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" HOUSE COMMITTEE PRINT NO. 4 107th Congress

2d Session

2002

DEPARTMENT OF VETERANS AFFAIRS

AND DEPARTMENT OF DEFENSE

HEALTH RESOURCES SHARING

STAFF REPORT TO THE

COMMITTEE ON VETERANS’ AFFAIRS

U.S. HOUSE OF REPRESENTATIVES

107TH CONGRESS

FEBRUARY 25, 2002.—Printed for the use of the Committee on Veterans’

Affairs of the House of Representatives

March 7, 2002 (1:52 p.m.)
COMMITTEE ON VETERANS’ AFFAIRS

CHRISTOPHER H. SMITH, New Jersey, Chairman

BOB STUMP, Arizona

MICHAEL BILIRAKIS, Florida

TERRY EVERETT, Alabama

STEPHEN E. BUYER, Indiana

JACK QUINN, New York

CLIFF STEARNS, Florida

JERRY MORAN, Kansas

HOWARD P. (BUCK) MCKEON, California

JIM GIBBONS, Nevada

MICHAEL K. SIMPSON, Idaho

RICHARD H. BAKER, Louisiana

ROB SIMMONS, Connecticut

ANDER CRENSHAW, Florida

HENRY E. BROWN, JR., South Carolina

JEFF MILLER, Florida

JOHN BOOZMAN, Arkansas

LANE EVANS, Illinois

BOB FILNER, California

LUIS V. GUTIERREZ, Illinois

CORRINE BROWN, Florida

JULIA CARSON, Indiana

SILVESTRE REYES, Texas

VIC SNYDER, Arkansas

CIRO D. RODRIGUEZ, Texas

RONNIE SHOWS, Mississippi

STEPHEN F. LYNCH, Massachusetts

SHELLEY BERKLEY, Nevada

BARON P. HILL, Indiana

TOM UDALL, New Mexico

SUSAN A. DAVIS, California

PATRICK E. RYAN, Chief Counsel and Staff Director

(II)

March 7, 2002 (1:52 p.m.)
(1)

DEPARTMENT OF VETERANS AFFAIRS AND DEPARTMENT

OF DEFENSE HEALTH RESOURCES SHARING

STAFF REPORT TO THE COMMITTEE ON VETERANS’

AFFFAIRS

Purpose.—This staff report to the Chairman and Ranking Member of the Veterans’ Affairs Committee is intended to analyze the

current status of health resources sharing between facilities of the

Department of Veterans Affairs (VA) and Department of Defense

(DoD). The law authorizing sharing was enacted in order to make

better use of such facilities and to improve access to quality health

care for beneficiaries of both departments. This report also discusses new opportunities for enhancing sharing authority and recommends legislation to achieve more VA-DoD resource sharing.

BACKGROUND

Veterans Administration and Department of Defense Health Resources Sharing and Emergency Operations Act.—In 1982, Congress enacted the Veterans Administration and Department of Defense Health Resources Sharing and Emergency Operations Act,

Public Law 97–174, 38 U.S.C. 8111, (the Sharing Act) to foster

more effective sharing of health care resources between the former

Veterans Administration, now the Department of Veterans Affairs,

and the Department of Defense. Previously, VA and DoD health

care facilities, many of which are co-located or in close geographic

proximity, operated virtually independently of each other. This occurred despite opportunities to enhance access and quality of service for beneficiaries, and save funds through shared clinical care

and joint procurement. The intent of the law was not only to remove legal barriers, but also to provide incentives for military and

VA health care facilities to engage in sharing through local agreements, joint ventures, national sharing initiatives, and other collaborative efforts to more effectively and efficiently use Federal

health resources.

The Sharing Act gives local health care executives flexibility in

establishing sharing agreements, including conducting negotiations, developing reimbursement methods and bartering services,

as well as streamlining the review and approval processes to minimize bureaucratic delay from Washington. As an incentive to

share, it provides that a facility furnishing services retain funds

earned from such sharing. To encourage establishment of sharing

as an important priority, the Sharing Act requires the VA’s Under

Secretary for Health and DoD’s Assistant Secretary for Health Affairs to recognize health resources sharing as an ongoing responMarch 7, 2002 (1:52 p.m.)
2

sibility. The Sharing Act has been amended three times in response

to proposals by the departments to improve the relationship between them. Currently, a Presidential Task Force to Improve

Health Care Delivery for our Nation’s Veterans is reviewing VA

and DoD policies and practices relating to sharing to identify new

or potential opportunities and make recommendations to the VA

and Congress to promote increased sharing.

The VA-DoD annual report to Congress in January 2000 depicted

sharing as a robust program with ‘‘virtually all’’ VA and DoD facilities involved. In reality, however, while VA and DoD have increased sharing in sheer dollar volume and added many new agreements over the past twenty years, the total amount of sharing remains miniscule as a percentage of the two departments’ combined

health care outlays. According to VA’s Office of Medical Sharing, in

fiscal year 2001 VA and DoD shared services valued at only $58

million out of the two departments’ total health care budgets of approximately $35 billion —about two-tenths of one percent of their

medical spending.

Congressional Commission on Servicemembers and Veterans

Transition Assistance.—The difficulties in VA-DoD sharing are already a matter of record. The January 1999 Report of the Congressional Commission on Servicemembers and Veterans Transition Assistance questioned whether the two departmental health care systems could survive as separate entities unless they continued to receive funding supplements, or restructured and realigned with each

other. To improve their prospects the Commission recommended:

• Joint procurement of pharmaceuticals, medical and surgical

supplies, and medical equipment.

• Interoperable clinical, management and financial information

systems.

• Joint procurement of health information technology.

• Development of compatible cost accounting systems and a

joint resource allocation and budgeting process.

• Combined funding of graduate medical education.

• Recognition of VA medical centers as equivalent to military

treatment facilities in DoD’s TRICARE community health program for military retirees and dependents.

