A fourth conclusion, although not specifically illustrated in the charts themselves, is that the need for institutional bed care must be minimized by placing greater emphasis on preventive health services. Under the present program relatively little attention has been given to outpatient departments of hospitals and other centers for the diagnosis and treatment of ambulatory patients-that is, those who do not require bed care. Such diagnostic and treatment clinics are essential if our communities are to have well-balanced medical services at a cost which they can afford.

The bill you are now considering contains five major proposals, in accordance with the President's recommendations, for achieving a better balanced program.

1. SURVEY AND PLANNING

Following the precedent of the original Hospital Survey and Construction Act, the bill authorizes an appropriation of $2 million, to remain available until expended, for grants to assist the States in surveying their existing facilities in the categories covered by the bill, and in developing revised State plans and construction programs. The minimum grant to any State for this purpose would be $25,000. Every State would be required to match these funds on a dollar-fordollar basis.

The importance of this survey and planning feature in assuring the sound investment of construction funds cannot be too strongly emphasized. The surveys made under the original act have contributed greatly to the success of the program. For the first time in the Nation's history each State and Territory undertook an orderly inventory and appraisal of its existing hospital and public health center facilities, and developed a comprehensive statewide plan for expanding and improving these facilities in accordance with the most urgent needs. These State plans will need to be revised to conform to the provisions of S. 2758 since 3 of the 4 construction categories covered by the bill are new or broadened.

2. FACILITIES FOR THE CHRONICALLY ILL

For each of the 3 remaining fiscal years of the present program, the bill would authorize appropriations of $20 million specifically earmarked for grants for construction of nonprofit hospitals for the chronically ill and impaired. In terms of program categories, this provision is new only in emphasis, for such facilities are now authorized under the present act.

The purpose of this new emphasis is to stimulate and accelerate the construction of hospital beds for the increasing number of persons with long-term illnesses who require hospitalization, but who do not need care in facilities as expensive to construct and operate as the general hospital.

While the language of the bill refers to "hospitals for the chronically ill and impaired," it should not be inferred that these will always be institutions independent of general hospitals. On the contrary, it is probable that many of the units constructed with the aid of these grants will simply be wings or other structures related to a general

hospital. In one recent study of 2,600 general hospitals having 50 or more beds, only 3 percent reported that they had special facilities or arrangements for chronic care. This percentage must be increased markedly if we are to promote better bed utilization and operating

economy.

The third major proposal of S. 2758 is the authorization of $10 million annually for grants for construction of nonprofit nursing homes in which patient care is under medical supervision. Nursing homes would constitute an entirely new program category, since aid for the construction of such facilities is not provided under the present program.

This proposal represents an auxiliary approach to the provision of beds for patients with chronic illnesses and impairments. The bill defines a nursing home as

*** a facility for the accommodation of convalescents or other persons who are not acutely ill and not in need of hospital care but who require skilled nursing care, and related medical services * * *

From this definition it is clear that the bill would not encompass oldage homes or any other institution furnishing domiciliary care without the essential elements of skilled nursing or medical services.

That the bill is confined to nonprofit nursing homes does not mean that nursing homes of this type are the only necessary or desirable ones. We are well aware that there are many thousands of proprietary nursing homes now in existence. It is not our intention to overlook or detract from the fine work being done by appropriately staffed and equipped proprietary nursing homes. They are rendering the Nation a laudable service in caring for their patients. However, there can be no doubt as to the need for additional high quality nursing homes. Here, as in the case of all other facilities covered by the present act and by the bill, it seems appropriate to limit eligibility for Federal construction funds to those which are sponsored by public or other nonprofit agencies or associations. Nothing in the bill would authorize or permit Federal ownership or operation of any nursing

home.

4. DIAGNOSTIC OR TREATMENT FACILITIES

In addition to the authorization for the construction of facilities for inpatient care, the bill also authorizes $20 million annually for the construction of nonprofit diagnostic or treatment facilities. A diagnostic or treatment center is defined as one for the diagnosis or treatment, or both, of ambulatory patients. Because such facilities are designed to serve ambulatory or outpatients, and to emphasize prevention, they help to decrease the need for inpatient care.

