United States General Accounting Office

GAO Report to the Ranking Minority Member,

Subcommittee on Compensation,

Pension, Insurance, and Memorial

Affairs, Committee on Veterans’ Affairs,

House of Representatives

February 1996 VA HEALTH CARE

Exploring Options to

Improve Veterans’

Access to VA Facilities

GAO/HEHS-96-52

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-256197 

February 6, 1996

The Honorable Lane Evans

Ranking Minority Member

Subcommittee on Compensation, Pension,

 Insurance, and Memorial Affairs

Committee on Veterans’ Affairs

House of Representatives

Dear Mr. Evans:

The Department of Veterans Affairs (VA) runs one of the nation’s largest

health care systems. As a major health care provider, it competes with

private health care providers to serve veterans. In fiscal year 1994, VA

served about 2.4 million of the nation’s 27 million veterans. The other

24.6 million veterans either received care from private providers or did not

seek health care services.

When the VA health care system was established in 1930, public and private

health insurance were virtually nonexistent. VA developed its system as a

direct delivery system, with the government owning and operating its own

health care facilities. Since then, the VA system has become one of the

nation’s largest networks of direct delivery health care providers, with 173

hospitals and 376 outpatient clinics nationwide. Because public and

private health insurance programs have also grown, most veterans now

have one or more alternatives to VA health care. Many veterans indicate

that they use private providers because they live too far from a VA hospital

or outpatient clinic. VA has recently encouraged its facilities to improve

veterans’ access to VA health care.

This report responds to your request for information on veterans’ use of VA

medical facilities. It discusses (1) characteristics of recent users of VA

medical facilities; (2) the geographic accessibility of VA and private

medical facilities that provide standard benefits; and (3) options that VA

facilities might explore to improve accessibility of VA health care, such as

where to locate new medical facilities and whether to establish new

VA-operated facilities or contract with private providers.

We reviewed VA studies and previous GAO reports for information on users

of VA medical facilities. To assess medical facilities’ accessibility to

veterans, we interviewed VA and private-sector officials, analyzed VA and

private-sector provider documents, and compared sites of VA and private

Page 1 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

facilities in four locations that represent the types of markets typically

served by VA:

• Chicago, Illinois—an urban area with a VA medical center,

• Rockford, Illinois—an urban area with a freestanding VA outpatient clinic,

• Salem, Oregon—an urban area with no VA medical facility, and

• Dublin, Georgia—a rural area with a VA medical center.

To identify the options that VA facilities might consider to improve

accessibility of VA health care, we reviewed VA policy directives and other

guidance and interviewed VA headquarters and selected medical center

officials (see app. I for a detailed discussion of our scope and

methodology). We did our work between January 1994 and

November 1995 in accordance with generally accepted government

auditing standards.

Results in Brief Veterans who used VA medical facilities during the early 1990s had lower

incomes and were less likely to have private insurance than veterans who

obtained their health care from non-VA facilities. Also, almost half the

veterans who used VA facilities had conditions incurred during or

aggravated by military service. Most veterans lived over 25 miles from VA

medical facilities, but veterans who lived within 5 miles of such facilities

made greater use of them.

VA hospitals and outpatient clinics that provide standard benefits are

generally less geographically accessible to veterans than private medical

facilities because they are outnumbered by private facilities and are

located throughout the country. VA has 173 hospitals and about 14,000

physicians, compared with the nation’s over 6,000 public and private

hospitals and 550,000 private physicians. Consequently, veterans often

travel longer distances or endure longer travel times to obtain care in VA

medical facilities than they would if they used private providers. For

example, while dozens of community hospitals and hundreds of private

physicians are located in the 52-county area served by VA’s Dublin,

Georgia, medical center, some veterans in the area travel up to 150 miles

to obtain services from the VA facility.

VA has recently begun taking steps to improve veterans’ access to VA health

care. In improving accessibility, VA faces two basic decisions: where to

locate new facilities and how to deliver care. We found that in deciding

where to locate facilities, VA could target areas that would improve

Page 2 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

convenience for existing users, improve access for all veterans, or improve

access for specific veteran groups or eligibility categories. For example,

VA’s Dublin, Georgia, medical center has targeted two relatively densely

populated areas as possible locations for new outpatient clinics so it can

improve access to new and current users. In deciding how to deliver care,

VA could compare the costs and other factors involved in providing care in

VA-operated facilities with those involved in contracting with private

providers. For example, while VA-operated facilities typically are more

expensive in the short run, such facilities would give VA more control over

resources.

Background In fiscal year 1994, VA medical care cost over $15.6 billion. VA facilities

served about 2.4 million veterans nationwide. VA services included 925,000

inpatient hospital stays and about 25 million outpatient visits.

The VA health care system was established primarily to treat war-related

injuries and help rehabilitate veterans with disabilities incurred or

aggravated as a result of military service; such service-connected

disabilities include blindness, paralysis, and loss of limb. Subsequently, the

Congress expanded the system so that hospital services could be provided,

to the extent space and resources were available, to veterans who did not

have service-connected disabilities and who lacked the resources to pay.

Today, all veterans are eligible for treatment at VA medical facilities, but

few are entitled to the full range of services under the existing complex

eligibility requirements. For example, veterans with service-connected

disabilities are eligible for cost-free hospital care, while high-income

veterans without such disabilities are eligible for such care but may

receive it only if space and resources are available. Such high-income

veterans are also subject to co-payments and, if insured, their insurers

must be billed for services provided by VA facilities.

When the VA health care system was established, there were no health

insurance programs to help veterans pay for needed care. Private

insurance began to emerge in the 1930s and expanded rapidly in the 1950s.

In the 1960s, the Congress established the Medicare and Medicaid

programs—public insurance programs that help the elderly and selected

low-income individuals pay for health care. By 1990, 9 out of 10 veterans

had one or more alternatives to VA health care for standard benefits

(excluding such special services as psychiatric care and prescription

drugs): about 81 percent had private health insurance, almost 26 percent

were eligible for Medicare, and 1.6 percent had Medicaid coverage.