• Combined policy staff and process to review health facilities

construction requirements.

The Commission reported that it was imperative for the departments to enter into a ‘‘true partnership’’ and restructure their organizations to overcome cultural and institutional barriers that needlessly separate them.

There are over 400 active health care sharing agreements and

eight joint ventures between VA and DoD involving 150 facilities.

However, about 75 percent of the $62 million in sharing currently

reported is derived from agreements at only 30 sites.

Inpatient Care.—About 75 percent of shared inpatient care (defined as acute bed care of more than 24 hours in duration) is provided at only 12 locations: Madigan Army Medical Center, Ft.

Lewis, WA; 5th Medical Group, Minot AFB, ND; 319th Medical

March 7, 2002 (1:52 p.m.)
3

1See Appendix I for site visits and contacts.

Group, Grand Forks AFB, ND; Ralph H. Johnson VA Medical Center, Charleston, SC; Walter Reed Army Medical Center, Washington, DC; Brooke Army Medical Center, Ft. Sam Houston, TX; 375th

Medical Group, Scott AFB, IL; Oklahoma City VA Medical Center,

Oklahoma City, OK; Overton Brooks VA Medical Center, Shreveport, LA; John L. McClellan Memorial Veterans Hospital, Little

Rock, AR; Bassett Army Community Hospital, Fort Wainwright,

AK; and James A. Haley Veterans Hospital, Tampa, FL.

Ancillary Services.—Most shared ancillary care (defined primarily as nuclear medicine, radiology and laboratory services) is

provided at 12 sites: VA Pittsburgh Health Care System, Pittsburgh, PA; Tomah VA Medical Center, Tomah, WI; Walter Reed

Army Medical Center, Washington, DC; Arnold Air Force Station,

Tullahoma, TN; 5th Medical Group, Minot AFB, ND; Sam Rayburn

Memorial Veterans’ Center, Bonham, TX; Dayton VA Medical Center, Dayton, OH; Moncrief Army Community Hospital, Fort Jackson, SC; Alvin C. York VA Medical Center, Murfreesboro, TN; Bassett Army Community Hospital, Fort Wainwright, AK; Madigan

Army Medical Center, Fort Lewis, WA; and Houston VA Medical

Center, Houston, TX.

SITE VISITS

During 2001, Committee on Veterans’ Affairs staff conducted

fact-finding site visits to VA and military treatment facilities in

West Los Angeles and San Diego, CA; Las Vegas, NV; Albuquerque, NM; San Antonio, TX (accompanied by House Committee on

Armed Services staff); El Paso, TX; Charleston, SC (accompanied

by House Committee on Armed Services staff and staff of Rep.

Henry Brown); Fayetteville, NC (accompanied by staff of the General Accounting Office (GAO)); and Chicago, IL (accompanied by

GAO and staffs of House Appropriations Subcommittee on VA,

HUD and Independent Agencies, Sen. Richard Durbin, Sen. Peter

Fitzgerald, and Rep. Mark Kirk). 1

Los Angeles, CA.—The West Los Angeles VA Medical Center, the

VA’s largest, is approximately 12 miles from Los Angeles Air Force

Base in El Segundo, CA. The Greater Los Angeles VA Healthcare

System consists of five ambulatory care centers, eight community

based outpatient clinics, the largest medical research program

within the VA, and the tertiary care medical center. This VA

health care system provides a full spectrum of services to over one

million veterans residing in the primary service area. These services include comprehensive medical, surgical, psychiatric, diagnostic, and treatment services, as well as psychiatric specialty programs and comprehensive rehabilitation programs. In addition, the

health care system operates a 321-bed domiciliary program and

two 120-bed nursing home units.

The fiscal year 2001 budget of the health care system was $384

million. Fiscal year 2001 VA-DoD sharing amounted to only

$24,724. Currently, the VA provides limited mental health services

to DoD beneficiaries at Los Angeles AFB. The Air Force is building

a new outpatient clinic that is expected to open in mid-June 2002.

March 7, 2002 (1:52 p.m.)
4

There was little evidence of any attempt by the Air Force or the

VA to consider a joint venture or partnership arrangement for this

facility. Joint staffing issues, reimbursement methodologies and

contract negotiations were frequently mentioned as barriers to

greater sharing, as well as differences in the beneficiary populations’ needs.

San Diego, CA.—The VA San Diego Healthcare System is a

major medical, surgical, psychiatric, tertiary, and community care

system with a medical center located in La Jolla and community

clinics located in Mission Valley, El Centro, Chula Vista, and Vista.

It had a fiscal year 2001 budget of $202 million. The medical center, which is a regional center for cardiac surgery and spinal cord

injury, has 238 inpatient beds with a 69-bed extended care center

and a 30-bed spinal cord injury center. The medical center provides

outpatient care through numerous clinics, including the four community clinics named above. This VA health care system also provides ambulatory surgery, rehabilitation, prosthetics, audiology, optometry, and home health care. Specialized programs include PTSD

counseling, Agent Orange and Persian Gulf War screening, alcohol

and drug treatment programs, and programs for homeless veterans. The health care system collaborates with the University of

California at San Diego School of Medicine and operates a large

medical research program.

Balboa Naval Medical Center San Diego is a 392-bed tertiary

medical center that had a fiscal year 2001 budget of over $388 million. It operates a network of clinics located at area military installations and provides emergency and ambulatory care to the active

duty population of all San Diego-based ship and shore commands.

The naval medical center also conducts graduate medical education

with about 20 different medical disciplines. It is a partner in a

sharing agreement with the San Diego VA Healthcare System. Balboa sends its referrals to the TRICARE civilian network, but the

VA medical center is not part of the TRICARE network because its

management believes it cannot compete with the three civilian

medical centers in the area. Balboa is 15 miles from the VA medical center.

