United States General Accounting Office 

GAO Report to Congressional Requesters 

April 2004 VA HEALTH CARE 

Resource Allocations 

to Medical Centers in 

the Mid South 

Healthcare Network 

GAO-04-444 

Highlights of GAO-04-444, a report to 

congressional requesters 

Since fiscal year 1997, the 

Department of Veterans Affairs 

(VA) has relied primarily on its 21 

health care networks to allocate 

resources to its medical centers. 

VA headquarters also directly 

allocates some resources to the 

medical centers. In addition, 

medical centers collect resources 

from third-party insurance 

payments and other sources. 

VA provides general guidance to 

networks for resource allocation to 

medical centers, but permits 

variation in networks’ allocation 

methodologies. Representatives 

from veterans groups and others 

have expressed concerns regarding 

resource allocations to medical 

centers in Network 9 (Nashville) 

known as the Mid South Healthcare 

Network. 

GAO was asked to report for fiscal 

year 2002 (1) the amount of 

resources medical centers in the 

network received and the source of 

those resources and (2) the basis 

on which medical centers in the 

network received these resources. 

GAO was also asked to supplement 

findings for fiscal year 2002 with 

information for fiscal years 1997 

through 2003. 

www.gao.gov/cgi-bin/getrpt?GAO-04-444. 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Cynthia A. 

Bascetta at (202) 512-7101. 

April 2004 

VA HEALTH CARE 

Resource Allocations to Medical Centers 

in the Mid South Healthcare Network 

The six medical centers in Network 9 (Nashville), known as the Mid South 

Healthcare Network, received a total of about $1 billion in resources in fiscal 

year 2002. The network allocated 83 percent of the total, or $825 million, to 

its medical centers. The medical centers received smaller amounts from VA 

headquarters (9 percent of the total or about $93 million) and resources from 

collections (7 percent of the total or about $73 million). As in fiscal year 

2002, the network allocated more than 80 percent of medical center 

resources each year from fiscal years 1997 through fiscal year 2003. 

Medical centers in Network 9 (Nashville) received about 77 percent of their 

resources, or $760 million, in fiscal year 2002 based on fixed-per-patient 

amounts, referred to as fixed-capitation amounts, for patient workload and 

case mix. Patient workload is the number of patients treated, and case mix 

is a classification of patients into categories based on health care needs and 

related costs. The largest portion of these resources allocated on this basis 

came from the network while a smaller portion came from VA headquarters. 

Medical centers in the network received about 23 percent of their total 

resources, or $232 million, in fiscal year 2002 based on a variety of other 

factors such as network managers’ determination of the financial needs of 

medical centers during the course of the year. These resources came from 

the network, VA headquarters, and collections. Since VA changed its 

resource allocation system in fiscal year 1997, the medical centers in the 

network received about the same portions of their resources based on fixedcapitation amounts and on a variety of other factors each year from fiscal 

years 1997 through 2003. 

VA agreed with GAO’s findings. 

Percentage, Amounts, and Basis of Approximately $1 Billion In Resources Received by 

Medical Centers in Network 9 (Nashville), Fiscal Year 2002 
Contents 


Letter 

Results in Brief 


Background


Medical Centers in Network 9 (Nashville) Received About 


$1 Billion in Fiscal Year 2002 from the Network and Other 

Sources 

Medical Centers in Network 9 (Nashville) Received Most of Their 

Resources Based on Allocations Using Fixed-Capitation 

Amounts for Patient Workload and Case Mix 

Expenditures Made by the Network 9 (Nashville) Office Increased 

by Approximately $22 Million Since Fiscal Year 1997 

Agency Comments 

1 

3 

5 

7 

9 

18 

21 

Appendix I Objectives, Scope, and Methodology 

Appendix II 	 Staffing Resources Available at the Tennessee Valley 

Healthcare System’s Nashville and Murfreesboro 

Locations 

Appendix III 	 Network 9 (Nashville) Office Staff and Their 

Responsibilities, Fiscal Years 1997 through 2002 

Appendix IV Comments from the Department of Veterans Affairs 35 

Appendix V GAO Contact and Staff Acknowledgments 36 

GAO Contact 36 

Acknowledgments 36 

Related GAO Products 37 

Page i GAO-04-444 VA Medical Center Resources 

22 

26 

33 
Tables 

Table 1: Network 9 (Nashville) Medical Centers, Patients, and Staff, 

Fiscal Year 2002 

Table 2: Resources Provided to Network 9 (Nashville) Medical 

Centers in Fiscal Year 2002, by Source 

Table 3: Allocations to Medical Centers from the Network 9 

(Nashville) Reserve Fund, Fiscal Year 2002 

Table 4: Expenditures Made by the Network 9 (Nashville) Office, 

Fiscal Year 2002 

Table 5: Number of Network 9 (Nashville) Office Staff Positions, 

Fiscal Years 1997 through 2002 

Table 6: Largest Administrative and Medical Center Support Staff 

Decreases at Nashville and Murfreesboro, Fiscal Year 2000 

to Fiscal Year 2002 

Table 7: Largest Changes in Patient Care Staff at Nashville and 

Murfreesboro Locations, Fiscal Year 2000 to Fiscal Year 

2002 

Table 8: Tennessee Valley Healthcare System’s Patients and Patient 

Care Staff, Fiscal Year 2000 and Fiscal Year 2002 

Table 9: Other Staff Located at Murfreesboro, Fiscal Year 2002 

Table 10: Position Titles and Responsibilities for Network 9 

(Nashville) Office Positions, Fiscal Years 1997 through 

2002 

5 

8 

16 

19 

20 

28 

30 

30 

31 

33 

Figures 

Figure 1: Percentage and Amounts of Approximately $1 Billion in 

Resources Medical Centers Received Based on FixedCapitation Amounts for Patient Workload and Case Mix, 

Fiscal Year 2002 

Figure 2: Percentage and Amounts of Approximately $1 Billion in 

Resources Medical Centers Received Based on a Variety 

of Factors Other Than Fixed-Capitation Amounts for 

Patient Workload and Case Mix, Fiscal Year 2002 

Figure 3: Number of Staff at Nashville and Murfreesboro Locations, 

Fiscal Year 2000 and Fiscal Year 2002 

Figure 4: Number of Administrative and Medical Center Support 

Staff at Nashville and Murfreesboro Locations, Fiscal Year 

2000 and Fiscal Year 2002 

10 

15 

27 

28 

Page ii GAO-04-444 VA Medical Center Resources 
Figure 5: Number of Patient Care Staff at Nashville and 

Murfreesboro Locations, Fiscal Year 2000 and Fiscal Year 

2002 

Abbreviations 

CMOP Consolidated Mail Outpatient Pharmacy 


DOD Department of Defense 


DRG diagnostic related group 


DSS Decision Support System 


ELC Executive Leadership Council 


FTEE full time equivalent employees 


MCAC Mid South Customer Accounts Center 


PTSD post-traumatic stress disorder 


TVHS Tennessee Valley Healthcare System


VA Department of Veterans Affairs 


VERA Veterans Equitable Resource Allocation 


VHA Veterans Health Administration 


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Page iii GAO-04-444 VA Medical Center Resources 

 29 
United States General Accounting Office 

Washington, DC 20548 

April 21, 2004 

The Honorable Bart Gordon 

House of Representatives 

The Honorable Jim Cooper 

House of Representatives 

The Department of Veterans Affairs (VA) has changed the way it allocates 

resources to its medical centers1

 in recent years. Since fiscal year 1997, VA 

has moved from a centralized allocation system—in which VA 

headquarters allocated resources directly to VA medical centers—to a 

more decentralized system in which VA headquarters allocates most of its 

resources to VA’s 21 health care networks. The networks then allocate 

these resources to their respective medical centers. VA headquarters also 

directly allocates some additional resources to the medical centers. In 

addition, medical centers collect resources from third-party insurance 

payments and other sources. While implementing this new resource 

allocation process, VA increased the number of patients it treated from 

3.1 million to 4.7 million from fiscal years 1997 through 2002 and received 

annual appropriations for medical care programs that increased from 

$17 billion to $21 billion. 

We and others have examined how VA uses the Veterans Equitable 

Resource Allocation (VERA) system to allocate resources to the 

networks.2

 VERA is a national, formula-driven approach that VA uses to 

allocate most of its resources to networks based primarily on two factors 

that experts generally recognize as key principles of health care resource 

allocation—patient workload and case mix. Patient workload is the 

number of veterans treated. Case mix is a classification of patients into 

1

Medical centers typically include one or more hospitals as well as other types of health 

care facilities such as outpatient clinics and nursing homes. 

2

U.S. General Accounting Office, VA Health Care: Allocation Changes Would Better Align 

Resources with Workload, GAO-02-338 (Washington, D.C.: Feb. 28, 2002); U.S. General 

Accounting Office, VA Health Care: More Veterans Are Being Served, but Better Oversight 

Is Needed, GAO/HEHS-98-226 (Washington, D.C.: Aug. 28, 1998); U.S. General Accounting 

Office, VA Health Care: Resource Allocation Has Improved, but Better Oversight Is 

Needed, GAO/HEHS-97-178 (Washington, D.C.: Sept. 17, 1997); RAND, An Analysis of 

Potential Adjustments to the Veterans Equitable Resource Allocation (VERA) System 

(Santa Monica, California: 2003); and Price Waterhouse LLP and The Lewin Group, Inc., 

Veterans Equitable Resource Allocation Assessment-Final Report, Mar. 27, 1998. 

Page 1 GAO-04-444 VA Medical Center Resources 
categories based on their health care needs and related costs. Using 

workload and case-mix data, VERA allocates a fixed amount of resources 

for each veteran in a case-mix category. These amounts are often referred 

to as capitation. By contrast, VA does not require that networks use a 

formula-driven approach, like VERA, to allocate resources to medical 

centers. Instead, VA provides general guidance to networks for allocating 

resources to medical centers that permits variation in the network 

allocation methodologies to take into account varying local conditions. 

