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98–035PDF 2005

HEARING VI ON THE DEPARTMENT OF VETERANS

AFFAIRS INFORMATION TECHNOLOGY PROGRAMS

HEARING

BEFORE THE

SUBCOMMITTEE OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON VETERANS’ AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

MARCH 17, 2004

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 108–32

(
COMMITTEE ON VETERANS’ AFFAIRS 

CHRISTOPHER H. SMITH, New Jersey, Chairman 

MICHAEL BILIRAKIS, Florida 

TERRY EVERETT, Alabama 

STEVE BUYER, Indiana 

JACK QUINN, New York 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

RICHARD H. BAKER, Louisiana 

ROB SIMMONS, Connecticut 

HENRY E. BROWN, JR., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

JEB BRADLEY, New Hampshire 

BOB BEAUPREZ, Colorado 

GINNY BROWN-WAITE, Florida 

RICK RENZI, Arizona 

TIM MURPHY, Pennsylvania 

LANE EVANS, Illinois 

BOB FILNER, California 

LUIS V. GUTIERREZ, Illinois 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

CIRO D. RODRIGUEZ, Texas 

MICHAEL H. MICHAUD, Maine 

DARLENE HOOLEY, Oregon 

TED STRICKLAND, Ohio 

SHELLEY BERKLEY, Nevada 

TOM UDALL, New Mexico 

SUSAN A. DAVIS, California 

TIM RYAN, Ohio

PATRICK E. RYAN, Chief Counsel and Staff Director 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS 

STEPHEN E. BUYER, Indiana, Chairman 

MICHAEL BILIRAKIS, Florida 

TERRY EVERETT, Alabama 

JOHN BOOZMAN, Arkansas 

DARLENE HOOLEY, Oregon 

LANE EVANS, Illinois 

BOB FILNER, California 

TOM UDALL, New Mexico

(II) 
(III)

C O N T E N T S 

March 17, 2004

Page

Hearing VI on the Department of Veterans Affairs Information Technology 

Programs ............................................................................................................... 1

OPENING STATEMENTS 

Chairman Buyer ...................................................................................................... 1

Prepared statement of Chairman Buyer ........................................................ 55

Hon. Lane Evans ..................................................................................................... 3

Hon. Michael Bilirakis ............................................................................................ 3

Hon. Darlene Hooley, prepared statement of ........................................................ 57

WITNESSES 

Clarke, John R., M.D., Member, Committee on Data Standards for Patient 

Safety, the Institute of Medicine, Professor of Surgery, Drexel University, 

and Adjunct Professor of Computer and Information Science, University 

of Pennsylvania .................................................................................................... 6

Prepared statement of Dr. Clarke ................................................................... 69

Davies, Edward C. (Ted), Managing Partner, Federal Civilian Agencies, 

Unisys Corporation; accompanied by Joseph Macies, Partner, Unisys Corporation ................................................................................................................. 36

Prepared statement of Mr. Davies .................................................................. 121

Halamka, John D., M.D., Chief Information Officer, Caregroup Healthcare 

System, and Chief Information Officer, Harvard Medical School .................... 4

Prepared statement of Dr. Halamka ............................................................... 59

Koontz, Linda D., Director, Information Management Issues, U.S. General 

Accounting Office; accompanied by Valerie C. Melvin, Assistant Director, 

Information Technology Management Issues, U.S. General Accounting Office ......................................................................................................................... 15

Prepared statement of Ms. Koontz .................................................................. 79

McFarland, Robert N., Assistant Secretary for Information and Technology, 

Department of Veterans Affairs; accompanied by Edward F. Meagher, Deputy Assistant Secretary for Information and Technology, Department of 

Veterans Affairs; Bruce A. Brody, Associate Deputy Assistant Secretary 

for Cyber and Information Security, Department of Veterans Affairs; K. 

Adair Martinez, Deputy Chief Information Officer for Benefits, Veterans 

Benefits AdministrationRobert M. Kolodner, M.D., Acting Chief Information 

Officer for Health, Veterans’ Health Administration ........................................ 34

Prepared statement of Mr. McFarland ........................................................... 107

Reardon, James C., Chief Information Officer for the Military Health Systems, Office of the Assistant Secretary of Defense (Health Affairs), Department of Defense .................................................................................................... 17

Prepared statement of Mr. Reardon ............................................................... 97

Roswell, Robert H., M.D., Under Secretary for Health, Department of Veterans Affairs; and Robert M. Kolodner, M.D., Acting Chief Information 

Officer for Health, Veterans Health Administration ........................................ 18

MATERIAL SUBMITTED FOR THE RECORD 

Letter to Chairman Buyer from Secretary Principi re responsibility for the 

decision selecting VAMC Bay Pines as the CoreFLS test site ......................... 32
Page

IV

Written committee questions and their responses: 

Chairman Buyer to Department of Veterans Affairs .................................... 130

Chairman Buyer to General Accounting Office ............................................. 132

Chairman Buyer to Department of Defense ................................................... 147

Chairman Buyer to Unisys Corporation ......................................................... 176
(1)

HEARING VI ON THE DEPARTMENT OF 

VETERANS AFFAIRS INFORMATION TECHNOLOGY PROGRAMS 

WEDNESDAY, MARCH 17, 2004

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, 

COMMITTEE ON VETERANS’ AFFAIRS, 

Washington, DC 

The subcommittee met, pursuant to notice, at 10 a.m., in room 

334, Cannon House Office Building, Steve Buyer (chairman of the 

subcommittee) presiding. 

Present: Representatives Buyer, Bilirakis, Boozman, Evans, and 

Udall. 

OPENING STATEMENT OF CHAIRMAN BUYER 

Mr. BUYER. The Subcommittee on Oversight and Investigations 

of the Committee on Veterans’ Affairs will come to order. This is 

our sixth hearing on the VA’s information technology programs. 

The date is March 17, 2004. 

By way of opening—this is not necessarily an admonishment, but 

perhaps the VA can take it as they choose. The subcommittee’s 

original letter of notification of this hearing, originally scheduled 

February 25, was sent to the VA on February 6. At the VA’s request, the subcommittee rescheduled the hearing for today. That 

letter was sent on February 13. The subcommittee just received a 

fax copy of the VA’s testimony at 9 a.m. this morning. We hear the 

usual excuse that OMB is holding it up. Would you please tell us 

how long it has been at OMB? I would think 40 days’ advance notice would be more than adequate time for the Department to respond to this committee. 

I also understand our pre-hearing questions were sent to the Department on March 11, and we have not received the courtesy of 

a response. I don’t understand that form of lack of responsiveness, 

Dr. Roswell. And for that reason I have to bring it up here. And 

this is a hearing on VA/DOD sharing. And the best way I can help 

prepare for these hearings and we can get on with it is when I 

have the advance testimony. And I have read everyone else’s and 

was quite confused that I didn’t have the VA’s, and now I am very 

disappointed. 

Today’s hearing will revisit some of the key VA initiatives, including VETSNET, its automated claims processing program. We 

will also review two new programs, the VA’s Core Financial and 

Logistics System, called CoreFLS, and the Patient Financial Serv-
2

ices System, PFSS. CoreFLS is currently undergoing an operational 

testing in VISN 8 at Bay Pines Medical Center in St. Petersburg, 

Florida. Unfortunately, during this testing phase, it became necessary to repeatedly postpone surgeries because of multiple problems with implementation of the new system. I am at a loss as to 

why the Department would choose the second-busiest hospital in 

the nation for a test site. So maybe the VA can explain that. 

When I learned about this situation, I asked the VA’s Office of 

Inspector General to conduct a comprehensive review of the ongoing implementation of CoreFLS at Bay Pines facility. This request 

was made by this subcommittee on February 19. We also requested 

that the IG’s investigation focus on the adequacy and effectiveness 

of the training provided to the employees of the facility. The cost 

of the two consecutive 30-day delays prior to full implementation 

of the total penalties assessed for the delinquent payments of invoices over 30 days old and current delinquent invoice inventory. 

I understand that the IG has sent 15 personnel down to the Bay 

Pines facility. Any updates you can give us on that, I would appreciate. 

The Patient Financial Services System, PFSS, pilot project is currently under way in VISN 10 at the Cleveland Medical Center. The 

pilot project is designed to test PFSS in order to demonstrate how 

integrated commercial patient management and patient financial 

software will improve VA’s third party collections. 

The subcommittee’s last hearing on November 19, 2003 dealt 

with the efforts being made by the VA and DOD to develop and deploy electronic medical records that are inter-operable, bi-directional, and standards-based. Currently, we have service members 

deploying overseas and we have service members transitioning 

from active duty back to civilian status. How much easier would it 

be for these men and women if their medical information was in 

electronic format in a common medical record? I guess what we 

would like to hear from the VA and DOD is what is the latest and 

greatest of your endeavors to move this process forward? 

The President has identified moving toward electronic medical 

records as one of the top priorities. In his State of the Union address, the President said, ‘‘By computerizing health records, we can 

avoid dangerous medical mistakes, reduce costs, and improve care.’’

In fact, the Institute of Medicine, commonly referred to as IOM, 

issued a report entitled, ‘‘Patient Safety Achieving a New Standard 

of Care.’’ The report was the work product of IOM’s Committee on 

Data Standards for Patient Safety and focused on improving quality of care in America and fostering the use of information technology within the health care system. We will hear from Dr. John 

Clarke, a member of IOM’s committee, and get his thoughts about 

the advantages of moving more aggressively toward paperless medical records. 

During our last hearing, it was acknowledged by me and others 

that more progress had been made in the last 14 months than in 

the prior 20 years. It has been 4 months since our last hearing, and 

we would like to know how much closer the two departments are 

in providing a seamless transition to veteran status. 

Another area of interest to the subcommittee is the VA’s Smart 

Card Initiative. The VA testified before this subcommittee back in 
3

September of 2000 about a Smart Card proof of concept demonstration that was conducted August 31, 2000 for the acting secretary 

and the veteran service organizations. The demo project showed 

how the Smart Card could support express registration, which 

would save time for the veteran and VA staff while improving data 

quality. The demonstration also showed how a veteran using a 

kiosk could digitally sign forms using keys securely carried on the 

card. The goal was to implement this program nationally by January 22, 2002. It is my understanding that a new Smart Card initiative has been underway. Hopefully, we will learn what went wrong 

with the past efforts to implement the Smart Card after conducting 

the demo project in 2000. 

This hearing will also give the new Assistant Secretary for Information and Technology, Mr. Robert N. McFarland, an opportunity 

to provide to the subcommittee an update on the implementation 

of the one VA enterprise architecture plan and the state of the Department IT program. I look forward to your testimony. 

Right now, I will pause and ask the ranking member, Lane 

Evans, if he would have any opening comments. 

OPENING STATEMENT OF HON. LANE EVANS 

Mr. EVANS. Yes, I do, Mr. Chairman. I thank you for your leadership on this issue. This committee has repeatedly addressed DOD 

and VA’s informational exchanges. Transcripts of basic medical information on separating servicemen is very important. The VA has 

a need to know that this information to do so is its mission. A list 

of all separated service members is important, especially lists of returning members from Iraq. VA claims that the DOD information 

is often conflicting and contains discrepancies. DOD claims that 

there were no errors in any records sent to the VA. Well, both, obviously, cannot be true. Secretary Rumsfeld requested a comprehensive list. Will he get it? If he could not, that is a specific 

problem that DOD has and it needs to be addressed elsewhere. But 

if he could get such a list, why could the VA get that same list, 

what seems to be the problem? If the two departments cannot walk 

out the interface, what are the options? 

Mr. Chairman, I appreciate your leadership, and I yield back at 

this time. 

Mr. BUYER. Mr. Bilirakis. 

OPENING STATEMENT OF HON. MICHAEL BILIRAKIS 

Mr. BILIRAKIS. Well, thank you, Mr. Chairman. Just very briefly, 

because you and Mr. Evans have basically covered the material. I 

commend you for holding this hearing. We know that the VA 

spends about a billion dollars on its information technology infrastructure each year, and certainly it is our duty to ensure that the 

American taxpayer is getting a good return on this investment. 

Obviously, I am concerned about the problem with Bay Pines. 

You have brought it up, and I am sure we are going to spend a 

lot of time on it with the witnesses. Mr. Evans, of course, brought 

up the interface between the two departments, the Veterans’ Affairs and the Department of Defense. I understand it is something 

like 16 or 17 years that the two departments have been trying to 

develop a common medical record for military service members and 
4

veterans. Seventeen years on something that seems to make an 

awful lot of sense. It is a practical thing to do and why in the world 

it taking so long and they still haven’t even gotten to that point 

is beyond my understanding. 

But then again, when it comes to computers and things like that, 

my understanding is not so very big, anyhow. But hopefully we can 

learn more about these matters here today. Thank you, sir. 

Mr. BUYER. Mr. Bilirakis, we are pleased that you are here 

today. As you chair the Health Subcommittee on the Commerce 

Committee, your impact upon our health system is immense. And 

this will be an important hearing as we learn more about do we 

digitize, not only its impact in the quasi-private system but obviously, here with the VA. And the VA has always been a leader, but 

they need to get with it here a little bit. 

Dr. Boozman? 

Dr. BOOZMAN. I really don’t have a statement. I want to thank 

you, though, for holding the hearing on such an important subject. 

Mr. BUYER. Thank you, Doctor. 

If our first panel will come forward, please. We now recognize Dr. 

John R. Halamka, chief information officer, CareGroup Healthcare 

Systems, and chief information officer at Harvard Medical School. 

Please take a seat. And next—please come forward—is Dr. John R. 

Clarke, a member of the Committee on Data Standards for Patient 

Safety for the Institute of Medicine, professor of surgery at Drexel 

University, and adjunct professor of computer and information 

science at the University of Pennsylvania. 

Dr. Halamka, you may proceed. 

STATEMENTS OF JOHN D. HALAMKA, M.D., CHIEF INFORMATION OFFICER, CAREGROUP HEALTHCARE SYSTEM, AND 

CHIEF INFORMATION OFFICER, HARVARD MEDICAL 

SCHOOL; AND JOHN R. CLARKE, M.D., MEMBER, COMMITTEE 

ON DATA STANDARDS FOR PATIENT SAFETY, THE INSTITUTE OF MEDICINE, PROFESSOR OF SURGERY, DREXEL UNIVERSITY, AND ADJUNCT PROFESSOR OF COMPUTER AND INFORMATION SCIENCE, UNIVERSITY OF PENNSYLVANIA 

STATEMENT OF JOHN D. HALAMKA 

Dr. HALAMKA. Great. 

Mr. BUYER. We will operate under the 5-minute rule. 

Dr. HALAMKA. Thank you, Mr. Chairman, and distinguished 

members of the subcommittee, for allowing me to testify today. I 

am John Halamka, and I serve as the chief information officer for 

the CareGroup Healthcare System. That is a collection of six hospitals and 3,000 doctors in eastern Massachusetts, comprising 

about 9 million patient records. 

Mr. BUYER. Sir, do you have a written statement? 

Dr. HALAMKA. I do, and that is included. 

Mr. BUYER. It will please be submitted for the record, no objection. 

Dr. HALAMKA. Okay. 

Mr. BUYER. Your oral testimony may be received. 

Dr. HALAMKA. Thank you. I also serve as the chief information 

officer of Harvard Medical School and the chairman of the New 
5

England Health EDI Network, an organization responsible for 

inter-linking the administrative medical records for the entire New 

England region. 

I would like to make a few remarks about creating interoperable 

medical records across systems and regions. My experience in doing 

this clinically in New England is it required a phased approach. 

First, we needed to identify who are the patients. We have no national patient identifier in this country at this time so our challenge is as patients move from doctor to doctor and region to region 

to identify who they are and link their records to an identifier. So 

in our hospital system, the first matter at hand was to create a 

master index of every patient in our region, the medical record 

numbers they had been known by in various doctors’ offices and 

hospitals. And once we created that database, that enabled us then 

to create what I will call a virtual medical record. I can now gather 

data using Web technologies from various doctors’ offices and hospitals because I have a common database of where the data resides 

and the medical record numbers by which each individual is 

known. 

Another challenge we had was data standards. These are very 

much evolving in medical informatics today. And in fact in 1998, 

when we first did this, many of the standards for the exchange of 

medications, problems, various things such as radiology studies 

didn’t exist. We actually had to invent them at the time. 

Well, the good news is as we think about this phased approach, 

the standards for interoperable medical records today do exist. In 

fact, Tommy Thompson in 2003 has adjudicated a set of basic information exchange standards that make interoperability today much 

easier than it ever has been in the past. 

The other thing we recognized is that doctors deliver care with 

a patient in front of them. We think of HIPAA as actually empowering the exchange of medical records because HIPAA specifically 

provides exceptions for treatment, payment, and operations. If the 

patient consents to be treated, the data can be gathered from various places the patients received care, delivered to the doctor to ensure good patient treatment quality. So in fact HIPAA has not been 

a barrier to us in the implementation of shared interoperable medical records. 

We also recognize that population health is ultimately very important. To ask questions such as are our diabetics getting proper 

laboratories or proper physical examinations? But we also recognize creating central repositories of consolidated information across 

hospitals is extraordinarily hard. So in our phasing we said clinical 

care for the individual patient seeking care is our first goal. And 

we have deferred creating unified databases for population health 

and data analysis as a future goal. 

I will say that I have worked with Rob Kolodner and I have spoken to Dr. Winkenworder about IT issues in the past. And as I understand the current interoperability of VA and DOD, they are following a phased approached fairly similar to what we have done 

in New England, starting with a master index of who are the patients, which went live last year, and now working on pilots to do 

a very similar virtual medical record approach with a pilot going 

live in the fall starting with medications and allergies. So this ap-
6

proach, virtual medical records based on standards and information 

exchange at the point of care, is a very sound approach that we 

have used for clinical information exchange. 

I will also say that we have done administrative data exchange, 

such as is the patient eligible for care, claims processing and financial information exchange throughout all the payers and providers 

in New England. The New England Health EDI Network, described 

in detail in my testimony, processes today about five million transactions a month, about 90 percent of the administrative transactions in our region, and it uses a very similar model: Web technologies, virtual linkage of multiple heterogeneous and disparate 

systems that exist in hospitals and payer systems. 

And my recommendation after analyzing DOD and VA technologies is that following a standards-based approach for administrative and clinical data, using this notion of a master patient 

index and distributed data stores does appear to be sound. And I 

certainly look forward to watching their progress because although, 

based on the information I have reviewed in this packet, the past 

has certainly been a checkered experience. I do believe, with the 

standards available today, that the future does look bright. 