Page 3 GAO/HEHS-96-52 Accessibility of VA Health Care
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The VA health care system is fundamentally different from private or public

health insurance programs. VA generally delivers health care to patients

directly using salaried physicians, nurses, and other professionals in VA

facilities. Insurance programs, on the other hand, provide services on a

fee-for-service basis or through contracts with private providers. VA does

not charge veterans for services provided to treat service-connected

disabilities, although veterans may be required to make co-payments for

nonservice-connected conditions if their income exceeds prescribed

thresholds. Insurance programs typically charge premiums to, impose

deductibles on, and require co-payments from all enrollees. In addition, VA

provides some services that insurance programs typically do not provide.

For example, VA covers outpatient prescription drugs and dental care that

are not covered by Medicare. Similarly, while Medicare and most private

insurance programs provide short-term nursing home care following

hospitalization, VA may, in some instances, offer more extensive,

longer-term nursing home and domiciliary care.1

If cost and service differences between VA and insurance programs

diminish, the importance of accessibility as a factor in veterans’ decisions

on where to obtain health care could increase. VA surveyed the status of

veterans in 1987 and found that distance to VA facilities was one of the

reasons most frequently cited by veterans for not using VA facilities.2 VA’s

survey of the status of veterans in 1992 also showed that about one-third

of the responding veterans who received inpatient care did not choose a VA

hospital because they were too far from the VA location.3 Similarly, over

one-fourth of the veteran respondents to VA’s health care reform customer

satisfaction survey said that, given a choice of health programs and

assuming no difference in cost, they would choose private providers, in

part, because the private providers were more accessible.4

In October 1995, VA began a major reorganization that will replace its four

regional offices with 22 integrated service networks. Each network will

include from 5 to 11 medical centers. The service networks will be the

basic budgetary and planning units for delivering veterans’ health care. VA

officials envision greater emphasis on integrated delivery systems of care

1

According to VA officials, eligibility requirements for long-term care are very complex.

2

Department of Veterans Affairs, 1987 Survey of Veterans (Washington, D.C.: Department of Veterans

Affairs, July 1989).

3

National Center for Veterans Analysis and Statistics, Department of Veterans Affairs, National Survey

of Veterans (Washington, D.C.: Department of Veterans Affairs, Apr. 1995).

4

Department of Veterans Affairs, Veterans Health Administration Health Care Reform Customer

Satisfaction Survey (Washington, D.C.: Department of Veterans Affairs: 1994).

Page 4 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

and on outpatient and primary care services as a result of the

reorganization.

Profile of VA Facility

Users

While many veterans received medical care during the early 1990s,

relatively few obtained their care from VA facilities. Veterans who used VA

facilities generally had lower incomes and were less likely to have private

insurance than veterans who used non-VA facilities. Also, almost half the

veterans who used VA facilities had service-connected disabilities. Most

veterans lived over 25 miles from VA facilities, but veterans who lived

within 5 miles of such facilities made greater use of the facilities.

Most Veterans Used

Non-VA Facilities

VA’s survey of the status of veterans in 1992 showed that 54.8 percent of

the 27 million veterans nationwide received medical care in 1992 but few

received care in VA facilities. About 90 percent of the veterans who

received either inpatient or outpatient care got it from non-VA sources, as

did over 80 percent of the veterans who received both types of care. The

survey also showed that of the 10 percent of veterans who received care in

VA facilities, 5.6 percent received VA care exclusively and 4.4 percent

received both VA and non-VA care. VA officials said that, while only

10 percent of all veterans used VA facilities in 1992, a larger percentage of

veterans used VA facilities over a 3-year period; the reason for this is that

many veterans do not require medical services every year. The officials

also said that some veterans who received both VA and non-VA care needed

resource-intensive care and had been transferred for that purpose to VA

facilities.

VA Facility Users Generally

Had Lower Incomes Than

Users of Non-VA Facilities

Using VA patient treatment records and Internal Revenue Service

information, we examined the incomes of the 2.2 million veterans who

used VA medical facilities in 1991 and found that two-thirds had incomes

under $20,000, and about one-third of these had incomes under $5,000.5

However, VA’s survey of veterans in 1992 showed that only about

32 percent of all veterans had gross family incomes below $20,000. This

suggests that most VA facility users had lower incomes than non-VA facility

users.

VA’s survey also showed that veterans’ use of VA facilities decreased as

incomes increased. For example, over 44 percent of veterans with incomes

5

VA Health Care: A Profile of Veterans Using VA Medical Centers in 1991 (GAO/HEHS-94-113FS,

Mar. 29, 1994).

Page 5 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

under $10,000 received inpatient care from VA facilities, compared with

2.5 percent of those with incomes over $50,000; and 32 percent of veterans

with incomes under $10,000 received outpatient care in VA facilities,

compared with 1.7 percent with incomes over $50,000. Moreover, cost was

the reason most frequently cited by veterans who participated in VA’s

survey for choosing a VA hospital for inpatient care: over 19 percent cited

cost as a reason for choosing a VA hospital, while less than 1 percent cited

cost as a reason for choosing private or public hospitals.

VA Facility Users Were

Less Likely to Have

Insurance

Veterans who used VA facilities were also less likely than users of non-VA

facilities to have insurance. VA’s survey of veterans in 1992 showed that

about 49 percent of all veterans had private insurance alone, 12 percent

had public insurance alone,6

 29 percent had both, and 9 percent had no

insurance.7

 The survey also showed that the availability of insurance

increased as income increased. For example, about 27 percent of veterans

with income under $10,000 had no insurance, compared with 1.3 percent

with income over $50,000. Conversely, about 14 percent of veterans with

income under $10,000 had private insurance, compared with over

76 percent with income over $50,000.

Veterans With

Service-Connected

Disabilities Were More

Likely to Use VA Facilities

Many veterans who used VA facilities had service-connected disabilities. In

1994, we reported that 1 million of the 2.2 million veterans who received

care in VA facilities in 1991 had service-connected disabilities.8

 In addition,

VA’s survey of veterans in 1992 showed that veterans with

service-connected disabilities were more likely than those without them to

use VA facilities. Almost 72 percent of the veterans who reported they had

a service-connected disability used medical facilities, compared with

53 percent who did not have such disabilities. About 24 percent of

veterans with service-connected disabilities received inpatient care

exclusively in VA facilities, compared with less than 7 percent who did not

have such disabilities. Similarly, about 16 percent of veterans with

service-connected disabilities received outpatient care exclusively in VA,

compared with slightly over 3 percent who did not have such disabilities.

