C. To achieve the foregoing objectives, the American Hospital Association Legislative Language. The following is proposed legislative language to COORDINATION OF PUBLIC AND INSTITUTIONAL PLANNING "(d) Each health systems agency shall coordinate its activities with- "(1) each Professional Standards Review Organization (designated under Section 1152 of the Social Security Act), "(2) entities referred to in paragraphs (1) and (2) of Section 204(a) of the Demonstration Cities and Metropolitan Development Act of 1966 and regional and local entities the views of which are required to be considered under regulations prescribed under Section 403 of the Intergovernmental Cooperation Act of 1968 to carry out Section 401(b) of such Act, "(3) Other appropriate general or special purpose regional planning or adminstrative agencies, and "(4) any other appropriate entity, including entities which provide institutional health services, in the health system agency's health service area. The agency shall, as appropriate, secure data from them for use in the agency's planning and development activities, enter into agreements with them which will assure that actions taken by such entities which alter the area's health system will be taken in a manner which is consistent with the HSP and the AIP in effect for the area, and, to the extent practicable, provide technical assistance to such entities. "(i) Nothing in this title shall be construed to authorize any Federal or State officer or employee or the officer or employee of any health systems agency to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer or employee of any institution, agency or person providing health services; or to exercise any supervision or control over the administration or operation of any such institution, agency or person. Mr. ROGERS. Thank you, Mr. McMahon, for a very helpful statement, and we will be pleased to receive your specific language suggestions which would carry out your thoughts. There is a call to the floor for a vote. I think if members could vote and return quickly, it would probably be the best procedure to follow at this time. We will recess for 10 minutes. We are sorry to have to interrupt. The committee stands in recess for 10 minutes. [Brief recess.] Mr. ROGERS. The subcommittee will come to order, please. We are delighted now to hear from Mr. Bromberg. Your statement will be made a part of the record in full [see p. 993]. If you could highlight it for us, as Mr. McMahon just highlighted his, that would be helpful to the subcommittee. STATEMENT OF MICHAEL D. BROMBERG Mr. BROMBERG. I will try to do that. I am Michael D. Bromberg, executive director of the Federation of American Hospitals. Accompanying me today is Robert J. Samsel, president of the Federation and vice president for Management Services and Marketing, Community Psychiatric Centers, Inc., of Santa Ana, Calif. The Federation represents the more than 1,000 investor-owned hospitals and our member hospital management companies now manage under contract approximately 200 additional hospitals including teaching, religious, community nonprofit and public institutions. We have supported the Planning Act since its passage, that concept that called for a clear preference of determination of needs at the State and local level not in the Department of HEW. We have not changed our position in support of Public Law 93-641 and we recommend a 3-year extension of the Health Planning Act notwithstanding efforts by the Department of HEW to strain its interpretation of the law to control and regulate every aspect of the planning process. The Chairman and members of the subcommittee deserve special credit for defending the original intent of Congress that Federal health planning guidelines not be allowed to override the health needs of local areas. We do remain concerned that Government, faced with budgetary pressures, will continue efforts to arbitrarily control costs without adequate consideration of the quality health resources required in individual State or communities. In order to preserve the bottom-up development of appropriate health plans based on local requirements, we urge amendments to Public Law 93-641 designed to clarify the scope of national guidelines on health resources and utilization. We recommend specifically the deletion of the requirement in section 1513 (b) (2) of the act that health systems plans "be consistent with" the national guidelines, retaining the requirement that HSA's "take into account" those national guidelines. The process for determining needed local health resources established by Public Law 93-641 must be given a reasonable opporttunity for success and that requires Federal assistance, but without bureaucratic roadblocks. HSA's are still in the development state and consequently they are particularly vulnerable to Federal pressures and proposals for substantial expansion of their responsibilities. We urge amendments to Public Law 93-641 which will help HSA's meet the responsibilities already assigned to them in a fair and equitable process and we caution against expansion of their duties or illusions about unlimited cost savings without sacrificing quality of health care. We advocate strengthening the capability of the local health system agencies by assuring that full financial support is provided by federally appropriated funds, as authorized in the law. This would permit the agency to attract experienced, qualified, and professionally trained staff personnel, able to understand the economic, financial, and administrative complexities of providing health services and institutional health care within the availability of health manpower and health facilities resources. We support a 3-year extension of the Health Planning Act and offer the following comments on the proposed Health Planning Act Amendments of 1978, contained in H.R. 10460. We endorse those provisions of section 209 which require inclusion on HSA governing bodies of elected officials and others broadly representative of the area. We urge expansion of this section to require inclusion of hospital representatives broadly representative of institutions in the area. The expertise of those knowledgeable in hospital administration is a necessary resource for governing board representation on a body