I will conclude by saying the way that we were able to achieve 

this interoperability in New England is through a strong vision and 

consistent leadership. It absolutely took managing every aspect of 

this interoperable exchange with a strong project plan, a single 

project management organization, and milestones that were adhered to. So it was actually much more an organizational problem 

than a technical problem to achieve interoperability. And in certainly the VA and the DOD’s experience, today I believe they do 

have an architecture and a plan and a vision whereas in the past 

that may not have been the case. 

So, again, I do look forward to a rosy future. And we are certainly happy to share our experiences in New England as it will 

help our nation exchange medical records. 

[The prepared statement of Dr. Halamka appears on p. 59.] 

Mr. BUYER. That is great. Thank you very much. 

Dr. Clarke, you are now recognized for 5 minutes. 

STATEMENT OF JOHN R. CLARKE 

Dr. CLARKE. Thank you, Mr. Chairman Buyer. Like you, I am 

also a veteran, I might add, having served as a physician in the 

Army and as a surgeon at the VA hospital in Philadelphia. I am 

speaking today, however, as a member of the Committee on Data 

Standards for Patient Safety of the Institute of Medicine. The Committee’s recommendation——

Mr. BUYER. Could you pull your microphone a little closer to you, 

please? 

Dr. CLARKE. It wasn’t on, excuse me. The Committee has made 

recommendations on health care standards to improve patient safety and in the interest of time, I will summarize the written statements. 

I think Dr. Halamka has already illustrated the important need 

to have an electronic medical record to provide accurate information for the care of patients, and so I will not discuss that any further. However, it is very clear that as these records develop, one 
7

of the inhibitors of developing the electronic record is that for the 

most part the successful systems today have been homegrown and 

talk within their own community but do not talk between communities. And the main problem that we addressed was the need for 

data standards so that all the electronic health records could talk 

to each other. The Committee made a number of recommendations 

along those lines. 

The National Committee on Vital and Health Statistics, which is 

a public/private advisory committee established to provide advice to 

HHS and Congress on national health information policy, has for 

many years recommended that the Federal Government assume a 

more active role in establishing national data standards. In 1996, 

Congress passed HIPAA, which mandated standardization of administrative and financial transactions. In 2001, the Consolidated 

Health Informatics Initiative, an inter-agency effort, was established as part of OMB E-Government Initiative to streamline and 

consolidate government programs among like sectors. 

The mission of the Consolidated Health Informatics Initiative is 

to articulate and execute a coherent strategy for the adoption of 

federal interoperability standards for healthcare information. 

DHSS was designated the managing partner for this initiative with 

both the DOD and the VHA as being major partners. The initiative 

played a pivotal role in the recent decision by the Federal Government that the programs of the DHHS, the VHA, and the DOD 

would incorporate certain data standards and terminologies. The 

initiative, although off to a very promising start, lacks a clear mandate to establish standards. In addition, once standards and gaps 

have been filled, the future of the initiative is unclear. 

The IOM Committee recommended that Congress should provide 

clear direction, enabling authority, and financial support for the establishment of a national, not just a federal, standard for data that 

support patient safety. Various government agencies will need to 

assume major new responsibilities and additional support will be 

required. Specifically, the recommendations concluded that the Department of Health and Human Services should be given a lead 

role in establishing a public/private partnership for the promulgation of standards for data that support patient safety and other 

quality of care initiatives. The Consolidated Health Informatics Initiative in collaboration with the National Committee on Vital and 

Health Statistics should identify data standards that are appropriate for national adoption and identify gaps in the existing standards that need to be addressed. 

The Agency for Healthcare Research and Quality in collaboration 

with the National Library of Medicine and others should provide 

the administrative and technical support for these efforts; in particular the agency should ensure the development of implementation guidelines, the certification process, and confirmation testing 

for all the data standards. They should also provide financial support and oversight for the developmental activities to fill the gaps 

in the data standards. 

And the National Library of Medicine should be designated as a 

responsible entity for distributing all the national clinical 

terminologies that relate to patient safety and other quality of care 

issues. 
8

Yes, the DOD and VHA need to be able to talk to each other, but 

to improve the safety, quality, and efficiency of healthcare, we all 

need to be able to speak the same electronic language. The incorporation of data standards into government programs is a logical approach to establishing national standards. The major government 

programs, including those operated or sponsored by the Department of Health and Human Services, the VHA, and the DOD, 

should incorporate these data standards into their contractual and 

regulatory requirements. 

The IOM Committee detailed an action plan for the deployment 

of these standards for classifying and coding health data for electronic interchange of data and for representing clinical knowledge 

electronically. With federal leadership in the establishment of 

standards for data that support patient safety, information technology systems built up over the coming decades should achieve the 

success to support the delivery of safe and effective care that we 

have been waiting for. 

Our committee report offered a blueprint to address the standards necessary to make electronic health records universal, not 

only within the federal sector, but across the country, as well. 

I would like to thank the committee for the opportunity to 

present the IOM findings, and I would be happy to take questions 

at the appropriate time. 

[The prepared statement of Dr. Clarke appears on p. 69.] 

Mr. BUYER. Thank you very much. Dr. Halamka, you testified 

that this was really more an organizational problem than an IT. In 

order for you to achieve the level of success that you have today, 

what type of institutional will was necessary? 

Dr. HALAMKA. Certainly we needed to have strong visionary leadership from the CEO, from the leaders of the organization that 

would help us get through some of the barriers because there are 

always the barriers of privacy and confidentiality versus the doctor’s need to know to deliver good care. So if there is a strong central vision that good care is the champion here, certainly that 

breaks down some of the other barriers. 

We also have to have a common agreement on standards, that 

each organization has to adjudicate, we will adopt interoperable 

medical records systems that will enable us to consolidate records. 

So it took leadership at the executive level, leadership at the IT 

level, and clinical leadership in the field to make sure we deployed 

electronic medical records that doctors would use to put the data 

in to begin with. 

Mr. BUYER. Dr. Clarke, your testimony was equally as clear, asking Congress to provide such direction and enabling authority. I believe that Congress here over the last two decades has done that. 

This is our sixth hearing. We have given not only great resources 

of America’s treasury but latitude and authority to DOD and to 

VA. So what I am most hopeful about here, Dr. Clarke and Dr. 

Halamka, is that that institutional will can proceed. And I know 

that patience is a virtue, but I am running out. This committee is 

running out of that patience. 

You used the word ‘‘heterogeneous,’’ Dr. Halamka, would you 

characterize the DOD and the VA health systems as heterogeneous? 
9

Dr. HALAMKA. Well, certainly. In fact, just as an example, if you 

think of a banking transaction, there are about five data elements 

in a banking transaction. There are about 65,000 data elements in 

an average medical record. So to represent those into an electronic 

system by its very nature creates very heterogeneous to interoperate data systems. 

Mr. BUYER. I should have asked this as a follow-up to the previous question. When you took on this cause and you had the institutional will, you laid out the direction, what was the time line in 

order to achieve success? 

Dr. HALAMKA. Sure. We did it in about one year. But the prerequisite was we had already had electronic representations to the 

data so the systems existed. And therefore that one year was defining the standards for interoperability, ensuring we had a cross 

index of our multiple patients, and then building a record that was 

frankly good enough, that perfection was the enemy of the good. 

That is if a doctor got a list of medications and it said, ‘‘Tylenol, 

Acetaminophen, Panadol,’’ all of which are the same drug, the doctor would be able to figure out that people are taking Tylenol. That 

was acceptable, a level of clinical data inoperability that didn’t necessitate that we solve every vocabulary and every data integrity 

issue first but got the doctor the information they needed to do 

clinical care in the safest way possible was really our goal. So one 

year. 

Mr. BUYER. If you feel as though you are not qualified to answer 

this question, just state so or you can give your personal opinion 

on how long do you think it could take the VA and DOD to enjoy 

such success, 17 years? 10 years? 5 years? 

Dr. HALAMKA. Well, I will say the following, that in 2004 I consider this the year of the ‘‘Perfect Storm.’’ We have standards. We 

have HIPAA that gives us guidelines for appropriate exchange of 

information. And I think the leadership of the VA and the DOD, 

it has that institutional will that I described and the project management is put in place today that wasn’t existent in the past such 

that I do expect the next year to see much more substantial 

progress from my knowledge of these systems than you have seen 

in the last 10 years. 

Mr. BUYER. All right, before I yield to Mr. Evans, I have to repeat this, and I will repeat it 10,000 times, the vision here is very 

clear: When a soldier, sailor, Airmen, Marine, they are injured on 

the battlefield or in the workplace, they are taken to a combat aid 

station. They take their dogtag, which has an electronic medical 

record, everything comes down. The first time they begin to provide 

service to them, it goes into electronic medical record form. When 

they are taken off the battlefield, whether it is in Iraq, Afghanistan, say they go to Landstuhl, it follows them, they know what 

care has been given. In transport, when they go from Landstuhl 

and they end up at Walter Reed or they end up in San Antonio, 

everybody knows what is happening. And then upon medical discharge, when they go to VA, everybody knows what has been done 

along the process. We increase the quality of care. That is where 

we want to go. 

Mr. Evans, you are recognized. 
10

Mr. EVANS. Dr. Halamka, your statement contains comments on 

exchanging administrative records via the Web indicate a significant degree of success in that area, which we can be happy with. 

But what would you recommend that would assist the VA, the 

DOD/VA information exchange, what must the two departments do 

to support a third party remedy? 

Dr. HALAMKA. Just so I understand the question, what are my 

recommendations to VA and the DOD to enjoy the same kind of 

success? 

Mr. EVANS. Yes. 

Dr. HALAMKA. So certainly, the adoption of a standard way of exchanging data. It is absolutely the case that medical records are 

going to be heterogeneous and distributed. You are not going to be 

able to create a centralized database of everything that happens in 

the course of an individual’s life, civilian and military. So by the 

adoption of the standards, such as the ones you have suggested, 

you now have the ability to query those source systems and gather 

the data the doctor needs to deliver care. So it is leveraging the 

Web, leveraging modern technologies, which afford such exchange, 

and adhering to standards rigorously throughout all systems will 

make them successful. But of course that is technology. There is 

the organizational aspect I talked about as well, you must have a 

consistent project plan that is adopted by every single hospital and 

site that is part of the care delivery system. It is only by herding 

the cats that you will make this information exchange possible. 

Mr. EVANS. Dr. Clarke, your testimony says that the implementation of the national health information infrastructure in which 

government healthcare systems can interface with the private sector, when you speak of the private sector, you mention suppliers, 

various insurers, purchasers, and employer groups. Please expand 

on how you will guarantee the security of this system and the privacy of the veterans’ medical records within this national health 

care infrastructure? 

Dr. CLARKE. The security of the individuals’ records I think are 

captured under the umbrella of HIPAA. And all institutions have 

to adhere to a policy whereby information is released only to authorized individuals, health care providers, and other individuals, 

under the HIPAA standards. So the requirements for the VA are 

the same as the requirements in our own institution. And when I 

want to get information from any other hospital, be it a VA hospital or be it another institution across town, I have to adhere to 

the same standards. 

Mr. EVANS. Thank you. Thank you, Mr. Chairman. 

Mr. BUYER. Thank you. Dr. Clarke, do you have a written statement you would like to entered into the record? 

Dr. CLARKE. Yes. 

Mr. BUYER. It shall be entered. 

Mr. Bilirakis, you are now recognized. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. Let’s see, Dr. 

Halamka, you work for Harvard Medical School, correct? And you 

have no private firm on the outside or anything of that nature? 

Dr. HALAMKA. Yes, I have no stock holdings nor affiliation 

with—— Mr. BILIRAKIS. So you are not in here trying to drum up work? 
11

Dr. HALAMKA. There is nothing I have to sell. 

Mr. BILIRAKIS. Right. And, Dr. Clarke, the same thing with you, 

you are with Drexel, right? 

Dr. CLARKE. I am a full-time employee of Drexel University. 

Mr. BILIRAKIS. Yes. If you had been requested, your recommendation, your help and your aid had been requested by the 

VA/DOD, would you have been available to help? 

Dr. HALAMKA. Yes; in fact, I have met with Rob Kolodner several 

times over the last several years. 

Mr. BILIRAKIS. I see. Well, it is not really comparing apples with 

apples, obviously. One is government with all sorts of turnover, 

particularly at the top with elections and whatnot and Harvard 

and Drexel of course there is a different situation. You are both 

M.D.s. I think it was in this hearing room that we had somebody 

testify, Mr. Chairman, a few years ago to the effect something 

about your chances of dying are enhanced the more time you spend 

in the hospital, or words to that effect. There are some statistics 

to that effect. Why is that? 

Dr. HALAMKA. Well, certainly if we think about the way that care 

is delivered in many hospitals, with handwritten orders that can’t 

be read, the potential for medical error is estimated at 7 percent 

of the inpatient population has a medication error during the 

course of their hospitalization. So if they use electronic medical 

records, such as computerized provider order entry, where there is 

no longer handwriting, there is no longer data re-entry by clerks, 

eliminates much of that. So as I understand the interoperability 

pilot of the DOD and the VA, medication data and allergy data is 

the first element to be exchanged. So in fact I think they are targeting that exact error issue. 

Mr. BILIRAKIS. So there is criticality behind getting this done, is 

there not? We are talking about lives. 

Dr. HALAMKA. Correct. 

Mr. BILIRAKIS. Why do you gentlemen think that the VA and the 

DOD have had a such a hard time getting this done? 

Dr. HALAMKA. And I will just render an opinion. 

Mr. BILIRAKIS. Lack of institutional will or more than that? 

Dr. HALAMKA. Render an opinion because of course I haven’t 

worked in either of those sites specifically but on the technical side 

the standards had not been adjudicated until fairly recently. So 

that certainly was a barrier. But we have the standards today. 

There was not a master patient index in the DOD system itself. 

There wasn’t an ability to identify the patients between the VA and 

the DOD until last year. So that there were some technical barriers. 

Mr. BILIRAKIS. Has it been principally DOD that maybe has been 

the problem? 

Dr. HALAMKA. I can’t say, because, again, I don’t know enough, 

but I recognize that the master patient index didn’t exist until last 

year. 

Mr. BILIRAKIS. With DOD. 

Dr. HALAMKA. That is correct. 

Mr. BILIRAKIS. But it did exist for some time in the VA system. 

Dr. HALAMKA. That is my understanding, yes. 

Mr. BILIRAKIS. Okay. 
12

Dr. HALAMKA. And then organizationally I don’t think the 

project, again from what I understand, had quite the priority in the 

past that it does today. It is highly visible. The people, the vision, 

and the technology exists. So I think today is very much a new day 

for this interoperability demonstration. 

Mr. BILIRAKIS. Well, Mr. Chairman, I am not really sure how 

much more we can ask of these two gentlemen. I would sure have 

loved to have seen the VA at the same table with them and the 

GAO. I think it would be an interesting play among the three 

groups. But in any case thanks, gentlemen. You appear to be experts at this. We are talking what, nine million patients and you 

have been able to get the job done. I would hope that the VA, and 

the VA is in the room, Dr. Roswell is one of my favorite people forever and ever, and others from the VA here and they are listening 

to you and hopefully we can get this thing done somehow. 

Thank you, Mr. Chairman. 

Mr. BUYER. Acting off of your intuition, I know both of you have 

come down here from Philadelphia and Boston, and I don’t know 

what your return schedules are, but if you could after the first 

panel retires, if you could wait and if you have anything you want 

to add after the GAO testimony. 

Mr. BILIRAKIS. I thank you, Mr. Chairman. That is good thinking. I meant to bring that up. 

Mr. BUYER. And if there is any interaction, we could do it at that 

time. 

Dr. Boozman? 

Dr. BOOZMAN. Mr. Halamka, what does the form look like that 

you use? Do you check boxes? 

Dr. HALAMKA. Everything we do is Web-based. And so when one 

thinks of navigating a Web page, text displays, checks boxes, pull 

down menus, so for the display of records we are gathering them 

from all of our various hospitals and doctors’ offices and showing 

them as a consolidated view as a Web page. 

Dr. BOOZMAN. When a doctor does an exam though, what do you 

recommend that he does? Do you have a particular form that you 

want him to use or are you just into gathering the information? 

Dr. HALAMKA. When we gather information as in data being 

input the system, everything is put through standard formats. We 

actually have a 35-member clinician committee designing all of the 

systems such that if you are ordering a medication, if you are doing 

a documentation of a history or physical, what are those data elements that need to be captured? So a lot of clinician input into designing those Web-based structured standard ways of getting data 

in. 

Dr. BOOZMAN. But when a guy does an exam, when an internist 

is with a patient, does he check boxes? 

Dr. HALAMKA. It is a combination of both free text, dictation or 

typing, plus checking boxes. 

Dr. BOOZMAN. You mentioned earlier that there are 65,000 

versus a much smaller amount in the banking, are you trying to 

standardize a form that the internist would use and that optometry 

would use? Wouldn’t it make sense in the day and age that we live 

now, there are so many different ways of doing that, wouldn’t it 
13

make sense to try and get that 65,000 down to much lower than 

that? 

Dr. HALAMKA. What we found is for procedure-based specialities, 

you are going in for a colonscopic exam for example or a pathologist 

has to review a slide, those types of activities actually render themselves very well to forms and structured data input. But when you 

see an internist and your chief complaint is fever, shortness of 

breath, it is very hard to put that into a structured form. So we 

will do both. 

Dr. BOOZMAN. But when you do see fever and whatever, because 

you have fever or whatever, you do certain things, right? 

Dr. HALAMKA. Sure. 

Dr. BOOZMAN. So it looks like you would have those certain 

things listed and then whatever the standard of care is for that 

particular complaint. See what I am saying? I understand what 

you are saying but the days of just writing on a chart kind of over? 

Dr. HALAMKA. Well, one of the challenges is so much in medicine 

is not black and white, it is gray. When you say fever, what does 

that mean? How high? Are there night sweats? Unlike again something discrete such as banking, so much of medicine is subjective 

that, yes, absolutely we can reduce much of medical practice to 

standard formats and standard vocabularies but there still has to 

be room for subjective interpretation and that is where we will use 

voice recognition to get in the doctor’s subjective view, which ends 

up as text in the record. 

