be the Public Health Service's. And it would be merely choosing one of several sources by which it fulfills that responsibility. Mr. FOSTER. Well, as I understand it from that statement then it would be in your opinion within the scope of the present law for the seamen's hospitals to all be closed, and simply have the Department as the Veterans' Administration or some other agency which has the facilities, to, on a contractual basis, be of service to them. HEW would continue to get their appropriations and by contract pay it over to VA. This would not be a change of responsibility, this would not require a change of law or any reorganization plan. Is that correct? Mr. PALMER. This probably would be theoretically true, but from a practical point of view, in the five locations where the large Public Health Service hospitals are, the Veterans' Administration or no other Federal agency is in a position to provide that care with their facilities. And this is why, if the responsibility for the care were transferred to the Veterans' Administration, the five hospitals would necessarily be transferred along with it, to enable them to have the facilities to assume that responsibility. Mr. FOSTER. Mr. Hughes, in respect to S. 1917 you spoke to the constitutional question. Of course, your comment didn't go beyond that in terms of whether or not this in your opinion is constitutional. The objectionable provisions, as I understand it, from the standpoint of the executive, is that which relates to a requirement that no transfer be made or closure made without the consent of appropriate committees of Congress. Mr. HUGHES. Yes, sir. Mr. FOSTER. If that were stricken, that is, that portion of lines 4 and 5, on page 2 were striken, and the bill simply said that responsibility and function of providing the service may not be transferred or Public Health Service station be terminated, period, that would avoid that constitutional problem which you raise? Mr. HUGHES. It would avoid a portion of the problem; yes, that is correct. It would avoid the committee approval. Mr. FOSTER. It would avoid the constitutional problem you raised; is that true? Mr. HUGHES. I think that is correct. Senator BARTLETT. Why did you say it would avoid part of the problem then? Mr. HUGHES. I understood him initially to imply that this would eliminate our objection to the legislation and I didn't want that impression to be conveyed. I believe it would remove the constitutional problem as such. Senator BARTLETT. Oh, that isn't your only reason for objecting to the bill? Mr. HUGHES. No, sir. I indicated others in the statement. I don't know whether you have had a chance to examine it, but the House of Representatives passed a bill yesterday, military construction authorization bill, which contains a provision seeking a somewhat similar objective. Mr. HUGHES. Yes; that is correct. Mr. KENNEY. Is that constitutional, would you say? That provision roughly says that no installation shall be closed until the expiration of 30 calendar days of continuous session of Con gress following the date on which the details of the closure are reported to the committees. Mr. HUGHES. As to constitutionality, I would, I think, pass on that. I am quite confident the provision is objectionable to the Defense Department and to the administration. While it has somewhat the same effect as this, it is different in form. Mr. KENNEY. It doesn't require the reaching of an agreement. Mr. HUGHES. Yes. However, it also relates to the President's powers, constitutional powers as Commander in Chief, which this at least does not so directly do. And this affects somewhat the legal and constitutional status of the provision. Mr. KENNEY. I see. This bill would be free from those restraints? Mr. HUGHES. This does not affect, as I see it, the President's Commander in Chief functions under the Constitution. ? Mr. KENNEY. In other words, this committee could adapt the language in the House bill to constitutionally serve this purpose Over the objections of the Bureau of the Budget, of course, I mean? Mr. HUGHES. Constitutional language could be devised which would have somewhat the same effect. That is, the form could be constitutional with what would be tantamount to an unconstitutional result in terms of its effect on the ability of the President or the ability of the agency to act. Mr. KENNEY. Thank you. Senator BARTLETT. Mr. Palmer, do you happen to know or could you supply the committee with information bearing on the average cost to the Government of treating a patient for 1 day in a Public Health Service hospital, as compared with a VA hospital? Mr. PALMER. I can answer it in general now and, if you want it more specifically, I can correct it. Senator BARTLETT. General answer would suffice. Mr. PALMER. Roughly, they are in the same magnitude, in the neighborhood of $28 to $30 a day. There is no major difference between the cost. Senator BARTLETT. Thank you. We appreciate very much your appearance here under somewhat difficult circumstances. Thank you. Mr. HUGHES. Thank