We have held hearings in the past on the question of providing additional facilities for medical education. There is a bill pending that will have to do with the purpose of increasing the number of nurses, by providing additional facilities for their training.

While that may not be the subject of this immediate hearing, yet, as you say, it has a very direct relationship to it and the committee is interested in giving consideration to those matters that you have just mentioned.

Dr. LEE. Thank you. I will go into that a little bit further, if we can have your indulgence.

Take the matter of doctors alone, to start with that. There are something like 11,500 approved internships, that is, for the first year of hospital internship in this country, that the AMA itself has approved. There are many more who would like to have internships but have not been approved.

But 11,500 have been approved. There are only approximately 7,000 graduates every year. So just beginning in the first year of internship there is a 4,000 deficit.

It goes right straight through. The deficiencies in public health, for instance, are perfectly appalling. The number of jobs that are awaiting for doctors in public health are great. They cannot get anybody to apply.

I came in the airplane from San Francisco yesterday with a public health service man from Iran, and he was telling me of the difficulties they are having in recruiting competent people for public health service jobs.

The situation in the insane hospitals is a ghastly one. You will frequently see in hospitals for mentally ill people that they will have as many as 4,000 patients, and they will have perhaps 15 doctors to take care of those.

Now, psychiatric care takes more time than any other type of medical care. And in addition there is the other medical problems that

occur.

I think the case for deficiency in the supply of doctors can be made out very clearly, in spite of contrary statements that have been made that there are enough doctors. And it is a matter of distribution. The fundamental supply is not enough.

I get it in a very direct way, and perhaps I feel it more keenly. We try to get young doctors for service in our group. Well, we do insist on an exceedingly high quality, and they have to have their board certification before they come. But now in order to get competent young people to start, we have to start these men, young doctors who have not practiced before, we have to start them at $10,000 a year. If we do not go to that, or higher, we cannot get the men.

It is simply a matter of supply and demand. It is just indicative that there is a shortage or we would not have to pay that much to get a young doctor, just beginning his medical career.

I am sure that something must be done on a governmental level to aid medical education. The medical schools are in a sad way as far as their finances are concerned. The private medical schoolsapproximately half of the 78 schools are private-are in a sad way. According to our calculations, there is about a $40 million to $50 million operating deficit for those private schools. That is, to bring them up to acceptable standards and to give the medical schools of

this country the kind of plant they should have, really modern plants, requires at least $200 million, in my opinion.

That is more money than is going to be available from philanthropy. The medical education fund sponsored by the AMA is a very laudable thing, but in spite of the fact the AMA gives about half a million dollars a year, it is just a drop in the bucket as far as meeting the actual needs is concerned.

I have been connected with the Stanford Medical School ever since I graduated, and we have a very serious problem, so serious that our medical school, which is one of the best in the country, may have actually to close.

The State of California is spending something like $30 million to $50 million on one medical school. And that is more than the entire endowment of Stanford University. We have to support ourselves from private sources.

So I believe that there is no solution for the problem of medical education, except some sort of governmental aid; whether on a State level or national level, I cannot say.

It would seem likely that it has to be on a Federal level, however, and until we increase the medical school facilities we are not going to increase the supply of doctors, and until we increase the supply of doctors all of these prepaid plans are academic because you will not have the men to supply in many cases because the men simply do not exist.

I am delighted that the matter is given serious consideration, and I see no alternative to some sort of Federal aid to medical education. And it is more true in the question of nursing.

The shortage of nurses is a very serious matter. It has to be remedied in some way if the country is going to get the kind of care that this country deserves.

My second objective is to improve the quality of such care. It must not be lost sight of. The arguments against various kinds of insurance plans and prepaid plans, and so forth, are that they degrade the quality of care that you get, that you get second-class medical care as a result of that.

I think any plan that is set up must bear in mind that it must give high-quality care if it is going to be successful.

The third objective, to make such care accessible to all who desire and need it, is really the crux of the financial problem. There has developed something that is a little bit new in the last 30 years in medical care, and that is it is worthwhile having it now.

Now, Henderson in 1910 made a statement that has been ofter quoted. And he said that if the random patient with the random disease made a random contact with a doctor, he had less than 30 percent chance of profiting by the encounter.

That was really true in 1910, but it is not true any more. The facts of the matter are now that any group of people that gets good medical care is going to be healthier, and they are going to live longer, and their children are not going to die, and their women are not going to die in labor. And the difference between their chances of survival in case of good medical care, poor medical care, is now clearly demonstrable. And that is a phenomenon of the last 30 or 40 years. Well, that fact is not lost on very large groups of the population, particularly of the labor groups.

I have talked many times with many labor leaders about this, and they say to me, "Doctor, our kids have a right to live just the same as rich people's kids, and we are entitled that they will get the same high-quality care."

The demand for this care for their wives and children is an insistent demand, and I am sure that it has to be met; it certainly is a function of Government to take cognizance of that clear demand. These people want their people, and their families, to have access to this highquality care as well as anyone else.

The doctors perhaps have oversold what they can do a little bit, and perhaps not.

The progress, particularly in the last 15 years in medicine, has been just amazing. That is not lost on the public generally. They say, "If all of these good things are to be had, we are going to have them.' So this matter of accessibility of medical care for those who need it and desire it is an important thing.

I believe that access to good medical care can be provided in various ways, but it can best be provided under some form of prepayment and particularly under the guise of group practice.

Now, the group practice principle I will maintain has the particular advantage of improving the quality of care. That is due to certain just plain human factors.

A group such as ours, for instance, cannot afford to have a bum in the group, because if he is there he destroys our whole reputation. We have to scrutinize the personnel with great care before we take them, and furthermore we have to keep close check of how they perform day by day.