Dr. BOOZMAN. Okay, I am not arguing with you, whatever you 

are doing is working so thank you very much. 

Dr. HALAMKA. Sure. 

Mr. BUYER. I have follow-up off of Mr. Bilirakis’ question. If this 

can be quantified from your analysis in implementation or having 

now lived through the system, is it possible to now actually calculate your medical errors or deaths through your quality assurance or risk management, what could have been avoided having 

gone through this electronic record? 

Dr. HALAMKA. Sure, well, the numbers that we have experienced 

are that we have been able to reduce adverse drug events by 50 

percent—— Mr. BUYER. Wow. 

Dr. HALAMKA (continuing). In our hospitalized patients. The av- erage cost of an adverse drug event is $5,000. And that is because 

of extra hospital days or extra care that needs to be rendered. And 

in our case it is about 60,000 patients a year that receive inpatient 

care. So if you do the multiplication, 60,000 patients times an error 

rate of 7 percent times $5,000, that reduced it by half. But when 

you start scaling that to the country, it gets to be a very significant 

number. 

Mr. BUYER. How do you achieve that? Why? Why do you receive 

50 percent? That is extraordinary. 

Dr. HALAMKA. We go from doctor’s brain to patient’s vein without 

a single hand-off. It used to be that a doctor wrote an order, it went 

through a piece of carbon paper. It was faxed to a pharmacist who 

then re-keyed into a pharmacy system. If it went to a nurse, well, 

today a doctor types in a structured form. It goes into the pharmacy system automatically. It then goes to a drug robot that deliv-
14

ers the medication to the nursing station. The nurse types in a patient name, gets the medication in the right dose and the right format and delivers it to the patient. There are no hand-offs whatsoever. 

Dr. CLARKE. Chairman Buyer? 

Mr. BUYER. Yes? 

Dr. CLARKE. If I could also elaborate from the perspective of the 

Institute of Medicine Committee. We felt very early in our discussions that it was important to recognize that quality of care was 

not—and patient safety was not just a matter of detecting and preventing errors. But rather it was involved in the delivery of quality 

health care. And the seminal discussion really involved an experience at Latter Day Saints Hospital where they looked at new drug 

allergies, that is people who developed allergies to medications they 

had never received. And they set up a program,—everyone agreed 

that those were not errors. But they set up a program whereby you 

could look at your drug choices and look at the pros and cons of 

each drug and they found that by presenting intelligent information to the provider at the point of care, they were actually able 

to reduce their new drug allergies by 50 percent. 

So this is not just a matter of detecting errors. This is a matter 

of providing a provider with accurate information about the patient, making a correct match, and providing top-quality care. It is 

not just a matter of picking up mistakes. Patient safety is a matter 

of delivering quality care. And medical records, electronic health 

records are essential to doing that. And standards are necessary for 

me to get information from your hospital so that I can take care 

of the patient who has been there and now is in Philadelphia. 

Mr. BUYER. Who are your vendors with regard to your hardware 

and software? 

Dr. HALAMKA. Sure. Starting with the hardware, all of our storage has to be very, very reliable. And we have purchased storage 

from EMC Corporation for that reliable storage. Our servers are 

provided by Compaq, Hewlett Packard Corporation. Our networks 

by Cisco. And our software has been created largely internally but 

we use a language from Intersystems Corporation called Cache, 

which is actually the same language and the same infrastructure 

that is used by the VA. 

Mr. BUYER. Thank you. Does anyone have any follow-up questions? Mr. Bilirakis? 

Mr. BILIRAKIS. No, Mr. Chairman. Well, I guess when we get the 

next panel up there, I know you have asked both of the doctors to 

stay around and that is just terrific that they are willing to do that. 

If somehow we can intermingle them, I think it might be interesting. Thank you. 

Mr. BUYER. Thank you very much for your testimony. 

Dr. HALAMKA. Thank you. 

Mr. BUYER. We now recognize panel two. We recognize Ms. Linda 

Koontz, director of information technology management issues, 

United States General Accounting Office. Also on this panel will be 

Mr. James C. Reardon, chief information officer for the Military 

Health System, Office of the Assistant Secretary of Defense for 

Health Affairs. We also recognize Dr. Robert H. Roswell, Under 

Secretary for Health, Department of Veterans Affairs. We also rec-
15

ognize Dr. Robert M. Kolodner, acting deputy chief information officer for health, Veterans Health Administration. 

Normally, when we do these congressional hearings and we ask 

the administration to come forward with their positions, we will 

have the GAO testify and then we will have the administration 

present their testimony. We bring in outside experts. We led off 

today with outside experts. Now we are going to turn to the GAO. 

And, to my colleagues, we have asked the administration to 

come. They don’t have prepared remarks, but I think that what we 

should do is after the GAO provides their testimony, if they would 

like to give any opening comment that they made based upon what 

they have heard from the first panel and the testimony from the 

GAO, that is permissible. You are here so that you can answer 

many questions that members have with regard to how we get this 

process moving forward. 

So with that as sort of our architecture of the hearing, we will 

lead off with Ms. Koontz. 

STATEMENTS OF LINDA D. KOONTZ, DIRECTOR, INFORMATION 

MANAGEMENT ISSUES, U.S. GENERAL ACCOUNTING OFFICE; 

ACCOMPANIED BY VALERIE C. MELVIN, ASSISTANT DIRECTOR, INFORMATION TECHNOLOGY MANAGEMENT ISSUES, 

U.S. GENERAL ACCOUNTING OFFICE; JAMES C. REARDON, 

CHIEF INFORMATION OFFICER FOR THE MILITARY HEALTH 

SYSTEMS, OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE (HEALTH AFFAIRS), DEPARTMENT OF DEFENSE; ROBERT H. ROSWELL, M.D., UNDER SECRETARY FOR HEALTH, 

DEPARTMENT OF VETERANS AFFAIRS; AND ROBERT M. 

KOLODNER, M.D., ACTING CHIEF INFORMATION OFFICER 

FOR HEALTH, VETERANS HEALTH ADMINISTRATION 

STATEMENT OF LINDA D. KOONTZ 

Ms. KOONTZ. Mr. Chairman, members of the subcommittee, I am 

pleased to be here today to participate in continuing discussion of 

the Department of Veterans Affairs Information Technology Program. With me today is Valerie Melvin, assistant director, who is 

responsible for our work in this area. 

My testimony focuses on a critical aspect of this program, VA’s 

work with the Department of Defense to achieve the ability to exchange medical health care data and create an electronic medical 

record for veterans and active-duty personnel. VA and DOD have 

been pursuing ways to share data in their health information systems and create electronic records since 1998. Yet accomplishing a 

two-way health data exchange has been elusive. 

When we testified on this initiative last November, VA and DOD 

had achieved a measure of success in sharing data through the 

one-way transfer of health information from DOD to VA health 

care facilities. Yet, VA and DOD faced significant challenges and 

were far from realizing the longer term objective, providing a virtual medical record based on the two-way exchange of data as part 

of their HealthePeople Federal strategy. The Departments had not 

clearly articulated a common health information architecture and 

lacked the details and specificity essential to determining how they 

would achieve this capability. 
16

Since November, VA and DOD have made little progress toward 

defining how they intend to achieve the two-way exchange of patient health data under the Healthy People federal strategy. Although VA officials recognize the importance of having an architecture to describe in detail how they plan to develop an electronic 

interface between their health information systems, they acknowledge that the Department’s actions are continuing to be driven by 

a high-level strategy that has been in place since September 2002. 

VA and DOD officials stated that they intend to rely on an initiative being undertaken this month to satisfy a mandate of the National Defense Authorization Act, which mandated that VA and 

DOD develop the capability to exchange outpatient pharmacy data 

by October 2004. The Departments hope to determine from a 

planned pharmacy prototype what technology can be used to facilitate the exchange of data between the health information systems 

they are developing. However, this project is in an early stage and 

the Departments have not yet fully determined the approach for 

this undertaking. Given these uncertainties, there is little evidence 

as to whether and how this project will contribute to defining an 

explicit architecture and technological solution for achieving the 

two-way exchange of patient health information. 

Adding to the challenge and uncertainties of developing the electronic interface is that VA and DOD have not fully established a 

project management structure to ensure the necessary day to day 

guidance of and accountability for the Departments’ implementation of this capability. Although maintaining they are collaborating 

on this initiative through a joint working group and receiving oversight from executive level counsels, neither Department has had 

the authority to make final project decisions binding on the other. 

Further, the Departments are operating without a project management plan describing the specific responsibilities of VA and 

DOD in developing, testing, and deploying the interface. 

In discussing these matters last week, we were told that the Departments had designated a program manager for the pharmacy 

prototype and begun discussions to establish a plan for the overall 

interface project. However, until essential project management elements are fully established, not only for the prototype but for the 

entire project to develop an interface, the Departments will lack assurance that they can successfully establish the capability to exchange data within the time frames they have set. 

In summary, Mr. Chairman, achieving an electronic interface to 

enable VA and DOD to exchange patient medical records between 

their health information systems is an important goal with substantial implications for our nation’s military members and veterans. However, at this time, the Departments lack critical components, including a well-defined architecture and a project management structure and thus risk investing in a capability that could 

fall short of the intended goals. The continued absence of a clear 

approach and sound planning for the design of this new electronic 

capability elevates concerns and skepticism about exactly what capabilities VA and DOD will achieve as part of the HealthePeople 

Federal and in what time frame. 

That concludes my statement. I would be happy to answer questions at the appropriate time. 
17

[The prepared statement of Ms. Koontz appears on p. 79.] 

Mr. BUYER. I think the testimony of the GAO is very critical. I 

don’t want to be redundant to the last hearing that this committee 

held last year, so I would just now turn to Mr. Reardon and then 

to Dr. Roswell for comments that you would like to make with regard to any progress that you have and respond to the testimony 

of the GAO, whether you agree with it, whether you disagree with 

it. Now is your opportunity. 

Mr. Reardon. 

STATEMENT OF JAMES C. REARDON 

Mr. REARDON. Good morning, Mr. Chairman and distinguished 

members of the subcommittee. Thank you for the opportunity to 

discuss the progress being made by the Department of Defense and 

the Department of Veterans Affairs in sharing medical information 

to facilitate the care of veterans. While I have submitted a more 

detailed written report, I would like to highlight some of our major 

efforts. 

We continue to enhance the Military Health System enterprise 

architecture to ensure that information technology investments directly support the military medical mission and allign with the Department’s high-priority Business Management Modernization Program. 

Protecting sensitive patient information is of the utmost importance to the Military Health System, and we have implemented a 

strong information assurance program which addresses information 

protection, both from the cyber, physical, and personnel security 

perspectives. We continue to enhance our secure standards-based 

infrastructure, which ensures essential patient and population-level 

health care information is well protected, and is available when 

needed around the clock. 

Another major focus is the Department’s electronic medical 

record called the Composite Health Care System II. CHCS II began 

worldwide deployment in January 2004 after successful completion 

of operational testing and evaluation and limited rate production at 

eight DOD medical facilities. CHCS II is an enterprise-wise medical and dental electronic health record that provides worldwide secure online access, to comprehensive patient records, a single electronic record for each beneficiary. CHCS II is patient-centric, secure, and scalable for use in all DOD medical facilities from our 

largest garrison based facility to our forward-deployed medical 

units. CHCS II is a core component of military medical readiness 

supporting uniform, secure, high-quality health care delivery to active duty service members, their families, and other beneficiaries. 

DOD continues to work very closely with the VA, electronically 

transferring large quantities of medical information via the Federal 

Health Information Exchange. This model of collaboration between 

the Departments markedly enhances continuity of care for our nation’s veterans. Examples of the electronic information being transferred to the VA include laboratory and radiology results, discharge 

summaries, allergies, and consults. Since last appearing before the 

subcommittee in November, we have expanded the information 

being provided to information on our national mail order pharmacy, 
18

and on our retail pharmacy, as well as our standard ambulatory 

data records are now moving to the VA at the point of separation. 

VA providers nationwide have access to electronic medical information on over 1.9 million separated Service members and the 

numbers continue to grow on a monthly basis. 

The primary focus of DOD/VA IT collaboration is the development of interoperability between DOD’s Clinical Data Repository 

and the VA’s Health Data Repository. A DOD/VA integrated product team led by senior clinicians and information technologists 

from both Departments is managing this initiative. The initial 

interface will be the pharmacy prototype, which will test our infrastructure and operational architecture to ensure we are exchanging 

data in a safe and secure manner that supports data integrity and 

patient safety. 

A joint DOD/VA team collaboratively developed the functional requirements for this initiative, the request for proposal and other 

supporting documentation. A DOD/VA selection board evaluated 

the proposals, made a selection, and a contract was awarded in late 

February to Integic Corporation. A joint project kick-off meeting 

with DOD, VA, and the winning contractor occurred earlier this 

month and the program management team and the contractor 

team will continue to meet weekly to ensure this effort stays on 

schedule. The health CIOs will meet on a bi-weekly basis to receive 

updates, provide input, and ensure quick issue resolution. The 

DOD/VA Health Executive Council and Joint Executive Council 

will also receive updates on a monthly and quarterly basis. 

In addition, DOD and VA are working closely as lead partners 

in the Consolidated Health Informatics Project, one of the 24 EGovernment Initiatives supporting the President’s Management 

Agenda and as principals on the new Federal Health Architecture 

initiative being managed by HHS. 

Mr. Chairman, and distinguished members of the committee, the 

collaborative relationship between DOD and DVA is strong and 

progress continues to be made. The groundwork has been laid for 

even greater accomplishment in the future, and the Department is 

firmly committed to continue success at the highest levels. This cooperative technology sharing serves as a vital tool to assist both 

Departments in caring for the men and women who serve and have 

served this country. They are the focus of our efforts. 

This concludes my oral statement. Thank you again, Mr. Chairman, for the opportunity to highlight our activities. And I will be 

pleased to answer any questions. 

[The prepared statement of Mr. Reardon appears on p. 97.] 

Mr. BUYER. Dr. Roswell. 

STATEMENT OF ROBERT H. ROSWELL 

Dr. ROSWELL. Thank you, Mr. Chairman. It is a pleasure to be 

here. I do not have formal prepared testimony, but I appreciate the 

opportunity to make comments, and I would like to do so. 

First let me publicly thank the first panel. I certainly agree with 

their testimony and the importance of an electronic medical records 

system. I would comment for the record that, as alluded to, medication errors account for a large number of adverse outcomes associated with hospitalizations. In fact, I have been told that 58 percent 
19

of all medication errors are associated with the ordering process 

and the computerized physician or provider order entry, what we 

call CPOE, is a process that virtually eliminates those 58 percent 

of mistakes. That has been fully implemented in the VA for several 

years. 

However, virtually all of the remainder of medication errors are 

associated with the administration of the medication, something 

that cannot be prevented by computerized physician order entry because that checks the validity of the order, checks for allergies, 

transmits those data to the pharmacy and assures that the medication ordered is the medication sent to the ward to be administered 

to the patient. The remainder of the errors occur with the actual 

administration of the medication. 

In VA we have implemented and have had in place for several 

years now bar code medication administration that virtually eliminates all the remainder of medication errors. So you can be very 

proud of your VA medical system and be assured, and all veterans 

can be assured, that medication errors are virtually eliminated 

through the use of information technology in the VA. 

With regard to the GAO testimony, I find it very helpful. Certainly I am not an IT expert. I do have the privilege to co-chair the 

Health Executive Council with Dr. Bill Winkenworder, and I sit as 

a full member of the Joint Executive Council. I am puzzled though 

by one comment Ms. Koontz made in her testimony, and that is 

that there is not a well-defined architecture for how information 

will be shared between the two Departments. Like you, Mr. Chairman, I feel very strong about the absolute imperative to make sure 

that there is seamless medical record information. But to me, I 

think there is a well-defined architecture. 

Again, from a non-IT perspective, you need four things to be able 

to have an integrated medical records system sharing between the 

two departments. First of all, both Departments have to be using 

an electronic medical records system. In VA, our Computerized Patient Record System, or CPRS, has been in place for years. In DOD, 

CHCS is in place at virtually all locations of care. And CHCS II, 

a graphically user interface updated version of CHCS, is being developed and it is in place in a number of locations. Both Departments have an electronic medical records system. 

The second thing you need is a master patient index, a list, a 

complete, comprehensive list of every patient in either system who 

has electronic medical record information. Again, VA has had a 

master patient index in place for years. DOD implemented a master patient index last year. It is fully in place now. 

The third thing you need to have full interoperability of medical 

records system is an architecture that will allow the sharing of 

that. That is the data repository architecture that both departments have agreed to go to. VA calls it Health Data Repository. 

DOD calls it Clinical Data Repository but the concept is the same. 

At every location of care, the electronic medical record system, by 

virtue of the master patient index, can identify and pull complete 

information from the data repositories in either system. With the 

sharing of master patient indices across both departments, then 

the two systems become one. It is a well-articulated architecture 

from my perspective. 
20

The final thing you need are the standards that allow us to move 

the 65,000 components of the medical records system across the 

data repository to any point of care,—excuse me, Jim—to any point 

of care in either system. That is a comprehensive undertaking, but 

let me assure you we are working collaboratively and aggressively 

on developing those standards. It is a huge product, but it is vitally 

important to our mutual success and more importantly, to the welfare of the men and women who have and will wear the uniform 

of our country. We are fully committed to this and anticipate that 

we will be on track to begin the initial implementation by the latter part of fiscal year 2005. 

Mr. Chairman, it is a pleasure to be here, and I would certainly 

be happy to answer any questions you may have. 

Mr. BUYER. I have lost track of how many times over the last 10 

years you have been here before this committee and testified on 

this issue. Do you know how many times? 

Ms. KOONTZ. This is the second time I personally have been here. 

Mr. BUYER. GAO? 

Ms. KOONTZ. GAO, I would have to say—do you know how 

many? At least five or six in our memory. 

Mr. BUYER. Do you recall any of the recommendations that the 

GAO has given that the Departments have implemented——

Ms. KOONTZ. Yes, I do. 

Mr. BUYER (continuing). Over the last decade? 

Ms. KOONTZ. Yes, I do. 

Mr. BUYER. What are they? 

Ms. KOONTZ. For example, I couldn’t enumerate them all, but one 

of the recommendations we made concerned the Federal Health Information Exchange. We had found at one point that there was a 

lack of an appropriate program management structure in place. 

They didn’t have someone who was really in charge of the effort. 