This type of facility enables medical specialists and technicians to work together as a team. It is a well-recognized fact that the team approach results in earlier diagnosis and better treatment for the patient.

The full extent of the need for diagnostic and treatment centers is unknown, and will remain so until such time as the States have completed their surveys and have established measures of need. We do know that such diagnostic and treatment facilities as now exist are concentrated largely in metropolitan areas and are generally associated with large medical centers.

While many of the centers constructed under this provision of the bill would be component parts of hospitals, others may be separate establishments. Indeed, communities which have no hospital at all could build and maintain modern diagnostic and treatment centers for their own citizens and for those of surrounding rural areas.

This portion of the bill would broaden the existing act, because facilities for ambulatory patients are presently eligible only when they are component parts of a hospital-as in the case of an outpatient department.

REHABILITATION FACILITIES

The final item in this 5-point program is the authorization of $10 million annually for grants for construction of nonprofit rehabilitation facilities. Because the objectives and background of this particular proposal are somewhat different from the four I have already discussed, I should like, with your permission, Mr. Chairman, to discuss this part of the proposed program at a later point in my testimony. At this time it may be helpful to have Dr. Scheele supplement, with the help of several charts, this explanation of the first four points of the bill.

Senator PURTELL. We would like very much for Dr. Scheele to use the charts.

Dr. SCHEELE. Thank you, Mr. Chairman. ·

The program Mrs. Hobby has described and the program projected in the bill the committee is considering would broaden the hospital survey and construction program (chart H) by providing for grants to the States for surveying and planning. In addition, it would provide grants to aid in the construction of chronic-disease hospitals, nursing and convalescent homes, diagnostic and treatment facilities, and rehabilitation facilities, as she has said.

Under the present Hill-Burton Act, shown here in green (chart I) are the several types of facilities which are now under construction: The tuberculosis beds, mental beds, general hospital beds, chronicdisease facilities, and ancillary facilities in general hospitals, including some rehabilitation facilities.

The proposed program would expand and increase the emphasis in chronic-disease beds and would emphasize and aid in nursing and convalescent-home construction, diagnostic- and treatment-center construction, and rehabilitation-facility construction.

The cost (chart J) of the program for the next 3 years, the remaining time that exists before the Hill-Burton Act expires, would include a one-time appropriation of $2 million for the State survey and planning money. In addition, authorizations are provided for annual appropriations of $20 million for chronic-disease hospitals, $10 million for nursing and convalescent homes, $20 million for diagnostic and treatment facilities, and $10 million for rehabilitation facilities, thus making the annual additional authorization provided in the bill over the original act $60 million.

Now, what could we expect to get for the expenditure of this type of funds! If the bill were passed and the Congress appropriated the full $20 million for chronic-disease bed assistance (Chart K), we would expect under the matching formula, and as a result of past ex

perience, that there would be added to that amount $16 million in State and local matching funds, making $36 million for construction of chronic-disease beds.

If this $36 million were to be expended for the construction of general beds, which run approximately $16,000 each, we would obtain approximately 2,250 beds. However, to be spent for cheaper facilities, chronic-disease beds, which some studies show run in the neighborhood of $13,000 per bed, we would receive a larger number of beds; we could construct a larger number, namely, 2,770, contrasted with 2,250.

I might say that this is a very conservative approach to the number of chronic-disease beds that we would get because the 13,000 figure is taken from some studies of separate chronic-disease hospitals. In those instances in which new chronic-disease beds would be built either as wings on existing hospitals, or as separate units, across the street from an existing general hospital, a large number of the ordinary hospital facilities that would be in separate distant facilities would not have to be built

In other words, we could take the patient requiring acute care suddenly across the street to the other building through the tunnel, or into the main part of the hospital. So that this is in a sense an outside figure and one could anticipate that we would get even more than this for our money.

