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ASSESSING CAPITAL ASSET REALIGNMENT 

FOR ENHANCED SERVICES AND THE FUTURE 

OF THE U.S. DEPARTMENT OF VETERANS 

AFFAIRS’ HEALTH INFRASTRUCTURE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JUNE 9, 2009 

Serial No. 111–27 

Printed for the use of the Committee on Veterans’ Affairs 

( 


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COMMITTEE ON VETERANS’ AFFAIRS 

BOB FILNER, California, Chairman 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

MICHAEL H. MICHAUD, Maine 

STEPHANIE HERSETH SANDLIN, South 

Dakota 

HARRY E. MITCHELL, Arizona 

JOHN J. HALL, New York 

DEBORAH L. HALVORSON, Illinois 

THOMAS S.P. PERRIELLO, Virginia 

HARRY TEAGUE, New Mexico 

CIRO D. RODRIGUEZ, Texas 

JOE DONNELLY, Indiana 

JERRY MCNERNEY, California 

ZACHARY T. SPACE, Ohio 

TIMOTHY J. WALZ, Minnesota 

JOHN H. ADLER, New Jersey 

ANN KIRKPATRICK, Arizona 

GLENN C. NYE, Virginia 

STEVE BUYER, Indiana, Ranking 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

HENRY E. BROWN, JR., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

BRIAN P. BILBRAY, California 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida 

VERN BUCHANAN, Florida 

DAVID P. ROE, Tennessee 

Malcom A. Shorter, Staff Director 

SUBCOMMITTEE ON HEALTH

MICHAEL H. MICHAUD, Maine, Chairman 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

HARRY TEAGUE, New Mexico 

CIRO D. RODRIGUEZ, Texas 

JOE DONNELLY, Indiana 

JERRY MCNERNEY, California 

GLENN C. NYE, Virginia 

DEBORAH L. HALVORSON, Illinois 

THOMAS S.P. PERRIELLO, Virginia 

HENRY E. BROWN, JR., South Carolina, 

Ranking 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

JOHN BOOZMAN, Arkansas 

GUS M. BILIRAKIS, Florida 

VERN BUCHANAN, Florida 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Veterans’ Affairs are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 


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C O N T E N T S 

June 9, 2009 

Page 

Assessing Capital Asset Realignment for Enhanced Services and the Future 

of the U.S. Department of Veterans Affairs’ Health Infrastructure ................ 1 

OPENING STATEMENTS 

Chairman Michael Michaud ................................................................................... 1 

Prepared statement of Chairman Michaud .................................................... 51 

Hon. Henry E. Brown, Jr., Ranking Republican Member .................................... 2 

Prepared statement of Congressman Brown .................................................. 51 

WITNESSES 

U.S. Department of Veterans Affairs: 

Hon. Everett Alvarez, Jr., Chairman, Capital Asset Realignment for Enhanced Services Commission ....................................................................... 29 

Prepared statement of Hon. Alvarez ....................................................... 70 

Donald H. Orndoff, AIA, Director, Office of Construction and Facilities 

Management .................................................................................................. 38 

Prepared statement of Mr. Orndoff ......................................................... 82 

U.S. Government Accountability Office, Mark L. Goldstein, Director, Physical 

Infrastructure ....................................................................................................... 31 

Prepared statement of Mr. Goldstein ............................................................. 73 

American Legion, Joseph L. Wilson, Deputy Director, Veterans Affairs and 

Rehabilitation Commission ................................................................................. 3 

Prepared statement of Mr. Wilson .................................................................. 52 

Disabled American Veterans, Joy J. Ilem, Assistant National Legislative Director ..................................................................................................................... 11 

Prepared statement of Ms. Ilem ...................................................................... 62 

Paralyzed Veterans of America, Carl Blake, National Legislative Director ....... 5 

Prepared statement of Mr. Blake .................................................................... 54 

Veterans of Foreign Wars of the United States, Dennis M. Cullinan, Director, 

National Legislative Service ................................................................................ 7 

Prepared statement of Mr. Cullinan ............................................................... 57 

Vietnam Veterans of America, Richard F. Weidman, Executive Director for 

Policy and Government Affairs ........................................................................... 9 

Prepared statement of Mr. Weidman ............................................................. 60 

MATERIAL SUBMITTED FOR THE RECORD 

Post-Hearing Questions and Responses for the Record: 

Hon. Michael H. Michaud, Chairman, Subcommittee on Health, Committee on Veterans’ Affairs, to Hon. Eric K. Shinseki, Secretary, U.S. 