Sharing revenue generated between these VA and DoD facilities

in the San Diego area was $117,183 for fiscal year 2001. There are

graduate medical education agreements among the Navy, the VA

and the University of California at San Diego School of Medicine

pursuant to which the VA provides resident training for Navy doctors. The VA also provides outpatient and ancillary services for a

branch DoD clinic, and the facilities reported that they were finalizing an agreement to share a community clinic that will serve veterans and the military community.

However, both facilities’ executives expressed the belief that

sharing opportunities are limited because of differences in patient

populations. Each facility is large, complex and offers all levels of

care with no excess capacity from primary to tertiary care, including complex surgery. Also, the facilities use different financial and

clinical data management systems. They reported that frequent rotations of senior Navy personnel created difficulty in maintaining

March 7, 2002 (1:52 p.m.)
5

working relationships and continuity of shared programs, especially

in the clinical area.

Las Vegas, NV.—The Mike O’Callaghan Federal Hospital at

Nellis AFB outside Las Vegas is a 96-bed Air Force-managed hospital with 52 VA-dedicated beds. The facility opened in 1994. The

VA also has a full spectrum outpatient clinic, a stand alone psychiatric day treatment center, two community-based primary care

clinics, and a community based outreach center in Las Vegas dedicated solely to the care of homeless veterans. Although this is a

unique joint venture of VA and the Air Force’s 99th Medical Group,

each partner maintains separate budget, financial, human resources and clinical data management systems. The Air Force’s

budget for fiscal year 2001 was $30 million and the VA’s was $16.8

million.

While this facility was planned and built as a ‘‘Federal’’ facility,

opportunities to enhance sharing under the Sharing Act have not

been explored or have been abandoned. For example, the two separately maintained pharmacies, one for veterans and another for Air

Force personnel, retirees and family members, could be consolidated. Also, VA’s existing Consolidated Mail Outpatient Pharmacy

system could be utilized by DoD beneficiaries in the region; the

budgeting, accounting, data and human resources management

systems could be combined; management of the separate intensive

care units could be merged, along with surgical operating rooms,

support facilities and staff; and a common medical record could be

established. Such changes would offer dramatic improvements in

efficiency and could promote the establishment of new programs

that would benefit veteran and military beneficiaries alike.

Albuquerque, NM.—The Albuquerque VA Medical Center and

Kirtland AFB Hospital co-location established in 1987 was the inaugural VA-DoD health resources joint venture. There are approximately 186,000 veterans in the area served. In addition to tertiary

care, the facility provides primary and secondary care. The facility

also provides for the referral of specialty care by the Kirtland AFB

clinic to VA physicians. This special partnership offers VA admitting privileges to Air Force physicians. The system currently operates five community based outpatient clinics and has partnered

with federally qualified health centers to offer veterans further access to clinics in 13 rural locations throughout the state. The relationships between these facilities have been significantly altered

over the duration of their partnership. The original arrangement

was that the Air Force operated a separate, 40-bed hospital within

the Albuquerque facility. Air Force health command downsizing

has resulted in a complete inpatient closure, and the Air Force now

purchases all inpatient clinical care services from the VA.

The VA medical center’s fiscal year 2001 budget was $186 mil- lion, and the Air Force’s was $17.6 million. In fiscal year 2001,

total sharing revenue was reported to be $6.8 million. While many

of the observations of lost opportunities to share observed in Las

Vegas do not pertain to Albuquerque, others do. For example, the

Air Force and VA needlessly maintain separate dental clinics with

separate supply chains and central dental laboratory functions. The

Air Force also continues to maintain a management presence as if

March 7, 2002 (1:52 p.m.)
6

it were still operating a separate facility, even though most of its

health care services are duplicates of existing VA activities.

San Antonio, TX.—The South Texas Veterans Health Care System is comprised of the Audie L. Murphy, Satellite Clinic, and

Kerrville Divisions. The Audie L. Murphy Division is a 294-bed tertiary care facility that provides acute care services to approximately 300,000 veterans in south central Texas. The hospital also

contains a 90-bed nursing home unit and a 30-bed spinal cord injury center. The Satellite Clinic Division operates five outpatient

clinics in San Antonio, Corpus Christi, Laredo, McAllen, and Victoria. The Kerrville Division provides 25 acute care beds and 154

nursing home care beds. The system is affiliated with the University of Texas Science Center at San Antonio, and supports a Geriatric Research, Education, and Clinical Center.

Brooke Army Medical Center provides primary, secondary, and

tertiary care to a large beneficiary pool in Texas, Oklahoma, Louisiana, Colorado, Kansas, Missouri, and Panama. Brooke provides

graduate medical education for about 550 students annually. It

also provides emergency trauma care to 50 percent of the civilian

population in San Antonio and houses the world-renown military

Institute of Surgical Research Burn Center. The Army medical center is a new state of the art facility that had a fiscal year 2001

budget of $275.4 million. It has unused bed capacity due to low patient populations. Brook is approximately 17 miles from the VA’s

Audie L. Murphy Division.

Wilford Hall Medical Center at Lackland AFB is a comprehensive health care system and the Air Force’s most important medical

center. The facility has 280 beds and is a major referral center.

Wilford Hall offers a full spectrum of specialty care and has the Air

Force’s only trauma center. This medical center has DoD’s only

allogenic bone marrow transplant center, the U.S. Air Force AIDS/

HIV center, and the only stereo lithography in DoD. More than 600

clinical research projects are in progress. Wilford Hall is an older

facility that will require major upgrades to maintain its accreditation, plus about $40 million in other needed major maintenance

and facility renovations. Its fiscal year 2001 budget was $154 million. The facility is located 11 miles from the VA’s Audie L. Murphy

Division.

The San Antonio Health Council, which is comprised of the leadership from Wilford Hall, Brooke, VA and the University of Texas

Health Sciences Center, is responsible for coordinating healthcare

in the San Antonio area, including sharing. The combined medical

budgets of the Air Force, Army and VA facilities are over $705 million. The DoD sharing revenue was $679,573.

