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96-474 PDF 2004

S. HRG. 108–663

VA CAPITAL ASSET REALIGNMENT FOR

ENHANCED SERVICES INITIATIVE

HEARING

BEFORE THE

COMMITTEE ON VETERANS’ AFFAIRS

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

SEPTEMBER 11, 2003

Printed for the use of the Committee on Veterans’ Affairs

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/senate

(II)

COMMITTEE ON VETERANS’ AFFAIRS

ARLEN SPECTER, Pennsylvania, Chairman

BEN NIGHTHORSE CAMPBELL, Colorado

LARRY E. CRAIG, Idaho

KAY BAILEY HUTCHISON, Texas

JIM BUNNING, Kentucky

JOHN ENSIGN, Nevada

LINDSEY O. GRAHAM, South Carolina

LISA MURKOWSKI, Alaska

BOB GRAHAM, Florida

JOHN D. ROCKEFELLER IV, West Virginia

JAMES M. JEFFORDS, (I) Vermont

DANIEL K. AKAKA, Hawaii

PATTY MURRAY, Washington

ZELL MILLER, Georgia

E. BENJAMIN NELSON, Nebraska

WILLIAM F. TUERK, Staff Director and Chief Counsel

BRYANT HALL, Minority Staff Director and Chief Counsel

(III)

CONTENTS

SEPTEMBER 11, 2003

SENATORS

Page

Specter, Hon. Arlen, U.S. Senator from Pennsylvania ......................................... 1

Nelson, Hon. E. Benjamin, U.S. Senator from Nebraska ..................................... 2

Prepared statement .......................................................................................... 4

Hutchison, Hon. Kay Bailey, U.S. Senator from Texas ........................................ 5

Miller, Hon. Zell, U.S. Senator from Georgia ........................................................ 6

Nelson, Hon. Bill, U.S. Senator from Florida ........................................................ 19

WITNESSES

Principi, Hon. Anthony J., Secretary, U.S. Department of Veterans Affairs ..... 8

Prepared statement .......................................................................................... 10

Response to written questions submitted by Hon. Bob Graham to the

Department of Veterans Affairs .................................................................. 14

Response to written questions submitted by Hon. Patty Murray to the

Department of Veterans Affairs .................................................................. 15

Response to written questions submitted by Hon. Jim Bunning to the

Department of Veterans Affairs .................................................................. 16

Alvarez, Everett, Jr., Chairman, Capital Asset Realignment For Enhanced

Services (CARES) Commission, U.S. Department of Veterans Affairs ........... 25

Prepared statement .......................................................................................... 26

APPENDIX

Murray, Hon. Patty, U.S. Senator from Washington State, prepared statement ...................................................................................................................... 35

Bunning, Hon. Jim, U.S. Senator from Kentucky, prepared statement ............. 36

Roswell, Hon. Robert H., M.D., Under Secretary for Health, Department

of Veterans Affairs, prepared statement ............................................................ 37

(1)

VA CAPITAL ASSET REALIGNMENT FOR

ENHANCED SERVICES INITIATIVE

THURSDAY, SEPTEMBER 11, 2003

U.S SENATE, COMMITTEE ON VETERANS’ AFFAIRS, Washington, DC.

The committee met, pursuant to notice, at 2:18 p.m., in room

SR–418, Russell Senate Office Building, Hon. Arlen Specter (chairman of the committee) presiding.

Present: Senators Specter, Hutchison, Miller, and Nelson.

OPENING STATEMENT OF HON. ARLEN SPECTER,

U.S. SENATOR FROM PENNSYLVANIA

Chairman SPECTER. Good afternoon, ladies and gentlemen. The

hearing of the Senate Veterans’ Affairs Committee will now commence.

Our hearing today is on the Veterans Administration’s Capital

Assets Realignment for Enhanced Service plan. This is a major undertaking by the Department of Veterans Affairs to analyze existing health care facilities and make a determination what new facilities are necessary; what existing facilities are obsolete; and how

better care can be delivered to our nation’s veterans.

We approach this issue with a good deal of skepticism in the veterans’ community. I believe that is something that we have to face

very, very candidly. The budget constraints have been restrictive.

We have not been able to take care of the influx of veterans, as we

have an aging World War II population; an aging Korean population; the Vietnam War; the Gulf War; and now, most recently, the

war in Iraq, so that there have been very, very heavy demands

placed upon the Veterans Administration.

My own experience with the VA goes back to my childhood,

where my father, Harry Specter, a veteran of World War I, was

treated at the veterans’ hospital in Wichita, Kansas. My dad was

an immigrant. He came from Ukraine; walked across Europe with

barely a ruble in his pocket to the United States; did not know that

he had a round-trip ticket to France, not to Paris and the Follies

Bergiere but to the Argonne Forest, where he was wounded in action; carried shrapnel in his legs until the day he died. And in the

late thirties, with the tremendous economic problems of the Depression, the veterans’ hospital was a godsend for my father.

I visited it not too long ago. It is now inside the city. When he

was there, I had a long bicycle ride out. But it was worth the ride,

because there was a free pinball machine there when I got to the

end of the road.

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But my own experience has shown me, including my extensive

travels as chairman of this committee and, before that, as a member of this committee; and earlier this week, I was in Pittsburgh,

where there is a proposal to close down a large facility known as

Highland Drive, which is a mental institution for 1,000 people. I

saw the empty spaces there. Just about 150 people are there, and

there is a plan to buildup a fairly close facility on University Drive.

But there are very grave concerns as to whether the other facility

will be completed before the first facility is closed down. That is understandable. And that is something we have to address.

The veterans ask questions about will the appropriations be

there? Last Monday was the day after the President had addressed

the nation, seeking $87 billion for Iraq. I said to the veterans even

the President does not know if he is going to get the appropriation.

But I assured them that I thought that our chances of getting that

done were good.

There are many, many facilities. I know the Senator from Texas

has concerns about Waco. These are matters which we will have to

take up in some detail, but this committee intends to pursue with

diligence an analysis as to what this plan is and to work with the

Veterans Administration. We know you are operating with good intentions to try to do the best we can for the veterans.

In the absence of the ranking member, let me turn, on the early

bird rule, to the Senator from Nebraska, Senator Nelson.

OPENING STATEMENT OF HON. E. BENJAMIN NELSON,

U.S. SENATOR FROM NEBRASKA

Senator NELSON. Thank you very much, Mr. Chairman.

I know that you hail from Kansas, the State just south of Nebraska, but you are probably a Penn State fan, and Nebraska will

wrestle with Penn State Saturday night. So I thought I should remind you of that.

[Laughter].

Senator NELSON. But I do want to thank, first of all——

Chairman SPECTER. You did not have to remind me, Senator Nelson.

[Laughter].

Chairman SPECTER. The only part that surprised me was that

you did not propose a wager.

[Laughter].

Senator NELSON. I was very good at wagers until we had a seven

and seven season, so I——

[Laughter].

Senator NELSON. When you learn humility the hard way, the lesson is well-remembered.

However, first of all, I want to thank our panelists and the witnesses for being here today. The veterans’ issues are issues that

are on everyone’s minds these days, and trying to come to terms

with the way to match the resources with the needs has been part

of what our witnesses have been involved with for a long period,

and I want to commend my good friend, Secretary Principi. It is always good to see you, and I know how difficult it must be for you

at times or for all times to hear that people have concerns, some

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skepticism about the best plans that you are proposing, and you

are here today to hear it again.

But I do know that you are committed to doing what you think

will be best for our nation’s veterans, both our current veterans

and, unfortunately, the veterans we are generating every day in

new engagements. So thank you for being here and for the opportunity.

After the merger of VISN 13 and 14 was announced to form

VISN 23, you very graciously and honorably came to Nebraska to

discuss the impact it would have on our veterans, and I know everyone there has appreciated that. The merger process was a good

example of the importance of including the concerns of those directly impacted by these decisions, and I appreciate the efforts of

the VA to incorporate concerns from stakeholders such as the veterans service organizations and Network Leadership, the VA employees, VA affiliates and collaborators under the CARES process.

I have reviewed both VISN 23 recommendations for enhanced

care as well as the draft national plan, and I would like to take

a moment to express some of those concerns that I mentioned regarding the community-based outpatient clinics, the CBOC’s, to the

realignment of some small facilities and, three, of course, the issue

of long-term care needs, which are changing daily with the creation

of new veterans’ needs at the present time.

Currently, only 51 percent of our Nebraska veteran enrollees are

within the VA driving guidelines for primary care, the guidelines

being 30 minutes for urban and rural areas and 60 minutes for

highly rural areas. As you are aware, VISN 23 is the most rural

VISN, as we understand it. In order to resolve the gap in access

to outpatient care, VISN 23 established a planning initiative to develop CBOC’s in Bellevue, Nebraska; Holdridge, Nebraska; O’Neill,

Nebraska; and Shenandoah, Iowa; and to increase the capacity at

the existing CBOC in Norfork, Nebraska.

According to the CARES planning initiatives and market plans,

the rationale for selection of these sites, the rationale was based on

the population of enrollees that lack access in these areas. By establishing the CBOC’s, it would increase the access level to 64 percent of enrollees by 2112 and up to 67 percent by 2022, with the

ultimate target being 70 percent.

During the network review process, there was wide support exemplified, with 80 percent of stakeholder comments agreeing and

supporting this proposal. So not all is as from the dark side as we

might have initially been concerned or thought with the concerns

being taken into consideration.

Chairman SPECTER. Senator Nelson, you are past the 5-minute

mark. Do you intend to be longer?

Senator NELSON. No, no. I will submit the rest of the written

statement. But what I wanted to do was indicate that there are efforts underway to work with the stakeholders. We appreciate that.

But we have got such a long direction to go with the new veterans

and the changing in the demographics as time goes by that we

need to continue to work together. I will submit the rest of my

statement, Mr. Chairman, for the record, but thank you very much

for this opportunity.

4

PREPARED STATEMENT OF HON. E. BENJAMIN NELSON, U.S. SENATOR

FROM NEBRASKA

Good Afternoon. I would like to thank all of the witnesses for appearing here

today to discuss the services our veterans have earned and received. Secretary

Principi it is always good to see you again. After the merger of VISN 13 and 14

was announced to form VISN 23, you came to Nebraska to discuss the impact it

would have on our veterans that was greatly appreciated. The merger process was

a good example of the importance of including the concerns of those directly impacted by these decisions. I appreciate the efforts of the VA to incorporate concerns

from stakeholders, such as, Veteran Service Organizations, Network Leadership, VA

Employees, VA Affiliates and Collaborators into the CARES process.

I have reviewed both VISN 23 recommendations for enhanced care as well as the

draft national plan, and I would like to take a moment to express some concerns

regarding: (1) Community Based Outpatient Clinic’s (CBOC’s), (2) Realignment of

Small Facilities, and (3) the issue of Long-Term Care needs.

Currently, only 51 percent of Nebraska Veteran enrollees are within the VA driving guidelines for Primary Care, the guidelines being 30 minutes for urban and

rural areas and 60 minutes for highly rural areas. In order to resolve the gap in

access to outpatient care, VISN 23 established a planning initiative to develop Community Based Outpatient Clinics (CBOC) in (1) DOD/Bellevue, NE; (2) Holdrege,

NE; (3) O’Neill, NE; (4) Shenandoah, IA; and (5) increase the capacity at the existing CBOC in Norfolk, NE. According to the CARES planning initiatives and market

plans, the rationale for selection of these cites were based on the population enrollees that lack access in these areas. By establishing these CBOC’s it would increase

the access level to 64 percent of enrollees by 2012 and 67 percent by 2022 with the

target being 70 percent. During the network review process, there was wide support

exemplified with 80 percent of stakeholder comments agreeing and supporting this

proposal.

Therefore, I was concerned when the draft national plan classified these CBOC

initiatives in the priority 2 category. To qualify as priority 1 a market must demonstrate a larger future outpatient capacity gap, large access gaps and the number

of enrolled who do not meet access guidelines is greater than 7,000. According to

2001 VA data, Nebraska has 52,022 enrollees and only 51 percent of these meet the

access guideline, leaving 49 percent or 27,696 total enrollees outside of the driving

guidelines.

I believe by placing all of these CBOC proposals effectively in the priority 2 category that rural areas of Nebraska will not see improvements in the near future

and will be penalized in comparison to more urban areas with a larger number of

enrollees. Once again, 49 percent of Nebraska enrollees are outside of the driving

guidelines; meaning the Department of Veterans’ Affairs is providing access to Primary Care only half of the time for Nebraska’s Veterans. I find this statistic deeply

troubling. Nebraska veterans, who sacrificed just like other veterans, should not be

penalized because they live in a densely populated area. Therefore, I support the

network proposal and advocate that these 4 CBOC recommendations be included in

the priority 1 category.

My second concern is in regards to the inclination to transition some smaller facilities from Acute Care Hospitals to Critical Access Hospitals. I am of the understanding that the VA is currently using the Medicare definition of a CAH: (1) must

have no more than 15 acute beds, and (2) cannot have lengths of stay longer than

96 hours and (3) maintain a strong link to their referral network. The national plan

proposed that the CAH model be implemented at the Cheyenne VA Medical Center

(VISN 19) and at the Hot Springs VA Medical Center (VISN 23).

921 Nebraska veterans utilize the Cheyenne Medical Center in Cheyenne, Wyoming. In the past fiscal year these veterans were served by 3,578 visits with an average length of stay for acute care at about 130 hours—above the 96 hours threshold for CAH model. The national plan’s focus for this facility is to maintain acute

bed sections, develop more restrictive parameters for types of in house surgery procedure and close all ICU beds. The recommendation to convert this facility to a CAH

model however was not included in the network proposal. Consequently, I have received a significant amount of feedback from local veteran service officers, organizations, facility employees and veterans concerned that this recommendation was suggested late in the CARES process leaving little feedback time for shareholders and

many veterans feel they will see a continual decline in services at the Cheyenne

Medical Center.

2,590 Nebraskan veterans are registered at the Hot Springs Medical with an average length of stay for acute care at about 72 hours—conforming to the CAH model.

The focus for this facility is to decrease bed numbers and increase contracts and reVerDate 03-FEB-2003 10:26 Jan 11, 2005 Jkt 096474 PO 00000 Frm 00008 Fmt 6633 Sfmt 6621 D:\VA\96474.TXT SSC2 PsN: SSC2
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ferrals. Many Nebraskan veterans are concerned about downsizing this facility especially when there is a clear need for continued inpatient services based on the local

domiciliary home and State veteran’s home both located on the Hot Springs Campus.