Department of Veterans Affairs, letter dated June 18, 2009, including 

questions from Hon. Joe Donnelly, and VA responses .............................. 85 


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ASSESSING CAPITAL ASSET REALIGNMENT 

FOR ENHANCED SERVICES AND THE FUTURE 

OF THE U.S. DEPARTMENT OF VETERANS 

AFFAIRS’ HEALTH INFRASTRUCTURE 

THURSDAY, JUNE 9, 2009 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON VETERANS’ AFFAIRS, SUBCOMMITTEE ON HEALTH, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:09 a.m., in 

Room 334, Cannon House Office Building, Hon. Michael Michaud 

[Chairman of the Subcommittee] presiding. 

Present: Representatives Michaud, Teague, Halvorson, Perriello, 

Brown of South Carolina, Boozman, and Bilirakis. 

OPENING STATEMENT OF CHAIRMAN MICHAUD 

Mr. MICHAUD. I call the Subcommittee on Health to order and 

while we are giving our opening remarks, I would ask the first 

panel to come forward. 

I would like to thank everyone for attending this morning’s hearing. Today’s hearing marks the fifth anniversary of the CARES decision, otherwise known as the Capital Asset Realignment for Enhanced Services. 

The purpose of this hearing is to assess the U.S. Department of 

Veterans Affairs’ (VA’s) implementation of CARES and to investigate the effectiveness of CARES as a capital planning tool. 

In addition, today’s hearing will explore whether CARES should 

continue in the future or if the VA should adapt to an alternative 

capital planning mechanism. 

When the VA embarked on the CARES process 5 years ago, over 

5 years actually, the VA’s health infrastructure was thought to be 

unresponsive to the needs of current and future veterans. 

While about 24 percent of the veterans’ population was enrolled 

in the VA for health care, the CARES plan assumed the enrollment 

population would increase to 33 percent by the end of 2022. 

In addition, there were concerns about the ability of the existing 

health care infrastructure to meet the demand of the aging veteran 

population who opt for warmer climates in the south and southwest. 

CARES was intended to eliminate or downsize unused facilities, 

convert older, massive hospitals to more efficient clinics, and build 

hospitals where they are needed in more populated areas. In essence, CARES was to direct resources in a sensible way to increase 

access to care for many veterans and to improve the efficiency of 

health care operations across the VA facilities. 


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Over the years, there have been challenges of implementing the 

CARES decision in numerous locations. Most notably, the VA actually has reversed the CARES decision under the leadership of different VA Secretaries. 

Too often we hear stories of veterans who have been waiting for 

new facilities for over 10 or more years. 

In addition, there is a new concept of health care centers, which 

provide primary and specialty care and is a hybrid of a Community-Based Outpatient Clinic (CBOC) and full-fledged hospital. Because this is a relatively new concept the VA is rolling out, it is 

important that we fully understand how it fits into the overall 

CARES plan. 

I look forward to hearing the testimony of our panels today as 

we determine the path forward to continue to build a strong health 

infrastructure for the VA system. 

One of the reasons why this Committee continues to receive legislation dealing with contracting out VA health care services is because VA has not moved as aggressively as we would like to see 

them move forward under the CARES process. Hence, Members of 

Congress are concerned and they are trying to do what they can 

to make sure that veterans in their State have access to that 

health care that they need to take care of their needs. 

I would now like to recognize Ranking Member Brown for an 

opening statement that he may have. 

[The prepared statement of Chairman Michaud appears on p. 51.] 

OPENING STATEMENT OF HON. HENRY E. BROWN, JR. 

Mr. BROWN OF SOUTH CAROLINA. Thank you, Mr. Chairman, and 

thanks to the panel for coming and sharing their knowledge with 

us this morning. 

Today, more than 80 percent of the primary, specialty, and mental health care of our veterans’ needs can be provided in an outpatient setting. Yet, much of the Department of Veterans Affairs’ 

health care infrastructure was built more than 50 years ago when 

VA care meant hospital care. 

A review of VA’s real property by the U.S. Government Accountability Office (GAO) in 1999 found that VA was wasting a million 

dollars a day on the maintenance of outdated and underutilized 

health care facilities. 

In response to this report and in recognition of the need to update facilities to deliver 21st century health care, VA established 

the Capital Asset Realignment for Enhancement Services (CARES) 

process. 

