VA Health Care

In March 1999, GAO reported that the Veterans Health Administration (VHA) could enhance veterans' health care benefits if it reduced spending on underused, inefficient, or obsolete buildings and used the savings to provide health care more efficiently in modern facilities both at existing locations or at new locations closer to where veterans live. VHA agreed and committed to realigning its portfolio of health care assets. It agreed to implement a strategic planning process that would systematically study all its medical care markets in order to develop capital asset realignment plans. VA's Capital Investment Board would use these plans to determine the best investment opportunities. Last year, GAO reported that VHA had made little progress and estimated the opportunity cost of delay to be as high as $1 million a day. VHA's efforts had focused primarily on discussions among VHA officials, Department of Veterans Affairs (VA) officials, and stakeholders such as veterans' service organizations regarding a conceptual framework for its asset realignment process. VHA reported then that its realignment process would be operational by September 1999. GAO is concerned that VHA's slow progress needlessly delays critical decisions and the opportunity to reinvest resources to enhance veterans' future health care. The weaknesses in VHA's realignment process, once implemented, will not necessarily produce, within a reasonable time period, capital asset plans that are in the best interest of veterans and taxpayers. If a capital asset realignment process is patterned after the Capital Investment Board's decisionmaking model, it would be less likely to replicate VHA's Chicago experience. Because VHA is struggling to reach a sound realignment decision in Chicago and complete the design of a systemwide realignment process and because VA's Capital Investment Board has a model that could address many of VHA's weaknesses, VA should consider transferring the asset planning responsibility to the Board. The daily cost of delayed decisions is unacceptably high.

GAO noted that: (1) VHA has been unsuccessful over the past 13 months in its efforts to design a capital asset realignment process; (2) VHA's efforts have focused on discussions of who should lead such a process, how stakeholders should participate, and how decisions are to be made; (3) moreover, VHA estimates, as it did 8 months ago, that it could be several months before its process is operational; (4) GAO's assessment of VHA's process, as currently designed, raises concerns about whether the right people are involved at the right times and in the right ways; (5) specifically, senior managers at headquarters may not be proactively involved in a leadership role at key decision points; (6) in addition, stakeholders with vested interests appear to be involved in decisionmaking, rather than advisory, roles; (7) activities supporting key components, such as options development and evaluation, are not sufficiently rigorous; (8) as a result, VHA may not be able to produce within a reasonable timeframe capital asset plans that are in the best interest of veterans; (9) VHA's slow progress creates dilemmas for VA's capital budgeting process; (10) in the short term, VHA and VA's Capital Investment Board face the challenge of maintaining and improving capital assets without sufficient information about future asset needs to ensure cost-effective capital investment decisions; (11) by contrast, if funding for projects is delayed until capital asset plans are completed, the longer-term challenge will be how to successfully finance and implement capital realignment investments potentially totalling billions of dollars; and (12) these challenges could be ameliorated, in part, if VA effectively manages short-term investment risks and Congress provides alternative financing arrangements for future investments.