And the last concern I would like to address is in relation to Long Term Care for

our nation’s veterans. The VA has acknowledged that veteran’s age 75 and older will

increase from 4 million to 4.5 million veterans by 2010. GAO has estimated that

veterans 85 and older will triple by 2012. Considering this increase, the VA will

need all the facilities they can build and maintain to plan for this increase. Cutting

facilities, as the draft CARES plan does, will not make this problem go away and

will only mean that another Administration is forced to deal with it in the very near

future. Thank you again for appearing before the Committee to address our concerns.

Chairman SPECTER. Senator Hutchison.

OPENING STATEMENT OF HON. KAY BAILEY HUTCHISON,

U.S. SENATOR FROM TEXAS

Senator HUTCHISON. Thank you, Mr. Chairman.

I want to thank you for scheduling this hearing, because it has

reverberations throughout my State as well as throughout the

country, I am sure. All of us who serve on this committee understand the need for the Veterans Administration to examine all of

the medical services provided to our veterans and to realign the requirements, where necessary, to address the greatest need. We also

recognize the need for the Veterans Administration to make the

best possible use of our resources.

I am concerned, however, that the draft plan, as it impacts my

state, neither enhances services nor wisely allocates resources. I

recognize that we are only in the second step of a four-step process

and that neither the independent commission nor Secretary

Principi have reviewed these initial recommendations. I am confident that the commission and Secretary Principi will closely

evaluate them.

The release of the draft plan caught many in Texas by surprise.

If the draft plan had been adopted as written, many in Marlin, Big

Spring and Waco, the communities most affected by the proposal,

fear they will lose access to veterans’ medical care. The plan would

result in a drastic reduction in current services. Prior to the release

of the draft plan, our veterans’ organizations and local community

leaders worked with their respective service network regional directors in developing plans to optimize use of their facilities.

But the draft plan that appeared in August bore almost no resemblance to the original recommendations by the service network

directors in the field. For example, the Veterans Integrated Service

Network Market Plan recommended establishing Waco as a regional psychiatric resource and spoke of an enhanced mission for

the Waco facility. Considering that the VA has spent over $80 million over the past decade building state-of-the-art psychiatric facilities in Waco and training technicians and nurses in this specialized

field, the original recommendation to consolidate psychiatric services seemed to be a good use of taxpayer funds. However, the recommendations were disregarded, and closure was recommended.

Similarly, in Big Spring, and I would like to say that the Mayor

of Big Spring, Russ McEwen, and the Howard County Commissioner, Bill Crooker, are in the audience, if you would stand. They

are so concerned about this. We appreciate your being here.

6

Let me tell you the story of Big Spring. They serve a veteran

population spread over 74,000 square miles in an area equal in size

to New York, New Jersey, Connecticut, Rhode Island, Massachusetts and Delaware combined. Big Spring VA Hospital serves

63,000 veterans. It would be inconceivable to imagine a recommendation to close a hospital in Delaware and send veterans to

be treated in Massachusetts, but that is comparable to what is

being done to Big Spring if that facility is closed or severely

downsized.

As was the case in Waco, the veterans’ community in Big Spring

worked with the VISN to make a strong case about the central location, and as I said this morning, even the mayors of Midland and

Odessa, where there would be a proposed new facility, have written

saying no, it should stay in Big Spring, where it is more central.

So I think that we can understand that there was a shock for the

report that came out after working with the VISN.

I recognize the need for the independent evaluation. Communities like Big Spring, Waco and Marlin need to have a strong justification to keep their facilities in place. But I am concerned that

we are on such a fast track that maybe these communities might

not get the full time and have the ability to fully prepare their defense. So I hope that we will not make mistakes in closing facilities

too quickly but that there will be a good, solid timeframe for these

communities to meet and have business plans to say what the community would like to do to upgrade the facility and make it more

worthwhile.

The mayors of these cities with whom I have met: Waco and Big

Spring and Marlin, all say that they are willing to do that. My

final comment is for Mr. Alvarez. We want to say how much we

respect you and the record that you have. You have undertaken a

thankless task and one that really shows the American spirit that

you have already shown in your service career that you would undertake it. I would just ask that you look at the original recommendations in addition to the most recent ones to see what the

regional people brought forward, because I think they shed a lot of

light on this process.

Finally, Mr. Chairman, let me say: no secretaries or assistant

secretaries have been as open to discussion, as forthcoming, as accessible as Secretary Principi and Secretary Roswell. I have met

with both of them. I have talked to them. I know that their hearts

are in the right place, but they could not be more accessible, and

I appreciate that. I just hope that in the end, there will be an ability by the communities to offer things that would be better for the

veterans’ hospital, to make it better and also to look at these original proposals that were made from the field where the service is

really being done.

With that, I thank you very much.

Chairman SPECTER. Thank you, Senator Hutchison.

Senator Miller.

OPENING STATEMENT OF HON. ZELL MILLER, U.S. SENATOR

FROM GEORGIA

Senator MILLER. Thank you, Mr. Chairman. Thank you for holding this hearing, and I would like to thank Secretary Principi and

7

Dr. Roswell and Mr. Alvarez for being here with us and for the

great job that they do every day.

I think it is very important and timely that the Veterans Administration address health care and other concerns of the soldiers, because military service should be a career of distinction and honor.

I know you believe that as strongly as I do and that those who

serve should be given the resources they deserve.

With troops still facing danger and a new generation of soldiers

using VA health care, ensuring access to health care services has

become paramount. But I also want to say that just as important

as accessibility is ensuring that veterans receive health care in a

timely manner as well. We have all heard the stories of veterans

waiting 6 months to see a VA physician. Those delays are too common across this country, and we have got to address this problem.

I applaud the goal of the CARES commission, and I believe the

result of the commission’s hard work will be more comprehensive

and more accessible health care for all of our veterans. I am optimistic. I realize that there are going to be changes that are not

going to please everyone, but I also understand that the Department of Veterans Affairs, just like every other department and just

like the Senate and Congress should get as much bang out of the

buck as we possibly can. It is not Government money; it is taxpayers’ money. We have got to operate the most efficient system of

veterans’ health care without compromising our mission.

We have the best military in the world, and our soldiers put

their lives on the line for this country every day. As you well know,

Georgia is home to 770,000 veterans, and it was Georgia soldiers

that made up the bulk of our troops deployed to the Middle East.

So it is critically important for the VA to guarantee that they will

have access to quality health care facilities when they return home.

So as the CARES initiative progresses, it is vital for the Veterans

Administration to preserve its commitment to veterans. I know you

understand that. I also want you to know that I will continue to

work to make certain that the VA remains dedicated to improving

health care for veterans in Georgia and nationwide, and it is my

hope that Congress and the administration can work together to

find solutions to adequately address VA’s budget concerns while

still providing the quality health care that we all know our veterans deserve.

Thank you.

Chairman SPECTER. Thank you very much, Senator Miller.

We now turn to the distinguished Secretary of Veterans Affairs

Anthony J. Principi. Secretary Principi comes to this job with superb qualifications I think never before matched, in that he had

previously served as Deputy Secretary of Veterans Affairs under

President George H.W. Bush. He had served as chief counsel and

staff director for the Senate Committee on Veterans’ Affairs, which

is a tough job and a great learning experience, and previous to

that, he had been chief counsel for the Committee on Armed Services. So he has quite a legislative background and quite an executive background.

A graduate of the U.S. Naval Academy, he had been in the private sector when President Bush brought him back to government.

He was confirmed on January 23, just 2 days after inauguration

8

day, and even though Secretary Principi has not made judgments

in the area, because the recommendations have not yet come to

him, it is he who started the process on his determination, as he

saw it, to give the veterans the best possible care.

We customarily set the time limit at 5 minutes, and when I start

the proceedings with a time limit, I like to point out that recently,

on the memorial services for Ambassador Annenberg, the time

limit was set at 3 minutes for President Ford and Secretary Powell

and Arlen Specter and others. So it should be noted that 5 minutes

is a large allocation by some standards.

[Laughter.]

Chairman SPECTER. Secretary Principi.

STATEMENT OF HON. ANTHONY J. PRINCIPI, SECRETARY, U.S.

DEPARTMENT OF VETERANS AFFAIRS, WASHINGTON, D.C.

Secretary PRINCIPI. Thank you, Mr. Chairman. Thank you for

your time. Good afternoon, Mr. Chairman and members of this

Committee. I appreciate the opportunity to discuss the VA’s Capital

Asset Realignment for Enhanced Services initiative, usually referred to as CARES.

CARES is rooted in the answer to the question: how can VA and

the Congress best allocate the limited resources available to support our vast infrastructure—well over 5,000 buildings; well over

15,000 acres of land across the country—so as to ensure that veterans receive the best possible care over the decades to come in

this new century? Many of our hospitals were built, designed for

medicine as it was practiced after World War II and, in many

cases, even after World War I, when we inherited old Army forts

from the military, and they became VA hospitals in the late 1800’s

and early 1900’s.

Then, lengthy inpatient admissions were the norm. Today, as you

well know, new procedures, advances in technology, new drug

therapies have moved most care to an ambulatory outpatient arena

and dramatically reduced the length of stay when inpatient care is

still required. Then, the mentally ill were locked away for decades

at a time behind closed doors. Today, most can be treated in their

communities with revolutionary new drugs like atypical

antipsychotics, where they can live at home; they can go to work

as long as they have the new drugs and the community and noninstitutional care support.

Telemedicine, digital radiology, allow physicians literally hundreds if not thousands of miles away from physicians to provide the

latest diagnostic treatment and care with the veteran in their community wherever that might be. Then, many facilities were located

with little regard to where veterans live at the time, much less

where they will be living in the third decade of the 21st Century.

As you know, in 1999, GAO testified that maintaining obsolete or duplicative structures diverts $1 million a day every day, every

year, away from the care of veterans. It is for those reasons that

the last administration initiated the CARES process and why I believe it was important to carry it forward. My goals are simple: provide our doctors and nurses with the facilities they will need to

provide 21st Century veterans with 21st Century medical care; create a plan for managing our capital assets over the next two decVerDate 03-FEB-2003 10:26 Jan 11, 2005 Jkt 096474 PO 00000 Frm 00012 Fmt 6633 Sfmt 6601 D:\VA\96474.TXT SSC2 PsN: SSC2
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ades that will optimize the practice of modern medicine while acknowledging the inevitable changes in veterans’ demographics.

The parameters I set are clear. The plan must ensure that VA’s

capacity to provide care, including our specialized services such as

mental health and spinal cord injury, is not reduced. Nor do I want

a plan that does not comply with the statutory requirements for

long-term care. As you know, we initiated the process with a pilot

in Network 12, basically northern Illinois and Wisconsin. Implementation of the plan for that network is underway. We learned a

lot about our process in that pilot project. It was very expensive.

We paid contractors and consultants millions to do what we could

do for ourselves. Veterans and other members of the community

said that they did not have a chance to provide input, and the process was very slow.

We owe it to our veterans, to our health care providers, to our

communities as well as to the American people to get our capital

asset planning house in order quickly. Our appropriations committees have made it clear that we must produce a well-thought-out

and comprehensive capital plan before they will entrust us with

significant construction funding, even for patient safety and seismic

protection projects.

In real dollars, the past 5 years have seen construction funding

at one-tenth the rate we received in the 1980’s. That will not

change until our project proposals reflect a plan for 21st Century

medicine. I addressed this challenge by directing the Undersecretary for Health to produce a plan based on information developed

with data on local facilities and demographics and with input at

the local level, from the veterans we serve, our employees, our affiliates and our communities. I further directed him to meld this

input into a comprehensive plan for an integrated national health

care system, but I also wanted a reality check.

To get that check, I commissioned an independent body, the

CARES Commission, to evaluate the Undersecretary’s plan, to

independently obtain stakeholder input and to provide their independent judgment to me on the plan prepared by the Undersecretary. To lead the commission, I chose Mr. Everett Alvarez, the gentleman to my right, a former VA deputy administrator; a veteran

whose courage and integrity were forged as a naval aviator and

tested as a POW for 8 years in Hanoi and a man whose commitment to America’s veterans is absolutely unquestioned.

Under his leadership, the commission will make such modifications as they deem appropriate and present their report to me. I

will then review this report very carefully; consult with Members

of Congress; and then accept the plan in its entirety or reject it or

ask the commission to go back and answer further questions, but

I will not pick, and I will not choose among the recommendations

and proposals.

When the process is completed, I expect that we will have a road

map for managing VA’s capital assets for the next 20 years. I fully

expect the plan to call for significant capital expenditures. I do not

delude myself that the plan will call for leaving every VA facility

intact as it exists today. I do expect that implementation of the

plan will mean better health care for more veterans of this nation.

10

Thank you, Mr. Chairman for the opportunity to testify before

you today.

[The prepared statement of Secretary Principi follows:]

PREPARED STATEMENT OF HON. ANTHONY J. PRINCIPI, SECRETARY,

U.S. DEPARTMENT OF VETERANS AFFAIRS

Mr. Chairman and Members of the Committee:

I am pleased to appear before the Committee to describe the process that produced VA’s Draft National CARES Plan, which represents the most comprehensive

effort to develop a road map that will guide the allocation of capital resources within

the Veterans Health Administration (VHA). With me today is Dr. Robert Roswell,

VA’s Under Secretary for Health, who will discuss the contents of the draft national

plan itself.

CARES is a comprehensive, data-driven planning process that projects the future

demand for health care services in 2012 and 2022, compares them against the current supply, and identifies the capital requirements and the asset realignments VA

needs to improve access, quality, and the cost effectiveness of the VA health care

system.

VA initiated CARES to create a strategic framework to upgrade the health care

delivery capital infrastructure and ensure that scarce resources are placed in the

types of facilities and locations that would best serve the needs of an aging veteran

population with increased acute and outpatient care needs. The dramatic changes

in the delivery of VA health care services including the expansion of outpatient services, an aging infrastructure with the average age of buildings over 50 years, costs

associated with the maintenance of excess space, and the potential use of underutilized campuses to provide revenues to enhance services were powerful factors that

coalesced into the need for CARES. GAO’s 1999 reports, which were critical of the

management of vacant space within VHA, and Congressional reluctance to provide

capital without an overall assessment of the current and future capital requirements to meet the health care needs of veterans have reinforced the importance of

a comprehensive capital plan.