CARES was designed to be the capital planning blueprint for the 

future, to modernize and better align VA health care facilities for 

the changing veterans’ population. 

The CARES Commission identified several ways to improve access and enhance quality of care, including increased collaboration 

and partnership with the U.S. Department of Defense (DoD) and 

VA’s academic affiliates. 

Specifically, in my home State of South Carolina, the CARES 

Commission supported a concept for a joint venture with the Medical University of South Carolina and the Ralph H. Johnson VA 

medical center in Charleston. 


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The Secretary’s May 2004 CARES decision also stated that VA 

will continue to consider options for sharing opportunities with the 

Medical University of South Carolina. 

Since the leadership of the Medical University came to VA with 

this proposal more than 6 years ago, I and this Committee have 

taken significant steps to study and move forward with this historic opportunity to establish a new innovative model of care. 

The ‘‘Charleston Model’’ would ensure high-quality health care 

for veterans in the Charleston area and could be leveraged to improve access to care in other areas. 

A significant milestone was reached in advancing the project 

with the passage of Public Law 109–461, the Veterans Benefit 

Health Care and Information Technology Act of 2006. Section 804 of this law authorized $36.8 million for VA to enter 

into an agreement with the Medical University to design, construct, 

and operate a collocated, joint-use medical facility in Charleston, 

South Carolina. However, much to my dismay, the VA has not yet 

set aside any funding to implement the law. 

As we evaluate the effectiveness of CARES, it is also vital that 

we reevaluate the importance of collaborative partnerships. Building on the close relationships that VA already has with medical 

schools across the Nation is a powerful tool that VA can use to 

achieve greater health care quality and further efficiencies while 

still preserving the identify of a veterans’ health care system. 

I look forward to our discussion today and yield back the balance 

of the time. 

[The prepared statement of Congressman Brown appears on 

p. 51.] 

Mr. MICHAUD. Thank you, Mr. Brown. 

I would like to recognize the individuals on panel one: Joseph 

Wilson, who is with the American Legion; Carl Blake, the Paralyzed Veterans of America (PVA); Dennis Cullinan, who is with the 

Veterans of Foreign Wars of the United States (VFW); Rick 

Weidman, who is with the Vietnam Veterans of America (VVA); 

and Joy Ilem, the Disabled American Veterans (DAV). 

So I want to thank all of you for coming here this morning. Look 

forward to your testimony. And we will start with Mr. Wilson. 

STATEMENTS OF JOSEPH L. WILSON, DEPUTY DIRECTOR, 

VETERANS AFFAIRS AND REHABILITATION COMMISSION, 

AMERICAN LEGION; CARL BLAKE, NATIONAL LEGISLATIVE 

DIRECTOR, PARALYZED VETERANS OF AMERICA; DENNIS M. 

CULLINAN, DIRECTOR, NATIONAL LEGISLATIVE SERVICE, 

VETERANS OF FOREIGN WARS OF THE UNITED STATES; 

RICHARD F. WEIDMAN, EXECUTIVE DIRECTOR FOR POLICY 

AND GOVERNMENT AFFAIRS, VIETNAM VETERANS OF AMERICA; AND JOY J. ILEM, ASSISTANT NATIONAL LEGISLATIVE 

DIRECTOR, DISABLED AMERICAN VETERANS 

STATEMENT OF JOSEPH L. WILSON 

Mr. WILSON. Good morning, Mr. Chairman and Members of the 

Subcommittee. Thank you for this opportunity to present the American Legion’s views on the future of the Department of Veterans 

Affairs’ infrastructure. 


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It is the American Legion’s position that Congress keep in mind 

the importance of continuity of care during a servicemember’s transition from active duty to the community. 

Within the VA medical system are various divisions that accommodate a high demand of services. 

In 2004, the VA completed the Capital Asset Realignment for Enhanced Services or CARES process, which called for the critical 

construction needs for outdated VA hospitals and clinics throughout the Nation, throughout the VA system. The Secretary of VA reported Congress would have to include $1 

billion annually for 6 years to ensure the success of CARES. The 

American Legion has recommended the same figure in its annual 

budget recommendation since the CARES decision. 

Due to lack of funding over the years, it is believed VA has been 

playing fiscal catch-up. Although the VA had begun implementing 

CARES decisions, a Government Accountability Office or GAO report found implementation was not being centrally tracked or monitored to determine the impact the CARES process has or has not 

had on the mission. 

