STATEMENT OF HON. BALTASAR CORRADA, RESIDENT COMMISSIONER, PUERTO RICO Mr. CORRADA. Mr. Chairman and members of the subcommittee, it is a pleasure for me to be able to testify on H.R. 10460 and particularly in support of my bill H.R. 10418. This bill is a simple one and would provide for the inclusion of Puerto Rico in section 1536 (a) of the Public Health Service Act. The only thing this will do is make Puerto Rico a single area state for the purposes of the act. Mr. Chairman, as I have previously written to you, the Government of Puerto Rico runs a very extensive public health service which provides health care to over 1.4 million persons or about half of our population. In order to do this, the Puerto Rico Department of Health has a very well staffed planning unit, which in many cases duplicates the work of the present HSA. In fact, the HSA's jurisdiction is identical to the Department of Health's planning unit, which is the local SHPDA. This produces a situation of overlapping responsibilities, duplication of efforts and wasted resources, time and funds, and both agencies are constantly interfering with each other's efforts to carry out their respective functions. The SHPDA's resources were diminished by recent legislation and therefore, it is now short-handed in spite of having greater responsibilities. The HSA on the other hand, is over endowed with funds. The HSA does not recognize the SHPDA's role in health planning, as it (the HSA) feels it has the authority to carry out its plans regardless of the SHPDA's opinion. As you can see, Mr. Chairman, this creates a serious problem for a government for which health planning has always been a question of public policy. Having an HSA that does not agree with the programs and philosophies of the Government can create serious disruptions in our health care delivery system. Pub. L. 93-641-the Health Planning Act-was designed for the type of health care delivery system which predominates in the states and not for Puerto Rico, where as I have said before, the Government directly provides health care for about half of the population, particularly the medically indigent. Our Government's considerably larger role in providing health services to the community demands that it have the authority to design and implement its own plans. As a matter of fact, the Puerto Rico Department of Health is quite capable of performing this task faster and at a much lower cost than the present HSA. On the question of community participation, I would like to point out that a law recently enacted by the Puerto Rico legislature regarding health planning in Puerto Rico mandates and safeguards community participation in all aspects of the health planning process. The Government has every intention of promoting genuine and effective community participation in the process to the fullest extent possible. Mr. Chairman, I would now like to briefly enumerate what we envision would be the benefits accruing to health planning in Puerto Rico if the provisions contained in my bill are enacted: First. The Puerto Rico Health Department information system could be greatly improved. Second. Health planning manpower could be better distributed throughout the island, since the Department has a highly developed regional organization. Third. The entire planning process would be accelerated. Fourth. The cost to both the Federal and State government would be greatly reduced, since having a single agency would mean cutting over-head and administrative expenses at least by half. Fifth. The Health Department's internal short-term planning and program needs would be better served. This would result in improved health services to the majority of the Puerto Rican people. I believe, Mr. Chairman, that these are very sound reasons for my proposal and I hope that the subcommittee will agree with me that everyone would be better served at a reduced cost to the Federal Government. I hope that you and the subcommittee members will support my bill. Mr. ROGERS. The next witness will be a panel of hospital representatives, Mr. John Alexander McMahon, who is president of American Hospital Association; Dr. Leo J. Gahrig, senior vice president of the American Hospital Association; and Michael D. Bromberg, executive director of the Federation of American Hospitals, accompanied by Mr. Robert J. Samsel, president of the Federation of American Hospitals. We welcome you gentlemen. It might be helpful if you could highlight the major points you think we should hear. Your full statements will appear in the record. STATEMENTS OF JOHN ALEXANDER MCMAHON, PRESIDENT, AMERICAN HOSPITAL ASSOCIATION, ACCOMPANIED BY LEO J. GEHRIG, M.D., SENIOR VICE PRESIDENT, AND PAUL W. EARLE, VICE PRESIDENT; AND MICHAEL D. BROMBERG, EXECUTIVE DIRECTOR, FEDERATION OF AMERICAN HOSPITALS, ACCOMPANIED BY ROBERT J. SAMSEL, PRESIDENT Mr. MCMAHON. Thank you, Mr. Chairman. Mr. Chairman, I am John Alexander McMahon, president of the American Hospital Association. With me today are Leo J. Gehrig, M.D., senior vice president, and Paul W. Earle, vice president, of the Association. We supported, as indicated in our statement [see p.-], the original planning law and the extension now before the committee. We have some amendments to suggest to the planning law itself. They are found from pages 3 to 12 and then we have comments on your bill H.R. 10460. Those comments begin on page 12 and go to page 19. We mention on page 3, Mr. Chairman, the voluntary cost containment effort, the fact that hospitals and physicians are concerned about the rate of increase in hospital costs and that it is exceeding the gross national product. We mention there the joint effort of the AMA, the Federation of American Hospitals and, of course, our own activities. We will be keeping the committee in touch with those voluntary efforts as we have already and will be glad to respond to any questions if you have them. Mr. Chairman, I would like to address myself specifically to four areas which we think ought to be touched on in the extension process and, of course, we could explore any others the committee would be interested in. On page 4 we expressed our concern about the national guidelines for health planning because we believe that national guidelines should serve as a flexible guide to the development of local health plans and objectives. Mandatory Federal guidelines imposed uniformly on each HSA and in each State, with modifications only