Mr. EVERETT. As I have indicated, Dr. Haber will testify today and tomorrow we shall hear from Mr. John Quigley of the State soldiers home of Chelsea, Mass., representing the several State homes throughout the country. Next week we shall hear from the representatives of several of the veterans' organizations of the Nation.

Dr. Engle, we are always happy to have you. We certainly appreciate your attitude on nursing homes. When we first started these hearings 2 or 3 years ago, as you know, the policy with the Veterans' Administration was not the same as it is now under your leadership, and we certainly appreciate your positive approach.

You may introduce all of your staff present with you, if you please,

Doctor.

STATEMENTS OF H. MARTIN ENGLE, M.D., CHIEF MEDICAL DIRECTOR; PAUL A. L. HABER, M.D., DIRECTOR, EXTENDED CARE SERVICE, ACCOMPANIED BY J. HERBERT SMITH, DEPUTY ASSISTANT CHIEF MEDICAL DIRECTOR FOR PROFESSIONAL SERVICES; BERNARD KAUFMAN, REPORTS AND STATISTICS STAFF; AND R. P. BLAND AND J. H. KERBY, ASSISTANT GENERAL COUNSELS, VETERANS' ADMINISTRATION; ROBERT WISE, D.M. & S. BUDGET SERVICE; MARLIN BOWERS, MANAGEMENT AND EVALUATION; FRANK MAVRIDIS, MANAGEMENT CONTROL STAFF; AND HAROLD SADLER, CONSTRUCTION SERVICE

Dr. ENGLE. Mr. Chairman and gentlemen, it is a privilege to appear before your committee today. We have in attendance Dr. Paul Haber, Director of our Extended Care Service, who will present much of the detail of our presentation. Dr. Haber is here.

We also have in attendance Mr. Ray Bland, Assistant General Counsel, and Bernard Kaufman, of the Statistical Liaison staff, and others in the group who will be available to answer detailed questions, if necessary.

Mr. EVERETT. You may proceed, Doctor.

Dr. ENGLE. With your concurrence, it will be my purpose to make a preliminary statement and then ask Dr. Haber to go into detail on our program.

The story I have to tell you today is one of steady progress, of continuously improving performance, and of completion of one phase of our commitment to the care of chronically ill veterans. Last year I stated that we had made what I consider an acceptable beginning. This year I think we have proceeded with all deliberate speed to construct the programs and facilities to provide desirable levels of care for chronically ill and disabled veterans.

We have continued during the past year to activate nursing home beds within the Veterans' Administration. Today, we have 3,942 beds, and tomorrow we will have 4,000 beds available for occupancy by veterans who need this kind of care. These 4,000 beds will be dispersed throughout our system at 62 stations. We have modernized and made fit for specific nursing home use and occupancy, these bedspaces at a cost of less than $10 million which was appropriated for that purpose, averaging a cost of less than $2,500 per bed to refurbish and

equip each bedspace in line with modern progressive nursing home management.

As of this date, we have admitted over 5,400 patients from hospital beds, and by providing 1.3 million days of VA nursing home care, we have freed up a like number of hospital bed-days of care for more acutely 117 patients.

Over 1,400 skilled persons are employed in our nursing homes, and by concentrating our physicians in our general and psychiatric hospitals, we have conserved this scarce item of medical health manpower. We have given much of the actual workload to our professional nurses appropriate for nursing homes and ancillary health manpower without decreasing the responsibilities of our medical staff for professional surveillance on an as-needed basis.

Of great importance, in my estimation, is that we have found 14 percent of the patients admitted are able to be discharged from our nursing homes. This means that out of every 20 patients selected for nursing home care, on the basis that they had reached maximum hospital benefits, or that no further improvement could be expected, three did actually improve enough to be able to leave. I think this is attributable to the fact that our nursing home staff has high goals, high levels of skill, and high morale, and that this is then translated into high levels of therapeutic achievement for our patients..

The community nursing home program constitutes the second part of Public Law 88-450 and has also accomplished desirable goals in the past year. Today we have approximately 3,200 patients in more than 900 approved community nursing homes. We have 2,270 contracts with nursing homes having approximately 161,000 beds in 48 States and Puerto Rico.

Mr. EVERETT. How many patients do we have in private nursing homes over the Nation?

Dr. ENGLE. At the present moment we have 3,200 patients.

Mr. EVERETT. That is in the private nursing homes in addition to these 4,000 that you have in our own installation?

Dr. ENGLE. That is right, sir.

We have lost over 80 contracts in the past year. These canceled contracts represent only a small part of the basic problem we have in our rate structure, since what happens usually when a nursing home proprietor finds VA authorized rates insufficient, is that he simply does not accept any more VA patients and does not bother to cancel a contract.

In some highly populated urban areas, particularly in New York, Michigan, and California, we are not able to place patients who need care at the currently authorized maximum per diem rate of 333 percent of the cost of care in our general hospitals. As of July 1, this will be $12. As you know, it started out being $10.50, and last January we raised it to $11.50. Effective July 1, it will be $12.

Mr. EVERETT. Can you raise it any amount that you want to, or is it done by law?

