The CHAIRMAN. Without objection, that material will be inserted at this point in the record.

(Information referred to follows:)

HOSPITAL LEADERS ENDORSING PRINCIPLE OF HEALTH CARE FOR THE AGED THROUGH SOCIAL SECURITY (OASDI)

Basil MacLean, M.D., former president of National Blue Cross Association; former president, American Hospital Association:

"I want to add my voice in support of the bill now before you which would provide health benefits to aged persons under the social security mechanism. * ** I have been in close contact with the problem for many years and in many capacities. As a physician, I have had an intimate look at the special and personal health needs of the aged. As a hospital administrator, I have seen that need reflected as a burden of obligatory and uncompensated service that acted as a constant drag upon the hospital's economic support and growth. As New York City commissioner of hospitals, I have seen these problems further translated into financial and social deficit for the entire community. As a president of the National Blue Cross Association, I participated firsthand in the attempt to meet some of these problems through existing voluntary prepayment organizations.

"A lifetime's experience has led me at last to conclude that the costs of care of the aged cannot be met, unaided, by the mechanisms of insurance or prepayment as they exist today. The aged simply cannot afford to buy from any of these the scope of care that is required, nor do the stern competitive realities permit any carrier, whether nonprofit or commercial, to provide benefits which are adequate at a price which is feasible for any but a small proportion of the aged" (letter to Hon. Wilbur D. Mills, February 5, 1960).

James P. Dixon, Jr., M.D., commissioner of health, city of Philadelphia, 1952 to 1959:

"Unpaid care has become such a drain on the resources of our hospitals that the quality and the availability of hospital services are seriously threatened.

"There are currently about 250,000 people on social security in the 5 counties of southeastern Pennsylvania, and these people use about 36 percent of all free care given in the area's 58 hospitals. If these beneficiaries were covered by hospital insurance, a third of our free care deficits would be wiped out. State and local grants could then be applied to the remaining two-thirds, and hospitals would be financially able to devote a much larger portion of their income to improvement of services and the raising of wages" (testimony on behalf of the Hospital Council of Philadelphia before the House Committee on Ways and Means, July 1959).

E. M. Bluestone, M.D., recipient of 1961 Distinguished Service Award of American Hospital Association; professor of public administration, New York University:

*** the sheer humanity of those who are in approval [of the Forand bill] far outweighs the arguments of those who, motivated largely by professional self-protection (which I consider misguided and unprogressive) are in disapproval. Passage of this bill into law would be a boon for the great majority of our elderly population who have the right to look to our legislators for relief at a time in their lives when they may need it most. It has all the wholesome earmarks of voluntary prepaid medical care insurance with the added advantage of Government partnership to see to it that no citizen is neglected in the late time of his trouble."

Martin Cherkasky, M.D., director, Montefiore Hospital, New York City. Dean A. Clark, M.D., director, Massachusetts General Hospital, Boston, Mass. Rt. Rev. Msgr. Edmand J. Goebel, director of hospitals, archdiocese of Milwaukee, Wis.

Jerome Preston, president, Massachusetts Memorial Hospitals.

Leonard S. Rosenfeld, M.D., director, Metropolitan Hospital, Detroit, Mich. Mr. KING. I would like to read it to the committee, Mr. Chairman, as I am quite impressed, but I do not want to take the time of the committee.

There has been a great deal of discussion, Doctor, of the hospital cost crisis. It is true that many voluntary hospitals are having difficulty with their financing?

Dr. GRONER. Yes.

Mr. KING. Is it true that a portion of the hospital deficit results from the fact that hospitals furnish free care or care at less than cost, to some aged persons and that State and local welfare agencies generally reimburse hospitals for less than the actual cost; sometimes as little as one-half of the cost to the aged who come under their program?

Dr. GRONER. This is correct. It is correct for the aged. It is also correct for the underage group, Congressman.

Mr. KING. Since State welfare agencies do not meet the cost of the hospital care for public assistance recipients can we expect the MAA program to meet this critical financial problem?

Dr. GRONER. I would think that the Members of Congress are in a better position to answer that than I. We think that the Kerr-Mills program, which, in my opinion, has been implemented more rapidly than I thought it would, but less rapidly than I hoped it would will work, so I think our position is that we think this program should be given a chance to see its results. This is one reason why we are opposed.