Representatives from veterans groups and others in Network 9 (Nashville), 

also known as the Mid South Healthcare Network, have expressed 

concerns about the allocation of resources to the medical centers in 

Network 9 (Nashville). These concerns have focused on the total amount 

of resources allocated to the network’s largest medical center, the 

Tennessee Valley Healthcare System (TVHS), which is located in Nashville 

and Murfreesboro; the basis on which medical centers in the network 

receive their resources; and to what extent network office expenditures 

have increased in recent years. 

You asked us to determine for fiscal year 2002 (1) the amount of resources 

medical centers in the network received and the source of those 

resources, (2) the basis on which medical centers in the network received 

these resources, and (3) the extent to which network office expenditures 

were greater than in fiscal year 1997 and the primary reasons accounting 

for any increase. To place this information in context, you asked us to 

supplement our findings for fiscal year 2002, the most recent year for 

which complete data were available at the time of our analysis, with 

information for fiscal years 1997 through 2003. 

To determine the amount of resources medical centers in the network 

received and the sources of those resources in fiscal year 2002, we 

categorized information in VA and Network 9 (Nashville) financial reports 

on resources available to medical centers by the source of those 

resources: Network 9 (Nashville), VA headquarters, and collections. 

Because resources for the TVHS medical center and the Network 9 

(Nashville) office are combined in the same financial accounts, we used 

financial reports maintained by TVHS to separate out financial information 

for the TVHS medical center. We developed estimates on similar 

information for fiscal years 1997 through 2001 and 2003 based on these 

and other data. To determine the basis on which medical centers in the 

network received resources in fiscal year 2002, we obtained and analyzed 

documents that described the allocation methodology used by the network 

and VA headquarters. We relied on VA data, interviews with VA officials, 

Page 2 GAO-04-444 VA Medical Center Resources 
and on our prior work to calculate the extent of allocations based on 

fixed-capitation amounts for patient workload and case mix. We 

developed estimates on similar information for fiscal years 1997 through 

2001 and 2003 based on these and other data. We limited our review to 

how resources were allocated to medical centers and did not analyze how 

medical centers in the network spent their allocations to deliver health 

care. To examine the extent to which network office expenditures were 

greater than in fiscal year 1997, we used financial reports maintained by 

TVHS to separate out financial information for the network office from the 

TVHS medical center resources and other data we obtained from the 

network office. We used these data to analyze changes in network staffing 

and other network office functions from fiscal years 1997 through 2002. 

We also interviewed network and VA headquarters officials about the roles 

and responsibilities of network office staff. To better understand the 

issues of concern for all three objectives, we conducted a site visit to 

interview officials at the network office located in Nashville and at the 

TVHS locations in Nashville and Murfreesboro. In doing our work, we 

tested the reliability of the data and determined they were adequate for 

our purposes. For a complete description of our scope and methodology, 

see appendix I. We conducted our work from March 2003 through April 

2004 in accordance with generally accepted government auditing 

standards. 

The six medical centers in Network 9 (Nashville) received a total of about 

$1 billion in resources in fiscal year 2002. These resources came from 

three sources: the network, VA headquarters, and resources collected by 

the medical centers. The network allocated the largest amount

83 percent of the total or $825 millionto its medical centers. VA 

headquarters allocated the next largest amount—9 percent of the total or 

approximately $93 milliondirectly to medical centers in Network 9 

(Nashville). In addition to these allocations, the medical centers collected 

other resources—7 percent of the total or about $73 million—from thirdparty insurance payments, copayments, and reimbursements for services 

provided to non-VA health care providers. The combined resources from 

the network, VA headquarters, and resources from collections for each 

medical center ranged from about $93 million for the Huntington medical 

center to about $291 million for TVHS. Medical centers in the network 

have relied on the network to provide most of their resources since VA 

changed its resource allocation system in fiscal year 1997. From fiscal year 

1997 through fiscal year 2003, Network 9 (Nashville) allocated more than 

80 percent of medical center resources each year. 

Results in Brief 

Page 3 GAO-04-444 VA Medical Center Resources 
Medical centers in Network 9 (Nashville) received about 77 percent of 

their resources, or $760 million, in fiscal year 2002 based on fixedcapitation amounts for patient workload and case mix. The network 

allocated a large portion of these resources, about $742 million, to its 

medical centers on this basis. To allocate these resources, the network 

classified its patient workload into three categories based on case mix, 

which resulted in medical centers receiving higher fixed-capitation 

amounts for patients with greater health care needs. VA headquarters also 

allocated about $19 million in resources directly to medical centers based 

on fixed-capitation amounts for patient workload and case mix. In 

addition to these resources, medical centers received about 23 percent of 

their resources, or $232 million, based on a variety of factors other than 

fixed-capitation amounts for patient workload and case mix. Of these 

$232 million in resources, $84 million came from Network 9 (Nashville), 

$75 million came from VA headquarters, and $73 million came from 

collections. For example, the network allocated about $33 million from its 

network reserve fund for unexpected contingencies based on network 

managers’ determination of the financial needs of medical centers during 

the course of the year. Since VA changed its resource allocation system in 

fiscal year 1997, medical centers in Network 9 (Nashville) received about 

three-quarters of their resources based on fixed-capitation amounts and 

about one-quarter based on a variety of other factors each year from fiscal 

years 1997 through 2003. 

Expenditures made by the network office increased from about $1 million 

to about $23 million from fiscal years 1997 through 2002, driven largely by 

spending for the consolidation of information technology and for staffing 

expenditures. Network office expenditures for information technology 

increased, in part, because the network assumed the costs of contracts the 

medical centers had previously paid for software licenses and information 

technology services. These expenditures represented $9.6 million or 

approximately 41 percent of total network office expenditures in fiscal 

year 2002. Expenditures for network office staff increased primarily 

because the network consolidated positions formerly located at the 

medical centers to a central location and added positions to handle an 

increased volume of insurance collections. The network consolidated its 

collections operations at Murfreesboro, Tennessee to increase the 

efficiency of collection operations. In addition to collections staff 

positions, the network increased the number of other network staff to 

improve network operations. Total network office staff expenditures 

accounted for $8 million of the network office’s total expenditures in fiscal 

year 2002—$5 million for collections staff and $3 million for other network 

office staff. 

Page 4 GAO-04-444 VA Medical Center Resources 
Background 

In commenting on a draft of this report, VA agreed with our findings. 

Network 9 (Nashville) is composed of a network office in Nashville, 

Tennessee; six medical centers located in three states; and 27 communitybased outpatient clinics. In fiscal year 2002, about 1 million veterans lived 

in the area served by the network. In that year, the six medical centers in 

the network treated about 208,000 patients or 20 percent of the veterans 

who lived in the area served by the network. (See table 1.) The largest 

medical center in the network is TVHS, which has two main locations— 

one in Nashville and the other in Murfreesboro, Tennessee. TVHS served 

more than twice as many patients and had more than three times the 

number of employees as the smallest medical center in the network in 

fiscal year 2002. For more detailed information on staff resources at 

TVHS’s two locations, which were integrated to form TVHS in fiscal year 

2001, see appendix II. 

Table 1: Network 9 (Nashville) Medical Centers, Patients, and Staff, Fiscal Year 2002 

Staff 


Inpatients Outpatient (full-time 


Medical center Patientsa treatedb visitsb employees)


Tennessee Valley Healthcare 

System (TVHS), Tenn. 61,120 9,490 463,578 2,321 

Memphis, Tenn. 35,440 7,559 294,373 1,723 

Louisville, Ky. 31,281 4,800 317,863 1,121 

Mountain Home, Tenn. 28,187 5,401 247,170 1,288 

Lexington, Ky. 26,963 5,391 267,327 1,245 

Huntington, W. Va. 25,378 3,570 252,887 

Total 208,369 36,211 1,843,198 8,395 

Source: VA. 

a

The number of patients using health care services as counted by unique or unduplicated social 

security numbers. Each patient is counted one time, regardless of how many visits each patient 

makes. 

b

The number of inpatients treated and the number of outpatient visits are not based on unique or 

unduplicated social security numbers. 

Network 9 (Nashville) has received increased allocations each year under 

VERA to provide resources for medical centers to treat their growing 

patient workload. From fiscal year 1997 to fiscal year 2002, the number of 

patients medical centers in the network treated increased by 27 percent. 

To meet patient health care needs, the network received $700 million in 

resources from VERA in fiscal year 1997, and by fiscal year 2002 the 

Page 5 GAO-04-444 VA Medical Center Resources 

697 
network’s allocations from VERA had risen to $849 million—a 21 percent 

increase. The network has been responsible for developing a method to 

allocate these VERA resources to its medical centers. VA headquarters 

provides general guidance to networks on the principles they should use 

when developing their allocation methodologies, but does not require that 

networks use patient workload or case mix in their allocation 

methodologies.3 

Using fixed-capitation amounts for patient workload and case mix are 

guiding principles recognized by experts on the design of health care 

payment systems and implemented in practice by major health care 

programs such as Medicare and Medicaid.4

 Medicare and Medicaid, for 

example, use fixed-capitation amounts to provide managed care plans 

with an incentive to operate efficiently by placing them at risk if their 

expenses exceed the payment amount. Our report on VERA in February 

2002 also concluded that VERA provides a reasonable approach to 

resource allocation, in part because VERA allocates resources to the 

networks based primarily on the use of fixed-capitation amounts for 

patient workload and case mix.5

 VERA provides fixed-capitation amounts 

for each case-mix category that are the same for each network and are 

intended to reflect VA’s average costs instead of historical local costs. 