In the field of nursing-home construction, if the full $10 million. were appropriated, we would expect approximately $8 million of matching funds from State and local sources. The combined total of $18 million, then, used to construct general hospital beds at $16,000 each, would give us approximately 1,125 beds.

However, used to construct nursing homes, running in the neighborhood of $8,000 per bed, would provide 2,250 beds. As you see, a substantially larger number. In fact, exactly twice as many as we could build if we were putting that same amount of money into general beds.

This program in total, then, would provide emphasis on early diagnosis and treatment. It would provide increasing emphasis on ambulatory care. In addition, it would take cognizance of the economic problems of medical care by providing facilities, worthwhile facilities, for patients at lower cost than we have in providing general beds at the present time. In addition, it would provide facilities in which care could be given at lesser cost.

And, as we pointed out earlier, it would free general beds that are now occupied by chronic-disease patients who could be taken care of in the other type facilities.

Finally, as the Secretary has said, it would provide rehabilitation facilities.

Senator GOLDWATER. Mr. Chairman, you have got me a little confused.

I think from my own experience with hospitals that your general per bed construction cost is low and your nursing home is high. Is it not true that general hospital construction has been running around $20,000 per bed?

Dr. SCHEELE, Because many of the hospitals built under the HillBurton program have been rural hospitals and have been small, 25-3035-bed hospitals, the per bed cost for the general hospitals has been

in the neighborhod of $16,000. But your general observation is a good one. Possibly that $8,000 is a high figure for nursing-home beds. I believe the point that you are making, with which we can agree in a general way, is that we would get even more for our money, get less general beds per dollar if you were to spend these amounts for general beds and we would probably get more nursing homes. As I indicated, we would probably get more chronic-disease beds than are shown here. So this is the most conservative picture of what we would get for our money.

Actually, we might get a great deal more as you point out.

Senator GOLDWATER. I am connected with 2 hospitals in my home town that have just completed construction under Hill-Burton funds, partly. In the general, it runs $22,000 and the tuberculosis, that ran $2,500 a bed. I cannot understand where there would be such a difference between a nursing home and a tuberculosis sanitarium in that neither of them would be operated with certain specialized facilities, and so forth, except VA. I think your $8,000 is high and I am not being critical of it, but I think you will find that as this program gets out to the people who build hospitals, that they may take a quick look at it and figure that we have not done a good job on figures back here. For my own information, I would like to have that studied a little bit to see if we are a little bit low on the top and high on the bottom. Mrs. HOBBY. Senator, I think you are certainly right, being low on the top, because I think all of us around the table know of hospitals where we have spent far more than $16,000 a bed. I have had a recent experience where the cost was $27,000 a bed. So I am very sure that we are very low. But it depends on the type of hospital you are building. If you are building a hospital in connection with a large medical center, and where it is a teaching unit, it will be much more expensive to build than if you build a community hospital that is essentially a hospital without being related to a university as a teaching center or part of a medical center. That is where some of this very high cost comes.

Now, those were the best figures that we had on nursing homes, but I must say I am inclined to agree with you. I think that is a high figure. I think they could be built for much less.

Senator GOLDWATER. I do think that the $16,000 is unrealistic. I cannot conceive of it, and I have been connected with small hospitals and big ones. I have yet to see a hosiptal to be built for $16,000 in the last 5 years.

Dr. SCHEELE. Dr. Cronin would like to amplify.

Dr. CRONIN. Senator Goldwater, $16,000 is the national average of the cost of general hospital beds under the Hill-Burton experience. Now, the non-Hill-Burton experience is essentially the same. I think the Secretary basically put her finger on the problem here. And that is, what are you building? Bed costs are tricky things to talk about. The best way to estimate construction is the square foot cost. Square foot costs on general hospitals today run about $20 a square foot.

When you talk about bed costs, you can take two small hospitals of 50 beds apiece. In one small hospital you have a diagnostic X-ray department. In the second small hospital you have a diagnostic X-ray department and a therapeutic X-ray machine. The bed cost is