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The
Regionalization
of Personal

Health Services

 

 

EDITED BY ERNEST W. SAWARD

Published for the Milbank Memorial Fund by .
PRODIST

New York 1975
 

 

Regionalization of Health
Services: Current Legislative
Directions in the United States

KARL D. YORDY

The concept of regionalization of personal health services has been
advocated for many years to provide a framework for organizing
the complex functions inherent in modern medical care. The Daw-
son Report (1920) in England and the writings of American propo-
nents such as Grant (Seipp, 1963) and Mountin (Mountin et al., 1945)
propose the same basic concept as a guide to the planning of health
services. The factors that led to a concern with regionalization—
greater specialization based on expanding knowledge and accom-
panied by problems of increased costs and access to services of
acceptable quality—have intensified in recent years; yet regionaliza-
tion remains a concept rather than a reality in American health care.
With the imminence of National Health Insurance strengthening the
already existing trend toward greater regulation of the health
services industry, it is timely to take the measure of regionalization
as an active principle guiding national policy. The focus of this
paper is on federal legislative intent and the specific legal mecha-
nisms that might be used to implement regionalization, including
those previous legislative actions which are the direct antecedents of
current legislation.

The realities of specific legislative provisions, legislative history
expressing Congressional intent, and experience with the halting
efforts of legislative antecedents during the past three decades all
202 The Regionalization of Personal Health Services

provide clues to the type of environinent provided by the American
political systern for implementing planning strategies such as region-
alization. ‘he analysis will show that there is ample reason to be
skeptical about any strong commitment to regionalization in current
legislation. But such conclusions are speculative. The primary
current legislative event, the National Health Planning and Re-
sources Development Act of 1974 (P.L. 93-641), was signed by the
President on Jan. 4, 1975. Its future implementation will take place
in a climate greatly influenced by the probable passage of some
form of national health insurance and a growing array of other
-regulatory mechanisms at the state and federal levels.

Definition of Regionalization

A definition of regionalization that follows closely the classic
concept of Dawson, Grant, and Mountin is used in this paper to
provide demanding criteria for the legislative analysis. Regionaliza-
tion is an explicit plan covering a defined geographic area. The plan
sets forth specific responsibilities for providing access by the popu-
lation to the full array of functions involved in the delivery of
modern medical care. Those functions are divided among several
levels of care according to the complexity of the services and the
frequency of their use among the defined population. Each practi-
tioner and institution is assigned responsibility for particular sets of
those functions, usually with a major focus on one level of care. The
hierarchical system set forth in the plan has provisions for integra-
tion of the component parts, including referral patterns upward
through the levels of care and established patterns of consultation
(and related education).

A fully implemented policy of regionalization would require
constraints on the types of services that could be offered by an
individual or institution. Such a policy would also imply specific
responsibilities to provide the defined population with each type of
care. The policies to carry out such an organized regional system
might be referred to in other fields as franchising rather than
regionalization.

 

 

 

Legislative Directions 203

The Federal Legislative and
Program Antecedents of Current Legislation

The National Health Planning and Resources Development Act
of 1974 is based on and replaces the legislation authorizing three
federal health programs—the Hill-Burton program providing assis-
tance in the construction of health facilities, the Regional Medical
Programs, and the Comprehensive Health Planning programs. In
addition, the Act removes authority for the experimental health
services delivery systems that were created by administrative action
using broad research and development authorities. A brief review of
these preexisting programs traces the thread of regionalization
through previous federal legislative policy.

The Hospital Survey and Construction Act (P.L. 79-725), com-
monly known as the Hill-Burton Act, was passed by the Congress in
1946. The basic purpose of this legislation was to support state
surveys of the need for hospital facilities and to provide matching
grants to assist in the construction of hospitals and public health
centers. While the primary justification of this legislation was in
terms of the need for new hospital construction, especially in rural
areas, following the hiatus of construction through the depression
and World War II, a review of the legislative history reveals some
reference to the concept of regionalization as a basis for hospital
planning. During the Senate hearings, Surgeon General Thomas
Parran described a regionalized plan (U.S. Senate Committee on
Education and Labor, 1945: 59-60). Parran’s plan, which seems to be
based on the concepts of Joseph Mountin, sets out a four-tiered care
system consisting of health centers for primary and emergency care,
rural hospitals, district hospitals, and medical centers, or base
hospitals. His plan was laid out in some detail. The following
exchange during the hearings (p. 60) provides an early indication of
the reluctance to make a real commitment to a conceptual plan
within the American political system:

Senator Pepper: That is essentially the pattern which is contem-
plated in this bill, is it not, Dr. Parran?