In addition to resources that VA allocates to its medical centers from the 

network and headquarters, medical centers also collect other resources 

3

VA policy provides the following 10 guiding principles to which networks shall adhere 

when developing network allocation methodologies: 1) be readily understandable and 

result in predictable allocations, 2) support high quality healthcare delivery in the most 

appropriate setting, 3) support integrated patient-centered operations, 4) provide 

incentives to ensure continued delivery of appropriate special care, 5) support the goal of 

improving access to care, 6) provide adequate support for the department’s research and 

education missions, 7) be consistent with eligibility requirements and priorities, 8) be 

consistent with the network’s strategic plans and initiatives, 9) promote managerial 

flexibility and innovation, and 10) encourage increases in alternative revenue collections. 

Veterans Health Administration (VHA), Department of Veterans Affairs, Network Resource 

Allocation Principles, VHA Directive 97-054 (Washington, D.C.: Oct. 30, 1997). 

4

For a discussion of health care programs that use fixed-capitation amounts for patient 

workload and case mix, see John Holahan and Shinobu Suzuki, “Medicaid Managed Care 

Payment Methods and Capitation Rates in 2001,” Health Affairs, vol. 22, no.1 (2003); 

Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment 

Policy (Washington, D.C.: 2003); and Nigel Rice and Peter C. Smith, “Capitation and Risk 

Adjustment in Health Care Financing: An International Progress Report,” The Milbank 

Quarterly, vol. 79, no.1 (2001). 

5

GAO-02-338. 

Page 6 GAO-04-444 VA Medical Center Resources 
Medical Centers in 

Network 9 (Nashville) 

Received About 

$1 Billion in Fiscal 

Year 2002 from the 

Network and Other 

Sources 

that they use in providing health care to veterans. VA medical centers 

collect third-party insurance payments and copayments from veterans.6

 VA 

collects insurance payments for treatment of veterans’ conditions that are 

not a result of injuries or illnesses incurred or aggravated during military 

service. In addition, some veterans are charged copayments for certain 

health care services and prescription drugs obtained at a VA pharmacy. VA 

medical centers also collect resources for a variety of services VA provides 

to non-VA health care providers such as hospital laundry services and 

outpatient care provided to Department of Defense active duty military 

personnel. 

The six medical centers in Network 9 (Nashville) received about $1 billion 

in fiscal year 2002 from three sources: the network, VA headquarters, and 

resources from collections. (See table 2.) The network allocated the 

largest share of this total—83 percent or about $825 million of the total 

resources received by the six medical centers. VA headquarters allocated 

directly to the medical centers the next largest share, which was about 

9 percent or $93 million of the total resources the network’s medical 

centers received. Finally, the six medical centers also collected about 

7 percent of the total resources medical centers received or $73 million in 

resources from collections of third-party insurance payments, veteran 

copayments, and reimbursements primarily for services provided to nonVA healthcare providers. 

6

See 38 U.S.C. §§ 1710(f), (g), 1722A, 1729. 

Page 7 GAO-04-444 VA Medical Center Resources 
Table 2: Resources Provided to Network 9 (Nashville) Medical Centers in Fiscal 

Year 2002, by Source 

Dollar amounts in millions 

Resources 

Resources from 

provided by Resources collections 

network provided by VA (percent of 

(percent of headquarters total 

total medical (percent of total medical 

Total center medical center center 

Medical center resources resources) resources) resources) 

Tennessee Valley 

Healthcare System 

(TVHS), Tenn. $291 $240 (82) $33 (11) $18 (6) 

Memphis, Tenn. 185 156 (84) 17 (9) 12 (6) 

Louisville, Ky. 143 117 (82) 11 (8) 14 (10) 

Lexington, Ky. 141 116 (82) 15 (11) 10 (7) 

Mountain Home, Tenn. 139 119 (86) 8 (6) 12 (8) 

Huntington, W. Va. 93 78 (83) 8 (9) 7 (8) 

All medical centers $992 $825 (83) $93 (9) $73 (7) 

Source: GAO analysis of VA data. 

Notes: Includes about $15.6 million from the fiscal year 2001 VERA allocation that the network 

allocated to the medical centers in fiscal year 2002. Dollar amounts and percents may not add due to 

rounding. 

The amount of resources that the network, VA headquarters, and 

resources from collections provided, in total, to each medical center in 

fiscal year 2002 ranged from about $93 million for Huntington to about 

$291 million for TVHS. The network provided the largest portion of each 

medical center’s total resources in fiscal year 2002. Network allocations as 

a percentage of total medical center resources ranged from 82 percent at 

TVHS and two other medical centers to 86 percent at Mountain Home. 

TVHS and Lexington received the highest percentage of resources directly 

from VA headquarters (11 percent), and TVHS and Memphis received the 

lowest percentage of resources from collections (6 percent). 

The percentage of resources that medical centers in the network received 

in fiscal year 2002 from the three sources varied because of several 

factors. For instance, TVHS received a lower percentage of its resources 

from the network than three other medical centers, in part, because it 

received a larger percentage of its resources from VA headquarters than 

most medical centers in the network. The larger allocation from VA 

headquarters was used, in part, for the TVHS transplant program, the only 

Page 8 GAO-04-444 VA Medical Center Resources 
one of its kind in the network. Louisville also received a lower percentage 

of its resources from the network than three other medical centers, in part, 

because the medical center received a higher percentage of its total 

resources from collections than any other network medical center. This 

resulted from agreements the medical center had—and resources it 

collected—for the delivery of outpatient and family practice care to active 

duty military personnel and their dependents at Ft. Knox, Kentucky. 

Medical centers in the network have relied on the network to provide most 

of their resources since VA changed its resource allocation system in fiscal 

year 1997. From fiscal year 1997 through fiscal year 2003, Network 9 

(Nashville) allocated more than 80 percent of medical center resources 

each year. We estimate that on average the network provided 87 percent of 

the resources medical centers received during this period. 

Medical centers in Network 9 (Nashville) received most of their resources 

in fiscal year 2002 based on allocations using fixed-capitation amounts for 

patient workload and case mix. A large portion of the resources allocated 

on the basis of fixed-capitation amounts for patient workload and case 

mix came from the network and a smaller portion came from VA 

headquarters. The other resources that medical centers received in fiscal 

year 2002 were based on a variety of other factors such as network 

managers’ determination of the financial needs of medical centers during 

the course of the year. These resources came from the network, VA 

headquarters, and collections. Since VA changed its resource allocation 

system in fiscal year 1997, medical centers in Network 9 (Nashville) 

received about three-quarters of their resources based on fixed-capitation 

amounts and about one-quarter based on other factors each year from 

fiscal years 1997 through 2003. 

Medical Centers in 

Network 9 (Nashville) 

Received Most of 

Their Resources 

Based on Allocations 

Using FixedCapitation Amounts 

for Patient Workload 

and Case Mix 

Medical Centers Received 

About Three-Quarters of 

Their Resources from 

Allocations Based on 

Fixed-Capitation Amounts 

for Patient Workload and 

Case Mix 

Medical centers received about 77 percent of their approximately 

$1 billion in total resources in fiscal year 2002—or $760 million—based on 

allocations using fixed-capitation amounts for patient workload and case 

mix. (See fig. 1.) The $760 million allocated on the basis of fixed-capitation 

amounts for patient workload and case mix came primarily from the 

network. The network allocated $742 million to medical centers on this 

basis. VA headquarters allocated the remainder of the resources based on 

fixed-capitation amounts for patient workload and case mix— 

$19 million—directly to medical centers in Network 9 (Nashville). The 

portion of medical center resources based on fixed-capitation amounts for 

patient workload and case mix was similar in other years. For each of 

Page 9 GAO-04-444 VA Medical Center Resources 
fiscal years 1997 through 2003, we estimated that medical centers received 

about three-quarters of their resources based on fixed-capitation amounts 

for patient workload and case mix. 

Figure 1: Percentage and Amounts of Approximately $1 Billion in Resources 

Medical Centers Received Based on Fixed-Capitation Amounts for Patient Workload 

and Case Mix, Fiscal Year 2002 

Allocation based on fixed-capitation amounts for patient workload and case mix 

Allocation based on a variety of other factors 

VA headquarters 

resources 

Network 

resources 

$742 million 

$760 million 

$19 million 

23% 77% 

Source: GAO analysis of VA data. 

Note: Dollar amounts do not add due to rounding. 

The network allocated the largest portion of medical centers’ resources— 

$742 million—based on fixed-capitation amounts for patient workload and 

case mix in fiscal year 2002. To calculate its patient workload, the 

network, like VERA, used two methods. The network calculated the 

number of patients who received a relatively limited amount of health care 

during a previous 3-year period, and calculated the number of patients 

who received relatively more care during a previous 5-year period. In its 

workload calculation for this 3-year period, the network’s resource 

allocation methodology, like VERA, excluded a group of veterans, known 

Network 9 (Nashville) 

Allocated Largest Portion of 

Resources Based on FixedCapitation Amounts for Patient 

Workload and Case Mix in 

Fiscal Year 2002 

Page 10 GAO-04-444 VA Medical Center Resources 
as Priority 7 veterans,7

 but included them in its 5-year workload 

calculation.8

 The network made an exception in the way it calculated 

3-year workload for a one-time $5 million allocation, its share of a 

supplemental appropriation VA received in fiscal year 2002. For this 

allocation the network included all Priority 7 veterans in its workload 

calculation. 