GAO was also tasked with examining how CARES contributes to 

the Veterans Health Administration (VHA) capital planning process, the extent to which the CARES process considered capital 

asset alignment alternatives and the extent to which VA had implemented CARES decisions and how the application has helped 

VA carry out its mission. 

Through CARES, the VA developed a model to estimate the demand for health care services as well as ascertained the capacity 

or availability of infrastructure to meet the demand. It was the recommendation of the VA to meet future health care demand by 

building medical facilities and opening more community-based outpatient clinics or CBOCs. 

GAO further examined the CARES process by other means such 

as conducting six site visits to VA facilities in Walla Walla; El 

Paso; Big Spring, Texas; Orlando, Florida; Pittsburgh, Pennsylvania; and Los Angeles, California, but they found critical infrastructure problems at the following facilities, Walla Walla, greater 

Los Angeles, Orlando, and Pittsburgh. 

As a result of the GAO report, it was recommended that VA provide the information necessary to monitor the implementation and 

impact of CARES decisions. 

It was also recommended VA provide outcome measures that report the progress of CARES as it relates to access to medical services for veterans. 

Since fiscal year 2002, approximately 945,000 Operation Enduring Freedom/Operation Iraqi Freedom (OEF/OIF) veterans have 

left active duty and become eligible for VA health care. Approximately 51 percent of the returnees were active duty while 49 percent were Reserve and National Guard. Many are also returning 

with various injuries and illnesses to include traumatic brain injury (TBI), spinal cord injury (SCI), blind eye injury, post-traumatic 

stress disorder (PTSD), and loss of limbs to name a few. 

The American Legion presents the above-mentioned numbers to 

evoke to the Congress and other pertinent stakeholders to determine the adequacy or lack thereof of care to veterans when there 


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is lack of funding and/or inadequate accommodations, namely infrastructure that houses VA services. 

While the decision to assess and plan and construct or reconstruct VA medical facilities has been underway since the CARES 

decision in 2004, the aforementioned figures also suggest veterans’ 

issues have and continue to increase. 

With the average age of VA facilities remaining at 49 years, the 

American Legion questions whether these facilities can sustain 

new medical technology for years to come. During that time, we 

must remain conscious that veterans’ issues are patterned to rise. 

It is, therefore, imperative Congress support the demand for timely 

construction of these facilities. 

It is the position of the American Legion that during the improvement/enhancement of VA facilities, a base of health care services must not only be maintained but must be increased to accommodate influxes. 

In order for the CARES plan to work successfully, there must be 

adequate funding to accommodate every project as implemented by 

the Commission. To play fiscal catch-up from this point would adversely affect the intent of the CARES project or VA infrastructure 

and all veterans who rely on VA health care. 

The American Legion also supports the mission of the CARES 

initiative if it provides a continuous, up-to-date infrastructure for 

an ever-changing veterans’ community. However, we express descent and concern if the intent is aimed at the effort to reduce VA 

expenditures under the pretext of cost savings without regard to 

the needs of the veterans’ population. 

Finally, the preparation to construct and/or reconstruct VA medical facilities must be planned in accordance with service alignment 

decisions to fulfill the promise of continuity of care and prevent 

other inadequacies such as fragmentation of care throughout the 

women veterans’ population. 

The American Legion maintains that the CARES implementation 

process must be an open and transparent process that continually 

and fully informs the veterans service organizations (VSOs) of 

CARES initiatives, criteria proposals, and timeframes. 

This also includes an accurate assessment of the demand for all 

medical services which gauges how much infrastructure is required 

to accommodate this Nation’s veterans. 

Through this form of checks and balances, the maintenance of 

quality stands to uphold the effectiveness of CARES as it pertains 

to strategic planning and the future of the entire VA system. 

Mr. Chairman and Members of the Subcommittee, the American 

Legion sincerely appreciates the opportunity to submit testimony. 

Thank you. 

[The prepared statement of Mr. Wilson appears on p. 52.] 

Mr. MICHAUD. Thank you, Mr. Wilson. 

Mr. Blake. 

STATEMENT OF CARL BLAKE 

Mr. BLAKE. Chairman Michaud and Ranking Member Brown, on 

behalf of Paralyzed Veterans of America, I would like to thank you 

for the opportunity to testify today. 


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I will limit my comments to CARES recommendations as they directly impacted care for spinal cord injured veterans and veterans 

with spinal cord dysfunction. 

