A Veterans Health Care Service

                                                                                                                                                2/26/08

History

In over seven decades of serving veterans returning from war, the VA has experienced many operational challenges.  In most cases, these challenges were met with practical and capable solutions such as General Omar Bradley’s alignment of VA medical centers with the nation’s medical universities following WWII.  Bradley’s solution brought a lasting partnership that has produced generations of US medical professionals and served VA patients capably and efficiently for sixty years. 

More recently, a dramatic cultural change in the 90’s ushered in new regional health service networks and established many innovations that catapulted VA into what is now regarded as one of the highest quality and lowest cost systems in the nation.  Developments established under the leadership of then-Under Secretary for Health, Dr. Ken Kizer, included universal primary care, a major shift to outpatient care and system “right sizing,” a capitation-based resource allocation system, adoption of a world-class electronic health record, industry-leading patient safety practices, and a new emphasis on wellness, disease prevention and health maintenance that is unmatched in the private sector. 

Critical Challenges Facing VA Today

Despite significant improvements, a number of critical issues today threaten the future viability of VA health care.  These issues revolve around historic inequities that threaten to strangle the nation’s largest   health system due to completely inadequate management and financial controls and under funding for mission tasks.  Some of the most challenging concerns, such as the looming federal financial crisis described in GAO and CBO reports[i], lie beyond VA’s control but have enormous implications for the discretionary funding program the Department depends on Congress to provide (consistently late) each year. 

In reality, most major problems facing VA defy internal reform due to the structural or legal constraints imposed on the system. These issues include the inability of the system to strategically manage capital assets, conduct long range or strategic planning, or restructure services to meet shifting demand.  The annual unknowns in how much and when a changing congressional budget will be provided exacerbate all of these.  Not once in the past eight years has the VA been able to implement a budget at the beginning of the year.

Some would liken the VA health system to an antique auto that has been “souped up” with modern improvements, but its chassis is rusting and in danger of falling apart. One of the most vexing problems is the many highly resource-intensive, aging facilities.  Average age of VA’s 153 medical centers is over 55 years (compared with less than half that in the private sector).  What is more challenging, however, is that facilities cannot be built, closed or refurbished without specific congressional approval, which creates a virtual impossibility for addressing VA’s target population.  The last VA medical center was built over 10 years ago, despite major geographic shifts in veteran population and patient demand over recent decades.  Demographically stranded hospitals with more staff than patients remain open due to local political pressures while facilities in areas with high veteran populations are literally bursting at the seams and appointments can take months to obtain.

Further exacerbating VA’s structural challenge is the difficulty in maintaining continuity of leadership due to rapid turnover of administrators.  For example, since 1999, four individuals were appointed Under Secretary for Health, with each serving an average of two years.  Subordinate positions change with similar frequently.  In government such movement may not seem unusual, but it effectively eliminates critical strategic planning and proactive management in a massive health system.

The net effect of these complex system and infrastructure problems is that despite the dedicated and heroic efforts of thousands of individuals the VA is highly inefficient and not capable of meeting veterans’ needs into the 21^st century.  In fact, the looming federal financial crisis may undo the system, as it exists today.  It is time for new thinking in order to address what have become intractable issues and it is in that light that the independent Commission on the Future for
America’s Veterans (CFAV) was formed to conceive solutions to the problems.  

A Necessary Solution

Following nearly two years of study, the Commission concluded that the best solution for providing the highest quality, most efficient and effective health care to the nation’s veterans is for a new structure to be established that would encompass the best characteristics of existing government entities and programs today.  Such a new entity would be much more capable of long range planning and strategic activity, while also functioning dynamically to manage its assets and ensure the financial stability needed to operate a major health organization in an increasingly difficult financial environment. 

Structure

The specific recommendation is to create a new government chartered organization with specific provisions detailing its structure.  It could be called the Veterans Healthcare Service (VHS).  It’s charter would detail a carefully organized mission for serving veterans and their families, while providing for a governance structure that would allow for internal management of its assets, its funding (to include a long-term capitated government funding stream for disabled and poor veterans) and its personnel. An appointed, and congressionally confirmed board of governors would oversee it.  The existing VA health care resources would be transferred through the legislation creating the entity, and that legislation would describe the specific provisions of management and oversight.  The board of governors would meet specific skill requirements, but be selected principally from the veterans and health community with nominations coming from VSO’s, academic medicine and labor.  Governors would serve terms sufficient to supercede administrations, and among their duties would be the responsibility to select and oversee professional management of the system.  The board would be responsible for governing the Veterans Healthcare Service under the oversight of the Secretary of Veterans Affairs, and it would receive funding through VA. 

Finance

To increase the system’s financial stability it will need multiple income streams in the coming times of increasingly difficult finances.  Resources would include funds associated with enrollment of all veterans and family members desiring to use VHS.  This would be on a means-tested basis (with service-connected disabled and indigent veterans subsidized as today by appropriated funds) and new enrollees would either bring health insurance or purchase graduated low cost coverage through the system.  As it benefits the government, lower cost VHS care could be reimbursed on a per capita basis by other state or federal programs for those veterans or family members preferring to use VHS.  A business plan detailing financial specifics will accompany the Commission’s May 2008 report. 

Precedence

Over the years, a number of federal agencies have successfully restructured to meet changing demands and priorities.  For example, the Post Office Department’s assets were transferred into a newly created US Postal Service in the 80’s and the resulting entity has become much more effective and efficient, managing its resources and successfully operating in a highly competitive marketplace.  

It is time that our nation’s veterans receive the best care possible through a system capable of operating at its best.  Business as usual is not an option with so much at stake.

                                                            Secretary of Veterans Affairs

Veterans Memorial Administration      Veterans Benefits Administration                     Veterans Healthcare Service

                                                                                                                                                                Board of Governors

                                                                                                                                                            Chief Executive Officer