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HEALTH / PAC Health BULLETIN Policy Advisory Center No. 68 January February / 1976 1 The Malpractice Malpractice Crisis Crisis Crisis: EVASIVE MEDICINE. Insurance economics creates an immediate crisis, while doctors, hospitals and the larger economic system exacerbate its underlying causes. 8 Overbedding the Suburbs: THE GRAFT GROWS GREENER. Medical entrepreneurs use political influence to build hospitals in the suburbs of Washington, D.C. 14 Peer Review 18 Vital Signs The Malpractice Crisis MEEVDAISCIIVEN EE vading Evading the root causes of a social problem is perhaps a natural reaction for those whose careers and mind - sets would be put at risk by facing up to them. When those same peo- ple are in a position to channel public discus- sion of the problem - even to determine the public's conception of what the problem is- the possibility that the larger society will ef- fectively deal with the problem is sacrificed for the sake of particularistic interests. And ultimately the unaddressed problem will in- evitably reassert itself in even more insidious forms. Something like this process seems to be unfolding in relation to the medical malprac- tice issue. Long developing - signals of discon- tent from the patient population - aided and " Bill Plympton abetted by bench and bar only - became a " crisis " when an economic threat to profes- sionals and institutions erupted. Then those with the power to define the crisis presented it almost entirely in terms of the insurance industry, the legal profession and the judicial system. Problems of the medical profession and the health - care system themselves have been acknowledged only glancingly, if at all. What follows will consider the profession's and the system's reactions to the crisis, sur- face and subterranean, and will attempt to glean those underlying causes that have been so elusive to public debate thus far. The Triumph of Economics What gave the medical malpractice prob- lem the status of a blown full - crisis in the eyes of the medical profession - and, through its reaction, in the public eye had - less to do with malpractice claims per se than with the price hiking - and withdrawal tactics of the malpractice insurance carriers. Those tactics Problems of the medical profession and the health - care system themselves have been acknowledged only glancingly, if at all. in turn were as much a reaction to the plum- meting of the stock market as to the escala- tion of malpractice litigation. (The 1974 bear market removed what for many insurers had been the incentive for entering the malprac- tice field: The so called - long tail - the long lapse of time between the paying in of a malpractice insurance premium and the pay- ing out of a settlement or judgment - allows for a handsome profit on investment during a bullish market.) The fact that economics more than medi- cine was the immediate catalyst of the crisis helped the medical profession initially to ig- nore the medical issues underlying malprac tice claims; at the same time, however, the profession's outraged reaction to the carriers ' conduct put it in the anomalous position of attacking economic behavior that simply re- 2 flected a set of free market - incentives that it had long found it in its interest staunchly to defend. The 1975 physicians'strikes then saw large segments of the profession launching into the further circularity of exercising their own freedom to withdraw their services in an at- tempt to rectify the effects of the industry's unseemly withdrawal. That tactic created still another incongruity, namely the specta- cle of a profession that had long argued that the least government is the best government demanding that state governments take an ac- tive role in the economics of medical practice. The Intersection of Economics and Medicine While the 1974 bear market wrought havoc with the reserves of all kinds of insurers, one characteristic of the economics of profes- sional liability insurance made it a particu- larly unattractive business. Here the profes- sion found it hard to avoid some consideration of problems of medical practice, for those economics made a direct connection between escalating premiums and disappearing in- surers and the profession's traditional, if weakening, resistance to any limitation of its members'freedom to practice any and all forms of medicine, subject only to the laws of supply and demand. That stance became a problem for the insurers - and thus eventually for the physicians - because their risk spread- - ing base of physician - insureds, unlike the broad base provided by their life insurance or auto insurance customers, is dangerously narrow. Thus a relatively small number of malpractice settlements or judgments, unlike a small number of deaths or auto accidents, can throw a carrier's loss experience for an untenable loop. That relatively small, though economically threatening, number of payments may repre- sent an even smaller number of physicians: A study of malpractice suits filed in the tri- county Metropolitan Detroit area over the five year - period 1970 through 1974, for exam- ple, showed that 2.1 percent of the area's physician's - those sued more than once - ac- counted for 46.2 percent of the suits. (1) The single infamous case of Dr. John Nork in Sac- ramento, with its $ 3.7 million jury verdict, alone accounted for 12 percent of the Cali- fornia losses of American Mutual Liability Company, the unlucky carrier. (2) Moreover, those physician defendants - threatening their insurers'economic security were not necessarily totally incompetent - as Dr. Nork apparently was - but might be un- qualified to perform certain complex proce- dures and unwilling to admit their limitations. Thus a study by Empire Casualty Company of Denver of its 72 largest settlements and judgments over a 15 year - period found that " Some of the biggest payouts... were for physicians who overestimated their ability to do such things as treat compound fractures, read X rays -, handle difficult deliveries, or per- form special surgery. In each case, prompt referral to, or consultation with, an appropri- ate specialist could have forestalled a mal- practice claim. " (3) The inherent instability of medical mal- practice insurance was not a problem for the industry (or, by extension, the profession) when malpractice suits were a relative rarity and their success even more rare and / or when a bullish stock market was inflating the carriers'reserves. The increasing willing- ness to sue of the patient population and its allies at the bar and the increasing willing- ness of the judiciary to ease the legal bar- riers to a successful suit, when combined with the decreasing viability of the stock mar- ket, left a traditionally important segment of the profession hoisted on its own petard. Those physicians, that is to say, who had stoutly defended the inviolability of the li- cense to practice from limitation or reexami- nation found that the incompetence, absolute or relative, of some of their brothers was mak- ing that stance more expensive than they had ever foreseen. Thus some elements of the profession, with much encouragement from the insurance in- dustry, (4) have moved from economics to medical care to the extent of beginning to sup- port legislative measures aimed at strength- ening regulation of physicians. That devel- opment augurs for an increase in the intra- professional split between primarily office- based generalists and primarily hospital- based superspecialists and for a boost to the already increasing power of the latter. The elite of the profession can well afford to rec- ognize the economic and public relations - dis- advantages of incompetents, absolute or rel- ative, practicing medicine and in fact stand to reap economic benefit from a reduction in competition from generalists practicing their superspecialized skills. The Triumph of the Institution Shifting the scene from the office to the institution, however, presents the profession- here joined by the hospitals - with another problem that it would prefer not to confront. American medicine has always proudly ex- hibited a bias toward high technology - treat- ment, toward inpatient hospital care and to- ward surgery. Given that an estimated 74 percent of incidents that become malpractice claims occur in hospitals and that about 57 percent of such incidents involve surgery, (5) the always questionable cost benefit / ratio of that bias is finally - in the short term at least hurting - physicians and hospitals as much as their patients. (While those statistics to some extent reflect the incompetence, ab- solute or relative, of surgeons, (6) they un- doubtedly also reflect the environmental risks unique to hospitals, the potential defects of technology available only in hospitals and the potential for harm inherent in any surgi- cal