Dr. Parran: It is.
204 The Regionalization of Personal Health Services

Senator Taft: Do you mean to say it is going to be forced on the
states, whether or not they want it?

Dr. Parran: By no means, Senator Taft.

The only reference one can find in the original Hill-Burton Act
implying that regionalization would be a guiding principle is
amended language (Section 622A) introduced by Senator Taft
calling for the state plans to include

.., the number of general hospital beds required to provide
adequate hospital services to the people residing in the state and
the general method or methods by which such beds shall be
distributed among base areas, intermediate areas, and rural
areas.

On this thin reed of legislative purpose and history was based the
hope that the Hill-Burton state plans might become an instrument
for regionalization of health services. While the state plans did not
contain a designation of base, district and rural hospitals, most
observers would agree that the Hill-Burton Program did little to
influence the kind of functional integration required for a regional-
ized system.

Recognizing the limitations of a state plan and construction
grants as mechanism for implementing health facilities planning,
amendments to the Hill-Burton Act in 1964 provided grants for
areawide health facility planning agencies. These planning agencies,
established outside the framework of state or local government,
were based on the voluntary health facility planning agencies
already carrying out facility planning in some communities. Given
no regulatory power, these areawide agencies attempted to influ-
ence the course of facility planning through persuasion, the publica-
tion of planning studies indicating needs, and the stimulation of
better institutional planning.

In spite of these attempts to emphasize planning, it seems clear
that the political strength of the Hill-Burton program was based on
construction or modernization of health facilities, not on the creation
of an integrated regional system of care, the former being a purpose
more to the liking of our political tradition.

 

 

 

 

Legislative Directions 205

The next major legislative event that bears on regionalization
was the passage of the Heart Disease, Cancer and Stroke Amend-
‘ments of 1965 (P.L. 89-239). This legislation authorized grants for
the establishment of Regional Medical Programs (RMPs) to consist
of “regional cooperative arrangements” among health care institu-
tions, medical schools, and research institutions to facilitate the
wider availability of the benefits of advances in the diagnosis and
treatment of heart disease, cancer, and stroke. The law grew out of
the report of the President’s Commission on Heart Disease, Cancer
and Stroke, chaired by Dr. Michael DeBakey. That report recom-
mended the establishment of a national network of regional centers,
local diagnostic and treatment stations, and medical complexes.
This concept of a regionalized system for each category of disease
was fundamentally modified in the final legislation to reflect the
objections of private medical practitioners, hospitals, and medical
centers to the detailed categorical arrangements proposed by the
DeBakey Commission.

The administrative guidelines for RMPs attempted to emphasize
regionalization as a theme for the program (U.S. Department of
Health, Education, and Welfare, 1968), yet the basic mechanism of
the program was voluntary and responded to plans developed by
each RMP. Pressures for implementation of an explicit plan for
regionalization were not applied, partly because of the strong
reaction to the original DeBakey Commission concept. The categor-
ical focus of the program, confusion over shifts in national policy,
preoccupation of much of the health care system with the imple-
mentation of Medicare and Medicaid, growing concern over the
rising costs of medical care and access to primary care, and
resistance of health care providers to compliance with more formal
plans were all reasons that eroded the potential of RMP to evolve
into a broader force for regionalization. Such political commitment
as there was to RMP was in terms of specific activities undertaken
by each RMP, rather than a commitment to a broader concept of
organization of health services. .

