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would he be capable of occupying a position at the head of these combined activities if he would attempt to disrupt an efficient organization as it now exists, and he certainly would look for a way of bringing those things dealing with the same problems together, avoiding duplication and taking advantage of some particular set-up in doing the thing in one of the other agencies that are probably doing it better than we are doing it in the Veterans' Bureau.

So, at the inception of it, if I had anything to say about it, and I think I might speak for any reasonable man on the subject, most certainly I would bring the organizations further together somewhat along the lines I have indicated on this chart.2

First, let us take your pensions. Now, while the Pension Bureau is dealing to-day with the pensions of the Civil War and the Mexican War and the Spanish-American War, and I believe they have actually to do with one or two special pension bills passed for World War men, the time will come when they will have undoubtedly an added load of World War men.

Committees of Congress this year are considering the very question of eliminating or modifying, either by presumption or otherwise, the great obstacle we have in handling claims before the Veterans' Bureau, and that is the question of service connection. When you take the service connection out of the World War veterans' law you have adopted a pension. You can dress it up in compensation clothes, if you want to, but it is a pension.

So to assume that by bringing these agencies together you would abolish the Pension Bureau, or absorb it in some other division of the Veterans' Bureau, would not be good administration. It should be set up and continued and it should be taken in as one of the main divisions of the new organization, including those things that pertain to pensions and those other things that are voted from time to time dealing with the veterans' problems that are in the nature of pensions. We have one proposition now in the Veterans' Bureau, a benefit that is after all a pension, in the statutory award of $50 that is given for arrested tuberculosis for the rest of a man's life. That award does not change after it is once granted. It is a permanent disability. Only when those cases come up for review, that is, when we have that disability in combination with other disabilities is there any further consideration.

Mr. SCHAFER. You could not put a $50 arrested tuberculosis case under the pension section because many hundreds of those cases have become compensation cases; they reactivate.

General HINES. That is true, under those circumstances. I am speaking of those on a permanent status. We have those problems, and the Congressman's remark just illustrates one instance where there is interwoven a very close line between pensions and compensation.

In the soldiers' home problem, as I stated, they have a big problem of domiciliary care, and one of hospitalization. It is essential for the men who are in need of hospital care that they be put into a hospital. There is a vast difference between hospital care and domiciliary care.

1 See p. 207.

One of the items that I refer to as a saving is that of the probable construction problem of the future, a saving that might result if these agencies were coordinated.

I might illustrate that better, probably, by taking this example. It has been estimated that there are approximately 1,000 veterans in our hospitals suffering from mental and nervous disabilities, particularly mental disabilities who require custodial care and who are no longer in need of hospital treatment. They require good housing, good supervision, and good food. That is domiciliary care. Accordingly, if these patients were transferred to soldiers' homes or taken into soldiers' homes, the hospital beds thus evacuated would be equivalent to a saving of $3,500,000 in new hospital construction, based upon a cost of $3,500 per bed, or based upon the difference in the cost of the cases for hospital care and domiciliary care.

A much greater saving would undoubtedly accrue through the addition of domiciliary facilities to existing veterans' hospitals, instead of establishing such accommodations in new locations.

We had a very striking example of that recently. In the State of Indiana there is a soldiers' home at Marion. The last construction bill authorized the construction of a new veterans' hospital in that State. Undoubtedly the facilities at Marion could be extended. That is a soldiers' home, but it is practically, to all intents and purposes, a large percentage of it, a hospital. A further extension of those facilities in lieu of the new unit would undoubtedly have resulted in economy, so far as construction goes.

Looking into the future somewhat, the committee know there is a great lack of soldiers' homes in the southern section of our country. In the South, at the present time, there are but two national homes, as compared with numerous veterans' hospitals conveniently located within that general area.

It will be necessary to have them there. The Veterans' Bureau is constructing hospitals there, and there will always be hospital units needed in those areas, but the greater problem in the future will probably be domiciliary care. So the construction of those additional plants would undoubtedly result in a large saving by the-construction of barracks.

