plan in Wyoming. Under the current provisions of the Act, priorities established in this plan are binding on the state agency. Consequently, the health systems agency can determine state policy without any input from state officials or agencies. I believe this situation goes considerably beyond the intent of the law.

In the spring of 1975, I appointed a committee to look into the requirements of this new legislation. The committee was composed of consumers and providers from throughout the state. After much discussion and deliberation, they recommended that Wyoming should seek inclusion under section 1536 of the Act, which would eliminate the need for a health systems agency. We were told by federal officials that this section applied only to Rhode Island and the territories, and that we should not waste their time and ours by pursuing that course of action. In retrospect, I regret not having insisted on the application for a waiver under section 1536.

My intent is not to malign the good people who have worked diligently as members of the boards governing the Health Systems Agency and the Statewide Health Coordinating Council. Under the circumstances, they have done an excellent job in implementing the law.

I do not question the applicability of this legislation to those states having more than one health systems agency. I cannot speak for them.

The achievement of equal access to quality health care at a reasonable cost is a high priority in the rural states where health resources are so scarce. Thus, my concern is not with the intent of the law.

However, I sincerely believe that the single statewide health systems agency structure inherently contains the seeds of conflict btween the State Health Planning and Development Agency and the Health Systems Agency staff. My fear is that this discord will overshadow the planning efforts by these two agencies. In the end it will be the people of Wyoming who will suffer.

My request is that you consider the factors I have presented here today during your deliberations of amendments to the Act. Please review the appropriateness of the structure and authority currently contained in the law, as it is applied to states with a single health systems agency. I think you will conclude that states, such as Wyoming, will be served best by inclusion under section 1536. The intent of the law will remain, but the source of conflict will be resolved.

Thank you.

Mr. ROGERS. Thank you very much for the points you have raised for consideration of the committee.

Dr. Carter.

Mr. CARTER. It is interesting to note that the recent GAO report recommended there be no single HSA States. That is the General Accounting Office, an arm of the Congress. GAO recommended that those States either receive a 1536 exemption and have only a health planning agency and no HSA's, or those States should have at least. two HSA's.

Governor HERSCHLER. That is right.

Mr. CARTER. Mr. Chairman, I believe that the law actually provides that States such as Wyoming can have two HSA's if they want them, and if they can prove the need for them, because we had that in mind. You remember that we worked with such a thing in mind and it was brought up on the floor. It is a question of HEW putting it into effect, as I see it, Mr. Chairman.

If it is necessary, I would help to legislate on this question because you do have a large State, and the problems of getting together, if you can get people to serve, are monumental.

Governor HERSCHLER. That is true.

I might add when this law was implemented, so far as our State was concerned, I am sure you realize it is a very complex and, if

you will, a confusing law, sir. I think that we were under the impression at least that we were required to make a decision at that point in time as to how many HSA's we wanted in our State. We felt in the interest of economics and considering the scarcity I suppose of population, we thought one HSA would be the right way to go. We feel now that that was not a correct decision, that we should be permitted, if we are able to do so without any problems, either to have two HSA's or being able to take advantage of the section 1536. We think our system as it originally was structured at the time this bill was enacted that we meet all the qualifications of 1536, it would be logical to be exempt.

Mr. ROGERS. I think the committee certainly wants to be helpful. I was just wondering, if you do qualify under 1536, how do you get broad citizen input?

Governor HERSCHLER. What I would plan to do, Mr. Chairman, is if that occurred, that with your State's Health Planning and Development Agency, that I would include then the members that are presently on SHCC continue with them so there would be citizen input along with our State agency. I think there would be coordination and cooperation which would be very helpful to us. So we would include our present members on the SHCC Council.

Mr. ROGERS. It is my understanding that you would either want to qualify for that exemption or have two agencies.

Governor HERSCHLER. Yes; one or the other. We would prefer to come under 1536. If that is impossible, we would prefer to have two HSA's.

Mr. ROGERS. Governor, thank you. We appreciate your being here and taking time from your busy schedule to do so. We look forward to working with you in this area.

Thank you so much.

Our next witness will be a panel of manufacturers representatives. Mr. Robert G. McCune, division manager, Radiation Imaging Product Division, National Electrical Manufacturers Association; and Mr. Harold O. Buzzell, who is president of the Health Industry Manufacturers Association.

We welcome both of you to the committee. Your statements will be made a part of the record, and you may proceed as you desire.

STATEMENTS OF ROBERT G. McCUNE, ON BEHALF OF RADIATION IMAGING PRODUCTS DIVISION, NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION (NEMA); AND HAROLD 0. BUZZELL, PRESIDENT, HEALTH INDUSTRY MANUFACTURERS ASSOCIATION

Mr. McCUNE. Thank you.