The next legislative antecedent, the Comprehensive Health
Planning program, was authorized by P.L. 89-749 in October 1966.
Comprehensive Health Planning (CHP) was deliberately steered
206 The Regionalization of Personal Health Services

away from the Hill-Burton program’s concern with construction of
health facilities and the RMP categorical and action-oriented em-
phasis. The planning mechanisnis created at the state and areawide
levels were to encompass all factors that relate to health. These
planning agencies replaced the areawide health facilities planning
agencies created under the Hill-Burton Act. The legislation itself was
very general. Review of the legislative history provides few clues to
a more specific intent other than an emphasis on the need for
coordination of splintered categorical federal programs. While the
planning agencies were encouraged to formulate local plans and
priorities for action, they were given no power to implement their
plans or to enforce constraints on undesirable duplication of ser-
vices.

Subsequent legislation and policies gave these planning agencies
responsibility to review and comment on other federally supported
health programs and provided a reemphasis on the planning of
health facilities by tying Medicare and Medicaid reimbursement
policies to planning agency recommendations concerning the need
for facilities. Nowhere in the legislation itself or the legislative
history of the program can one find specific indication that compre-
hensive health planning was to be used as an instrument of regionali-
zation as it is defined in this paper.

Another federal program intended to improve the organization
of the health delivery system on an areawide basis was the Experi-
mental Health Services Delivery Systems program, initiated in 197]
by administrative action and funded through the National Center
for Health Services Research and Development. This program had
as its intent the establishment of community management structures
intended to improve the organization of the health delivery system,
in order to improve access to care and moderate the increase of
costs while maintaining or improving the quality of care. The
programs were also intended to achieve greater integration and
coordination of the federal health funds being provided to the
selected communities. This program was plagued from its begin-
ning by lack of clear policy objectives, by administrative reorgani-
zations at the federal level, and by a temporary funding commit-
ment. The lack of specific legislative authority as well as the

 

 

 

 

Legislative Directions 207

administrative difficulties indicate that this short-lived program
cannot be considered as any further evidence of political commit-
ment to the implementation of regionalization.

The Political and Legislative
Context for the New Legislation -

An unusual legislative climate was the breeding ground for the
new legislation replacing all the programs just described. Strong
conflict between the executive and legislative branches of the
federal governinent led to legislative battles over authorizing legisla-
tion and appropriations, The President desired in early 1973 to
eliminate many federal programs, including Regional Medical
Programs and Hill-Burton, and to reduce funds for others. The
resulting confrontation led to a determination by the Congress to
seize the initiative in rewriting federal health legislation, rather than
reacting to executive branch proposals—the primary pattern of
legislative initiative in recent years. The Congressional committees
were sensitive to rising pressures for resolution of problems of
health care costs and the distribution of services. The committees
seemed determined to make the new legislation focus specifically on
defined problems of the health care system. In formulating sharper
objectives, they wished to resolve the confusion surrounding the
roles of the existing programs. The imminence of national health
insurance added to the pressures to create a stronger planning and
development mechanism through federal legislation.

Though the new legislation was conceived in an initial atmo-
sphere of legislative-executive conflict, a surprisingly broad area of
agreement rapidly emerged. The Administration and the Congress
could agree that the existing programs had not been sufficient
instruments for improving the effectiveness and efficiency of the
health care system. There was agreement to replace the multiple
planning structures of the previous programs with a single planning
program involving both state and areawide components. There was
agreement on the need to sharpen the objectives of the new
program and establish clearer criteria for accomplishment. In spite
208 The Regionalization of Personal Health Services

of the areas of agreement that emerged between the Congressional
committee staffs and the staff of the Department of Health, Educa-
tion, and Welfare, it is still fair to conclude that the basic initiative
for this new legislation came from the Congress.

As the intent to draft legislation that looked afresh at the
structure for planning, regulation, and development of the health
care system proceeded, a number of major policy issues needed to
be resolved—issues that had never been clearly settled in previous
legislation. These issues included

—the influence of public authority over the predominantly
private health care sector;

—the division of responsibilities among the federal, state, and
local levels of government;

——the degree to which the major sources of health care financing,
both public and private, are subject to the influence of plan-
ning agencies;

—the extent of regulation over capital use, rates, and the distri-
bution of manpower;

—the relationship of medical centers, including medical schools,
to a structure for the planning of health services: and

—the relationship of the planning structure to other federal
health services programs.