To calculate case mix in fiscal year 2002, the network classified patient 

workload into different categories, depending upon estimates of the 

patients’ health care needs and associated costs for treating them. The 

network, like VERA, used three case-mix categories: basic non-vested, 

basic vested, and complex.9

 Basic non-vested and basic-vested categories 

included patients who have relatively routine health care needs and are 

principally cared for in an outpatient setting. Basic non-vested patients 

receive only part of their care through VA and are less costly to VA than 

basic-vested patients. Basic-vested patients, by contrast, rely primarily on 

VA for meeting their health care needs. Patients in the basic non-vested 

and basic-vested category represented about 97 percent of the network’s 

patient workload in that year. The complex category included patients 

who generally required significant high-cost inpatient care as an integral 

part of their rehabilitation or functional maintenance, and represented 

about 3 percent of the network’s workload in that year. For patients in 

each case-mix category, the network paid medical centers a capitation 

rate, which is based on the average cost of care in VA for a patient in that 

category. The capitation rates that the network used for each of these 

categories were the same as those used in VERA: basic non-vested ($197), 

basic vested ($3,121), and complex ($41,667). The network also allocated 

7

Priority 7 veterans are veterans with relatively higher incomes compared to other veterans 

and most have no service-connected disabilities. VA classifies veterans according to their 

eligibility for enrollment for health benefits, with Priority 1 veterans having the highest 

priority for enrollment and prior to fiscal year 2003, Priority 7 veterans having the lowest 

priority for enrollment. At the beginning of fiscal year 2003, an additional category, Priority 

8, was established which includes mostly veterans with no service-connected disabilities 

whose incomes exceed a certain regional threshold. Many of the veterans formerly 

classified as Priority 7 veterans are now classified as Priority 8. See 38 U.S.C. § 1705(a)(8). 

8

VA did not include Priority 7 veterans in VERA’s 3-year workload allocations, in part, 

because VA’s expectation was that collections from copayments and third-party insurance 

reimbursements would cover the majority of the costs of patients who received a relatively 

limited amount of health care. 

9

The basic non-vested and basic-vested workload calculations are based on a 3-year time 

period and the complex workload calculations are based on a 5-year period. 

Page 11 GAO-04-444 VA Medical Center Resources 
about $9 million to medical centers based on other patient case-mix 

categories.10 

Medical centers in Network 9 (Nashville) with larger patient workloads 

generally received more resources than medical centers with smaller 

patient workloads. In fiscal year 2002, for example, TVHS had the largest 

patient workload and received the most resources. However, if two 

medical centers had similar patient workloads but the two had differences 

in the case mix of their patients, one may have received more resources 

than the other. For example, Mountain Home and Huntington medical 

centers had almost identical patient workloads in fiscal year 2002, but 

Mountain Home received a larger allocation from the network 

($119 million) than Huntington ($78 million), in part, because of an 

important difference in their respective patients’ case mix. Mountain 

Home had more patients whose health care needs required more 

expensive care as indicated by the number of complex care patients. In 

that year, Mountain Home had almost 1,200 complex patients compared to 

400 complex patients in Huntington. 

VA headquarters allocated the remainder of resources that medical centers 

received based on fixed-capitation amounts for patient workload and case 

mix in fiscal year 2002, which was about $19 million. The largest resource 

allocation VA headquarters made to medical centers in Network 9 

(Nashville) on this basis—$13 million—was to pay a portion of the costs 

for veterans receiving care in state veterans’ nursing homes, which are 

operated in several locations in Network 9 (Nashville), including 

Murfreesboro, Tennessee and Hazard, Kentucky.11 VA paid the same 

amount for veterans receiving this service, about $53 per day per veteran, 

without adjusting for differences in veterans’ health care needs. The 

second largest resource allocation VA headquarters made to medical 

centers in Network 9 (Nashville) based on fixed-capitation amounts for 

patient workload and case mix in fiscal year 2002 was about $5 million for 

its transplant program.12 VA headquarters allocated these resources based 

VA Headquarters Allocated a 

Small Portion of Resources 

Based on Fixed-Capitation 

Amounts for Patient Workload 

and Case Mix in Fiscal Year 

2002 

10The network allocated these resources to medical centers for part of their equipment 

allocations. 

11State veterans’ nursing homes provide nursing home care to veterans in state-owned and 

operated veterans’ nursing homes, for which VA pays a portion of daily costs. Other state 

veterans’ homes in the Network 9 (Nashville) area are located in Humboldt, Tennessee; 

Wilmore, Kentucky; and Oxford, Mississippi. 

12VA headquarters allocated about $6 million directly to TVHS for transplants based on 

other factors. 

Page 12 GAO-04-444 VA Medical Center Resources 
Network 9 (Nashville) Changed 

Its Patient Workload and CaseMix Measures During the Fiscal 

Year 1997-2003 Period 

on the number of patients needing transplants and the type of transplant 

needed: kidney, liver, heart, and bone marrow transplants. The capitation 

amounts for transplants ranged from $50,000 to $138,000 in fiscal year 

2002. TVHS received all the VA headquarters transplant resource 

allocation in Network 9 (Nashville) because it is the only medical center in 

the network performing transplants. VA also allocated about $1 million to 

medical centers through a per diem rate per veteran to support housing 

programs for homeless veterans operated by nonprofit community-based 

organizations. 

Network 9 (Nashville) changed how it determined patient workload in 

fiscal year 2003 to allocate resources to its medical centers. For that year, 

the network calculated patient workload based on a 1-year period—or the 

total number of patients who used network medical centers in fiscal year 

2002. In addition, the network included all veterans, including Priority 7 

and 8 veterans, in its patient workload. According to a network official, the 

network made these changes in determining patient workload to better 

account for the costs involved in treating its patients. By contrast, in fiscal 

years 1997 through 2002, the network determined workload based on the 

same measures that VERA used by calculating the number of patients who 

received a relatively limited amount of health care during a previous 3-year 

period, and calculating the number of patients who received relatively 

more care during a previous 5-year period. And like VERA, the network 

also generally excluded Priority 7 veterans from its 3-year workload 

calculation but included them in its 5-year calculation from fiscal years 

1997 through 2002. 

Network 9 (Nashville) also changed the way it calculated its case mix for 

allocating resources to medical centers several times during this period. In 

fiscal years 1997 and 1998, the network used the same 2 case-mix 

categories that VERA used—basic and special.13 In fiscal year 1999, the 

network did not use the 3 case-mix categories that VERA converted to in 

that year but instead used the 44 classes that VA used to construct VERA’s 

3 case-mix categories. In fiscal years 2000 through 2002, the network used 

the 3 case-mix categories that VERA used: basic non-vested, basic vested, 

and complex care. In fiscal year 2003, the network made a significant 

change by increasing the number of case-mix categories from 3 used in 

fiscal year 2002 to 644 case-mix categories. The fiscal year 2003 case-mix 

13VERA’s special case-mix category in fiscal years 1997 and 1998 was renamed as complex 

in fiscal year 1999. 

Page 13 GAO-04-444 VA Medical Center Resources 
approach classified the health care needs of hospital inpatients into the 

511 diagnostic related groups (DRGs) used by Medicare to pay hospitals 

for inpatient care.14 For outpatient care, the approach used 121 different 

categories to classify the type of visit and account for the amount of 

resources the visit consumed. Additionally, the network used 12 different 

categories to measure the intensity of care in long-term care settings. 

According to a network official, these changes were made to better 

account for medical centers’ cost for treating patients. 

The Network 9 (Nashville) decision to use more case-mix categories in 

fiscal year 2003 is consistent with a recommendation we made to VA in 

February 2002 to improve VERA’s allocation of comparable resources for 

comparable workloads among networks.15 In that report, we 

recommended that VA adopt more case-mix categories to better account 

for differences in patient health care needs and that VA make other 

improvements. We also pointed out that the literature and experts we 

consulted suggested that a large increase in the number of case-mix 

categories—such as the increase in the number of Network 9 (Nashville) 

case-mix categories from 3 to 644 in fiscal year 2003—has advantages and 

disadvantages. Specifically, using more case-mix categories can increase 

the accuracy of health care resource allocations whether at the network or 

medical center level, but may also provide more opportunities to classify 

patients inappropriately to receive the highest capitation amounts. 

Medical Centers Received 

About One-Quarter of 

Their Resources Based on 

a Variety of Other Factors 

Medical centers in Network 9 (Nashville) received about 23 percent of 

their total resources, or $232 million, in fiscal year 2002 based on a variety 

of factors other than fixed-capitation amounts for patient workload and 

case mix. (See fig. 2.) These resources came from three sources: Network 

9 (Nashville), VA headquarters, and collections in the amounts of $84 

million, $75 million, and $73 million, respectively. 

14DRGs are designed to group patients with similar clinical problems that are expected to 

require similar amounts of hospital resources. Each DRG has a national relative weight that 

reflects the expected relative costliness of inpatient treatment for a patient in that group 

compared with that for the average Medicare patient. Groups expected to require aboveaverage resources have higher weights and those that require fewer resources have lower 

ones. 

15In response to our recommendation, VA increased the number of VERA case-mix 

categories in fiscal year 2003 from 3 to 10 in an effort to capture more accurately the health 

care needs and associated costs of its patients. See GAO-02-338. 

Page 14 GAO-04-444 VA Medical Center Resources 
Network 9 (Nashville) 

Allocated a Portion of 

Resources Based on a Variety 

of Other Factors in Fiscal Year 

2002 

Figure 2: Percentage and Amounts of Approximately $1 Billion in Resources 

Medical Centers Received Based on a Variety of Factors Other Than FixedCapitation Amounts for Patient Workload and Case Mix, Fiscal Year 2002 

Allocation based on a variety of other factors 

Allocation based on fixed-capitation amounts for patient workload and case mix 

VA headquarters 

resources 

Network 

resources 

Resources from 

collections 

$84 million 

$75 million 

$73 million 

77% 23% 

$232 million 

Source: GAO analysis of VA data. 

In fiscal year 2002, Network 9 (Nashville) used a variety of factors to 

allocate $84 million to its medical centers. Using these factors, the 

network allocated $36 million for education and research support, $33 

million for the network reserves, $14 million for equipment and 

nonrecurring maintenance, and $1 million for other purposes. 

