UNITED STATES SENATE /a, *- COhW=l-ROLLER GENERAL 6F THE UNIT?% !ZATES, . WAStiINGTON. D.C. 20548 B-167966 Dear Mr. Chairman: In accordance with your request dated September 18, 1969, the General Accounting Office has examined into the co- ordination among Federal and State agencies and local organi- zations in planning and constructing short-term-care hospitals and skilled-nursing-care facilities in certain metropolitan areas. We have examined also into the extent to which certain medical facilities and services are shared among hospitals. This is our report on planning, construction, and use of medi- cal facilities in the Cincinnati, Ohio, area. The responsible Federal, State, and local health organi- zations have not been furnished with copies of this report for their review and comments; however, the information developed during our review has been discussed with these organizations. We plan to make no further distribution of this report unless copies are specifically requested, and then we shall make distribution only after your agreement has been obtained. Sincerely yours, JJ Comptroller General of the United States % The Honorable Abraham A. Ribicoff Chairman, Subcommittee on ,,& Executive Reorganization Committee on Government Operations United States Senate Contents Page DIGEST 1 CHAPTER 1 INTRODUCTION 4 Hill-Burton program 4 Cincinnati health service area 6 2 PLANNING, CONSTRUCTION, AND USE OF SHORT- TERM-CARE HOSPITALS 14 Hospital occupancy 16 Use of private funds in hospital con- struction 19 Conversion of medical facilities con- structed with Federal grants to uses not specified in Federal grant ap- plications 20 3 PLANNING, CONSTRUCTION, AND USE OF SKILLED- NURSING-CARE FACILITIES 23 State plan for skilled-nursing-care facilities 24 4 COORDINATION AMONG ORGANIZATIONS FOR SHARING MEDICAL FACILITIES 27 Maternity beds 27 Pediatric beds 28 Cobalt units 28 Common-purchase agreements 29 5 SCOPE OF REVIEW 31 ABBREVIATIONS CORVA Health Planning Association of Central Ohio River Valley GAO General Accounting Office PHS Public Health Service COMPTROLLER GENElUL'S P&PORT. PLANNING, CONSTRUCTION, AND TO THE SUBCOMMITTEEON USE OF MEDICAL FACILITIES IN EXECUTIVE REORGANIZATION THE CINCINNATI, OHIO, AREA COikfUTTEEON GOVERNMENT OPERATIONS B-167966 lJb'ATTED STATES SENATE DIGEST ------ UHY -THEREVIEW WASI%~DE At the request of the Chairman of the Subcommittee on Executive Reor- ganization, Senate Committee on Government Operations, the General Accounting Office (GAO) examined into the coordination among Federal and State agencies and local organizations in planning and construct- ing short-term-care hospitals _-._ and skilled-nursing-care facilities in certain metropolitan areas. GAO also reviewed the extent to which certain m94acilities and services are shared among hospitals. The reviews were made in Baltimore, Maryland; Cincinnati, Ohio; Denver, Colorado; Jacksonville, Florida; San Francisco, California; and Seat- tle, Washington. GAO did not review the quality of care being pro- vided by the short-term-care hospitals and skilled-nursing-care facil- ities. This report represents the results of GAO's review in the Cincinnati health service area. FINDINGS AND CONCLUSIONS P<iq r- 1 The Ohio Department of Health administers the grants made by the Public LHealth Service (PHS), Department of Health, Education, and Welfare, un- '2~~ 'der a program--commonly referred to as the Hill-Burton program--for construction and modernization of hospitals and other medical facili- ties. The State agency annually prepares a State plan setting forth an estimate of the number of short-term-care hospital beds and skilled- nursing-care beds needed for the ensuing 5 years. GAO did not evaluate the appropriateness of the methods prescribed by PHS for use by the State planners in determining future bed needs. (See p. 5.) According to the tentative 1971 State plan, the Cincinnati health ser- vice area will need 4,494 short-term-care hospital beds by 1975. The projected total capacity of all hospitals in the area in 1975 is 4,694 beds, or 200 in excess of the projected need. Tear Sheet JULY15J9-71 State planners, when formulating a State plan, are not required by PHS regulations to consider planned increases in total bed capacity. The State agency considers only facilities in operation and those under construction. Two hospitals were planning a total of 100 additional beds, but completion dates and financing arrangements were indefinite. Therefore by 1975 the Cincinnati health service area could have 300 beds in excess of the projected need. (See p. 14.) State agency officials explained that control over privately funded construct'on did not exist but that, when Federal funds were used, some control could be exercised. If construction of a proposed hospital or skilled-nursing-care facility is to be financed with Federal assistance, the State agency must determine that there is a need for the facility before Federal assistance is given. The 1971 State plan shows that 6,839 skilled-nursing-care beds will be needed by 1975. As of December 31, 1969, 6,441 skilled-nursing-care beds were in service and 398 additional beds were under construction in two facilities. According to the State plan, the beds in existence and under construction will meet the needs of the Cincinnati health service area in 1975. GAO, however, has some reservations as to the validity of the data in the State plan because it is based on estimates of use--provided by areawide planning agencies in four major Ohio cities--and is not in- dicative of actual use. The skilled-nursing-care facilities do not report occupancy data in a consistent and reliable manner. Without more reliable data the PHS formula cannot be used properly to determine whether a health service area has too many beds or needs more beds for skilled nursing care. GAO believes that there is a need on the part of the State agency to properly accumulate and ana- lyze data from the conamunity, to enable the preparation of a more reliable planning document for use as part of the State plan. (See pp. 23 to 26.) GAO's review showed that two hospitals had received Hill-Burton grants for the construction of skilled-nursing-care facilities for 195 beds. These beds had not been used as skilled-nursing-care