In reflecting on the CARES report, we believe that the health 

care concerns of veterans with catastrophic disabilities and particularly veterans with spinal cord injury or dysfunction (SCI/D) were 

adequately addressed. 

Emphasis was placed on expansion of the SCI hub-and-spoke delivery model to fill geographic gaps in SCI/D services. Specifically 

the CARES Commission called for the construction of four new SCI 

centers in the VA system. Those locations were targeted for new 

centers in Syracuse, New York, Veterans Integrated Services Network (VISN) 2; VISN 16, which was later pinpointed to Jackson, 

Mississippi, by the VA and PVA officials; Denver, Colorado located 

in VISN 19; and Minneapolis, Minnesota, which was previously in 

VISN 23. 

With regards to Denver, the Subcommittee is probably aware 

that it has been a long and difficult process to determine what the 

health care infrastructure plan for this region would be. The 

CARES planning called for a 30-bed SCI center to be located at a 

new Denver VA medical center to be built on the Fitzsimons Campus. However, the larger facility planning process moved forward 

in bits and starts. 

The plan for Denver has taken many controversial turns spread 

out over many years with no plan being more troublesome than the 

new plan that was released in early 2008 by then VA Secretary 

Peake. 

Fortunately the VA finally announced in March that a new 

stand-alone hospital will be built on the Fitzsimons Campus and a 

new SCI center will be included in that facility. 

PVA was pleased that the final CARES Commission report included several recommendations for the expansion of long-term 

care services directed at spinal cord injured veterans as well. 

Prior to the CARES initiative, the VA system of care provided 

only 125 long-term care staff nursing home beds dedicated to veterans with spinal cord injury. These SCI long-term care beds were 

located in four VA facilities, at Brockton, Massachusetts; Hampton, 

Virginia; Castle Point, New York, and at the Hines VA medical 

center in Chicago, Illinois. 

Interestingly, the VA had no institutional long-term care beds for 

SCI veterans located west of the Mississippi River at that time. 

While some progress has been made to expand VA’s capacity for 

dedicated SCI long-term care, much work remains to be done. Despite the CARES Commission recommendations to increase SCI 

long-term care capacity, we believe that particular emphasis needs 

to be placed on expansion into the western United States. 

In 2007, VA released a copy of its long-term care strategic plan 

that in the opinion of the co-authors of the Independent Budget and 

outlined in the fiscal year 2010 Independent Budget was lacking in 

specific planning detail regarding the future direction of its longterm care program. 

In 2008, PVA understood that VA was working on the development of a second more comprehensive long-term care strategic 

plan. However, to the best of our knowledge, no follow-up plan has 


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ever been released. We would encourage the Subcommittee to investigate this issue further. 

The CARES Commission emphasized in its final report that strategic planning for aging veterans and veterans with serious mental 

illness will be essential going forward. 

The Subcommittee has posed the question about the viability of 

CARES in assessing the future health care needs of veterans. As 

pointed out in the Independent Budget for fiscal year 2010, despite 

the fact that CARES was completed in 2004, the VA continues to 

assess its needs and priorities for infrastructure by using concepts 

derived from the CARES model. 

PVA actually sees this question as being one about whether or 

not the CARES recommendations made then appropriately address 

new demands on the system, particularly as it relates to the younger generation of veterans returning from Operation Enduring Freedom and Operation Iraqi Freedom. 

Moreover, the question seems to suggest that CARES did not 

take into account that new demands to be growing in rural communities and that the infrastructure changes outlined by CARES do 

not reflect this change. 

While we certainly understand this concern, we believe that the 

CARES model appropriately addressed where the greatest demand 

for care comes from. 

Moreover, the CARES model provided a blueprint for aligning 

VA’s infrastructure to best meet the needs of the most veterans 

possible. 

Recognizing that certain demand has changed since 2004, the VA 

has moved forward on other major and minor construction initiatives outside of the CARES recommendations. 

Mr. Chairman, we would again like to thank you and the Subcommittee for examining this issue. We look forward to working 

with the Subcommittee going forward to assist the VA in accomplishing this difficult task. And I would be happy to take any questions that you might have. 

[The prepared statement of Mr. Blake appears on p. 54.] 

Mr. MICHAUD. Thank you, Mr. Blake. 

Mr. Cullinan. 

