Late Breaking News
VA Restructures Acquisition Process to Reduce Expenses
- Categorized in: May 2010
WASHINGTON, DC—In order for VA to restructure itself to serve the needs of veterans in the 21st century, it must find ways to standardize and centralize its acquisitions process, Secretary Eric Shinseki told legislators last month. That centralization includes the creation of a new assistant secretary for acquisitions position, as well as eight new deputy assistant secretary positions—a proposal first made by Shinseki’s predecessor.
There are three things that the continuing redesign of VA is meant to accomplish, Shinseki testified at a House VA Committee hearing last month. “We want it to be capable of agilely leveraging the significant opportunities provided to VA in the next two budgets; we want to produce demonstrable returns on investments; and we want to improve access, quality, and safety of our services, while still being able to control costs involved.”
To achieve this, Shinseki plans to strengthen VA’s management infrastructure across the board, but especially in the area of acquisition reform. “We are hard-pressed to improve our return on investment without an appropriate acquisition management structure, which we lack today.”
VA has 153 medical centers in its system and, for the most part, each has a separate acquisition process. “There may be a number of hospitals that are linked together, or a VISN (Veterans Integrated Service Network) may have imposed some kind of control, but for the most part, contracting is done [by the hospital].”
And while VISNs have oversight over the hospitals in their region, it is difficult for VA headquarters to track contracts nationwide. “It’s difficult at my level to see how well we do that: what we buy, how we buy it, and when we buy it. The impact of cost could be influenced by when you decide to buy a certain product, and especially when you’re buying at this amount.”
For example, VA hospitals this year found themselves in the market for snowblowers, and the timing of the purchase had a large impact on the cost. “If we buy at the beginning of snow season, we’re going to pay a certain price. If we buy at the end, and we want a full warranty on our purchase, we’ll get a far different price,” Shinseki said.
VA wants to centralize the agency’s policies on procurement and acquisition, with those policies being managed out of the new assistant secretary office. However, once those policies are in place, VA wants to decentralize the actual execution of contracting—meaning hospitals will be able to make purchasing decisions, as long as they do so under the guidance of the central acquisitions office.
The lack of centralized support and oversight has resulted in a number of botched projects over the years, Shinseki told legislators. “The IT setbacks that have tested your patience have largely been project management and acquisition failures. For both IT and acquisitions, past weaknesses have stemmed from decentralized control, lack of management information, and in some cases, improvised policies.”
The Clinical Effect
The restructuring will also have a profound effect on patient safety. Shinseki reminded legislators of the multiple incidents during the last couple of years of improperly cleaned or serviced endoscopy equipment resulting in the exposure of thousands of patients to infection.
“When I went to take a look at the situation, we had maybe 25 versions of endoscopes. And I think everyone who had an interest in having a particular endoscope was very happy with that arrangement. But all of the responsibility for assuring the safety for performing the endoscopies falls on the youngsters who are in the basement of hospitals trying to clean each of 25 versions and meeting the established regimen, according to that manufacturer, each using a different set of cleaning tools, a different set of solvents. So the risk in the system falls on [youngsters] who are doing the best they can, but we’ve created for them an almost impossible task.”
Centralized procurement would mean the purchase of the same type of endoscopy equipment nationwide. This would give VA leverage in addressing some of the engineering problems that led to the maintenance issues. “If you have a one-way valve and a two-way valve and they are both color-coded the same, it would take serious attention to not mess them up,” Shinseki noted. “But if procurement were coordinated, we could get manufacturers to give us color coding, or other safety features that won’t allow the wrong valve to be coupled.” It would also mean that VA personnel could transfer from one hospital to another and not need to be trained on a new brand of equipment.
Shinseki estimates that acquisition reform will save $2 billion from the department’s $15 billion annual acquisitions spending.