The CARES Process was designed to balance the need for a national planning

process with the recognition that health care delivery is local. This was accomplished through the use of national data bases that standardized the forecasts of

enrollment and utilization, the identification of national planning topics, and the

use of standardized tools in determining how to meet the projected needs. Forecasts

of enrollment and the need for outpatient and inpatient care were developed

through the year 2022 for each VISN and market area. Data were integrated with

Medicare to ensure forecasts reflected Medicare utilization. All VHA space was assessed for functionality and safety. Based upon these data, a national planning

agenda was developed and sent to the field for solutions. A standardized costing and

decision support system assisted in the planning. The agenda included the development of cost effective solutions to meet the future space requirements, the mission

of small facilities, reduction in vacant space, consolidations and realignments of

services and campuses and collaboration with DoD. Stakeholder input was required

and occurred at the national and field levels. Seventy-four market plans were submitted as input to the development of the Draft National CARES Plan.

CARES was initiated in a Pilot in VISN 12 in 1999. The CARES process focuses

on markets—or distinct veteran population areas. The Phase I pilot identified three

market areas: the Chicago area, Wisconsin and the Upper Peninsula of Michigan.

In this initial effort, the contractor assessed veterans’ health care needs in the

test market and then formulated various solutions that could meet those needs. Following a detailed review process a plan to realign capital assets in the VISN 12

market areas was approved. The results of CARES Phase I were announced in February 2002.

In preparing for CARES Phase II extension of the process to the remaining 20

VISN’s, I determined that VA personnel, rather than contractor staff, would coordinate and carry out the planning process. The conversion from a contracted study

in one VISN, to a VA-operated planning process extended to the entire system, went

well beyond the scope of the pilot. The use of VA staff was necessary to ensure that

a process was created that would be ongoing and become part of VA strategic planning process rather than a one time study performed by outside consultants.

In effect, CARES Phase II piloted a new process that will be integrated into a

redesigned strategic planning process. The challenge of developing a national process while recognizing that health care is delivered through local systems required

a new approach that included the following elements:

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• use of national data bases and methodologies to determine current and future

needs; • assessment of all space in VHA for its safety and functionality; • national definition of the planning initiatives to be addressed by VISN’s. VISN

development of plans that address the planning initiatives; • standardized planning support systems and data for plan development and costing to ensure consistent results; • policy and tools that supported local and national stakeholder involvement; • onsite technical support to the VISN’s for plan development; and • detailed national review process to create a national plan from the VISN plans.

A major enhancement in the Phase II model was increased commitment to the

aggressive, systematic inclusion of stakeholders. The requirement for in-depth communications with a vitally interested public at national, regional, and local levels

was integral to the process. Multiple modalities and media were designed and used

to inform stakeholders about CARES in general and to solicit their comments on

potential changes in respective markets in particular.

NINE-STEP PLANNING MODEL

The enhanced CARES model comprised a nine-step process designed to ensure

consistency in the development of CARES Market Plans within each VISN.

STEP 1: IDENTIFY MARKET AREAS AS THE PLANNING UNIT FOR ANALYSIS

OF VETERAN NEEDS

The VISN’s identified 74 market areas based on standardized data for veteran

population, enrollment, and market share provided by HQ. Each network also used

local knowledge of their unique transportation networks, natural barriers, existing

referral patterns, and other considerations to help select their market areas.

STEP 2: CONDUCT MARKET ANALYSIS OF VETERAN HEALTH CARE NEEDS

A national actuarial firm—referred to hereinafter as CACI/Milliman—that had

developed enrollment, workload, and budget projections for VA budget development,

under VA direction modified the model to develop standardized forecasts of future

enrollees and their utilization of resources from 2002 through 2022 for each market

area in all VISN’s. Translation of the data into the VHA CARES Categories listed

below facilitated the identification of ‘‘gaps’’ between current VHA services and the

level or location of services that will be needed in the future. These were ‘‘high

level’’ macro categories that would enable planning to occur at a level of detail adequate for capital needs rather than detailed service-level planning: Inpatient Medicine; Outpatient Primary Care; Inpatient Surgery; Outpatient Mental Health; Inpatient Psychiatry; Outpatient Specialty Care; Outpatient Ancillary and Diagnostic

Care.

The model also projected workload demand in the following categories, which were

not used to identify gaps because private sector benchmark utilization rates were

not available to validate results: Residential Rehabilitation; Intermediate/Nursing

Home Care; Domiciliary; Blind Rehabilitation.

Spinal Cord Injury

Since the statistical model’s data validation on these non-private sector services

was not adequate for objective planning, these categories were either removed from

the Phase 1/ cycle (Le., held constant) or, as in the case of Blind Rehabilitation and

Spinal Cord Injury, alternative forecasting models were developed by teams of VA

planners and VHA experts from the concerned special disability programs, who collaborated to produce these unique projections.

Data on the current supply and location of VHA health care services were collected for all facilities, markets, and VISN’s. In most instances, fiscal year 2001 was

used as the source year for baseline data. A profile was created for each VISN and

made accessible to VHA staff on a web site established as the repository for all

CARES data. Baseline data included:

• Space (condition, capacity and current vacant space)

• Workload (fiscal year 2001 bed days of care and clinic stops)

• Unit Costs (facility specific in-house and contract unit costs)

• Special Disability Population Data

• Access Data

• Facility List

• Research Expenditures and Academic Affiliations

• Clinical Inventory

• Potential DoD, VBA and NCA Collaborations

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• Enhanced Use Lease Valuations • Summary of VISN fiscal year 2003/fiscal year 2007 Strategic Plans

STEP 3: IDENTIFY PLANNING INITIATIVES FOR EACH MARKET AREA

Data collected in Step 2 made it possible to directly compare current access and

capacity, with quantitative projections of future demand. ‘‘Gaps’’ were indicated in

any market where actual utilization in fiscal year 2001 was significantly less than

utilization projected for fiscal year 2012 and fiscal year 2022. Such gaps in various

market areas formed the basis for the development of ‘‘planning initiatives’’—essentially a description of the potential future disparity between capacity and need.

Planning Initiative Selection Teams were formed and selected planning initiatives

for each VISN and Market Area based on established criteria for planning remedial

action. Planning Initiatives were identified in the following areas: • Access to Health Care Services • Outpatient Capacity (Primary Care, Specialty Care, Mental Health). Inpatient

Capacity (Medicine, Surgery, Psychiatry) • Special Disabilities (Blind Rehabilitation, Spinal Cord Injuries and Disorders) • Small Facilities • Consolidations and Realignments (Proximity) • Vacant Space • Collaborative Opportunities (DoD, VBA, NCA)

In addition to the Planning Initiatives, all workload changes that resulted in gaps

between predicted demand and current supply had to be planned for, including inhouse provision of services or by contracting, sharing, or other arrangements. The

requirement to manage all projected workload was a significant addition to the

planning process; it was included in order to assure that all space needs were addressed in the National CARES Plan. The Planning Initiatives and their data were

transmitted to the field in November 2002 to begin the market planning process.

STEP 4: DEVELOP MARKET PLANS TO ADDRESS PLANNING INITIATIVES

AND ALL SPACE REQUIREMENTS

The selected planning initiatives formed the key elements of the VISN CARES

Market Plans. All VISN’s developed market plans, which included a description of

the preferred solution selected by the VISN for all planning initiatives identified in

every market as well as potential solutions considered to address each planning initiative.

VISN planning teams were expected to identify alternative solutions for their plan

development process. In proposing these various alternative solutions, VISN planners were required to assemble specific supportive data, which were entered into the

IBM-developed market-planning tool. The standardized algorithms in the market

planning tool assured a consistent methodology for analyzing each solution’s impact

on workload, space and cost, as well as other CARES criteria such as quality, access, community impact, staffing, and others.

Thus, all VISN’s used the same criteria and planning tool (using local operating

and capital costs) to determine the relative merits of meeting future demand via

contract, renovation of available space, new construction, sharing/joint ventures/enhanced use or acquiring new sites of care. VISN’s briefed stakeholders on their planning initiatives, and presented their proposed solutions. Comments and other feedback from stakeholders were duly noted for incorporation into the planning process.

VISN market plans were submitted to VHA Headquarters on April 15, 2003.

STEP 5: VACO REVIEW AND EVALUATION: DEVELOPING THE DRAFT

NATIONAL CARES PLAN

The VISN plans served as input to the development of the Draft National CARES

Plan. The Draft National CARES Plan is not a compilation of individual VISN

plans. It represents a comprehensive series of national decisions made after reviewing the individual VISN Market Plans. Each VISN CARES Market Plan was subjected to an extensive tri-partite review before ultimately being considered by the

Under Secretary for Health for inclusion in the Draft National CARES Plan. The

groups conducting the reviews were field and headquarters review teams organized

by the National CARES Program Office, the Clinical CARES Advisory Group

(CCAG), and the CARES Strategic Resource Group (also known as the ‘‘One VA

Committee’’). The clinical experts (CCAG) provided the most rigorous review and

comments on issues with medical and other direct care (including mission-related)

implications, while the Strategic Resource Group took a more generalized management approach, looking especially closely at matters concerning collaboration with

other departments or administrations.

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The National CARES Program Office performed a comprehensive and intensive

review, assembling review groups to look at similar types of planning initiatives

from all VISN’s, assuring a structured assessment that was consistent across the

VA system as well as an overall assessment of whether the individual solutions

within a market added up to a sensible market plan.

The final review was by the Under Secretary for Health, who reviewed the key

issues and the comments from the diverse review groups and stakeholders. As a result of the Under Secretary for Health’s review of the adequacy of the market plans,

selected VISN’s were required to review the potential realignment of specific facilities/campuses and to consider the feasibility of conversion from a 24-hour/7day-perweek operations to an 8-hour-per-day/40-hour-per-week type of operation. The rationale for the requested review was to fully assess the potential to consolidate

space and improve the cost effectiveness and quality of VA’s health care delivery.

The guidance included the continuation of all services to veterans as part of the realignment review. The results of this initiative were completed in July 2003 and incorporated into the draft National CARES Plan.

The product of the Under Secretary’s review process and policy decisions formed

the draft National CARES Plan that I transmitted to the CARES Commission on

August 4, 2003.

STEP 6: INDEPENDENT COMMISSION REVIEW

I established the CARES Commission in December 2002 to provide an objective

and external perspective to the CARES process. It is not expected to provide a ‘de

novo’ review of the VA medical system. Rather, the Commission is charged with reviewing the Under Secretary’s Draft National CARES Plan so that it can make specific recommendations to me regarding the realignment and allocation of capital assets needed to meet the demand for veterans’ health care over the next 20 years.

At the first of its monthly meetings, in February, I asked the Commission to examine the Draft Plan with a critical and independent eye; I also asked the Commission to report to me on the validity of the opportunities identified in the Plan for

improving our ability to provide quality healthcare for veterans by effective deployment of physical resources.

The Commission is made up of 16 individuals from all walks of life: doctors and

nurses, medical and nursing school professors and deans, health care professionals,

members of veterans’ service organizations, former VA officials, business managers

and leaders in their communities. Each member brings his or her special qualifications and experiences to the Commission, as well as sensitivity to the Commission’s

unique mission. Chairing the Commission is the Honorable Everett Alvarez, Jr.,

who is best known as the first American aviator shot down over North Vietnam and

who was a prisoner of war for 81⁄2 years. Among his other accomplishments, Chairman Alvarez served as Deputy Director of the Peace Corps, and as Deputy Administrator of the Veterans Administration for 4 years.

The Commission may accept, modify or reject the recommendations in the Draft

National CARES Plan. In making its recommendations, the Commission will consider information gained through nation-wide site visits, written comments from interested parties and formal public hearings. The Commission completed 59 of its 65

site visits in July, with some scheduled into this month. These informal tours

through VA facilities and the geographic areas they serve have included meetings

and conversations with many veterans, individuals inside the VA family, and local

community leaders. The Commission has completed over half of its 36 formal public

hearings, with the last one scheduled for October 3.

STEP 7: SECRETARY OF VETERANS AFFAIRS DECISION

I anticipate that the Commission will provide me their recommendations and supporting comments regarding the Draft National CARES Plan by December 2003.

After reviewing their recommendations, I will make a determination to accept, reject, or refer back to the Commission for additional review or information prior to

making a final decision.

STEP 8: IMPLEMENTATION

VISN’s will prepare detailed implementation plans for their CARES Market

Plans, which will be submitted to the Under Secretary for Health for approval. Approved market plans will be used by VISN’s to develop capital proposals that will

be selected for funding through a capital prioritization process that is linked to the

CARES process and to subsequent strategic planning cycles.

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STEP 9: INTEGRATION INTO STRATEGIC PLANNING PROCESS

As VISN’s proceed with the implementation of their CARES Market Plans, the

planning initiatives and proposed solutions will be refined and incorporated into the

annual VHA strategic planning cycle. The integration of capital assets and strategic

planning will ensure that programmatic and capital implementation proposals are

integrated into current VHA strategic planning and resource allocation. The alignment of policy assumptions and strategic objectives will thus form an integrated

planning process.

Mr. Chairman, in a recent article in the Washington Post, Dr. David Brown commented on VA by indicating that ‘‘VA is the most safety conscious, self aware, and

in many ways the best run medical system in the country.’’ This is high praise indeed from a well-respected physician, and it is my goal that the VA strategic planning process will in every way possible reflect the standards and performance implicitly expressed in Dr. Brown’s statement. The CARES initiative is an important

step in that direction. This completes my testimony. I will now be happy to answer

any questions that you or other Members of the Committee might have.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. BOB GRAHAM TO THE

DEPARTMENT OF VETERANS AFFAIRS

Question 1. In the market plan submitted to the Under Secretary for Health by

VISN 1, officials stated they had considered ‘‘alternatives to consolidate Long Term

Care (LTC) (including the Alzheimer’s and SCI Units) and Psychiatry inpatient beds

from the Bedford to Brockton facilities’’ yet, ‘‘as final projections are not available

for LTC inpatient beds and earlier projections indicated a substantial increase in

LTC beds, it was determined to utilize current capacities.’’ Despite these assessments to the contrary—made by those with firsthand knowledge of the situation—

VA’s draft National CARES Plan proposes that Bedford instead convert these facilities into outpatient operations only. (a) How do you justify this disconnect? (b) If

the conversion does take place, what will happen to those patients who rely on the

Bedford VAMC’s 100-bed specialized care unit for veterans with Alzheimer’s disease? Please explain how VA will ensure that these veterans continue to get the

long-term care services they so desperately need.