To allocate $36 million in resources for education and research support, 

Network 9 (Nashville) used two methods. For education, the network 

allocated $22 million in resources to medical centers based on the number 

of residents at each medical center in the current academic year, the same 

approach that VERA used that year. For research support, the network 

allocated $14 million in resources to medical centers based primarily on 

the amount of funded research in fiscal year 2000, like VERA. 

To allocate the network’s reserve fund, network management allocated 

about $33 million in fiscal year 2002 based on the financial needs of 

medical centers. The network reserve fund was intended to provide 

resources for unexpected contingencies and cover unmet expenses that 

Page 15 GAO-04-444 VA Medical Center Resources 
medical centers have during the course of a year. VA headquarters requires 

that all networks have such a fund, which is similar in concept to VERA’s 

reserve fund.16 Network officials told us while they encourage efficient 

operations, some medical centers have higher costs in certain areas and if 

these medical centers are unable to lower their costs, the network 

allocates funds from the reserve to help medical centers cover unmet 

expenses during the year. In fiscal year 2002, the network allocated 

reserve funds to medical centers for these purposes and distributed about 

half of the reserve fund to the Lexington medical center because of its 

higher than average costs in pharmacy, radiology, and laboratory 

expenses. Table 3 shows how the network distributed the network reserve 

to its six medical centers in fiscal year 2002. 

Table 3: Allocations to Medical Centers from the Network 9 (Nashville) Reserve 

Fund, Fiscal Year 2002 

Percent of network 

Medical center Amount distributed reserve distributed 

Lexington, Ky. $15,595,390 46.9 

Tennessee Valley Healthcare 

System (TVHS), Tenn. $7,097,166 21.4 

Mountain Home, Tenn. $5,834,036 17.6 

Louisville, Ky. $4,403,466 13.2 

Memphis, Tenn. $222,870 0.7 

Huntington, W. Va. $87,738 0.3 

Total $33,240,666 100 

Source: GAO analysis of VA data. 

Note: According to Network 9 (Nashville) officials, the network does not necessarily allocate its entire 

reserve fund to medical centers each year, sometimes carrying over some resources into the next 

year. The amount carried over each year varies. For example, the network carried over about $5 

million from its fiscal year 2002 reserve fund into fiscal year 2003. 

16VERA uses its national reserve fund to cover network requests for additional allocations 

over and above the networks’ other VERA allocations and other sources of revenue. 

Allocations from the reserve fund provide protection to patients from the risk that a health 

care network would not be able to provide services because its expenditures exceeded 

available financial resources. 

Page 16 GAO-04-444 VA Medical Center Resources 
VA Headquarters Allocated a 

Portion of the Resources 

Medical Centers Received 

Based on a Variety of Other 

Factors in Fiscal Year 2002 

To allocate resources for equipment and nonrecurring maintenance, the 

network allocated about $14 million17 for that purpose in fiscal year 2002 

based on priorities established by the chief engineers from each medical 

center and the network’s Executive Leadership Council (ELC).18 These 

groups prioritized a list of projects submitted by each medical center and 

the network allocated resources for projects according to these priorities. 

VERA, by contrast, allocated its equipment and nonrecurring maintenance 

resources to all networks that year based primarily on fixed-capitation 

amounts for patient workload. 

Two other factors accounted for a small portion of resources medical 

centers received or approximately $1 million. The network used other 

factors to control the amount of change in a medical center’s total network 

allocation from the prior year and for differences in local costs. In fiscal 

year 2002, the network capped net change in medical centers’ resources 

allocated by the network to a maximum of an 8 percent increase or 

decrease from fiscal year 2001 resource allocations. The caps were 

designed to prevent year-to-year fluctuations beyond management’s ability 

to prudently manage services. In addition, the network adjusted the 

amounts allocated to some medical centers relative to others to account 

for local price differences. These differences resulted primarily from 

variations in federal employee pay rates at the various medical centers in 

the network. 

VA headquarters directly allocated $75 million to medical centers for 

special programs such as prosthetics, stipends for medical residents and 

other trainees, and other programs based on a variety of other factors. In 

fiscal year 2002, VA allocated $34 million for prosthetics directly to 

medical centers based largely on medical centers’ historical expenditures 

for prosthetics, including items such as hearing aids, wheelchairs, and 

artificial limbs. VA headquarters also allocated $25 million that year to 

medical centers in the network to fund stipends for medical residents and 

other trainees based on the type and number of medical residents at each 

medical center. VA headquarters allocated about $16 million for other 

programs, including readjustment counseling, substance abuse, and posttraumatic stress disorder (PTSD) based on a variety of other factors. 

17In addition, the network allocated about $9 million for equipment using patient workload 

and case mix. 

18The ELC included all medical center directors and network leadership. 

Page 17 GAO-04-444 VA Medical Center Resources 
Medical Centers Also Received 

a Portion of Their Resources 

from Collections in Fiscal Year 

2002 

Expenditures Made 

by the Network 9 

(Nashville) Office 

Increased by 

Approximately 

$22 Million Since 

Fiscal Year 1997 

Medical centers in Network 9 (Nashville) collected $73 million in 

resources from third-party insurance payments, copayments, and 

reimbursements for services provided to non-VA health care providers in 

fiscal year 2002. Medical centers in the network collected about 

$67 million of this amount from third-party insurance and copayments 

paid by veterans. Medical centers in the network also collected about 

$6 million in resources through reimbursements from the provision of 

health care services to non-VA entities such as private hospitals, the 

Department of Defense (DOD), and DOD’s civilian health care contractors 

in fiscal year 2002. Each medical center retained the resources it collected 

and had the flexibility to use these resources for any health care purpose. 

The amounts collected varied depending upon the priority status of 

veterans treated, whether their treatment was required for a serviceconnected condition, whether the veteran had health insurance, and other 

factors. 

Expenditures made by the network office increased from $1 million in 

fiscal year 1997 to $23 million in fiscal year 2002. The two primary reasons 

for the $22 million increase were the consolidation of information 

technology and staffing expenditures. Information technology 

expenditures accounted for the largest increase in expenditures made by 

the network office. This increase occurred, in part, because the network 

assumed the cost of contracts for software licenses and information 

technology services for which medical centers had once been responsible, 

according to network officials. Instead of having each medical center 

contract for information technology services individually, the network 

took responsibility for these contracts to consolidate and negotiate lower 

costs. In fiscal year 2002, computer contracts, software licensing, and 

other information technology expenditures represented $9.6 million or 

approximately 41 percent of total network office expenditures. (See table 

4.) 

Page 18 GAO-04-444 VA Medical Center Resources 
Table 4: Expenditures Made by the Network 9 (Nashville) Office, Fiscal Year 2002 

Network 9 (Nashville) office expenditures Amount Percent of total 

Information technology related expenditures $9,583,965 

Staff expenditures 8,051,324 

Contracts/consultant services a 3,198,000 

Otherb 1,295,579 

Office of Resolution Managementc 1,119,098 

Total $23,247,966 100 

Source: GAO analysis of VA data. 

Note: Percents do not add due to rounding. 

a

Contracts and consultant services include a contract regarding quality assurance and consultant 

services for enhancing clinical and operational improvements for TVHS. 

b

Other includes after-hours telephone care, awards, and accounting support. 

c

Office of Resolution Management provides Equal Employment Opportunity complaint processing 

services to VA employees, applicants for employment, and former employees. 

Staff expenditures accounted for the second largest increase in 

expenditures made by the network office and accounted for $8 million by 

fiscal year 2002. Most of the increase in network office staff resulted 

because of growth in Mid South Customer Accounts Center (MCAC) 

staffing. (See table 5.) This growth occurred because the network 

consolidated staff positions formerly located at medical centers for 

medical insurance collections and claims processing at a central location 

and also added additional staff for this purpose. To establish this 

operation in fiscal year 1998, the network transferred 57 positions from the 

medical centers to MCAC. By fiscal year 2002, the network had added 

another 30 MCAC staff positions. MCAC staff expenditures in fiscal year 

2002 were about $5 million. The MCAC operation is based at TVHS’s 

Murfreesboro location. Network officials told us they consolidated this 

operation to increase efficiency and improve oversight of collections and 

claims processing. From fiscal years 1997 through 2002, collections for 

third-party insurance payments and copayments increased from 

$28 million to about $67 million. 

Page 19 GAO-04-444 VA Medical Center Resources 

41 

35 

14 

6 

5 
Table 5: Number of Network 9 (Nashville) Office Staff Positions, Fiscal Years 1997 

through 2002 

Fiscal year 

Network office staff positions 1997 1998 1999 2000 2001 2002 

Staff positions at Mid South Customer 

Accounts Center (MCAC) 0 57 62 66 68 87 

Mandated by VA headquarters 4 5 8 7 8 

Other network staff positions 4 4 6 8 14 16 

Total 8 66 76 81 90 112 

Source: GAO analysis of VA data. 

Note: The MCAC opened in fiscal year 1998. 

Staff expenditures by the network office also increased because of growth 

in positions mandated by VA headquarters and additional staff positions 

that network management said would improve operations. These staff 

positions accounted for about $3 million in staff expenditures in fiscal year 

2002. The network office added 5 positions from fiscal years 1997 through 

2002 that were mandated by VA headquarters for all network offices to 

improve operations VA wide. These staff positions included a patient 

safety officer and a compliance officer. In addition, the network created 12 

other network staff positions from fiscal years 1997 to 2002 that 

management expected to improve operations. For example, the network 

created a pharmacy benefits manager position to manage the network’s 

pharmaceutical budget, which, according to network officials, has brought 

down the increase in pharmaceutical costs for the entire network, and a 

Decision Support System (DSS) manager to oversee DSS activities.19 For a 

detailed description of all network office staff positions and their 

responsibilities for the network from fiscal years 1997 to 2002, see 

appendix III. 