beds, however, but had been converted to short-term-care hospital beds. The change in the category of bed use at the two hospitals caused part of the ex- cess short-term-care hospital beds shown in the 1971 State plan. (See pp. 20 to 22.) PHS does not have adequate authority to require that health facilities be used for the purpose specified in the Hill-Burton grant applications, and the Hill-Burton Act does not effectively preclude reclassification of such facilities so long as they are used for one of the types of health facilities specified in the act. 2 To minimize future conversion of health care facilities from one cate- gory to another9 the State agency estab7ished a policy in April 1970, which required that an applicant certify that a facility would be used for the purpose s-&ted in the Hill-Burton grant application and that a petition substantiating the need for a change in category be submitted to the State agency if a facility desired to make such a change. GAO found that there was some sharing of specialized medical and other services among hospitals. There was a potential, however3 for more sharing of such services. It was noted that more could be done in the sharing of maternity and pediatric beds and in the utilization of cobalt facilities. (See pp. 27 to 29.) GAO believes that, before this potential can be fully realized, studies will be required TV determine what services can be shared and how such sharing can be accomplished to benefit all concerned, The greatest op- portunity to achieve the benefits of sharing appears to be in planning for new facilities. ‘1’r.u Shrct INTRODUCTION At the request of the Chairman of the Subcommittee on Executive Reorganization, Senate Committee on Government Op- erations, the General Accounting Office examined into the coordination among Federal and State agencies and local or- ganizations in planning and constructing short-term-care hospitals and skilled-nursing-care facilities in certain metropolitan areas. We did not review the quality of care being provided by the short-term-care hospitals and skilled- nursing-care facilities. We considered the actions taken to effect the sharing of certain facilities and equipment among hospitals. Metropolitan area z covered by our reviews included Bal- timore, Cincinnati, Denver, Jacksonville, San Francisco, and Seattle. These areas were selected on the basis of the Fed- eral financial participation in the construction of short- term-care hospitals and skilled-nursing-care facilities and on the basis of the wide.dispersion of the cities throughout the United States. This report presents the results of our review in the Cincinnati health service area. HILL-BURTON PROGM Title VI of the Public Health Service Act (42 U.S.C. 2911, commonly known as the Hill-Burton program, authorizes the Public Health Service to make grants to States for tie construction of medical facilities. PHS, under the Hill- Burton program, requires each State to designate a single agency to administer the program and to prepare annually a State plan projecting the need for medical facilities and comparing that projected need with the resources expected to exist in each designated health service area of the State. The Ohio Department of Health, herein referred to as the State agency, is designated to administer the Hill- Burton program in Ohio. In accordance with the method pre- scribed in PHS guidelines, the State agency annually esti- mates the need for short-term-care hospital beds and 4 skilled-nursing-care facilities for the ensuing 5 years for the State of Ohio. We did not evaluate the appropriateness of the method- ology used Ln arriving at these estimates. We accepted the State plan estimates of the status and projected need of medical facilities in the Cincinnati health service area. The State plan estimates are arrived a&in accordance with PHS guidelines, without considering the bed capacities of the PHS, Veterans Administration, or military hospitals. The basic data used by the State agency to project the need for short-term-care hospitals and skilled-nursing-care facilities in the Cincinnati health service area consists of (1) current and projected population figures furnished by the Bureau of the Census, (2) hospital utilization data fur- nished by the hospitals, and (3) estimates of occupancy for skilled-nursing-care facilities furnished by areawide plan- ning agencies in four major Ohio cities. To arrive at a projected average daily census of pa- tients, the State agency multiplies the projected population by the use rate (the number of days of inpatient care for a year for each 1,000 population) and divides the result by 365. For hospitals the projected average daily cerpsus is divided by 80 percent and increased 5y 10 beds to arrive at a total estimate of beds needed, assuming SO-percent occu- pancy of hospital facilities. The projected average daily cezlsus for skilled-nursing-care facilities is divided by 90 percent and increased by 10 beds to arrive at an estimate of beds needed, assuming go-percent occupancy of skilled- nursing-care facilities. The result of these calculations provides a va-zancy rate to meet emergencies of about 20 per- cent for short-term-care hospitals and ll> percent for skilled-nursing-care facilities. The State agency has established special priorities for the distribution of Hill-Burton grant funds to be used for construction of buildings to accommodate city health depart- ments; shared facilities when two or more hospitals agree to share; outpatient facilities serving the needs of the disadvantaged in low-income areas; and hospitals with re- search and training programs that are owned by, or affiliated with, medical schools. The State agency is also responsible for licensing ma- ternity and psychiatric hospitals and maternity and psychi- atric units of hospftaks. Hospitals and units of hospitals are not Bicensed, except for these types of facilities. The State agency, however, requires hospitals to register axmu- ally and to submit reports which provide most of the data for the State plan. IHursing homes me licensed by the State, except in three cities, including Cincinnati, where l.Pcens- ing authority is delegated to city health departments. The State of Ohio wasallotted, under the Hill-Burton program