Response. VA’s complete response to both questions follows question 2 below.

Question 2. In addition to its specialized care unit for veterans with Alzheimer’s

disease, the Bedford VAMC houses a Geriatric Research, Education, & Clinical Center (GRECC), which is widely respected for its innovative and practical clinical research on dementia care. The GRECC is also a recognized leader in providing palliative care to veterans with advanced progressive dementia. (a) How will a conversion

of the Bedford facility impact the ongoing dementia research that is presently taking place at the Bedford GRECC? (b) Along similar lines, how does VA plan to continue providing palliative care services to the veterans who depend on the Center?

Response. The following response is intended to address all parts of both questions.

The realignment proposal for the Bedford campus contained in the draft National

Plan provides that outpatient services will be maintained at the Bedford campus.

Current services in inpatient psychiatry, Alzheimer’s disease, domiciliary care, nursing home care, and other workload from the Bedford campus will be transferred to

other VISN 1 facilities. The realignment process will also maintain special programs

such as Alzheimer units, GRECC’s (including dementia research), and palliative

care, though not necessarily at the Bedford campus. The preliminary proposal included the possibility of realigning these programs to the Brockton campus. The remainder of the Bedford campus will be evaluated for alternative uses such as enhanced use leasing for an assisted living facility that would be available to veterans.

Any revenues or in kind services will remain in the VISN to invest in services for

veterans.

The realignment proposal is currently being refined and will specifically address

the needs of all programs, including the special programs mentioned above, to ensure that patient care needs are met and will be part of the proposal that is reviewed by the CARES Commission and the Secretary. In addition, research associated with these programs will be considered in the revised realignment proposal.

The LTC planning model that is currently available does not adequately account

for changes in the delivery of long-term care services and changes in disability

among the elderly population. It overstates the future demand for Nursing Home

beds. This model is currently under revision. As a result, in this stage of the planning process, the realignment analysis uses current nursing home capacity rather

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than plan for what may be an excessive number of beds. However, if the Secretary

approves the recommendation, the results of the improved forecasting model will be

available and used to finalize the proposal prior to implementation planning. This

will ensure that future nursing home needs are accurately assessed both for Bedford

and throughout the VA health care system.

Implementation plans to effect the transfer of programs and services are not yet

developed. However, the transition would take place over time and in a manner that

is least disruptive to patients and their families. The final determination of the future of the Bedford VAMC is being made in successive steps to ensure that patient

care services are maintained for veterans. Both the CARES Commission and the

Secretary will review the realignment recommendation before the Secretary makes

a final decision on the draft National CARES Plan proposal. It is the Secretary’s

policy that no services will be closed without alternative locations to provide these

services to veterans.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. PATTY MURRAY TO THE

DEPARTMENT OF VETERANS AFFAIRS

Question 1a. My understanding is that the VISN 20 regional VA leaders complied

with all the requirements for the CARES market plan. I fail to understand why,

at the very last minute—before the plans were sent on to the Commission—more

than two dozen facilities, including three in Washington State, were told to re-do

their plans. It looks to me that after months of reviewing VISN submissions, the

VA has decided to rewrite the rules to get the response it seeks. This undercut

months of work and more importantly it seems like a particularly disingenuous

thing to do to our veterans groups—in Washington State and in the dozens of communities which were affected. Why was the decision made to undercut the CARES

process at the 11th hour?

Response. The Under Secretary for Health requested changes to the market plans

as a result of reviews conducted during preparation of the draft National CARES

Plan. This review was an integral part of the design of the CARES process to ensure

that the plan was truly national in scope and not simply a compilation of the individual VISN market plans. Rather than undercutting the CARES process, this review and the proposed changes to the market plans were an effort to ensure that

national, system-wide issues are adequately addressed. The VISN’s’ market plans

contain the results of thousands of decisions regarding how outpatient and inpatient

demand will be managed, i.e., whether space will be leased, renovated, or constructed, or whether community contracts and 000 sharing will be utilized. Almost

all of these decisions are included as recommended in the market plans.

When the Under Secretary reviewed the results of the market plans, he concluded

that there were opportunities to realign campuses to improve the quality, access,

and resource use by examining opportunities to move these campuses from inpatient

to outpatient operations, i.e. by converting from 24-hours, 7-days/week to an 8-

hours, 5-days/week operations. He asked the VISN’s to determine how this could be

accomplished at selected sites with the provision that there would be no loss of services to veterans. He specified that inpatient services must be provided either at

other VAMC’s through sharing agreements or in the local community through contracts. He also stipulated that outpatient services were to be maintained on the

VAMC campus or in the local community through leasing of sites or contracting for

care. The realignments focused on moving long-term care sites to locations with an

acute care presence because this would also improve access to diagnostic and therapeutic services for the long-term care population. In addition, the current physical

environment in many sites, such as Walla Walla and White City, would require significant capital investment in older buildings. It would be more expensive to renovate such buildings than it would be to build a new nursing home, for example.

Many patients served by long-term care facilities are often more dispersed geographically than those served by acute care facilities, and where contracting is combined with relocation of beds to other VAMC’s, access is likely to be improved.

With respect to the Vancouver campus, we believe we have an opportunity to put

the campus to better use. It appears to be underutilized for inpatient care services,

and we are exploring opportunities to improve access to outpatient services at another location.

All of the draft National CARES Plan realignments are proposals that are being

further reviewed. Additional cost benefit information will be available to the CARES

Commission and the Secretary prior to the final decision on the National CARES

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Plan. Should the proposals be approved, detailed planning would occur as part of

implementation planning.

Question 1b. Can you explain to me why headquarters desired a significantly

redrawn market plan for Washington State and VISN 20?

Response. The only changes in the VISN 20 market plan involved the three facilities indicated in the realignment analysis mentioned above in our response to Part

A of your question.

Question 2. The stated CARES mission is to ‘‘realign and enhance VA health care

to meet veterans’ needs now and into the future.’’ What I keep hearing from the

VA is a need to close existing facilities to provide better care to our veterans; a

promise to use any savings from CARES efficiencies to enhance VA healthcare in

areas with a growing veterans population and expand coverage into currently underserved areas. Unfortunately, veterans in my State have no recourse if any expected

cost savings don’t materialize, or are directed for another purpose. What assurances

do we have that the Administration will request enough funding to cover the costs

of expanding the coverage and enhancing care?

Response. While there are always budget constraints, the final CARES Plan will

provide a systematic data-driven assessment of the capital requirements to meet the

current and future needs of veterans. I am committed to developing capital funding

requests that will provide the improvements and expansion of our infrastructure

through the 5-year capital planning process. In many, perhaps most, cases the savings generated by CARES will require front end capital investments whose savings

and revenues will not be realized until all the components of the realignment are

in place and will occur over an extended timeframe. In addition, the capital requirements associated with realignments will receive the highest priority in developing

these budget requests.

In this regard, we also note that S. 1156, marked up by the Senate Committee

on Veterans’ Affairs on September 30, contains a provision (section 402) that would

authorize VA to plan and carry out major construction as outlined in the final National CARES Plan. It would also authorize up to 5-year contracts for these CARES

projects and the use of any combination of funds appropriated for CARES.

Question 3a. We know the final CARES plan may include the closure of nearly

6,000 beds—hundreds in Washington State. It is my understanding that the VA’s

intention is to reopen these beds in other VA facilities or to contract out for the

beds. But, I find virtually no mention of how this will be accomplished. Are you comfortable telling our veterans that their hospitals will be closed but hopefully beds

will be found later?

Response. The draft National CARES Plan identifies the need for approximately

600 fewer acute care beds by 2022. These beds are spread among 20 VISN’s and

do not significantly impact the future of any acute care facilities. The number of

beds affected by proposed realignments total approximately 3,144. These are primarily Nursing Home, Domiciliary, and Long-Term Psychiatry beds. These beds will

continue to be available either in other VAMC’s or through local contracts. If the

proposed realignments are approved for the final National Plan, further study will

be required to finalize the exact distribution; however, the majority of these beds

are currently proposed for transfer to other VAMC’s.

Question 3b. How can the VA make the decision to close more than a hundred

nursing home and psychiatric beds in Washington State without having examined

the potential demand for such care?

Response. The proposed realignment maintains services to veterans and does not

eliminate the nursing home and psychiatric beds to veterans. However, the forecasting models for Nursing Home, Domiciliary, and long term psychiatry that were

available for the VISN market planning and the draft National CARES Plan required improvement to accurately represent the future needs of veterans. As a result, the demand for these beds was maintained at current capacity. This enabled

the planning process to move forward while recognizing that final detailed planning

would require projections of future demand. The planning models that will provide

this information are under revision. If the proposals are approved, the revised planning models will be available to ensure that final implementation planning is based

on the most accurate estimates of the expected needs of veterans.

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. JIM BUNNING TO THE

DEPARTMENT OF VETERANS AFFAIRS

Question 1. Dr. Roswell, would you please give me your reasons for proposing to

close the Leestown Road Medical Center in Lexington? I particularly want to hear

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what benefits you expect to come from that and what you plan to do to offset any

losses there.

Response. The CARES Commission recommended that the Lexington-Leestown

campus remain open, and that plans be developed to make the footprint of the

Leestown campus smaller, making most of the campus available for disposition and/

or enhanced use leasing. The benefits of remaining, on the Lexington Campus, but

in modernized facilities, will alleviate any additional burden on Cooper Drive. While

the mission of the Leestown Campus will remain unchanged VA will develop a master plan to provide for an appropriate sized footprint and consider enhanced use

lease partnerships. At the same time, the master plan will provide an improved environment for care and maximize reuse potential of Lexington. As you know, these

actions are consistent with the Secretary’s May 7, 2004, decision for LexingtonLeestown to pursue opportunities to reduce the footprint of the Leestown campus.

Question 2. Dr. Roswell, the current VA hospital in Louisville is very old and the

design is not suited to modern health care delivery. What other factors made you

decide to study moving the hospital and what benefits do you expect to gain by a

new partnership with the University?

Response. Due to the poor environment of care and overcrowding at the current

Louisville VA Medical Center (VAMC), the CARES Commission recommended that

VA study the feasibility of building a replacement VAMC for Louisville in proximity

to the University of Louisville, including the possibility of a shared infrastructure

with the medical school and the VA Regional Office (VARO). In his May 7 CARES

decision, the Secretary decided to study the need for a replacement hospital for the

Louisville VAMC, focusing on access to and quality of care as well as referral patterns with other regional medical centers, the potential for collaboration with the

University of Louisville, and the collocation with the VARO. The study is expected

to be completed in November 2005.

Question 3. Mr. Alvarez, what information are you looking for to decide whether

to retain the existing Louisville facility or to build a new facility in cooperation with

the University of Louisville?

Response. Due to the poor environment of care and overcrowding of the current

medical center, the CARES Commission concurred with the Draft National CARES

Plan proposal to study the feasibility of building a replacement medical center for

the Louisville VAMC in proximity to the University of Louisville, including the possibility of shared infrastructure with the medical school and the VBA office. As you

know, on May 7, 2004, the Secretary announced his acceptance of the Commission’s

recommendation and VA will undertake a comprehensive study of the feasibility,

cost effectiveness and impact of replacing the Louisville VA Medical Center with a

state-of-the-art medical center with a focus on access to and quality of care. Further,

this comprehensive study will consider referral patterns from other regional medical

centers, the potential for collaboration with the University of Louisville, and collocation with the Veterans Benefits Administration.

Question 4. Mr. Secretary, I am glad that the draft proposal recommends more

clinics in Kentucky like we talked about earlier this year. I am not sure the final

cares plan can predict all locations where clinics will be needed in the future. If the

need is shown are you willing to consider and support building more clinics even

if they are not in the final cares plan?

Response. The CARES Commission recommended that VA prioritize communitybased outpatient clinics (CBOC’s) under a national framework and continue to enhance access to care. In my May 7 CARES decision, I prioritized 156 of the CBOC’s

proposed in CARES for implementation by 2012 pending availability of resources

and validation with the most current data available. This list reflects VA’s priorities

for planning based upon the most current information. As VA proceeds in implementing CARES and engages in future planning, the locations of these CBOC’s may

change, but the priorities will remain constant.

For example, VA currently has 11 CBOC’s in Kentucky located in Prestonburg,

Whitesburg, Somerset, Morehead, Fort Knox, Dupont, Shively, Staniford, Bowling

Green, Paducah, and Fort Campbell. Under the CARES plan, an additional 9

CBOC’s will be implemented by 2012: Berea, Hopkins County, Perry County, London, Glasgow, Grayson County, Graves County, Davies County, and Carroll County.

An additional CBOC in Morehead that was previously congressionally approved, but

never implemented will be opened in 2005.

VA will enhance access to care in underserved areas with large numbers of veterans, enable overcrowded facilities to better serve veterans, and continues to support sharing with DOD. These principles will remain priorities even if management

strategies to meet them evolve as new data and information become available.

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Chairman SPECTER. Thank you very much, Mr. Secretary.

We will now proceed with a round for 5 minutes for each member.

Mr. Secretary, there has been considerable concern about the exclusion of Category 8, which would be veterans with non-service

disabled or veterans who have income generally of less than

$23,000 a year. Do you foresee a relaxation there so that veterans

who earn more then $23,000 a year or some other combination of

non-service connected disability would allow others to get the service? $23,000 a year does not signify that a person could afford medical care.

Secretary PRINCIPI. Indeed, it does not, Mr. Chairman.

The answer to the question really depends upon the level of resources that the Department receives to provide care to, first and

foremost, our core constituency, the men and women disabled in

service; the poorest of the poor, who have few other options for

health care; and third, those in need of specialized services like spinal cord injury and blind rehabilitation.

It is certainly my hope that, whether it be next year or the year

after, we will be able to once again reopen enrollment to Priority

8 veterans, but our focus has been over the past year to ensure

that those men and women, both in the past and returning from

Iraq and Afghanistan today who are disabled in combat or in training accidents are able to access the VA health care system as well

as the very, very poor, the pensioners, the people at the poverty

line. I am sure that once we are able to do that, we are able to reduce our waiting list to zero, then we will certainly—I certainly

will consider reopening it up to Priority 8s.