If a man seems to be deficient in certain respects, we either do not let him do that work or we immediately proceed to reeducate him and make a competent person out of him because the group cannot afford to have a poor quality person in the organization and the reflection upon the integrity and the reputation of the whole group depends upon that.

A doctor, practicing entirely alone and by himself, is not subjected to this kind of discipline that he gets when he is under the scrutiny, every day, of his colleagues in a group. Within a group we know exactly what every man is doing and how he practices. And the mere fact that he knows his activities are going to be subjected to such scrutiny tends to keep the quality up. He does not get careless because he knows his fellows know about it.

The doctor completely alone, to use a slang expression, can get away with things because nobody knows whether the quality is high

or not.

That is an interesting sidelight on the practice of medicine. The patients do not know a good doctor from a poor one. In general that is true. The doctors do. The doctors know who the good doctors are. It makes something of a travesty of this free choice of physician which is dinned into our ears all of the time.

Actually the free choice of physician to a certain extent is a myth, because most peoples' method of choosing a physician is not based on freedom. It is based on expediency of one kind or another.

Also, the fact is that the patients have no real way of knowing who the good doctors are. You will see doctors that other doctors

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know that are really not very outstanding people and yet they have tremendous practices, by virtue of social connections or of pleasant personality or ability of salesmanship or something like that.

That does not help a man in a group. In a group the doctors know who is good and who is not, and it gives a chance for a doctor, who really is good but lacks these qualities of salesmanship, let us say, to have a chance to practice and to have a big practice because his colleagues know he is good; whereas if he has to depend upon his own ability to sell himself, he may fail.

It is a human situation but one that you have to give some consideration to in that matter of freedom of choice.

In this matter of quality in group practice, we went to this little Palo Alto town of about 6,000 people, which is now about 35,000, and we had the idea that we could bring this town the same type of medical care they might get from a big university clinic. And we kept adding specialists of one kind or another to do that.

That has had a very interesting effect upon the town, generally. We do not have any monopoly at all on the business, and I suppose we do 70 percent of the medical care of that town. But the quality of the doctors, outside our group, is also very high. It has to be to meet the kind of competition. It gives, now, the small town more specialists than all of the rest of the county put together. We have about 35,000 people in a county of about 200,000, and there are more specialists in that town than there are in the whole county in general.

It is reflected in an interesting way. We were going over the figures the other day with one of the science writers, and that town has one of the lowest maternal mortality records in the whole world. And I think it has absolutely the lowest infant and childhood mortality record in the United States.

We went over our figures for children deaths there, and almost no child in that town has died in the last 15 years, except through accident or through cancer, including leucocythemia. It is a rare thing that a child dies of ordinary disease. We have not had any diphtheria for years, and most of the other infectious diseases have been wiped out.

It is an example of the fact that quality and competency of the medical care will reflect itself statistically. And we can make a case of that kind for quality care based primarily on group-practice.

Now, I do not want you to get the idea that this clinic of ours is responsible for that directly, because as I say we do not do all of the business in the town, but it has set a standard for the community that the rest of the community has had to meet, and as a result the whole community has really supported medical care.

I feel intensely about this matter of quality of care, and I do want to make the point emphatically that group practice contributes very markedly to quality, as well as accessibility of care.

This matter of whether prepayment on group practice, and so forth, actually decreases the cost of medical care, the overall costs of medical care, I am really rather cold to.

I do not believe the costs of medical care in this country, overall. are excessive. As a matter of fact, I think we should spend a whole lot more for medical care than we do. I am not the least bit apologetic for the big incomes that doctors make. I have made a big in

come all of my life, after a few very tough years in the beginning, and I have no apologies for that because I feel that I and my colleagues have made a service to the town that is equally important with the bankers and the lawyers and the promoters, and some other people that have made big incomes.

Our contribution to the welfare of society is great. There should not be any apologies for doctors' incomes. I think doctors, if anybody should drive Cadillacs, the doctors should drive Cadillacs; we have a lot of driving to do.

So the matter of the overall costs is not so important. The country would be better off if we spent a hell of a lot more for our medical care than we do. You can buy health. We showed in the commission's studies that the mortality, and the incidence of disease, and the morbidity depended upon your income.

The poorer you are, the sicker you are going to be, the shorter you are going to live, and the more hospitalization you are going to require. It is a striking and dramatic example that health is a purchasable commodity. You can purchase health; you can purchase life.

The real problem is not to reduce the overall expenditures for health at all. It is to solve the matter of the distribution of the costs so everybody can have the accessibility.

I quoted this figure of $300 million for medical schools, and $300 million would give this country fine medical schools. We spend $200 million for an aircraft carrier without thinking anything about it. And I think as between the two, the schools will do the country as much good.

To move along with this: There is not any question at all that there is a tremendous public demand for some sort of insurance and prepayment as a method of paying bills. I will say that the development of the last 12 years particularly has been a gratifying thing in the development of these various voluntary prepayment plans.

There is not any doubt either in my mind that, in general, the public is dissatisfied with the type of prepayment plans that they have presented. They want more for their money, and they want more comprehensive care. That is a phrase that you get all of the time, "comprehensive care."

Some people sneer at that and say, "You cannot give comprehensive care." And they call it "pie in the sky."

That is not true. I think that the time is coming now when this phrase "comprehensive care" is beginning to have a definite meaning of its own. And it means that you are going to provide the patients with preventive examinations, with immunizations, with home calls, with office diagnostic work with their hospital and their surgery, and a new concept that has come up lately and getting more important with the rehabilitation of these people from the effects of their disease or injury.

That is what is meant by "comprehensive care." It is really comprehensive, and that is what the people want.

These complaints that I get of the prepayment plans are largely because of what has been called the fine print, all of the exceptions that are not covered. The people want to get a package deal, if you want to call it that. Actually, the most popular plans are those that