during fiscal years 11945 through 1970, $68 million in funds in the foPlowIng categories. The Cincinnati health service area was allotted $7.2 million of this $68 million. Amount Category (000,000 emitted) Hospitals and public health centers $34 Long-term care (includes skilled nursing care> 18 Rehabilitation 3 Modernization 8 Diagnostic or treatment centers 5 Total $68 During fiscal year 1970 the State of Ohio was allotted $7.7 milHion. The Cincinnati health service area was not allocated funds for fiscal year 1970. The State agency divided Ohio's 8% counties into 46 health se-mice areas by designating selected cities as kos- pita1 centers, with the county or countc%es surrounding the cities forming the boundary lines for the health service areas. Counties with smal"s populations or without hospitals were combined 9 in who%e or in par+ts with adjacent counties after determining what medica% fa&%Lties the residents of the counties were usfng. CinchnatE, heated in the southwest corner of Ohio in I-Iamilton county, is bordered on the south by Kentu&y and on the west by Indiana, Ohio csmties adjacent to Hamilton are Butler and Warren to -tie north and Clermont to the east. A map of the area is shown on page 8. The Cincinnati health service area includes Hamilton County, the western part of Clermont Coasrdy , and the southern part of Warren COW&Y. The Cincinnati health service area is represented by the shaded areas on the map. As of December 31, 1970, there were 22 hospitals in the Cincinnati health service area. Of these 22 hospitals, 14 are short-term-care hospitals (see ch. 2 for discussion), in- cluding a hospital operated by the Veterans Administration; two are long-term-care hospitals which provide skilled nurs- ing care, (see ch. 3 for discussion); and four are psychiat- ric or tuberculosis hospitals, which are not discussed in this report. In addition to the existing 16 short-term-care hospitals, there are two short-term-care hospitals under construction, one of which will replace an existing short- term-care hospital. The locations of the hospitals within the Cincinnati health service area are shown on the map on page 9. Generally there are two types of nursing homes--those which provide care for convalescent or chronic-disease pa- tients requfring skilled nursing care and are under the gen- eral direction of persons licensed to practice medicine or surgery in the State and those which. provide primarily domi- ciliary care. Only the homes providing skilled care qualify for Hill-Burton grants. Our review covered only those nurs- ing homes providing skilled nursing care. There are 100 skilled-nursing-care facilities (two long-term-care hospi- tals, three units of hospitals, and 95 separate nursing homes) in the Cincinnati health service area, many of which are located near the hospitals in the Cincinnati health ser- vice area. Diagnostic and treatmeflt centers provide services for outpati~ts. A public health center is a community outpa- tient facility which provides services to prevent disease, prolong life, and maintain a high degree of physical and men- ta'k efficiency. These centers were not included in our re- view. CINNCINNATI AND THE SURROUNDSNG AREA OHIO --- I ---------, ____-------- r I BUTLER I WARRE INDIANA 0 6 12 , t I I SCALE IN MILES /‘, ,r- - 1 GRANT : PENDLETON i \ \ \ \,,_r‘-- A CINCINNATI HEP ,LTH SERVICE AREA COMPLETED IN7 ‘ERSTATE HIGHWAYS @@@ea@e PLANNED INTERSTATE / HIGHWAYS -I\,” KENTUCKY 8 HOSPITAL LOCATION 0-Q See Listing -N- COMPLETED INTERSTATE HIGHWAY _ ___ PLANNED INTERSTATE _-mm HIGHWAY 9 HQspitals la dz21e cincimazi Health Service Area sbsrt-term-care hospi$aPs: 1. Providence Hospital (under const~ction~ 2. St. George Hospital 3. Shriners Burns Hnstitde 4. Childrenss Elospftal 5, Christ Hospital 6. Christian R. Hohes Hospital 7. Cincinnati General Rospita31 8. Deaconess Hospital 9. Good Samaritan Ho+9ita% 10. Jewish Hospital 11. St. Francis Hospital 12. St. Mary Hospital. (to be replaced by the Providence PSospftal.1 l-3. Veterans Administkatfon Hospital l-4. Bethesda Hospfta% 15. Bethesda North Hospital (opened. in June 3.970) 16. otto c. Epp l!lemorial EQspieal 17. ckir Lady OS Mercy ~Hos=$ta~ 18. Clemsnt County Csmmdty &x3gitaf hot shown 0x1 map; uder construction axi wiHB be located about I.5 miles east of Our Lady cxf PIemy HospftaI> ao l Long-term-care and psyehi.aZric hospitals: 19. RolPman Psychiatric Hospital 20. Csnvalesc~t HospitaP fQk Children 21. am Hospital of HamiHton County (tubercuEosEs) 22. Daniel Drake l!femorPal Hospital 23. Emerson A. North Hospital (psychiatric) 24. Longview State Hospital (psychiatric) Statistics for the 12 months ended March 31, 1967, in- dicate that most pati s admitted to the Cincinnati area hospitals resided in ifton Col.mtyo These were the most recent statistics available at the tPme sf our review. Be- cause the Cincinnati health service area has a large9 cen- trally located hospital comj%ex which includes the College of Medicine, University of Cincinnati, it receives special- ized medical cases from surro~ding counties of Ohio, Pndi- ana0 and Keneucky. About 12 percent of the patients admit- ted to the Cincinnati hospitals reside in surrounding coun- ties. In I.957 the Greater Cincinnati Hospital Council was es- tablished to coordinate hospital pPanning. The hospital emnei% is composed of the hospital a inistrator and a rep- resentative of the board of trustees OA each of the member hospitals in an eight-comty area. The hospital council was formed for the following purposes. --TQ promote voluntary eoopera among member hospi- tals in dealing with eomon istrative and opera- tional problems by a free e e sf ideas9 policies, and infomtion regarding methods of a inistration, --To coordinate the effo732s of hospitals,in general9 in the fields of @Evil defense2 disaster, and general com- munity health prob"aems 0 . The activities of the hospital council are limited to promoting cooperation, It has no direct or indirect control or authority over finances5 policies, and internal procedures or practices of its members. Ihrough planning efforts of the hospital council partially financed under section 318 of the Public Health Service Act for areawide health facil- ity planning, an extensive series of construction programs were