Chairman SPECTER. Mr. Secretary, what factors or what events—

what do you think would have to occur before you would reopen

Category 8 or at least make a modification to include more veterans?

Secretary PRINCIPI. Well, certainly, I think it depends directly on

the level of appropriations that we receive from, you know, requested by the President and appropriated by the Congress and a

recommendation from my undersecretary that we can reopen the

doors to Category 8s, because we are able to meet the demands

that are being placed upon the VA.

But I might say, Mr. Chairman, members of the committee, the

demands are unprecedented. Categories 1 through 7 continue to

grow dramatically in many parts of the country. More and more

veterans are coming to us for care. A significant number are coming to us for prescription drugs, because they simply cannot get it,

as we all know, in the private sector.

They have Medicare physicians. They are getting medical care,

but they cannot get the prescription drugs, and they are coming to

the VA in record numbers.

Chairman SPECTER. Mr. Secretary, there had been a preliminary

staff review, which suggests that the real focus here is on psychiatric institutions like the one at Highland Drive in Pittsburgh,

which is a facility for 1,000 people and is largely vacant, has only

about 150 people, and some of those are homeless.

The treatment for psychiatric patients has now changed dramatically with drugs, with integration into the community. Is a major

19

thrust of the CARES project here the re-evaluation plan being directed toward psychiatric hospitals?

Secretary PRINCIPI. Acute psychiatric care is clearly considered in

our plan. What we are doing in the VA is we are developing a new,

long-term care psychiatric model to address the long-term psychiatric care, institutional care needs of our nation’s veterans. But

as you said, the focus in our Nation has been on community reintegration of the mentally ill back into the community, and we are

able to do that because of revolutionary new drugs, but we also

have to have the non-institutional care programs and the community support services available to care for these veterans and, you

know, all Americans who are moved from mental institutions.

I believe that mental health is a very important core mission of

the VA. It may not be as glamorous as some of the other things

that are being done, but it is very, very core; very important:

PTSD, substance abuse, chronic mental illness——

Chairman SPECTER. Mr. Secretary, let me interrupt you. I have

got 16 seconds left.

Secretary PRINCIPI. Sure.

Chairman SPECTER. I want to ask one more question, and I am

going to observe the red light.

You say you will accept the plan only in its entirety. Do you

think that the law constrains you to take it all or none?

Secretary PRINCIPI. No, sir.

Chairman SPECTER. Or why would you not exercise some discretion?

Secretary PRINCIPI. I will exercise——

Chairman SPECTER. I will note the red light went on with the

conclusion of the word discretion.

Secretary PRINCIPI. The law does not constrain me. I just did not

want to be in a position to politicize this report by picking and

choosing. I wanted to work closely after the commission submitted

their report to me to address concerns that I might have, questions

I might have, with regard to some of their recommendations and

ask them to go back and to reassess it.

But I felt that politicizing this report would destroy its integrity

and perhaps doom our entire effort. But I am not constrained by

law.

Chairman SPECTER. Senator Nelson.

OPENING STATEMENT OF HON. BILL NELSON, U.S. SENATOR

FROM FLORIDA

Senator NELSON. Thank you, Mr. Chairman.

Mr. Secretary, as I described, in rural markets, we are having

problems with veterans who have to drive long distances. Do you

feel like we are serving our veterans in this area by placing the

CBOC proposals in the Priority 2 category? It seems to me that

that is a significant question, and I would be interested in what

you think about that.

Secretary PRINCIPI. Well, as you know, Senator, over the past

several years, the VA has moved very dramatically into outpatient

care. Prior to the mid-1990’s, if I am correct, Dr. Roswell, the VA

had no freestanding community-based outpatient clinics, and it has

been a dramatic change that today, we have close to 700 commuVerDate 03-FEB-2003 10:26 Jan 11, 2005 Jkt 096474 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 D:\VA\96474.TXT SSC2 PsN: SSC2
20

nity-based outpatient clinics; thereby, veterans in rural areas do

not have to drive 4, 6 hours to a VA medical center to get care.

They can access it much closer to their homes.

So we have literally gone from 0 to almost 700. This plan—and

Dr. Roswell can comment—it calls for, I believe, another 48 community-based outpatient clinics. But we have to maintain balance.

We have to preserve our inpatient care capability and our outpatient care. We cannot afford to go too far in one direction, because at some point in time, those veterans are going to need to

get into inpatient care. That is why we have—Dr. Roswell, you may

want to comment.

Dr. ROSWELL. Yes. Let me just add, Senator Nelson, that the Priority 1 CBOC’s recommended in the national plan were those

CBOC’s where 7,000 or more veterans failed to meet the access criteria established in the plan. Unfortunately, the CBOC’s proposed

for your State did not meet those criteria. There were fewer than

7,000 veterans in those locations who would be served by a new

CBOC. That is not to say, though, that they are taken out of the

plan. A very important construct of the national plan that I forwarded to the CARES Commission was that the recommendations

in the national plan augment what is in the existing plan. We still

recognize all 262 CBOC’s proposed in each of the VISN market

plans as bona fide requests, and certainly, the ones from your State

are included in that list of 262. But the national plan, of necessity,

had to identify our highest priority, hence, those 48 included only

those CBOC’s where 7,000 or more veterans would now meet access

standards.

Senator NELSON. Chairman Alvarez, is the CARES Commission

considering at the present time changing the priority grouping for

these CBOC proposals, or are you going with the initial recommendations, if you know?

Mr. ALVAREZ. At this time, we are not going along with anything.

We are not sticking with any or making any changes. We are in

the process of gathering information, and we are holding hearings

around the country at this time. When we finish that, we will take

all of the information that we have. I must add that we continually, as we go through the hearing and the data gathering process, continue to ask for more information.

But I can assure you that this is one area that we have a special

interest in also. We have noted the large number of veterans who

have to travel long distances for access to primary care, and of

course, that is one of the charges I have given the members is to

take a good look at that, understanding the Priority 1, Priority 2

categories, but look at everything very closely, so no, we are not following any special standard.

Senator NELSON. Mr. Secretary, as we were speaking about the

creation of new veterans every day, are there any studies underway right now with respect to the wounded in terms of location as

to where their future needs may be and how those special needs

might be met as well as the current needs and the changing needs

of areas? Perhaps Dr. Roswell would want to address that.

Dr. ROSWELL. Certainly, with the Secretary’s leadership, we are

working in an unprecedented manner with the Department of Defense to identify casualties coming out of Operation Iraqi Freedom.

21

To date, there have been 6,000 men and women who have been

evacuated from that theater of operations. We are working very

closely with DOD to track all of those.

Fortunately, the vast majority of them have non-life-threatening

illnesses, and in fact, many of them may return to active duty. But

where there are serious illnesses, it will certainly lead to future

health care needs through the Department of Veterans Affairs and

disability compensation benefits. We have established a very comprehensive program to identify those veterans and make sure they

get their disability benefits, the services through the Department

as well as the health care that is needed.

Secretary PRINCIPI. We have full-time employees up at Walter

Reed, at Bethesda, participating in the discharge planning process,

so that we know when they leave Bethesda, Walter Reed, and go

back to Omaha, wherever, that they do not fall through the cracks;

that they are enrolled, and when they get to the VA, their name

is in the computer. I think that is a very important step.

Senator NELSON. Thank you.

Thank you, Mr. Chairman.

Chairman SPECTER. Thank you very much, Senator Nelson.

Senator Hutchison.

Senator HUTCHISON. Thank you, Mr. Chairman.

Mr. Secretary, I think the most shocking thing that you have

said here today is what the Chairman picked up on, and I did as

well, that you do not intend to pick and choose among the recommendations. What I am concerned about is that while the committee will be charged with looking at the very best way to give

the best service to veterans, it will be only the Secretary and the

Department that could put the efficiencies and the budgetary

issues and also the issues of where different services are given together to make a final decision.

So my question is: how are you going to put the overview on the

commission findings so that you would be the one who could say

certain areas could be addressed that perhaps the commission

would not have the information to even put into the system?

Secretary PRINCIPI. Once I receive a report and study it very,

very carefully, it would be my intention to work closely with the

members of the commission, the chairman of the commission, to

address any issues that I believe need further refinement or perhaps need to be changed; that I have a question about or a concern

about, and I will not approve the report until such time as I am

convinced, in my own mind, that from both a local and a national

perspective, it is correct.

I just did not believe it would be appropriate, once I had all of

those questions asked and answered and my concerns addressed to

start, you know, picking and choosing. I wanted to adopt this plan

in its entirety to ensure that, from a national perspective, looking

at all of the different markets, all of the different networks, that

this plan promotes the delivery of health care, access and quality

of health care across the nation. But I can assure you, Senator,

that I will work very, very closely with the Chairman of the Committee to ensure that all the issues are addressed.

22

Senator HUTCHISON. Well, I am going to take it from that that

you will provide the overview within the process before there is a

final——

Secretary PRINCIPI. Most assuredly.

Senator HUTCHISON [continuing]. Plan adopted.

Secretary PRINCIPI. Most assuredly, Senator.

Senator HUTCHISON. Second, let me ask you, because I know two

of my communities have asked this question, and I would assume

it would probably be throughout the country, but my two communities would like to have some ability to offer help to make a hospital more effective. What would be the process for them to be able

to do that? They have the hearings, but if they do not know exactly

where you and your overview are going, they might not know what

they could offer that would be helpful. So how are you going to accommodate that before the final, final decision to actually close a

facility?

Secretary PRINCIPI. Well, I would certainly hope that communities would make those views known to the members of the commission when they testify; certainly submit proposals to the commission or to the undersecretary for any collaboration that might

assist one way or the other in the disposition of what is going to

happen at that facility and then certainly after the report is submitted can submit that to me.

So I would believe that right now, the commission is in the phase

of holding hearings, gathering data and input from the communities, and community involvement and community impact is an

important consideration for the commission. So I would suggest,

Senator, that they make those views known to the commission, the

commission staff here in Washington, and if there is any difficulty

in getting that information to us, I would be more than happy to

assist.

Senator HUTCHISON. Well, let me just ask——

Mr. ALVAREZ. May I?

Senator HUTCHISON. Yes.

Mr. ALVAREZ. In addition to what the Secretary just stated, what

we are finding out is that there are a number of proposals that

have come forth from the community affecting the plans. What we

have found is that these people in the communities have already

worked with the local VA people through the VISN director’s office

and have establishing relationships and are working on their portions. So I would offer that as another opportunity, because as a

reviewing committee, we became aware of it and keep an eye out

for it when it comes up.

But I think the bulk of the work can be initiated through the undersecretary.

Senator HUTCHISON. OK; thank you. I see my time is up. But

there will be a second round?

Chairman SPECTER. No, we are going to have to move on, Senator Hutchison. Would you care to ask an additional question or

two now?

Senator HUTCHISON. Well, yes. Let me just ask Mr. Alvarez:

would you have in your purview also looking at the VISN recommendations that did not make it to the final draft plan?

23

Mr. ALVAREZ. Yes, Senator, we have access to all of that information.

Senator HUTCHISON. And will you look at those——

Mr. ALVAREZ. We will look at that plan.

Senator HUTCHISON [continuing]. As part of your decisionmaking?

Mr. ALVAREZ. We are asking questions not only about the national plan but also about the market plans that were submitted.

So that is part of the——

Chairman SPECTER. Senator, there will be an additional round as

to the other witnesses.

Senator HUTCHISON. Oh.

Chairman SPECTER. I was really referencing that as to Secretary

Principi.

Senator HUTCHISON. Are the other witnesses going to speak and

then have questions?

Chairman SPECTER. Secretary Roswell is not going to be offering

an opening statement and is prepared to submit to questions.

Senator HUTCHISON. But Mr. Alvarez will?

Chairman SPECTER. Will, too. Mr. Alvarez will, too, so there will

be another round.

Senator HUTCHISON. OK; well, let me just finish, then, with Mr.

Principi one other question, and that is the one concern I have

about a community coming forward with some suggestions is that

you might have, in the back of your mind, a different use for the

facility that the community could then say we will be able to provide, say, a private developer for an extra building with a leaseback or something that they might not know is in your mind. So

will there be some process by which you could say we are looking

for an opportunity to see what you could put forward in this realm,

if it is different from what they are doing now?

Secretary PRINCIPI. Absolutely. Senator, this is a planning process that will result in a series of recommendations and from that

point becomes a very critical stage of looking toward the implementation of this plan. I would highlight here that this is a 20-year

plan and that some of the changes would take place in the first few

years, but this is scheduled to be phased in over a 20-year period

as the demographics of the veteran population change. So it is not

going to happen all in year one or year two.

The second important point to mention for all members of the

Committee is that it certainly is my intent not to sell this VA property, to excess it, to board it up. It is my intent and my hope that

through the enhanced lease use authority that you have given us

by statute that we can convert some of these properties that are

underutilized into projects such as assisted living to meet the longterm care needs, the assisted living needs, of our nation’s veterans

or for other purposes that provide services to veterans.

So I expect that we will be maintaining this property, but we will

be transforming it in many different ways. Of course, the community would play a major role in whatever decision is ultimately

made.

Senator HUTCHISON. Thank you very much.

Thank you, Mr. Chairman.

Chairman SPECTER. Thank you, Senator Hutchison.

24

Senator Miller.

Senator MILLER. Mr. Secretary, have you received the input and

participation, are you getting it that you hoped to get from the veterans’ organizations?

Secretary PRINCIPI. Yes, we have, and we have really——

Senator MILLER. You have probably gotten more than you wanted?

Secretary PRINCIPI. Well, we have certainly tried to make that an

important part of this process, and I think one of the criticisms

early on, when that first phase was started, was that there was little input. When I changed this process around, I wanted to ensure,

to the degree that we could, that the stakeholders had an input.

Of course, a lot of that information and preliminary plans had to

come to Washington for a national perspective, and some changes

were made by the Under Secretary, and he can address those. But

clearly, that was an important part.

Senator MILLER. I agree.

This is a question probably for Dr. Roswell. Explain to me how

the medical facilities on the military installations, how are they

worked into this process exactly.

Dr. ROSWELL. In the formulation of the national plan, we had

three representatives from the Department of Defense who worked

very directly with us and considered a large number of potential

collaborations. In fact, upwards of 70 different potential collaborations between VA and DOD were considered. Twenty-one were

identified as high priority in the national plan and went forward

as projects to be pursued in collaboration with the Department of

Defense.