you, Mr. Chairman. We appreciate the opportunity. LETT. Senator BARTLETT. The next witness on S. 1917 is James Kelly. STATEMENT OF JAMES F. KELLY, DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE; ACCOMPANIED BY ELMER SMITH, SUPERVISORY OPERATIONS ANALYST, OFFICE OF THE SECRETARY; DR. G. P. FERRAZZANO, CHIEF, DIVISION OF HOSPITALS, U.S. PUBLIC HEALTH SERVICE; AND DR. LEO J. GEHRIG, CHIEF, BUREAU OF MEDICAL SERVICES, U.S. PUBLIC HEALTH SERVICE Mr. KELLY. My name is James Kelly, Deputy Assistant Secretary for Administration, Department of Health, Education, and Welfare. I am accompanied by Elmer Smith, Supervisory Operations Analyst. Office of the Secretary; Dr. G. P. Ferrazzano, Chief, Division of Hospitals, U.S. Public Health Service, and Dr. Leo J. Gehrig, Chief, Bureau of Medical Services, Public Health Service. The Secretary asked me to represent him this morning since I have worked closely with him on the problem of providing improved and more accessible medical care for Public Health Service beneficiaries. He asked me to express his appreciation that we were being afforded the opportunity of discussing our views on S. 1917, as well as the outlines of the Department's plan for changes in the general hospital system of the Public Health Service. We submitted to the committee this morning the Secretary's written views on the bill and I will not repeat them. I would like to mention the Department's plan, if I might. THE DEPARTMENT PLAN Last January the Department announced a far-reaching proposal to effect overall changes in the Public Health Service hospital system that were aimed at meeting several objectives. These are: 1. To provide more comprehensive and, therefore, better care for the patients served by the existing hospitals; 2. To provide such care at locations which would be more accessible to the patients needing medical services; and 3. To strengthen the medical and dental training programs that provide an important source of recruitment for the clinical service and national leadership positions within the Public Health Service. In addition to accomplishing these objectives, the plan will produce an estimated savings in operations of over $1 million annually to the Federal Government. These results would be achieved through changes in the pattern of medical care facilities and resources now used by the Public Health Service to provide care to its beneficiaries. These changes are designed to be implemented in stages over the next 3 or 4 years. Twelve Public Health Service general hospitals were operated during fiscal year 1965. The future plans for these institutions are as follows: (a) The five largest hospitals would be enlarged and modernized. Overall existing bed capacity of these institutions is about 1,900, and the plan anticipates an expanded capacity of about 2,400 beds, or an increase of approximately 20 percent. These hospitals are located at Baltimore, New Orleans, San Francisco, Seattle, and Staten Island. Wherever possible, close affiliations would be sought between these hospitals and university medical centers in order to strengthen training programs for medical and other health personnel. In addition, other steps would be taken both to expand the size of training programs and to bring about improvements in patient care services. (b) The seven smallest institutions are scheduled to be closed on the basis of the following timetable: Chicago and Memphis in fiscal year 1965; Savannah in fiscal year 1966; Boston, Galveston, and Norfolk during fiscal year 1967, and Detroit in either fiscal year 1968 or 1969. Patients now receiving care at these hospitals would in the future be cared for in other Federal or community hospitals. Under crossservicing arrangements American seamen would be cared for at the hospitals of the Veterans' Administration able to offer compre hensive care which is nearest the point where their illness is first identified. Active duty Coast Guard, Public Health Service, and Coast and Geodetic uniformed personnel and their dependents would, for the most part, receive care under similar arrangements in hospitals of the Department of Defense. Two categories of patients to be cared for at Federal expense in community hospitals are Bureau of Employee Compensation cases, that is Federal employees injured in the line of duty, and some dependents of active duty uniformed service personnel. Other patients, primarily retired uniformed service personnel and their dependents, will need to seek care in community hospitals at their own expense. The Public Health Service would continue to operate its network of outpatient clinics and offices, and, in particular, it would continue the operation of such clinics in the cities where hospitals are scheduled to be closed. These outpatient facilities would not only offer clinical services to ambulatory patients but would also act as referral points in arranging for the care of Federal beneficiaries under the cross-servicing agreements noted above. Both the Veterans' Administration and the Department of Defense have assured us