Section 641. There is hereby authorized to be appropriated the sum of $2,000,*** for the purpose of surveying the need for *** nursing homes.

Then after setting up certain procedural steps for spending the money for the survey, the framers of this economic monstrosity, seemingly gaining courage from contemplating the sheer audacity of their mental aberrations, throw reason to the winds and proceed with the following: Section 651. There is hereby authorized to be appropriated for the fiscal year ending June 30, 1955, and for each of the two succeeding fiscal years

(4) $10 million for grants for the construction of nonprofit nursing homes. What kind of logic this this?

On one page is provided means for a survey to determine whether er not there is a need for a given facility and on the next page is prorded an appropriation to build the facility.

Why make the survey in the first place?

My point is simply this: If it were the honest intent of the survey to determine whether or not a need existed, there certainly could be no objection.

I feel confident that, while such a survey might reveal certain regional or local shortages, it would also reveal that the problem is being reaonably well met by private initiative and enterprise which, if bolstered and assisted in a manner hereinafter set out, could in a very short time ore than adequately meet the need.

It is our contention, however, that there is a definite move afoot to discredit proprietary nursing homes in general. To substantiate this, I would like to refer you to the Sunday supplement magazine known as "Parade," a syndicated publication that has widespread circulation in Sunday papers throughout the country. It is carried by the Indianapolis Times, the Chicago Sun-Times, the Boston Sunday Post, just to mention a very few.

On Sunday, February 14, appeared one of the most scurrilous attacks on private nursing homes ever conceived, and in one of the most flagrant displays of yellow journalism it has been my misfortune to see it took several situations from the State of Florida, which, incidentally, has just passed its first nursing home licensing and inspection law-August 1953-and then made the very broad, general statement that comparable conditions existed the width and breadth of the United States.

On Sunday, February 21, appeared a second article which again used examples from Florida and a rather vague reference to California, and again said similar conditions existed throughout the country.

The article then referred to the fact that the Federal Government was passing laws to provide for nonprofit homes, inferring that with this action "God's in His Heaven and all is right with the world." Throughout both articles appeared snide comments and inferences about profit.

The source of information for these articles is an organization known as the National Committee on the Aged of the National Social Welfare Assembly. This is one of those professional bleeding-heart groups to whom the word "profit" has a somewhat opprobrious connotation. Further, it feels that the answer to all of the Nation's ills, including health, education, welfare, and what have you, lies in the Federal Government taking over lock, stock and barrel-on a nonprofit basis, of course.

(2) in which such nursing care and medical services are prescribed by, or are performed under the general direction of, persons licensed to practice medicine or surgery in the State.

That rather confines the original broad interpretation of nursing home by having it in conjunction with the hospital. I wondered if you had any comments on that.

Mr. MUSE. Yes, Mr. Chairman; we have, and I can best illustrate what my comments would be by citing to you the fact in my State of Massachusetts there are over 10,000 patients being served in nursing homes, distributed throughout the entire Commonwealth in 457 nursing homes, so that it would be of little assistance to the overwhelming numbers of these patients if only, for instance, in the metropolitan area of Boston the 4 or 5 hospitals there had an annex and in those cases it would not be feasible because they don't have the space or the land, nor do they have the inclination in our hospitals, but it would not be feasible to set up nursing homes that are ancillary to the hos pitals if we have in our mind servicing the people where their servicing is required in the communities probably 150 miles away from Boston or 150 miles in the opposite direction from Pittsfield.

The needs are in the local towns and in the small cities, and that is our problem, and I would like to reemphasize it: There are over 10,000 patients receiving that type of care, as pointed out in exhibit A, which is typical, and I am asking you to note the range of the patients and from whence they came and under whom they are being sponsored, and who is responsible for their care.

This is typical of the nursing-home problem, and I hope that we would not confuse what the hospitals may legitimately need while at the same time we are serving the great needs that are attendant upon the nursing-home field, so that we have offered an amendment whereby the term "nursing home" would mean:

Provided, that such services are prescribed by a person licensed to practice medicine in the State of the care of the patient is under the formal supervision of a person licensed to maintain a nursing or convalescent home in the State.

