(i) Such a program should maintain the free choice of doctor and hospital by the recipient. ( (j) Such a program should permit and encourage continuous adaptation to new knowledge in the provision of services. AMERICAN HOSPITAL ASSOCIATION, Hon. PAT MCNAMARA, Chairman, Subcommittee on Aging, Senate Labor and Public Welfare Committee, WASHINGTON SERVICE BUREAU, DEAR SENATOR MCNAMARA: At the time of my recent appearance before your subcommittee to discuss the matter of the health needs of the aged, I indicated at the request of Senator Randolph that we would be glad to try and furnish for your record some comparative cost figures as between home care programs and the cost of care in nursing homes. With respect to nursing home care, costs in the southeastern part of the country run from $5 to $6 per day; in the area surrounding the city of Chicago, from $10 to $11 per day; and in the western part of New York State $7.50 a day. I have previously stated before the committee a figure of $7 a day and this applied to a new nursing home unit opened in the State of Arkansas with which I was familiar. Therefore, I believe it can be said a reasonable estimate of costs for adequate nursing home care runs from $6 to $10 a day with, perhaps, $8 as an overall average. With respect to home care programs, we have communicated with the Jewish Hospital in St. Louis, Mo., and the Montefiore Hospitals in Pittsburgh and New York City, all of which have very fine home care programs. I believe the information received from Dr. David Littauer, executive director of the Jewish Hospital in St. Louis, provides the kind of information you desire. Dr. Littauer points out that in their analysis of the operation of their program over a 5-year period, some reduction in cost could be expected, with increased volume of care. Their program and the others as yet provide care to a limited number of patients. The following statement of costs appears in the report on the 5-year analysis of the program operated by the Jewish Hospital in St. Louis: Costs "One of the most cogent arguments advanced in support of home care is the markedly lower cost per day when compared with care in the hospital. Depending on the scope and variety of services offered, the number of cases carried, allocation of overhead expenses, and whether visiting physicians or resident physicians are employed, the per diem costs of typical programs have ranged from less than $2 to over $5. In 1952 the extensive home care service of the department of hospitals of the city of New York was operated at cost of $1.58 per day. Resident physicians provided medical coverage for the daily census of almost 2,000; had indirect overhead costs and stipends to visiting physicians been included, the cost would undoubtedly have been higher. A report in 1954 by the Council of Jewish Federations and Welfare Funds of five home care programs that it surveyed shows per diem expenditure of $0.94, $1.42, $2.83, $3.64, and $5.49. "Costs on home care cannot be compared exactly with costs in the hospital. There is a substantial capital expenditure when a hospital is built. Thereafter, allocated against the bed that a patient occupies within the institution are a number of fixed overhead costs which do not exist and are not necessary in the home, such as the cost of telephone equipment and service, insurance, administrative departments, plant operation, and the like. Moreover, nursing department personnel, house staff, housekeeping maids, food service workers, and others come into daily contact with the patient. "A patient at home, on the other hand, may see a physician not oftener than once every 2 weeks, and a nurse only twice a week. The fixed overhead of the home (rent, food, utilities) is not charged to the cost of caring for the patient in the home. "Despite the imperfections of the yardstick, by any basis of comparison, cost per day in the home is considerably lower than care for equivalent patients ; would be in a general hospital. Cost of care for acute general hospital patients now averages about $24 per day, and for chronic patients in the hospital the cost may be between $15 and $18 per day if complete services are offered. "The detailed breakdown of expenses for each year indicates average costs ranging from $2.88 to $3.34 per day in the home. We estimate that the other costs of the household allocable to the patient, such as food, rent, utilities, might average an additional $3 per day." You will note that the above statement refers to a comparison between home care costs and general hospital care costs. However, these figures on the cost of home care may be compared with costs of nursing home care cited above. I hope this information will be helpful to you. You may be interested to know also that the American Hospital Association is working with the American Medical Association and the U.S. Public Health Service on an inventory of home care programs to include financial data on costs and sources of revenue. This material should be available in March of 1960 and a working conference dealing with home care programs will probably be held in April of that year. Sincerely yours, KENNETH WILLIAMSON, Associate Director. Senator MCNAMARA. Thank you. You may proceed. Mr. WILLIAMSON. I would like to correct the record, Senator, to this extent, that Dr. Crosby, who is the executive director, might be a little taken aback. I am the associate director. Senator MCNAMARA. We are sorry for the promotion. Mr. WILLIAMSON. I do not personally object to it. It is very nice. Thank you. Senator, I would like to just comment from sections of the statement within the 10 or 12 minutes that you mentioned. May I first say we join in commending most highly this subcommittee and you, Mr. Chairman, for what we consider the excellent manner that you are going about all this, bringing all sorts of groups and individuals before you and giving them a chance really to tell you what they think about the problem and how they see it. We think this is most constructive. Our statement, I might just say, is really keyed to the four questions which you set and rather limited to