procedure.) Physicians'and hospitals ' malpractice insurance premiums might be lower, that is, if they had heeded the charges made by critics of the system that it is fraught with unnecessary hospitalization and unnec- essary surgery; their reason for evading that issue of course is that their incomes would be lower as well. So while at least passing concern is ex- pressed for the problem of medical incompe- tence, the problem of inherent systemic risks Published by the Health Policy Advisory Center, 17 Murray Street, New York, N.Y. 10007. Telephone (212) 267-8890. The Health / PAC BULLETIN is published 6 times per year: Jan./Feb., Mar./Apr., May June /, July Aug /., Sept./Oct. and Nov./Dec. Special reports are issued during the year. Yearly subscriptions: $ 5 students, $ 7 other individuals, $ 15 institutions. Second - class postage paid at New York, N.Y. Subscriptions, changes of address and other correspondence should be mailed to the above address. New York staff: Barbara Caress, Oliver Fein, David Kotelchuck, Ronda Kotelchuck, Louise Lander, and Steven London. San Francisco staff: Robin Baker, Elinor Blake, Thomas Bodenheimer, Dan Feshbach, David Landau, Ellen Shaffer. S.F. office: 558 Capp Street, San Francisco, Cal. 94110. Telephone (415) 282-3896. Associates: Robb Burlage, Morgantown, W.Va.; Constance Bloomfield, Desmond Callan, Nancy Jervis, Kenneth Kimmerling, Howard Levy, Marsha Love, New York City; Vicki Cooper, Chicago; Barbara Ehrenreich, John Ehrenreich, Long Island; Judy Carnoy, Carol Mermey, San Francisco; Susan Reverby, Boston, Mass. BULLETIN illustrated by Bill Plympton, Health Policy Advisory Center, Inc. 1976. is not only ignored but flouted. For there ap- pears to to be a movement, inspired by vari- ous ramifications of the economics of mal- practice insurance, toward increasing num- bers of physicians relating to an institutional base in preference to a solo private practice. There are, for example, the repeatedly re- ported cases of academic physicians giving up their part time - private practices because their increased malpractice premiums (which fail to distinguish between full time - and part- time practice) make such practices hopeless- ly uneconomic to maintain. There is the ad placed by a medical employment agency in which the inducement " Free Malpractice " ap- pears in type twice as large as the induce- ment " Med School Affiliations. " (7) There is the report from the Defense Department that the incentive of malpractice insurance as a fringe benefit is bringing the armed forces record numbers of applications for medical commissions. (8) Or there is the announce- The incentive of malpractice insurance as a fringe benefit is bringing the armed forces record numbers of applications for medical commissions. ment by a South Dakota insurance carrier that doctors coming to that state will only be insured by it if they join an established group practice. (9) A collection of incentives and disincentives, all ultimately related to the malpractice crunch, thus seems to be accel- erating the movement of medical practice from office to group and institution. As doctors increasingly move to an insti- tutional base, that base is likely to exercise increasing control over their medical practice within it, again for reasons relating to the economics of malpractice. That control may itself take an economic form, as in an insist- ence that physicians not provided with insur- ance by the institution obtain it in adequate amounts on their own; thus a federal district 4 court in New Orleans has upheld the right of a hospital to suspend the privileges of a member of its medical staff for failing to com- ply with its requirement that staff physicians maintain a minimum amount ($ 1 million) of malpractice insurance coverage. (10) In terms of medical practice, the increased willingness of the judiciary to hold hospitals liable for the conduct of their medical staffs has given hospitals an economic incentive to increase their scrutiny of that conduct. Ac- cording to one commentator, " This concern [about their potential liability] has been a tremendous impetus for hospitals to demand that their medical staffs undertake more ef- fective auditing procedures of their mem- bers. " (11) Here the hospitals are being forced to juggle the need to minimize their liability by instituting review and regulatory mech- anisms affecting their medical staffs and the need not to jeopardize the good will of those same physicians, on which they depend for the maintenance of occupancy rates that alone guarantee an adequate cash flow. Thus the most advantageously situated institution is the one that is least dependent on private practitioners for its patient supply, a fact that may further reinforce the trend toward insti- tutionally based medicine. Conversely, the most disadvantageously situated practitioner is the one lacking the preference or the tal- ents for maneuvering in an increasingly bu- reaucratic setting. A Healing Relationship or a Market Transaction? While ignoring the increased risks of high- technology, institutionally based medical care, those with the power to define the con- tent of the malpractice crisis have equally ignored a more fundamental problem: A per- ceived medical injury is a necessary but not sufficient ingredient of a malpractice claim, the essential catalyst being that quantum of resentment that can transform an unfortu- nate state into a hostile act. If the patient perceives his physician as being primarily motivated by a concern for his well being - (a concern that would include an unwillingness to risk performance of a procedure beyond the scope of the physi- cian's skills), the patient will have no reason to seek a pound of flesh when the results were not what he and his doctor had hoped for. But if the patient sees the physician as a highly paid entrepreneur (or employee) who in turn seeks him as a defective commodity to be repaired for the sake of a profit, his re- action to an untoward result will be the same as is his reaction when his auto mechanic charges a hefty price for failing to fix his car. (The probability of the latter perception is recognized by the insurance industry, which advises its physician customers - : " Keep your charges reasonable - the doctor who has the biggest fees can be the biggest target, too. " (12)) The fact that American medical practice is based on a system of economic incentives (whether the fee service - for - system or the pre- payment system) creates an inherent conflict of himself as a damaged commodity, what- ever it can offer him in terms of reduced mor- bidity and mortality. Scientific medicine is most markedly market medicine when its practice overlaps with the profit based - mar- ket for the products of a technological age. Thus the patient risks ceasing to be half of a social relationship and becoming instead an appendage of a machine whose use increases the income of the corporation that manufac- tured it, the hospital that bought or leased it and the physician who has prescribed its use. This result is not inherent in the machine per se but stems from an economic and social Plympton of interest for the physician - an altruistic in- terest in his patients'maximum well being - frequently conflicts with his economic self- interest in maximizing his patients'profitabil- ity. The larger society, that is, has created an occupational group that it expects to exhibit an altruistic concern for the welfare of others but has simultaneously placed that group within a system of market incentives having no necessary relationship to the degree to which that welfare is furthered. (The profes- sion itself of course has been an active par- ticipant in the creation of this dilemma.) In- sofar as an injured patient perceives the eco- nomics as dominating the altruism, it is not surprising that he seeks an economic solution to a therapeutic problem. In the context of a capitalist economy, the practice of scientific medicine can only heighten the patient's uncomfortable sense system in which the incentive for the devel- opment of new technology is to maximize profits rather than human potential. Or the incentive for use by the mystique of scientific medicine on the practitioner's part may be to maximize his status, which thereby increases the psychic distance between him and his patient: In their classic study of Yale- New Haven Hospital, Duff and Hollingshead found that " Sometimes... scientific ' ' medi- cine was used as'insulating'medicine be- tween patients and physicians. In that proc- ess the physician assumed superior knowl- edge and discounted or even ignored the report of the patient. " 13 () Thus science be- comes identical with mystification instead of furthering human autonomy. Financing mechanisms exacerbate the commodification phenomenon even further. The economic incentives of insurance - based 5 payment mechanisms distort the choice of