6

Public insurance includes Medicare, Medicaid, and the Civilian Health and Medical Program of the

Uniformed Services (CHAMPUS).

7

Type of insurance was unknown for about 1 percent of the veterans.

8

GAO/HEHS-94-113FS, Mar. 29, 1994.

Page 6 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

VA Facility Users Often

Traveled Long Distances

Veterans’ use of VA facilities was influenced by the distances they had to

travel to the facilities. Our analysis of 1990 census data showed that about

50 percent of all veterans lived over 25 miles from a VA hospital, including

6 percent who lived over 100 miles away, and 34 percent lived over 25

miles from a VA clinic.9

 Many of those veterans traveled long distances to

use VA facilities. For example, 44 percent of VA facility users lived over 25

miles from VA hospitals providing acute medical and surgical care, and

32 percent lived over 25 miles from outpatient clinics that provided such

services.

Living closer to a VA facility significantly increases the likelihood that a

veteran will use VA health care and VA officials told us that some veterans

move to be closer to VA medical facilities. For example, about 11 percent

of all veterans lived within 5 miles of a VA hospital, and they accounted for

22 percent of the facility users. Similarly, 17 percent of veterans lived

within 5 miles of a VA outpatient clinic and accounted for 26 percent of the

clinic users. The likelihood and frequency of VA use decline significantly

among veterans living more than 5 miles away. Veterans with

service-connected disabilities and low-income veterans, however, are less

sensitive to distance.

VA Medical Facilities

Are Less Accessible

Than Private Facilities

VA medical facilities are located throughout the country and are

outnumbered by private-sector facilities. Consequently, private-sector

health care is usually more convenient to veterans than VA health care. In

some urban areas, for example, VA operates one or two hospitals, while the

private sector may have a dozen or more hospitals and hundreds of

locations that provide primary and specialty care. While private-sector

hospital and outpatient providers are less plentiful in rural areas than in

urban areas, they still generally outnumber VA providers.

VA Health Care Facilities

Are Scattered

VA hospital and outpatient clinics are often located hundreds of miles from

each other, as shown in figure 1.

9

VA Health Care: How Distance From VA Facilities Affects Veterans’ Use of VA Services

(GAO/HEHS-96-31, Dec. 20, 1995).

Page 7 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

Figure 1: Locations of VA Medical Centers and Freestanding Outpatient Clinics

Page 8 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

VA Medical Centers

VA Freestanding Outpatient Clinics

Page 9 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

Some areas of the United States have more extensive VA medical coverage

than others. Of VA’s 158 medical centers,10 124, or 78 percent, are located in

urban areas and 33 are in rural areas.11 Similarly, of VA’s 187 freestanding

outpatient clinics,12 123, or almost 66 percent, are located in urban areas

and 58 are in rural areas.13 VA has no medical facilities in 147, or about

46 percent, of the country’s 323 urban areas.

Private-sector medical facilities also significantly outnumber VA facilities.

For example, in contrast to VA’s 173 hospitals, there are over 6,000 public

and private hospitals nationwide.

Moreover, private-sector health care programs generally target specific

geographic markets and place a priority on developing extensive networks

of providers. They typically strive to provide primary care within a few

miles or minutes of their enrollees in urban markets and within a

reasonable distance or time, albeit somewhat longer and farther, in rural

areas.14 Further, while they realize that enrollees are willing to travel

longer distances for specialty care, they also realize that such services

must be “convenient” to attract enrollees and remain competitive with

other private programs.

Comparison of Veterans’

Access to VA and Private

Facilities in Selected

Markets

Veterans generally have less access to VA medical facilities than to private

facilities, as the following market examples show. Nevertheless, VA

officials said that veterans often have better access through VA facilities

than through private facilities to such specialty services as mental health

care, rehabilitation for the blind, and post-traumatic stress disorder care.

An Urban Area With a VA

Medical Center

Veterans living in urban areas with one or more VA medical centers, such

as Chicago, Illinois, may not have to travel long distances for care in VA

facilities but may have to endure long travel times. Moreover, private

facilities are generally more accessible.

10VA medical centers typically include one or more hospitals and a hospital-based outpatient clinic.

11One VA medical center is located in Puerto Rico.

12Freestanding outpatient clinics are facilities that are physically separate from a VA medical center;

that is, they are not located on the medical center property.

13VA also operates six freestanding outpatient clinics outside the United States: two in Puerto Rico,

two in the Virgin Islands, one in Guam, and one in the Philippine Islands.

14Primary care is a point of entry into the health care system for nonemergency care.

Page 10 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

VA operates four medical centers in the Chicago primary metropolitan

statistical area, which encompasses nine counties with almost 700,000

veterans.15 Together, the four medical centers provide services ranging

from primary care to highly specialized services, such as psychiatric

inpatient care and treatment for spinal cord injuries. The centers provide

2,600 acute-, psychiatric-, and extended-care beds. In 1993, almost 17,000

veterans in the Chicago metropolitan area received VA inpatient services,

and almost 70,000 received VA outpatient services. While over 77 percent of

the veterans in the Chicago metropolitan area live within 20 miles of a

medical center, traffic congestion makes these centers difficult and

time-consuming to reach. When public transportation is used, travel times

may exceed 1-1/2 hours.

Private facilities are often more convenient. Over 100 hospitals and

thousands of primary care and specialist physicians are located in the

Chicago primary metropolitan statistical area. In addition, insurance

companies and managed care programs have formed networks of

hospitals and physicians to offer enrollees a wide range of services located

near their homes. Patients enrolled in one of Aetna’s managed care plans,

for example, have a choice of 45 hospitals and more than 450 sites where

they can obtain primary care within the Chicago metropolitan area. (See

fig. 2.) An executive from another major managed care plan serving the

same area told us that the plan’s goal is to provide two primary care

physicians within 5 miles of every enrollee.