El Paso, TX.—The VA El Paso Health Care System is a modern

ambulatory care center that provides primary and specialized ambulatory services to approximately 74,583 veterans and also operates a community-based outpatient clinic in Las Cruces, NM. The

clinic, completed in 1995, is adjacent to the Beaumont Army Medical Center. There is no VA hospital in El Paso, the closest VA hospital being 500 miles away in Albuquerque. Consultants and feebasis specialists supplement the medical staff. Inpatient care for

acute medical and surgical emergencies is provided through a VAMarch 7, 2002 (1:52 p.m.)
7

DoD sharing agreement with William Beaumont Army Medical

Center. Services that the VA El Paso Health Care System provide

include primary care, urgent care, mental health services, social

work, audiology, radiology, ophthalmology, podiatry, orthopedics,

laboratory services, pharmacy and surgery. The center has a

shared ambulatory surgery suite with eight operating rooms. Affiliation agreements for residency programs in internal medicine and

psychiatry are administered through a consortium agreement with

Texas Tech University and the Army medical center.

Charleston, SC.—Naval Hospital Charleston, now an outpatient

facility, is a 1974-vintage, 350-bed hospital that was downsized as

a result of the 1993 Base Realignment and Closure Commission. It

now serves as an ambulatory care center providing primary and

specialty care for local active duty Navy personnel, family members

and retirees. Its fiscal year 2001 budget was $45.1 million. All

Navy inpatient care is referred to the TRICARE provider network.

Few referrals were made to the Ralph H. Johnson VA Medical Center, which is a designated TRICARE facility located only 6.5 miles

away, reportedly because of a lack of capacity at the VA to handle

additional inpatient workload.

The Ralph H. Johnson VA Medical Center is a primary, secondary, and tertiary care medical center providing acute medical, surgical, and psychiatric inpatient care, as well as primary and specialized outpatient services. The medical center is affiliated with

the Medical University of South Carolina and has one of the leading open-heart surgery programs in the southeastern United

States. It also conducts major medical research in diabetes, lipid

disorders, heart disease, hematology, fetal alcohol syndrome, kidney disease, and rheumatology. Its fiscal year 2001 budget was

$112.5 million. The facility was constructed in 1966 as a 500-bed

acute care hospital. It reports an operating capacity of 115 beds,

but due to a nursing shortage, only 92 beds are available for patient care admissions.

Both the VA and DoD Charleston facilities are outmoded for delivering health care in a modern and efficient manner. However,

the State of South Carolina plans to replace the Medical University

of South Carolina’s academic health center adjacent to the VA

Medical Center. No local plan has been developed, but it is conceivable that the three entities, the Navy, VA and the State of South

Carolina, could become a unique example of cooperation in delivering health care by sharing a new multi-purpose federal-state academic health center for the military and civilian residents of eastern South Carolina.

A regional VA Consolidated Mail Outpatient Pharmacy (CMOP),

one of eight such facilities nationwide, is located in Charleston and

is across the street from the naval hospital compound. It produces

52,000 mailout prescriptions daily for eligible veterans throughout

the southeastern United States. The executive staff of the Naval

Hospital confirmed an awareness of its existence but had neither

visited it nor considered its potential relevance to the naval hospital’s pharmacy workload. The Navy reported difficulty recruiting

and retaining pharmacy technicians because it could not offer competitive salaries for the Charleston area. Because of pharmacy perMarch 7, 2002 (1:52 p.m.)
8

sonnel shortages, the Navy is experiencing difficulty maintaining

its own mailout workload of about 500 daily prescriptions. The

CMOP director informed the staff that the facility could easily accommodate an additional 500-prescription daily workload if Navy’s

requirement could be translated and incorporated into VA’s regional automated order-entry network.

Fayetteville, NC.—The Fayetteville VA Medical Center, constructed in 1939, is primarily a long-term care center with a variety of active outpatient programs. The medical center serves

163,205 veterans and operates 157 beds, including a nursing home

care unit. It provides acute medical, surgical and psychiatric care,

as well as intermediate care. It opened a community-based outpatient clinic in February 1999 in Jacksonville, NC. Through a series of renovation projects, the medical center has a full array of

inpatient and outpatient services. The medical center has affiliation agreements with 16 educational institutions covering 24 different areas of study.

Womack Army Hospital is located about 12 miles from the VA

medical center. Dedicated March 18, 2000, Womack is the Army’s

newest medical center. It serves more than 160,000 eligible beneficiaries. The facility has three buildings, including a seven-floor inpatient tower, and exhibits the latest in technology and innovation.

Some of the services provided include cardiology, hematology-oncology, pulmonology, and endocrinology. Fayetteville and Womack currently use a magnetic resonance imaging (MRI) unit jointly acquired in 1992. The use agreement will expire in May 2002. However, when the new hospital was built, the Army unilaterally purchased a new MRI unit, disregarding their previous MRI sharing.

The result may be increased costs to VA as it sends patients to

Womack for magnetic resonance imaging on a fee basis. The VA

medical center shares other resources with both the Army hospital

and Pope AFB under VA-DoD sharing agreements to augment

health care delivery. Pope AFB is 4.8 miles away from Womack

Army Hospital.

Womack was planned and built without an institutional laundry

on the premise that the VA facility’s laundry would accommodate

the Army’s workload under a sharing agreement. The VA spent

$2.9 million to renovate its laundry for that purpose. However,

Womack withdrew from this agreement because VA failed to maintain necessary minimal quality. Womack now has a 6-year contract

for laundry service with a commercial vendor, and VA’s laundry is

operating at barely over 50 percent of its intended capacity.