Senator MILLER. I cannot help but wonder, though, what would

happen if BRAC comes along and closes those that you have

worked into that.

Dr. ROSWELL. Well, certainly, that is a concern that we have addressed. That is why we have asked for DOD input. Obviously, no

one can foretell what the next round of BRAC will bring. But I

think the collaboration and the highest and best use of Government

facilities, be they VA or DOD, to better serve all Americans, certainly, is a laudable use of Government resources that would surely

be considered by a BRAC process in the future.

Secretary PRINCIPI. I think there is a growing realization, Senator, that the military and the VA need each other. You know, we

are two very large health care systems in this country, the largest

direct health care providers in America, and we are both national

resources, in my opinion, to the American people. By working together, we can provide more care to more people in a more costeffective manner. That is why sharing makes a great deal of sense.

We are doing that at Kirkland in Albuquerque. We are doing it in

Nevada. We are doing it in Alaska. We are doing it out at Tripler

in Hawaii. Across the country, we are finding the military and the

VA are working closer together than ever before. I think that is

good news for military people, for veterans and for the American

people.

Senator MILLER. I share that belief.

Thank you.

Chairman SPECTER. Thank you, Senator Miller.

25

Chairman SPECTER. We are now going to have another round

with Chairman Alvarez and Secretary Roswell. We had intended

the first round to be on Secretary Principi, but we are flexible, and

when the questions have gone to the other witnesses, that is fine.

Dr. Roswell is the deputy undersecretary and, in that capacity,

heads the Veterans Health Administration. He has an excellent

background, having directed VA’s health care networks for Florida

and Puerto Rico. He had served in Birmingham, Alabama and

Oklahoma City. He is a 1975 graduate of the University of Oklahoma School of Medicine. I would like to say, on a parenthetical

personal note, I went to the University of Oklahoma for a year myself at the start of my college career. I notice that Senator Nelson

is not going to touch Oklahoma and Nebraska, at least at this

point.

[Laughter.]

Chairman SPECTER. Chairman Alvarez is a member of the Bar

of the District of Columbia. He served as deputy administrator of

the Veterans Administration from 1982 to 1986 and deputy director

of the Peace Corps from 1981 to 1982. But I think his most remarkable public service occurred on August 5, 1964, when, as a

young lieutenant, junior grade, he was the first American pilot shot

down over North Vietnam; 81⁄2 years in a prisoner of war camp in

North Vietnam, as described in his book, Chained Eagle, the circumstances relating to that. For those who have read the book, it

is very inspirational. So we thank you for your great service, Chairman Alvarez, taking on this job. We will start a second round of

questions as to both Dr. Roswell and Chairman Alvarez.

Dr. Roswell, as I stated, is only responding to questions; does not

have an opening statement. If you would care to make an opening

statement, Chairman Alvarez, we would be pleased to hear it.

STATEMENT OF EVERETT ALVAREZ, JR., CHAIRMAN, CAPITAL

ASSET REALIGNMENT FOR ENHANCED SERVICES (CARES)

COMMISSION, U.S. DEPARTMENT OF VETERANS AFFAIRS,

WASHINGTON, D.C.

Mr. ALVAREZ. Thank you, Mr. Chairman. I have submitted a

statement for the record, and if it is all right with you, I will just

summarize it.

Chairman SPECTER. Fine. The full statement will be made a part

of the record, and we will welcome your summary.

Mr. ALVAREZ. Thank you.

As stated in the CARES Commission charter, Secretary Principi

established our commission in December of 2002 to bring an objective and external perspective to the CARES process. The parameters set for the 16-member commission that we have are straightforward. First, we are to review the proposed realignment and allocation of capital assets described in the undersecretary’s draft national CARES plan in order to determine whether the proposals

reasonably assess and meet the demand for veteran health care

over the next 20 years, with the understanding that the goal is to

enhance VA’s health care services. Then, we will make specific recommendations to the Secretary.

I want to state that our mission is not to provide a ‘de novo’ review of the VA medical system or to rebuild the proposed plan. In

26

accordance with our charter, we may accept, modify or reject the

recommendations in the draft national CARES plan. We will provide our rationale for any positions that we take. Further, in making these recommendations, we will consider information that we

are gaining from involved parties that speak at our meetings and

through our nationwide site visits; written comments from interested parties and formal public hearings that we currently are

holding.

By dividing into groups, our commission was able to visit 59 VA

facilities in July, and we will have visited nine more by the end of

this month for a total of 68 site visits. These informal tours

through VA facilities and the geographic areas they serve have included meetings and conversations with many veterans, individuals

inside the VA family and local community leaders. In addition, currently, we have completed over half of our 36 formal public hearings, with the last one scheduled for October 3. The selection of the

sites for all of the public hearings was made with careful consideration of many factors, and this deliberative process included coordination with many of the VISN staffs and their directors, reviewing

market plans and taking into account the public access to the hearings.

The locations were selected to provide access to concerned individuals from all markets covered at each hearing. Where appropriate and available, we are also providing video feeds from the

hearings to medical centers in some locations to ensure easier access for attendees who might otherwise not be able to personally

view the proceedings.

Thousands of individuals have attended these public hearings so

far, and we have heard from the local population mostly impacted

by the draft plan. Oral testimony has usually been sought from

local veteran service organizations, employee organizations, academic affiliates, organizations with collaborative relationships and

involved local elected officials. We have also welcomed Members of

Congress who have either submitted their views personally or

through written statements, and we have also received, as of this

week, comments from over 11,500 individuals.

Let me conclude by thanking you for the opportunity to advise

you of the work of our commission. I believe it is a deep honor and

a responsibility I take very seriously to serve as the chairman of

the CARES Commission, and I hope that our counsel will assist

Secretary Principi and the Department of Veterans Affairs in its

goal to effectively realign and allocate VA’s capital assets to meet

the demand for health care services for our well-deserving veterans

over the next 20 years and beyond.

Thank you very much.

[The prepared statement of Mr. Alvarez follows:]

PREPARED STATEMENT OF EVERETT ALVAREZ, JR., CHAIRMAN, CAPITAL ASSET RE- ALIGNMENT FOR ENHANCED SERVICES (CARES) COMMISSION, U.S. DEPARTMENT OF

VETERANS AFFAIRS

As you know, and as stated in the CARES Commission Charter, Secretary

Principi established the CARES Commission in December 2002 to bring an objective

and external perspective to the CARES process. The parameters set for the 16-member Commission are straightforward: the Commission is, first, to review the proposed realignment and allocation of capital assets described in the Under Secretary’s Draft National CARES Plan in order to determine whether the proposals

27

reasonably assess and meet the demand for veterans’ health care over the next 20

years, with the understanding that the goal is to enhance VA’s health care services.

We will then make specific recommendations to the Secretary.

At the first of our monthly meetings, in February, the Secretary asked the Commission to examine the Draft Plan with a critical and independent eye. He also

asked us to report to him on the validity of the opportunities identified in the Plan

for improving VA’s ability to provide quality healthcare for veterans by effective deployment of physical resources. We intend to fulfill this responsibility.

Our mission is not to provide a ‘de novo’ review of the VA medical system or to

rebuild the proposed Plan. In accordance with the Commission Charter, the Commission may accept, modify or reject the recommendations in the Draft National

CARES Plan. We will provide our rationale for any positions we will take. Further,

in making these recommendations, we will consider information gained from involved parties speaking at our meetings and through nationwide site visits, written

comments from interested parties and formal public hearings.

We will also rely on our own experiences. Over time, and in conversations with

my colleagues, we have recognized and agreed that, in appointing the Commissioners, the Secretary identified and appointed individuals whose qualifications,

taken together, supply a sound basis for fulfilling this mission. The commissioners

come from all walks of life—doctors and nurses, medical and nursing school professors and deans, health care professionals, members of veterans service organizations, former VA officials, business managers and leaders in their communities. We

also have learned to recognize and depend upon the special backgrounds and experiences each of us brings to the Commission, and have noted each other’s deep sense

of commitment to the Commission’s unique mission to benefit America’s veterans.

Before we can make our recommendations to the Secretary, as I stated earlier,

we will consider information gained through our meetings, nation-wide site visits,

written comments from interested parties and formal public hearings.

At our monthly meetings, we have heard from and questioned representatives

from the CARES office and the contractors who developed the underlying model to

the Draft Plan. We also have heard from others, from within and outside VA, such

as representatives from Veterans Service Organizations, employee organizations,

medical affiliates, experts in modeling, enhanced use opportunities, and Federal

property management and from the GAO.

By dividing into groups, the Commission was able to visit VA facilities in 59 locations in July and will have visited 9 more by the end of this month, for a total of

68 site visits. These informal tours through VA facilities and the geographic areas

they serve have included meetings and conversations with many veterans, individuals inside the VA family and local community leaders.

In addition, we have completed over half of our 36 formal public hearings, with

the last one scheduled for October 3. The selection of the sites for all of the public

hearings was made with careful consideration of many factors. This deliberative

process included coordinating with the many Veterans Integrated Service Networks,

or VISN’s, reviewing market plans, and taking into account public access. The locations were selected to provide access to concerned individuals from all markets covered at each hearing. Where appropriate and available, we also are providing video

feeds from the hearings to medical centers in some locations to ensure easier access

for attendees who might otherwise not be able to view the proceedings.

The CARES Commission’s public hearings are formal proceedings where invited

witnesses submit written testimony and answer the Commissioners’ questions.

Thousands of individuals have attended these public hearings, where we heard from

the local population most impacted by the Draft Plan. Oral testimony has been

sought from local Veterans Service Organizations, employee organizations, academic

affiliates, organizations with collaborative relationships and involved local elected

officials. We have also welcomed Members of Congress, who have either submitted

their views personally or through written statements. We also have received, as of

the beginning of this week, comments from 11,500 individuals.

Before we begin our deliberations, however, we will hold, in this very room, our

first National Meeting since the Draft National CARES Plan was issued where we

will hear from parties outside of the Department of Veterans Affairs. This meeting

is scheduled for Tuesday, October 7. We are inviting, from both the Senate and

House of Representatives, the Chairmen and Ranking Members from the Veterans

Affairs Committees and Appropriations VA, HUD and Independent Agencies subcommittees. We also are inviting leadership from Veterans Service Organizations,

the Department of Defense, national Veterans Affairs employee organizations and

national medical and nursing affiliate’s organizations. As a final step in the Commission’s information gathering process, and as we prepare to begin formal deliberations, we have asked these leaders to provide a national perspective on the CARES

28

process and the Draft National CARES Plan to the entire Commission. We believe

hearing their opinions provides an essential and valuable contribution to the Commission. The meeting is scheduled to begin at 8:30 a.m.

Let me conclude by thanking you for this opportunity to advise you of the work

of the Commission. I believe it is a deep honor, and a responsibility I take very seriously, to serve as the CARES Commission Chairman. I hope our counsel will assist

Secretary Principi and the Department of Veterans Affairs in its goal to effectively

realign and allocate VA’s capital assets to meet the demand for health care services

for our well-deserving veterans over the next 20 years. Thank you.

Chairman SPECTER. We will now proceed to 5-minute rounds for

each of the members.

Dr. Roswell, are you in a position to give categorical assurance

to the veterans in the Pittsburgh vicinity that before the Highland

Drive facility is closed that there will be a replacement facility

opened.

Dr. ROSWELL. I cannot give a categorical assurance, because——

Chairman SPECTER. How about a plain assurance.

Dr. ROSWELL. Well, obviously, the University Drive division,

where those patients are planned to be relocated, will require some

structural renovations that will be dependent upon construction appropriations being available to the Department, but I can give you

an absolute assurance that we will not separate any veteran from

care that is currently being received unnecessarily.

Chairman SPECTER. Not separate them unnecessarily, you say?

Dr. ROSWELL. In other words, we will not——

Chairman SPECTER. In what context did you use the word unnecessarily?

Dr. ROSWELL. We will be sure that all care provided to veterans

is continued throughout this process.

Chairman SPECTER. Well, you do not know about the appropriations for the other facilities; OK, you do know, you do have the

power to control not closing down Highland Drive until the replacements are there.

Dr. ROSWELL. That is correct, and that would be the intent. The

Secretary spoke of VISN 12. We have had a situation where patients could be relocated to an existing facility without the need for

new construction, although new construction was planned as a further enhancement of that campus. In those situations, patients

were moved.

Chairman SPECTER. Well, OK, but what you are saying is that

Highland Drive is not going to be closed until you can accommodate the veterans in the area at the new facility.

Dr. ROSWELL. That is correct.

Chairman SPECTER. OK. Moving on to Butler and Erie and Altoona, Pennsylvania is a fairly popular State on the hit list. Does

that have anything to do with my being Chairman?

Dr. ROSWELL. No, sir, it does not.

Chairman SPECTER. OK; I am advised that the network director

did not recommend the changes as to Butler, Erie or Altoona, and

I am also advised that it is OK for me to say that, not revealing

any confidences in making that disclosure. It is important to know

things; it is also important—not important; indispensable to maintain confidences, but we are not disclosing any confidences.

Now, as to Butler, there seems to be a view that because it is

small, it ought to be closed. I hope you will not make that distincVerDate 03-FEB-2003 10:26 Jan 11, 2005 Jkt 096474 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 D:\VA\96474.TXT SSC2 PsN: SSC2
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tion, because there are many facilities which are small. I go back

to my early days in the State of Kansas where everything is small.

It might even apply to Nebraska. What is the thinking, Dr.

Roswell, on closing someplace because it is small?

Dr. ROSWELL. Well, our first priority is to make sure that we provide world-class care to veterans and to do that to an increasing

number of veterans in the years ahead. Let me point out that the

CARES plan actually will enhance our ability to provide services

to——

Chairman SPECTER. Dr. Roswell, I have got two more questions

in a minute and 44 seconds.

Dr. ROSWELL. With regard to Butler, there are only a very small

number of acute beds, just 30 miles away from a world-class facility at Pittsburgh. That is our recommendation, to move that acute

inpatient care there. But we would preserve the nursing home care

and the outpatient care that currently is provided with very high

quality at Butler.

Chairman SPECTER. Let me urge you not to make decisions on

the basis of size smallness, and let me urge you to travel Route 8

from Butler to Pittsburgh before you make the final decision.

