Department of Veterans Affairs to Realign its Capital Assets

by U.S. Medicine

July 26, 2009

WASHINGTON, D.C.—For the last 5 years, the Department of Veterans Affairs has been in the midst of a process to realign its capital assets—closing some facilities, opening others, and shifting resources around—in an attempt to keep pace with the geographic location and health care needs of the veteran population. This endeavor is guided by a 5-year-old report that may no longer present an accurate picture of veterans’ needs and what changes VA needs to make. Some legislators and veteran’s advocates are questioning whether VA’s plan is out of date, and raising the possibility that it was inherently flawed to begin with.

The Creation of CARES

Near the end of the last decade, the Department of Veterans Affairs was told that because much of its infrastructure was designed for the existing veteran population at the middle of the century, it was ill-equipped to deal with the veterans of today, and was losing money through poor resource management.

Government Accountability Office officials testified to Congress in March 1999 on VA’s capital asset planning process, concluding that VA was spending about 25% of medical care funding on asset ownership, when only about a quarter of its 1,200 buildings were being used to provide direct health care. The agency had 5 million square feet of unused space that cost VA $35 million per year to operate. The GAO concluded that if VA could reduce the level of resources spent on underused or inefficient buildings, and redirect those resources to underserved veteran populations, it would help both the agency and the veterans being served.

Shortly thereafter, VA began its Capital Asset Realignment for Enhanced Services (CARES) process. An independent commission was formed to examine the state of VA’s facility resources and provide the first comprehensive, long-range assessment of VA’s healthcare system infrastructure needs in 20 years. The commission began its examination in February 2003, holding dozens of public hearings and visiting 81 VA and DoD medical facilities. They analyzed more than 212,000 comments from veterans, their families, and stakeholders, and in February 2004, presented their report to then-VA Secretary Anthony Principi.

The report listed what service areas needed to be enhanced, as well as which facilities needed to be closed, built, and modernized or updated. It also projected the future demands on VA services through 2022 in each geographic area that VA serves, compared them again to existing infrastructure, and made recommendations on how to meet that need.

The report’s release sparked argument and worry from veteran’s groups and legislators. Legislators balked at recommendations to close or diminish VA facilities in their districts, and veterans wondered whether new facilities would be in place before old ones were closed. The more controversial projects, such as the consolidation of four medical centers in the Boston area to one giant facility, were set aside for further investigation. That particular proposal was eventually scrapped by then-VA Secretary Jim Nicholson in 2006.

Finding Fault with the Plan

Earlier this year, House VA Committee chairman Rep Bob Filner, D-CA, promised that his committee would hold hearings looking at the CARES report and seeing whether it was still a viable document to guide VA’s asset realignment process. Last month, the House VA Subcommittee on Health held the first of those hearings, gathering testimony from veteran’s service organizations and other officials on a laundry list of deficiencies in the CARES report. “Over the years, there have been challenges in implementing the CARES decision in numerous locations. Most notably, the VA has reversed the CARES decision under the leadership of different VA Secretaries,” declared subcommittee chairman Michael Michaud, D-ME. “Too often, we hear stories of veterans who have been waiting for new facilities for 10 or more years.”

VSO leaders concurred that the new facilities recommended in the CARES report have been delayed too long. Joseph Wilson, American Legion Deputy Drector, placed some of the blame on lack of funding. “The Secretary of VA reported that Congress would have to include $1 billion annually for 6 years to ensure the success of CARES,” Wilson said. “The American Legion has recommended the same figure in its annual budget recommendation since the CARES decision. Due to lack of funding over the years, it is believed VA has been playing fiscal catch-up.”

Wilson also noted that the CARES report neglected to include information on long-term care needs and mental health care needs in its final recommendations—two areas of health care that VA has found itself struggling to improve over the last several years.

Richard Weidman, Executive Directory for government affairs for the Vietnam Veterans of America, testified that the CARES re-port—like VA in general—had not taken sufficient account of how many new veterans would be arriving at its doors seeking service in recent years. “They underestimated the number of OIF/OEF veterans who will be seeking service, and underestimated the number of older veterans who were eligible and determined to seek care from VA, even before VA began easing rules for Priority 8 veterans,” Weidman said.

Weidman also argued that the formula used by the CARES commission to determine veterans’ needs in a particular area was flawed from the start. “The formula used was a civilian formula, and did not take into account the wounds, maladies, conditions, and injuries derived from military service, especially wartime service. They underestimated the number and types of resources that individual veterans will utilize,” Weidman said. “The formula estimates one to three presentations from each person walking through the door. In fact, in VA hospitals, it ranges from one to seven, not one to three.”

Weidman also found fault with the logic used that older veterans will move south when they retire, lowering the overall need for care in the northern states. “People who are of a certain income when they reach a certain age, they move south when they retire. Those that are left are older, sicker, and poorer, so the burden rate—the number of presentations per person—is going to go up in the north,” Weidman said. “So the CARES formula is going to be somewhat askew when it comes to estimating what will be the future needs of the physical structure where the health care is to be delivered.”

Following Through

According to Mark Goldstein, GAO’s Director of physical infrastructure, VA is in varying stages of implementing 34 of the capital projects identified in the CARES process, but has only completed eight. In 2008, GAO reported that VA had reduced underutilized space in its buildings by 68%.

However, GAO found it difficult to estimate just what efect those changes were having in terms of health care impact, because VA had no way of determining it. “VA did not centrally monitor the implementation and impact of CARES decisions,” Goldstein testified to the subcommittee. “Without this information, VA could not readily assess the implementation status of CARES decisions, determine the impact of such decisions, or be held accountable for achieving the intended results of CARES.”

In 2007, GAO reported that VA does not have performance measures to allow them to assess the results of CARES. Performance measures, Goldstein said, not only allow VA to judge the effectiveness of its actions, but give stakeholders and veteran’s advocates something to hold VA accountable with. In previous reports, GAO recommended that, if VA is serious about getting the most they can out of the CARES process, such measures should be created.

There was further testimony that VA was not doing everything in its power to make CARES work. Everett Alvarez, Jr., Chairman of the CARES commission, testified that the landscape of VA’s health care needs has changed in the last few years, with needed emphasis on combat medicine, polytrauma injuries, long-term rehabilitation and mental health. If a new CARES commission were chartered today, he said, those issues should be at the forefront of the discussion, as well as integration of care and infrastructure issues.

Also, Alzvarez said, if VA ever chartered such a commission again, it would need to give it more clout than the previous one. “When I look at this process and compare it with the BRAC process (the process used to determine what military bases should be realigned), the big difference is that we were an internally appointed commission. And we didn’t have much bite.”

With the BRAC process, he said, decisions—though they might have been opposed in Congress—were eventually made and carried through. “If you’re going to do this again, give the commission some bite. Let them have some effect on the outcome of this,” he argued. “Be realistic. Without strong realistic backing, it’s just not going to go anywhere.”

VA planned to release an internal oversight report late in June to provide an assessment on its strategic planning process.

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