Mr. SCHAFER. Would that not also result in a saving in this respect. In some of these Southern States you are constructing Veterans' Bureau hospitals, and if you also construct domiciliary barracks you would reduce the cost of care in hospital cases, because if you have those domiciliary barracks connected with the hospital, after the veteran's treatment had reached such a stage that further hospital care was not needed, during the convalescent period he could be transferred to the domiciliary barracks in the same institution, which everyone knows probably can be operated for a great deal less than a hospital, and therefore it would assist the Veterans' Bureau to reduce expenses.

General HINES. The Congressman is right about that, and I have here a little data on that point which I will put in as I go along.

The National Home for Disabled Volunteer Soldiers has estimated that the membership of that organization will approximate 63,000 by 1953, which is an increase of approximately 36,000 over the number now on its roll.

Further, it has been determined that the population of the Southern and Southwestern States is approximately one-fourth of the entire country. Applying this per cent to the estimated increase of 36,000 members, we may expect in 1953 an average increase of 9,000 members from this area, that is, in the Southern and Southwestern States.

The cost per bed of adding facilities to an existing institution will, for obvious reasons, run approximately $1,000 less than the cost per bed at a new hospital. Accordingly, for those 9,000 members, rather than building hospitals, if we add to the existing plants the Veterans' Bureau plants, the cost is less than building a new plant by all of $1,000 and there is an actual saving of $9,000,000, covering the 9,000 additional members.

Still another possible saving would result in certain States through enlargement of an existing institution instead of erecting a new hospital. An example of this is found in the case of Indiana where authority has recently been granted by the Congress for erecting a veterans' hospital. The Soldiers' Home has a branch at Marion, Ind., approximately 69 miles from Indianapolis, and, if that branch were under the control of the Veterans' Bureau, the chances are that it would have been developed to meet the bureau's requirements in that State, instead of erecting an entirely new hospital at another location.

You have another example at Hampton, Va., where there is a soldiers' home and a large acreage of ground, with many of the buildings suitable for barracks. They have a suitable hospital, and it would manifestly be advantageous to have the home used for that purpose. The contention is going to be made later that there should be a new hospital in Virginia to add to those facilities in order to meet the problem. But if we could do as I suggested we could meet the problem in that way.

I estimate an annual saving approximating $1,500,000 in administration expenses as the result of this proposed consolidation.

As to these items, of course, as I stated, it was a broad estimate, but I am sure I can point out the facts to the committee in sufficient detail to show the possibilities, and I still feel that it is a very conservative estimate.

For instance, we have a regional office located at Los Angeles. We also have one at Milwaukee, in Congressman Schafer's district. Both of the soldiers' homes at those points are so located that they offer a proper location for a regional office. The rentals and the administrative costs of those two units, by the combination, would result in a saving of $55,690 per annum.

This computation is based upon the actual experienced savings accruing at Portland, Oreg., where a consolidation of a regional office and a hospital has been effected. Of course, we have not consolidated with any soldiers' home because that is not possible at the present time.

There are presently hospitalized in Veterans' Bureau hospitals approximately 1,000 patients who require custodial care rather than actual hospital care. So by the transfer of these patients to a domiciliary status an average daily saving amounting to $1.91 will be made. This saving represents the difference between the average per diem cost of $2.91 in Veterans' Bureau hospitals of that type and the domiciliary average rate of $1 experienced in soldiers' homes

over a period of five years. The annual aggregate saving involved will approximate $697,150.

By consolidation of the Pension Office and the soldiers' homes with the Veterans' Bureau certain finance, statistical and mail and records activities will be absorbed, that is activities that would be common to these agencies. It is known that the greater part of these activities can be absorbed without increasing appreciably the number of employees now engaged in this type of work in the Veterans' Bureau. This, it is estimated, would result in an annual saving of $200,000 a year, conservatively figured.

The addition of domiciliary barracks to existing Veterans' Bureau hospitals in the southern and southwestern area to care for the future anticipated domiciliary load in those sections would allow the employment of such members in certain capacities on the same basis as now prevails in the Soldiers' Home. This would entail a considerable reduction in salary expenditures compared with present costs where the Veterans' Bureau is required to employ full-time local labor for these services. The amount which is anticipated as a saving by this action is computed at $400,000 per annum. I am giving you these estimates as I see them.