The success of any attempt to develop and implement plans for
regionalization of health services in this country would seem to be
heavily dependent on how these issues are received. However, the
pressures of compromise prevented a clear resolution of any of
them, except perhaps the strengthening of controls over the avail-
ability of capital for the construction of new facilities.

Description of the New Legislation

The National Health Planning and Resources Development Act
of 1974 that emerged from this legislative context is a very detailed
piece of legislation. Among the reasons for this degree of detail were
the perception by the Congress that the executive branch had
misused broadly written authorities to achieve purposes not in-

 

 

Legislative Directions 209

cluded in the Congressional intent, a Congressional view that the
lack of clearly specified objectives and procedures impeded the
effectiveness of RMP and CHP, the provision of more detailed
procedures because of the regulatory impact of the new legislation,
and finally the sheer diversity of issues dealt with in this legislation.
The amount of detail makes a brief summary of the law difficult, but
the following are the key features of the legislation that have
potential significance for its use in implementing regionalization.

The legislation would establish a three-tiered planning structure.
At the federal level the Secretary is required to specify national
guidelines for health planning, including standards respecting the
appropriate supply, distribution, and organization of health re-
sources, and a statement of national health planning goals, stated to
the extent practicable in quantitative terms. To guide the Secretary’s
actions, the Congress has provided a specific list of national health
priorities. In developing the national guidelines, the Secretary will
be advised by a new National Council on Health Planning and
Development.

The basic operating level of this planning system will be a
network of health systems agencies with responsibility for health
planning and development in geographic areas designated by the
governors of the states. These geographic areas are to have a
substantial population base and encompass the full range of health
services needed to meet the needs of that population. The “health
service area” would. seem, therefore, to be an appropriate geo-
graphic base for regionalization. These health systems agencies are
to prepare long-range health systems plans and short-range annual
implementation plans that will achieve the goals of increasing
accessibility, acceptability, continuity, and quality of health services
and restraining increases in the costs of these services. The agencies
can also develop specific action plans for particular programs and
projects to be carried out within the plan. These agencies can be
either nonprofit corporations established for this purpose or public
planning agencies that meet the very specific requirements provided
in the law. It seems clear from the legislative history that the
Congress expects most of these agencies to be nonprofit corpora-
tions,
210 The Regionalization of Personal Health Services

In between the federal and area levels, the legislation establishes
state health planning and development agencies, advised by a
statewide health coordinating council. This state agency is expected
to prepare a state plan based on the area plans, be responsible for a
state medical facilities plan, serve as the planning agency for
approval of capital facility expansion under Section 1122 of the
Social Security Act, and administer a state certificate-of-need pro-
gram.

The distribution of responsibilities among these three levels
would seem to emphasize goal setting and evaluation of the effec-
tiveness of planning agencies at the federal level, the development
of specific long-range and implementation plans at the areawide
level, and the conduct of regulatory activities at the state level, with
substantial reliance in the conduct of those activities on the plans
developed by the health systems agencies. In addition, the health
systems agencies are given the power to review and approve or
disapprove many federal grants and contracts providing for the
development, expansion, or support of health resources. The health
systems agency and the state health planning and development
agency are also authorized to review at least every five years the
appropriateness of all institutional health services. However, the
agencies are given no specific regulatory power to discontinue any
of these services.

The Act authorizes the Secretary to give additional authority to
not more than six state planning agencies to carry out a program of
rate regulation. This limited number of programs will be used for
the purpose of demonstrating the effectiveness of such rate-
regulation activities.

Other provisions of the Act provide for assistance in the con-
struction or modernization of medical facilities in accordance with
the state health facilities plan and the provision of a small amount of
funds to each health systems agency from which it may make grants
and contracts to assist in the implementation of its plan.

The law also authorizes the Secretary to provide technical
assistance to planning agencies and to support centers for health
planning, which will engage in studies to improve planning tech-

 

 

Legislative Directions 211

The law contains extraordinary detail concerning the structure of
the health systems agencies and the state agencies, criteria for their
functions, and requirements for coordination with related activities.
The law also gives the Secretary very strong responsibilities for
reviewing the effectiveness of the agencies and taking action to
correct deficiencies.