what care to provide in what setting from being a matter for doctor patient - agreement based on therapeutic and human considera- tions to being a matter of channeling care into those modalities that the insurance com- pany has made an economic decision to cover. And the economic incentives usually coincide with that modality inpatient - hospi- tal care - that is both most risky and most depersonalized. Social policy in the form of Medicare and Medicaid, because based on the payment principle rather than the service principle, has extended the economic incentives of the market to new arenas. Thus Medicaid has brought us free enterprise with a vengeance, in the form of scandal - ridden Medicaid mills in New York, prepaid health plans in Cali- fornia and nursing - home chains all over. It has also extended to the poor the same risks of excessive hospitalization and excessive surgery to which the American medical sys- tem has long subjected the middle class. Medicare has abolished as superfluous the altruistic (albeit patronizing) medical tradi- tion of treating the elderly poor at rates they could afford to pay. The loudly heralded rights to care these programs were said to have created were more accurately rights to call on government to pay for a bureaucra- tized commodity rather than rights to enter freely into a healing relationship. Given that patients see medical care being furnished and financed as a product, whether dispensed by an individual entrepreneur or a large corporation, it is not surprising that they increasingly seek economic satisfaction when the product turns out to be defective. Here they receive reinforcement from the le- gal system, where the sanctity of property rights on which it is based reifies human ex- istence and makes the ghoulish equation be- tween pain and suffering and monetary damages. But if the patients, who have few if any alternatives, are chasing an illusion, the pro- fession, which is appreciably more powerful, is exacerbating the commodification of health care and the " legalized and legitimated doctor patient - hostility " (14) that goes with it -even further. In part that exacerbation re- lates to the apparent trend already noted of increasingly providing health care in an in- stitutional, and therefore further deperson- 6 alized setting. More concretely, it relates to the physician's common reaction to the ali- enation and hostility of the patient turned plaintiff. (That reaction can be quite colorful, as in the statement of a physician - member of the HEW Commission on Medical Malprac- tice: " The doctor feels put upon. He feels nude on the corner of the Main Street of life. INSERT MONEY HERE I OPEN NN tH] t} iy Sane Ps RCYR ANEYR' Seeks oi Hy SWE: \H NS RASS B. Plympton He often tries to cover himself with pride, and even occasionally arrogance, only to find himself being castrated. He really doesn't want to believe the hostility he feels. " (15)) In terms of conduct, that reaction duplicates the patient's alienation and hostility in the form of what has come to be known as defensive medicine. Of course one practitioner's defensive med- icine may be another practitioner's standard practice. What distinguishes the phenomenon is not its content but its motivation: The pa- tient is not an object of altruistic concern but a potential enemy against whom defensive measures must be taken, which must in turn be disguised as procedures undertaken for the patient's benefit. Thus outright deception joins economic motivation in insuring that what should be a healing relationship will have more of the character of a market trans- action, and one between parties with oppos- ing interests at that. The Foam Rubb-e rP il-l ow Syndrome Ultimately the evasiveness of the malprac- tice debate is destined to get its participants - and the American public - only a bad case of the foam rubb-e rpi l-l ow syndrome (attack the problem here and it pops up there). The smorgasbord of purported solutions to the crisis that the medical profession and its al- lies in the insurance industry have been dish- ing out, aside from the admittedly short - term expedients for patching up the insurance market, address patient hostility as expressed in malpractice claims by seeking either to suppress it (e.g., by shortening the statute of limitations and abrogating various common- law doctrines of liability) or to channel it into hopefully less expensive outlets (e.g., arbitra- tion or compenstaion systems modeled on workmen's compensation). Perhaps it is to be expected that the medi- cal profession will treat symptoms rather than causes, but for the sake of pursuing its short- " The doctor feels put upon. He feels nude on the corner of the Main Street of life. He often tries to cover himself with pride and even occasionally arrogance, only to find himself being castrated. ' George W. Northup, D.O. term self interest - it is ignoring the importance of starting with a correct diagnosis. Thus pa- tient hostility is obtusely blamed on the ava- riciousness of that other profession, whose members, however greedy, don't have a case until they have a client angry enough to un- dertake the ordeal of a lawsuit. The doctors'dilemma of course is that the alternative to such short sightedness - is per- haps as painful as the hostility of the patient- litigant. The commodification of medical care, despite its inherent cycle of risk alienation- - injury ho-s ctoiunlteir t-y h os-ti lity and so on, has brought ample economic rewards to the profession and to the delivery system within. which it operates. When those rewards are threatened by the economics of patient hos- tility, the natural reaction is to seek to render that hostility less economically rewarding rather than to call into question the economic basis of one's own well heeled - livelihood. What threatens an onset of the foam rubber- - pillow syndrome is the fact that the hostility is not going to go away but is going to seek new channels for its expression with the help of a profession that thrives on hostility. Thus the malpractice crisis in one form or another is destined to be a permanent feature of the American scene unless and until social con- ditions make possible a solution based on social and ethical values rather than on the crudities of economic motivations. -Louise Lander References 1. Physicians Crisis Committee, Court Docket Survey (De- troit: The Committee, 1975), calculated from data at pp. 42-43. 2. " Argonaut and Malpractice: A Tangled Web, " Medical World News 16 (July 14, 1975), 23-35 at p. 25. 3. Howard Eisenberg, " New Light on the Costliest Malprac tice Mistakes, " Medical Economics 50 (August 20, 1973), 146-63 at p. 147. 4. One insurance official is quoted as telling the AMA Board of Trustees that " this is not an insurance problem but a insurance medical - problem. We need the medical profes- sion's help in weeding out those physicians who are con- tributing to the problem. " " " AMA Trustees Seek a Solu- tion. " American Medical News, June 23-30, 1975. 5. US DHEW. Report of the Secretary's Commission on Medi- cal Malpractice (Washington, D.C.: The Department, 1973), p. 9. 6. That hospital - linked malpractice statistics need to be an- alyzed in terms of the types of practitioners involved is suggested by the Detroit - area study, which examined the number of patient admissions per malpractice case for 55 hospitals and found that of the 17 university - affiliated teaching hospitals that sample included, 12 had better- than average - malpractice case ratios. Physicians Crisis Committee, op. cit., p. 39. 7. Advertisement for Saffer Medical Consultants, New York Times, Sunday, August 24, 1975, Section 4. 8. Everett R. Holles, " Doctors Are Joining Services to Avoid Malpractice Insurance Costs, " New York Times, March 22, 1975; Lt. Col. Edmund C. Hessert Jr., USAF. " The Wild Blue Malpractice - Free Yonder,'Medical Economics 52 (November 10, 1975), 142-54. 9. Lawrence K. Altman, " Malpractice Rates Drive Up Doctor Fees, " New York Times, July 27, 1975. 10. Court " Upholds Hospital Rule on Malpractice Coverage, " Hospitals 49 (March 16, 1975), 171. 11. Don Harper Mills, " Malpractice Litigation: Are Solutions in Sight? " JAMA 232 (April 28, 1975), 369-373 at p. 373. 12. Eisenberg, op. cit., p. 163. 13. Raymond S. Duff and August B. Hollingshead, Sickness and Society (New York: Harper & Row, 1968), p. 380. 14. From " We have been concerned to show the connections between the growth of commercial practices in certain sectors of medical care and the increasing application of the laws of the marketplace of legalized and legitimated doctor patient - hostility. The second is a logical conse- quence of the first. " Richard M. Titmuss, The Gift Rela- tionship (New York: Pantheon Books, 1971), p. 170. 15. George W. Northup, D.O., quoted in " How the Commission Arrived at a Report, " Medical World News 14 (October 5, 1973), 44-48 at p. 48. 