I am here as a representative of the Radiation Imaging Products Division of the National Electrical Manufacturers Association (NEMA). This divisional trade group consists of 54 manufacturing companies of conventional medical and dental X-ray, diagnostic ultrasound, computed tomography, nuclear imaging and therapy medical technological equipment. In my brief comments today I

would like to share with you our industry views concerning national health planning.

My comments will be a brief summary.

First I would like to offer for your consideration several changes to H.R. 10460. We would propose that:

In section 202, dealing with National Health Priorities, under section 1502, that in the proposed paragraph (11), the word "underutilized" be inserted between (of) and (duplicative);

In section 202, National Health Priorities, under section 1502, that paragraph (12) be revised to include the words "cost effective" between the words (of) and (policies);

Under section 218, certificate-of-need programs, that paragraph (7) of the proposed section 1527 amendment be revised as follows:

(7) For purposes of Sections 1523 and 1527, the term "major medical equipment" means single use medical equipment which is used for the provision of medical and other health services and which costs in excess of $200,000.

In the first suggestion we feel that the inclusion of "under-utilized" will better clarify this priority by establishing more defined criteria than simply "duplicative."

The second suggestion of including the phrase "cost effective" we hope will encourage HSA's to carefully distinguish between policies for purposes of mere implementation and policies that will in fact work toward achieving efficient local solutions relative to problems of health care costs.

Our suggestion for redefining "major medical equipment" in paragraph (7) of the certificate-of-need programs section of the bill is due to the concern that in smaller hospitals, for example, construction of a new multiple patient service room would be requested under a normal certificate-of-need process. But the HSA could also ask for a listing of all the numerous but different types of medical equipment to be used in the patient medical room. If all the installed individual medical equipment were to be considered as an aggregate, it could result in a total dollar figure reaching or exceeding the certificate-of-need requirement for major medical equipment. We have also suggested that the certificate-of-need dollar threshold for major medical equipment be only that equipment in excess of $200,000. We believe this should be considered to avoid the inclusion of lower cost basic medical equipment not envisioned to be covered under the certificate-of-need requirement. Such a dollar level would then allow the local HSA to deal with only major medical equipment of the high dollar-high technology type that is of concern.

We support the efforts of this committee to insure that national and local health planning is an effective approach to achieving a much needed reduction in the health care costs of this country. We would only ask that the role of medical technology be considered a necessary component of all such efforts to contain the rising costs of health care delivery, rather than being too often denounced as a major contributor to these increasing costs. Extreme indeed, when you consider that the diagnostic imaging equipment industry represents only about 0.6 percent of total health care expenditures.

I think there is widespread agreement that the twentieth century biomedical research and technological innovation have been re

sponsible for profound imrovements in human health. Some diseases have been eradicated; others can now be prevented; life itself has been extended; and much pain and suffering has been alleviated. Further, I believe it fair to say that in a number of areas hospitals will have to look to greater utilization of medical technology to effect cost savings. It will be needed in more efficient and accessible emergency centers and out-patient clinics. It will be needed to replace older equipment with high operating and maintenance cost in order to reduce hospital expenses. It is also possible that some hospitals will have to turn to medical technology under new cost reduction measures in order to maintain adequate and safe patient monitoring. Yet, these same hospitals will be faced with artificial limitations on the use of new technology.

We would urge the Congress, and particularly this committee, to be sensitive and alert to any health planning cost containment policies that could inhibit the growth of medical technology, thereby institutionalizing inferior procedures and inefficient practices.

We also believe that another serious question that should be addressed is, what will the impact be on the development of new technology to meet future needs? Obviously, such development is an expensive undertaking with considerable commercial risk. It will become even less attractive to an independent technology manufacturer if its fair market potential is to be arbitrarily reduced or indirectly capped. Health planning legislation could well carry a secondary effect as to whether new technology is to be limited and also how the development may need to be funded.

Some of the concern I have expressed here today I think is best illustrated by the recently published revised proposed National Guidelines For Health Planning. We are specifically concerned with the proposed standard on computed tomographic scanner, but of more importance is the questionable logic of the whole procedure and basis for decision for many of the standards dealing with technological services and facilities.

On the guidelines for CAT scanners, it appears that this proposed HEW standard will be promulgated without full comprehension of the effect of the so-called minimum standard on the use of this technological equipment. Simply stated, the proposed CAT scanner standard will inappropriately restrict proper access to this proven diagnostic medical technology and serious put in question the industry's interest in further pursuing state of the art technology.

In terms of the major procedural issue I mentioned I would like to share with you the following facts. In late summer, 1977, an HEW study team was organized with representatives from the office of the Assistant Secretary for Planning and Evaluation and the office of the Assistant Secretary for Health. The study team was asked to conduct a month-long phase I study of DHEW systems approach to technology management. This phase I study, "Health Technology Management at the Department of Health, Education, and Welfare," was completed on or about November 7, 1977, in draft form as a report to the Secretary.

Because of DHEW's recent release of revised proposed National Guidelines For Health Planning, and because the majority of the