19Network officials estimate that the pharmacy benefits manager reduced the network’s 

pharmacy cost per unique user to a 4 percent growth in fiscal year 2002, compared to a 12 

percent growth the previous year. DSS is an executive information system designed to 

provide VA managers and clinicians with data on patterns of patient care and outcomes as 

well as the capability to analyze resource utilization and the cost of providing health care 

services. DSS has been implemented at all VA medical centers. 

Page 20 GAO-04-444 VA Medical Center Resources 

9 
Agency Comments 	 In commenting on a draft of this report, VA agreed with our findings. VA 

provided technical comments which we incorporated, as appropriate. VA’s 

written comments are in appendix IV. 

As agreed with your offices, unless you publicly announce its contents 


earlier, we plan no further distribution of this report until 30 days after its 


issue date. We will then send copies of this report to the Secretary of 


Veterans Affairs, interested congressional committees, and other parties. 


We also will make copies available to others upon request. In addition, the 


report will be available at no charge on the GAO Web site at 


http://www.gao.gov. If you or your staff have any questions about this 


report, please call me at (202) 512-7101. Another contact and key 


contributors are listed in appendix V.


Cynthia A. Bascetta 


Director, Health Care—Veterans’ 


Health and Benefits Issues 


Page 21 GAO-04-444 VA Medical Center Resources 
Appendix I: Objectives, Scope, and 

Methodology 

We reviewed Network 9 (Nashville) allocations to its medical centers for 

fiscal year 2002 to determine: (1) the amount of resources medical centers 

in the network received and the source of those resources, (2) the basis on 

which medical centers in the network received these resources, and 

(3) the extent to which network office expenditures were greater than in 

fiscal year 1997 and the primary reasons accounting for any increase. To 

place this information in context, we supplemented our findings for fiscal 

year 2002, the most recent year for which complete data were available at 

the time of our analysis, with information for fiscal years 1997 through 

2003. We limited our review to how resources were allocated to medical 

centers in Network 9 (Nashville) and did not analyze how they spent their 

allocations to deliver health care. 

The Amount of Resources 

Medical Centers in 

Network 9 (Nashville) 

Received and the Source 

of Those Resources 

To determine the amount of resources medical centers in Network 9 

(Nashville) received in fiscal year 2002 and the source of those resources 

we obtained financial data from the Office of the Chief Financial Officer 

within the Veterans Health Administration and from the Network 9 

(Nashville) office. We categorized transactions in financial reports, 

referred to as medical center allotment reports, into the source of the 

resources: (1) Network 9 (Nashville), (2) VA headquarters, and 

(3) resources from collections. We identified transactions and summed the 

amount provided from each of the sources based on analysis of the 

medical centers’ allotment reports and interviews with VA headquarters 

and network officials. As part of resources allocated by the network, we 

also included the amount each medical center received in fiscal year 2002 

from the network’s share of a supplemental appropriation that VA 

received, and the resources allocated for each medical center’s costs for 

Consolidated Mail Outpatient Pharmacy (CMOP) mail prescription 

services to veterans. In fiscal year 2002, medical centers in Network 9 

(Nashville) had additional resources that they carried over from the prior 

fiscal year, because they were authorized to use certain resources for 

longer than 12 months. We did not include $25 million the medical centers 

carried over into fiscal year 2002, because the network had allocated these 

resources in the prior year. 

Information was available for resources allocated to all medical centers in 

medical center allotment reports except for the Tennessee Valley 

Healthcare System (TVHS) because TVHS’s allotment report also included 

resources allocated to the network office. To determine the amount of 

resources allocated to TVHS in fiscal year 2002, therefore, required 

additional analysis. Each network medical center was identified in the VA 

allocation system with a unique three-digit station number; however, TVHS 

Page 22 GAO-04-444 VA Medical Center Resources 
Appendix I: Objectives, Scope, and 

Methodology 

and the network office shared the same station number, and as such, the 

VA allocation system combined their allotment data. To separate the TVHS 

and network office transactions, we obtained the fiscal year 2002 network 

office financial transfer report from TVHS. We separated each transaction 

on the combined network/TVHS allotment report, which allowed us to 

construct an allotment report for TVHS. We also obtained an internal 

allotment ledger from TVHS and network officials that documented fund 

transfers between the two, which were transacted outside the VA 

allotment system. Using our TVHS allotment report and the TVHS/network 

internal allotment ledger, we determined the amounts TVHS received 

through each funding source by applying similar calculations as with the 

other medical centers. This information was not available for TVHS’s 

Nashville and Murfreesboro locations after fiscal year 2000. However, 

information on staffing resources at these two locations was available 

after that year. See appendix II for our analysis of staffing information at 

the two locations. 

We estimated the percent of total medical center resources received from 

Network 9 (Nashville) for fiscal years 1997 through 2001 and 2003 to 

supplement our findings for fiscal year 2002. To develop these estimates, 

we used VA headquarters and network office data. To determine the 

amount of resources the medical centers received from the network we 

used VA information on the VERA allocations to Network 9 (Nashville) 

and network data on network office expenditures for these fiscal years. To 

estimate the total amount of resources the medical centers received 

through VA direct allocations in fiscal years 1997 through 2001 and in 

fiscal year 2003, we assumed it was the same percentage as in fiscal year 

2002 when medical centers in the network received 3 percent of all funds 

VA headquarters allocated directly to all VA medical centers nationwide. 

To determine the amount that medical centers received through revenue 

collections in these years we relied on VA data. 

The Basis on Which To obtain information on the basis on which the medical centers received 

Medical Centers in resources, we interviewed network officials including the director, the 

Network 9 (Nashville) chief financial officer, and TVHS officials. In addition, we obtained and 

Received These Resources analyzed documents that described the network’s allocation methodology 

and relied on our prior work on VERA.1

 To determine the basis on which 

VA headquarters allocated resources directly to medical centers in the 

1

GAO-02-338, GAO/HEHS-98-226, and GAO/HEHS-97-178. 

Page 23 GAO-04-444 VA Medical Center Resources 
Appendix I: Objectives, Scope, and 

Methodology 

network, we interviewed officials in the Office of the Chief Financial 

Officer within the Veterans Health Administration. To determine how 

insurance collections and copayments as well as other resources were 

incorporated in allocations, we interviewed network officials, including 

the director of the Mid South Customer Accounts Center (MCAC). Based 

on our analysis of information we obtained from the network and VA 

headquarters, first we calculated the percentage of resources allocated on 

the basis of fixed-capitation amounts for patient workload and case mix in 

fiscal year 2002. We then subtracted this amount from the total resources 

medical centers received in fiscal year 2002 to determine the amount they 

received based on other factors. 

We estimated the percent of total resources received by all medical 

centers combined based on fixed-capitation amounts for patient workload 

and case mix for fiscal years 1997 through 2001 and 2003. To determine the 

total amount of resources allocated to the medical centers by the network 

based on fixed-capitation amounts, we used VA headquarters data on the 

amount of VERA allocations to Network 9 (Nashville) each year during 

this period. We then subtracted out expenditures made by the network 

office from data provided by the network. From this total, we subtracted 

out resources for allocations made to medical centers that were not based 

on patient workload and case mix. We obtained data on these allocations 

from VA headquarters, except allocations from the network reserve fund. 

We estimated network reserve funds for fiscal years 1997 through 2001 

and 2003 by making the assumption that these funds represented 4 percent 

of all resources allocated to the network by VERA as in fiscal year 2002. 

To estimate the total resources medical centers in the network received 

directly from VA headquarters during this period we assumed it was the 

same percentage as in fiscal year 2002, when medical centers in the 

network received 3 percent of all funds VA headquarters allocated directly 

to all VA medical centers nationwide. We estimated the portion of these 

direct VA allocations to medical centers in the network that was based on 

fixed-capitation amounts for patient workload and case mix by assuming 

that during this period the portion was the same as in fiscal year 2002, 

when such resources amounted to 20 percent of VA headquarters’ direct 

allocations to the network. To determine the amount of resources 

collected for each medical center in the network during this period, we 

used information provided by the network and VA headquarters. 

Page 24 GAO-04-444 VA Medical Center Resources 
Appendix I: Objectives, Scope, and 

Methodology 

The Extent to Which 

Network 9 (Nashville) 

Office Expenditures Were 

Greater Than in Fiscal Year 

1997 and the Primary 

Reasons Accounting for 

Any Increase 

To determine the extent to which network office expenditures were 

greater in fiscal year 2002 than in fiscal year 1997 and the primary reasons 

accounting for any increase, we analyzed reports on network office 

expenditures. Specifically, we analyzed expenditures made by the network 

office for fiscal year 2002 that were set aside from resources that the 

medical centers received. We also reviewed network office expenditures 

for information and technology, staffing, and other functions for fiscal 

years 1997 through 2002. We interviewed network officials to obtain the 

number of staff and their job titles and responsibilities from fiscal years 

1997 through 2002. We interviewed the MCAC manager regarding the 

number of collections staff since fiscal year 1998, when the MCAC was 

created. We also contacted officials at VA headquarters to verify which 

staff positions were mandated by headquarters. As part of this analysis, we 

categorized staff into staff positions at MCAC and other network office 

staff positions, which included positions mandated by VA headquarters for 

all VA networks and those positions that Network 9 (Nashville) 

management established to improve operations. We included positions at 

the MCAC as network office positions because their salaries were paid 

from the same account as other network office staff and they were 

supervised by an official who reported to the network director. 

Overall Data Verification 

and Methodology 

Throughout our review we examined the reliability of VA data and our use 

of those data. We discussed these data with VA headquarters and network 

officials to validate their accuracy. In addition, we discussed our 

methodology with VA headquarters and Network 9 (Nashville) staff who 

agreed that our approach and our assumptions were reasonable. 