that, as a matter of fact. I will not go into any wordy description identifying the American Hospital Association in the statement. Senator MCNAMARA. Thank you. Mr. WILLIAMSON. I think that a summary of the description of our interests in our work in this field-I will not go into any detail on that. I would like to point out we have here that the American Hospital Association was really the major advocate of voluntary health insurance, something which we take great pride in and point out that through the efforts of the Blue Cross plans alone they now report about 312 million people are enrolled, aged people, beyond 65 years of age in Blue Cross. The hospital field foresaw a good many years ago the need to provide the possibility of old people having continuity of health protection into their old years and after they ceased employment. In 1951 the association sponsored a commission on financing hospital care, a group of very eminent individuals from all walks of life. I think then that that committee's report really began for the first time to spell out what the financial difficulties are and would be for the future. In 1954, picking up after this committee's work, we started with two committees, one following the other, over a period of 312 to 4 years, delving into the financial aspects of the problems of health care of the aged. In my statement I mention a recent effort on our part, and that is a thorough study and documentation of what we consider are the pros and cons involved in the use of the social security system as an approach. I have copies of that document, Senator, and would be glad to make them available to the committee if you like. Senator MCNAMARA. We would appreciate that very much. Mr. WILLIAMSON. With respect to the second question, analytical evaluation, I would like to read this if I may. It is very brief. The association is continuing its efforts to promote a full utilization of voluntary health insurance approaches to financing the health needs of retired aged persons. We believe it is essential that every effort be made to give voluntary approaches a full opportunity to solve the problem. We shall continue to exercise every effort in encouraging the provision of health services for the indigent aged. At the present time, there remain a good many States and local communities where Government has not assumed its responsibility in meeting the needs of such persons. The lack of financing available for the care of such persons is a serious drain upon the resources of our voluntary hospitals. We believe there will have to be increased State matching in financing the health needs of aged persons who are indigent, certainly if this problem is to be solved. We believe a great deal more work needs to be done in planning for the particular kinds of facilities needed in the care of the aged and in the organization of the health services required. In addition to participation in numerous studies, we believe hospitals can become a primary force in furthering experimental projects in home-care programs and in programs for ambulatory patients. Much thought needs to be given to the use of various programs which will meet the health needs of the aged without concentrating upon hospital and other institutional programs. It is our belief that an important problem faced by older persons, for example, arises from inadequate housing. We have urged the Congress to proceed with nonprofit programs to stimulate the provision of good housing for the older citizens. Such a provision is embodied in the housing legislation. It was in both the House and Senate bills to do this. It is our intention to urge hospitals to make particular effort in encouraging sponsorship of such needed housing and to develop programs for relating health services to housing needs. Thus, a great many aged persons may be kept out of hospitals, nursing homes, and other institutions. We believe our association has a responsibility to present its thinking to the Congress on any legislation with respect to the health needs of aged persons. Even though we may not approve of particular legislation under consideration, we believe it is incumbent upon us to advise in those matters where we have special competence and where the Congress has a right to expect us to provide responsible comment. The next area, that of the specific problems, Mr. Chairman, we have broken these down into a number of areas, and I think if I read two paragraphs I could give you in essence what we think as to the problem. All of the information available to us points to the fact that retired aged persons face a pressing problem in financing their health care. We know that, by and large, the aged are an economically disadvantaged group. They are particularly hard hit by inflation. They have little opportunity to augment the purchasing power of deflated dollars, and they are a direct economic concern of all families that share in the financial responsibility for their maintenance. A major illness spells exhaustion of savings, perhaps a call for help upon relatives and, in many cases, a resort to public assistance. Ill health is a major cause of destitution among the aged. The problem is made greater by the fact that retired aged persons require much greater amounts of hospital care than do other groups in the population. By and large, they require these increased amounts of care at a time when their income is greatly reduced. The problem is further complicated by the fact that the cost of care is increasing and is likely to continue to increase for some time for hospital care certainly at an average of at least 5 percent a year. The overall financial circumstances surrounding hospitals indicate that for the future, the kind and amount of hospital care the aged receive will be directly related to the adequacy of the financing. Hospital care must be paid for by someone. There is no way to discount the cost of care without adding the cost of that discount to someone else's hospital bill. The question, therefore, we believe fundamentally is one of providing adequate financing. In the following pages we have discussed the various