7 COMFY BED HOSPITAL MQCui ckDo nna's Health 9 TOVER SERVED THOUSAND HAPPY DOC MEDICAL CARE E - Z HEALTH HOSPITAL 19990 0 B.Plympton Overbedding the Suburbs THE GRAFT IS While unchecked hospital expansion has GREENER resulted in a surplus of acute - care beds in many urban centers (see BULLETIN, May / June, 1975), many surrounding suburban com- munities still suffer from a shortage of beds. Since World War II many private physicians have abandoned their downtown offices and followed their patients to the suburbs. But inner - city hospitals, with their vast capital in- vestment in plant and equipment, have been slower to move, leaving many suburban resi- dents without ready access to care, particu- larly in cases of medical emergency. This absence of competing institutions plus the affluence of suburbia have made it a good market for proprietary (private, profit- making) medical - surgical hospitals. More- over, suburban hospitals offer lucrative de- velopment opportunities. Local government officials are usually more than willing to make the necessary sewer hookups and im- prove access roads for new hospital projects. Hospital developers are then in a position to build adjacent shopping centers, office build- ings and motels. A case in point is the Greater Laurel area in the Maryland suburbs of Wash- 8 ington, D.C. Laurel is a small Maryland town (popula- tion 11,000) located in the northwest corner of Prince Georges County on what was once the main road connecting Baltimore and Wash- ington. In the past the economy of the sur- rounding area was based on milk and horse racing (at the Laurel Raceway). But the expansion of government operations has brought major new federal installations near- by, including the Goddard Space Flight Cen- ter at Greenbelt and the Agricultural Re- search Center at Beltsville. Meanwhile, neigh- boring University of Maryland at College Park has expanded enormously since World War II. As a result, the population of the Greater Laurel area has shot up to 125,000, most of it in Prince Georges County and the remainder in the three neighboring counties (Montgom- ery, Howard and Anne Arundel). By 1980 200,000 people are expected to be living there. Despite this growth there is no general hos- pital within 15 miles of the area. The hospi- tals currently serving the area are all near the Maryland - D.C. border, at least 20 minutes away. (Kimbrough Army Hospital at Fort George G. Meade is closer, but serves only military personnel and their dependents.) Residents had long expressed the need for a local hospital and tried to induce one to locate there. The only offers, however, had been proprietary hospitals which would not have met community health - care needs and which failed to generate the necessary local financing. By the late 1960's local residents had become desperate and turned to the State government for help. They're Off and Running at Laurel In the Spring of 1970 the Maryland State Legislature created the 12 member - Greater Laurel Hospital Authority (GLHA) and charged it with determining the health facil- ity needs of the four county - Laurel area through a comprehensive health planning study. The Authority was also empowered to develop specifications for any recommended hospital or other health facility. The GLHA's role was strictly advisory. Sole power to approve or disapprove new health facilities was vested in the Director of the State Comprehensive Health Planning (CHP) Agency under Maryland's 1968 certificate - of- need law. (Similar legislation was passed in many states during that period to regulate hospital overbedding.) Under the 1968 law State CHP Director Dr. Eugene Guthrie was to receive plenty of advice - from a special State CHP Advisory Committee and from lo- cal advisory committees set up in every sin- gle Maryland county. (The county commit- tees had originally been established as so- called areawide comprehensive health plan- ning agencies under the 1966 federal compre- hensive health planning legislation.) These county CHP committees were further mandated to hold hearings on each request for approval of a new health facility. If ap- proved, the new facility would be given a so- called certificate of need for one year. It was then required to be recertified annually until the facility opened its doors, a procedure de- signed to keep the pressure on builders to move quickly. Creation of the Greater Laurel Hospital Authority just added another bu- reaucratic layer to this structure, ostensibly to help smooth over disputes in the four- county Laurel planning area. The first entrepreneur to leave this prob- lematic starting gate was Dr. J. Allen Offen, a local Laurel obstetrician and highly suc- cessful real estate developer. In December, 1969, just before the GLHA was set up, Offen announced plans to construct the Parkway Medical Center, a 250 bed - for profit - hospital, in a rural area served by a narrow winding country road seven miles from any popula- tion center. Offen's group, Intercity Hospital Corporation, had acquired over 100 acres of land there. It planned to use 22 acres for the hospital and accessory buildings and to de- velop shopping centers, professional build- ings and motels on the remaining property. Financial support came from the S. L. Ham- merman Organization, Baltimore mortgage bankers, headed by I. H. (Bud) Hammerman II. (Hammerman was later sentenced to 18 months in prison in the construction kickback scandal which forced then Vice President Spiro Agnew from office.) Lawyer for the project was Robert L. Weinberg, a prominent Baltimore Democrat. Offen enlisted the support of prominent lo- cal politicians as well. Foremost among them was Gladys Spellman, then member of the Prince Georges County Board of Commis- sioners and chairperson of the State CHP Ad- visory Committee, and now a member of the US House of Representatives. As a member of the Board of Commissioners, the County's ruling body until 1970, she argued Offen's case for the special exception zoning he need- ed for his site. She then got herself appointed Crass Cash Crash Competition to build hospitals is not limited to the Laurel area in the northern part of Prince Georges County. In southern Prince Georges County, Mary Hayes, owner of the 33 bed - for profit - Clinton Community Hospital, has spent four years trying to sabotage the application of Dr. Francis Chiaramonte for a certificate of need to build his for profit - 300- bed Southern Maryland Hospital in Clinton. In August, 1974 a State's Attorney an- nounced the arrest of Ms. Hayes on charges that she hired a private detective to break into Dr. Chiaramonte's office. Later the detec- tive placed his wife there as an office worker to gather confidential information to be used against Chiaramonte. The Washington Post reported that Ms. Hayes had also discussed with the private detective the possibility of his arranging to have an airplane crash land on Chiaramonte's building site to back up her argument that the site was dangerously lo- cated in the flight path of Andrews Air Force Base. to the County CHP Committee just prior to its 1970 certification hearings on the Parkway proposal. In addition she had accepted Of- fen's help in her successful 1970 campaign for County office. Eventually, she admitted a conflict of interest, but only at the local level. She then resigned from the County CHP but remained on the more powerful State CHP Committee. Similarly, the Laurel Mayor and City Coun- cil have loyally supported Offen. Among them, too, conflicts of interest abound. One City Councilwoman, for example, sits on the Parkway Medical Center's board of directors; her nephew, just out of law school, serves as Offen's paid local attorney. Another City Councilman, who was also a Laurel physi- cian, a former Prince Georges County CHP chairman and a member of the Citizen's Ad- visory Committee to the GLHA, suddenly be- came a vigorous supporter of Offen. Later it was learned that he was a partner in a pro- fessional office building to be erected near Offen's site. Parkway Leads at the First Turn In April, 1971, before the Prince Georges County CHP had even released its recom- mendations on the Parkway proposal, State CHP Director Guthrie unexpectedly granted Parkway's certificate of need. At no time did he hold state hearings, as he was permitted by law to do, nor did he require the Parkway group to submit health planning studies of any sort. His move was an obvious attempt to head off the County committee's report, released just days later, which recommended that Parkway not be approved because it was inaccessible and did not provide adequate outpatient services, adequate arrangements for treatment of the poor or consumer partici- pation. (Earlier that month the Maryland Na- tional Capital Planning Commission, yet an- other suburban planning agency, had rated the Parkway site last among 14 proposed hos- pital