I think that the Departments took action on our recommendation, 

and I think that that is, at least in part, why they have seen some 

success with that particular effort. 

Mr. BUYER. Do the Departments view you as a partner in this 

endeavor? 

Ms. KOONTZ. I don’t know what the other thing is. 

Mr. BUYER. There is a censorship button up here. 

Ms. KOONTZ. I understand. I think we have had a good working 

relationship with the Departments. I think with every situation, do 

we agree on all the points? Absolutely not. There is plenty of area 

of disagreement. 

Mr. BUYER. There is a common theme that I have been picking 

up out of the some of the testimony, those of whom have been critical. The notes here, absence of sound project management, lack of 

identifiable decision authority, lack of defined strategy, lack of 

identified requirements, lack of clear goals, lack of consistent leadership. To the GAO, what would you say are some of the most important ignored recommendations that need to be accomplished 

here? 

Ms. KOONTZ. Well, actually, we don’t have any outstanding recommendations on this particular project at this point. 

Mr. BUYER. Okay. 
21

Ms. KOONTZ. But what I would say, the primary thing that we 

see missing at this point is the program management structure, 

that is, to provide a structure for managing the process where you 

know who is in charge, you have clear lines of authority, you know 

what VA and DOD roles are in developing interoperability and that 

you have a project plan that tells you what your objective is, what 

your tasks are going to be, what your milestones and what your resources are. This is what you need in order to affix accountability 

for any project and make sure that it gets successfully carried out. 

Mr. BUYER. Mr. Reardon, Dr. Roswell, do you concur? 

Mr. REARDON. Regarding our relationship with GAO, I find the 

information and the recommendations that GAO provide to be very 

helpful and we do try and to work closely with them. 

Mr. BUYER. With regard her statement now, do you concur? 

Mr. REARDON. On the project management plan? 

Mr. BUYER. Yes. 

Mr. REARDON. I do agree that we have a draft project management plan, that is not as detailed as it needs to be. We will be finalizing a detailed project management plan this month. We had 

a generalized project management plan and now that we have the 

prime integrator on board, they will be working with us to lay out 

specifically what actions need to occur between now and product 

delivery. 

Mr. BUYER. Dr. Roswell, do you concur? 

Dr. ROSWELL. Mr. Chairman, I certainly respect and value the 

GAO as very important in virtually all aspects of the operation of 

the Department. My only point was that I do think we have an architecture. If I can understand as a non-IT professional what we 

have to do and where we are going, I think the architecture is in 

place, or at least it is defined. I won’t say it is in place. With regard 

to project management, though, I would defer to Rob Kolodner, our 

CIO in VHA, to make comments. 

Dr. KOLODNER. Mr. Chairman, as Mr. Reardon has indicated, we 

have put in place a project manager and we are in the process of 

getting that approved through the same procedures that we had 

previously through FHIE, that is through the HEC and JEC. That 

approval has not been finalized yet, so GAO is correct that it is not 

yet in place. However, we are moving the approval through and actually modeling our project management—in terms of the project 

manager and in terms of the oversight that Mr. Reardon and I will 

be doing on a bi-monthly basis and that the HEC and JEC will 

have—to really follow the same successful project management 

process that we had for FHIE. 

Mr. BUYER. Thank you, sir. Mr. Evans, you are now recognized. 

Mr. EVANS. Ms. Koontz, you stated on page 9 of your testimony 

that the VA and DOD are operating without a project management 

team or plan describing the overall development and implementation of the interface, including the specific roles and responsibilities 

of each department in development of testing in deploying this 

interface. You address security requirements. 

Secondly—I guess it is a two-part question here—do we have a 

project manager already in place or are you hiring one? What is the 

problem with getting the master management plan and somebody 

to implement it? 
22

Mr. REARDON. Yes, sir, we do have a project manager in place. 

The individual has been officially appointed. He has a project management team in place working right now. There is a VA lead program manager and we have a DOD deputy program manager. 

Mr. EVANS. Okay. 

Mr. REARDON. That individual is in place now. 

Mr. EVANS. Okay, I guess that is all the questions I have right 

now. I yield back my time and ask for additional questions to be 

added for the record. 

Mr. BUYER. No objection. Mr. Bilirakis? 

Mr. BILIRAKIS. Thank you, Mr. Chairman. Going to Bay Pines 

and St. Petersburg, Dr. Roswell, would you say—well, GAO is familiar with the problem at St. Petersburg and Bay Pines? 

Ms. KOONTZ. We have not been asked to study——

Mr. BILIRAKIS. You have not. So you are not ready, you have not 

kept up with that. I know that that system was selected to do different work than what we are talking about here. But it is intended to expand nationally, isn’t that right, Dr. Roswell? 

Dr. ROSWELL. That is correct, Mr. Bilirakis. CoreFLS is a major 

component of our software. It deals with financial transactions, inventory management, project management, requisitions. So it is a 

very complex——

Mr. BILIRAKIS. It is complex but we are talking about black and 

white information, no subjectivity involved as there would be in the 

interfacing of the medical system that we have been talking about 

up to now. And yet somehow we blew it at Bay Pines. So there is 

going to be a long delay insofar as the CoreFLS is concerned from 

a national standpoint. Is that correct? 

Dr. ROSWELL. I believe there will be delays unequivocally. The 

original project time line called for moving the testing of CoreFLS 

software at Bay Pines to the Tampa facility. 

Mr. BILIRAKIS. Right. 

Dr. ROSWELL. That has been suspended and we are now evaluating other possible sites to begin the next phase of the deployment 

and testing of CoreFLS. 

Mr. BILIRAKIS. Would you say that what has happened there, if 

we weren’t able to get something in one facility, and we are talking 

about non-subjective data, black and white type data, how in the 

world can we do something from a health standpoint where we are 

talking about including subjective data on a national scale? I guess 

my question is would you think that that might be a setback to 

what we have been talking about here, the interfacing? I think psychologically or logically or whatever it is, you would say, hell, it has 

got to be setback. 

Dr. ROSWELL. Certain psychologically I think it may be a setback. It also points out the absolute complexity of health care, even 

the black and white, non-clinical component of health care. Part of 

CoreFLS’s problems, I am told have to do with the way it interfaces 

with our very extensive inventory of virtually every medical supply, 

every suture, every expendable item in our inventory. And that is 

a package that exists within our existing suite of applications. It 

had been deployed but it wasn’t being utilized to inventory every 

single item and therefore the interface didn’t work. I think it points 

out the complex problems. Now I would point out that this data re-
23

pository architecture that I spoke of, as I understand it, would 

allow COTS products, which is an acronym for commercial off-theshelf software, to be interfaced with the data repository. One of the 

problems in our system as it currently exists is that the same suite 

of software is installed on servers at virtually every medical center. 

Mr. BILIRAKIS. Well, Doctor, forgive me, the bells are ringing and 

my time is going to be up soon. But is much of the problem at Bay 

Pines personnel, lack of will insofar as the personnel is concerned? 

Dr. ROSWELL. There certainly have been some personnel issues 

that have influenced—— Mr. BILIRAKIS. People have been directed to do something a certain way and just haven’t done it? It is that simple? 

Dr. ROSWELL. That is currently under investigation. We are still 

evaluating that. But, yes, I would suspect——

Mr. BILIRAKIS. You would say that. Well, let me ask in my remaining time, Doctors Halamka and Clarke, any response, any reaction to what you have heard here from Dr. Roswell, Mr. Reardon, 

from GAO? Feel free. Let us know. I don’t mean to belittle DOD 

or VA. You know how I feel about both Departments and whatnot. 

Dr. HALAMKA. Well, certainly from the testimony they have 

given, they have described architecture based on a central repository at DOD and VA, a common master patient index, and standards to exchange information between the two repositories using 

this master index, which is the same approach we have used in 

New England quite successfully. The one challenge they have is I 

will be very honest, in New England I have 9 million patient 

records and a million active patients, each of them has about 10 

million active patients for round numbers. So the challenge is probably tenfold or twentyfold greater than mine, so I certainly understand the complexity of interfacing those multiple heterogeneous 

systems. 

But it does sound like technologically they are doing the right 

thing. And if they are putting project management in place to oversee that process, obviously that is the operational side that we all 

need to be successful. 

Mr. BILIRAKIS. So you feel that progress is being made based on 

what you know about it all? 

Dr. HALAMKA. Based on what I have heard, it does sound like 

they are doing the right thing, yes. 

Mr. BILIRAKIS. Dr. Clarke, anything you want to add? 

Dr. CLARKE. Dr. Roswell mentioned that the difficulty that they 

were facing right now is standards. And certainly the IOM Committee identified standards as the area that needed to be overcome 

and this is at a national level. This could be the DOD and the VHA 

or this could be Tenant Health Care System and Inter-Mountain 

Health Care System. The problems remain. They have to be able 

to talk to each other. And there are many nitty-gritty components 

to these standards that have to be ironed out by consensus groups. 

Mr. BILIRAKIS. Let’s go into the minds of the personnel who 

would be doing all this. It would take a heck of a lot of cooperation, 

an awful lot of people involved. Have you run into any problems 

in your experience with maybe a reluctance, basic reluctance on the 

part of personnel not delivering the way they should and that sort 

of thing? Should there be a problem in that regard? 
24

Dr. CLARKE. Well, standards require consensus—and if you are 

talking about having standards for the Internet or standards for 

the banking industry or standards for nuts and bolts in cars, everyone who is a participant has to be involved. So, for instance, if you 

want to talk about communicating a picture, you have different 

vendors that have different ways of generating a picture electronically. They have to decide on a common way of transmitting that 

picture in order for one institution to see another institution’s x 

rays. 

Mr. BILIRAKIS. So when one person is sort of not living up to that 

standard could mess up the entire—— Dr. CLARKE. If you read the IOM report, standards are developed 

in a variety of different ways. Groups can come together and agree 

on a standard. One particular vendor might dominate and therefore establish a defacto standard. There are many ways standards 

can evolve. Right now we need some leadership to define, to bring 

together our current system into a unified standards system. 

Mr. BILIRAKIS. Thank you, Doctor. 

Dr. CLARKE. The banking industry has developed a system where 

I can get money out of any machine in the civilized world. And the 

health care, which is a very information-intense industry, is not at 

that level. 

Mr. BILIRAKIS. Thank you. Thank you, Mr. Chairman. I appreciate your indulgence. 

Mr. BUYER. Thank you, Mr. Bilirakis. I have to extend my apologies to everyone. Congress and our voting schedule, we are facing 

a motion to adjourn, which is a 15- minute vote. Then we have 5 

to 10 minutes of debate left on the Iraq resolution. Then there is 

a 15-minute vote on the previous question, 5 minutes on the rule. 

When you add the give and take in between, you are looking at an 

hour. So what I am going to do is adjourn the committee for an 

hour—actually, for 65 minutes. We will return at 12:30. 

I apologize. I know some of you have some things, some plans. 

What we didn’t get with this panel and which I have to ask you 

to come back is the issues with regard to reduction of medical errors. We spoke about pharmaceutical but others to improve the delivery of health care with regard to these seamless record claims 

processing and collections. So we will have that when we return. 

We stand adjourned. We will take the hearing back up at 12:30. 

[Recess.] 

Mr. BUYER. The subcommittee comes back to order. And I want 

to thank you. 

I noted, Mr. Reardon, from your testimony when you mentioned 

CHCS One, implemented around 1986 to 1987 and now we are 

phasing into CHCS II which really sort of started in 1999 but you 

are pushing back implementation now until June of 2006. Is this 

a hard date or are you going to constantly keep pushing back farther and farther and farther? 

Mr. REARDON. No, sir, I think it is a hard date. What began in 

1999 was the actual development of all of the requirements for the 

electronic medical record. The requirements were approved, I believe, in September of 2002 by the Department. We have gone 

through the acquisition cycle, have passed operational testing, and 

limited production. We are into full production right now. We are 
25

looking at a 30 month implementation schedule and CHCS II will 

go to all of our DOD medical facilities. The completion date is 

scheduled for June 2006. 

Mr. BUYER. To bring this online and to implement, what is the 

cost? What have you spent to date and then what do you think it 

is going to cost? 

Mr. REARDON. Sir, there is a 20-year life cycle. The life cycle esti- mate for 20 years is $3.8 billion. That is the Department’s number. 

CHCS II will go to all facilities and will include not only medical 

but the complete dental record, as well. 

Mr. BUYER. Would all of you comment with regard to where we 

left off? If we move toward this dreamland of seamless integration, 

along with this digitized record, that we truly will improve the delivery of health care, improve our claims processing and collections? 

I would like some testimony with regard to that? 

Dr. ROSWELL. Mr. Chairman, I don’t think there is any question 

that a fully integrated electronic medical records system would not 

only enhance transitional issues but it would improve health care 

benefits, delivery, and cost of recovery. 

Mr. BUYER. All right. If the private sector can do this so fast, 

why can’t we do it? 

Dr. ROSWELL. Again, Mr. Chairman, I will defer to much more 

expert IT colleagues, but let me refer to earlier testimony that Dr. 

Halamka made concerning the size of both Departments, the number of beneficiaries, in addition to the seven million enrolled veterans, the roughly 10, 12 million DOD beneficiaries who may be eligible for health care services. There are significantly different missions of the two departments. 

So it is not a small undertaking but I have to say that from a 

Joint Executive Council perspective, from my vantage point, I have 

never seen the level of commitment or cooperation that I currently 

experience between the two Departments. And while I don’t hold 

out false hope that that will lead to a fully deployed seamless electronic medical records system within the next 12 or 24 months, I 

think we are making substantial progress. And I have to say I am 

pleased to be a part of that. 

Mr. BUYER. Well, gentlemen, define the horizon? When? What is 

the goal? What is your time line? 

Dr. KOLODNER. The time line for the data exchange in an interoperable fashion is the next fall 2005 to begin that roll out and to 

be completed as the CHCS Two roll out completes in DOD. 

I think just to comment briefly on your previous question about 

the issue of electronic health records, one of the things that would 

be important for us to note is that both DOD and VA have full 

CPOEs (computerized provider order entry) at a time when only 30 

percent of the private sector has that capability in their inpatient 

setting and less than 10 percent of the private sector has that in 

the doctors’ offices and small clinics. 

So what we have accomplished, in what are two of the largest 

health care systems in the world, is actually remarkably advanced 

compared to the vast majority of health care settings. We are now 

working very diligently to standardize that data, because we had 

systems that were installed 10 and 20 years ago, when standards 

did not exist. Our first challenge is to standardize the data within 
26

our systems, so that it is interoperable, and then to make sure that 

the standard we each implement is actually the same standard, so 

that we can move data across these two systems. And that is the 

2005 deadline. 

Mr. BUYER. This committee wants to keep the VA at the forefront. We want you to be the leaders and pull the country toward 

your direction. That is our position on this committee. I didn’t articulate it as well as others but that is what we want to do. And 

because you serve a population that our society respects and honors, they are willing to use the U.S. Treasury to do that. And we 

have done that in many fronts. 

And so there is a reason obviously we brought the first panel to 

testify when we can see this happening in the private sector and 

its implementation and the benefits. And we understand this is a 

very large health system. And I have been just as challenged and 

at times frustrated by having two systems not be able to talk to 

each other. You have heard me over the years talk about that to 

the point where, well, I don’t want to be redundant. And I am in 

quest of the virtue of patience. But I think what we are going to 

have to do is keep hand in hand, not only with the GAO but with 

this committee and with DOD and VA get there. And I suppose the 

reason I asked you to define the horizon is because I can’t define 

it either based on all of your testimonies. I am just being very honest with you. I don’t know where it is or how we get to that. 

Mr. Bilirakis? 

Mr. BILIRAKIS. Thank you, Mr. Chairman. And I join you in expressing our gratitude to these good people for being so patient and 

remaining. Hopefully, you have at least gotten lunch during the 

time that we have had to break. I express basically the same frustration as the chairman has expressed. We have had testimony 

from you and from the other gentlemen in terms of the help in 

terms of human errors and whatnot that would ensue from getting 

this system into place. So we are talking about human beings here. 

We talk about equipment and things of that nature but what we 

are really talking human beings, the bottom line and their health. 

In Ms. Koontz’ written testimony, ‘‘In discussing these matters 

last week, VA officials stated the Departments had recently designated a program manager for the plan prototype.’’ Isn’t a program manager a very fundamental part of an undertaking like 

this? Do you have a program manager? Who is going to answer 

that? Is there a program manager? 

Mr. REARDON. Yes, sir. Yes, sir. There is a program manager. He 

was formally assigned the responsibility for this particular program. It is the same individual who was the program manager for 

the Federal Health Information Exchange Project, which the recommendations from the GAO in their report have been implemented and have proved to be successful. We were looking for 

somebody who we felt had the right experience and knew how to 

work in this DOD/DVA environment, knew who the individuals 

were and would be able to work with both the clinicians and the 

technologists. That person is in place. 

Mr. BILIRAKIS. Well, Mr. Reardon, with all due respect, according 

to this statement, ‘‘recently designated a program manager,’’ how 

recent is that? 
27

Mr. REARDON. Within the last 3 weeks. 

Mr. BILIRAKIS. The last 3 weeks? 

Mr. REARDON. Yes, sir. 

Mr. BILIRAKIS. Which means that prior to that, even though you 

have both talked about progress having been made, even though 

there have been other hearings prior to today on this subject, there 

was no program manager in place? 

Mr. REARDON. We had. 

Dr. KOLODNER. At that stage of the project, we each had project 

manager leads. We still have those leads and they had planned the 

projects and determined that the contract did not need to be 

awarded by our plan until recently. It is at this point that we needed to appoint an overall program manager. We now have that person in place, and we have the contract in place. We are progressing 

along the time line that we had laid out. 

Mr. BILIRAKIS. Yes, but, sir, this has been in the planning and 

the discussion phase I guess for something like 17 years. There is 

no question maybe about the complexities that the Harvard system 

doesn’t have or something of that nature, we are talking of course 

about more patients here when you take into consideration both 

DOD and VA. And also we’re talking about it being government, 

which means bureaucracy. And I guess we are also talking about 

changes at the top every 4 years sometimes and things of that nature, and I know those can be problems too. 

But if this is so important and if it is going to save so many lives, 

why is it taking so long? Help us out here a little bit. We are here 

not only to criticize, we are here to help. And this is so important 

and it hasn’t taken place. And frankly, the Bay Pines thing just 

kind of blows my mind. Again, I don’t understand—I am an engineer before I went into law, but you would never know it because 

I am not very literate when it comes to this stuff. But what has 

happened at Bay Pines is to me, and I am not sure what happened 

at Bay Pines, that is what the investigation is all about, and I 

guess we are going to find out. 