Chicago, IL.—North Chicago VA Medical Center, a member of

the VA Great Lakes Health Care System, provides area veterans

with primary medical and psychiatric care, medical subspecialty

care, ambulatory surgery, and physical medicine, rehabilitation,

and supportive ancillary services. Community-based treatment

teams provide both home-based primary medical care and psychiatric care for veterans with serious mental illnesses. The VA

medical center operates the Evanston Primary Care Clinic adjacent

to the Northside Veterans’ Center in Evanston and hosts community health clinics throughout northern Illinois. Its primary affiliates are the Finch University of Health Sciences/Chicago Medical

March 7, 2002 (1:52 p.m.)
9

School. The VA medical center also provides clinical experience to

Navy corpsmen through a sharing agreement with the Great Lakes

Naval Training Center, and it shares the same general military

compound in Waukegan with the training center.

Naval Hospital Great Lakes offers a variety of specialty services.

Although obstetrical services are not available at the naval hospital, such care is provided through local community hospitals. The

naval hospital is part of TRICARE Region 5 under the military’s

new managed health care plan. The TRICARE Service Center offers benefits counseling, referral processing, enrollment processing

and assistance locating providers that accept TRICARE and Medicare. The VA medical center provides the naval hospital with dental and support services and some inpatient, outpatient, and ancillary services. However, neither the Navy’s current economic analysis of the naval hospital nor the VA’s Capital Asset Realignment

for Enhanced Services process addresses an opportunity to enter

into a partnership to preserve essential medical infrastructure, promote military readiness and meet the needs of both beneficiary

populations.

OBSTACLES TO SHARING

In most site visits, the Committee on Veterans’ Affairs staff identified the following systemic obstacles that preclude or discourage

VA and DoD facilities from developing or sustaining meaningful

sharing arrangements:

• Absence of any statutory requirement for health resources

sharing between the departments.

• Inadequate or outdated guidance from the Secretaries of Defense and Veterans Affairs on health resources sharing policy.

• Restrictive regulations, policies and procedures that inhibit

health resources sharing.

• Incompatible methods to reimburse costs of services rendered

to beneficiaries of the other department’s programs.

• Unclear or unstated strategic goals for health resources sharing in either department.

• Absence of sharing goals for regional or facility executives in

either department.

• Incompatible computer systems and healthcare workload reporting systems.

• Incompatible information technologies and lack of common information technology goals, resulting in dual entry of workload, duplicative data and wasteful methods of information retrieval.

Senior Management Issues.—Executive leadership is a key to

meaningful VA-DoD sharing programs. VA and DoD assign executive personnel in their health care systems according to different

internal administrative policies and practices. VA tends to assign

its civil service health executives to facilities for long periods, sometimes entrenching poor management practices and promoting empire building. On the other hand, DoD limits military treatment facility commanders (as well as clinical program directors) to much

March 7, 2002 (1:52 p.m.)
10

shorter assignment periods, typically no more than three years. At

the change of command or reassignment of the VA medical center

executive, agreements between previous executives and commanders may have to be renegotiated or even cancelled.

Health care facility executives of the VA, Army, Navy, Air Force,

and Coast Guard are subject to annual performance evaluations.

These evaluations focus on matters of policy execution with many

common and some unique requirements (for example, readiness in

a military treatment facility). The success or failure of a facility’s

sharing program, however, is rarely evaluated. Executives whose

facilities share ‘‘too much’’ with a partner may be perceived as

eroding the facility’s financial, administrative or clinical foundations to the detriment not only of their facility but also of their careers. Thus, entering into sharing agreements with other federal

agencies can be risky behavior, and may be approached cautiously

or avoided.

Lack of Funding Incentives.—The Committee on Veterans’ Affairs

staff observed no positive funding incentives for health care facilities of either department to provide care for each other’s eligible

beneficiaries when it would be advantageous for the government to

do so. In fact, the advent of TRICARE has introduced a powerful

disincentive to the referral of military patients to nearby VA facilities. The referring military facility under TRICARE rules must

identify a funding source within its allocation to reimburse the VA

facility, but no such identification or payment need be made when

a military patient is referred to the TRICARE network. Also, Committee staff observed that there are few incentives to jointly procure medical services, devices, supplies or capital equipment, even

when the end-use of such goods or services is indistinguishable between the two departments.

OPPORTUNITIES FOR JOINT ACTIVITY

Graduate Medical Education.—Current DoD and VA graduate

medical education programs should be reviewed for opportunities

for greater collaboration. These opportunities would aid coordination of federal subsidies to the teaching hospitals. Both departments’ graduate medical education programs must maintain a sufficient case mix for residency program certifications. Joint DoD and

VA residency programs at co-located sites could ameliorate the effects of DoD military deployments. Maintaining competent specialty residency programs is a critical factor in wartime readiness.

The Committee on Veterans’ Affairs staff believes that DoD programs would benefit from joining VA academic partnerships

through exposure to a more diverse clinical mix. Many of the techniques used in VA surgeries and various other invasive procedures

are needed for combat-trauma cases.

Joint Procurement.—Despite other examples of joint procurements of magnetic resonance imaging equipment, the recent major

capital medical equipment acquisitions by DoD in Fayetteville at

Womack Army Medical Center and El Paso at William Beaumont

Army Medical Center were made without consultation or coordination with nearby or co-located VA facilities. Such independent decisions affect these facilities’ relationships for many years after the

March 7, 2002 (1:52 p.m.)
11

fact, add unnecessary cost, create inefficiency and contribute to further counterproductive decisions in both facilities. These were

clearly lost opportunities for joint procurement. In addition to medical equipment, numerous opportunities exist for joint procurement

of pharmaceuticals, medical supplies and contracted medical care

and support services.

RECOMMENDATION

With the Administration’s broad scale defense reviews, reinforced

by the terrorist attacks of September 11, 2001, DoD appears to be

entering a period of reassessment of its basic military assumptions.

This should affect DoD’s health policy decisions, as well as facility

management and other elements of its health care administration.