We are trying to make this broad enough so that the nursing-home facilities will be able to be distributed throughout the country, and I would like to emphasize, if I may, Mr. Chairman, this point: That, if this type of guaranteed loan is made available, virtually there will be a wholesale demand for it on the part of nursing-home administrators who have not been able to make long-term capital improvements on their properties; and before they can even get it they must apply to a bank which will make inquiry as to their ability and capacity to repay the loan.

That would be the first check.

The second check would be in the Government administration itself to see that it would be a worth-while project and located most likely where a nursing home would be self-amortizing.

With those two checks, we would find the nursing homes would be put up with a more rapid facility than is being dreamed of under the present bill in its present form.

Senator GOLDWATER. The reason I mentioned this to you: In my interpretation of this, it goes quite a long ways in taking the Govern ment out of competition with the private nursing home-the addition of this committee amendment in the House that says "which is oper ated in connection with a hospital"-in other words, these have to be applied for locally. They just can't be dreamed up.

Now, if you apply locally, they couldn't just apply to build a nursng home in such-and-such a place. It would have to be connected with the hospital. The hospital would have to make the request.

I think that this is quite in your favor, and I was wondering if you were acquainted with it because we will have to consider this, too, ard it will be considered on the floor.

Both that (1) and (2) of (o) on page 15 seems to me to take the Government pretty much out of competition.

I agree with you. I don't like the Government getting into the field of free enterprise. By the same token, I like to see free enterprise do their own financing.

Mr. MUSE. Well, Mr. Chairman, we feel generally the Hill-Burton Act has been a magnificent instrument in the progress of the public health of this country. We believe its original intent was to help the rural areas. We believe it has accomplished that. Now they are sing this wonderful instrument that has worked for good, finding some other place to use it and now using it in a field that has not been Properly surveyed; and I raise the problem of construction cost only to indicate to this committee that we can raise reasonable doubts about ther references made in nursing homes if such a glib figure of $8,000 being used as a normal construction cost.

Senator HILL. Of course, a nursing home could be built in connecon with a hospital today under the existing law?

Senator GOLDWATER. That is right.

Senator HILL. But you have had no complaint about that, have

Senator GOLDWATER. I think what they are objecting to, Senator Hill, is the fact this bill attacks the nursing homes or, let's say, comes and mentions the nursing home as a new area in which this bill can work or which the Government can work.

Isn't that correct?

Mr. Mrse. That is right.

Senator GOLDWATER. And you would like this bill we are considerng now, S. 2758, to exclude the nursing home in its scope?

Mr. MUSE. That is right, Mr. Chairman.

Senator GOLDWATER. I think we understand each other on that, but I do wish you would study the House language and see if you don't agree that pretty much does it. It puts it back to where it is today, practically. Under the existing Hill-Burton Act, nursing homes could be built in conjunction with hospitals, and that, in effect, is what this language says.

Mr. Muse. Well, we—

Senator GOLDWATER. Now, the only thing that remains, if that is true, is your request that funds be available from the Government for financing the constructing of nursing homes; and, just as a point of interest to me, because I am on the banking and currency committee, does the SBA. Small Business Administration, cover the nursing homes?

Mr. MUSE. It does.

Senator GOLDWATER. You can borrow money from the SBA for that purpose?

Mr. MUSE. Mr. Mustin has made application to the SBA for this, 46293-54-pt. 1-15

Senator GOLDWATER. You haven't gotten the money yet?
Mr. MUSTIN. No, sir.

Senator HILL. What is the status of your application, if I may ask? Mr. MUSTIN. They have several plans. The one they prefer is what they call the deferred participation, in which you would find a bank or lending agency who would lend the money and service the loan, and the SBA would give a guarantee of 75 to 90 percent, and for that they would receive 112 to 2 percent brokerage.

It is quite interesting to note that several of the lending agencies we dealt with never heard of the SBA. So, they questioned me as to whether or not it is a good risk. They liked the FHA type of loan.

However, as a last resort, and it is coming, we can go to the SBA and they will lend the total sum on 6 percent interest for a period not to exceed 10 years, but the loan need not be amortized.