initiated between 1960 and 1965 with financing from bonds issued by Hamilton County and the city of Cincinnati, gifts, private borrowings, and Hill-Burton funds. Public Law 89-749, approved in November 1966, established comprehensive health planning. It authorized the Surgeon General, PHS, to make grants to States and local communities to plan for health services, facilities, and manpower re- lating to physical, mental, and environmental health. Comprehensive health planning is a continuous process which requires the participation of both providers and con- sumers of health services to identify health needs and re- sources, establish priorities, and recommend courses of ac- tion. In 1967 the Governor of Ohio designated the Ohio De- partment of Health and its Office of Comprehensive Health Planning to carry out the program. As of December 1970, 11 areawide agencies3 involving all but seven of Ohio's 88 counties, had been established. The Cincinnati areawide comprehensive health planning agency was established in July 1968. This agency, known as the Health Planning Association of the Central Ohio River Valley (CORVA), serves four counties in Ohio, eight in Kentucky, and t-go in Indiana. CORVA is an independent, non- profit corporation chartered under the laws of Ohio and reg- istered and recognized in Kentucky and Indiana. Since 1968 the agency has been supported for organizational purposes by Federal grants of about $271,000 and by matching non- Federal funds. The map on page 8 shows the 14 counties in Ohio, Indiana, 3nd Kentucky served by CORVA. CORVA's pri-aary goal is to provide the local cornnrrmaity with a mechanisn to participate in the plans and development of health progruns. The hospital council served as the pri- mary community wealth planning organization until CORVA was 12 established. COWA has contracted with the hospital corn- cil to assist in hospital facilities planning in the Cincin- nati area. The hospital council no longer receives funds under section 318 of the Public Health Service Act, repealed in November I.966 with the passage of PubSbe Law 89-749. 13 CHAPTER2 PLANNING, CONSTRUCTION, AND USE OF SHORT-TERM-CARE HOSPITALS According to the 1971 State plan, the Cincinnati health service area will need 4,494 short-term-care hospital beds by 1975(l) and the projected capacity of non-Federal, short- term-care hospital beds in 1975 is 4,694 beds or 200 beds in excess of the projected need. In addition, two hospitals were planning a total of 100 additional beds, but completion dates and financing arrangements were indefinite. Therefore by 1975 the Cincinnati health service area could have 300 beds in excess of the need now projected in the State plan. The State plan shows that, of the 66 health service areas in the State of Ohio, the Cincinnati health service area is 50th in priority for construction of short-term-care hospi- tals. The State plan shows also that, of the projected 4,694 bed spaces by 1975, 341 bed spaces in four of the 16 non- Federal, short-term-care hospitals do not conform to Hill- Burton construction standards. We noted that 285 of the 341 bed spaces did not meet Hill-Burton construction standards because the buildings were not constructed of fire-resistant materials, had wooden roofs, or had exit doors not as wide as required by Hill-Burton standards. Although these beds did not conform to Hill-Burton con- struction standards, Cincinnati's Building Department and the Fire Prevention Bureau approved their continued opera- tion because the facilities met the building code require- ments when they were constructed and because safety pre- cautions existed, such as sprinkler systems. Local fire inspection officials stated that these facilities were 1On March 1, 1971, the State plan for fiscal year 1971 had not yet been published. The information included in this report was furnished to us by the State agency from its most recent draft of the 1971 State plan. relatively safe for patient care. The State plan recognizes that these beds are available to meet current and future patient-care needs. The number of beds in short-tern-care hospitals in the Cincinnati health service area has been increasing, and the number of nonconforming beds has been decreasing since 1964 when the hospital councilgs Committee on Hospital Facilities Research completed a plan for expansion and modernization of hospitals in Hamilton County. That planning effort was funded partly by PHS through section 318 of the Public Health Service Act, which section authorized grants to local organizations for areawide health facilities planning. Sec- tion 318 was repealed in November 1966 with the passage of Public Eaw 89-749. Since 1964 construction programs have been undertaken which will total about $100 million. Funds were provided primarily by city and county bond issues ($34.2 million) and through private means ($58 million); the Hi‘BE-Burton program contributed $7.2 mil1io.n over a period of 6 years. P Acccsrding to the armuah reports submitted to the State agency by the non-Federal, short-term-care hospitals, the beds in the Cincinnati health service area averaged 87- percent occupancy during calendar year 1963. Beds desig- nated for medical and surgicall use averaged 89-percent oc- cupancyo while beds designated for maternity or pediatric use averaged 74- and 7%percent occupancy, respectively. The hospital council realized, through its statistical programs, that the birth rate had been dropping from 1957, which caused a need for fewer maternity and pediatric beds. Actions taken by the hospital council to reduce the number of maternity beds and the possibility of reducing or con- solidating pediatric services are discussed in chapter 4. The following table shows the 1969 occupancy data for the 15 non-Federal, short-term-care hospitals that were in operation in 1969. Hospital Beds in Use in Calendar Year 1969 and Avers Short-Term-Care Hospital-Bed Occupancy for 1969 aeported by Cincinnati health Service Aiea Hospitals to the Ohio Department of Health Medical and surgical Maternity Pediatric Total Percent Percent Percent Percent Hospital Beds occupancy Beds OCCUPCUXY Beds occupancy Beds occupancy Bethesda 37?a 75 80 78 457 Catherine Booth (note b) 24 35 :: Children's 2;5 7; 2:zc Christ 524 56 ;6 25d 59 605 ii Christian R. Holmes 48535 Ei 5:: 96 Cincinnati General 62 ;4 ;4a 76 Deaconess 224 1:: 224 108: Good Samaritan 513 95 s5 s5 ;5 673 Jewish 367 50 90 23 :02 44Of 8: Otto C. Epp Memorial z85 60 88 Cur Lady of Mercy ;; 104 28 ;4 103g 96 St. George 75 75 92 St. Francis 210 210 95 St. Mary 152 80 -2 6; 154 Shriners Burrs Institute 30 98 30 - ;08 Total 394 - Li 3,894 -87 aAlthough 377 beds were in use on December 31, 1969, about 100 of that total were opened in June 1969. The average occupancy of bed3 available for use would, therefore, be greater than 75 percent. bClosed in September 1969. 