With its Capital Asset Realignment for Enhanced Services initiative, the VA is also studying the realignment of its health care capital assets. The Committee on Veterans’ Affairs staff concludes that

as the two departments move ahead, many of the observed organizational barriers and redundancies could be reduced or eliminated,

and new incentives could be created to help achieve greater sharing

of their health resources.

Demonstration Projects.—The barriers the Committee on Veterans’ Affairs, GAO and the Transition Commission identified have

reduced the ability of VA and DoD to maximize efficiencies and the

quality of patient care that Congress intended for their health care

programs. To improve the effectiveness of the existing joint ventures VA and DoD should undertake demonstration projects to:

• Develop and implement integrated and compatible budgets,

reimbursement methodologies, cost accounting systems and

information technology systems; additionally, develop a budgeting and resource allocation process that takes into account

the combined needs of the two departments at each joint venture location, including a demonstration ‘‘unified budget,’’ to

be presented jointly to Congress by the two Secretaries.

• Create an information infrastructure that facilitates data exchange of patient health, financial and management information across the demonstration sites.

• Consolidate the employment and human resources management authorities of title 10 and title 38 of the U.S. Code; use

the new flexibility to develop a hybrid system that incorporates the best of both systems.

• Develop a joint policy staff to identify needs based upon the

combined VA-DoD beneficiary population in conjunction with

each department’s missions; this policy staff should develop a

joint strategic plan to accomplish these missions, including

identifying opportunities for capital infrastructure projects

and joint procurement of equipment, supplies and services.

• Establish a new federal facility in Charleston, SC, that consolidates the Charleston Naval Hospital, the Johnson VA

Medical Center and the Medical University of South Carolina

academic health center.

March 7, 2002 (1:52 p.m.)
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2See Appendix II for text of bill.

• Consolidate VA health care at Womack Army Medical Center,

Fayetteville, NC; build a new VA ambulatory and long-term

care facility that adjoins Womack.

• Develop a joint patient medical record and combine the Government Computerized Patient Record initiative with VA’s

Computerized Patient Record System and DoD’s Composite

Health Care System.

• Develop a ‘‘certificate of need’’-type requirement for any VA or

DoD capital medical acquisition investment or new infrastructure requirements in the 21 co-located VA-DoD facility sites

identified by GAO.

Additionally, VA and DoD should mandate a specific savings

goal, such as a quantified level of savings over five years based on

their combined medical outlays nationwide. The departments

should prepare and submit a joint report of such savings achieved

through resource sharing initiatives. The departments should also

submit an acquisition plan specifying the medical equipment, supplies, clinical services and support services to be jointly procured.

Congress should consider legislation to achieve improved access,

readiness enhancement and greater efficiencies in this major

health investment by the American people. On July 27, 2001, the

Chairman of the Committee on Veterans’ Affairs introduced H.R.

2667, the Department of Defense-Department of Veterans Affairs

Health Resources Access Improvement Act of 2001. 2

The bill would:

1. Establish findings of Congress that, after nearly two decades

of legislative authority, Department of Veterans Affairs (VA)

and Department of Defense (DoD) sharing of health resources

is inadequate given the still unfulfilled potential of two independent appropriated Federal health care providers to work

together; and the sense of Congress that the departments

should explore new ways to improve health resource sharing.

2. Establish a health care facilities integration demonstration

project, with five qualifying sites selected jointly by the Secretaries of Veterans Affairs and Defense, to identify advantages and challenges of integrating co-located military and

VA health care facilities.

3. Require a unified management system be adopted in the

qualified demonstration sites, including budget and financial

management; health care staffing and assignment; and, medical information and information technology systems that provide standards of information quality equivalent to those

adopted for the departments at large.

4. Empower each Secretary to waive regulations and administrative policies that impede the purposes of the demonstration project with a report of requested waivers and dispositions of requests.

5. Authorize the Secretary of Defense to appoint, using authorities available to the Secretary of Veterans Affairs, under

Chapter 74 of Title 38, United States Code, civilian health

March 7, 2002 (1:52 p.m.)
13

care personnel to duties in facilities unified under the demonstration project.

6. Authorize, to the extent practicable, the same health benefit

and co-payment rates for VA and Defense beneficiaries in facilities participating in the demonstration project; prohibit reductions in existing benefit levels or increases in co-payment

rates applicable to any patient under care in a unified facility

under the demonstration project.

7. Authorize to be appropriated to each department, $10 million

for fiscal year 2002 and $25 million for each succeeding year,

during the term of the demonstration project, to be used to

establish the demonstration project and underwrite further

enhancements to VA-DoD sharing.

8. Require the Secretaries of VA and Defense to submit within

two years a joint prospectus for construction of a new, more

accessible and unified Federal health care facility in an area

where co-located VA and DoD facilities need replacement.

9. Require that both Secretaries study, develop, and implement

shared affiliation agreements for graduate medical education

at demonstration project sites.

10. Require the Secretaries to share health resources when such

sharing is feasible and consistent with national policy.

11. Rescind requirement that VA maintain a maximum number

of authorized, and a minimum number of operating, hospital

and nursing home beds in conjunction with VA-DoD military

contingency support.

12. Require Secretaries to submit a final report eight months

prior to termination of the demonstration project, and terminate demonstration project on September 30, 2006.

H.R. 2667 will be included in the legislative agenda of the Committee on Veterans’ Affairs for consideration during the second session of the 107th Congress.

March 7, 2002 (1:52 p.m.)
14

APPENDIX I

SITE VISITS and CONTACTS

Greater Los Angeles VA Healthcare System, West Los Angeles, CA,

February 20, 2001.