through a cumbersome exceptions process-as previously proposed by HEW in regulations-would prevent the development of viable health service plans adapted to local needs. We have mentioned in our testimony the need to clarify the guidelines and the relationship between local and national authorities and in the attachment to our testimony we set forth a specific amendment which we think would clarify the confusion that exists and clarify the attempts, on occasion, of HEW to move farther than it should. On page 5, Mr. Chairman, we have mentioned an amendment to expand the scope of the requirement for State certificate of need to encompass health capital expenditures without regard to ownership or location. We believe that the private offices of health practitioners should be subject to CON review to the extent those offices are proposing to obtain highly specialized equipment or develop facilities typically provided in an institutional setting. We set forth in the testimony as an example the CAT scanner situation, and we mention specifically the amendment that we have proposed that would also apply to such activities as health maintenance organizations, surgical centers, extended care facilities, and home health care services. One other thing, Mr. Chairman, we ought to make clear: our amendment takes a little different approach from yours because it is an amendment to section 1525. I think we are going in the same direction, but we are still at work studying this, and we will have further discussions to make and would like permission to pass those on later on as to how we can achieve this goal, whether in the further expansion of our suggested change in the definition or through your approach to broaden the definition of capital expenditures. Mr. ROGERS. We will be pleased to receive those suggestions. Mr. MCMAHON. On page 7 we mention the amendment we have suggested on the composition of planning body governing boards. We think it appropriate to identify the need for hospital administrators to have a place on the governing boards of planning agencies. We made reference also to the need to redefine the term "indirect provider" to facilitate selection of interested, informed and effective consumer representatives. In a survey we have undertaken, preliminary indicate half of the planning agencies don't have hospital management representa tives and, because of the importance of the hospital system, itself, in the area to the plans and in the modification of services over time, we think the planning process would be better served if they were there. On page 9, Mr. Chairman, we have given attention to the problems of the confusion and duplication of construction standards and the multiplicity of agencies involved in their enforcement. These multiple codes produce added costs for institutions which must be passed on ultimately to producers and payers. We recommend a single set of codes and standards for the physical requirements of hospitals and other institutions and facilities. States and local governments would also be urged to adhere to these standards. From pages 10 to 19 we have addressed some of the changes you set forth in H.R. 10460. I would like to address myself to only one of those. It begins on page 16 and it has to do specifically with the proposed new requirement that within four years States must have in effect a program under which services found to be inappropriate may not be provided in such States. We interpret this to mean there must be established a program of compulsory decertification and we oppose such a program. Compulsory decertification would cause serious community conflicts and raise issues of compliance with due process requirements, abrogation of contracts, and deprivation of private property without just compensation. Closure, conversion, and merger of units, the steps that are effective means for dealing with excessive services, are likely to be successful if they are performed voluntarily, in conjunction with financial and other support from planning agencies, Government, and third-party payers. We suggested-I am referring specifically to the language beginning at the top of page 17, that instead of compulsory decertification, consideration be given to substitute provisions to require the State to develop a program to facilitate the voluntary elimination of excessive services by helping to: One: Satisfy the financial requirements related to the action; Two: Provide orderly and timely access to alternate facilities and services for patients and physicians of the unit to be closed; Three: Develop a plan for the best use of the unit to be closed; Four: Secure other employment opportunities for employees of the unit; and Five: Obtain the cooperation of the various parties affected by the change. If steps such as these are taken, litigation, community opposition and political pressures to prevent the closure of services can be minimized. Therefore, we recommend this approach to obtaining cooperation in the elimination of excess capacity and duplication of facilities and services. Thank you very much, Mr. Chairman, for the opportunity to present these thoughts. We will at an appropriate time be pleased to answer any questions or elaborate on any of the points covered. [Testimony resumes on p. 989.] [Mr. McMahon's prepared statement and attachment follow:] AMERICAN HOSPITAL ASSOCIATION 444 NORTH CAPITOL STREET, N.W., SUITE 500, WASHINGTON, D.C. 20001 TELEPHONE 202-638-1100 WASHINGTON OFFICE STATEMENT OF THE AMERICAN HOSPITAL ASSOCIATION THE HEALTH PLANNING AND RESOURCES DEVELOPMENT AMENDMENTS OF 1978 Association. February 2, 1978 Mr. Chairman, I am John Alexander McMahon, President of the American Hospital With me today are Leo J. Gehrig, M.D., Senior Vice President, and Paul W. Earle, Vice President, of the Association. Our Association represents some 6,500 member institutions, including most of the nation's hospitals, as well as extended and long-term care institutions, mental health facilities, hospital schools of nursing, and over 24,000 personal members. We appreciate this opportunity to present the views of the Association on Public Law 93-641, the National Health Planning and Resources Development Act of 1974, and your bill H.R.10460, the Health Planning and Resources Development Amendments of 1978, which would amend and extend this law. Background Our Association has supported the enactment and implementation of P.L.93-641, and |