Furthermore, we tested the consistency of VA allocation data by 

systematically comparing various types of data we obtained from several 

VA sources. For example, we verified the amount and source of 

transactions on the medical center allotment reports through interviews 

with network and VA headquarters officials and by matching these 

transactions with other financial reports obtained from VA. To better 

understand all of these issues, we conducted a site visit to interview 

officials at the network office located in Nashville and at the TVHS 

locations in Nashville and Murfreesboro, Tennessee. We performed our 

review from March 2003 through April 2004 in accordance with generally 

accepted government auditing standards. 

Page 25 GAO-04-444 VA Medical Center Resources 
Appendix II: Staffing Resources Available at 

the Tennessee Valley Healthcare System’s 

Nashville and Murfreesboro Locations 

VA combined the Nashville and Murfreesboro medical centers to create a 

single integrated medical center—the Tennessee Valley Healthcare System 

(TVHS)—to improve veterans’ health care and gain efficiencies. In fiscal 

year 2000, the TVHS integration was announced and the first TVHS 

director was hired. Separate financial resource information was available 

for the Nashville and Murfreesboro locations before fiscal year 2001. The 

accounting systems of the two locations were merged in fiscal year 2001 

and since then, information has not been available on the financial 

resources allocated separately to the Nashville and Murfreesboro 

locations. However, information on staffing at each location was available 

for fiscal year 2002 and staff salaries and benefits comprised over half of 

TVHS’s budget in that year. Overall staffing at each location declined since 

the integration, but trends varied by type of staff, such as administrative 

and medical center support staff and patient care staff. From fiscal year 

2000 to fiscal year 2002, the TVHS patient workload increased while 

patient care staff remained about constant. Also, 125 other VA staff 

worked at the Murfreesboro location in fiscal year 2002, in addition to the 

staff at TVHS.1 

Information Not Available 

on Financial Resources 

Allocated Separately to 

Nashville and 

Murfreesboro After Fiscal 

Year 2000 

Information was not available on financial resources allocated separately 

to Nashville and Murfreesboro after fiscal year 2000. Beginning in fiscal 

year 2001, Network 9 (Nashville) did not allocate resources to 

Murfreesboro and Nashville separately because they were combined as a 

single medical center, TVHS. Moreover, TVHS did not allocate resources to 

each location. Instead, TVHS allocated resources to the programs it 

operated across the two locations. As a result, the accounting systems did 

not reflect allocations by location. 

1

Staff refers to full time equivalent employees (FTEE) and does not include contract staff. 

Page 26 GAO-04-444 VA Medical Center Resources 
Appendix II: Staffing Resources Available at 

the Tennessee Valley Healthcare System’s 

Nashville and Murfreesboro Locations 

Staffing Declined at the Overall, the number of staff declined at Nashville and Murfreesboro from 

Nashville and fiscal year 2000 to fiscal year 2002. However, the amount of change varied 

Murfreesboro Locations by the type of staff. The number of staff at Nashville declined by 49, or 

from Fiscal Year 2000 to about 4 percent, from fiscal year 2000 to fiscal year 2002. At Murfreesboro, 

the number of staff declined by 77, or about 7 percent, from fiscal year Fiscal Year 2002 2000 to fiscal year 2002. (See fig. 3.) 

Figure 3: Number of Staff at Nashville and Murfreesboro Locations, Fiscal Year 

2000 and Fiscal Year 2002 

1400 

1,288 

1200 

1000 

800 

600 

400 

200 

0 

Nashville Murfreesboro 

1,239 

1,132 

1,055 

FY 2000 

FY 2002 

Source: GAO analysis of VA data. 

Note: Staff refers to full time equivalent employees (FTEE). Numbers are rounded to the nearest 

FTEE. 

Staffing trends varied by type of staff at both locations. Administrative and 

medical center support staff combined declined at both locations while 

patient care staff remained about constant. Administrative and medical 

center support staff include administrative, clerical, and wage rate staff 

who do not provide patient care-related work, such as secretaries and 

maintenance staff. At Nashville, the number of administrative and medical 

center support staff combined declined by 52, or 11 percent, from fiscal 

year 2000 to fiscal year 2002. At Murfreesboro, the number of 

administrative and support staff combined declined by 65, or 14 percent, 

from fiscal year 2000 to fiscal year 2002. (See fig. 4.) 

Page 27 GAO-04-444 VA Medical Center Resources 
Appendix II: Staffing Resources Available at 

the Tennessee Valley Healthcare System’s 

Nashville and Murfreesboro Locations 

Figure 4: Number of Administrative and Medical Center Support Staff at Nashville 

and Murfreesboro Locations, Fiscal Year 2000 and Fiscal Year 2002 

500 484 

431 

459 

394 

Nashville Murfreesboro 

FY 2000 

FY 2002 

Source: GAO analysis of VA data. 

Note: Staff refers to full time equivalent employees (FTEE). Numbers are rounded to the nearest 

FTEE. 

The largest decreases in administrative and medical center support staff 

are shown in table 6. The largest declines were in administrative and 

clerical staff. Smaller declines occurred among wage rate employees who 

are medical center support staff. 

Table 6: Largest Administrative and Medical Center Support Staff Decreases at 

Nashville and Murfreesboro, Fiscal Year 2000 to Fiscal Year 2002 

Location Administrative and clerical Wage ratea 

Nashville -45 -9 

Murfreesboro -56 -9 

Source: GAO analysis of VA data. 

Note: Table excludes changes in the number of administrative and medical center support staff of 1 

or 2 positions. Staff refers to full time equivalent employees (FTEE). 

a

Wage rate employees, such as maintenance staff, are paid at an hourly rate. 

Page 28 GAO-04-444 VA Medical Center Resources 

400 

300 

200 

100 

0 
Appendix II: Staffing Resources Available at 

the Tennessee Valley Healthcare System’s 

Nashville and Murfreesboro Locations 

There was very little change in patient care staff at both Nashville and 

Murfreesboro between fiscal year 2000 and fiscal year 2002. Patient care 

staff includes those who provide direct hands-on care to patients, such as 

doctors and nurses, as well as those staff who provide indirect care, such 

as pharmacists and laboratory technicians. The number of patient care 

staff at Nashville increased less than 0.5 percent from fiscal year 2000 to 

fiscal year 2002. The number of patient care staff at Murfreesboro 

decreased by almost 2 percent during the same time period. (See fig. 5.) 

Figure 5: Number of Patient Care Staff at Nashville and Murfreesboro Locations, 

Fiscal Year 2000 and Fiscal Year 2002 

900 

804 807 

800 

700 

600 

500 

400 

300 

200 

100 

0 

Nashville Murfreesboro 

673 661 

FY 2000 

FY 2002 

Source: GAO analysis of VA data. 

Note: Staff refers to full time equivalent employees (FTEE). Numbers are rounded to the nearest 

FTEE. 

The largest changes in patient care staff from fiscal year 2000 to fiscal year 

2002 can be seen in table 7. The biggest increases were in nursing staff and 

the biggest declines were in nursing aides and assistants. 

Page 29 GAO-04-444 VA Medical Center Resources 
Appendix II: Staffing Resources Available at 

the Tennessee Valley Healthcare System’s 

Nashville and Murfreesboro Locations 

Table 7: Largest Changes in Patient Care Staff at Nashville and Murfreesboro 

Locations, Fiscal Year 2000 to Fiscal Year 2002 

Location Increases Decreases 

Nashville 9 nurses (practical and 3 nursing aides/assistants 

licensed vocational) 10 other health 

6 part-time physicians technicians/aides/therapists 

5 nurse practitioners 

Murfreesboro 13 nurses (registered) 	 18 nursing aides/assistants 

3 other health 

technicians/aides/therapists 

3 social workers 

Source: GAO analysis of VA data. 

Note: Table excludes changes in the number of administrative and medical center support staff of 1 

or 2 positions. Staff refers to full time equivalent employees (FTEE). 

Number of TVHS Patients The number of TVHS patients increased while the number of patient care 

Increased While Patient staff remained about constant from fiscal year 2000 to fiscal year 2002. The 

Care Staff Remained About number of patients increased at TVHS from fiscal year 2000 to fiscal year 

Constant 2002 by 7 percent. The number of patient care staff decreased less than 

1 percent during the same time period. (See table 8.) 

Table 8: Tennessee Valley Healthcare System’s Patients and Patient Care Staff, 

Fiscal Year 2000 and Fiscal Year 2002 

Fiscal year Patientsa Patient care staff 

2000 57,080 1,477 

2002 61,120 1,468 

Source: GAO analysis of VA data. 

Note: Staff refers to full time equivalent employees (FTEE). 

a

The number of patients using health care services as counted by unique or unduplicated social 

security numbers. Each patient is counted one time, regardless of how many visits each patient 

makes. 

125 Other TVHS Staff In addition to TVHS staff, 125 other VA staff worked at Murfreesboro in 

Worked at Murfreesboro fiscal year 2002. These staff consisted of Network 9 (Nashville) staff, staff 

Location in Fiscal Year working at the Consolidated Mail Outpatient Pharmacy (CMOP), the Office 

2002 of Resolution Management, and the Veterans Benefits Administration. 

Table 9 shows the numbers and types of VA staff other than those who 

work for TVHS who work at the Murfreesboro location. 

Page 30 GAO-04-444 VA Medical Center Resources 
Appendix II: Staffing Resources Available at 

the Tennessee Valley Healthcare System’s 

Nashville and Murfreesboro Locations 

Table 9: Other Staff Located at Murfreesboro, Fiscal Year 2002 

Description Staff 

Network 9 (Nashville) – includes 87 staff at the MCAC and 8 other network 

office staff whose offices are located at Murfreesboro. 