sites.) Then in July, 1971, the GLHA further under- cut the Parkway proposal. It submitted its report, recommending another site, a few miles south of the town of Laurel, and urging construction of an entire health campus, con- sisting of a 250 bed - nonprofit hospital with provisions for outpatient care, community health education, extended care, home care and para medical - , medical and nursing edu- 10 cation. A citizens advisory committee was to play a key role in the planning for the hospital. The GLHA urged Offen to locate on their site and build the proposed health campus there. Later Maryland Governor Marvin Man- del intervened with Offen on behalf of the GLHA site. But Offen was not interested in outpatient care or medical education. He would only consider the GLHA site, he said, if he received a no strings - land deal which would permit him to build a proprietary med- ical surgical - hospital along with office build- ings and a shopping center. This was too much for the State government and it refused. Now They're Neck and Neck In October of that year State CHP Director Guthrie granted a certificate to the GLHA to build its proposed Greater Laurel Hospital, citing its more ready accessibility to most of the population in the Greater Laurel area compared to Parkway. Nevertheless his ear- lier approval of Parkway remained in effect. So Laurel residents, who had previously failed to convince a single hospital to locate there, now were faced with the prospect of The Maryland National Capital Planning Commission has rated the Parkway site last among 14 proposed hospital sites. two 250 bed - hospitals. The obvious questions Lwhether the Greater Laurel area had enough patients to support two such hospitals - was not even addressed by Guthrie in his rulings. The task of organizing the financing and construction of the Greater Laurel Hospital was taken on by the GLHA. It worked with the four county governments having jurisdic- tion in the Greater Laurel area in an effort to get them to finance and run the hospital. In late 1972 the GLHA decided it was most prac-  C < / < ,, -- B. Plympton tical to turn management and financing re- sponsibilities over to the Prince Georges County Department of Hospitals. Parkway Stumbles Meanwhile Parkway had run into financial troubles. The money originally promised to finance the hospital had dried up in the de- pressed economy of the 1970's. By November, 1973, after three years of trying, Offen had not raised the $ 2.5 million necessary to begin construction. Facing another annual recerti- fication hearing later that month, at which he would have to defend his inability to break ground for the hospital, Offen made a des- perate move. He unveiled a prospectus, since dubbed the November Bombshell. Offen pro- posed to sell 100 physicians limited partner- ships in the hospital at $ 26,250 each. This group would share 80 percent of the annual profits while Offen would get the remainder (estimated at $ 130,000 per year). Offen would also get a developer's fee of $ 200,000 and an annual $ 120,000 management fee. Further in- come would accrue from leasing X ray -, lab- oratory and pharmaceutical facilities and 39,000 square feet of examining rooms. The Washington Post estimated (November 8, 1973) that Offen's profits on the deal would add about $ 40 a day to patients'bills. The public was outraged and pressure for decertification mounted. Having tried the pro- prietary route, Offen made a last ditch - effort to save Parkway by transforming it into a non profit - institution. He worked with Gladys Spellman over the next several months to develop such a proposal and maneuvered the Governor's office into making a public 11 announcement of Parkway's change of status. State CHP Director Guthrie used the change as an excuse to recertify Parkway once more. In March, 1974 the Prince Georges County CHP held further hearings on Offen's plans. At that time Offen announced a further change the nonprofit hospital would now be managed by the profit making - Hospital Af- filiates, Inc. (HAI) of Nashville for a reported $ 800,000 annual fee. (HAI is the leader in the growing international hospital management contract industry. Of the 62 hospitals it oper- ates around the world it owns 28 and man- ages 34 under contract with the owners.) The appointment of this firm to operate the hos- pital further aggravated the hospital's al- ready weak standing in the community. Again, the County CHP issued a decertifica- tion recommendation, but again it was ig- nored at the state level. Four Hospitals Fight for the Lead Soon the public was in store for another bombshell, this one launched by State CHP Director Guthrie and reported by Victor Cohn of the Washington Post in a series of articles in early 1974. Cohn reported that the Agency had granted certificates of need to not two, but four hospitals, with a total of approxi- mately 900 beds, lying within a 10 mile - radius in northern Prince Georges County. In addi- tion to the Greater Laurel Hospital and Park- way Medical Center, certificates of need were granted to a group of physician - investors led by Dr. Leon Levitsky to build a 208 bed - for- profit Prince Georges Doctors Hospital and to a group in Bowie to build a bed 185 - nonprofit community hospital patterned after the GLHA model. (While hearings had been held for each, they had not been extensively reported in the press and had largely escaped public attention.) Thus the State CHP Agency, set up in 1968 to prevent hospital overbedding, had contrib- uted to just the opposite effect, a surplus of hospital beds, in the Greater Laurel area. The County Health Department predicted that a 319 bed - surplus would result in northern Prince Georges County if all four hospitals were built. The surplus would also adversely affect hospitals in neighboring areas which had previously been used by Laurel residents. Separate reports from the National Capital Area Hospital Council and the Johns Hopkins University called for a moratorium on hospi- 12 tal construction. In May, 1974 Dr. Neil Solomon, Maryland State Secretary of Health and Mental Hy- giene (HMH), stepped into the picture. Solo- mon, an academic M.D.-Ph.D. endocrinologist who still spends a good deal of his time in research and publishing, denounced Guthrie for " utter mismanagement " of the State CHP Agency, citing the glut of approved hospital beds in Prince Georges County as an exam- ple. (Solomon, however, had been aware all along of the multiple certifications and could have prevented them had he wanted to.) Actually, Solomon's anger more likely stemmed from his discovery that Guthrie, fearing that Solomon might veto some of his certifications, had been covertly working with For God, Mothers- head and Country Doctors Hospital, a 208 bed -, for profit - facility under the leadership of Dr. Leon Levitsky, was one of four hospitals approved for con- struction in northern Prince Georges County. Levitsky's chief lobbyist was Andrew O. Mothershead, a Prince Georges construction executive and former member of the Mary- land state legislature. Mothershead got him- self appointed to the County CHP committee, where his chief concern was obtaining certifi- cation for Doctors Hospital. In 1974, when Mothershead was seeking to regain his old seat in the State House of Delegates, Levitsky formed a PG Physicians Political Action Com- mittee, which gave by far its largest contribu- tion to the Mothershead campaign. state legislators on a bill to make the State CHP Agency independent of the State Depart- ment of Health and Mental Health. Solomon dismissed Guthrie for " general poor perform- ance " and named Leonard Albert, an HMH fiscal officer, as his successor. Albert's first act in office showed that the differences between Solomon and Guthrie were rooted in policy differences. Albert im- mediately recertified Parkway, claiming that the Prince Georges County CHP had lost its objectivity and could no longer be taken se- riously. In June, 1975, bowing to growing pub- lic pressure, Albert finally decertified Park- way, citing its inability to obtain financing and lack of a viable citizens advisory com- mittee - two shortcomings that had existed all along. Appealing the Decision In another eleventh - hour effort Gladys Spellman, now a member of the US House of Representatives, recruited former US Sen- ator Joseph Tydings of Maryland to represent Parkway in its appeal of the decertification to Secretary Solomon. Solomon, however, promptly sustained the decertification deci- sion. At this point Dr. Offen resigned as Presi- dent of Parkway Hospital for " personal rea- sons. " Tydings nevertheless appealed the Secretary's decision to the next higher level -a seven member - State Board of Review within HMH. The Board voted unanimously to overturn the earlier decertification deci- sions and reinstated Parkway. By the end of 1975, Greater Laurel Hospital