As to Erie, the plan is to cease inpatient surgical services, and

my review and the information I have pretty conclusively is that

the inpatient surgical services are very good, notwithstanding the

contention that because they are limited, they may lose their skills.

What is your thinking on Erie?

Dr. ROSWELL. Actually, our recommendation in the national plan

is to discontinue acute inpatient surgery but to maintain a surgical

observation unit and allow the staff to continue to perform outpatient surgeries.

Chairman SPECTER. Why the limitation?

Dr. ROSWELL. Because the average daily census in 2002 at Erie

on the surgical service was three patients. We do not believe that

provides sufficient numbers of patients to justify or to provide the

high quality of care that is required of our patients not only by the

surgeon but by the entire perioperative team.

Chairman SPECTER. Well, I hear those surgeons have access to

other work to keep their skills sharp.

My last question in the eight remaining seconds is as to Altoona,

you talk about a critical access hospital. What does that mean?

Dr. ROSWELL. A critical access hospital is a hospital that basically recognizes that small hospitals are needed, just as you have

said, Mr. Chairman, in certain locations. The inherent danger with

quality in a small hospital is if the staff are tempted to provide

care beyond their capability. In many cases, we have part-time

physicians who maintain their skills, but let me point out that in

situations such as Erie, the nursing staff, the postoperative staff,

are generally full-time VA employees, and they need to maintain

their skills as well to assure that quality care is continued. We believe we can do that on an outpatient basis, but on an inpatient

basis, we have to maintain the integrity of the entire staff.

A critical access hospital would not normally provide surgical

care other than limited outpatient care. It would be designed to

provide inpatient care for less-complicated inpatient requirements

that normally could be managed definitively within a 96-hour peVerDate 03-FEB-2003 10:26 Jan 11, 2005 Jkt 096474 PO 00000 Frm 00033 Fmt 6633 Sfmt 6601 D:\VA\96474.TXT SSC2 PsN: SSC2
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riod of admission. For patients who require inpatient surgical care

or more intensive inpatient care, including ICU stays, the recommendation would be to stabilize those patients and transfer

them to a world-class tertiary facility such as the one in Pittsburgh.

Chairman SPECTER. Senator Hutchison. Pardon me, Senator Nelson.

Senator NELSON. Thank you, Mr. Chairman.

With respect to changing acute care hospitals to critical access

hospitals, it is my understanding that the VA uses the Medicare

definition generally. But in the case of the Cheyenne Medical Center, that apparently is not the case, because the average stay there

is considerably longer than in the case of a critical access hospital.

But, yet, you want to switch it to that.

It has a great impact on Nebraskans. One thousand Nebraskans

utilize that center. In the past fiscal year, there were 3,578 visits

by 1,000 Nebraskans for acute care at about 130 hours above the

96-hour threshold. Yet, you are in the process of apparently recommending changing that category. Can you explain to me why that

is the case and, also, how that is going to improve care for those

Nebraskans and others who use the hospital?

Dr. ROSWELL. Well, ultimately, Senator, we believe that the veterans in western Nebraska are entitled to the same standard of

care as veterans are anywhere in the nation, and we want to make

sure that that care is high-quality care and accessible. Sometimes,

that is not possible because of the sparse populations.

In the case of the Cheyenne, Wyoming facility, the level of surgical care is somewhat limited, but the level of expertise, the imaging support, the technology support for the hospital in Cheyenne is

less comprehensive than it is, for example, in Denver. We still believe that that hospital serves a very——

Senator NELSON. It is a long way to Denver.

Dr. ROSWELL. It certainly is. There is no question about that.

But we believe that we have to assure that patients who receive

care at that facility receive the very best possible care we can provide. The recommendation to make it a critical access-like hospital

would be to limit complex surgical care and to attempt to reduce

stays on average to 96 hours.

Senator NELSON. Well, I applaud the effort at trying to get quality care, because the last thing we want is a reduction in quality

care. But the access issue and the ability of people to be able to

get that access continues to be in doubt. Would you, for example,

be able to certify the hospital, which is not a VA hospital but could

become an approved hospital, in Scottsbluff, which is a full-service

hospital with regard to everything? I mean, I think we have to

have a plan other than saying go to Denver, and I appreciate the

fact that Mr. Alvarez is picking up on where I am going, because

I think it is not going to be unique to Nebraska; obviously, it is

going to have implications for Texas. The whole VISN 23, a very

rural area, is going to be affected by very similar decisions.

Dr. ROSWELL. I certainly agree with the premise, and let me

point out that in the national CARES plan, reliance upon contract

hospitalization, access to tertiary services contracted locally in the

community, is a key feature, and it is a current deviation from VA’s

31

existing policy. With me today is the acting director of our national

CARES program office, Mr. Jay Halpern, and he may wish to address that further.

Mr. HALPERN. Senator, we are absolutely committed to maintaining services that are accessible. In areas where there are those tertiary capabilities that meet those standards, we would want to contract with them. In addition, we will be developing our own critical

access hospital policy. Ninety-six hours right now is what Medicare

uses. I do not know that we are fixed to that length of stay. We

have to develop our own policy that makes sense for us. But certainly, that is the intent.

Senator NELSON. Well, can you give me a categorical assurance

that before people are told in Western Nebraska that they can no

longer go to the Cheyenne Medical Center because of the change

you will have a contract in place with another facility in closer

proximity to those veterans? Because I think that is the question,

and that has to be the goal.

Dr. ROSWELL. It is unequivocally the goal, that we enhance access to services, including outpatient care, inpatient care, surgical

care, and all types of care that veterans might need, including

those in Western Nebraska. We will do everything that we possibly

can. That is as close of an assurance as I can give you.

Senator NELSON. It is not quite categorical, but it is moving in

that direction.

Dr. ROSWELL. Thank you.

Senator NELSON. Thank you.

Thank you, Mr. Chairman.

Chairman SPECTER. Thank you, Senator Nelson.

Senator Hutchison.

Senator HUTCHISON. Thank you, Mr. Chairman.

Let me just ask Dr. Roswell: the VA estimates that the number

of veterans most in need of long-term care, 85 years of age and

older, will more than double to about 1.3 million in 2012. Yet, I am

told that the CARES planning process did not take into account the

long-term care and outpatient mental health needs projections. So

how are you going to care for those people that you are projecting

to have such an increase in population?

Dr. ROSWELL. Well, actually, Senator, we believe that the population over 85 will triple by 2012, so your point is extremely welltaken. We are very concerned about providing long-term care to

older veterans, and we will have a substantial burden. We have

preserved the current long-term care capacity in the national

CARES plan. We believe, however, we need to carefully examine

our long-term care policies to determine what mix between institutional and non-institutional care will be required to meet the future

demand.

We also have been criticized, and understandably so, for proposing to close hospitals when we, in fact, might need those facilities to provide nursing home care to older veterans if institutional

care becomes a requirement. We have learned, through very painful experiences, that when you convert a 50-year or older hospital

which was designed for hospital care a half-century ago to a nursing home, you wind up with a substandard nursing home, and the

32

cost of such conversion is approximately twice the cost of new construction.

So we anticipate that, in fact, when we are able to further determine the definitive long-term care policy, we may need additional

long-term care beds. But we believe veterans deserve the best longterm care facilities, and that would be new construction in lieu of

converting a 50-year-old hospital to inadequately meet the longterm care needs.

Senator HUTCHISON. Thank you, Mr. Chairman. I asked my

other question of Mr. Alvarez earlier, and I appreciate that opportunity. Thank you.

Chairman SPECTER. Well, I will return to the questions that I

asked you that really could not be answered in the course of the

8 seconds that we had left, and we will be submitting some additional questions for the record. But when we are talking about the

medical center in Erie, and we are talking about enough cases to

have adequate competency, you cannot maintain sharp surgical

care if a surgeon does not have enough cases. But it is my understanding that although the surgeons would have only a few cases

at the VA facility, they would have other practices privately where

they are maintaining their skills, so that there is really no reason

to close Erie because the doctors do not have adequate surgical

skills. Is that not correct?

Dr. ROSWELL. The premise that you presented is a correct

premise, that the surgeons, in fact, may maintain their surgical

skills by practicing in venues other than the VA facility. However,

just as important if not more important is the anesthesia staff, the

post-anesthesia recovery staff, the surgical nursing care that is provided within the first 24 hours postoperative and then the continuing surgical care that is provided by the nursing staff.

In those professions, not physicians but still valuable members

of the health care team, nursing personnel need to maintain their

skills with regard to surgical care and postoperative surgical management, and it becomes more difficult to maintain that skill set

in that population of professionals.

Chairman SPECTER. Well, Dr. Roswell, have you analyzed those

collateral skills and come to the conclusion that they are not sufficiently active to maintain those skills.

Dr. ROSWELL. We have looked at that both within the Department; we have looked at that through our National Surgical Quality Improvement Program. We have looked at the results of the

leapfrog group, which is——

Chairman SPECTER. How about at Erie?

Dr. ROSWELL. At Erie, I have not personally or specifically looked

at that.

Chairman SPECTER. Well, have your subordinates.

Dr. ROSWELL. Again, let me ask Mr. Halpern to address the situation at Erie.

Chairman SPECTER. Mr. Halpern, we had not expected you to

testify, so we have not extolled your virtues. But let the record

show that you are the acting director of CARES; have been that

since December 2002; that you have 35 years in the Federal Government in a variety of health care capacities, and we will include

your resume in the record. It is very distinguished.

33

Mr. HALPERN. That is very fine. Thank you, Senator.

Chairman SPECTER. Now, you may answer, now that you have

been accredited.

Mr. HALPERN. What I would add to Dr. Roswell’s comment is

that it is not just about today’s practice of medicine and practice

of surgery. It is looking into the future. It is very hard for a small

facility to acquire the technology, the diagnostic and interventional

technologies that are increasingly a part of modern-day surgery. So

it is very difficult for staff, in fact, to be skilled in those particular

areas, particularly support staff, the technical staff. We have not

specifically site-visited and assessed Erie.

Chairman SPECTER. Well, I would like you to take a look at that,

because the backup facilities identified by Dr. Roswell have been

functioning there for some time, and we can make a determination

as to whether they are able to maintain their skill level. But I

think before you can make a determination for closing a facility,

you really have to individualize your analysis, just take a look at

the specific facility, because we will. This Committee will. So we

are going to be asking you the hard questions as to what the facts

are upon which you base your conclusion that there are insufficient

skill levels. So I would ask you to take a look at Erie.

Dr. ROSWELL. Mr. Chairman, I understand your concern. I will

share a——

Chairman SPECTER. It is not only a concern for Erie. I have not

had a chance to go to all of the other facilities that are on the list,

but all of these other Senators will.

Go ahead, sir.

Dr. ROSWELL. I just want to say that I have met with the VISN

director from VISN 4 and the facility directors. We have discussed

this in great detail. I sat across from the table, much closer than

you and I are, with the director of one of the smaller facilities, and

I said yes or no, if you had a serious problem, would you want to

get acute care in your hospital? And the answer was no.

Chairman SPECTER. How is it that you can get yes or no answers, and I cannot?

[Laughter.]

Chairman SPECTER. Well, let us go on to Altoona. In more than

8 seconds, tell me what a critical access hospital is.

Dr. ROSWELL. First of all, let me point out that Altoona has a

fairly dynamic work load right now. The recommendation in Altoona is, and the projections are, that by the year 2012 and beyond,

the demand for acute inpatient care at that location will decline to

the point where it really may not be feasible any longer to maintain an acute tertiary inpatient——

Chairman SPECTER. You are projecting to when?

Dr. ROSWELL. 2012, so the recommendation in the national

CARES plan would actually maintain Altoona——

Chairman SPECTER. 2012? How do you project to 2012, Dr.

Roswell?

Dr. ROSWELL. We took the 2000——

Chairman SPECTER. I talked about that with Strom about 20

years ago when he could not do that.

Dr. ROSWELL. Well, it is difficult. There is no question about it.

But we are using the very best health care actuary in the nation,

34

in the world, for that matter, to help us project. We are extrapolating the veteran population. We look at the demand for care, the

types of problems treated, and we actually come up with what we

believe are fairly accurate projections that not only look into the future but have been validated by back-testing. We believe that they

are, in fact, as accurate as we possibly can be.

As the Secretary pointed out, this is a 20-year plan that looks at

a comprehensive set of resources that must be in place for veterans

in the decades ahead, and it is imperative that we act now to be

able to address those needs in the future.

We may be wrong, though. In the case of Altoona, if we do not

see the decline in the acute inpatient work load, it will not convert

to a critical access hospital.

Chairman SPECTER. Well, we want to help you not be wrong, especially as to Altoona. When you say Altoona is dynamic, it is a

growing area. It is an area on the move. I will take a look at your

projections and how you figure it out. But from what I see on the

ground, Altoona is growing. It is not contracting.

Dr. ROSWELL. Well, again, this would be a recommendation to

monitor the actual inpatient census, but we anticipate that sometime around 2010, 2012, the census would begin to decline, which

would then, at that time and only at that time, require us to reevaluate the mission of the Altoona VA Medical Center. We will be

happy to monitor it concurrently with you and certainly will take

no actions to reduce the scope of services at Altoona unless we actually observe, realize that decline in inpatient work load.

Chairman SPECTER. Well, all right; that is a good assurance, if

you are not going to alter the available services at Altoona until

you see that actual decline. That is not based on a projection; that

is based on hard facts at hand.

Dr. ROSWELL. Exactly.

Chairman SPECTER. I also want to thank you, gentlemen, for

coming in today. There is a lot of interest in this subject matter

across the country, and that is reflected by a lot of interest on Capitol Hill. I know you men and the Veterans Administration generally are committed to veterans’ care, and I conclude with the

same admonition on skepticism that I began with: wherever I travel extensively in my State and beyond, veterans are concerned

about the adequacy of the budget. So, starting there and the budget constraints, there is just an inevitable feeling that changes are

being made with regard for the continuation of service.

I think your testimony here is solid on those assurances, and we

are going to have to back it up, and it is important for the veterans

to know that there will be Congressional oversight and Congressional analysis on what you are doing.

Thank you all very much, and that concludes our hearing.

[Whereupon, at 3:30 p.m., the committee adjourned.]

(35)

APPENDIX

PREPARED STATEMENT OF HON. PATTY MURRAY, U.S. SENATOR

FROM WASHINGTON STATE

Chairman Specter, I want to thank you for convening the Committee, and I want

to welcome Secretary Principi and Chairman Alvarez.