The provisions of the law and the legislative history were
examined for evidence of intent to carry out the concept of regional-
ization. Nowhere in the Act does the term “regionalization” appear.
But the “national health priorities” set forth in the Act do not contain
provisions that are supportive of the concept of regionalization.
Among the priorities in Section 1502 are the following:

(2) The development of multi-institutional systems for coor-
dination or consolidation of institutional health services (includ-
ing obstetric, pediatric, emergency medical, intensive and coro-
nary care, and radiation therapy services)... .

(5) the development of multi-institutional arrangements for
the sharing of support services necessary to all health service
institutions. . . .

(7) The development by health services institutions of the
capacity to provide various levels of care (including intensive
care, acute general care, and extended care) on a geographically
integrated basis.

The long-range plans to be developed by the health systems
agencies would seem to be the most specific mechanism for laying
out a plan of regionalization within the structure of this Act. These
plans are to describe “health systems in the area which, when
developed, will assure that quality health services will be available
and accessible in a manner which assures continuity of care at
reasonable cost for all residents of the area...” and the plan shall

“take into account and [be] consistent with the National Guidelines

for Health Planning Policy issued by the Secretary under Section
1501 respecting supply, distribution and organization of health

resources and services . . .” (Section 1513 a 2).

A reading of the legislative history, particularly the reports of the

House and Senate committees (U.S. House of Representatives

niques and provide technical and consulting assistance to the health
Committee on Interstate and F oreign Commerce, 1974; U.S. Senate

systems agencies and the state agencies.

 
212 The Regionalization of Personal Health Services

Committee on Labor and Public Welfare, 1974), fails to provide any
further specifics concerning the content of the plans. Along with the
detailed analysis of experience with the antecedent programs and
descriptions of the proposed legislation, the House report (pp.
32-35) does contain a list of seven principles that the House
Committee followed in writing the new legislation. Most of these
principles concern the processes of planning, and none provide any
additional legislative intent concerning regionalization. The justifi-
cation of the need for better health planning, as revealed by the
reports and other legislative history, emphasizes the rising costs of
care, the duplication of services, lack of access, and uncoordinated
federal programs. The legislation is described as a necessary step to
help the health system respond to the additional demands anti-
cipated from national health insurance. In the reports, cousiderable
attention is given to the inversion of financial incentives within the
health system that creates a need for planning and regulation to
contain the tendency toward excessive use of services and toward
superspecialization. But there is generally a lack of attention to
specific principles or organizations that would require adherence to
a plan.

One must conclude that any further specificity concerning
regionalization as an intent of this program must be provided in the
Secretary’s guidelines or be developed by a health systems agency at
its own initiative.

The Prognosis for
Regionalization under This Legislation

The previous section points out that the potential to use this
legislation as an instrument toward regionalization is consistent with
both the structure and the priorities established in the legislation.
However, it has also been pointed out that evidence of intent to use
the legislation for this purpose is not explicit. Both the history of the
antecedent legislation and general knowledge of the American
political system's efforts to make substantial changes in major social
systems indicate that an explicit political commitment is needed to

 

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Tr ae an

Legislative Directions 213

imake real any expression of intent. Adininistrative action by the
Secretary through regulations and guidelines is unlikely to be suffi-
cient.

Even if that intent and commitment were clear, unresolved
policy issues can quickly begin the erosion of the administrative will
and energy necessary to bring about major changes. As has been
pointed out, a number of these major policy issues were raised in the
course of considering this legislation. Compromises emerged on
each controversy. It is clear that the influence of public authority
over the predominantly private health care sector remains limited,
and the responsiveness of the private sector to more specific
mandates of responsibility under a health services plan is therefore
questionable.