charged with major responsibilities for making decisions on appropriate capital expenditures by hospitals. Hospital representation on an HSA executive committee should also be required. We endorse section 215 which adds to the list of expertise which must be present on an HSA staff in financial and economic analysis. Health economists are needed by HSA's to properly assess projected population, industry, demographic, and economic trends and to interpret and translate the dynamics of change into impact on existing and future health services and facilities. HSA staff should also have experience in hospital fiscal matters including reimbursement and budget issues. It is imperative that the certificate-of-need responsibilities of State agencies and HSA's be met with continuing regard for due process of law. We urge the subcommittee to clarify the availability of judicial review following an adverse decision by the State agency. The expansion of certificate-of-need coverage under section 218 to major medical equipment, regardless of location, raises several questions ranging from the degree of government intervention in the private practice of medicine to competitive advantages granted to certain types of providers. On page 9 we try to make the point that where the process does not cover a particular class of providers, whether a physician's office, HMO, or anyone else, the resources required and controlled by exempt providers not be counted in the determination of institution needs. We support the Chairman's approach to treat HMO's and physicians offices alike. We also strongly urge the subcommittee to amend H.R. 10460 to specifically require Federal hospitals to comply with the same certificate-of-need requirements applicable to non-Federal providers. We are concerned with scction 1527 (a) (3), which directs that a certificate of need be withdrawn if it is determined on an annual review that adequate progress has not been made. "Adequate progress" is a vague term which should be changed to reflect "good faith efforts to commence or continue the authorized project." Progress can be blocked by Government, a striking construction union, or by others over whom the recipient of a certificate has no control. On page 11 we endorse the definition of capital expenditure in section 218 and specifically the exclusion of simple acquisitions which do not involve changes in services or the number of hospital beds. The purpose of certificate of need laws is to approve new construction or the acquisition of new equipment and not to hinder the transfer of property rights. This change will also facilitate mergers, shared services, and the growth of multifacility systems. We oppose section 218 (b) (4) which changes the maximum review period for certificate-of-need applications from 90 days to 1 year. We support the consideration of competing applications at the same time, but see no justification for a 1-year delay in the decisionmaking process. In effect, this amendment encourages a 1-year moratorium on capital which could adversely impact on quality of care and increase costs by delaying projects to a period of higher inflation. On page 12 we discuss appropriateness review. Section 219 (b) requires each State to have in place within 4 years a program which in effect decertifies inappropriate services. This directive begs the complex legal and economic issues involved in terminating health services or closing health facilities. We believe that any decertification program should be voluntary and carefully tested on a limited basis. When a facility or service is voluntarily decertified, it should receive payment equal to the fair value of the property to recognize debt and equity. Assurances should also be made to provide for employees who lose their jobs and to provide access to comparable care for displaced patients. While we support experimentation with voluntary decertification, we also believe that the potential cost savings from hospital bed reduction have been grossly exaggerated. A well-managed institution will not incur substantial costs for maintaining empty beds beyond the interest payments and amortization of the debt. A major reason for the high cost of maintaining some empty beds has been the cost reimbursement system which provides no incentive for efficient management of the personnel and other viable costs which should not be incurred for most empty beds. For these reasons, the closing of some beds within a hospital will save little or no money; however, the closing or conversion of an entire institution can have a significant impact. We would recom mend that any experiment in voluntary decertification assign a priority to the closing or conversion of entire hospitals, rather than partial closings and that cost savings in such experiments be carefully analyzed before a more comprehensive decertification program is undertaken. In addition to our comments on H.R. 10460, we offer the following suggestions for strengthening the planning process: First, HSA's should be required to solicit competitive applications for needed services, equipment, and facilities in order to stimulate competition and lower costs. Second, certificate-of-need agencies should be required to select the most cost effective of acceptable applications for needed services, equipment, and facilities. Third, the definition of capital expenditures in section 1122 of Public Law 92-603 for medicare purposes and the definition for certificate of need under Public Law 93-641 should be consistent. We urge the Congress to raise the $100,000 threshold in section 1122 to $150,000, making it consistent with the Health Planning Act. In addition, we recommend that the dollar threshold be adjusted annually by an economic index reflecting general inflation factors. Fourth, exempt replacement of equipment, plant maintenance, and capital expenditures mandated by law from the certificate-ofneed process. In conclusion we support the general approach of H.R. 10460 and urge the adoption of those amendments designed to assure fairness and objectivity in the certificate-of-need process, and improve funding and qualified staff, in order to strengthen the health planning process. Thank you. [Testimony resumes on p. 1010.] [Mr. Bromberg's prepared statement and attachment follow:] |