Dr. ENGLE. Under the constraints of current law, Mr. Chairman, we can't raise it to a level that exceeds one-third the cost of care in our general hospitals.

Mr. EVERETT. What is the overall price that you now have for caring for patients? Around $40?

Dr. ENGLE. No; it runs around $34.

Mr. EVERETT. I see.

Dr. ENGLE. This contrasts with an average per diem in community hospitals which, according to a recent article, is running around $53 or $54. We recommend on the basis of this problem. Mr. Chairman, that the committee act favorably on the Administrator's legislative proposal, which is embodied in H.R. 7481, to amend the law to permit payment for contract nursing home care up to 45 percent of our general hospital cost rather than one-third. This will enable us more effectively to carry out this program in high-cost areas and to assure that veterans needing community nursing home care on transfer from VA hospitals will receive it as near their own homes as practicable.

We have forged a careful system of quality control and followup of our patients, and we are constantly striving to update and improve the assurance that these patients receive all the care they need, and that the program does not permit abuses of excesses in costs or deprivation of treatment.

This program of community nursing home care has enabled almost 15,000 patients to be placed in community-contract-nursing homes, and in this process we have freed up a total of 1.5 million days of hospital care. So that this, plus the hospital program, has freed up 3 million days of care that we can use for patients needing more acute

attention.

Mr. EVERETT. Doctor, how many patients do you have in the hos- ' pitals proper now over the whole system? You were authorized 125,000 beds, weren't you?

Dr. ENGLE. At this point in time we are running about 104,000 patients in hospital beds in our own system.

Mr. EVERETT. You have a long waiting line, haven't you, in most of the hospitals?

Dr. ENGLE. Well, there are waiting lists in some areas, but there have been progressive declines in waiting lists. We have a waiting list now of about 3,400 patients for medical and surgical care, and a waiting list of about 3,500 patients for psychiatric care. Just a few years ago we would run on an average of about 12,000 veterans awaiting care for medical ailments and something like about 8,000 or 10,000 for psychiatric ailments. The number of people who apply for hospital care has increased slightly each year for the last 20 years, but through better techniques, better turnover, and through other sources of care in the community, like through the medicare program, the overall impact has been lessening of numbers of patients in hospital beds. And one very major factor in this decline has been the nursing home program which has allowed us to give care in community nursing homes to the veteran population and allowed us to discharge patients and free these beds.

Mr. EVERETT. Mr. Satterfield and Mr. Hammerschmidt, any time you want to ask any questions, please do.

Let me bring up one matter that has been worrying me about nursing home care. That is, that you have to be admitted to a VA hospital before you can get into a nursing home. We have run into that in Tennessee and other States where you have long waiting lists and a man has to get into a hospital first before he can get any nursing home

care. We certainly want to develop some plan so that veterans can go directly to the nursing home without having to go through the hospital.

Dr. ENGLE. This has obviously been a subject of some interest to you, Mr. Chairman. Of course, we acknowledge that one of the intents, the basic intents of the legislation, 88-450, was to free up hospital beds for hospital patients and to give to the veteran who needed only nursing home care nursing home attention rather than having him tie up a hospital bed. In other words, it was to enable us to maximize the use of hospital facilities. And if veterans were admitted directly to a nursing home from the community, rather than from our hospital system, it wouldn't achieve that purpose. This is not to deny that many veterans need only nursing home care and are handicapped in securing this by the requirement that they must first be hospitalized in the VA.

We think that further experience might be of value in assaying the significance of this. We think it is a problem. We are not sure it is a very critical one at this moment.

Mr. EVERETT. I would like to get up some cost figures of how much more the cost would be to the Veterans' Administration to do that, because I realize that it would cost a lot more. What I mean is, more people would be admitted to nursing homes. I would certainly like your staff to develop that matter. Before the hearings are closed I would like to get into that phase and aspect of it.

Dr. ENGLE. The VA has no firm basis at this time for estimating the cost of a plan for admitting veterans directly for nursing home care. Mr. EVERETT. You are saying to a veteran out here, "Yes, John Jones got in the hospital and he got in the nursing home." But John Smith is equally as sick as he can't get in unless he goes to the hospital, and you have a long waiting line and it is going to take him 3 months to get into the veterans hospital. This is true in a lot of the hospitals that I am familiar with.

Mr. Hammerschmidt.

Mr. HAMMERSCHMIDT. On these contracts with private nursing homes, what lengths are they? Do you renew them annually? Dr. ENGLE. Well, I will ask Dr. Harber.

Dr. HABER. Our contracts are renewed when, in the opinion of the director of the clinic or hospital who has made the original contract, they need to be renewed. Whenever rates are increased, as we have had two increases in rates, these are automatically renewed. Whenever the nursing home requires a renewal, because they feel that their costs have gone up, this is accomplished.

The basic intention here is to make as little administrative headache for the nursing home operator who wishes to receive VA patients without permitting a boost of the potential deterioration of the nursing home without our supervision.

Mr. HAMMERSCHMIDT. Thank you. Do you enter into just an openended contract? Do they have a commitment to take so many veterans? I notice that your area of concern is where the nursing homes make more money by taking other patients and just don't notify you. Do you have any way to protect yourself?