And God knows we better find out, because if that is intended 

to be a national system, we better find out where the problems lie 

in that one particular location so that we don’t make the same mistakes later on. God only knows when is that going to be put into 

place from a national system standpoint. 

Well, what is the problem? Can you tell me have you run into 

resistence over the years on this health interface with DOD, what 

is the problem? Ms. Koontz, you said the interfacing has been ‘‘elusive’’ to use your word. Should it have been elusive? Why was it 

elusive, do you know? 

Ms. KOONTZ. I think, just as the first panel clarified, as so often 

is the case, this isn’t really a technical or a technological problem, 

it is a management problem. And I think what we are seeing here 

is the need to put in place the kind of structures that ensure that 

you have fleshed out what your plan is and that you have accountability for accomplishing it. Also, I did want to clarify that while 

the Departments have put in place a program manager, my understanding is that this program manager is for the pharmacy prototype. And the pharmacy prototype may be a first step toward defining the interface between the two health information systems that 
28

they are developing. But by no means does that project define how 

they are going to get from where they are today to how they are 

going to be exchanging information in 2005 and specifically what 

information is going to be exchanged at that point and how they 

are going to move beyond to——

Mr. BILIRAKIS. So in essence we don’t really have a program 

manager in place? 

Ms. KOONTZ. I would agree with that, that we are looking for 

something more than what is in place. 

Mr. BILIRAKIS. Any quick response to that? 

Mr. REARDON. Yes, sir, the person who has been put in charge 

will be the program manager for the full interoperability project. 

Over the last 2 years, the VA and DOD have worked hard together 

under a program management structure to package a substantial 

amount of health information on our separating Service members 

and pass that to the VA when the Service member separates. At 

this time, we are packaging and sending to the VA the information 

on, depending on the number of separation notices we get on a 

monthly basis, 10 to 25,000 individuals each month. This information is available for the VA clinicians to use when they treat our 

separated Service members. 

Mr. BILIRAKIS. Yes, well, I am not trying to belittle the task, I 

am not saying the task is not as large as it apparently is and obviously is, but I think if we were to pick up the record or the minutes 

of some of the prior hearings on this subject, Mr. Chairman, we 

would find it essentially much of the rhetoric that has taken place 

is similar to what we have heard here today. That is kind of frustrating. And I would hope, Dr. Roswell, come on, I know you well 

enough to know that we are talking about people’s lives here and 

we have got to really spur this thing on. And if you need help from 

us, well, we all have budgetary problems and whatnot, but we don’t 

know to even try to help unless we hear from you to that effect. 

Thanks, Mr. Chairman. 

Mr. BUYER. Thank you. Mr. Reardon, I have a question relative 

to timely and complete data for the service personnel who are returning from deployed operations around the world today. The 

FHIE provides patient record data from the current CHCS clinical 

system. How long does it take after separation for this data to be 

made available to the VHA or VBA? 

Mr. REARDON. Sir, when we, the medical community, receive the 

separation notice, it is taking us approximately 15 days to pull the 

information out of the CHCS systems, compile it, and send it over 

to the VA. That doesn’t include the time that the Service personnel 

systems take to get the separation notice to the Defense Manpower 

Data Center. I am not sure what that time is, sir, but I speculate 

it is roughly 60 days. 

Mr. BUYER. Dr. Roswell, do you know what it is? 

Dr. ROSWELL. I don’t. I would say that when we look back 12 

years to the first Gulf War, the flow of information, and in fairness 

with this committee’s leadership efforts, is orders of magnitude better than it was. It is not a perfect system. But it is orders of magnitude better. We have complete rosters of all military personnel 

being separated. That allows us to overlay that against our system. 
29

For example, I am pleased to tell you that 12 percent of those 

who have served in Operation Iraqi Freedom and Operating Enduring Freedom have already been seen in the VA health care system. 

And our data system has allowed us to analyze the types of illnesses, the types of services they are receiving. I am also pleased 

to tell you today that the overwhelming majority of care has been 

outpatient care for the types of medical problems one would expect 

to see in this age population. 

So there is an ongoing continuous flow of information. And I 

think the importance of and the validity or the value of that information has reinforced to the current leadership how important our 

continued efforts will be. 

Mr. BUYER. Mr. Reardon, I had heard that it was 90 days. That 

would be inaccurate according to your testimony? 

Mr. REARDON. I am not sure, sir. I will have to take that for the 

record and we will get back to you. 

(The information follows:)

Page 75/Line 1663

Question: How long does it take separation for patient record data from 

the Composite Health Care System to be made available to VA?

Answer: There is variability among the Services in reporting separations to the 

Defense Management Data Center (DMDC). Once separations are reported to 

DMDC, it takes 20 to 50 days to provide the information to VA. We are working 

to develop a process that could reduce this to about 20 days once the separation is 

reported to DMDC. 

Mr. BUYER. Do you believe it would be the goal that you would 

provide, be able to provide the separation data to VHA and VBA 

in real time? And, if so, how would you define real time? 

Mr. REARDON. Sir, the objective would be to provide the information to the VA very rapidly within a few days from the time that 

we receive the separation notice. 

Mr. BUYER. In our efforts to bring this seamless, it is digitized, 

seamless in real time. That is how I envision it. That is how I 

think it is supposed to be. Do I get all nods? 

Mr. REARDON. Yes, that is correct. 

Mr. BUYER. That is where we want the horizon to be. 

Mr. REARDON. Yes, sir. 

Mr. BUYER. And so as we want to seek to provide not only the 

health care but then to define our compassionate sincerity for the 

sacrifice, it means we have to be responsive in real time. And so 

when the health care is there but then there is the delays in the 

claims processing, then we are not complete in our efforts. Do you 

concur? 

Mr. REARDON. Yes, sir. 

Mr. BUYER. All right. That is why I had to ask that particular 

question. I would ask unanimous consent for counsel for the minority to make any comment that they would like to make with regard 

to this panel. Hearing no objection, so ordered. Mr. Sistek is recognized. 

Mr. SISTEK. Thank you, Mr. Chairman. And I would like to build 

upon your question to the first panel regarding the willpower of the 

agencies to make this seamless medical records transfer work. We 

note that the agencies have different missions. And GAO notes that 
30

there are some management problems or they perceive some management problems. I don’t think we doubt the willpower of the 

agencies to make it work in any way. But, as the vice chairman 

just said, sometimes there are changes every 4 years and something new rolls in. Agencies require strategic and performance 

plans at the highest level and these filter down and devolve to the 

different functions of those agencies. 

My question is could each agency, could the DOD and the VA 

point to their strategic plans, point to their performance plans and 

find a way that they can demonstrate to this committee that the 

intent is there to actually make this work, that you are actually 

planning forward at the highest levels? Does that exist? Could you 

point that out? And then I have two quick follow-ups after we go 

there. 

Mr. Reardon? Dr. Roswell? 

Mr. REARDON. Sir, there is a joint strategic plan that has been 

approved by senior leadership in both DOD and VA. One of the 

areas in the plan addresses information sharing. It specifically lays 

out the objectives of information sharing between the two agencies. 

Dr. ROSWELL. And let me add, Mr. Sistek, that also between the 

Departments, the Joint Executive Council structure has actually 

been formalized by law. We are compliant with that. And I think 

that is a very good thing that will assure that the leadership oversight, the joint leadership oversight is in place through any administration change. I would also point out that the procurement practices of both Departments certainly provide to my perspective 

strong testimony to the commitment in the respective Departments 

based on DOD and VA efforts to move towards key elements that 

are necessary to implement the data repository architecture within 

both Departments, it gives us that full interoperability. 

Mr. SISTEK. I was aware of the joint strategic plan but my question really is how does that joint strategic plan link to the individual GPRA plans of each agency because each agency has a specific mission and if there is no linkage between the joint strategic 

plan and the two agency strategic plan, as you move forward, defending your agency GPRA plan to Congress or whoever else asks 

those questions, the joint plan kind of has the potential to be left 

out in the weeds. And that is the core of my question to you. Is 

there enough linkage to your overall agency GPRA plan to support 

the joint agency plan? 

Mr. REARDON. Yes, sir, from the DOD perspective there is. 

Mr. SISTEK. And then one follow-up question to this. By position 

in either agency, who is accountable for making this work? Can you 

name the position that ultimately would be held accountable for either success or failure? 

Mr. REARDON. Yes, in DOD it would be my position. 

Mr. SISTEK. Dr. Roswell? 

Dr. ROSWELL. Well, I certainly would want to be held accountable. To me this is one of the most important things on my plate. 

Mr. SISTEK. Thank you very much. Ms. Koontz, would you like 

to comment on the linkage of GPRA plans and how they would devolve down to this? 

Ms. KOONTZ. I don’t think there is anything I can add here, 

thank you, although I think your question is appropriate because 
31

there should be linkage among all these elements in order to actually accomplish what they are trying to do. 

Mr. SISTEK. Thank you very much and thank you, Mr. Chairman. 

Mr. BUYER. Thank you. In my opening remarks, I had made reference to Bay Pines, and I didn’t understand why you chose the 

second-busiest for implementation. Dr. Roswell, can you tell me the 

decision-making process that was made to select Bay Pines? 

Dr. ROSWELL. I would defer to Mr. McFarland on the next panel 

to address this in more detail. But let me tell you that the CoreFLS 

software that is being tested at Bay Pines is a complex but critical 

component of our entire software suite, dealing with virtually all 

types of financial transactions. From my perspective, Bay Pines 

was a reasonable choice, for the following reasons: Bay Pines is the 

only medical center anywhere in the VHA system that has on a 

single location, on one piece of property, a complex VA medical center, a national cemetery system, a VA regional office, a VISN office, 

and a regional council office. In addition to all of those functions 

on that one site, there also is a large software services development 

and support staff office that provides a lot of technical expertise 

that would be available to facilitate the pilot testing that has taken 

place at Bay Pines. 

Is it a complex medical center? Unequivocally. It is one of the 

most complex in the inventory. But by the same token, the complexity of the medical center adds all of the pieces that ultimately 

would need to be functioning in a fully implemented deployment of 

this type of software and the support services were deemed to be 

necessary. 

Would I do it over again? Probably not. 

Mr. BUYER. Was this your judgment? 

Dr. ROSWELL. I concurred in the decision. 

Mr. BUYER. You concurred in the decision. Then whose decision 

was it? 

Dr. ROSWELL. Rob, can you help me? 

Dr. KOLODNER. I am not sure, sir. 

Dr. ROSWELL. Do we know, Ed? 

Mr. BUYER. You can let us know. 

Dr. ROSWELL. Yes, we will be happy to submit that for the 

record. 
32

(Subsequently, the Department of Veterans Affairs provided the 

following information:)
33

Mr. BUYER. I yield to Mr. Bilirakis. 

Mr. BILIRAKIS. Just very briefly—well, let me ask you would we 

put that decision in a category of a high-risk decision? And if we 

would, or even if it is just close to it, was there a back-up plan 

maybe to some of the resources that were not available in order to 

perform the surgeries or whatnot where maybe a back-up plan 

where you could maybe get them from Hailey in Tampa or from another source? A commonsense question I think, I don’t know, 

maybe I haven’t phrased it correctly. 

Dr. ROSWELL. Well, obviously it is an important question, and I 

would have to say that we didn’t anticipate the complexity of the 

pilot testing based on what we have seen. There is no question 

about that. It is clear based on the knowledge we currently have 

that a better decision would have been to identify a smaller, less 

complex medical center where there weren’t so many interdependencies which could fall like dominoes with a failure within the system. 

Having said that, I think there was a back-up plan in place in 

that we anticipated that the existing systems and that the manual 

systems behind that would be sufficient. But I think in fairness, 

Mr. Bilirakis, that we don’t fully understand exactly what the software, personnel, and process failures at Bay Pines were. That is a 

subject that is still under heavy scrutiny, and we are going to need 

to look very, very carefully at the IG findings in an effort to try 

to learn and understand where we have erred. 

Mr. BILIRAKIS. Yes, I just hope that we focus on trying to determine where the errors and why the errors took place so that we 

don’t make the same mistakes again. And sometimes politics gets 

in the way of that and hopefully that won’t be the case here. 

Mr. BILIRAKIS. Thanks, Mr. Chairman. 

Mr. BUYER. Dr. Roswell, I have a ton of respect for you. And I 

am not going to do the Monday morning quarter backing on your 

judgments. It is easy to look back. I would like to know what impact, if any, this depreciable effect as had upon your schedule of 

implementation? 

Dr. ROSWELL. Again, I would defer to the IT folks. I believe it 

probably will have at a minimum a 60 day delay. 

Mr. BUYER. I will let the third panel cover that, if you will make 

a note to cover that. All right. 

I want to thank you for your testimony. I want to thank the 

GAO. We will see each other again soon, I am quite sure. I have 

to concur with the statement, Ms. Koontz, that you put or that you 

wrote that, ‘‘Success lies at the highest levels of project disciplines.’’ I concur. That is what I take away from this hearing today. And, 

if anything, what this hearing does is it brings us all to the table, 

it helps us focus, and helps us keep kicking the can down the road, 

so to speak. We know where we want to go. We keep trying to define that horizon. This is a very expensive endeavor. This is one in 

which the Congress is willing to take on. 

And as we bring up the third panel, Mr. McFarland has a tremendous job ahead of him because not only is this one of the priorities of the Secretary, it is of the highest priorities of this full committee and of our chairman and the ranking member to take on the 

IT systems for we spend so much money in IT and to prevent these 
34

three stove pipes. So as we take on the IT architecture, we want 

to do so smartly so that all this hardware and software is interoperable and seamless with DOD. And it is not. And that is where 

we want to take it. And we are willing to make that investment 

to do so. 

So I appreciate your testimony. There will be follow-up questions 

from the committee for which we will submit to you in writing. And 

I appreciate your service. 

Mr. REARDON. Thank you, Mr. Chairman. 

Dr. ROSWELL. Thank you. 

Dr. KOLODNER. Thank you. 

Mr. BUYER. We will now call the third panel. If Mr. Robert 

McFarland, Assistant Secretary for Information and Technology, 

Department of Veterans Affairs, will please come forward and take 

a seat. We would also like to recognize Mr. Ted C. Davies, managing partner for Unisys. 

I would note, I believe that Mr. Reardon had made mention that 

he had some written testimony. Mr. Reardon, are you still in the 

room? Would you submit that for the record? 

Mr. REARDON. I did, sir. 

Mr. BUYER. Oh, you did. All right, hearing no objections, his 

written statement will be submitted for the record. Thank you. 

Gentlemen, if you have written statements—Mr. Davies, do you 

have a written statement? 

Ms. DAVIS. Yes, I do. 

Mr. BUYER. Would you like for that to be entered for the record? 

Mr. DAVIES. Yes, I would. 

Mr. BUYER. It shall be ordered. 

Mr. McFarland, do you have a written statement to be entered 

for the record? 

Mr. MCFARLAND. Yes, I do. 

Mr. BUYER. It shall also be entered for the record. 

I will now recognize the Honorable Mr. McFarland for any comments that he would like to make relative to our hearing today. 

STATEMENTS OF ROBERT N. MCFARLAND, ASSISTANT SECRETARY FOR INFORMATION AND TECHNOLOGY, DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY EDWARD 

F. MEAGHER, DEPUTY ASSISTANT SECRETARY FOR INFORMATION AND TECHNOLOGY, DEPARTMENT OF VETERANS 

AFFAIRS; BRUCE A. BRODY, ASSOCIATE DEPUTY ASSISTANT 

SECRETARY FOR CYBER AND INFORMATION SECURITY, DEPARTMENT OF VETERANS AFFAIRS; K. ADAIR MARTINEZ, 

DEPUTY CHIEF INFORMATION OFFICER FOR BENEFITS, 

VETERANS BENEFITS ADMINISTRATION; ROBERT M. 

KOLODNER, M.D., ACTING CHIEF INFORMATION OFFICER 

FOR HEALTH, VETERANS’ HEALTH ADMINISTRATION; AND 

EDWARD C. (TED) DAVIES, MANAGING PARTNER, FEDERAL 

CIVILIAN AGENCIES, UNISYS CORPORATION; ACCOMPANIED 

BY JOSEPH MACIES, PARTNER, UNISYS CORPORATION 

STATEMENT OF ROBERT N. MCFARLAND 

Mr. MCFARLAND. Thank you, Mr. Chairman, members of the 

committee. Before I make my opening remarks, let me say that we 

have heard you, Mr. Chairman, and we apologize and regret the 
35

fact that the proper testimony was not here in the time frame it 

was supposed to be. We have no excuses. In my vernacular, I promise you that will not happen on my watch again. 

Thank you, Mr. Chairman. I am very pleased to appear before 

this committee representing the Secretary and the Department’s 

information technology program. I am honored to return to the 

service of our country and to our veterans. I am most aware and 

energized by the size and the complexity of our task. While I have 

been here only a few short weeks, I believe I can make several useful observations. 

First, and perhaps foremost, I have seen a level of commitment 

and dedication to the mission on the part of everyone I have encountered that is truly remarkable. Second, my impression so far 

is that the Department of Veterans Affairs has made significant 

progress over the last three years in obtaining the Secretary’s stated commitment to reform how IT gets done at the VA. 

However, much remains to be done. Over the past 2 years, VA’s 

Office of Information and Technology has initiated a rigorous information technology process. This process includes a disciplined 

project management methodology and an information technology 

portfolio management system that has been recognized by the Office of Management and Budget. We are well under way with an 

enterprise architecture that aims to align the business with the information technology plans, goals, and efforts. We are in the final 

phase of rebuilding our nationwide telecommunications infrastructure and we are implementing aggressive cyber security and privacy programs to ensure the protection of our infrastructure from 

attack, both external and internal, and to ensure the privacy of our 

service peoples’ personal information. 

In parallel to building a safe, secure, and technically current infrastructure across the VA system, we are working diligently to improve both service delivery and our internal business processes. To 

improve the sharing of medical information between the Departments of Defense and the VA, we have taken positive steps to develop data standards, as well as interoperable health records. Communication and collaboration are key to our joint success in building seamless veteran information environments. 