Consolidated Mail Outpatient Pharmacy (CMOP) 

Office of Resolution Management 

Veterans Benefits Administration <1 

Total 

Source: GAO analysis of VA data. 

Note: Staff refers to full time equivalent employees (FTEE). 

The 95 Network 9 (Nashville) staff consisted of 8 office staff whose offices 

were located at Murfreesboro and 87 staff of the Mid South Customer 

Accounts Center (MCAC), which is responsible for insurance billing and 

collections for the network. These 87 staff were formerly located at 

medical centers within the network but were consolidated at the 

Murfreesboro location to increase the efficiency of collections. The CMOP 

had 28 VA staff in fiscal year 2002 (in addition to 155 contract staff) and 

provides mail prescription services to veterans. The CMOP at 

Murfreesboro is one of seven CMOPs across the country. VA’s Office of 

Resolution Management had 2 staff located at Murfreesboro in fiscal year 

2002 and provided Equal Employment Opportunity (EEO) complaint 

processing services to VA employees, applicants for employment, and 

former employees. Finally, the Veterans Benefits Administration had a 

part-time staff person providing vocational rehabilitation and employment 

counseling at Murfreesboro in fiscal year 2002. 

Methodology We obtained information on staffing resources available at VA’s Nashville 

and Murfreesboro locations in fiscal year 2002 by interviewing Network 9 

(Nashville) and TVHS officials. These officials told us that beginning in 

fiscal year 2001, information on financial resources allocated to Nashville 

and Murfreesboro separately was not available because these locations 

were combined as a single medical center, TVHS, in fiscal year 2001. 

However, information on staffing numbers and costs at each location was 

available and staff salaries and benefits constituted over half of TVHS’s 

fiscal year 2002 budget. Therefore, our scope was limited to a comparison 

of staffing numbers at each location in fiscal years 2000 and 2002. We 

obtained the number of staff positions and descriptions for each position 

for each location for fiscal years 2000 and 2002, reported by each staff 

member’s duty station. The number of staff positions was reported as the 

Page 31 GAO-04-444 VA Medical Center Resources 

95 

28 

2 

125 
Appendix II: Staffing Resources Available at 

the Tennessee Valley Healthcare System’s 

Nashville and Murfreesboro Locations 

number of full time equivalent employees (FTEE). We analyzed the 

increase and/or decrease in staff positions between the 2 years by the type 

of staff. We obtained workload data for TVHS for fiscal years 2000 and 

2002 and compared them with the number of patient care staff during 

those years. In addition, we interviewed TVHS officials to determine the 

number of other VA staff working at the Murfreesboro location in addition 

to those staff working for TVHS. 

Page 32 GAO-04-444 VA Medical Center Resources 
Appendix III: Network 9 (Nashville) Office 

Staff and Their Responsibilities, Fiscal Years 

1997 through 2002 

Table 10 provides a brief description of the responsibilities for Network 9 

(Nashville) office staff and the number of office staff positions filled from 

fiscal years 1997 through 2002. The table includes staff positions at the Mid 

South Customer Accounts Center (MCAC), positions mandated by VA 

headquarters for all networks, and other staff positions Network 9 

(Nashville) created. 

Table 10: Position Titles and Responsibilities for Network 9 (Nashville) Office Positions, Fiscal Years 1997 through 2002 

Number of positions filled for fiscal years 

Network office staff Network responsibilities 1997 1998 1999 2000 2001 2002 

Staff positions at the Mid South 

Customer Accounts Center (MCAC) 

Perform billing, collecting, and verifying thirdparty insurance activities 0 57 62 66 68 87 

Staff positions mandated by VA 

headquarters 4 5 8 7 8 

Network Director Chief executive 

(mandated in FY 1997) 1 1 1 1 1 

Chief Financial Officer Advises network director and other managers 

(mandated in FY1997) on fiscal management 1 1 1 0 0 

Chief Medical Officer Provides clinical leadership 

(mandated in FY1997) 1 1 1 1 1 

Chief Information Officer Manages the design, development, and basic 

(mandated in FY1997) functions of information technology and 

communications systems 1 1 1 1 1 

Information Security Officer Develops and integrates infrastructure with 

(mandated in FY 2001) mandated systems and products to ensure 

implementation and coordination of 

information and data systems 0 0 1 1 1 

Patient Safety Officer Manages and implements patient safety 

(mandated in FY 2001) policies of VA’s National Center for Patient 

Safety 0 0 0 0 1 

Prosthetics Manager Manages, plans, develops, evaluates, and 

(mandated in FY1999) implements prosthetics program 0 0 1 1 1 

Quality Management Officer 

(mandated in FY 1997) 

Advises network director and others on quality 


improvement and performance management 0 1 1 1 1 1


Compliance Officer 

(mandated in FY 2000) 

Plans, organizes, coordinates network 


activities, develops compliance program for 


internal controls and processes, and oversight 


in accordance with VA headquarters 


requirements 0 0 1 1 1 1


Other network staff positionsa 4 4 6 8 14 16 

Acquisition and Materiel Managerb	 Manages the acquisition and materiel 

management product line 0 0 0 0 0 1 

Page 33 GAO-04-444 VA Medical Center Resources 

9 

1 

1 

1 

1 

1 

1 

1 
Appendix III: Network 9 (Nashville) Office 

Staff and Their Responsibilities, Fiscal Years 

1997 through 2002 

Number of positions filled for fiscal years 

Network office staff Network responsibilities 1997 1998 1999 2000 2001 2002 

Ambulatory Care Product Line Advises director and other managers on 


Manager ambulatory and primary care 0 0 0 1 1


Auditor/Compliance Officer 	 Identifies policies and procedures needed to 

prevent and detect noncompliance with VA 

regulatory, ethical, and legal requirements 0 0 0 0 1 

Budget Analyst	 Performs budget analysis, formulation, 

justification, and execution 0 0 1 1 1 

Capital Assets Manager 	 Manages capital assets to ensure adherence 

to policies and procedures 0 0 0 1 1 

Decision Support System (DSS) Establishes, plans, and directs DSS activities


Manager 0 0 1 1 1


Deputy Network Director 	 Assists network director and acts as director in 

his absence 0 0 0 0 1 

Health System Specialist 	 Serves as program analyst for examining 

network activities such as cost effectiveness of 

operations 0 0 0 0 1 

Mid South Customer Accounts Manages and operates the MCAC and 

Center (MCAC) Manager b insurance collections program 0 0 0 0 0 

Mental Health Product Line Serves as technical advisor to network director 

Manager on the mental health program 0 0 0 0 0 

Operations Director Manages construction, equipment, and 

network office daily operations 1 1 1 1 1 

Patient Administration Director Manages patient access and benefits 

administration programs 0 0 0 0 0 

Pharmacy Benefits Manager Manages pharmaceutical budget, coordinates 

professional and administrative functions at 

medical centers 0 0 0 0 1 

Public Affairs Officer Manages public relations 1 1 1 1 1 

Secretary Performs administrative and clerical duties 2 2 2 2 3 

Telephone Care Manager Supervises employees of the network’s 24-

hour/7 days-a-week telephone health care 

advice center and provides technical guidance 

to day-shift staff at medical centers 0 0 0 0 1 

Total staff 8 66 76 81 90 112 

Source: GAO analysis of VA data. 

a

In fiscal year 2003, VA headquarters announced that some of the staff positions would become 

mandated later. 

b

The acquisition and materiel manager and the MCAC manager functioned in these positions since 

fiscal year 1997, but were charged to the TVHS payroll until the positions were transferred to the 

Network 9 (Nashville) payroll in fiscal year 2002. 

Page 34 GAO-04-444 VA Medical Center Resources 

1 

1 

1 

0 

1 

1 

1 

1 

1 

0 

1 

1 

1 

3 

1 
Appendix IV: Comments from the 

Department of Veterans Affairs 

Page 35 GAO-04-444 VA Medical Center Resources 
Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact James C. Musselwhite, 202-512-7259 

Acknowledgments 	 In addition to the contact named above, Cheryl A. Brand, Linda C. Diggs, 

Krister Friday, Donald W. Morrison, and Thomas A. Walke made key 

contributions to this report. 

Page 36 GAO-04-444 VA Medical Center Resources 
Related GAO Products 


VA Health Care: Access for Chattanooga-Area Veterans Needs 


Improvement. GAO-04-162. Washington, D.C.: January 30, 2004. 


VA Health Care: Changes Needed to Improve Resource Allocation. GAO­


02-685T. Washington, D.C.: April 30, 2002. 


VA Health Care: Changes Needed to Improve Resource Allocation to 


Health Care Networks. GAO-02-744T. Washington, D.C.: May 14, 2002. 


VA Health Care: Allocation Changes Would Better Align Resources with 


Workload. GAO-02-338. Washington, D.C.: February 28, 2002.


VA Health Care: More Veterans Are Being Served, but Better Oversight Is


Needed. GAO/HEHS-98-226. Washington, D.C.: August 28, 1998. 


VA Health Care: Resource Allocation Has Improved, but Better Oversight 


Is Needed. GAO/HEHS-97-178. Washington, D.C.: September 17, 1997. 


Veteran’s Health Care: Facilities’ Resource Allocations Could Be More


Equitable. GAO/HEHS-96-48. Washington, D.C.: February 7, 1996. 


VA Health Care: Resource Allocation Methodology Has Had Little Impact 


on Medical Centers’ Budgets. GAO/HRD-89-93. Washington, D.C.: 


August 18, 1989. 


VA Health Care: Resource Allocation Methodology Should Improve VA’s 


Financial Management. GAO/HRD-87-123BR. Washington, D.C.: 


August 31, 1987. 


(290248) Page 37 GAO-04-444 VA Medical Center Resources 
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