15The Office of Management and Budget designates areas of the country with a large population

nucleus and surrounding communities that have a high degree of economic and social integration as

metropolitan statistical areas.

Page 11 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

Figure 2: Locations of Aetna Hospitals and VA Facilities in the Chicago Nine-County Primary Metropolitan Statistical Area

0

WISCONSIN

ILLINOIS

10

Miles

VA Hospitals (4)

Aetna's Preferred Hospitals (45)

20

Chicago

North Chicago

 LAKE

MICHIGAN

INDIANA

An Urban Area With a

Freestanding VA Outpatient

Clinic

Veterans living in urban areas with only a freestanding VA outpatient clinic,

such as Rockford, Illinois, often travel long distances to other VA facilities

to obtain needed inpatient and specialty care. Such care is often available

from nearby private providers.

VA operates one outpatient clinic in the Rockford metropolitan statistical

area, which encompasses three counties with about 40,000 veterans. The

VA clinic provides a broad range of primary care and some specialty

services. In 1993, about 400 veterans in the Rockford metropolitan area

received VA inpatient services, and about 2,200 received VA outpatient

services. While almost 74 percent of these veterans lived within 10 miles of

the clinic, they had to travel about 70 miles to obtain inpatient care or

outpatient specialty services not available at the Rockford clinic. The

Page 12 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

nearest VA medical centers are in Madison, Wisconsin, and North Chicago,

Illinois.

According to local health care officials, private-sector care is generally

available within minutes of most of the Rockford population. Rockford has

three general medical and surgical hospitals that, together, have almost

1,000 hospital beds. Each has developed a network of providers. For

example, the SwedishAmerican Health Alliance System includes 3

hospitals and 22 primary care sites in the Rockford metropolitan area and

operates or is affiliated with many retail pharmacies, acute-care centers,

and home-care and long-term care facilities in the Rockford area. (See fig.

3.)

Figure 3: Locations of SwedishAmerican Health Alliance Hospitals and Primary Care Sites and VA Facilities in the

Three-County Rockford, Illinois, Metropolitan Statistical Area

N

ILLINOIS

68 miles

WISCONSIN

SwedishAmerican Health Alliance Hospital

SwedishAmerican Health Alliance Primary Care Site

(N=number of sites)

VA Outpatient Clinic

VA Medical Center

0 30

OGLE

Rockford

WINNEBAGO

Madison

15

Miles

BOONE

70 miles

Milwaukee

North Chicago

Chicago

1

1

1

1

1

1

2

2

1

1

3

8 1

WISCONSIN

ILLINOIS

 Lake

Michigan

Rockford Metropolitan Statistical Area (MSA)

Chicago VA Service Area Border

Chicago Primary Metropolitan Statistical Area

INDIANA OHIO

MICHIGAN

Page 13 GAO/HEHS-96-52 Accessibility of VA Health Care
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An Urban Area Without a VA

Facility

Veterans living in urban areas with no VA medical facilities, such as Salem,

Oregon, often travel long distances to obtain VA health care. Private

providers are often nearby.

VA operates no hospital or outpatient clinic in the Salem primary

metropolitan statistical area, which encompasses two counties with about

46,000 veterans. The Salem metropolitan area, situated in VA’s Portland,

Oregon, service area, covers 27 counties in northwest Oregon and

southwest Washington. In 1993, about 600 veterans from the Salem

metropolitan area received VA inpatient services, and about 2,700 received

VA outpatient services. These veterans had to travel from 20 to over 70

miles to get to the Portland facility.

Many private medical facilities are located in the Salem metropolitan area,

typically, according to officials of these facilities, within 20 minutes of

Salem residents. One of Oregon’s largest hospitals—a 454-bed facility that

serves as a referral point for smaller hospitals in surrounding

communities—is located within the Salem city limits, and there are three

smaller hospitals in the metropolitan area as well. Physicians are widely

distributed and within easy reach of most residents. In addition, the area

has several private-sector managed care plans that have developed

networks of providers to make care convenient for their enrollees. ODS

Health Plans, for example, offers its enrollees a choice of 4 hospitals and

56 primary care sites in Salem. (See fig. 4.)

Page 14 GAO/HEHS-96-52 Accessibility of VA Health Care
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Figure 4: Locations of ODS Health Plan Hospitals and Primary Care Sites in the Salem, Oregon, Primary Metropolitan

Statistical Area and the Nearest VA Facility

1

5

3 1

1

8

1

1

6

6

POLK

VA Hospital

Salem Primary Metropolitan Statistical Area

Hospitals in ODS' Managed

Care Network

VA Outpatient Clinic

Primary care sites in ODS'

Managed Care Network

(N=Number of sites)

N County lines in the Portland VA Medical Center Service Area

23

47 miles

Salem

Portland

MARION

Eugene

Portland

Portland VA Medical Center Service Area

WASHINGTON

OREGON

IDAHO

M

A Rural Area With a VA Medical

Center

Veterans living in rural areas served by a single VA medical center, such as

central Georgia, often travel long distances to obtain care in VA facilities

because such facilities often serve large geographic areas. Private facilities

scattered throughout the rural areas may be more convenient.

VA operates a medical center in Dublin, Georgia, a rural community about

135 miles southeast of Atlanta. The medical center is the only VA medical

facility in a 52-county area with about 130,000 veterans. The facility

provides primary and secondary medical, surgical, and psychiatric care, as

well as extended-care services. In 1993, about 3,700 veterans in the Dublin

service area received VA inpatient services, and about 14,000 received VA

outpatient services. The veterans came from as far away as 70 miles to the

north, 150 miles to the east, 100 miles to the south, and 140 miles to the

west. Moreover, veterans needing highly specialized care are referred to

Page 15 GAO/HEHS-96-52 Accessibility of VA Health Care
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the VA medical center in Augusta, Georgia, about a 2-1/2-hour drive from

Dublin.