aspects of these problems. We reviewed various possible sources of financing which have been considered and discussed. We have discussed also the adequacy of care. I might just here, Mr. Chairman, say that there is a good deal of talk on this question and in the House committee 2 weeks ago there was much talk as to whether aged people are or are not getting care. It is a very important question and we believe it should be discussed fully. There is another aspect with respect to their getting the care they must be considered, and that is what is the effect of their getting the care, what is the impact if they pay the hospital and other bills themselves and the effect upon the resources. Far too little we believe exists now in the way of information on this crucial question, and it is our thought, Senator, that in the grassroots, the hearings you are going to have around the country, perhaps one of the most important things we see you might do is try to get a broader base of information on this area. It is our belief, and I might summarize it, that there are undoubtedly many old people who may not receive the care they need. That is a summary of all the evidence as we see it. With respect to the means test approach which is being discussed I might say that to force aged persons into a state of indigency as a basis for their receiving health care is unacceptable to us. With respect to State and local action getting at the financial problems, we think that we must face squarely the fact that in many, many States much more would need to be done than is being done now to finance the care of the indigent. For example, we were just looking at the figures yesterday that came out that indicate in States where they are doing a fairly adequate job in financing the health needs of public assistance, it is running about $40 a month. Yet you find States that are spending from $1 to $5 a month and many States in the area of $6 and $7, which indicates that States and local government will have to go much, much further than they are at present if there is any hope of really getting at the problem of these people. I might summarize, if I may, and read the 11 points I believe would summarize the overall problems as we see it. 1. By and large, the aged face serious difficulties in providing adequate financing of their health needs. 2. The financing of care in hospitals and in nursing homes may be quite different from the problem of financing the cost of physician services. 3. With rising hospital costs, it is becoming increasingly difficult for hospitals to pass on to other patients the cost of care rendered to aged persons. 4. The extent of the care required by aged persons demands substantially additional financing. 5. The source of the additional financing required remains the basic question. 6. It seems clear that the problem will grow as the numbers of aged persons increase, as inflation reduces the value of their income, as costs of health care increase, and as the total need for services continues increasing. 7. Voluntary health insurance faces great difficulties in meeting this problem. As we say in the statement, they are going a long, long way, and much further now than they were even a few years ago. The extent of their ability to overcome these difficulties needs further careful appraisal. 8. The goal should be to develop a program which will keep individuals in their old age financially self-sufficient rather than to drive them into a state of indigency because of their health needs. 9. The financial solvency of the aged is of great importance to hospitals and the whole community. 10. The continued and increased support of voluntary health insurance by the working population must be encouraged, and no program for meeting the health needs of the aged which harms voluntary health insurance is a satisfactory answer. 11. To the extent that Government financing is needed for a satisfactory solution, the Federal Government will have to participate in such financing on some basis. The fourth area of questioning is the one that deals with the relative responsibility of various groups. I will just read quickly two or three paragraphs only from that. It is difficult, if not impossible, to dissassociate the health needs of aged persons from their other needs. We believe the problem is such that it cannot be satisfactorily solved except by the participation of all concerned, including the individual and his family, the local community, all of the various voluntary agencies, and of the government-local, State, and Federal. There are numerous activities which can be undertaken at the local community level which can have an important effect upon reducing the need of aged persons for care in hospitals and other institutions. Hospitals must increase their efforts to make available services to aged persons as ambulatory patients and their efforts to provide the care needed so that it may be less costly than acute general hospital care. Efforts by hospitals and by others to provide nursing home facilities. are essential. Great effort must be made to increase the level of quality of care rendered so that aged persons entering facilities called nursing homes may be assured basic health services. The States have real responsibility to improve the standards for nursing homes and to strengthen their enforcement. A differentiation should be made between purely custodial institutions and health care facilities. We believe, for example-and we spell out various points therethat the Federal Government is going to have to participate and we believe increase its participation with respect to the meeting of the facility needs for acute hospital care, for nursing home care, and for chronic disease facility care of the aged, and for necessary housing, as I mentioned. Substantial increases in Federal funds are needed through grantsin-aid, we believe, to bring this change about. We have concluded that the Federal Government will have to participate with State governments in the financing of the cost of education of nursing personnel, and this is a critical problem we think we face for the future. |