Mr. KING. Since it seems that additional assistance programs like the one in Colorado are accompanied by increased use of hospitals, and welfare programs often pay less than the cost of the services patients require under the program, is it not possible that the MAA may make financing problems worse?

Ďr. GRONER. My own opinion is that it will not make them worse. I think we are taking a large load now. I think that payment for this load would reduce our expenses or increase our income. This is very difficult to answer, I think, as you can appreciate, because we have not had the real impact of MAA, and I do not think that we could anticipate with any degree of accuracy what it is going to be until we have the impact. It is a very difficult question.

Mr. KING. Is unnecessary utilization of hospitals today common? Dr. GRONER. Sir?

Mr. KING. Is it a common practice, this overutilization of hospitals? Dr. GRONER. This is one reason that we urge so strongly that there be standards of care in this bill and that there be some method of approving hospitals. The Joint Commission on Accreditation of Hospitals does set up standards. The joint commission does police the overutilization; the joint commission is now considering requiring a utilization committee in hospitals as a requirement of accreditation, and I would urge that the requirement for such committee be kept in the bill.

I think there is probably less overutilization-I know there is less overutilization now as a result of the joint commission that there was several years ago. To give you my own opinion, I do not think overutilization is as general as we hear. I think that there are specific hospitals and in most instances, I could almost say every instance, these are unapproved hospitals where you do find overutilization. In that regard, yes, it is a problem.

Mr. KING. I have heard and you have heard, too, perhaps, Doctor, statements to the effect that if payments are provided for hospital services it would be a problem of overutilization of these services. I am advised that the recent study conducted by Professor McInerny, newly appointed president of the Blue Cross, that in the opinion of the medical panel, 6.8 percent of discharge patients leave the hospital too early and where the patient footed the hospital bill himself understay was far more common than overstay.

Dr. GRONER. I have not seen Mr. McInerny's report. I understand he does point up the problem in this report that underutilization is a greater problem than overutilization. I do not know the reasons which he gives for this. I think, Mr. McInerny, in his study, though it was made in Michigan-I think he was dealing with hospitals which were accredited which brings me to my point of a minute ago, that I think this factor can be kept to a minimum.

Mr. KING. We hear frequently that a great many aged persons would be cared for at home or on an ambulatory basis, rather than in an institution. Do you think the home health, nursing home, and outpatient diagnostic provisions of this bill are desirable, or should they be modified?

Dr. GRONER. I think that the home care at this state of development. is such a nebulous thing that it should not be included at this time, until such time as it can be defined better.

I think in the interest of good health care for our people, that outpatient services should be included and certainly nursing home services. Again, I appreciate the fact that these are medically oriented in the bill, which I think insures good nursing home care, and I would say, yes, they should be included.

Mr. KING. Your organization in previous testimony before this committee has stated, Doctor, reasonable criteria are necessary to determine the eligibility of hospitals to participate. Are the criteria in this bill reasonable?

Dr. GRONER. Yes, sir.

Mr. KING. I understand that only hospitals having at least 25 beds may be accredited by the Joint Commission on Accreditation. If the health insurance proposals were enacted, would you work out some kind of procedure for accrediting these hospitals so that the joint commission could take practically full responsibility for determining which hospitals were eligible to participate?

Dr. GRONER. We would hope, Congressman, that the joint commission could find it possible to go below 25 beds. I do not know how small you get before you no longer are a hospital and I think there would have to be a line drawn somewhere, whether it would be 8, 10, or 12 beds, I do not know. We would hope that there would be adequate financing for this accreditation. This is a very expensive procedure.

Mr. KING. The joint commission is experimenting with the acquisition of nursing homes. Do you think if the bill is enacted that the commission could also play a major role in determining which nursing homes were eligible to participate in the program?

Dr. GRONER. The American Hospital Association is presently listing nursing homes which would give some minimums. The joint commission on accreditation in its last meeting appointed a com

mittee to investigate the feasibility of the accrediting of nursing homes. The American Hospital Association is anxious that there be accreditation of nursing homes, and we think the vehicle is the joint commission on accreditation.

Mr. KING. I understand that the American Hospital Association believes that the hospital utilization committee would perform a desirable and valuable function. Is such a committee likely to become a requirement for accreditation?

Dr. GRONER. The board of trustees of the American Hospital Association, which is one of the four participants in the joint commission, is unanimously requesting the joint commission on accreditation to make a utilization committee necessary for accreditation.