Private medical facilities are also scattered throughout the Dublin VA

medical center service area and are more accessible to veterans, with the

exception of veterans living in Dublin, than is VA’s medical center. In 1993,

there were more than 40 medical and surgical hospitals and almost 1,400

physicians in the area. In addition, Blue Cross/Blue Shield of Georgia,

which operates a preferred provider network throughout the state, offers

its enrollees a choice of 10 hospitals and 79 primary care sites in the

52-county area. (See fig. 5.)

Figure 5: Locations of Blue Cross/Blue Shield Hospitals and Primary Care Sites and the VA Facility in the 52-County

Dublin, Georgia, VA Medical Center Service Area

1

2 20

1

19

6

1

3

1

3

3

1

3

1

1

3

1

5

3

1

ALABAMA

Columbus

N

VA Medical Center

VA Freestanding Outpatient Clinic

Primary Care Sites in Blue Cross

Blue Shield Service Benefit Plan

(N=Number of locations in county)

Hospitals in the Blue Cross Blue Shield

Service Benefit Plan

Atlanta

GEORGIA

FLORIDA

Dublin

0

Augusta

25 50

Miles

Savannah

 SOUTH

CAROLINA

Page 16 GAO/HEHS-96-52 Accessibility of VA Health Care
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Options VA Might

Explore for Improving

Accessibility of VA

Health Care

In February 1995, VA issued an interim policy that encouraged its field

offices to employ all means at their disposal, consistent with funding

availability and federal law, to improve veterans’ access to VA health care.

VA also authorized its offices to establish VA-operated clinics as well as

VA-funded or VA-reimbursed private clinics, group practices, or individual

practitioners. The directors of VA’s newly created 22 networks are

exploring ways to better integrate service delivery.

In developing plans for improving veterans’ access to VA health care, the

directors face two basic decisions: where to locate new facilities and how

to operate them. Each decision involves the assessment of a variety of key

factors.

Target Population Is Key

Factor in Deciding Where

to Locate New Facilities

A key factor that could influence VA’s decisions about where to locate new

medical facilities is the population to be targeted. VA has several options:

(1) improve convenience for current users, (2) attract new users by

improving access for all veterans, or (3) improve access for specific

groups of veterans, such as those in selected eligibility categories or those

residing in medically underserved areas.

Improving Access for Current

Users

In improving convenience for existing users by making VA medical

facilities more accessible, VA could decide, for example, to help veterans

traveling great distances or times to receive care or to help the largest

number of veterans, without regard to travel distances or times.

To improve convenience for current users with long travel distances or

times, VA would have to establish criteria for determining reasonable travel

distances or times and then assess the number of current users residing in

areas beyond those distances or times. These criteria could vary

depending on whether the area targeted is urban or rural. Facilities could

be located so they could provide the maximum number of existing users

with improved access, as illustrated in the following examples.

• In a densely populated urban area like Chicago, Illinois, one-quarter of a

medical center’s current users might live 10 to 20 miles from the facility.

However, traffic congestion and transportation barriers might cause these

veterans to travel an hour or more one way to obtain care, especially if

they needed to use public transportation. A medical center could decide to

make outpatient care available within 30 minutes’ average travel time.

That is, the center could establish facilities nearer to large numbers of

current users who now have to travel significantly longer than 30 minutes.

Page 17 GAO/HEHS-96-52 Accessibility of VA Health Care
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• In a largely rural area, such as the one served by the VA medical center in

Dublin, Georgia, many veterans must travel extensive distances to obtain

VA care. In fiscal year 1994, over 23 percent of the outpatient visits at

Dublin were by veterans living in or around Macon and Albany, Georgia,

which are located approximately 50 and 100 miles away, or about 1 to 2

hours, respectively, from the medical center. A rural VA medical center like

Dublin could significantly reduce the time veterans needed to travel for

outpatient care by adding access points in key population centers, such as

Macon or Albany.

To establish delivery sites that improve access for the largest number of

current users, VA could identify large concentrations of veterans currently

served. These concentrations would be likely to be within close proximity

of existing medical centers. For example, a medical center in an urban

area could elect to establish a nearby clinic because over one-third of its

current users resided in that area. Providing a new facility in a nearby

location could help alleviate overcrowding at the medical center.

Attracting New Users Medical facilities could also be located to attract new users. VA could

identify areas that have a large number of veterans who do not now

receive VA care. The target population could be based on the total number

of veterans in an area, as shown in the following examples.

• Officials from the Dublin, Georgia, VA medical center told us their goal was

to improve the accessibility of VA health care services for new and current

users. Consequently, Dublin targeted population centers in its service area,

such as Macon and Albany, as possible locations for new outpatient

clinics.

• Portland, Oregon, VA medical center officials told us their plans were

designed to retain existing users and attract new veterans. As a result,

Portland officials planned on adding access points in major urban areas of

their service area, such as Salem, from which they would be likely to draw

the most veterans.

VA also could target a population on the basis of a predetermined

percentage of nonusers, regardless of how many veterans resided in the

area. For example, a VA medical center could choose to establish a delivery

site in a remote area where less than a prescribed percentage of veterans,

such as 5 percent, obtained care at the medical center. By providing an

access point closer to where the veterans lived, the medical center could

encourage more veterans to use its health care services.

Page 18 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

Improving Access for Selected

Eligibility or Other Groups

VA’s assessment of areas in which to locate new medical facilities could

also consider differences in veterans’ eligibility status and other factors. In

general, veterans with service-connected disabilities, low-income veterans,

and certain other “mandatory care” veterans, such as World War I veterans

and veterans exposed to toxic substances, have the highest priority for

receiving VA health care. High-income veterans without service-connected

disabilities have the lowest priority.

VA could improve access for one or more of the high-priority groups. For

example, a medical center could target veterans with service-connected

disabilities. The center could establish medical facilities in areas with high

concentrations of such veterans, providing more convenient access.

Moreover, the size of the facility could be based on the estimated number

of such veterans residing in the targeted area.

VA medical centers also could choose to provide better health care access

for veterans living in areas where community providers are unavailable.