Internally, regarding VETSNET, I would like to reassure you, 

Mr. Chairman, that we are working hard to ensure that VETSNET 

remains on schedule. Development of the final components is complete and undergoing vigorous testing. VBA is scheduled to begin 

a live test deployment in April of 2004 in the Lincoln, Nebraska regional office, and we are committed to having VETSNET fully deployed to all regional offices by December of 2005. 

In the financial business arena, we will continue to coordinate 

with the Office of Management on successfully implementing 

CoreFLS in order to provide VA with an integrated financial and 

logistics system. The system is critical to the success of efficient delivery of service to our nation’s veterans, and will allow the VA to 

effectively manage the resources entrusted to us. Without CoreFLS, 

VA will not be able to remove the financial and security material 

weaknesses that currently exist. While there had been problems 

with the system and legitimate concerns raised over the selection 

of Bay Pines as the test site for this new integrated system, I be-
36

lieve that the system and the approach are sound and I fully support the Secretary’s order that we will not roll the system to other 

sites until we have remedied all the critical issues identified at Bay 

Pines. 

Finally, I believe it is important to mention again an area of 

great interest to me and to the subcommittee, cyber security. This 

remains one of our top priorities. We are currently implementing 

a comprehensive security configuration and management program 

designed to provide optimum protection of VA’s infrastructure from 

both the outside and inside attacks. A comprehensive, VA-wide 

cyber security program is vital to not only the security and privacy 

of our veterans but also to our ability to provide the best service 

to our veterans. 

This concludes my oral statement, and I would be pleased to answer questions. 

[The prepared statement of Mr. McFarland appears on p. 107.] 

Mr. BUYER. Thank you, Mr. Secretary. 

Mr. Davies, you are now recognized. 

STATEMENT OF EDWARD C. (TED) DAVIES 

Mr. DAVIES. Mr. Chairman and members of the subcommittee, 

thank you for the opportunity to address the committee today on 

Unisys’ role as the prime contractor for the Department of Veterans Affairs Patient Financial Services System Project. By incorporating industry standard billing information, PFSS will improve 

the computerized patient records process by providing the medical 

record with a greater level of detail about each veteran’s care. 

In 1990, the VHA health care system began an evolution from 

one where the VA paid for all veteran care to one in which third 

party insurance carriers now pay for veterans’ non-service connected health care. While VA has made progress in its ability to 

collect these insurance claims, without an integrated financial software tool, VA will continue to struggle to improve the revenue 

cycle process. VISTA, which was originally designed exclusively 

around patient care, does not have internal capability to act as an 

efficient billing system. 

Congress directed VA to test a commercial financial package with 

the VISTA system. Unisys is very pleased to have been selected in 

July 2003 by the VA to implement the PFSS pilot. We understand 

the objective is to obtain significant improvements in the timeliness 

and quality of billing and collections of first and third party claims. 

And we understand the strategic importance of the PFSS pilot. Our 

team is fully committed to success at all levels. 

Our first task after contract award was to select a COTS vendor. 

We placed the two industry leaders in a head to head run off to 

identify the vendor that would provide the best value to the VA. 

The selected vendor, IDX, successfully demonstrated their solution’s ability to perform VA-unique billing scenarios without any 

custom modifications to the software’s core functionality. 

We then worked to establish a partnership, including representation from Team Unisys, the VHA chief business office, the VHA Office of Information, and VISN 10, and have developed a roadmap 

for successful implementation in the first VISN 10 site. We have 

recently completed an analysis of the current revenue cycle process 
37

flows within the medical center and the VISN. With that as a baseline, we have built a model for the future state to be processed. 

This future state will be supported by the IDX flow cast software 

integrated with VISTA. 

Unisys and the VA understand that achieving medical improvements in the revenue cycle will depend not only the PFSS software 

but also on significant business processes and organizational 

changes. The business process changes needed have been documented, and we are working closely with the VA on effective 

change management to enable them. 

Once implemented, the key improvements expected from PFSS 

include a 15 percent increase in collections, reduction of gross days 

revenues outstanding to 75, reductions of accounts receivables 

greater than 90 days to 26 percent, and a reduction in days to bill 

to 25. In addition to these key improvements, PFSS will directly 

benefit the veteran. One outcome of this project is an improved patient financial statement, which will combine in one easy to read 

document all charges for services provided. The project team will 

actively engage veterans to help identify the best ways to address 

veterans’ concerns with a financial statement and to identify and 

develop solutions for what they consider chronic billing problems. 

The PFSS system also will enable quicker turnaround time on 

claims so that veterans can more consistently take advantage of insurance company coverage of co-pays. 

A primary goal of PFSS is to provide a model for standardizing 

revenue cycle business practices throughout the VA enterprise. 

Standardization has many benefits, not the least of which is the 

ability to analyze performance and trends and to report accurately 

at the enterprise level. 

A fundamental requirement for success in this project is VA and 

Unisys top-down commitment to providing necessary resources and 

accountability. We are coming together as partners to address all 

challenges and establish priorities. 

Mr. Chairman, I look forward to continuing our partnership with 

the VA and working with you and the other members of the committee to ensure PFSS success. This concludes my oral testimony. 

My written statement includes a graphical representation showing 

how VISTA and our solution will seamlessly work together when 

fully implemented. I will be pleased to answer any questions members of the committee may have. 

[The prepared statement of Mr. Davies appears on p. 121.] 

Mr. BUYER. Mr. Secretary, I welcome you to your first Veterans’

Affairs Committee hearing. As a former Vietnam veteran, welcome 

home. These flags that sit behind us depict a lot of sacrifice, and 

I know you have been successful in the private sector. And for you 

to come to public service when you really don’t have to and then 

to serve your comrades, I know you bring that distant memory to 

life. I suppose not only the administration are most hopeful that 

obviously you didn’t hang up the experience, your intellect and 

commonsense from Texas with your coat, that you have brought 

that to this position. 

I want to ask this question because I was concerned when this 

position was created and the Admiral was in the position whether 

he felt that he had the authority to his job. It seems if you can con-
38

trol the money, you can get a lot of attention. But you don’t necessarily control the money in this particular position. So you have 

to make noise, which is a little different and awkward. 

So you come from the private sector, from a very successful company, Dell Computer, and now you step into this. Do you feel or 

sense that you will have the authority to make this change in the 

IT architecture to be successful in taking on the cultures of the 

three stove pipes? 

Mr. MCFARLAND. Well, in the short period of time I have been 

here, I am gratified to say that everything I have questioned and 

everything I have asked to get done has been done with full cooperation of all three of the administrations. I have had no one 

question whether I had the right to ask a question or had a right 

to ask to initiate a process. I have also, based on your question 

from the subcommittee, I have conferred with our general counsel 

and I have conferred with the Secretary and I feel quite confident 

that I do have that authority. 

I must tell you that one of the first things I learned was that all 

major acquisitions must currently come through my office for signature before they go up. And they have been coming through and 

I have been getting a look at where we are spending at least some 

of our money. You are right, I do come from an environment where 

I am used to having the authority and accountability, and I am 

prepared to accept both. I feel pretty comfortable, given what I 

know so far, that the answer is, yes, I do have the authority to implement what we have to do to get this job done. 

Mr. BUYER. What are your impressions of the VA’s IT culture in 

the short time you have been at VA? 

Mr. MCFARLAND. I think the culture is reasonably consistent 

with what I have found in the private sector. I don’t know about 

history here but I do know what exists today, and I am impressed 

with what I have seen that has been put in place. And some of this 

I think I have to give credit to my predecessor. We have a very significant project management process in place. We are very careful 

about the way we develop our OMB 300s and the process in which 

we develop those looks like it is working well. There are 59 OMB 

300s in the VA so there is a significant amount of work going on 

here and the money we are spending has got a lot of projects. 

I have to be honest with you and tell you I haven’t dived into 

each of those 59 yet, but my intention is to do so. So far I think 

the culture fits my style pretty well. I am not at all surprised at 

anything I have found so far. 

Mr. BUYER. What is your assessment in following the Secretary’s 

directive to bring this seamless IT architecture to our three systems, of whom are sitting to your left? 

Mr. MCFARLAND. I am sorry, sir? 

Mr. BUYER. We are going to make them interoperable so they all 

talk to each other and what is your initial assessments on how that 

can be done? 

Mr. MCFARLAND. Well, there seems to be a considerable history 

of, as you mention, of a stove-piped architecture. Based on what I 

have seen so far, we are on the third iteration of the one VA enterprise architecture. It is using a format that is very widely accepted, 
39

and we are about to issue the third iteration of that. What I have 

seen so far on that says that we have the capability to do this. 

Now, down at the individual level out in the field, day to day operations go on, and we do have some challenges I think in trying 

to centralize some of that environment so that we can really bring 

some economies of scale together for the VA and to be sure we have 

a good handle on the resources that are used out there to do some 

of the infrastructure things. I am very happy with what I see on 

the telecommunications modernization program. It looks like there 

is a very good architecture there. To me, that is the absolute train 

that all of our initiatives have to ride on. We have to do this very 

successfully in order to be sure that we can roll out the other initiatives that we have. They have to ride on this telecommunications infrastructure. 

My intent so far is to try to take some of this infrastructure environment, pull it together from the various administrations, look at 

where we have duplication, try to eliminate that duplication without affecting the performance that the administrations have 

learned to expect and try to reduce the cost. To me that is kind of, 

if you will, my profit motive in this whole thing. 

Mr. BUYER. Dr. Kolodner, I don’t want to mis-pronounce that, 

Kolodner, I apologize, when the PFSS system was designed, who 

did that and, what stakeholders were at the table when this was 

designed? 

Dr. KOLODNER. The project was one of installing billing, and then 

we evolved that to the PFSS. Replanning and design involved multiple levels of VHA leadership. Specifically, I think it preceded the 

creation of the Chief Business Office. The Chief Business Office 

took over as the business lead. It also involved the Office of Information and Deputy Under Secretary for Health for Operations and 

Management. 

Mr. BUYER. At any time were the individuals that actually implement these kinds of systems ever brought into the processes, from 

admin to the clerical to the inputting to the processing? 

Dr. KOLODNER. The decision to go ahead with the billing system 

was made at the leadership level. The project itself, including 

PFSS, is a partnership with the staff in VISN 10, which will be 

where the pilot system is located. We have put in a process when 

we need to do business process re-engineering, which this requires, 

that actively involves the front-line medical center staff, those in 

this case VISN and medical center. And they are part of the process to define what is needed, how we do it, and the support and 

training that are needed in order to be successful in the process. 

Mr. BUYER. And were you present at the negotiations with 

Unisys with the system and the contract? 

Dr. KOLODNER. My staff were present in the process of the evaluation and their recommendations were presented to me and, at 

that time, to Bob Perrault, the chief business officer. 

Mr. BUYER. And in order for this pilot to be successful, a lot of 

cooperation is necessary, and I want to have this go both ways. Do 

you feel as though the VA is cooperating sufficiently for this pilot 

to be successful? And I ask that question to both of you? 

Dr. KOLODNER. Yes, I think that this has been one of the projects 

where we really are following a pathway of working with an inte-
40

grator, with the COTS product, and it working in a way that is 

really functioning as a unified team, both across the necessary elements of VA and VHA as well as with our counterparts from the 

private sector. 

Mr. BUYER. Mr. Davies? 

Mr. DAVIES. Before I respond to the specific question about how 

well it is working, let me comment on the requirements part of this 

effort. We responded to a statement of objectives, which gives us 

a lot of flexibility in how we implement at different VISNs. So at 

the initial site we are really spending a lot of time with the people 

on the ground there allow us to understand the requirements. They 

are truly getting a lot of input into the requirements. So that is 

very positive, as Dr. Kolodner just said, that is very important. 

Mr. BUYER. Are you getting employee resistance? 

Mr. DAVIES. No, actually the employees are very excited to have 

this come in to their center. It gives them some functionality they 

would like to have. So we see that as a very positive step and we 

have engaged a lot of them in the process. 

To your question about cooperation, we have had a lot of very 

constructive dialogue. There were some important meetings out in 

Cleveland where we were piloting this about 2 weeks ago, and that 

included folks from OI and the CBO as well as Unisys and the 

VISN 10 staff. There were a number of issues that were raised in 

terms of making this work, and we are studying how do we get 

through these issues right now. So we are working together very, 

very well and we have just got to get closure on a few of these as 

we move forward. 

Mr. BUYER. Thank you. I have further questions but at this time 

I yield to Mr. Bilirakis. 

Mr. BILIRAKIS. Well, thank you, Mr. Chairman. Mr. Secretary, I 

guess I am going to congratulate for having achieved this position 

but I say ‘‘I guess’’ only because I am not sure that it did you any 

good. Ordinarily it is a reward for whatever, and I don’t know that 

you would consider this a reward especially after sitting through 

this hearing here this morning, you are probably wondering. 

Organization, quite often we hear, and an investigation is taking 

place at Bay Pines, but some of the things that we hear is that 

there is sort of resistance on the part of some of the personnel regarding some of these newfangled ideas I guess type of thing, 

which there is just no excuse for. But anyhow it might be part of 

our real world. But other than that, there have to be I think organizational charts all the time. And in an organizational chart now, 

Mr. Meagher, Mr. Brody, Mr. Martinez, and Mr. Kolodner would 

all be kind of part of your organizational line, right? 

Mr. MCFARLAND. Yes, sir. 

Mr. BILIRAKIS. Okay, do you have full, would you then have full 

responsibility, let’s go to—I do want to get into something on Bay 

Pines, but let’s go to this common medical concept with DOD, 

would you have full responsibility for that? 

Mr. MCFARLAND. I believe to the best I can tell so far, Congressman, I believe I have shared responsibility for that. Certainly I believe, along with my staff, we have responsibility on VA’s part for 

doing what we have to do make sure this common sharing works. 

So, yes, I believe on VA’s behalf I think the buck stops here. 
41

Mr. BILIRAKIS. Stops with you or with the VA? God knows it 

stops with the VA—well, it would stop with the VA and DOD in 

general. 

Mr. MCFARLAND. Well, my feeling is that when it comes to IT 

issues, to make this work, that I think Mr. Reardon and I both 

share the responsibility to try to lead through to get this kind of 

thing implemented as quickly as we can. Having been in that side 

of the house, having come out of the service and drawn on benefits 

and having to wait, candidly, for quite a while to get my benefits 

done, I can share the pain that the veterans go through when they 

don’t have the seamless interface. So I have an additional motive 

to try to move it forward. 

Mr. BILIRAKIS. And you heard the significance of some sort of a 

new system that would cut down on medical errors and things of 

that nature so we are talking about live human beings here who 

have served their country and it is something, if it is ever installed, 

would be very helpful in terms of quality of health care, is that 

right? 

Mr. MCFARLAND. Absolutely. Absolutely. 

Mr. BILIRAKIS. And I know Dr. Kolodner being an MD, certainly 

all of us, all of you, but it would be Dr. Kolodner particularly being 

an MD, should and would care about that. But we just sometimes 

wonder, we are talking about caring and yet delay after delay after 

delay. 

So, in any case, the next time the chairman, if he is still chairman of this subcommittee, Mr. Buyer holds a hearing on oversight 

on that particular project, you would be the one coming here to let 

us know that it has been taken care of or the progress of it, right? 

Mr. MCFARLAND. Well, I would believe that I would share in that 

responsibility, yes. 

Mr. BILIRAKIS. Okay, now you have heard and you sat through 

all of the hearing, and we commend you and are thankful to you 

for that. But you heard there is a time line of some time in 2005, 

the middle of 2005, something like that time line, have you had 

any input into that? You are awfully new on the job but any input 

at all in that? 

Mr. MCFARLAND. I have not had any input in that. I have had 

just a cursory review of where they are trying to go with the whole 

subject of DOD sharing and of course it is medical and other things 

as well. So I am not qualified at this point to answer any questions 

regarding that. 

Mr. BILIRAKIS. So you can’t tell us that you feel that it is a realistic goal, not at this point? 

Mr. MCFARLAND. I would not feel comfortable telling you that, 

not with the little knowledge that I have about the task. 

Mr. BILIRAKIS. But you are going to be looking into that, aren’t 

you? You are concerned enough to determine whether or not——

Mr. MCFARLAND. I am a full member of the JEC as Dr. Roswell 

is and it is my responsibility to look into it and understand where 

we are going with it. 

Mr. BILIRAKIS. Okay, sir. Shifting now to the problems with the 

CoreFLS at Bay Pines, that is a $472 million project. Is there a 

project manager for that project, do you know? 
42

Mr. MCFARLAND. Yes, there is a process manager, a program 

manager and a good one. 

Mr. BILIRAKIS. And he has been there since the inception of that 

system now? 

Mr. MCFARLAND. I am not sure how long he has been there. He 

has been on that job, I believe——

Mr. BILIRAKIS. Mr. Meagher shakes his head no so apparently 

not? 

Mr. MCFARLAND. It has been about a year. 

Mr. BILIRAKIS. He has been there about a year? 

Mr. MCFARLAND. Yes. 

Mr. BUYER. Mr. Bilirakis? 

Mr. BILIRAKIS. Be glad to yield. 

Mr. BUYER. Would you yield? 

Mr. BILIRAKIS. By all means. 

Mr. BUYER. Your question was is there a project manager, the 

answer was there is a process manager. 

Mr. MCFARLAND. I am sorry, yes, there is a project manager. I 

consider a project manager to be in charge of process as well as the 

project being on time and on schedule. So I believe their job is to 

look at both. 

Mr. BILIRAKIS. Is it true as far as you know that this project has 

been in place since what, the year 2000 or something like that, 

January of 2000, and that there was not a project manager or a 

process manager or whatever name, title we want to give him, in 

place until a year ago? 

Mr. MCFARLAND. I would have to yield to Mr. Meagher on that 

regard. 

Mr. MEAGHER. That is true. The answer would be true. 

Mr. BILIRAKIS. Any explanation for that? Did we seriously address it, Mr. Meagher, and just decided it wasn’t necessary to have 

one or did we just not address it at all? Somebody has got to be 

in charge of these things. 

Mr. MEAGHER. Well, sir, I believe there were people in charge. 

We didn’t have one individual, I think we had several different individuals, and we realized that that is not the way to do this. So 

about 14 months ago I believe they selected a very, very qualified 

and competent project manager. And he has done a fantastic job 

over the last 14 months. 

Mr. BILIRAKIS. I mis-pronounced your name. Mr. Meagher, is 

that the way you prefer it? 

