-

do not believe such measures are possible in as diverse a
field as the health care delivery system, and the effort can
only tend to homogenize and rigidify the field a step we
decry both insofar as it destroys community hospitals' indiv-
idual identity and diversity and as it presages even greater
Federal control. The bureaucrat requires order and conformity
to regulate and control. We believe this Committee should
oppose efforts to obtain that control.

15. The conflict of interest provision (Section 104)
should be strengthened.

We believe that the proposed section on conflicts of
interest is a good approach to the problem.

suggestions for strengthening the provision:

However, we have

a. The term "any matter" is far too broad. It would, for instance, seem to apply even to the development of the health systems plan. Since every hospital is likely to be affected by the health systems plan, it might be argued that every hospital employee who is a member of the governing board would be precluded from participating in the development of the plan. Surely, Congress does not wish that result. Perhaps the conflict of interest provision should be made applicable to matters other than the development of the HSP, AIP, and state health plan. b. To the designated relationships, those of "purchaser" and "medical staff" should be added. These relationships are just as likely to create a conflict of interest as are those specified in the proposed amendment.

NATIONAL COUNCIL OF
COMMUNITY HOSPITALS

The medical staff relationship is particularly important.

A physician on an HSA board speaks with all of the imputed authority of a physician. He should not be able to speak on whether or not the hospital in which he practices should obtain a particular piece of equipment.

Moreover, it should be made clear that he should not be able to participate in the review of an application of another hospital. Just as he has an interest in what equipment his hospital obtains, he has an interest in what equipment a hospital at which he does not practice obtains since it affects his practice and his hospital. Perhaps this could best be done, in addition to adding medical staff to the prohibited relationship, by including language in the committee report specifying that anyone on the medical staff of a hospital has a competitive relationship with any other provider if the hospital itself has such a competitive relationship.

c. The terms "substantial" and "indirect," of course, are impossible to define. To avoid litigation after the fact on whether a particular member should have been disqualified as having a relationship of the type delineated, we propose that the Chairman of the HSA and the SHCC be given the authority to determine whether or not a sufficiently substantial relationship exists to warrant disqualification, provided that he makes public disclosure of his determination.

NATIONAL COUNCIL OF
COMMUNITY HOSPITALS

Title II of S. 2410 would add a new Part G to Title XVI. Part G is intended to provide incentives for the closing of unneeded hospitals or hospital services. However, we doubt that it will have its desired effect, for three reasons:

1. The complicated bureaucratic process envisioned by this part is likely to deter hospitals from participating. The proposed provision would require the hospital to file an application and to obtain approval of the closing. As soon as a hospital files such an application it would immediately lose employees who would see the handwriting on the wall. It would not be able to operate its facility while the validity of the closing was being examined, and if the closing were not ultimately approved, it would be in difficult financial circumstances. For effective management, a hospital has to be able to rely upon payment; it cannot be expected to continue to operate while it is in the process of obtaining approval for its closing.

2. There is little management benefit in obtaining an incentive payment. The payment may be used only for certain specified services, which must be approved by local and state planning authorities and by the Secretary. This will entail bureaucratic hassle and delay. If the Government truly wanted to provide incentives that hospitals would find attractive, it should provide that the incentive payment is free of planning controls.

NATIONAL COUNCIL OF
COMMUNITY HOSPITALS

3. It is unclear, in that connection, whether the determination by the HSA of the need for the service to which the incentive payment would be applied (Section 1642(a) (2) (A)) is

Again,

a specific determination or one based on general plans.
as noted in the first paragraph, if the hospital can be assured
that it will obtain the incentive payment, it is more likely to
do the closing than if it must go through the review process in
each individual case. If a plan called for the construction of
new ambulatory care facilities, the hospital should be able to
obtain the money for that purpose without having to undergo
specific need determination.

4. The amount of the conversion payment, moreover, fails to provide any incentive. A hospital would be permitted only

50% of the reasonable cost of the conversion. This is hardly an incentive to do the conversion.

For there to be an effective program for closing facilities, the payment must be automatic upon compliance with certain conditions rather than subject to pre-review; it must provide an extra benefit to the institution rather than merely putting it in a break-even situation. And the program must be simple and self-triggered by the hospital.

CONCLUSION

I commend the Committee for delving into the intricacies of the Planning Act in an effort to improve the planning process, and urge the Committee to consider these amendments.

STATEMENT OF THE NATIONAL COUNCIL OF COMMUNITY MENTAL HEALTH CENTERS
ON RENEWAL OF HEALTH PLANNING AND RESOURCES DEVELOPMENT ACT (P.L. 93-641)
AND PLANNING AUTHORITIES UNDER SEC. 314 (d) OF THE CMHC ACT

This statement is submitted on behalf of the National Council of Community Mental
Health Centers (NCCMHC) representing 387 community mental health boards and centers
and some additional 287 agencies involved in the delivery of mental health services.
INTRODUCTION

The National Council of Community Mental Health Centers (NCCMHC) has in the past strongly supported the Health Planning and Resources Development Act (PL 93-641) as an important prerequisite to national health insurance and as a vital program to ensure development of effectively coordinated systems of health care delivery, having the potential to control health care costs. The program has not been in operation for very long, few health systems agencies are fully operational and state planning structure is in its infancy in most states. Therefore, NCCMHC supports an extension of the program at this time in order to give this newly initiated planning system an opportunity to fully develop so that in the future its impact on improving the delivery system and holding down unnecessary expenditures can be fully evaluated.

However, this support is qualified, because unless some changes can be made in the law to ensure that the process deals adequately with mental health needs and problems, the health planning mechanism of PL 93-641 may do more harm than good in ensuring effective, coordinated delivery of mental health systems.

Problems Regarding Mental Health Planning

There have been several studies regarding the effectiveness of mental health and related planning programs (such as planning for alcoholism, drug abuse and developmental disabilities), all of which demonstrate that the uncoordinated planning efforts now being conducted are duplicative, ineffective and frequently ignored once the plan has been drawn up. Attempts to coordinate private and public mental health services have been consistently frustrated.