For example, although many veterans have public or private health

insurance, those that live in underserved areas may not be able to obtain

care because of shortages of private providers. To improve access for such

veterans, a VA medical center could identify veterans living in areas

designated Health Professional Shortage Areas16 and establish a medical

facility in the area.17

Resources, Market

Conditions, and Private

Provider Willingness to

Contract With VA Are Key

Factors in Deciding How

to Deliver Care

VA has identified two alternative approaches for expanding access. First, it

could establish VA-operated facilities, using either VA-owned or VA-leased

space. Second, it could contract with non-VA providers to provide care.18

VA’s decisions in this regard are likely to be primarily influenced by three

factors—resources, market conditions, and the willingness of private

providers to contract with VA.

16Health Professional Shortage Areas are geographic areas and population groups recognized by the

federal government as having an acute shortage of health care personnel.

17In VA Health Care: Retargeting Needed to Better Meet Veterans’ Changing Needs (GAO/HEHS-95-39,

Apr. 21, 1995), we discussed how well the VA health care system is meeting the health care needs of

veterans and options available for reconfiguring the system to better meet veterans’ needs.

18Currently, VA has authority to contract for health care services under prescribed conditions, for

example, when specialized medical resources or routine treatment of certain veteran groups, such as

those with service-connected conditions, is required. VA recently developed a legislative proposal to

expand its contracting authority.

Page 19 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

Resources The availability of resources is a key factor affecting VA’s decisions

whether to operate new VA medical facilities or contract for care. In

general, VA could assess the cost implications on a short- and long-term

basis, taking into account start-up and operating costs. VA could also

consider the potential for fraud, waste, and abuse.

VA-operated facilities typically require a substantial capital investment,

which increases VA’s costs over the short term. For example, VA would

have to build, purchase, or lease a facility. It would also have to staff and

equip the facility.

VA-operated medical facilities could be more costly to operate than

contracting for care. Although performing valid cost comparisons is

complicated, one VA medical center concluded that certain types of health

care could be more expensive when delivered in a VA medical center. The

medical center contracted with a community provider to furnish certain

health care services to veterans at a capitation rate of $178. A medical

center official estimated that the cost to provide the same services in the

VA facility would be substantially more.

Similarly, in their Fiscal Year 1995 Independent Budget for the Department

of Veterans Affairs,

19 veterans’ service organizations estimated that adding

132 VA-operated leased clinics to VA’s direct delivery system over a 4-year

period could cost $346 million—$137 million more than the $209 million

the veterans’ service organizations estimated it would cost to provide

comparable services through contracts with the private sector.

VA-operated medical facilities would also be likely to result in less

accessibility for veterans than could be achieved through contracting,

because of high start-up and operating costs. VA could operate its own

facility in an area or, for the same dollar expenditures, could contract for

care at multiple locations, significantly enhancing the geographic

accessibility of services to veterans living in the area. Managed care plans

in the areas we visited typically contracted for care with geographically

dispersed networks of physicians rather than operating their own facilities

at only a few locations. In Salem, for example, most managed care plans

contracted with an independent practice association that represented

virtually all physicians practicing in the area. Thus, the plans were able to

offer their enrollees numerous locations where they could obtain care.

19Annually, four congressionally chartered veterans’ service organizations—American Veterans of

World War II, Korea, and Vietnam; Disabled American Veterans; Paralyzed Veterans of America; and

the Veterans of Foreign Wars of the United States—prepare and submit to the Congress an

independent budget proposal for VA.

Page 20 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

On the positive side, VA-operated facilities could give VA more control over

resources, potentially lessening the risk of fraud, waste, and abuse. VA has

had problems in administering contracts and sharing agreements. For

example, in a 1987 audit of scarce medical specialist contracts, VA’s

Inspector General reported that VA medical centers had paid for services

they had not received and had not established controls to ensure that

contractor performance and billing complied with contract terms.20 Our

July 1992 follow-up to the Inspector General’s report found that VA lacked

assurance that these problems were identified and corrected.21

In addition, contracting has sometimes led to less VA control over the

utilization of health care services to veterans because VA has had difficulty

controlling practice patterns of private physicians. Chicago VA officials

told us this was a major factor in their decision to replace a contract clinic

that was reimbursed on a fee-for-service basis with a VA-operated clinic in

Rockford, Illinois, in 1994. According to VA officials, reviews of the

contract clinic’s medical records indicated that many veterans continued

to receive treatment at the clinic after their conditions had stabilized.

Moreover, attempts to convince contractor physicians to discharge stable

patients were unsuccessful, they said, because VA lacked direct

administrative control over the physicians. While this problem could be

avoided if VA contracted on a capitation basis, VA officials said that

capitation contracts could lead to other problems, such as diminished

services.

Market Conditions The stability of market conditions and the competitive environment in

which VA operates could affect its health care delivery decisions. In

general, VA would need to ensure that its decisions included sufficient

flexibility, since market conditions vary over time. Also, VA would need to

ensure that its decisions considered the availability of existing providers in

a particular market.

Operating its own facilities could limit VA’s ability to expand or relocate

operations promptly in response to changing market conditions.

Expanding or relocating services could be more time consuming and

difficult than modifying or renegotiating a contractual arrangement with a

20Office of the Inspector General, Department of Veterans Affairs, Audits of Selected Aspects of VA’s

Program for Sharing Scarce Medical Resources, Report No: 7AM-A99-089 (Washington, D.C.:

Department of Veterans Affairs, July 15, 1987).

21VA Health Care: Inadequate Controls Over Scarce Medical Specialist Contracts (GAO/HRD-92-114,

July 29, 1992).

Page 21 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

private provider because clinics would need to be constructed or leased,

equipped, and staffed.

Moreover, VA may be at a disadvantage in recruiting primary care

physicians to operate its facilities. Only about 20 percent of VA’s physicians

are primary care physicians, while about 60 percent of managed care

plans’ physicians are typically primary care physicians. Private-sector

officials we spoke with believed that VA would have difficulty increasing

the number of primary care physicians to staff its facilities because of the

shortage of such physicians and because VA currently is unable to match

the salaries and benefits offered by managed care plans.