As we all know—under the CARES initiative—the Department of Veterans Affairs

asked its regional offices to study the health care needs of local veterans and to develop a plan to meet those needs.

I support the idea behind CARES—to provide a realignment of veterans’

healthcare services that will enhance care for those who fought so bravely for our

country.

However, as this process has moved forward, there have been some troubling revelations, and it appears that Chairman Alvarez has an unenviable job. It seems

CARES is driven more by meeting budget targets than by meeting the healthcare

needs of our veterans. Local experts in my region—which covers Washington, Oregon, Idaho and Alaska—submitted a plan several months ago that showed dramatic enrollment growth, and significant gaps in areas like long term care, primary

care and specialty care. The VA sat on this report for several months. Then, just

8 days before the scheduled release of the national report, the VA called up leaders

at more than two dozen facilities—including three in Washington State—with some

shocking news. The VA said that it didn’t like their recommendations. VA headquarters then ordered these regional leaders to include a new and troubling recommendation—closing these VA facilities. The next day, I sent Secretary Principi

a letter outlining my objections to the VA’s interference with the regional market

plan and expressing my strong opposition to closing any of the three Washington

VA facilities.

The CARES process is supposed to provide an objective, external perspective as

the VA works to meet the increasing demand for veterans healthcare. Veterans deserve more from the VA.

Since that time, Secretary Principi personally pledged to me that one of the Washington State facilities—American Lake in Tacoma, Washington would not be closed.

I appreciate the Secretary’s admission that the possible closure of American Lake

was a tremendously flawed proposal. Questions remain at the other two facilities

in my state—in Vancouver and Walla Walla—as well as other facilities around the

country.

In Vancouver, instead of the creative community-based partnerships that were

proposed, the VA will potentially shut this facility in the fastest growing area of

Metropolitan Portland. In fact, patient numbers have risen 17 percent this year—

more than three times as fast as usual—at the combined Portland / Vancouver medical center.

The city of Vancouver, Clark County and the VA have been working for years to

create an enhanced use facility that would compliment the services at the Vancouver facility. Now, only a few months from issuing construction bonds, this plan

may be in jeopardy.

In Walla Walla, veterans may lose a facility that was shifting to long term care

and some other services may be contracted out. The Walla Walla VA Medical Center

is also one of the largest employers in the community and serves a veterans population of approximately 69,000.

Closure of the Walla Walla facility would leave area veterans 180 miles from the

Spokane VA Medical Center.

And let’s not forget that there is a Federal law—on the books since 1987—that

prohibits changing the mission of the Veterans Administration Medical Center in

Walla Walla.

36

Veterans in Washington State and across the country are having a terrible time

getting the care they need, but instead of improving services, the VA is exploring

closing facilities.

Another troubling aspect of the CARES process is the apparent disregard of veterans long-term care needs.

While Secretary Principi has stated that CARES includes a ‘‘commitment to long

term care,’’ the model used to project demand did not include long term care or mental health care.

The VA said that the modeling for such care ‘‘needed more work’’ and that ‘‘the

Department cannot wait on perfection.’’ Yet, the VA readily acknowledges that the

number of veterans age 75 and older will increase from 4 million to 4.5 million by

2010. And, both the VA and the GAO estimate that the veterans population most

in need of nursing home care—veterans 85 years old or older—is expected to triple

to over 1.3 million by 2012 and remain at that level through 2023. Clearly we’ve

got to do more—not less—to meet this growing need.

A major function of the Vancouver and Walla Walla facilities is long term care,

and I’m going to continue to speak up for the veterans I represent. They deserve

better than the treatment they’re getting from this Administration.

So Mr. Chairman, I will have more questions for the Secretary to answer this

afternoon, just as I did when the VA’s General Counsel testified before this committee.

I fear that the CARES process is losing its legitimacy, and the good work Chairman Alvarez set out to accomplish is being driven by budgetary issues within the

VA.

Mr. Chairman, I believe this Committee must increase its oversight. We have to

ensure that CARES and the work of the Department and the Commission are transparent and accessible to veterans. The VA’s stealth effort to potentially close facilities in Washington State—despite the regional recommendations and a lack of longterm care data—is a sign that the CARES process is a growing problem for the VA

and the Congress. Our veterans deserve better, and I’m going to hold this Administration responsible for the way it’s treating the veterans of Washington State.

PREPARED STATEMENT OF HON. JIM BUNNING, U.S. SENATOR FROM KENTUCKY

Thank you, Mr. Chairman. Kentucky will be heavily affected by the CARES Process. The draft proposal now being considered by the CARES Commission proposes

to close a medical center in Lexington and relocate the Louisville Medical Center.

I am very concerned about that and so are the veterans in Kentucky.

I Certainly support new and improved facilities that improve VA’s ability to provide timely and quality health care. But any reductions or closures of facilities must

be accompanied with other means to ensure no veteran is unable to get the help

he or she needs. Mr. Secretary, Dr. Roswell, and Mr. Alvarez, I am counting on you

to make proposals that are good for all our veterans.

At hearings earlier this year I talked about the benefits of partnerships with university medical schools. The medical centers in Lexington and Louisville have strong

partnerships with the universities there. I support those partnerships and encourage you to strengthen those as you move forward. The draft proposal does that and

I hope that remains in the final plan.

In Lexington there is not much space to expand around the medical center at the

University of Kentucky. Many veterans have trouble going there because of parking.

While those issues are addressed in the draft proposal, I believe very serious

thought and planning needs to go into any changes in Lexington to ensure enough

capacity is added at the hospital and veterans are able to get there easily.

The draft proposal recommends a stronger partnership with the University of

Louisville, including a possible new facility adjacent to University hospital. I support stronger ties with the University and an upgrading or replacing the current

medical center should be a priority. The Louisville Medical Center is the oldest in

the region. The University of Louisville is eager to work with VA to develop an innovative proposal to provide better facilities and more access to the University’s resources.

I strongly support that. If VA decides to move the current hospital, I hope any

new facility is built in partnership with the University of Louisville.

Mr. Secretary, earlier this year you and I talked about VA clinics in Kentucky.

I am very pleased that the draft proposal contains several new clinics in the eastern

half of the Commonwealth. Veterans in Kentucky love the clinics and want more

of them. I hope the final proposal adds even more clinics throughout the Commonwealth, especially in western Kentucky and places like Owensboro where the comVerDate 03-FEB-2003 10:26 Jan 11, 2005 Jkt 096474 PO 00000 Frm 00040 Fmt 6601 Sfmt 6601 D:\VA\96474.TXT SSC2 PsN: SSC2
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munity has stepped forward and offered to help by providing facilities and other resources.

One final point I want to make is that I encourage VA to work with the Army

to share resources at Fort Knox and Fort Campbell. Many veterans live around

those bases and it only makes sense that the two departments should work together

in those areas.

Again, I want what is best for our veterans. I urge the VA to be careful in making

any recommendations and to provide Congress and the public strong evidence for

making any changes. Thank you for coming today. I look forward to hearing your

answers to my questions.

Thank you, Mr. Chairman.

PREPARED STATEMENT OF HON. ROBERT H. ROSWELL, M.D., UNDER SECRETARY FOR

HEALTH, DEPARTMENT OF VETERANS AFFAIRS

Mr. Chairman and Members of the Committee: The Secretary has described the

reasons for CARES and the process utilized to develop the market plans and the

Draft National CARES Plan. My statement today will focus on the Draft National

CARES Plan itself.

In preparing the Draft National Plan, VA developed demographic projections

through the year 2022, conducted a comprehensive capital inventory, assessed usage

and vacant space, conducted a clinical inventory of programs offered at all sites, and

developed access standards for the use of all VA facilities in evaluating accessibility

of their services. The Draft National Plan is based on national themes such as improving access to high quality health care services, ensuring outpatient capacity, enhancing access to special disability programs, and prioritizing the capital infrastructure needed to support delivery of high quality health care into the future.

The VISN’s market plans contain the results of thousands of decisions regarding

how outpatient and inpatient demand will be managed, i.e., whether space will be

leased, renovated, or constructed, or whether community contracts and DoD sharing

will be utilized. The Draft National Plan, however, is not simply a compilation of

market plans developed at the local level. We also reviewed the plans at the national level and in many cases requested additional analysis by the VISN’s. CARES

represents the most comprehensive and objective assessment ever completed of the

capital infrastructure needed to support VA health care.

OVERVIEW OF THE DRAFT PLAN

In total, the draft National CARES Plan includes recommendations that would result in the following actions:

• 11 million sq. ft. to be renovated

• 9 million sq. ft. to be constructed

• 3.6 milion sq. ft. of vacant space eliminated

• reduction of 600 acute hospital beds

• projected annual increase of 18.9 to 12.1 million outpatient clinic stops (in 2012

& 2022, respectively)

• private sector contracts to meet peak load demand and access

• 48 new high priority community-based outreach clinics (CBOC’s)

• 2 new hospitals (Orlando, FL, and Las Vegas, NV)

• 1 replacement hospital (Denver)

• improved access (in terms of driving time) from 72 percent to 84 percent of enrollees meeting guidelines for access to acute hospitals; and from 94 percent to 97

percent for tertiary care hospitals (2001 vs. 2012 and 2022)

• maintaining enrollee access at 74 percent within primary care access guidelines,

but improving market-level access from 67 percent of markets meeting guidelines

to 79 percent, if 48 new proposed CBOC’s implemented

• preservation of current Special Disability Program capacity and addition of new

locations:

• 2 new Blind Rehabilitation Centers (VISN’s 16 and 22)

• 4 new Spinal Cord Injury & Disorders (SCI/D) Units (VISN’s 2, 16, 19, and

23)

• 5 expansions of SCI/D LTC beds (VISN’s 8, 9, 10, and 22) and expanded

acute/sustaining beds (VISN 7)

• collaboration within and outside VA:

• VBA: 13 high priority regional benefits office co-locations

• NCA: 7 high priority future cemetery use opportunities

• DoD: 21 high priority collaborations/joint ventures

38

REALIGNMENTS AND CONSOLIDATIONS

I would like to discuss in more detail the decisions I made regarding realignments

of Division II campuses and changing the mission of small facilities. When I reviewed the results of the market plans, I concluded that there were opportunities

to realign campuses that improve the quality, access and resource use by examining

opportunities to move these campuses from inpatient to outpatient operations, i.e.

by converting from 24-hour, 7-days/week to 8-hours, 5-days/week operations. I asked

the VISN’s to determine how this could be accomplished at selected sites with the

provision that there would be no loss of services to veterans. I specified that Inpatient services must be provided at other VAMC’s through sharing agreements or

community contracts.

Outpatient services were to be maintained on the campus or in the local community through leasing of sites or contracting for care. The realignments focused on

moving long-term care sites to sites with an acute care presence because this would

also improve access to diagnostic and therapeutic services for the long-term care

population. The current physical environment in many sites would require significant capital investment in older buildings that are more expensive to renovate than

to build a new Nursing Home for example. In addition, since patients served by

long-term care facilities are not geographically concentrated, i.e. they come from

larger geographic areas, the relocations do not significantly impact access. Where

contracting is combined with relocation of beds to other VAMC’s or where relocation

is at a site with a greater concentration of veterans, access is improved. The draft

National CARES Plan realignments are concept proposals that will be further reviewed and additional cost benefit information will be provided to the Secretary and

the CARES Commission prior to the final CARES Plan decision. Should the proposals be improved further, detailed planning would occur as part of implementation

planning. In no case would services be discontinued without alternative sites of care

available and operational. Any savings or revenues realized from enhanced use leasing of sites will be used to benefit veterans in the communities where the campuses

are located.

SMALL FACILITIES

The future of small facilities and their role in the VHA health care system were

key components of the CARES process. The issues were how to ensure that veterans

will receive the best diagnostic and interventional technologies and whether this is

feasible in facilities that are already small and show forecasted declines or remain

at similar bed levels. The trend toward more sophisticated imaging and advances

in invasive techniques, which shorten hospital stays but require the investment in

expensive major equipment, has led to a further consolidation of care in tertiary

care facilities of more complex cases. Optimal and efficient functioning of the VA’s

health care delivery system depends upon early referral and transfer of patients

with complicated conditions and those requiring major surgery, where outcomes

may be volume-dependent.

These trends have led to declines in bed days of care in smaller facilities to the

point at which staff proficiency and outcomes may be compromised in low-volume

sites. Moreover, economies of scale in provision of the latest medical and imaging

technology cannot be realized. Nevertheless, many small VA medical centers

(VAMC’s) are important providers of health care in their communities. The CARES

review of small facilities in the VA has proposed a Critical Access Hospital (CAH)

designation of small facilities, based upon the Center for Medicare and Medicaid

Services model, requiring that they meet certain operational standards and restricting their ‘‘scope of practice.’’ The intent of this process would be to improve the efficiency, effectiveness, and to enhance the level of functioning of, small facilities within the context of VA’s national system of health care delivery. Over the course of

the next year, the VA will develop and implement policies to govern the operation

of acute beds in small VA facilities, which may fit into a CAH-like model of health

care delivery.

ENHANCED USE

Of the top 20 VA facilities identified by the Office of Asset and Enterprise Management (OAEM) as having the highest potential Enhanced Use Lease opportunities, 18 have Enhanced Use Lease initiatives included in the VISN CARES Market

Plans. By the end of the CARES planning timeframe, approximately 4.5 million

square feet of vacant space is expected to be available for enhanced use lease initiatives. This square footage does not include the acres of land that more than half

of the 18 facilities propose for enhanced use lease initiatives.

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CONCLUSION

Mr. Chairman, the draft national plan is currently under intensive scrutiny by

the Secretary’s CARES Commission. Following review of the Commission’s recommendations and the subsequent approval of a final National CARES Plan by the

Secretary, implementation will take place over a period of many years. It will be

a multifaceted process, depending upon whether implementation of specific initiatives requires additional capital, recurring funding, primarily policy changes, or realignments. In particular, the complexity of realigning clinical services and campuses necessitates careful planning in order to ensure a seamless transition in services. In no case would services be discontinued without alternative sites of care

being available and operational. And, as I mentioned earlier, savings or revenues

realized from enhanced use leasing will be used to benefit veterans in the communities where the affected campuses are located.

This concludes my statement. I will now be happy to answer any questions that

you or other members of the Committee might have.

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