Kenneth Clark, Director VA Desert Pacific Healthcare Network

Ronald Norby, Deputy Network Director/Clinical Services Officer VISN 22

Philip P. Thomas, Chief Executive Officer, GLA

Charles Dorman, Chief Operating Officer, GLA

Dr. Dean Norman, Chief of Staff, GLA

Dr. Erika Scremmin, Chief of Physical Medicine/Rehabilitation,

GLA

Dr. Phillis Guze, Chief of Medicine, GLA

Dr. Robert Eli, Vice President for Mental Health, GLA

Steve Berman, Chief of Community-Based Services, GLA

Lynn Carrier, Vice President for Administration and Support

Services, GLA

Donna Bieter, Vice President for Clinical Support Services and

Nurse Executive, GLA

Gloria Martinez, Vice President for Ambulatory and Primary

Care, GLA

Dr. Michael Mahler, Vice President for Specialty and HospitalBased Services, GLA

VA San Diego Healthcare System and Balboa Naval Medical Center, San Diego, CA, February 21, 2001.

Ronald Norby, Deputy Network Director, VA Desert Pacific

Healthcare Network

Gary Rossio, CEO, VASDHS

Jacqueline G. Parthemore, MD, Chief of Staff, VASDHS

Janet Jones, RN ACOS/Nursing and Patient Care Services,

VASDHS

Sarah Simpkins, DDS, VISN 22/DoD Coordinator

Robert Stevens, Administrative Coordinator, External Sites,

VASDHS

Cindy Butler, Public Affairs Officer, VASDHS

Capt. Kristine Minnick, Director, TRICARE Southern California, Region 9

Capt. William Roberts, Deputy Commander, Naval Medical

Center, San Diego

Capt. Elaine Melissa Kaime, Breast Health Center

Capt. Rick Cole, Nuclear Medicine

Cmdr. Muying Dow, Pharmacy

Douglas Sayers, Public Affairs Officer, Naval Medical Center,

San Diego

Dr. Ron Jackson, Civilian Scientist, Defense Spatial Orientation Center

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Mike O’Callaghan Federal Hospital, Las Vegas, NV, February 22,

2001.

Ron Norby, Deputy Director, VA Desert Pacific Healthcare

Network

John Hempel, CEO, VA Southern Nevada Healthcare System

Sharon Joseph, Acting Chief Operations Officer, VASNHS

Anthony Salem, Chief of Staff, VASNHS

Dan Gerrard, Chief Administrative Officer MOFH

Col. Philip La Kier, 99th Medical Group Commander, CEO

MOFH

Col. John Butler, Deputy Commander 99th Medical Group

Col. Stephen Schmidt, Commander, Dental Squadron

Col. Mary Moran, Commander, Medical Operations Squadron

Lt. Col. Evelyn Otero-Ruiz, Operations Officer, Medical Operations Squadron

Lt. Col. Danny Seanger, Commander, Medical Support Squadron

Lt. Col. Verba Moore, Commander, Aerospace Medicine Squadron

New Mexico VA Health Care System and VA Medical Center –

Kirtland AFB, Albuquerque, NM, February 23, 2001.

Arlene Martin, AF Joint Venture Assistant Director

Smith Jenkins, VISN 18 Director, NMVASCS

Patricia A. McKlem, Interim Chief Executive Officer,

NMVAHCS

Barbara K. Chang, M.D., M.A., Chief Medical Officer,

NMVAHCS

Ron Richter, Chief, Engineering, Acting Chief Operating Officer, NMVAHCS

Cynthia Nuttall, R.N., Medical Staff Coordinator, NMVAHCS

Catherine Beesley, Joint Venture Director, Management Analyst, CMO, NMVAHCS

Col. Marconi-Dooley, Medical Group Commander

Col. Byers, Medical Group Deputy Commander

Col. Williams, Chief of Professional Services

Maj. Pascoe, Support Squadron Commander

First Naval Hospital and Ralph H. Johnston, VAMC, Charleston,

SC, April 11, 2001.

Capt. Alana Benton, Commanding Officer

Capt. Ken Meredith, Executive Officer

Robert A. Perreault, Director

Tony Bennett, Chief Financial Officer

Larry Labbate, Physician, Mental Health Service

Patti Snodgrass, Chief Resident, Mental Health Service

T. Lynn McFall, Chief, Physical Medicine and Rehab Service

Philip Freedland, Chief, Radiology Service

Sarah D. Williams, Associate Nurse Executive

Denise R. Carey, Associate Medical Center Director for Patient

Care Services

Avtar K. Singh, Chief, Path-Lab Medicine Service

William R. Tyor, Chief, Neurology Service

Bernard G. Williams, Chief, Dental Service

Nancy G. Mikell, Chief, Pharmacy Service

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Diane Milligan, Coordinator, Surgical Service

Dexter Hood, Health Administration Officer

Lt. Cmdr. Jeff Plummer, Legislative Liaison–SECNAV

Brooke Army Medical Center, San Antonio, TX, April 17, 2001.

Maj. Gen. Lee P. Rodgers, CG Wilford Hall Medical Center

Brig. Gen. Daniel Perugini, Commander, GPRMC and BAMC

Col. Glenn Taplin, Chief of Staff, GPRMC

Col. Greg Anders, Medical Director, GPRMC

Maj. Tim Edmon, Director of Managed Care, GPRMC

Rosa Wages, Health Systems Specialist, GPRMC

Col. Maryann McAfee, Acting Deputy Commander for Clinical

Services, BAMC

Col. Martin Fisher, Deputy Commander for Administration,

BAMC

Lt. Col. Carlos Angueira, Dept of Health Plans Management,

BAMC

Joe Heer, Management Analyst, BAMC

Col. Thomas Peters, Administrator, WHMC

Col. Philip J. Perucca, Chief of the Medical Staff, WHMC

Lt. Col. Donna Wallace, Plan/Program Analysis, WHMC

Sandra Berrigan, Associate Director for Patient Care, VA

Louise Parker, Assistant to the Chief of Staff, VA

VA El Paso Health Care System and William Beaumont Army Medical Center, El Paso, TX, April 18, 2001.