Further, VA-operated facilities might duplicate private-sector services in

areas where the private sector has sufficient capacity, requiring VA to

compete for existing patients. Several private-sector officials we spoke

with questioned the need to open new VA outpatient facilities, especially in

urban areas where the private sector already provides sufficient access. In

these cases, contracting with existing providers might be a more viable

option for improving access.

Conversely, VA-operated facilities might be a more viable option in areas

that are underserved by the private sector. Some rural and inner-city areas,

for example, suffer from a shortage of physicians. In other areas,

physicians may have full practices and, as a result, be unlikely to take on

additional patients. Thus, if VA wanted to improve access for veterans in

such areas it might be able to do so only by establishing its own facility.

Willingness of Private Providers

to Contract With VA

Finally, even if VA chose to do so, it could have difficulty contracting for

veterans’ health care. Several private-sector officials indicated that

providers would be cautious about entering into capitation arrangements

with VA because the risk of financial loss would be too high. They said that

the VA patient population is perceived as being sicker and, therefore, more

expensive to care for than the general population. At the same time, they

questioned the willingness of VA to provide an adequate level of

reimbursement, particularly under a capitation arrangement.

A medical center in Chicago recently encountered such an obstacle. The

VA medical center proposed establishing a VA-operated outpatient clinic in

its service area after failing to interest three local health maintenance

organizations (HMO) in providing services on a capitation basis. The HMOs

were not interested because they believed the medical histories of the

medical center’s patients represented too high an underwriting risk. The

Page 22 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

HMOs, according to medical center officials, were unwilling to develop a

rate for patients outside their normal risk definition.

In addition, officials at two managed care plans expressed concern about

contracting with VA because doing so could adversely affect veteran

patients’ care. Non-VA physicians who lacked admitting rights in VA

hospitals would be required to relinquish control of patients needing

inpatient care to VA physicians. Officials at one managed care plan said

that their physicians would not be likely to be receptive to such an

arrangement because they would lose the ability to ensure continuity of

care for their patients. Similarly, officials from another plan said that

contracting only for primary care would result in veterans’ seeing

physicians from two different systems—their plan and VA. This, they said,

would make tracking their patients difficult.

Finally, some private-sector officials believed that many providers would

be reluctant to contract with VA because of their unwillingness to deal with

excessive government contracting requirements and regulations.

Conclusions Veterans’ access to VA health care could improve significantly if medical

centers employed all means at their disposal to expand access, as VA’s

February 1995 interim policy encourages centers to do. While medical

centers have numerous options in locating new facilities, selecting a target

population, such as current or new users, poses a difficult policy choice.

Also, medical centers’ decisions on how to operate new facilities—directly

or by contracting—require the evaluation of several key factors on a

facility-specific basis to ensure care is delivered in the most appropriate

manner. Overall, medical centers will be likely to use a variety of options

tailored specifically to the variabilities of local conditions.

Agency Comments

and Our Evaluation

We obtained comments on a draft of this report from VA officials, including

the Deputy Secretary for Health. The officials agreed with the basic

concepts in our report. They cautioned, however, that evaluating veterans’

access to health care and improving access may be more complex, in

reality, than the report appears to suggest. For example, they said that the

availability of a large number of private-sector medical facilities does not

ensure that veterans can receive needed care from such facilities, noting

that veterans often need such special services as psychiatric care and

rehabilitation for blindness. We revised the report to show that we focused

on veterans’ access to standard health care benefits. VA officials also

Page 23 GAO/HEHS-96-52 Accessibility of VA Health Care
B-256197 

suggested some technical changes, primarily for clarification. We

incorporated the suggestions as appropriate.

Copies of this letter are being sent to the Chairmen and Ranking Minority

Members of the House and Senate Committees on Veterans’ Affairs and

the Secretary of Veterans Affairs. Copies will be made available to others

upon request.

Please call me at (202) 512-7101 if you have any questions or need

additional assistance. Other GAO contacts and contributors to this report

are listed in appendix II.

Sincerely yours,

David P. Baine

Director, Federal Health Care

 Delivery and Quality Issues

Page 24 GAO/HEHS-96-52 Accessibility of VA Health Care
Page 25 GAO/HEHS-96-52 Accessibility of VA Health Care
Contents

Letter 1

Appendix I 

Scope and

Methodology

28

Chicago, Illinois 29

Rockford, Illinois 29

Salem, Oregon 30

Dublin, Georgia 30

Appendix II 

GAO Contacts and

Staff

Acknowledgments

32

Figures Figure 1: Locations of VA Medical Centers and Freestanding

Outpatient Clinics

8

Figure 2: Locations of Aetna Hospitals and VA Facilities in the

Chicago Nine-County Primary Metropolitan Statistical Area

12

Figure 3: Locations of SwedishAmerican Health Alliance

Hospitals and Primary Care Sites and VA Facilities in the

Three-County Rockford, Illinois, Metropolitan Statistical Area

13

Figure 4: Locations of ODS Health Plan Hospitals and Primary

Care Sites in the Salem, Oregon, Primary Metropolitan Statistical

Area and the Nearest VA Facility

15

Figure 5: Locations of Blue Cross/Blue Shield Hospitals and

Primary Care Sites and the VA Facility in the 52-County Dublin,

Georgia, VA Medical Center Service Area

16

Abbreviations

CHAMPUS Civilian Health and Medical Program of the Uniformed

Services

HMO health maintenance organization

VA Department of Veterans Affairs

Page 26 GAO/HEHS-96-52 Accessibility of VA Health Care
Page 27 GAO/HEHS-96-52 Accessibility of VA Health Care
Appendix I 

Scope and Methodology

To obtain information on users of VA medical facilities, we reviewed VA’s

studies of the status of veterans in 1987 and 199222 and previous GAO VA

health care reports.23

To compare the accessibility of VA and private-sector facilities, we

categorized VA’s existing facilities into four general markets: urban and

rural areas with medical centers and urban and rural areas with

freestanding outpatient clinics. We also identified urban areas where VA

operates no medical facilities. We visited the following locations:

• Chicago, Illinois—an urban area where VA operates a medical center,

• Rockford, Illinois—an urban area where VA operates a freestanding

outpatient clinic,

• Salem, Oregon—an urban area where VA has no medical facilities, and

• Dublin, Georgia—a rural area where VA operates a medical center.