that, under these contemplated cross-servicing arrangements, they will be able to offer on a timely basis the care needed by Public Health Service beneficiaries. Many studies and considerations contributed to the final decisions which are incorporated in the Department's plan. Among these were the findings that hospitals of less than 180 to 200 beds could not feasibly provide the comprehensive range of diagnostic and therapeutic services which are an essential part of modern medical care. Furthermore, these studies have also suggested that the training potential of the hospital system can be maximized in a system of hospitals of from 300 to 900 beds each which are affiliated with university medical centers. POSSIBLE CONFUSION OVER THE EFFECT OF THIS PLAN To date, hearings on the Department's plan have been held by the House and Senate Appropriations Committees, the Intergovernmental Relations Subcommittee of the House Government Operations Committee, and the House Merchant Marine and Fisheries Committee. During the course of these hearings, we became aware of the fact that confusion may have arisen in many minds concerning the effect of this plan. Therefore, we would like to clarify certain points which may needlessly be causing concern. The plan does not contemplate any transfer in the responsibility of the Public Health Service for the medical care of its designated beneficiaries. Instead, the more extensive cross-servicing arrangements that are called for are seen as an enlargement of the authority residing in the Surgeon General to make the optimum arrangements for serving the needs of these beneficiaries. The Public Health Service will retain responsibility for determining care needed by patients; arranging for such care; providing followup care through outpatient clinics, when necessary; and handling special items unique to its beneficiaries, such as fitness for duty slips required by American seamen. Similarly, the intention of the plan is not to diminish the scope or quality of care being provided these patients. Instead a deliberate effort is being made to offer better care to patients through the use of facilities which can offer more comprehensive services and which are more conveniently located to patients to be served. Furthermore, the primary purpose of initiating this plan is not economy. The savings involved are relatively small when compared with total Federal expenditures for medical care. We are pleased that the plan is less costly than feasible alternative arrangements, but we wish to emphasize that the primary purposes of the plan are related to the directive contained in President Kennedy's 1962 health message which requested the Secretary to develop a plan for providing more accessible hospital care to seamen and to recommend improvements in the physical facilities of those Public Health Service hospitals needed to provide such care. COMMENTS ON S. 1917 I have taken the liberty of providing this background statement on the overall aspects of the Department's plan in the hope that it will provide a framework for the comments contained in the report which the Secretary has submitted on S. 1917 which is now under consideration by this committee. Our understanding is that the bill attempts to place two limitations on the authority of the Surgeon General. First, it would prevent the partial or total transfer or assignment of the responsibility and function of providing care for those beneficiaries listed in section 322 (a) of the Public Health Service Act, without the consent of the committees of Congress. As noted above, the Department's plan does not contemplate such a transfer. In addition, we agree that under existing law such a transfer could not be made, except by act of Congress in amending present law or by a reorganization plan which would be subject to congressional review. Thus, we believe that no purpose would be served by this aspect of the bill. Second, it would require that the approval of certain committees of Congress be obtained to any proposal to terminate the provision of medical and dental services at any institution, hospital, or station of the Public Health Service. As you are aware, the medical care system of the Public Health Service is a complex network of facilities and resources. To insure its effective operation, a great variety of decisions must be made of both a professional medical and an administrative nature. We believe that Congress has wisely left these decisions to the discretion of the executive branch. There are many means already in existence to allow the Congress to assess the stewardship of the executive branch in carrying out its responsibilities for patient care. These include review of, and action on, budget requests; consideration of requests for new legislation; and special ad hoc reviews of program operations and plats. The special benefits of these devices and relationships are that they clearly establish complete responsibility in the executive branch to discharge its responsibilities and to efficiently utilize the authorities |