Byron K. Jaqua, CEO, El Paso VA Health Care System

Dr. Stephen Shapiro, Chief Medical Officer, El Paso VA Health

Care System

Everett Ray Perdue, Special Assistant to the CEO

Brenda James, Chief Coordinated Care and Social Work

Service

Albert Hernandez, Administrative Officer to the CMO

Col. Carla G. Hawley-Bowland, Commander, BAMC

Col. Homer J. Lemar, Acting Deputy Commander for Clinical

Services, BAMC

Col. Iris West, Acting Deputy Commander for Patient Services/

Nursing, BAMC

Lt. Col. Leo F. Voepel, Escort Officer, Business Management

Division, BAMC

Lt. Col. Al W. Moran, Chief, Business Management Division,

BAMC

Maj. Mark C. Wilhite, Acting Chief of Staff, BAMC

Laverne A. Rupkalvis, Business Management Division, BAMC

Fayetteville VA Medical Center and Womack Army Medical Center,

Fayetteville, NC, May 10–11, 2001.

Daniel Hoffman, Director, VISN 6

Janet Stout, Medical Center Director FVAMC

James Skidmore, Director for Operations FVAMC

Lynn Cooper, RN, Director Patient Care Services FVAMC

Alan Shernoff, DDS, Acting Chief of Staff FVAMC

Joseph Albanese, Chief, Business Office FVAMC

Thomas Hallum, Staff Assistant to the Director FVAMC

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Eugene Paul, Minority Veteran/Homeless Coordinator FVAMC

Paul Reid, AFGE Local 2080 President

Norma Byrd, Public Affairs Officer FVAMC

Bonnie Henderson, VBA Regional Office, Winston-Salem

Gerald York, VA Regional Office, Winston-Salem, NC

Col. Matteson, WAMC Commander

Col. Ray Terrill, WAMC Chief of Staff

Lt. Col. Brian Canfield, WAMC Chief Directorate of Business

Operations

Lt. Col. John Lee, WAMC Executive Officer

Maj. David Petray, WAMC Chief Resource Management

Division

Jan Delaney, WAMC Management Analyst

Chuck Burden, WAMC Chief Clinical Operations Division

Shannon Speight–Lynch, WAMC Public Affairs Officer

North Chicago VA Medical Center, Chicago, IL, June 8, 2001.

Patrick Sullivan, Acting Director

Tariq Hassan, MD, Chief of Staff

Mary Roseborough, MSN, Associate Director for Patient Services/Nurse Executive

Frank Maldonado, MD, Chief of Medicine

Darryl Holst, Leader, Facility Management

Chuck Loring, Facility Management

Terry Martin, Administrative Assistant to the Chief of Staff

Doug Shouse, Staff Asst. to the Director

Kathryn Maginnis, Coordinator for CARES, VAHQ Staff

Jack Hetrick, Deputy VISN Director (at North Chicago VAMC

meeting)

Larry Wilson, HSS for VISN 12 (at Great Lakes Naval Hospital meeting)

Naval Hospital Great Lakes, Great Lakes, IL, June 8, 2001.

Capt. Elaine C. Holmes, MC, Commanding Officer

Capt. Raymond J. Swisher, MSC, Executive Officer

Capt. Mathew Ausmus, DC, Director of Surgical Services

(Acting)

Capt. Deborah Gray, NC, Director of Nursing Services

Cmdr. Andrea Rosemond, NC, Director of Fleet Medicine

(Acting)

Cmdr. Deborah Mathews, NC, Head Quality Assurance

(Acting)

Cmdr. Joel Cook, MC, Director of Ancillary Services

Cmdr. Martie Slaughter, MSC, Director for Administration

Lt. Cmdr. Sharon Moser, MSC, Director of Resources

Management

Lt. Cmdr. Jennifer Anders, MC, Director of Primary Care

(Acting)

Lt. James Stilley, MSC, Head of Managed Care Department

(Acting)

Lt. Roland Fahie, MSC, Head of Blood Banking Services

Division

Lt. Thomas Matt, MSC, Assistant Director of Resources

Management

March 7, 2002 (1:52 p.m.)
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Lt. Jeff Paul, MSC, Head of Personnel Department

Lt. j.g. Sophie Alexander, MSC, Utilization Review Division

Master Chief Petty Officer Richard Kough, Command Master

Chief

Petty Officer 1st Class Sam Collins, Plans/Operations/Medical

Intelligence

VA-DoD Resource Sharing Meeting, Washington, D.C., June 27,

2001.

Maj. Gen. Hal Timboe, Medical Corps, Commanding General,

North Atlantic Regional Medical Command and Walter Reed

Army Medical Center

Rear Adm. K. Martin, Commander, NNMC, Bethesda

Patrick Ryan, Staff Director, HVAC

Art Wu, Deputy Staff Director, HVAC

John Bradley, Staff Director for Health, HVAC

Veronica Crowe, Professional Staff Member, HVAC

Len Sistek, Minority, Oversight and Investigation, HVAC

Susan Edgerton, Minority Staff Director for Health, HVAC

Debra Wada, Minority Professional Staff Member, HASC

Ed Wyatt, Professional Staff Member, HASC

Rebecca Hyder, Legislative Director, Rep. Bilirakis

Art Hamerschlag, Deputy Chief Financial Officer, VHA

Sheila McCready, VHA

Sandy Garfunkel, Director, VAMC, Washington, D.C.

Earl Newsome, VAMC, Washington, D.C.

Edward Demarest, VA–ADOSH

Doug Dembling, VA–OCLA

Ann C. Barr, GAO

Lt. Col. James Grier, Army OCLL

Lt. Cmdr. Jeff Plummer, Navy–OCLL

March 7, 2002 (1:52 p.m.)
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A P P E N D I X II

H.R. 2667, DEPARTMENT OF DEFENSE–DEPARTMENT OF VETERANS

AFFAIRS HEALTH RESOURCES ACCESS IMPROVEMENT ACT OF 2001

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