Mr. MEAGHER. Yes, sir. 

Mr. BILIRAKIS. It is not spelled that way. Mr. Davies, would private industry undertake this type of an effort without having someone who would be called a project manager or a program manager 

or whatever in charge? 

Mr. DAVIES. Well, I can only draw—I can easily draw an analogy 

to PFSS in that we have a senior program manager dedicated to 

this effort, as well as a full-time partner, which is a vice president 

of our company, Mr. Joe Macies, actively involved everyday. And 

then I have oversight. 

Mr. BILIRAKIS. From the inception, right? 

Mr. DAVIES. Yes, from the inception. 
43

Mr. BILIRAKIS. Why do you think the VA has not had the same 

sort of luxury, if you will? It is not a luxury. What, lack of funding? 

Mr. MEAGHER. No, sir, there were several people who were in 

that role. 

Mr. BILIRAKIS. Yes, but that is the problem though, isn’t it? 

Mr. MEAGHER. Yes, sir. 

Mr. BILIRAKIS. Several people? 

Mr. MEAGHER. Yes, sir. 

Mr. BILIRAKIS. That is the problem. 

Mr. MEAGHER. And I think it would be wrong to say there wasn’t 

a project manager or there wasn’t project management. I think perhaps given how important this was and is, that having someone of 

the current project manager’s caliber probably should have happened a little sooner. But there has been project management 

throughout. 

Mr. BILIRAKIS. By several, lack of consistency, et cetera, et 

cetera. 

Mr. MEAGHER. Yes, sir. 

Mr. BILIRAKIS. Wow. Well, thank you, Mr. Chairman. You 

weren’t prepared to have it back to you? 

Mr. BUYER. You know, Mr. Bilirakis, you have got the latitude 

to keep going if you like because you are asking the right questions. In fact, if there was a particular project manager—well, let 

me ask you this. You are at Dell Computer, you have got somebody 

in charge of a multi-million dollar project like this and it had a catastrophic result. Now you have a choice. You could either say that 

was one hell of an investment in a person, of whom we will never 

make that mistake again, or look for another job. About right? 

Mr. MCFARLAND. That would be correct, sir. 

Mr. BUYER. So tell me what is your assessment as a senior executive with regard to who is in charge of that project? 

Mr. MCFARLAND. Well, I can’t pass on history because I haven’t 

been part if it here but if I could, I would like to make a comment 

about my perspective on CoreFLS, if you are interested. 

Mr. BUYER. No, what I am interested in is accountability. This 

is the oversight investigation function of the VA. We send a lot of 

money your way to perfect particular systems. If they fail, we have 

a right to ask the questions as to why they fail. Would you concur? 

Mr. MCFARLAND. I would concur. 

Mr. BUYER. That is where we would like to focus. Now recognizing, I don’t want to pull you into an area that would be premature, we recognize that we, this committee, have asked the IG 

to go down and send their team. So I don’t want you to pull the 

trigger too early. So I will defer on the question and perhaps it is 

not fair nor timely to ask of you. But it sort of lets you know how 

this subcommittee feels, not only Mr. Bilirakis, by his line of questioning, which I thought was relevant, material, and appropriate. 

Let me switch over to VETSNET. This is a 10 year program. 

This is a $680 million program. In the 2005 budget, you asked for 

$5 million. During the budgetary hearings, nobody could tell us 

what the $5 million was for. Ms. Martinez, can you tell us what 

the $5 million was for? 

Ms. MARTINEZ. It is called VETSNET capacity planning. This is 

to buy system processors, hardware, memory, and the ability to be 
44

sure that we are going to have the most responsive system for the 

users trying to process the claims. 

Mr. BUYER. And I understand that you are prepared to test 

VETSNET, is that correct? 

Ms. MARTINEZ. Yes, we are starting parallel testing on March 

22nd in Lincoln, Nebraska. 

Mr. BUYER. Lincoln, Nebraska. Why not Bay Pines? I suppose 

you went through a judgment process as to why not Bay Pines? 

Ms. MARTINEZ. The field operations group and C&P services met 

together to talk about what kind of impact doing the parallel testing would have on the workload. Lincoln is considered a very productive, one of the very productive ROs, and we felt that it was the 

right size with the right people to take it on. 

Mr. BUYER. And when will this occur? 

Ms. MARTINEZ. March 22nd we go into parallel tests. As you 

know, today we don’t have a real time system. We close out stuff 

and then pay the veterans. There are a lot of timing issues involved. And we will, as we go through the parallel test, be very 

careful and cautious about being sure that we can move forward. 

And we hope to be going to our live field test on April 26 in Lincoln. 

Mr. BILIRAKIS. Mr. Chairman, may I ask Mr. McFarland Ms. 

Martinez sort of delineated for us some of the criteria that were 

used in selecting Lincoln, Nebraska for that project. Do you know, 

you have got to be concerned, and I know you have just recently 

been on the job, so we don’t want to be unfair, but are you concerned as to the criteria that was used to pick Bay Pines? 

Mr. MCFARLAND. Well, with the cursory review that I have had, 

and I have not had the opportunity to dig into CoreFLS in the 

depth I would like to and intend to dig into it, I am concerned. I 

am concerned at a couple of things. One, I am concerned at the size 

of, as has already been stated here, at the size of the installation 

that we chose to do the basic implementation on. It has been my 

experience that you have to look a little deeper than just the installation. I think you have to look also at the process used to train 

and to implement. And I have had a cursory look at that, and I am 

concerned about how we trained. And I am concerned about the implementation process that we used. I am candidly less concerned 

about the software than I am the implementation aspects. And my 

intent is to dig into those and see if I can come out of there with 

some lessons learned on this. 

Mr. BILIRAKIS. So I have already gone into the organizational 

chart and responsibilities and authority and whatnot. So CoreFLS 

is within the purview of your authority? 

Mr. MCFARLAND. It is a joint project, really managed out of the 

Office of Management by the CFO of the VA. And we are the support organization to that project. I do not own CoreFLS as the chief 

executive of that project. The CFO does. But I certainly, I own the 

project management office, of which this fits in, and so from a 

project management standpoint, we are part of the management of 

the program. 

Mr. BILIRAKIS. I wonder, Mr. Chairman, if we certainly shouldn’t 

be micro-managing. We are an ivory tower here. I wonder if there 

isn’t a specific authority here. 
45

Mr. BUYER. Mr. Bilirakis, you are asking the right questions. If 

we are going to create a position such as this, and he is going to 

be in charge and responsible for the architecture of the VA and yet 

we are going to have, we are back to the stovepipe stuff all over 

again. And that is why we talked about lines of authority. So I 

don’t view you at all as micro-managing. You are trying to understand how this gentleman right here will have more than just a 

title. And we debated this over the last few years when they created this position, whether Congress should come in and start making distinct lines of authority. I would give you budget authority. 

I would give you money. That is what I would do. If you want to 

start talking about people who would be hopping up and down, I 

would give you the money and let them come to you. That is what 

I would do. 

So I yield back to you, Mr. Bilirakis, I think you are right on 

point. 

Mr. BILIRAKIS. Well, that is a great concern. And I again, to what 

extent should we be pressing lines of authority and things of that 

nature. But, by God, if it is going to take, if you don’t have the 

complete authority here to be able to discuss it with us, and it is 

going to take bringing in people from maybe at your level but from 

other offices, if you will, or whatever the case may be, then we are 

never really going to get, I wonder if we are ever going to get to 

the problem and what resulted in all this. And you have already 

said you are not as concerned with the software as you are with 

the people involved, the implementation of it all, which is where 

basically my concern comes from. But somebody else on the same 

level as you, or maybe even higher, is more concerned with the 

software. So here we have a conflict. 

Mr. BUYER. Does the gentleman yield? 

Mr. BILIRAKIS. Yes, sir. 

Mr. BUYER. If you would, go back to the last panel when we 

asked a very simple question about, all right, whose judgment was 

it at Bay Pines and who was responsible? Well, I concurred. Well 

then who made the decision? Nobody knows who can make the decision? What would be awful is is that you have a particular position, and there are a lot of these different projects that are out 

there on numerous time-lines, a lot of money, dates being consistently pushed back, yet who is going to be responsible and accountable? Sure, we can send it through and you can be signed off on 

it, but how from an accountability standpoint do we then do our 

oversight upon the VA. That is why I believe we need empowerment of you. If you have comments on it, stay in your lane but good 

luck. 

Mr. MCFARLAND. I can tell you that, again having only 5 weeks 

here, if I were here, I will say this unequivocally, if I were 

here,——

Mr. BUYER. Your personal opinion is welcome. 

Mr. MCFARLAND. Pardon me? 

Mr. BUYER. Your personal is welcome. 

Mr. MCFARLAND. My personal opinion is that if I were here at 

the time that a major business process software system were being 

implemented and I were the CIO, I would insist that that business 

software system be under the control of the Department of Infor-
46

mation and Technology. Now, that being said, I was not here, and 

it is easy for me to be a Monday morning quarterback in that environment. I was not here and I don’t know the reasons why the 

project was run through Office of Management. It is a financial and 

logistics system. And certainly any major complex system needs to 

have user specifications and the users have to dictate how the 

product is developed. I don’t ever question that. I believe OIT’s job 

is to provide the tools and the management of projects but the 

specifications need to come from users. They are the ones that have 

to use it. But I would say that in most situations, such a complex 

system would be run through the CIO. 

Mr. BUYER. I yield back to Mr. Bilirakis. 

Mr. BILIRAKIS. Well, just very quickly, sir, and you have been 

very patient. There is a private contractor on the Bay Pines situation? 

Mr. MCFARLAND. Yes, sir, there is. 

Mr. BILIRAKIS. Is that private contractor one that has been in 

place since January of 2000? 

Mr. MCFARLAND. Yes, I believe there are actually two contractors. It is an Oracle E-Business suite of products, which a highly 

respected software. And then there is an integrator that is responsible for managing that project. 

Mr. BILIRAKIS. Who is that? 

Mr. MCFARLAND. It is Bearing Point. 

Mr. BILIRAKIS. Bearing Point. 

Mr. MCFARLAND. It used to be someone else but they are called 

Bearing Point now. 

Mr. BILIRAKIS. They are responsible for managing it so they 

would have been responsible for training, getting to again your people’s thing, they would have been responsible for training those 

people? 

Mr. MCFARLAND. I would believe, yes, they would be in charge 

of the implementation and the training aspects, yes. 

Mr. BILIRAKIS. Do we know, Mr. Meagher, what type of training 

may have taken place? Was it adequate? Is that within your purview? 

Mr. MEAGHER. Well, again, I was part of several meetings that 

took place when that was being discussed, and I have spoken to 

Mr. McFarland about that. I will tell you that at the time it was 

very sophisticated training. It was fairly expensive. And my opinion 

at that time was this might be a little bit of overkill. We were 

spending a lot of money—— Mr. BILIRAKIS. At that time? 

Mr. MEAGHER. Last summer. 

Mr. BILIRAKIS. Last summer. 

Mr. MEAGHER. What has turned out, in all candor, is that it was 

not near enough. There was not a near enough hands on. And I 

think, as Mr. McFarland, with a fairly fresh set of eyes pointed out, 

we may have gone too high-tech too soon. It may have really required more hand holding, more on the ground sooner, training 

sooner, the development of advocacy groups. We have learned a lot. 

Unfortunately, sir, in your district, but we have learned a lot about 

how big a change what we are proposing to do here is and how 

much training is really required. We are going to change that. But 
47

again in candor and in honesty at the time I thought it was perfectly adequate training. It turned out I was wrong. 

Mr. BILIRAKIS. Mr. Chairman, your staffer here as spent some 

time with the private contractor on the subject of training. And I 

wonder, I think that his findings maybe could be a part of a record. 

I would ask unanimous consent that maybe he might share that 

with us. I think it is important for you all to hear this too. Could 

we do that, sir? 

Mr. BUYER. I think that would be unusual. 

Mr. BILIRAKIS. It would be darn unusual. But we are trying to 

get the bottom of what happened here so that we don’t make the 

same mistakes in the future. And these gentlemen, Mr. Meagher, 

has already admitted that it was probably rather than overkill, it 

was under kill. 

Mr. MEAGHER. Yes, sir. 

Mr. BILIRAKIS. If that is the right word. And I don’t know 

that——

Mr. BUYER. Let us, Mr. Bilirakis, be a little patient again. I say 

this because it is a virtue which I will strive for. We have got the 

IG. They are going to do their investigations. And we can do our 

follow-up when we get the IG report. 

Mr. BILIRAKIS. Okay, but I guess I get concerned with that, and 

I like to think that we ought to learn from our mistakes and from 

history. So we don’t know specifically how much time they spent 

on the training or anything of that nature or do we? 

Mr. MEAGHER. Well, they spent a considerable amount of time 

and money doing the training starting back in September and October of last year. And, again, without having this experience, it 

seemed adequate and probably more than adequate, both in terms 

of the amount and the type of training. As we got into it, we realized how big a change this was to how folks have to do business 

down there. I would say now that we were mistaken. More training 

was required, maybe not so much high-tech training, maybe much 

more hands-on personal training. It would have been a lot more expensive. It is going to be more expensive to do that kind of training. But it has been shown I believe that that is what it is going 

to take. 

Mr. BILIRAKIS. Yes, obviously it is turning out to be a hell of a 

lot more expensive, isn’t it? We are talking about a lot of money 

burned as a result of not maybe spending what additional it may 

have taken to get these people trained adequately. 

All right, I guess maybe this is in the hands of the IG and we 

are not sure what they are going to come up with here. But from 

what we understand, Mr. McFarland, most of the training took 

place through the Internet, hardly any of it was on a personal basis 

and things of that nature. And voluntarily, and what voluntarily 

you are told, if you really want to get trained here, just plug into 

this particular net, Web site and whatever. 

All right, sir, thank you. 

Mr. BUYER. I had asked the question of the second panel and Dr. 

Roswell asked that I defer to you and that is the question about 

the delay of implementation. You have a schedule of implementation and now things are sort of on hold because of Bay Pines. How 

long will this be delayed? 
48

Mr. MCFARLAND. Well, I will give you a personal estimate. My 

suspicion is that we would probably see at least a 60-day delay 

based on the last schedule of defects that I looked at. I don’t think 

that is necessarily optimistic but I think it is probably realistic. 

Mr. BUYER. Thank you. Mr. Davies, in your testimony you state, ‘‘Unisys understands that technology alone rarely, if ever, succeeds 

in transforming agency or business operations. Achieving improvements in the VA revenue cycle will depend not only on the PFSS 

software but also on significant business process and organizational 

changes.’’ What are these business processes and organizational 

changes for which you refer to? 

Mr. DAVIES. I am actually going to let Joe Macies, who is accompanying me answer that since he has been intimately involved in 

this the whole way. 

Mr. BUYER. And he is? Is he the project manager? 

Mr. DAVIES. Joe is the vice president at Unisys overseeing the 

project on a day to day basis. 

Mr. BUYER. All right, sir, you are recognized. 

Mr. MACIES. Thank you. The changes that we are talking about 

is that we are fundamentally trying to change the VA to be more 

like a commercial operation. As a result, we are redefining all of 

the business processes, the flows and trying to automate a lot more 

than currently exists. This involves changing jobs, job descriptions, 

roles that people will have, how the data is captured, how it flows. 

And result, we are looking at not just re-engineering so that it 

suits the commercial software, we are also looking at structural 

changes in how the organization is going to look like. And we recognize that when you are putting in that much change, particularly 

for adults, it is a massive effort. They need to understand and see 

the benefits of what this whole new process. 

To date we have identified the current and to be processes. We 

have identified the differences. We are going to put an overall 

change plan in place to communicate, to educate, and ultimately to 

implement the changes throughout the organization. 

Mr. BUYER. How many hospitals in VISN 10? 

Mr. MACIES. There are five. 

Mr. BUYER. How many clinics? 

Mr. MACIES. Over 40. 

Mr. BUYER. And since you are the one that is working hands-on, 

how do you rate the level of cooperation here between the employees, i.e., even the culture, with regard to what is being proposed? 

Mr. MACIES. I would say that the people who are close to the 

project and are participating in defining the requirements and how 

the system is to work in the future are very excited, very supportive, understand what needs to change, and in fact are the ones 

driving to identify the changes that are required. I think as you go 

further down the line, people who are less involved, as you would 

anticipate and expect, there are I would say fears of the unknown. 

Thus with the change plan that I referred to earlier, we need to 

communicate to them what it is that is going to happen. 

We plan to do that through their peers and formal training. 

There are 20 some odd people who are currently participating from 

VISN 10 on our project team and that number is going to get larger. We have a communication plan and a roll out effort that is 
49

going to include a lot of the VA folks to carry the word and help 

us with the change. But I would say overall the cooperation is outstanding. 

Mr. BUYER. This is a 5 year contract, correct? 

Mr. MACIES. For a national roll-out. 

Mr. BUYER. What are your benchmarks for success? 

Mr. MACIES. I think our benchmarks for success is to have a successful pilot to begin with in Cleveland and then roll out the rest 

of the VISN. The keys are we would like to standardize so that all 

of the medical centers from a collection perspective are the same, 

they are using the same measurement metrics, and to improve the 

collections obviously. There is a whole list of metrics that have 

been identified that we need to meet. Clearly we understand that 

once we go live with the pilot, there will be some——

Mr. BUYER. Have these metrics, have they been agreed to? 

Mr. MACIES. It is a set of metrics that that have been agreed to 

within the VA. 

Mr. BUYER. So you have laid out your principles in a matrix for 

which you then to begin to break down? 

Mr. MACIES. Correct, and one of the things that we are very cognizant of is as we go through the analysis and design of the system, is that we are constantly looking at the metrics and seeing if 

we make a certain design decision, to achieve the metric. 

Mr. BUYER. Also, Mr. Davies, in your testimony, ‘‘So while 

Unisys’ responsibilities for PFSS are focused initially on technology 

enhancements, we are working with the VA to ensure that relevant 

business processes and change management issues are identified 

and addressed.’’ Could you elaborate on that? 

Mr. DAVIES. Well, I think the discussion we just had gets at a 

lot of that. The general theme is one of ‘‘we can’t just put the technology in and hope it works. We have got to really re-engineer all 

the processes around it.’’ And those were some of the things that 

Joe was just discussing with you. 