'In 1972 a 45-bed addition and space for another 36 beds will be completed. dne hospital administrator said that there were 68 pediatric beds but that only 25 were in use. eCincinnat1 General Hospital has 66 pediatric beds but reported only 24 in use. f In 1970, 22 beds were opened for service. gin 1970, 50 beds were completed. 46 A State agency official told us that an 80-percent oc- cupancy rate was desirable and allowed efficient operations. The executive secretary of the hospital council and Cincin- nati Blue Cross officials said that a hospital should op- erate at 95-percent occupancy to be efficient, because hos- pitals staffed for a higher rate of operation than they nor- mally experienced. Other estimates given to us by admin- istrators of hospitals in the Cincinnati health service area were between 85- and 97-percent occupancy. We were unable to obtain a consensus as to an occupancy rate which would enable a hospital to operate most efficiently. Many factors influence the occupancy of hospitals, in- cluding the availability of health insurance coverage for alternative methods of care and the willingness of the phy- sicians to transfer patients to nursing homes. The hospi- tal council, in studies of patients in hospitals, concluded that 17 to 20 percent of the patients in hospitals could have been transferred to slcilled-nursing-care homes for treatment. Cincinnati Blue Cross officials said that they were aware of estimates made by physicians and hospital ad- ministrators that from 10 to 30 percent of hospital patients could receive needed care in nursing homes. In that connec- tion, the president of the Cincinnati Academy of Nursing Homes stated in a letter to GAO dated January 22, 1971, that: "At the present time, existing Nursing Homes have 1,000 beds that are vacant and it is generally felt that this is due to the policy of local hos- pitals retaining patients for hospital care, who could be transferred to a nursing home." The executive secretary of the hospital council and the president of the Academy of Pkdicine informed us that, be- cause most health insurance plans did not provide coverage for nursing-home or outpatient care or for care in physi- cians' offices, patients often were admitted to hospitals so that the costs of treatment would be covered. These of- ficials said the system of hospital insurance payment pro- vided no incentive to use the least costly means of treat- ment. 17 In July 1970 Blue cross, in an attempt to reduce hos- pitalization, began a 6-month experiment in southwestern Ohio, providing payment for cobalt treatments on an outpa- tient basis. In January 197% BPu.e Cross was continuing the experiment while evaluating the results of the test, 18 USE OF PRIVATE FUNDS IN HOSPITAL CONSTRUCTION The executive secretary of the hospital council informed us that some construction was undertaken which had not been contemplated in the expansion and modernization plan pre- pared by its research committee. He said, however, that the hospital council had no control over the use of construction funds. In its expansion and modernization plan, the research committee commented: "Questions have arisen concerning the professed plans of certain hospitals to go on their own ini- tiative beyond the limits recommended by the over- all hospital plan. Your Subcommittee recognizes the danger inherent in any policy restricting ex- pansion of facilities where such expansion is to be accomplished with funds provided by the insti- tution." The research committee recommended that facilities con- structed with public funds be stringently held to the over- all hospital plan but that hospitals not be restricted in privately financed expansion and modernization. The re- search committee urged, however, that every hospital under- take only expansion that was consistent with community needs. State agency officials stated that control did not ex- ist over privately funded construction but that, when Fed- eral funds were used, some control could be exercised. If construction of a proposed hospital or skilled-nursing-care facility is to be financed with Federal assistance, the State Hill-Burton agency must determine that there is a need for the facility before Federal assistance is given. The need for a new facility in a health service area is based on a comparison of the current bed capacity of fa- cilities (in service and under constructional with the pro- jected need as shown in the State plan, In this way the State Hill-Burton agency can prevent the construction of ex- cess medical facilities which are financed directly or indi- rectly with Federal assistance. The executive secretary of the hospital council stated that, because Ohio had no hospital licensing or franchising 19 law which required that a community need be demonstrated be- fore hospital beds could be constructed, the organizations which, in his opinion, could assist in preventing overcon- struction were those which paid for health care services. He also said that these organizations should establish poli- cies of not paying for any part of a construction program (the cost of which is included in the health insurance reim- bursement rate structure) unless construction was approved by the areawide comprehensive health planning agency. Blue Cross of Southwest Chio and F/ledicrji:e pay about 75 percent of hospital costs in the Cincinnati area. In this regard, officials of Blue Cross stated that they hoped to issue such a policy in the near future, if it was determined to be allowable by State law, to assist in reducing rising hospital costs. (See p. 22 for a discussion of the effect of overconstrucr-ion on a hospitalss operating costs.) CONSTRUCTEDWITH FEDERAL