I also invite your attention to the fact that by the addition of domiciliary barracks to existing Veterans' Bureau hospitals a considerable, although undetermined, saving will be made in travel. In other words, it may be assumed that a man in Texas who is in need of domiciliary care would now be required to travel to Johnson City, Tenn., or Marion, Ind., whereas, if domiciliary barracks were erected at the Veterans' Bureau hospital, Legion, Tex., the amount necessary for travel would be negligible in comparison. Due to the anticipated growing load of domiciliary cases the amount of saving so made would increase materially each year for a long period of time.

You have asked that I indicate to you the breakdown of the appropriation for the Veterans' Bureau so you may have some comparative costs.

The appropriation for 1930 for the Veterans' Bureau was $499,975,000, which may be divided as follows: Administrative expenses, administrative salaries, $15,649,239, which is 3.1 per cent of the total; printing and binding, $125,000, which is 0.03 per cent of the total; other administrative expenses, which includes expense items such as stationery, motor vehicles, telephone and telegraph, $2,806657, which is 0.056 per cent of the total.

That is to say, the total of what might be termed "overhead" is $18,580,996, and the percentage of the total of that amount is 3.72

per cent.

The direct expense, including items for salaries and medical and hospital cost-that is, the load that can not be controlled except by the patients' load in our hospitals-is $25,044,000, and the percentage of the total is 5.01; medical and hospital cost, $31,650,000, which is 6.33 per cent of the total; military and naval compensation, $191,450,000, which is 38.29 per cent of the total; adjusted service certificates fund, $112,000,000. That is an appropriation made annually to be invested in the fund for the adjusted service certificates, or the bonus, and that is 22.42 per cent of the total; insurance, $115,050,000, which is 23.05 per cent of the total; construction, which is an appro

priation which follows the authorization bills, for that year was $6,000,000, which is 1.2 per cent of the total.

The total direct expenses, that is, whatever goes directly to the benefit of the veterans, was $481,384,004, which is 96.28 per cent of the grand total.

Mr. DALLINGER. You do not mean that $481,000,000 went to the service men?

General HINES. That went to them either as military or naval compensation, it went either to the redemption of this bonus, that is, into the fund for the redemption of the bonus, or was paid for salaries of medical men in regional offices and hospitals, all of which is for the direct benefit of the veterans.

Mr. DALLINGER. Including some salaries. What I would like to know would be what percentage of the total appropriation for the Veterans' Bureau was actually paid to the veterans. The balance, of course, would be the expense for administering it.

General HINES. You mean as compensation or insurance?
Mr. DALLINGER. Yes.

General HINES. This table will give it to you. The amount for military and naval compensation is 38.29 per cent. That is straight for compensation. The adjusted service certificate fund, which, of course, goes directly to the veterans, is 22.4 per cent. Then you would add insurance, which is 23.05 per cent. For the running of the hospitals the amount is 6.33 per cent.

The only item left out of there would be salaries of medical officers in hospitals, and, of course, you could not run them without those salaries, which properly should be included, I think. The direct expense, Congressman, that goes to the veterans in the way I have indicated amounts to 96.28 per cent.

Mr. DALLINGER. But that includes some salaries.

I

General HINES. It does not include administrative salaries. have excluded that. I have included as administrative expense the salaries of the administrative officers, printing and binding, the travel of employees, stationery, telephone, and telegraph. At least part of the expense of telephone and telegraph could probably be charged to the operation of the hospitals. That whole total is $18,580,996.

Mr. STONE. How much rental is paid out each year by the Veterans' Bureau for quarters in the United States?

General HINES. That amount is $807,511.96.

Mr. SCHAFER. In giving those insurance figures you only included the direct appropriations from the Federal Treasury; you did not include the premium payments that the veterans have paid in.

General HINES. No. Of course, now the term insurance has expired so the Government makes an appropriation for two purposes each year, one to liquidate the liability established under the term insurance over and above what has been paid in as premium, that long since having been wiped out, and the balance to be transferred to the converted insurance fund, which is a self-sustaining fund in those cases where a man dies of a service-connected disability; that is, his disability and death are chargeable to the war hazard. That fund is reimbursed each year and those costs are running now at

See page 214.

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