Page 2 health planning agencies in our health service area prior to Public Law 93-641 and the concept of a regional, comprehensive health planning is one that takes time, great care and delicacy to sell. In terms of innumerating specific successes of our. Agency we feel that the very fact that we have a health system agency organized with nine (9) subarea health planning councils actively participating with us is no small success in itself. Between the 30 persons on our Board and an additional 215 or so subarea health planning council members and probably another 100 or 200 individuals who are working closely with the local health planning councils and our Board, we feel that we have a very strong, active, committed nucleus. They are adopting the concept that looking at our health care problems and needs in a systamatic, rational and thorough manner will benefit the citizens they represent. We believe that we have quite strong relationships with our 18 county courts or commissions as well as with the health care institutions in our health service area. We have completed our health system plan, are moving towards the completion of our annual implementation plan and expect to begin to do selected project and Certificate of Need reviews within the next two months. We feel strongly that if this very delicate and fragile mechanism for improving the health of citizens is to succeed we must have sufficient resources. We are encouraged by the effort of Board and staff members from the minimally funded rural HSAs coalescing around the unique problems but exciting potentials of the minimally funded and rural HSAs. Our Board of Directors have not met as a body to discuss this position paper but on behalf of the Board, I believe that the principals stated in the position paper reflect our Board's concerns and expectations about the role of our health systems agencies and the necessary resource support for them. I can not supply you with names of Board members who are able and willing to testify before committee hearings but will try to determine their availability when we meet as a Board. Thank you very much for your iniative and commitment to represent us at the hearings scheduled in Washington. If there are any questions or concerns that you have or any request for additional information, please don't hesitate to contact us at: Eastern Oregon Health Systems Agency, 1037 North 6th, Redmond, Oregon 97756, or telephone area code 503 548-5185. CC: Richard L. Brownrigg, M.D. Sincerely, Jaimen A Carlson James H. Carlson, President Agency We agree with the position as outlined in the position paper from your agency A copy of the 1976-77 Annual Report which includes listing of Committee Miss Mary Storm (114A W. Church St., Frederick, Md. 21701 301-662-8266) and Sincerely, Sterling & Bollinger, Sehen Sterling Bollinger, Sr, President CC: Senator Charles McC. Mathias, Jr. Representative Goodloe Byron Senator SCHWEIKER. Next we will hear from a panel representing the Washington Business Group on Health, Mr. Richard Martin and Mr. John Brown. We will put your full statement in the record, Mr. Martin, and you may go ahead and highlight it. STATEMENT OF RICHARD MARTIN, MANAGER, HEALTH SERVICES INDUSTRY RELATIONS, GOODYEAR TIRE AND RUBBER CO., AKRON, OHIO; JOHN BROWN, DIRECTOR OF EMPLOYEE BENEFITS, GENESCO, INC., NASHVILLE, TENN.; AND WILLIS GOLDBECK, DIRECTOR, WASHINGTON BUSINESS GROUP ON HEALTH, A PANEL Mr. MARTIN. Gentlemen, my name is Richard Martin. I am the manager of health services industry relations for Goodyear Tire and Rubber Co. in Akron, Ohio. With me today is John Brown, director of employee benefits, Genesco, Inc., in Nashville, Tenn. Also, Willis Goldbeck, director of the Washington Business Group on Health is here and would be happy to assist in responding to any questions you may have. We are representing the Washington Business Group on Health, an organization of more than 150 major employers having serious concerns for the quality and cost of health care. More specifically, we are here because we both serve with our respective health systems agencies. I am the president of the Summit-Portage County HSA in Akron, and John Brown is vice president of the Board of the Middle Tennessee HSA in Nashville. Let me state clearly that we do not, as some have recommended, seek the repeal of Public Law 93-641. Rather, we seek a strengthened and improved health-planning law. Our own experience and the position of the WBGH support the health-planning system. I want to ssure you that we do not take our position casually or base it upon naive hopes. No system which is national in scope and comprises hundreds of new organizational entities will be perfect. No matter what amendments are passed, 10 years from now those who would rather see planning fail will be able to present isolated horror storie. to support their position. We do not want to see planning fail. As business people, we have taken the position that the only responsible way to make health planning truly reflect our local needs is to make a major commitment to working within the system for its improvement and implementation. Business supports health planning for several reasons: One: If properly conducted, it is local planning. Two: The rising cost of health care, of which we are all so well aware, forces us to look inside the system for changes. This is especially true at a time when so many of our Nation's resources are increasingly limited. It is inconceivable to business people that $160 billion segment of our economy would or should be totally devoid of planning. The waste in our health system costs us billions of dollars annually which could otherwise be applied to our very real health needs. Three: As private businesses, we desire to keep our health system in the hands of the private sector to the greatest extent possible. We believe long-term solutions can only be achieved by a cooperative effort of the public and private sectors. The health-planning system is a vehicle to work together toward our common objectives. Four: It makes sound economic sense for business to become directly involved with the HSA. No matter how much our individual companies spend on health benefits and programs, in most locations we do not have the size and strength to reorder the delivery system by ourselves. Therefore, and quite appropriately, we must work with labor, with other employers, with local government, and especially with the providers. In my community, the HSA represents a good case study of the accomplishments which can be derived from health planning with strong support from the corporate community. Financial support has been received from the local rubber companies. The following chart shows the results of the HSA project review process. [The material referred to follows:] Although the HSA's primary function is frequently viewed as saying NO, substantial savings can be made even when all agree that expansion is needed. Mr. MARTIN. Although the HSA's primary function is frequently viewed as saying "no," substantial savings can be made even when all agree that expansion is needed. A 600-bed hospital received approval for a major modernization and expansion project. The HSA and hospital worked together for 1 year to jointly plan for this needed project. An agreement was made that the hospital would reduce manpower by 63 full-time equivalents in 1979 and reduce the average length of stay by 1 day. Result: Savings of $7,750,000 over a 10-year period. Public attention is drawn to the capital expenditures that receive or are denied HSA approval. However, in the long term, it is often the project-financing method which produces the greatest cost, or saving. A 500-bed hospital proposed construction of an ambulatory care center at a cost of $7,127,000. The proposal included refinancing of current debt as well as the new debt at 9.75 percent interest. The HSA negotiated with the hospital to investigate financing alternatives. The hospital withdrew the project and developed a new financial plan which did not include refinancing of current debt and scaled down the project to a cost of $6,733,000. Result: Capital savings, $394,000. Dollars saved over 10 years due to new financial plan resulted in a saving of $12 million. The hospital has also agreed to provide the HSA with the following: A quarterly report on construction progress and costs; a quarterly report on utilization of services; a total construction cost that will not exceed $6,733,000; a progress report on efforts to reduce the average length of stay by 1 day by 1978. 5. Finally, we support planning because we know it can work. We have seen planning make, in its very short life since Public Law 93– 641 was signed, substantial progress. We look at the alternatives and we see only two-chaos or evermore stringent Government controls. Neither is acceptable. Both can be avoided. After a period of skepticism, the WBGH is being deluged with requests by HSA's for assistance in obtaining business participation. The reason for this new interest is simple. Those HSA's with strong business participation have found that the business people are, in general, excellent consumer representatives. Business can and should sit with labor as vocal consumer advocates. Business brings to the HSA management expertise, potential economic support, technical backup by the company in such areas as computer services and economic analysis, and the business people working on an HSA can serve as the natural conduit to other employers in the community. We offer a variety of recommendations, some of which are general, while others are keyed specifically to S. 2410. First. Cost effectiveness should be specifically stipulated as a criterion for certificate of need review. We are concerned with the reports that HMO's and other forms of prepaid group practice are being unduly restricted because their potential cost effectiveness does not receive adequate consideration. Second. We support an increase in the consumer majority on HSA Boards. While there is no perfect number, reports from HSA's indicate that the current 51 percent frequently is not reflected in decisionmaking meetings. As business and labor increasingly are asked to participate, we do not desire to replace any other qualified consumers or to create a false division between business/labor consumers and unaffiliated individuals who are also serving as consumers. Third. The planning process should cover all acute care facilities including Government hospitals. The fact that their patient population may come from a broader area than the HSA jurisdiction should be considered, but should not be an excuse for total exemption from the planning process. Fourth. We oppose any legislative mandates concerning the categories of public officials or providers which must severe on HSA Boards. Fifth. We support fully funding the HSA's at their authorized levels. Sixth. We support the inclusion of public health, and prevention as required HSA staff skills. |