The division of responsibilities among the federal, state, and
local levels of government remains ambiguous, as it has always been
with health legislation. In this new legislation, the Secretary retains
considerable responsibility for establishing objectives and monitor-
ing the planning and development structure, establishing a clear
federal role. Yet the health systems agencies seem likely to bypass
local government in most instances, and the relationship between
the state agencies and the health systems agencies contains the seeds
of considerable conflict. The relationship of medical schools, medi-
cal centers, and other health manpower training activities to the
planning framework seems absent,. yet any meaningful concept of
regionalization must include concern with manpower distribution.
Beginning efforts are made to relate the planning structure to the
sources of health care financing, particularly with regard to capital
financing and a modest step toward rate regulation. Yet the impact
of the financing mechanisms, especially with the imminence of
national health insurance, on many other aspects of health services
organization are profound, and the ultimate linkage between plan-
ning and financing is not yet established. The legislation does take a
major step in resolving confusion among federal programs and in
relating other federal health services programs to the health systems
plans.

If intent, commitment, and resolution of major policy issues are
all present, does sufficient authority exist within the legislation to
214 The Regionalization of Personal Health Services

overcome the resistance of independent providers and the tendency
of the political system to respond to particulars rather than general
schemes? The Dawson Report (1920: 7) refers to the need to relate
intermediate steps to the ultimate design: “To construct any part
well and to avoid mistakes in local effort, the whole design must be
before the mind.” .

The regulatory authority provided in the new legislation is
focused on capital expansion and federal grant programs. Such
authorities would seem to be useful in shaping the direction of new
activities but not very effective in influencing the organization of
existing institutions and programs. The achievement of a regional-
ized system through authority over new activities would probably
take many years. Primary reliance in achieving regionalization
would still be based on assembling and disseminating data, publiciz-
ing plans and recommendations, and the persuasive capacities of the
health systems agency. Details of structure and process should not
be mistaken for real authority, even when a political commitment to
change exists.

It is reasonable to conclude that this legislation has potential
significance in achieving progress toward regionalization but that
the legislation itself is not sufficient for that purpose. What is needed
first is a concept of regionalization that contains modifications more
appropriate for the probable directions of the American health care
system. This concept will have to-provide for some real consumer
choice among multiple delivery systems developed within an over-
all regional plan. The concept will also have to deal more explicitly
with the legal and political realities of a private health care system
and the federal structure of government in the United States. More
explicit political commitment for such a concept will have to be
sought from both the executive and the legislative branches. Finally,
the national health insurance program adopted will have to rein-
force the commitment. Perhaps the intent to regionalize the treat-
ment of end-stage chronic renal disease to be financed under the
Medicare Amendments of 1972 (P.L. 92-603) will provide a test case
for that commitnent. The Department of Health, Education, and
Welfare published guidelines for that regionalization in April 1974,
but specific regulations had not yet been issued at the time this paper
was prepared.

 

 

 

 

Baines eereranne Steere ein

 

Legislative Directions 215

This analysis is not intended to denigrate the significance of the
National Health Planning and Resources Development Act of 1974.
In the author’s view, that Act represents progress over preceding
legislation. However, realism with regard to objectives and imple-
menting mechanisms is essential for effective actions. So must it be
for any progress toward regionalization through the current legisla-
tion.

References

Dawson Report (United Kingdom Ministry of Ilealth, Consultative Council
on Medical and Allied Services)
1920 Interim Report on the Future Provision of Medical and Allied
Services. London: His Majesty’s Stationery Office.
Mountin, J.W., E.H. Pennell, and V.M. Hoge
1945 Health Service Areas: Requirements for General Hospitals and
Health Centers. PHS Bulletin No. 292. Washington: Government
Printing Office.
Seipp, C. (ed.)
1963 Health Care for the Community: Selected Papers of Dr. John B.
Grant. Baltimore: The Johns Hopkins Press.
U.S. Department of Health, Education, and Welfare
1968 Guidelines. Regional Medical Programs (rev.).

U.S. House of Representatives Committee on Interstate and Foreign Com-
merce

1974 Report No. 93-1382. National Health Policy, Planning, and Re-
sources Development Act of 1974 (ELR. 16204). Washington:
Government Printing Office.

U.S. Senate Committee on Education and Labor

1945 Hearings on S. 191, Hospital and Survey Construction Act. 79th
Congress, 1st session. Washington: Government Printing Office.

U.S. Senate Committee on Labor and Public Welfare

1974 Report No. 93-1285. National Health Planning and Development
and Health Facilities Assistance Act of 1974 (S. 2994). Washington:
Government Printing Office.