Mr. BUYER. Well, I have every imaginable vendor in line and everyone has an idea on how to put down processes, how to change 

culture, how to improve collections, how to improve claims processing, I am serious. They are all out there. And they have got 

their ideas. We are watchful. We are most hopeful with regard to 

this pilot project. Actually, this has gone much larger than what 

we first envisioned for it to be. And we are sort of struggling as 

to whether we say, okay, we are going to let you move out with 

your pilot project but it is 5 years. I am telling you I am still working on that virtue. Five years. 

So I have to look at this, Mr. Davies, and go, okay, do we go 

ahead and authorize some smaller ones at some other particular 

hospitals so we can look at what you are doing and compare it to 

perhaps some other ideas because I don’t want there to be a Bay 

Pines. I want to make sure that we have got the right processes 

with the right management decisions so when they come through 

that door, the inputting is correct and the back-end is correct. And 

that is about where we are, Mr. Davies. 

Mr. DAVIES. If I could comment on that. 

Mr. BUYER. Yes. 
50

Mr. DAVIES. The first comment would be that I know you have 

a line of vendors that are out there. Plese keep in mind that we 

won this contract competitively so any one of those vendors could 

have competed on this, maybe some of them did. The VA did choose 

Unisys as the best value for the VA. We are in the middle of a pilot 

project right now. Before we roll out nationally, we are going to 

have to demonstrate to the VA and probably to you that we have 

success here. So don’t feel like you have no other say in this. You 

are still going to get another look at it after we get done with the 

pilot and we will demonstrate success. 

I think what we are showing right now, and we are trying to 

demonstrate right now, is that we are absolutely committed to the 

success of this project by doing the right things up front. And the 

right things include heavy involvement from the user community, 

which is what Joe was talking about. We have involved literally 20 

people right now and many, many more coming down the pike. It 

also requires a lot of coordination with multiple offices within the 

VA, which we are in the middle of doing. So we are doing the right 

things up front and that is going to set us up for success at the 

end. But you certainly will get another whack at this before it goes 

national. 

Mr. BUYER. Oh, you are absolutely correct. 

Mr. DAVIES. I know you will. 

Mr. BUYER. I guess now I am going to ask about your resume. 

Then I can get to how you have measurable outcomes. Tell me 

about some of your successes around the country with regard to 

what you are applying with VISN 10? 

Mr. DAVIES. I can tell you about successes around the country. 

Are you talking about my personal experience now? 

Mr. BUYER. I am talking about with Unisys. 

Mr. DAVIES. Okay, in terms of—I will combine a couple of them. 

One thing that I look at when I look at the oversight of a project, 

it comes from a lot of work I have done with the Department of 

Defense over the years where you baseline a project, both from a 

cost, schedule and a technical perspective. You lay out what you 

are trying to accomplish and you measure that on a regular basis. 

So what we are doing, the way we apply that within Unisys is 

we have regular project reviews and take a look at where we are. 

That is one of the mechanisms that we use. Another mechanism is 

as was asked before in terms of dedication of senior resources on 

this project. We have a dedicated senior project manager and some 

very experienced senior staff from industry that we have applied 

to this project. We have a vice president, Joe Macies, who has run 

large projects before, who is dedicated to this as well. And our senior management looks at it on a regular basis. 

So we are dedicating the kind of management oversight that is 

required. I think at the end of the day, and it has been somewhat 

of a theme that I have heard today here, these kind of things happen because you have leaders involved in projects in doing the 

right things. And that is one of the best measures of success that 

I can put out here. 

Mr. BUYER. Have you taken on other large medical centers or 

health systems in the private sector? 
51

Mr. DAVIES. I don’t think we have an implementation like this 

right now. I think I am going to let Joe talk a little bit about some 

of our private sector capabilities because he was involved in those 

earlier. 

Mr. MACIES. Yes, I think that when you look at a national role 

under the VA, it is clearly one of the more unique aspects. It would 

be probably difficult to find as large a health provider anywhere, 

certainly in the U.S. However, when you look at what we are trying to do in Cleveland, I think that you would find hundreds, if not 

many hundreds, of hospitals that have implemented similar systems in a timely and very successful manner. I think the other critical aspect of what we are trying to do in Cleveland, if you break 

it down into two or three risk areas. The software that we are implementing has been implemented at Iowa University Hospital successfully, a little larger than what we are doing in VISN 10. So it 

works. It has been proven to work. That same software has been 

implemented in the software so it works. 

I think the question you asked earlier, on top of the software and 

the technology, we recognize that some of the challenges within the 

VA is making changes. And, as I indicated too, what we are finding 

is that users management at VISN 10 are very interested in 

change and they are welcoming it, and are looking at the system 

as something that is going to be very beneficial for them. So with 

that, I think we understand that if we combined the change with 

the technical solution, we should have success. 

Mr. BUYER. All right, I am trying to follow this. We have a pilot 

project ongoing. Secretary, you testified that you don’t necessarily 

own CoreFLS. So what about this system, you don’t own this one, 

either? 

Mr. MCFARLAND. No, sir, I do own this one. 

Mr. BUYER. This one you own? 

Mr. MCFARLAND. Yes, I do. It falls within VHA and my deputy 

CIO, Dr. Kolodner, and that purview rolls up to me. And I have 

a note here that I will be getting regular updates on this project. 

Mr. BUYER. Oh, you beat me to the next question. Because the 

next question is if in fact you own this, how do you measure successful outcomes with regard to the project and the contract? 

Mr. MCFARLAND. I am going to look at the agreed upon schedule 

between VA and Unisys. I am going to look at the implementation 

dates. I am going to ask a lot of questions about training. And I 

am going to have regular meetings with these folks on how we are 

doing on the project. 

Mr. BUYER. You know, Mr. Bilirakis, he is going to do really well 

in this job. I yield to you, Mr. Bilirakis. 

Mr. BILIRAKIS. I think he will probably realize in no time at all 

Vietnam might have been a snap compared to this current job. It 

might have been good training. 

Mr. Davies, just very quickly, in the process of bidding for a job 

or considering whether you should bid for a job, do you take into 

consideration the demographics of an area in terms of the manpower that would be available and their backgrounds and that sort 

of thing? Yes, let me just please stop at that point. 

Mr. DAVIES. Are you asking about the people that we staff the 

job with? When you say the demographics of as area? 
52

Mr. BILIRAKIS. Well, I am talking for instance in St. Petersburg 

and Bay Pines, if you were the contractor or considering whether 

you should be the contractor, and you know that the implementation would be the employees at the center—— Mr. DAVIES. Yes. 

Mr. BILIRAKIS (continuing). Right, do you take on that consideration in terms of demographics, their backgrounds and that sort of 

thing? 

Mr. DAVIES. Absolutely. 

Mr. BILIRAKIS. You do. 

Mr. DAVIES. When we go national, whenever we go to a location, 

we need to have people that understand that location. Maybe they 

have worked there before or they have had a lot of experience 

there, we would definitely want some of those people on the team. 

Couple those people with folks that have been successfully involved 

with the pilot and you have got a winning combination. So it is a 

combination of people, absolutely. 

Mr. BILIRAKIS. And that would be a factor in maybe determining 

what type of training you should be giving those people? 

Mr. DAVIES. Oh, absolutely. Through our experience with the 

folks in VISN 10, we get a pretty good understanding of the types 

of people that are going to have their hands on the system. Based 

on our understanding of the types of people that have their hands 

on the system, we will define training programs that will work for 

them. No question about that. That is why I think it is so important for us to be so involved with them early on in the program 

so we can think about that down the road. 

Mr. BILIRAKIS. Have you considered in your own mind what happened at Bay Pines and maybe what some of the problems may 

have been? 

Mr. DAVIES. I am only superficially aware of what happened in 

Bay Pines. Some of the things I have heard today I think are relatively, I don’t want to say commonsense type mistakes, but you 

can sort of see where they happened. I think we can all kind of deduce our reactions to that. But I don’t think I really want to add 

any more. 

Mr. BILIRAKIS. Yes, I can understand that you probably would 

not want to. Thank you very much. Thank you, Mr. Chairman. 

Mr. BUYER. We are about finished. Mr. Secretary, as we move to 

the digitized world, and you know this far more than I do, it is far 

reaching more than at first blush. So when we talk about IT architecture, we are not talking about just what the lap tops and the 

PDAs and those types of things. This is also moving into a lot of 

very expensive equipment that is used to digitize, to go seamless. 

And in order to make it all work, hopefully you—I know you have 

got that signature authority with regard to the purchasing of hardware and software. 

But there are other systems that speak into them. And if you are 

not involved in that process of the purchases of very expensive 

equipment out there in the medical world that sends these X’s and 

O’s into the system, we are not there. So hopefully, what I am 

hopeful here is that you have to be at the table. You have got to 

make sure that they all understand because the challenges that we 

have is working with DOD and VA, they are continuously today 
53

buying equipment that is not compatible with each other. They 

can’t talk to each other. It blows my mind. 

So we use great language and we say all the right words but we 

still have got blinders on and we are still buying equipment that 

is incompatible with each other. So I want you to go beyond just 

an IT architecture of data and inputting and administration and 

claims processing, VHA, and health, in order to make that health, 

it has got to go beyond. Do you concur? 

Mr. MCFARLAND. I concur. 

Mr. BUYER. All right. Yes, Mr. Bilirakis? 

Mr. BILIRAKIS. Well, when you finish, Mr. Chairman. 

Mr. BUYER. Go ahead, I yield. 

Mr. BILIRAKIS. All right. Would it be beyond the realm of the way 

we do things here if we receive from Mr. McFarland a periodic update on what is happening regarding all of these systems but particularly the common medical concept? In other words, rather than 

2 years from now, if we are both here, we find out that the problem 

is developing and that sort of thing. 

Mr. BUYER. I think what would be really appropriate, Mr. Bilirakis, on that point, and you have beaten me to it, is and I will 

yield to you, Mr. Secretary, let’s let you do your assessment of what 

all is out there, what are the lists of all these contracts, where they 

are, where the costs are, and trying to think beyond where you 

presently are in a digitized world. And you then let us know and 

come meet with us in a formal meeting. I think that would be an 

excellent idea. 

Mr. BILIRAKIS. I would like to see a date, though, tied into that, 

Mr. Chairman. 

Mr. BUYER. Okay. 

Mr. BILIRAKIS. I would like to see us choose a date here that 

maybe——

Mr. BUYER. Two or 3 weeks, how long would it take for you to 

do that assessment? 

Mr. MCFARLAND. Sir, it is going to take me a while. There are 

59 major projects in the $1.6, $1.7 billion. I could give you a cursory overview in a couple of weeks. I don’t know that you want me 

to give you a cursory overview. 

Mr. BUYER. No. All right, well, Mr. Bilirakis, your request is 

noted and we will work with the secretary on a realistic time line 

for him to do his assessment. 

Mr. MCFARLAND. I will dig into them. You have my promise on 

that. 

Mr. BUYER. Thank you. In September 2000, the VA testified on 

the implementation of the VA SmartCard with a national implementation of January 2002. That is another one of these 59 programs. Do you know what happened? All right, we will talk to you 

in 6 weeks. 

On the cyber security question, the VA IG was extremely critical 

of the Department’s cyber security posture with regard to the 

Worm. Mr. Brody, can you tell us what happened and why the systems were shut down for such a period of time and things were in 

chaos? 

Mr. BRODY. You are referring to MS Blaster? 

Mr. BUYER. Yes. 
54

Mr. BRODY. That would have been in the late summer time 

frame last year. What occurred was that we did not have a comprehensive security configuration and management program in 

place across the Department. That program, that initiative is now 

underway so that in the not too distant future we should be able 

to deal in a more automated fashion with that kind of a malicious 

code attack. The situation we were in late last summer is that each 

individual machine across the Department had to actually be physically touched by a human being because we didn’t have the ability 

to push out patches on an automated fashion. And so while we 

were working diligently to do that, the manual effort takes many 

days whereas an automated effort would only take hours. 

Mr. BUYER. Mr. Secretary, does cyber security come under your 

responsibility? 

Mr. MCFARLAND. Yes, it does and it is a very important thing to 

me. I am not used to an environment where this kind of vulnerability has been as prolific as it has been here. I am working daily 

with Mr. Brody on making sure that he has the funds and the people and the contracts to try to get this process done. I do not want 

to touch 400 information security officers out there to try to get a 

patch out. I want to do it in the dead of night. And I don’t want 

to ask anybody if they will please install a patch. That is my philosophy on this subject. 

Now, there are tools out there that will do that. And we are evaluating those tools right now. Candidly, there are approximately 

230,000-plus desktops that we need to touch out there to be 100 

percent secure. The question I have, and we are trying to determine right now, is there a tool in the commercial space that can 

scale to that degree. And that is my only concern. If this were Dell 

Computer, sir, we would be touching 40,000 desktops and it 

wouldn’t be an issue. It is done everyday. I believe that the technology is there to do this but it is something we have to test very 

carefully. But we are going to do this. It is possible and we are 

going to do this. 

Mr. BUYER. How do you do that when you don’t have the authority? You don’t own 430 information security officers, do you? 

Mr. MCFARLAND. Well, as of a discussion I had with both the 

general counsel and the Secretary within the last 24 hours, I do 

have that authority, sir. 

Mr. BUYER. I like it. I like it. I like it. This hearing is concluded. 

I like it. 

[Whereupon, at 2:20 p.m., the subcommittee was adjourned.] 
(55)

A P P E N D I X 

PREPARED STATEMENT OF CHAIRMAN BUYER

Good Morning. Today’s hearing is our sixth hearing on the Department of Veterans Affairs Information Technology programs. This hearing will revisit some key 

VA initiatives, including VETSNET, its automated claims processing program. 

We will also review two new programs, the VA’s Core Financial and Logistics System (CoreFLS) and the Patient Financial Services System (PFSS). CoreFLS is currently undergoing operational testing in VISN 8 at the Bay Pines Medical Center 

in St. Petersburg, Florida. Unfortunately, during this testing phase it became necessary to repeatedly postpone surgeries because of multiple problems with implementation of the new system. 

This is unacceptable and I am at a loss as to why the Department would choose 

the second busiest hospital in the nation for its test site. When I learned about this 

situation, I asked the VA’s Office of Inspector General to conduct a comprehensive 

review of the ongoing implementation of CoreFLS at the Bay Pines facility. This request was made by my Subcommittee on February 19. 

We requested that the IG’s investigation focus on the adequacy and effectiveness 

of the training provided to employees at the facility, the cost of the two consecutive 

30 day delays prior to full implementation, and the total penalties assessed for delinquent payment of invoices over 30 days old and current delinquent invoice inventory. I understand that the IG has sent (15) personnel down to the Bay Pines facility. 

The Patient Financial Services System (PFSS) pilot project is currently underway 

in VISN 10 at the Cleveland Medical Center. The pilot project is designed to test 

PFSS in order to demonstrate how integrated, commercial patient management and 

patient financial software will improve VA’s third party collections. 

The Subcommittee’s last hearing on November 19, 2003 dealt with the efforts 

being made by the VA and DOD to develop and deploy electronic medical records 

that are interoperable, bi-directional, and standards-based. Currently, we have 

servicemembers deploying overseas and we have servicemembers transitioning from 

active duty back to civilian status. How much easier would it be for these men and 

women if their medical information was in electronic format in a common medical 

record? I guess we want to hear from both the VA and DOD what is the latest and 

greatest in your endeavors to move this process forward. The President has identified moving toward electronic medical records as one of his top priorities. In his 

State of the Union address, the President said, ‘‘By computerizing health records, 

we can avoid dangerous medical mistakes, reduce costs, and improve care.’’ In fact, 

the Institute of Medicine, commonly referred to as IOM, issued a report entitled: 

‘‘Patient Safety Achieving a New Standard for Care.’’ The report was the work product of the IOM’s Committee on Data Standards for Patient Safety and focused on 

improving quality of care in America and fostering the use of information technology 

within the health care system. We will hear from Dr. John Clarke, a member of the 

IOM’s Committee, and get his thoughts about the advantages of moving more aggressively toward paperless medical records. 

During our last hearing it was acknowledged by me and others that more progress 

had been made in the last fourteen months than the prior twenty years. It’s been 

four months since our last hearing. 

How much closer are the two departments to providing a seamless transition to veteran status? 

Another area of interest to the Subcommittee is the VA’s smart card initiative. The 

VA testified before this Subcommittee back in September of 2000 that a Smart Card 

proof-of-concept demonstration was conducted on August 31, 2000 for the Acting 

Secretary and Veterans Service Organizations. The demo project showed how the 

Smart Card could support express registration which would save time for the vet-
56

eran and VA staff while improving data quality. The demonstration also showed 

how a veteran using a kiosk could digitally sign forms using keys securely carried 

on the card. The goal was to implement this program nationally by January 22, 

2002. It is my understanding that a new Smart Card initiative has been underway. 

Hopefully, we will learn what went wrong with past efforts to implement the Smart 

Card after conducting the demo project in 2000. 

This hearing will also give the new Assistant Secretary for Information and Technology, Mr. Robert N. McFarland, an opportunity to provide the Subcommittee with 

an update on implementation of the One-VA Enterprise Architecture plan and the 

state of the Department IT program.
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WRITTEN COMMITTEE QUESTIONS AND THEIR RESPONSES
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Post Hearing Questions for Mr. Macies (UNISYS)

Question 1:

How does UNISYS intend to differentiate between service and non-service connected 

care for billing purposes?

Answer 1:

The determination of service and non-service connected care for billing purposes is 

the sole responsibility of the VA following the then current policies and procedures 

for that determination. The capture of the service or non-services determination occurs primarily at the time the services is being provided and is captured in the clinical VistA systems. Unisys has not received the time line that OI plans to automate 

the capture of the service and non-service related transactions in VistA.

Question 2:

The VA Medical Center in Tampa found a solution to this important aspect of billing for services. Does UNISYS intend to visit this facility?

Answer 2:

Unisys is always interested in existing solutions. In coordination with the VA, 

Unisys has contacted the MCCF Coordinator at Tampa to learn how we can benefit 

from their experience. In a preliminary discussion, we have found that their claims 

development unit researches all cases regarding service connection. When they come 

across a service connection which might be ambiguous or unclear they run a HINQ 

and then contact the Regional Office for clarification on the condition and rating. 

If they get clarification, they load the new eligibility information. Our understanding is that they have developed and implemented a business process improvement that is complementary to the automation provided by PFSS. It is our plan to 

visit Tampa and further explore their process and asses how it can best be incorporated into the PFSS environment.

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