Veterans' Health Care

Challenges Facing VA's Evolving Role in Serving Veterans Gao ID: T-HEHS-98-194 June 17, 1998

The Department of Veterans Affairs (VA) operates one of the nation's largest health care systems, including 400 service delivery locations, 3,000 buildings, and 183,000 employees. This year, VA will serve about 2.7 million of the nation's 26 million veterans, at a cost of $19 billion. During the past 75 years, this health care role has evolved from one of rehabilitating disabled wartime veterans to also providing a health care safety net for veterans in peacetime. Today, VA is positioning itself as a competitive health care alternative for all veterans. More specifically, three years ago VA began to transform its health care system, in response to market changes and budgetary pressures, to make it more competitive with other health care providers. To aid in this transformation, Congress provided new revenue sources and reformed veterans' eligibility for care and VA's ability to purchase services from other providers. This testimony focuses on how the transformation of VA's health care system is progressing and what challenges VA faces as its role evolves.

GAO noted that: (1) VA has made progress in transforming its health care system to compete more effectively with health care providers in order to become veterans' provider of choice; (2) these initiatives have enabled VA to avoid over $1 billion in unnecessary expenses--savings that have provided critical financing needed to further improve the system's overall accessibility and quality of care; (3) in addition, the networks are planning to develop and implement additional efficiency initiatives over the next 5 years; (4) but VA faces several challenges before completing its transformation; (5) of these, VA's decisions concerning existing infrastructure may be the most significant and contentious; (6) VA continues to serve veterans in other locations, using aged and deteriorating buildings that will require billions of additional dollars to renovate or replace; (7) VA's decisions to consolidate inpatient medical care at fewer locations are complicated by such challenges as VA's longstanding relationships with universities' medical schools for education and research, and with the Department of Defense for contingency medical support; (8) in GAO's view, VA's future success in fulfilling its health care role, as envisioned by recent eligibility reforms, depends in large part on its ability to transform its current delivery infrastructure into an integrated system of VA and private-sector providers, which may be more attractive to new users, especially those already insured, who could provide VA with an additional source of revenue; (9) VA's strategy also suggests that it will ultimately purchase much more health care from private-sector providers than it does now and deliver care using its existing infrastructure only in those geographic areas where a private-sector alternative is not reasonably available or where VA is the acknowledged leader; (10) VA's success also will depend on its ability to overcome several management and implementation challenges; (11) if, as some have suggested, VA's competitive role is expanded to include not only the current veteran population but also veterans' spouses and dependents, the challenges facing VA will be even greater; (12) it is essential that VA address these infrastructure and other management challenges; (13) if VA is ultimately unable to overcome these challenges, it is conceivable that VA could have to limit enrollment among lower-income veterans; and (14) this could include those with the greatest need, because they have no other health care alternatives.

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