So, I think I can deal with them, if it gets down to that point. However, it isn't the best instrument, in my judgment. We should have at least 20 years and we should not be required to pay any 6 percent interest. Twenty to twenty-five years is what we really need. Senator HILL. If you had a lower rate of interest and a longer period of time, the loan would stretch out over that period of time. Mr. MUSE. Yes, sir; 20 years

Senator HILL. Or you could amortize it out and pay a reasonable rate of interest?

Mr. MUSE. Yes, sir; absolutely. We don't want to be given anything.

Senator GOLDWATER. Do you have any other questions?
Senator HILL. No. That is all.

Senator GOLDWATER. Would you study that and, within the next day or so, or within the next week, at your convenience, let the committee know what you think of that language?

I may be mistaken, but I think your problem is answered in the House language there, at least as far as answering the problem of the Government being in competition with the private nursing home.

I think the committee would appreciate your opinion on that, because we have to consider that, too.

Mr. MUSE. I shall counsel with our executive director.

Senator GOLDWATER. Do you have any other statement to make! Mr. MUSE. No; we have not, Mr. Chairman, except to thank you for the opportunity to have appeared before you and to congratulate this committee, as we did Representative Wolverton's committee, for the most sincere efforts they are making relative to the public health program of the United States.

Senator HILL. Didn't you have some other statements or some other witnesses?

Mr. MUSE. I have a statement from a young lady from Washington, Mrs. Lucia Forde Murphy, that I would like to have extended upon the record-and if it would be possible to presume upon the committee-it is a very short statement-I would like to ask that she address this committee.

Senator GOLDWATER. My problem is that I have an appointment at the White House in 15 minutes.

If you would care to be chairman and remain here, Senator-
Senator HILL. I will be happy to do so.

Senator GOLDWATER. I hate to leave.

Senator HILL. You have to be on time.

Mr. MUSE. Mr. Chairman, gentlemen, this is Mrs. Lucia Forde Murphy from the State of Washington.

Senator HILL. Mrs. Murphy.

STATEMENT OF MRS. LUCIA FORDE MURPHY, REPRESENTING THE INLAND EMPIRE ASSOCIATION OF LICENSED NURSING HOMES

Mrs. MURPHY. Thank you very much.

I am Lucia Forde Murphy from Spokane, Wash., Mr. Chairman. I am here in the Nation's Capital at the request of certain nursinghome administrators who comprise the Inland Empire Association of Licensed Nursing Homes, with headquarters in Spokane, Wash. The group is an affiliate of the Washington Association of Licensed Nursing Homes.

I have traveled across the country for the privilege of joining with others to appear before and alert your committee, Mr. Chairman, to certain aspects of S. 2758 that seem ill advised, economically unfeasible, and socially unsound.

That there has not been sufficient research into the whole area of nursing homes and the health problems that they must solve is adequately testified to by what the Secretary of Health, Education, and Welfare has not been able to tell this committee or Representative Wolverton's committee in the House.

I urge you, Mr. Chairman, when you reread the Secretary's testimony you will discover little factual data on the construction cost of nursing homes; vague reference to the cost for per-patient day care. This cost is estimated between $2 per day to $8 per day, leaving us in doubt as to whether the Secretary's committee was referring to boarding homes for the aged or nursing homes.

I think that as you reread the testimony concerning nursing homes you will find that the basis of the study is predicated on trends, theories, estimates, and speculation.

On this basis you are being asked to venture into a field completely foreign to the original intent of the Hill-Burton Act.

As was pointed out by Representative Pelley when he addressed the House of Representatives on March 9, there is no need for Federal grants of money to care for the aged population in the State of Washington. At that time he said:

Dr. Cronin, of the Department of Health, Education, and Welfare assured me in our State of Washington a good job is being done by private enterprise.

From an economic point of view, this bill would appear to waste your taxpayers' money, at least as far as the State of Washington is concerned. That portion of $2 million that would be made available to individual States for survey, contemplated under the terms of this bill, is not needed in my State.

In keeping with the initiative of a well-informed citizenry, there has been formed in Spokane, Wash., the Spokane Gerontology Volunteers composed of citizens representing 100 local organizations and who have already begun a survey into the needs of our elder citizens. In that connection, Mr. Chairman, I would like to submit this chart for the record.

Senator HILL. It may be received.

(The chart referred to is as follows:)