VA Health Care

GAO recommends that the Department of Veterans Affairs (VA) implement more effective health care capital asset planning and strengthen its budgeting processes to avoid spending billions of dollars operating hundreds of unneeded buildings over the next five or more years. VA should focus on Office of Management and Budget guidelines that suggest that agencies use market-based assessments to determine target population needs, evaluate the capacity of existing assets, identify excesses and deficiencies, estimate assets' life-cycle costs, and compare these with alternatives for meeting the population's needs. VA has 40 markets with two to nine VA locations that have utilization significantly below inpatient capacity and that compete with other VA locations to serve rapidly declining veteran populations. VA could restructure these assets and enhance veterans' benefits. VA has 66 other markets with a single VA location, also in areas with rapidly declining inpatient workloads and veteran populations, where assets could be restructured and benefits enhanced. VA's centralized budget development process to review and approve capital investments of $4 million or more under its major construction appropriation relies on inconsistent or incomplete information for decision-making. The 22 regional offices that make less expensive investment decisions in VA's decentralized assessment process generally do so without systematically assessing ways to redesign or simplify work processes or explore lower-cost alternatives. Such decisions account for more than 85 percent of VA's total health care investment dollars requested for fiscal year 2000. Over the past 3 years, VA has significantly reduced the number of high-cost investment proposals involving alterations or improvements by dividing them into less expensive ones, which require less information about benefits, risks, and alternatives. This has resulted in VA's decentralized process having approved investments that VA's centralized process considered to be a low priority or unsound.

GAO noted that: (1) VA's large, aged infrastructure could be the biggest obstacle confronting its efforts to transform itself from a hospital-based operator to a health care provider that relies on integrated networks of VA and non-VA providers to meet veterans' health care needs; (2) over the next few years, VA could spend one of every four of its health care dollars operating, maintaining, and improving capital assets at its 181 major delivery locations that encompass over 4,700 buildings on 18,000 acres of land nationwide; (3) VA has delegated basic health care planning responsibilities to its 22 regional offices, each of which oversees from 5 to 11 major health care delivery locations; (4) each regional office has developed a 5-year business plan that includes management of the health care assets under its control; (5) these plans indicate that billions of dollars may be used to operate hundreds of unneeded buildings over the next 5 years or more; (6) this is because VA plans to continue to operate and therefore necessarily maintain its 181 major delivery locations, even though most locations operate in markets that include two or more VA locations; (7) if VA followed the Office of Management and Budget's (OMB) guidelines on managing capital resources, in GAO's view, its planning would focus on assets needed to meet veterans' needs in 106 markets; (8) these markets include: (a) 66 with a single VA location; and (b) 40 with multiple locations; (9) VA's budgeting processes have weaknesses that could result in unwise capital asset investment decisions totalling hundreds of millions of dollars; (10) VA has significantly improved its centralized budget process by requiring more rigorous, systematic assessments of proposed major investments than VA has done previously; (11) GAO also expressed concerns about VA's decentralized assessment process for less expensive capital investments; (12) VA's 22 regional offices use varying approaches, which are considerably less rigorous than that used in VA's centralized process; (13) over the last 3 years, VA has significantly reduced the number of high-cost investment proposals, involving alterations or improvements, submitted for VA's centralized review and prioritization; and (14) 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.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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