was under construction and Bowie Hospital was in the final stages of financial planning. Prince George's Doctors Hospital opened its doors in May, 1975. The County Health Department predicted that a 319 bed - surplus would result in north- ern Prince Georges County if all four hospitals were built. After years of struggle, Parkway hospital is still alive in Laurel. It remains to be seen whether other suburban communities will be able to halt similar health - care profiteering and wanton overbuilding of hospital beds, for which they will pay in taxes and unnecessary treatment for years to come. -Jay Herson (Jay Herson is a member of the faculty of the Department of Community Health at Howard University College of Medi- cine and a Laurel, Maryland community activist.) MORE ON THE WASHINGTON, D.C. AREA HEALTH / PAC has reprinted Ronald Kessler's six part - series on " The Hospital Business. " This landmark series documents how conflicts of interest, financial abuse, and the lack of accountability in Washington D.C.'s largest nonprofit hospital inflate patient costs. Washington Post Series: $.35 each; $.30 for two or more, (add 20% for postage). Health / PAC, 17 Murray Street, New York, N.Y. 10007 13 Peer Review the American health care sys- tem, their deportation will just exacerbate the shortage of trained physicians. FMGs: A CASE OF RETRIBUTIVE JUSTICE Dear Health / PAC: During the past two decades, foreign medical graduates (FMGs) have been recruited to the US health care delivery systems in ever increasing - numbers. Now, in complete dis- regard of the important medi- cal contributions they have made, the US State Department has ruled that they are no longer needed here and large numbers of them face deporta- tion. Effective January 1, 1976, all foreign medical graduates who have entered the US un- der the Exchange Visitors Pro- gram (EVP) and have since ap- plied for permanent residence will lose their Exchange Visit- ors status and are subject to deportation unless they receive permanent resident status with- in 60 days. In addition to the personal hardship inflicted on FMGs, such a deportation will ad- versely affect the health care services available to the Amer- ican people. A massive depor- tation of FMGs would remove thousands of practicing physi- cians from rendering valuable medical services in community hospitals. HEW figures show that in 1971 one out of five licensed physicians and one out of three Who Are the FMGs? FMGs are doctors who ob- tained their medical education and licensure in countries oth- er than the US. The majority of them come from India, the Philippines, Korea, Taiwan and Thailand. In recent years FMGs have entered the US in increasing numbers through the Exchange Visitors Program. (They are called Exchange Visitor For- eign Medical Graduates or EVFMGs.) The Exchange Vis- itor Program (EVP) was cre- ated in 1948 under the US In- formation and Educational Ex- change Act. It " sought to pro- vide an opportunity to students from different countries to get together and learn from each other's culture and provide high quality education to peo- ple from developing countries. " The benevolence contained in its aims is commendable un- til we consider the political and economic conditions pre- vailing in the US in the 1950s, the period of the Cold War. The US wished to gain favor- able international public opin- ion and to develop political al- lies. In the same period, the US suffered from a serious lack of medical manpower which motivated hospital administra- tors to begin recruitment of FMGs to fill this shortage. hospital - based physicians was an FMG. Despite the high per- The Inequities of the EVP centage of FMGs providing The EVP has never func- health care services for the US, tioned according to its origi- the need for more housestaff nally stated goals. First of all, in American hospitals remains the " exchange flow " has been especially great. Each year, as grossly one way - with more many as 10,000 slots remain participants entering the US vacant. If the 70,000 FMGs in each year than Americans go- 14 the US cannot fill the gaps in ing to other countries. An av- erage of approximately 4,700 EVFMGs enter the US each year, while only 2,500 US citi- zens obtain grants to study abroad. It is often argued that this one way - flow still benefits developing nations by educat- ing some of their citizens in advanced medical techniques which they can apply when they return. This is where the EVP's real aims are unmasked. FMGs who came to obtain more advanced medical train- ing all too often ended up in the slums of America's health care system working - with lim- ited licenses in state penal and mental institutions, nonaffili- ated hospitals (those without any full time - teaching staff) and congested municipal hos- pitals in depressed inner - city areas, where training is non- existent. They conveniently fill those vacancies which Ameri- can doctors generally do not desire. Working as many as 110 hours per week, FMGs per- form scutwork while receiving salaries lower than their Amer- ican counterparts in affiliated and high ranking - hospitals. Thus, the EVP is not a training program. It is a service pro- gram providing low skilled - and routine patient care, a fact re- flected in the general dissatis- faction expressed by the FMGs with their educational experi- ence. A study by J. Haberstam in the June, 1971 Journal of Medical Education reported that only 10 percent of the FMGs questioned were satis- fied with the EVP. The Foreign Residence Requirement Between 1956 and 1970, US immigration law required a two year - absence from the US if FMGs wanted to change their J - 1 temporary visa (grant- ed under the EVP) to perma- nent residence status. After 1970, though, this requirement was relaxed in most cases and the the FMGs FMGs were were usually usually al- al- lowed to begin the adjustment process without leaving the country. Then a long and com- plex series of maneuvers by the Immigration and Naturali- zation Service (INS) and State Department ensued. The first action came in 1972 when FMGs from countries with criti- cal shortages in health man- power were told they must re- turn home for two years before applying for permanent status in the US. But this policy was not fully implemented, and the INS allowed exceptions for countries like the Philippines. Then in April, 1975, the State Department announced a new ruling which halted the prac- tice of granting waivers. This reversal of policy means that FMGs who are on temporary visas, such as the J - 1 visa, face deportation if they cannot ob- tain alien status within 60 days of the ruling's effective date, January 1, 1976. Implications and Consequences of the State Department Ruling The State Department ruling is unfair and discriminatory to FMGs in two major respects: First, the ruling's effect is ret- roactive. FMGs, when apply- ing to the EVP in their home country, may very well have agreed to comply fully with the two year - foreign residence requirements should they de- sire to obtain permanent resi- dence in the US. Many FMGs, however, learned through of- ficial channels when they ar- rived that it was possible to obtain waivers from the INS and / or State Department and to remain in the US while await- ing their alien number. With this understanding, they filed an application in the full belief that no legal violation was be- ing committed. Now, over 800 Filipino physicians, one of the largest FMG groups, who ap- plied for permanent residence under the waiver policy as far back as July 31, 1972, are af- fected by the new ruling. Second, the ruling, by stipu- lating the 60 day - time limit, discriminates against national- ities with a protracted waiting period. Under the quota sys- tem, nations are given a lim- ited number of applications per year for alien status. FMGs from countries with a large number of applications and relatively few openings will have a waiting time longer than the two year - home resi- dency requirement stipulated by the EVP. At present, Fili- pinos who applied as far back as 1970 are still awaiting their alien numbers and are includ- ed with those who are threat- ened by the State Department ruling. What we face now are the complications which have aris- en out of the inconsistent prac- tice of the INS, State Depart- ment and Educational Com- mission for FMGs in imple- menting the provisions of the immigration law. They waived or relaxed implementation of certain sections when they needed the FMGs; they have decided to implement it strictly when they felt that the US did not need them. The Interests of the FMGs and the American Public Are One FMGs perform valuable serv- ices, especially in those areas where doctors are in short sup- ply and also in general or pri- mary care specialties. An HEW 15 study titled " Foreign Medical Graduates and Physician Man- power in the United States " documented (page 11) that " In 1972, for example, over 70% of the residency positions in non- affiliated hospitals in general practice, pathology, neurology and anesthesiology were filled by foreign trained - physicians; at least 60% of the residents in non affiliated - hospitals in obstetrics and gynecology.gen- gynecology.gen- eral surgery, pediatrics, and internal medicine were FMGs. In every case, the proportion of foreign medical graduates in these specialties was much lower in university - affiliated programs. " The East Coast, in particular New York City, will suffer most with a reduction of FMG staff. The HEW report continues (page 37): " Of the 14,440 resi- dency positions filled in 1972 by FMGs, 5,835 (40%) were in the States of New York (26.8%) followed by New Jersey, and Pennsylvania. New York leads all other States in numbers of foreign - trained residents as it does in the number of foreign- trained physicians as a whole. Among other'high'States on percentage of FMGs in filled residency positions were Dela- ware, Rhode Island, Illinois, and West Virginia. In these States, hospitals are substan- tially dependent on foreign medical graduates. " In all fairness to the inter- ests of the American public, the presence of FMGs in the medical system in the US must cease to be presented as nega- tive. The functions and serv- ices heretofore rendered by FMGs should instead be rec- ognized and accorded the credit they deserve. After serv- ing the medical needs of the American public, FMGs do not deserve to be treated as ob- 16 jects which one simply dis- cards when they no longer serve a purpose. Last Ace in the Game The underlying and subtle tones of racial and national discrimination can be felt when we consider that most FMGs come from Third World nations, most of them being Asians (Indians, Filipinos, Koreans). Moreover, this move may be the " last ace " in a concerted and many faceted - effort by the elite and white dominated - American medicine to bar FMGs from full integration in the medical profession in the US. It would, in fact, take an- other complete study to repudi- ate the string of discriminatory attacks lashed out on FMGs around their " incompetence, " " inability to communicate and relate to American patients, " etc. One cannot help but remem- ber past incidents resembling the present FMG issue. In the industrial unrest and populist opposition to the growth of mo- nopolies in the 1880s and 1890s, Chinese - no longer needed aft- er their labor in building the transcontinental railroad - were targeted as threats to the livelihood of the American people. In the 1900s, this role was assigned to Italians and to Eastern European Jews. Arbi- trary immigration rulings were similarly enacted to legalize their speedy deportation. The EVP has also served as a source of a huge rip - off, not only of manpower but also of money invested in education and in training that manpower. The estimated cost of educat- ing and training a physician in the US today is $ 100,000 or more. The US, by enlisting the FMGs into its hospitals, saves 800 $ million for every 10,000 li- censed foreign physicians. More important than these savings, however, is the fact that the EVP has also served to forestall the resolution of a long standing - problem involv- ing the medical needs of the American people and the in- terests of the profit motivated - medical industry. In their de- sire to maintain medicine as a closed shop, the medical pro- fession has enforced highly re- strictive admission policies so as not to " overcrowd " the pro- fession. Hence, the US is con- tinually faced with a physi- cian shortage. To forestall the basic rectification of this prob- lem (i.e., by educating and training more Americans to become physicians), FMGs are instead recruited on a tempo- rary basis (under the guise of training) to answer the patient care needs of America. Out of the 150,000 physicians added to the US health labor force from 1962 to 1971, only a little over half were US graduates. The rest were FMGs. Broader Representation in EVP Policy Making - In this connection, a national body must be formed with the task of formulating all policies relating to the EVP. It must: OE Be composed of not only representatives of American medical organizations but also representatives of FMG asso- ciations and community per- sons representing the public; @ Monitor and evaluate the educational quality of the train- ing provided by the program; OE Also ensure that exchange visitors who return to their countries of origin will be able to fully utilize their potential. This would mean making reg- ular and thorough evaluations of what particular fields of medicine are most needed in other countries. This would as- sure that the EVP would truly be relevant and beneficial to the critical medical needs of the participating underdevel- oped nations. @ This body must also con- tain the proper mechanisms for FMGs to air their griev- ances and to have access to due process procedures when- ever necessary. Legal Status for All EVFMGs In light of the above, the Emergency Defense Commit- tee for the FMGs believes that FMGs, having provided valu- able service to the American public, must be recognized for their actual functions and con- tributions. Because they have worked as any other US resi- dent, FMGs now deserve to be legally recognized as such. All EVFMGs who applied for permanent residence be- tween 1970 and 1975 must be allowed to remain in the US while awaiting their alien num- bers. None of them should be arbitrarily asked to leave and none of them should remain under such a threat. For more information on the plight of FMGs, write to EDC- FMG, 204 E. 25th Street, Apt. 2B, New York, N.Y. 10010 or call (212) 889-2705. -The Emergency Defense Committee for the FMGs. " CON GAME " COMMENDED Dear Health / PAC: I finally cleared enough time to read " The Mental Health Con Game, " published in the July August / 1975 issue of Health / PAC BULLETIN. I think it is probably the most infor- mative, concise, and sophisti- cated analysis of the New York Department of Mental Hygiene that I have seen. I could quibble with a few small points. For example, at page 2 you note a 58% decline in state hospital population in New York State compared with a 56% decline nationwide since 1955. That may well be accurate, but it suggests that New York State is continuing to depopulate its state hospitals somewhat faster than the na- tionwide average. In fact, in the last few years, New York State has lagged behind the national average in the rate of depopulation. Other small crit- icisms could be made, but they would only be small objections to what is a genuinely excel- lent article. -Bruce J. Ennis Staff Counsel New York Civil Liberties Union FRIENDSHIPMENT Friendshipment, a broad national coalition seeks the support of interested people and groups in its program of reconciliation and reconstruction in Viet- nam. In particular, Friendshipment is engaged in raising fund - campaigns to meet two requests from the Vietnamese government: * VD Treatment: The Vietnamese are seeking aid in ridding the country of a particularly virulent form of venereal disease left as a legacy of the war. Requested are funds to send large quantities of detection kits, laboratory equip- ment and penicillin. * Steel tubing, which will be used in the production of desks for reconstruc- tion of the educational system and for the manufacture of wheelchairs for thousands of severely injured war victims. Steel tubing is inexpensive and its use provides jobs as well as the needed products. In addition, Friendshipment offers films, books and other educational ma- terials on life in Vietnam and seeks to build support for reconstruction aid promised by the US in the Paris agreements as a condition for ending the war. Finally, Friendshipment is organizing observances of the first anniversary of the war to take place April 30 in cities and on campuses across the country. For more information on Friendshipment, and its program, nationally and locally, contact: Friendshipment, People to People Aid to Vietnam 235 East 49th Street New York, New York 10017 or call: (212) 486-0580 Contributions are tax deductible. 