I might add that the tissue committees and other committees of this type which also cut down utilization, or keep it at a minimum, are now in effect. We would like the joint commission to go one step further with the utilization committee, though many hospitals have done this on their own.

Mr. KING. The bill's provisions for reimbursement are designed to follow the American Hospital Association's principles for payment to hospitals by providing for reimbursement on a cost basis. Do you recommend any modifications of this principle?

Dr. GRONER. No, sir; we feel that hospitals should be reimbursed on a full cost, or a true cost basis, and we do not think they should be paid over cost, nor do we think they should be paid less than cost. The principles of payment are in the process of being revised. We think that they could be polished up some to reflect more nearly true cost, but we do think this would be a fair basis, largely speaking, for payment to hospitals.

Mr. KING. In the light of your experience, Doctor, with prepayment plans, are there changes in any provisions or are there any new provisions which you would suggest to improve the present bill?

Dr. GRONER. Only the one on which I spent so much time.

I would like to see the Blue Cross mechanism utilized for the reasons I mentioned. I think it would have virtually universal acceptance by hospitals immediately and I think there is a very intimate relationship between Blue Cross and hospitals because of their interrelationship between quality and cost of care. I think the Blue Cross plans are hospital oriented and again I would say that I think that hospitals should have the right to select the method by which the program should be administered.

Mr. KING. What was the attitude of the American Hospital Association at the time the Blue Cross plan was initiated?

Dr. GRONER. The American Hospital Association, and hospitals— of course, this is a hospital program-supported it throughout. It was born in Baylor Hospital in Dallas.

Mr. KING. There were not any serious concerns at that time by your organization?

Dr. GRONER. Serious concern about what?
Mr. KING. About the advent of Blue Cross.

Dr. GRONER. Support of Blue Cross; no, sir.

Mr. KING. The American Medical Association, however, strenuously objected, or opposed the initiation of that sort of program?

Dr. GRONER. Are you asking me a question or are you stating a fact?

Mr. KING. It is a fact, I guess. I just wanted you to say yes. Dr. GRONER. I was a little younger then, Congressman, and I am not familiar with the situation at that time.

Mr. KING. I probably should not have asked you that question. I understand that you may have some reservations about the word "reasonable" in the provisions for payment under the bill on the basis of reasonable cost. We intended with this phrase to follow the principle 3.400 in your principles for reimbursement, which I will not quote. Will you comment on that?

Dr. GRONER. Our only objection to the word "reasonable" is the shades of interpretation. I do not think we would fight, bleed, and die for this. I do not think this is as important as some of our other testimony. But we do think there would be shades of interpretation and this is the only reason it is made.

Mr. KING. It would not be too difficult to work out if there were some modifications or suggestions?

Dr. GRONER. I would not anticipate any difficulty.

Mr. KING. That is all, Doctor. You have been very helpful.
Dr. GRONER. Thank you, sir.

Mr. KING. Thank you.

The CHAIRMAN. Any further questions?

Mr. Curtis?

Mr. CURTIS. Doctor, you state that your organization represents 90 percent of all general hospital beds and more than 75 percent of all listed hospitals of all types. What kind of hospitals are not included? Are those the small ones with 25 beds or less, or what?

Dr. GRONER. Not included in the 90 percent are those who do not choose to be members. I would say that a majority of them are in the small group; yes, sir.

Mr. CURTIS. Just for the record, would not hospitals break themselves down into three general groups: one, those for profit, and I doubt if there are too many of those; ones that are publicly owned, whether State, municipal, or county, or even Federal; and then those run by eleemosynary institutions. Is that pretty well the three categories?

Dr. GRONER. Yes, sir.

Mr. CURTIS. Can you give me roughly in relation to the beds what proportion the profitable hospitals represent? In other words, profits are quite small; is that correct?

Dr. GRONER. As a total rule?

Mr. CURTIS. In the total of those you represent I presume that would be rather small. Do you have any percentage figures? Dr. GRONER. Proprietary hospitals run 5 to 7 percent of the total. Mr. CURTIS. What would eleemosynary hospitals run about of this group?

Dr. GRONER. I would like to, if I may, Congressman, supply you for the record the figure on breakdown by the type of ownership, by number of beds, and this type of thing.

Mr. CURTIS. Yes, if you will supply it for the record.
Dr. GRONER. We have it available.