GRANTS TO USES NOT SPECIFIED IN FEDERAL GRANT APPLICATIONS The State agency awarded Hill-Burton grants to two hos- pitals in the Cincinnati health service area to construct skilled-nursing-care facilities. Cne grant was for 120 skilled-nursing-care beds in the Cincinnati General Hospi- tal. The other grant was for the St. George Hospital which was to be a 75-bed, chronic-disease, skilled-nursing-care hospital. The 120 skilled-nursing-care beds completed in September 1969 at the Cincinnati General Hospital, however, had not been used for skilled-nursing-care patients, and the 75-bed, skilled-nursing-care facility, which was completed in November 1968 at the St. George Hospital, was being used as a short-term-care facility. In July 1965 Cincinnati General Hospital was awarded a Hill-Burton grant of $500,000 to assist in construction of the 120-bed, skilled-nursing-care unit, on the basis of the need for these bzds shown in the 1965 State plan, as part of its 650-bed, short-term-care hospital. The 1970 State plan indicated that the hospital changed the category of the skilled-nursing-care beds to short-term-care beds. According to a State agency official, the beds had not been used for skilled nursing care but the change in category W;LS approved. A State agency official told us that, when construction was under way, hospital officials decided that skilled- nursing-care space was available in the Daniel Drake Memo- rial Hospital, and therefore skilled-nursing-care beds at Cincinnati General Hospital would not be needed for extended- qpe patient care, In June 1965 St. George Hospital was awarded a Hill- Burton grant of $700,000 to assist in constructing a chronic- disease, skilled-nursing-care hospital. In September 1970 the State agency inquired into the overall use of the hos- pital, because the hospital's annual reports indicated that it was being used as a short-term-care facility. State agency officials said that a petition,, which in- cl.uded information concerning the need for a change, would be necessary to change the hospital to a short-term-care facility because Hill-Burton funds were involved. The hos- pital administrator replied that many of the patients were chronic-disease patients but that increasing demands were being made on the facility for emergency and short-term-care cases. The administrator requested the State agency to change the hospital's classification to a short-term-care hospital. The State agency said that the request would be reviewed by CORVA and advised the hospital, as follows: "The proof of need to change the qpe of faciliq including proof of the greatest need in the com- munity is required. In other words proof that a general hospital is more needed in the area than a long-term-care facility. Also the effect such a change would have on adjoining existing hospi- tals which have been meeting needs over the years must be considered." State agency officials told us in January 1971 that they and CORVA were studying the situation. PHS does not have adequate authority to require that health facilities be used for the purpose specified in Hill- Burton pmt applications, and the Kil1-Burton Act does not effectively preclude reclassification of au& facilities so long as they are used for one of the types of health facil- ities specified in the act. The PHS General! Cmmsel ruled that a grantee could reclassify beds as long as cl.1 the fa- cility was not sold or transferred to, am ineligible program applicant and (2) the hospital continued to qualify as a pubBic or nonprofit hospital. Through Hill-Burton grants the Governme:;&t can contribute to the construction of hospital facilities which can become part of the overall excess bed capacity in the area, By the conversion of Hill-Burton-financed skilled-nursing-care beds to short-term-care beds, which were not necessalry to meet the overall needs in the area, it could be argued that Gov- ernment funds indirectly contributed to the construction of excess short-term-care hospital bed capacity in the area. In this regard, changing the category of bed use at the two hospitals from skilled nursing care to short-term care caused part of the excess short-term-care hospital beds shown in the 1971 State plan. Low utilization, which is a natural. result of excess medical facilities , generally results in higher operating costs for each patient-day. Since the Government reimburses hospitals and skilled-nursing-care facilities under the PIedi- care and Medicaid programs, the Government can be expected to share in the higher operating costs. To minimize future conversion of health care facilities from one category to another, the State agency established a policy in April 1970 that required an applicant's govern- ing body, upon award of a Hill-Burton grant, to certify that the faciliq would be used for the purpose stated in the Hill-Burton grant application. The policy required also that, if the facility desired to change the category of use-- as did the St. George Hospital--the faciliv submit to the State agency a petition substantiating the need for such a change in category. 22 CHAPTER 3 PLANNING, CONSTRUCTICN, AND USE OF SKILLED-NURSING-CAPE FACILITIES According to the 1971 State plan, the Cincinnati health service area will need 6,839 skilled-nursing-care beds by 1975. As of December 31, 1969, 6,441 skilled- nursing-care beds were in service in 100 non-Federal nursing homes and hospitals. In two facilities 398 additional beds were under construction. According to the 1971 State plan, the 6,441 beds in service and the 398 under construction will meet the needs of the health service area in 1975. We have some reservations, however, as to the validity of the State plan data for skilled-nursing-care facilities, since it is based on estimates of use which may not be re- liable. PHS guidelines state that skilled nursing care is 24- hour care which is sufficient to meet the total nursing needs of all patients, This care requires the employment of at le.