impact on the same geographical area were interpreted as duplication of service. Although previous HSA reviews have demonstrated a lack of primary care resources and even though no other HMO organizations currently exist or are under development in the area, the criteria usually applied to hospitals and nursing homes were applied to HMO development. The recommendation which the HSA staff initially made was that the two organizations merge and that the one organization be funded. The process of subarea and executive committee review yielded a different interpretation in which the objective of maximizing financial resources to the area became more important. The executive committee recommended that both independent organizations be funded. At the conclusion of the DHEW review, the regional office notified both organizations that it intended to fund only one organization. This action on the part of DHEW was apparently taken without notifying or consulting the HSA. The HSA executive committee met again and agreed to maintain its initial recommendation for the funding of both organizations. The process which Health Care Plan has undergone demonstrates clearly that many HSA's do not have appropriate staff expertise to deal with the unique issues of HMO development. The criteria outlined in the federal regulations are too general and can, in some cases, be misleading. There is a definite need for more specific criteria and for criteria which are relevant to the major issues being addressed by HMO development. 24 Valley Health Plan 441 West Street Amherst, Massachusetts 01002 F. Q. Rice Executive Director Valley Health Plan (VHP) is a HMO program grantee. In January 1976, VHP submitted its application for an initial development grant to the Western Massachusetts Health Planning Council (WMHPC) for review. An adversary relationship quickly developed between VHP and WMHPC. From this experience VHP's Executive Director drew the following conclusions: "1. 2. 3. 4. Neither the staff nor the sub-area advisory council understood anything in any depth about HMOs. What they thought they knew was erroneous or severely biased for the most part. Many of the consumer members of the council, reflecting the motivations that led them to volunteer in the first place, had strong social action agenda of their own. They could not accept any intrinsic value in an organization that valued fiscal solvency or saw its role as different from serving the poor as its top priority. Allied to this was the lack of pragmatism on the part of much Finally, I am afraid that the HSAs continue to be greatly Other Plans Blocked by HSAs The following organizations encountered serious planning difficulties with the local HSA during the grant funding process and have not become operational: 1. North Central Connecticut HMO 275 Broad Street Windsor, Connecticut 06095 2. The Gulf Coast Family Health 912 Convent Avenue Pascogoula, Mississippi 39567 3. Southwest Medical Plan Suite 1111 7430 Louis Pasteur Drive San Antonio, Texas 78229 4. Southeastern Montana Health Plan 2101 Clark Street Miles City, Montana 59301 Documentation of the problems encountered by these organiza tions is on file with HEW's Division of HMO Development, 5600 Fishers Lane, Rockville, Maryland. Senator JAVITS. Thank you very much, and thank you, Mr. Chair man. Senator CHAFEE. Thank you, Mr. Seidman. Next, we have Mr. Wisniewski, research director of the Service Employees International Union. We welcome you here. You have submitted your statement, I believe. STATEMENT OF STANLEY WISNIEWSKI, RESEARCH DIRECTOR, SERVICE EMPLOYEES INTERNATIONAL UNION, WASHINGTON, D.C. Mr. WISNIEWSKI. The statement that I am going to make represents the views of George Hardy, president of the Service Employees International Union (AFL-CIO) and Leon Davis, president of District 1199, of the National Union of Hospital and Healthcare Employees, Retail, Wholesale and Department Store Workers Union (AFL-CIO), and over 350,000 health care workers who are members of our two unions. Health planning as established in Public Law 94-641 supplies an orderly, rational approach to health resource allocation, but the interim period since the enactment of the Health Planning Law has not been problem-free. S. 2410 attempts to resolve some of these shortcomings and omissions. However, we feel that the proposed health planning amendments of 1978 could be greatly strengthened in several key areas. Our most immediate concern is with the proposed part G of title XVI, which seeks to assist and encourage the discontinuance of unneeded hospital services. As long as efficient utilization of all health care resources is the primary aim of the planning process, we feel that wasting health care manpower resources is incompatible with proper health planning. Yet the new program outlined in part G is almost totally insensitive to employment problems it may create. Section 1642(a) (2) of the proposed amendment only goes so far as to suggest to an institution considering closing its inpatient facilities that it may use some of the incentive payment received under the program to provide for severance pay, retraining, or placement services for workers who are terminated. Given the list of alternative uses available for the incentive payment, the possibility that workers would receive even these meager considerations seems remote. Indeed, even the proposed amendment ranks this consideration last in the order of spending uses permitted for the incentive payment. Workers deserve a better break. The health care system deserves better planning than this if it is to claim efficient utilization of available health manpower. Voluntary severance pay schemes and tenuous promises of retraining are not acceptable manpower strategies in the health care industry any more than if these were the only approaches used nationally to deal with unemployment problems. It is about time that we realized that proper mannower planning in the health care industry means not only stimulating the supply of trained personnel when shortages exist, but also means dealing respon sibly with dislocations and temporary maldistribution problems when they occur. Part G of the proposed amendment should require more than just an evaluation of the impact on discontinuing services on the provision of health care as suggested in section 1642 (b) (2). We feel that an evaluation of the impact on the local economy ought to be required as well, with special attention devoted to the negative employment effects of proposed hospital closings. Such a requirement would bring health planning legislation into conformance with national employment goals and provide coordination of purpose with Federal manpower policy efforts. To that end, we recommend that section 1642 (b) (2) be amended by adding to that section the following: and an evaluation of the manpower effects of such discontinuance or conversion on health care manpower in the health service area in which such hospital is located. Evaluations of the manpower implications of discontinuance of hospital services should focus on, but not be limited to, an examination of the degree of potential unemployment and the costs of such unemployment to the health service area as reflected by unemployment insurance costs, tax revenues foregone, public assistance costs, retraining and/or relocation costs. Evaluations of the manpower implications of conversion of hospital facilities where no permanent unemployment is anticipated should focus on, but not be limited to, an examination of the costs of temporary unemployment associated with the lag between termination of old services and initiation of new services. Measures for dealing with the involuntary unemployment problem must be improved. The methods suggested in part G of title XVI would be inadequate if utilized, and further, there is no certainty that institutions would in fact expend moneys received as incentive payments in this manner. Therefore, we strongly urge the addition of another type of incentive payment which would be earmarked for handling potential unemployment problems. Part G of title XVI should be appropriately amended to establish an incentive payment to other hospitals in the health service area which are willing to accept displaced hospital workers in their facilities. This should be a reasonable incentive structure that, coupled with a strict attrition program, would, within a reasonable period of time, return the hiring institution to appropriate levels of staff. Tying the incentive payment structure to a strict attrition program would prevent permanent overstaffing. Furthermore, where immediate placement in other facilities in the area is impossible, these incentive payments should be expended for retraining and assisting displaced workers secure other suitable empolyment. These proposals would not totally remove the negative employment effects of discontinuing hospital services but would represent a positive program for efficient utilization of health manpower within the context of national employment goals. With respect to other portions of the bill, we heartily support the additional staff requirements listed in section 105 for health systems agencies, to assure expertise in financial and economic analysis and public health and disease prevention. The full potential of HSA's as planning instruments can only be realized if proper analysis of the economic impact of various health care decisions is carried out and if HSA's concentrate on plans for |