For purposes of this report, we considered metropolitan statistical areas

and primary metropolitan statistical areas as urban areas. The Office of

Management and Budget defines a metropolitan statistical area as either

(1) an area that includes at least one city with a population of at least

50,000 or (2) a Census Bureau-defined urbanized area of at least 50,000

inhabitants and a total metropolitan population of 100,000 (75,000 in New

England). Metropolitan statistical areas with populations of 1 million or

more are called consolidated metropolitan statistical areas if separate

component areas, or primary metropolitan statistical areas, can be

identified in the areas.24 We used the primary metropolitan statistical area

rather than the consolidated metropolitan statistical area to determine

whether VA had medical facilities in urban areas. For example, both

Portland and Salem, Oregon, are part of the same consolidated

metropolitan statistical area but are separate primary metropolitan

statistical areas. VA has a medical center located in Portland, and we

classified the Portland primary metropolitan statistical area as an urban

area with a VA medical center. The Salem primary metropolitan statistical

area has no VA facility, and we classified it as an urban area with no VA

medical facilities.

221987 Survey of Veterans (July 1989) and National Survey of Veterans (Apr. 1995).

23We made extensive use of two reports: GAO/HEHS-94-113FS, Mar. 29, 1994, and GAO/HEHS-96-31,

Dec. 20, 1995.

24As of June 1993, there were 250 metropolitan statistical areas and 18 consolidated metropolitan

statistical areas consisting of 73 primary metropolitan statistical areas in the United States.

Page 28 GAO/HEHS-96-52 Accessibility of VA Health Care
Appendix I 

Scope and Methodology

The four study locations were selected as a nonrandom judgmental sample

representing VA’s typical market categories and a diversity of geographic

areas. In Chicago and Dublin, we met with local VA officials to discuss the

accessibility of VA’s health care facilities and options for improving access.

For Rockford, we met with local and North Chicago VA Medical Center

(the parent facility) officials. For Salem, we met with officials from the VA

medical center in Portland, Oregon, the closest VA medical facility.

In each location, we also met with private-sector hospital and managed

care plan officials to obtain information about the local health care market

and the accessibility of their health care services. In each market area, we

used the provider directory of one managed care plan to determine the

number of primary care sites and hospitals available to the plan’s

enrollees. A provider directory is a listing of the hospitals, physicians, and

other health care providers affiliated with the managed care plan. We

graphically depicted these facilities and VA’s facilities on maps of the four

locations. The list of organizations contacted follows.

Chicago, Illinois

VA • Lakeside VA Medical Center

• North Chicago VA Medical Center

• Crown Point Outpatient Clinic

Private Sector • Blue Cross/Blue Shield of Illinois

• Chicago HMO

• Aetna Health Plans

• Northwestern HealthCare Network

• HealthNetwork

• Highland Park Hospital

Rockford, Illinois

VA • Rockford Outpatient Clinic

Private Sector • SwedishAmerican Health Alliance System

Page 29 GAO/HEHS-96-52 Accessibility of VA Health Care
Appendix I 

Scope and Methodology

• Rockford Health System

Salem, Oregon

VA • Portland VA Medical Center

Private Sector • HMO Oregon (Blue Cross/Blue Shield of Oregon)

• Kaiser Permanente

• ODS Health Plans

• PacifiCare Health Systems

• SelectCare Health Plans

• Salem Hospital

Dublin, Georgia

VA • Carl Vinson VA Medical Center

Private Sector • Fairview Park Hospital

• Blue Cross/Blue Shield of Georgia (Macon, Georgia)

To determine how far veterans in our study areas lived from a VA medical

facility, we computed the distance from zip codes where the veterans lived

to the closest VA medical facility in the area (that is, the Chicago primary

metropolitan statistical area; the Rockford metropolitan statistical area;

the Salem primary metropolitan statistical area; and Dublin service areas,

as defined by VA). If VA had no facilities in the area, we computed the

distance to the nearest VA facility. For example, in the Chicago, Illinois,

primary metropolitan statistical area, we computed the distance from the

zip codes where veterans lived to the closest of VA’s four medical facilities

in the area; in the Salem, Oregon, area, which had no VA facility, we

computed the distance from where the veterans lived to the VA facility in

Portland, Oregon, the VA facility closest to Salem.

We also used these zip codes to determine the number of veterans living

and receiving services in the study areas. We applied 1990 U.S. census data

to these zip codes to determine the number of veterans living in each study

area. We applied data from VA’s fiscal year 1993 Outpatient and Patient

Page 30 GAO/HEHS-96-52 Accessibility of VA Health Care
Appendix I 

Scope and Methodology

Treatment databases25 to these zip codes to determine the number of

veterans who received VA outpatient and inpatient services in each study

area.

To identify the factors VA considers in deciding where to locate new

medical facilities and whether to add new VA-operated facilities or contract

with private providers, we reviewed VA policy directives and other

guidance and interviewed VA central office and selected medical center

officials. We also reviewed prior GAO reports and other studies. In addition,

we met with VA Office of General Counsel officials to discuss VA’s

contracting authority. We also discussed contracting and expanding VA’s

direct delivery system with officials from the private-sector organizations

we visited.

25VA’s Outpatient File lists all veterans who received VA outpatient services each year. VA’s Patient

Treatment File lists all veterans discharged from a VA Medical Center each year. Both databases track

veterans’ zip codes.

Page 31 GAO/HEHS-96-52 Accessibility of VA Health Care
Appendix II 

GAO Contacts and Staff Acknowledgments

GAO Contacts Paul R. Reynolds, Assistant Director, (202) 512-7109

Robert T. Ferschl, Evaluator-in-Charge, (312) 220-7632

Byron S. Galloway, (202) 512-7247

Staff

Acknowledgments

In addition to those named above, the following individuals made

important contributions to this report: Abigail Ohl provided assistance

with data gathering and analysis, and Ann McDermott, Angela Pun, and

Joan Vogel prepared the graphics.

(406077) Page 32 GAO/HEHS-96-52 Accessibility of VA Health Care
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