%? CISt one registered professional nurse responsible for the total nursing service and of a registered nurse or licensed practical nurse in charge of each tour of duty* Facilities providing primarily domiciliary care were not included in our review. The 1971 State plan noted that 3,968 bed spaces, in use or available for use in 79 of the 100 skilled-nursing- care facilities in the Cincinnati health service area, did not conform to Hill-Burton construction standards, because the buildings were not constructed of fire-resistant mate- rials or did not meet other Hill-Burton fire and safety re- quirements. These beds are recognized in the State plan as being available to meet current and future patient-care needs and are licensed to operate by the Ohio Department of Health or by the Cincinnati Health Department. Officials of the Ohio Department of Health informed us that these fa- cilities were safe for patient care, according to their standards which required inspections for building and fire safety by the State Fire Marshall. . 23 Federal involvement in construction of skilled-nursing- care facilities in the Cincinnati health service area has heen very limited in recent years. Most skilled-nursing- care facilities in the area are operated for profit, al- though Hill-Burton assistance is available only to nonprofit orgapizations. In recent years (1967-701, the Federal Hous- ing Administration has insured only two mortgages for skilled-nursing-care facilities and the Small Business Ad- ministration has guaranteed only one loan for a skilled- nursing-care facility. One skilled-nursing-care facility received a Hill-Burton grant in 1963. STATE PLAN FOR -.--- SIXLLED-NURSING-CARE FACILITIES To determine whether additional facilities are re- quired, the 1971 State plan for skilled-nursing-care facili- ties projects the gross need for facilities for each desig- nated health service area for the ensuing 5 years and com- pares such needs with facilities, in existence or under construction, that conform to Hill-Burton'construction standards. To determine the gross need, the past year's use of skilled-nursing-care facilities is related to the current population of persons 65 years of age or over to determine the number of patient-days used for each 1,000 population. The formula assumes that an increase in the population of persons 55 years of age or over will result in a proportionate increase in the use of skilled-nursing- care facilities. Although data to project gross need is available on the use of long-term hospitals and units of hospitals, we have found that it is not readily available for nursing homes which make up a major part of the total skilled- nursing-care beds in the Cincinnati health service area. A State agency official said that nursing homes were re- quired to submit monthly occupancy reports but that only 60 percent of the nursing homes submitted the reports. He said also that the requirement had not been enforced be- cause the State agency believed that emphasis should be placed on establishing a system of good patient care rather than on reviewing reports. 24 A State agency official told us that the data on use of nursing homes in the State plan was estimates based on information obtained from areawide planning agencies in four major Ohio cities. The State plans for fiscal years 1969 and 1970 were based on estimates of 95-percent occu- pancy p and the State plan for fiscal year 1971 was based on go-percent occupancy. State agency officials said they had had difficulty in deciding what estimate to use for nursing-home occupancy for the 1971 State plan. The first draft of the plan was based on loo-percent occupancy, but, after some deliberation, the occupancy rate was revised to 90 percent. The only occupancy data for nursing homes prepared regularly by a central source includes only those beds cer- tified as extended-care facilities for Medicare. The hos- pital council has maintained data on the use of those fa- cilities since 1967. According to that data the occupancy of extended-care facilities was maintained at a level of about 90 percent through July 1969, By December 1969 the occupancy rate had declined to about $7 percent. The Cincinnati Academy of Nursing Homesp an organiza- tion of proprietary nursing homes, surveyed Cincinnati nursing homes to determine the occupancy rates and reported in January 1971 that the average occupancy was about 80 percent. In accordance with PEE guidelines, a go-percent occupancy factor was used in the State plan for estimating future bed needs. The following chart, using different levels of occupancys compares the bed-need determination with the inventory of facilities to be available in 1975 in the Cincinnati health service area. Percent of Projected bed Bed need occupancy need Available or excess(-) 80 6,179 6,839 -660 90 6,839 6,839 95 7,169 6,839 330 100 7,496 6,839 657 Without more reliable data concerning occupancy rates in skilled-nursing-care facilities, the PHS formula cannot be used properly to determine whether a health service area has too many beds or needs mOFe beds for Skilled nursing care. We believe that there is a need on the part of the State agency to properly accumulate and analyze date from the community, to enable the preparation of a more meaning- ful planning document for use as part of the State plan. 26 We obtained information m. the extent to which certain medical facilities and services were shared among the Cincin- nati area hospitals. Our review irduded maternity and pe- diatric beds md cobalt mits, We dso examined into the US@ Qf gr -purchasing arrangenen-Cs as a means of reducing hospital costs. Although we fcmnd that there was some sharing of spe- cialized medical a.nd other services among hospitals in the Cincinnati area9 we believe that there is a potential for more sharing of such services, We believe also that, before this gotentiaf can be ful%y realized, studies wi%P be re- quired to dete-mine what services cxn be shared and how such sharing can be aecmp~ished to benefit all. concerned. We believe that the greatest opportunity to achieve the benefits of sharing appears to be in planning for new facilities, Under the provisiom of section X3 of Public Law 91-296, which mends the Pub%ic Health Service Act, States are enti$fed 133 receive Hi1l-Bw333n grant funds up to 90 per- gPjece vs cost if the pmjeCt offers Bspotential health care msf thrmgh shared services among health care fasilitiesP8 or 'atRrougR interfacikity coopera- tion." It appears that this legislation, which increases Federal financial participation in