VA Health Care

In fiscal year 2000, the Veterans Health Administration's (VHA) asset ownership costs could be as much as $4 billion or more, accounting for 25 percent of VHA's proposed $17 billion medical care appropriation. Instead of using these resources to provide health care more efficiently in existing locations or closer to where veterans live, Department of Veterans Affairs (VA) asset plans call for operating hundreds of unneeded buildings over the next 5 years or more. VHA could save millions of dollars annually that could be used for medical care if it conducted market-based assessments to assess its population's needs, evaluate the capacity of its existing assets, identify performance gaps (excesses or deficiencies), estimate its assets' life-cycle costs, and compare such costs to other alternatives, such as partnering with other public or private providers, purchasing care from such providers, and replacing obsolete assets with modern ones. VA could enhance the credibility of its investment decisions if it modified its written guidelines for the centralized budget development process it uses to review and approve capital investments of $4 million or more under VHA's major construction appropriation to describe in greater detail minimum quantitative data requirements and exclude from prioritization proposals that fail to meet the requirements. VA should also use its centralized budget process for a larger share of its less expensive capital investments now decided through a decentralized process. Other improvements could include restructuring VHA's asset appropriations into a single capital investment appropriation and authorizing VA to accumulate resources for capital improvements from operational savings available through asset restructuring.

GAO noted that: (1) VA's asset plans indicate that billions of dollars might be used operating hundreds of unneeded buildings over the next 5 years or more; (2) this is because VA does not systematically: (a) evaluate veterans' or asset needs on a market (or geographic) basis; or (b) compare assets' life-cycle costs and alternatives to identify how veterans' needs can be met at lower costs; (3) in GAO's view, VA could enhance veterans' health care benefits if it reduced the level of resources spent on underused or inefficient buildings and used these resources, instead, to provide health care, more efficiently in existing locations or closer to where veterans live; (4) over the last 2 years, VA has significantly improved its budgeting process for major capital investments; (5) this process, however, still relies too heavily on: (a) inconsistent or incomplete information; (b) imprecise decision criteria; and (c) qualitative (rather than quantitative) measurement standards; (6) this results in subjective asset-management judgments, based on individual viewpoints, rather than objective decisions, based on systematic assessments of proposed investments' benefits, costs, and risks; (7) VA's capital asset decision-making also appears to be driven more by the availability of resources within VA's different appropriations rather than the overall soundness of investments; and (8) VA's reliance on construction appropriations could be reduced if VA is given legislative authority to use: (a) proceeds from the disposal of unneeded assets to invest in more appropriate ones; or (b) some or all of operational savings or third-party collections attributable to capital investments.