17 sy 18 Vital Signs We mourn the death of Harry Becker, December 23, 1975. Harry was a friend of Health / PAC from its inception. His MEDICARE DEDUCTIBLE RISES Medicare, which now covers only 38 percent of health - care costs of the elderly, will soon cover even less. The Social Se- curity Administration an- nounced in November that the inpatient deductible - the amount Medicare patients - must pay for the first 60 days of hospitalization - would jump January 1 from $ 92 to $ 104, a 13.1 percent increase. The de- ductible is equal to the aver- age cost of one day of hospital- ization. Also increasing is the amount patients must pay for hospitalization exceeding 60 days and for stays in skilled nursing facilities exceeding 20 days. (Health Lawyers News Report, November 1975; American Medical News, October 6, 1975.) wealth of experi- ence in the health system, his wisdom and insights were reflected in much of Health / PAC's past work and will be missed in the future. | MAKING HOME CARE SAFE FOR PROFITS HEW is changing its regula- tions to open the provision of home health services under Medicaid to private, profit- making companies - a move which critics charge will invite the same abuses which have plagued nursing homes. In the past Medicaid, like Medicare, allowed participa- tion of profit making - compa- nies providing home health care only if they were licensed. Since only 11 states have li- censing laws, however, this has meant the virtual exclu- sion of such companies. The new rules allow participation by proprietary companies if they meet federal standards unless states specifically act to exclude them. While HEW ad- mits being unable to enforce standards, it justifies the meas- ure in terms of increasing ac- cessibility to home health serv- ices. Critics, which include among others groups representing the elderly and the professional staff of HEW (not the policy- makers) argue otherwise. " Ex- panding these services to the proprietary agencies... with- out the requisite enforcement, which the department says it doesn't have, will be opening it up to the abuses we have in nursing homes,'" says Law- rence Lane of the American Association of Retired Persons. Others argue that the risks are much greater at home, where the individual is isolated and unable to protect himself, than _ is the case in nursing homes, which come under at least min- imal review. (New York Times, November 28, 1975.) PRISON GUINEA PIGS About 85 percent of all initial testing of prescription drugs on human subjects is done on prisoners, the president of the Pharmaceutical Manufac- turers Association (PMA) testi- fied recently. This testimony surprised the group to which it was presented - the National Commission for the Protection of Human Subjects of Biomedi- cal and Behavioral Research, established by Congress to in- vestigate and chart policy on human experimentation. The PMA president characterized as low the finding of a Com- mission survey that biomedi- cal research on prisoners was being done in only seven state and federal prison systems. The Commission did not even survey county and municipal jails, it said, due to lack of time and money. The issue being argued before the Commission is whether truly voluntary in- formed consent is possible in a coercive environment such as a prison. Most experiments are conducted in the most coercive of penal institutions - medium and maximum security pris- ons. The Commission recom- mendations will go to HEW, which funds most biomedical research. (New York Times, January 10,1976.) VALIDATION: SUSPENDING THE EMBARRASSMENT The Social Security Admin- istration has halted its contro- versial efforts to validate find- ings of surveys conducted by the Joint Commission on Ac- creditation of Hospitals (JCAH), which are accepted by the SSA as qualifying a hospital to receive Medicare. Of the first 101 hospitals surveyed by the SSA, 65 flunked, embarrassing the JCAH and the SSA and an- gering the hospital establish- ment. Violations occurred mainly in fire and safety stand- ards. The validation surveys were ordered by 1972 legisla- tion and will be suspended at least until the Senate Finance Committee responds to a re- port on the first surveys. (See BULLETIN, July August / , 1975, page 31.) (Hospital Week, October 31, 1975; Washington Developments, November 7, 1975.) Rx FOR A SORE THROAT? Sore Throat continues to plague the American Medical Association (AMA) despite vig- orous attempts to root him out. Jestfully named after Deep Throat of Watergate fame, Sore Throat continues to leak purloined AMA documents to the press, the Administration and various congressional committees, bringing the AMA trouble and embarrassment on many fronts. (See BULLETIN, July August / , 1975, page 30.) The AMA has attempted to in- volve the FBI and the Chicago police in an effort to identify the person, has put officers and staff through lie detector tests and most recently has unof- ficially spread the rumor that Sore Throat is, in fact, the Church of Scientology, whose views on health and disease are at odds with those of the medical profession. Sore Throat has caused sufficient embarrassment for the AMA to issue a " white paper " refut- ing the implications of leaked documents. (Washington Report, November 3, 1975; New Physician, December 1975.) BLACK EYE FOR SSA? The General Accounting Of- fice (GAO) dealt a black eye to the Social Security Adminis- tration (SSA) and to advocates of public administration of na- tional health insurance when it found the cost of adminis- tering Medicare by SSA to be considerably higher than costs of administration by either Blue Cross or commercial in- surance companies. The audit, conducted in 1973, found the cost of processing a claim was $ 12.39 for the SSA, $ 7.31 for Travelers Insurance Company, $ 7.28 for Mutual of Omaha, $ 3.81 for Blue Cross of Chicago and $ 3.55 for Blue Cross of Maryland. GAO charged that costs are higher for SSA because of the high pay and low productivity of government workers. SS... countercharged that the GAO study was done when it was in the midst of switching from manual to computerized claims processing and that cost has subsequently dropped to $ 4.11 a claim. Both parties agree that 19 the reason costs to Blue Cross are so low is that it handles the least complicated claims. (Washington Post, October 28, 1975 and November 12, 1975; Washington Developments, October 24, 1975.) UNTYING THE BIND The chairmen of obstetrics and gynecology of New York City's six medical schools and two unidentified women pa- tients have brought suit against federal, state and local sterili- zation guidelines for women in municipal hospitals or receiv- ing Medicaid. (See BULLETIN, January February / , 1975 and July August / , 1975 concerning New York City sterilization guidelines.) The challenged guidelines bar sterilization for women un- der 21 and for those who are mentally incompetent; require a 30 day - wait for voluntary sterilization and prohibit elicit- ing patient consent during hos- pitalization for childbirth, abor- tion or other procedure. The guidelines have been pro- pounded by civil rights and feminist groups concerned about women, particularly poor black women, being co- erced into sterilization. The suit charges that guide- lines violate the rights of wom- en who want sterilization and are unconstitutional because they apply only to women who cannot pay to have the proce- dure done privately. The physi- cian plaintiffs also assert " in- juries to their First, Fifth and Fourteenth Amendment rights to privacy, liberty and prop- erty. ", (New York Times, January 11, 1976.) SPEAKING OF STERILIZATION .. What is likely to be the first compulsory sterilization law in the world is presently being drawn up by the State of Pun- jab in India, and is slated for passage early this year. The law would require sterilization after a couple had a specified number of children, probably two or three, although details such as which partner would be sterilized are still being worked out. The measure is certain to be a controversial one, and the government of Prime Minister Indira Gandhi, which has promised its own " strong steps [on family plan- ning] which may not be liked by all, " is keeping a close eye on the experiment. (New York Times, January 2, 1976.) CATCH - 22 CUTBACKS The November, 1975 Health Law Newsletter reports on some of the more innovative approaches states have taken to cutting back their Medicaid programs. Last September the Alabama authorities decided not to mail out Medicaid cards because the state legislature had not yet adopted a state budget appropriating Medi- caid funds. Without cards, Medicaid recipients could not obtain services and the state would thus not have to pay for them. After threat of a suit the cards were mailed out, but each bore the stamped nota- tion " Subject to Availability of Funds, " warning doctors that they might not be paid for ser- vices to Medicaid patients. The legislature subsequently adopted the budget and appro- priated the funds, but mean- while no other program in the budget suffered from these back handed - cutbacks. Likewise in early summer Florida imposed a regulation requiring that Medicaid pre- scriptions exceeding $ 20 a month have prior authoriza- tion. It failed, however, to set up an authorization mechan- ism, making prior authoriza- tion impossible. The issue is now in the courts. SUBSCRIBE TO THE HEALTH / PAC BULLETIN student subscription $ 5 Y' regular subscription $ 7 [] institutional subscription $ 15 [] Name: Address: Health / PAC, 17 Murray Street, New York, New York 10007 2200