Veterans' Health Care

Facilities' Resource Allocations Could Be More Equitable Gao ID: HEHS-96-48 February 7, 1996

The Department of Veterans Affairs (VA) confronts the challenge of equitably allocating more than $16 billion in health care appropriations across a nationwide network of hospitals, clinics, and nursing homes. The challenge is made greater by the changing demographics of veterans. Although nationally the veteran population is declining, some veterans have relocated from the Northeast and the Midwest to southern and southwestern states in the past decade, offsetting veteran deaths in these states. VA has tried for years to implement an equitable resource allocation method--one that would link resources to facility workloads and foster efficiency. The need for such a system has become more urgent in recent years because of the demographic shift in veterans and the dramatic changes in health care resulting from increasingly limited resources. The resource allocation system can help VA achieve this goal by forecasting workload changes and providing comparative data on facilities' costs. Nonetheless, VA has not taken steps to overcome several barriers that can prevent it from acting on the data the system produces. If the system is to live up to its potential, several changes must be made, including linking resource allocation to VA's strategic plan, conducting a formal review and evaluation of facility cost variations, evaluating the basis for not allocating funds through resource planning and management, and using resource planning and management to overcome differences in veterans' access to care.

GAO found that: (1) the VA resource allocation system enables VA to identify potential inequities in resource allocations and forecast facility workload changes, but VA has made only minimal changes in facilities' funding levels; (2) there is a significant difference between comparable health care facilities' operating costs and patient workloads; (3) VA has not used its resource planning and management system (RPM) to ensure that resources are allocated to facilities within the same priority category; (4) VA excluded over $4 billion of its medical care appropriation from the RPM process during the first 2 years of RPM because it wanted to give VA facilities more time to adjust to the reallocation process and large budget changes; (5) the RPM system does not address veterans' unequal access to outpatient care; and (6) VA plans to reallocate a larger portion of its fiscal year 1996 facility budgets based on the RPM process and implement a decision support system to better compute the costs of specific services provided to each patient.


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