those projects which in- vdve sharing, shmld provide hospitals which are seeking Federal grant funds with a strong incentive to share ser- vices. In A.qpst I.970 a committee, cQ¶lpQsed of a inistrators of ImspitaPs having obstetrical. units and members of the Cincinnati Obstetrical md Gynecological Society, was estab- fished to plan the fu$ure obstetrical-care needs of the com- munity. The possibi%ity of a central obstetrical and gyne- cological center at Bethesda Hospital wzs discussed, The executive secretary of the hospital council. said that Be- thesda Hospital could become one of the outstanding obstet- rical and gynecological hospitals in the country if such centralization were to take place, The administrator of Bethesda Hospital said that many problems which obstructed centralization existed but that a very extensive study would be needed before a decision could be made on the fea- sibility of centralization. The administrator of Good Samaritan Hospital, which has a maternity service that exceeds Bethesda Hospital's, was opposed to centralization because Good Samaritan had a good occupancy rate in its maternity unit which was operated in conjunction with a large pediatric unit., PEDIATRIC BEDS In December 1970 five hospitals in the Cincinnati health service area had 384 pediatric beds in use, 71 pedia- tric beds under construction, and 73 pediatric beds not in service in two of the five hospitals because of Pow occu- pancy of pediatric beds. (See p. 16.1 The executive secretary of the hospital council said that pediatric services could be centralized into one or two of the area hospitals, which would result in more effi- cient use of bed space, more efficient operation, and better patient care. Relative to consolidation at the hospital which serves primarily children, he commented that many physicians were forced to use pediatric facilities at other hospitals because of problems with scheduling surgery at the hospital. He explained that, at this hospital, faculty members of the University of Cincinnati College of Medicine were given preferential. treatment and that other physicians had difficulty in scheduling patients for surgery. In ad- dition, he said that higher educational requirements were imposed on physicians seeking to practice at this hospital. COBALT UNITS In response to an inquiry from two hospitals in sur- rounding counties concerning the desirability of adding co- balt equipment, the hospital council reviewed and reported on the use of cobalt equipment in the Cincinnati hospitals. In June 1970 the hospital council reported that five * cobalt units in Cincinnati hospitals were being used at 44.6 percent of capacity. The study was based on an esti- mate that a cobalt device with a fresh charge feasibly could provide 60 treatments a day. Using 20 days a month as a base, the hospital council estimated that the cobalt units in existence in June 1970 could provide 18,000 treat- ments over a 3-month period, The five hospitals, however, in the first 3 months of 1970, provided 8,024 treatments, or less than 45 percent of capacity, Use of a sixth cobalt unit, in a private physician's office in Cincinnati, was not included in the study. A seventh cobalt unit, which was approved by the hospital councilp was put into service in December 1970 and will probably lower the overall utili- zation of cobalt units in the area. As a result of the study3 the assistant executive sec- retary of the hospital council said that two hospitals in surrounding counties had decided not to add cobalt equip- ment but to use cobalt units in the Cincinnati hospitals. COHNON-PUPCUASE AGREEME&TS In October 1968 the hospital council began a study of possible savings through group-purchasing of liquid oxygen, The following data provided by the executive secretary prompted the study. Thousand of cubic feet a momth Price for each PO0 cubic feet High Low Under 25 $0.90 $0.64 25 to 75 .82 .42 75 to 125 .75 .313 Over 125 .50 .285 Five suppliers responded to the hospital council's invita- * tion to quote prices under a common-purchase agreement, and e the lowest bidder was accepted as the supplier for the par- . ticipating hospitals. ted bid was at a rate of $0.275 for each BOO cubic feet for quantities up to 100,000 cubic feet a month with further graduated reductions. 29 The assistant executive secretary of the hospital coun- I cil said that three hospitals initially.had entered into the common-purchase agreement and that later additional hospitals had joined in the agreement. He stated that other hospitals which had contracts with the successful bidder also received the benefit of the lower rates. As a result of the common- purchase agreement, some suppliers not participating in the agreement aiso reduced their prices. The hospital council estimated that hospitals in its eight-county area will save about $75,000 annually through the common-purchase agreement. 30 CHAPTER 5 SCOPE OF REVIEW We reviewed the coordination among Federal and State agencies and local organizations in planning and constructing short-term-care hospitals and skilled-nursing-care facil- ities in the Cincinnati health service area. We reviewed the planning for and constr*uction of medical facilities, pri- marily short-term-care hospitals, financed either with pri- vate and community funds or through Federal financial assis- tance. We compared the existing and planned capacity of short-term-care hospitals and skilled-nursing-care facili- ties with the projected needs as determined by the State planning agency. We also considered the actions taken to effect the sharing of certain facilities and ecyclipment among hospitals. The information in this report was based, for the most part, on discussions with officials of Federal and State health agencies, local planning organizations, hospitals, and other health-related organizations. The review concen- trated on the Hill-Burton program, and therefore more of the information was obtained from the Ohio Department of Health, Columbus, which is the State Hill-Burton agency. U.S. GAO Wash., D.C.
Planning, Construction, and Use of Medical Facilities in the Cincinnati, Ohio, Area
Published by the Government Accountability Office on 1971-07-15.
Below is a raw (and likely hideous) rendition of the original report. (PDF)