STATEMENT OF DENNIS M. CULLINAN 

Mr. CULLINAN. Thank you. Chairman Michaud, Mr. Brown, distinguished Members of the Subcommittee, on behalf of the men and 

women of the Veterans of Foreign Wars and our auxiliaries, I want 

to thank you for inviting us to participate in today’s very important 

oversight hearing. 

In April 1999, GAO issued a report on the challenges that VA 

faced in transforming the health care system. At the time, VA was 

in the midst of reorganizing and modernizing after passage of the 

‘‘Veterans Eligibility Health Care Reform Act of 1996.’’ 

VA then developed a 5-year plan to update and modernize the 

system, including introduction of systemwide managed care principles such as the uniform benefits package. 

In response to the enormous challenges brought about in implementing this plan, VA began the Capital Asset Realignment for 

Enhanced Services or CARES process. It was the first comprehenVerDate Nov 24 2008 08:32 Jan 14, 2010 Jkt 051866 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 I:\VA\51866.XXX APPS06 PsN: 51866

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sive, long-range assessment of the VA’s health care system’s infrastructure, since 1981. 

CARES was VA’s systematic, data-driven assessment of its infrastructure that evaluated the present and future demands for health 

care services, identified changes that would help meet veterans’ 

need. 

The CARES process necessitated the development of actuarial 

models to forecast future demand for health care and the calculation of the supply of care and the identification of future gaps in 

infrastructure capacity. 

Throughout the process, we were generally supportive and we 

continue to emphasize our support for the ES or enhanced services 

portion of the CARES acronym. We wanted to see that VA planned 

and delivered services in a more efficient manner, it also properly 

balanced the needs of veterans. And for the most part, that process 

did just that. 

The 2004 CARES decision document gave VA a broad road map 

for the future. It called for the construction of many new medical 

facilities over the 100 major construction projects to realign or renovate current facilities and the creation of 150 new CBOCs to expand health care in areas where the CARES process had identified 

gaps. 

The strength of CARES in our view is not its resultant one-time 

blueprint, but in the decisionmaking framework it produced. It created a methodology for future construction decisions. 

VA’s construction priorities are reassessed annually, all based on 

the basic methodology created to support the CARES decisions. 

These decisions are created systemwide, taking into account what 

is best for the totality of health care and what its priorities should 

be. 

We continue to have a strong faith that this basic framework 

serves the needs of veterans in most cases. Despite its strengths, 

there are certainly some challenges. 

While a huge number of projects are underway, a number of 

these, they are still in the planning and design phase. As such, 

they are subject to changes, but they have also not received full 

funding. 

The Congress and Administration must continue to provide full 

funding for the major construction account to reduce this backlog, 

but also begin funding future construction priorities. 

With the twin problems of funding and speed in mind, VA has 

recently been exploring ways to improve the process. Last year, 

they unveiled the Health Care Center Facility (HCCF) or leasing 

concept. 

As we understand it, HCCF was intended to be an acute care 

center somewhere in size and scope between a large VA medical 

center and a CBOC. It is intended to be a leased facility, enabling 

a shorter time for it to be up and running, that provides outpatient 

care. Inpatient care would be provided on a contracted basis, typically in partnership with a local health care facility. 

While supportive of more quickly providing greater health care 

access to veterans on a cost-effective basis, we expressed our concerns with the HCCF concept in the Independent Budget. Primarily 

we are concerned that this concept, which relies heavily on wideVerDate Nov 24 2008 08:32 Jan 14, 2010 Jkt 051866 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 I:\VA\51866.XXX APPS06 PsN: 51866

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spread contracting, would be done in place of needed major construction. 

Acknowledging that with the changes taking place in health care 

VA needs to look very carefully before building new medical facilities, cost plus projected usage must justify full-blown medical centers, that leasing is the right thing to do only if the agreements 

make sense. 

VA needs to do a better job explaining to veterans and the Congress what their plans are for every location based on the facts. 

The misconception that plagued the Denver construction project 

amply demonstrates this point. 

We have seen the importance of leasing facilities with certain 

CBOCs and Vet Centers, especially when it comes to expanding 

care to veterans in rural areas. 

CARES did an excellent job of identifying locations with gaps in 

care and VA has continued to refine its statistics, especially with 

the improved data it is receiving from DoD on OEF/OIF veterans. 

Providing more care to rural veterans is a major challenge for 

the system and the expansion of CBOCs and other initiatives can 

only help. We do believe, however, that much of what will improve 

access for these veterans will lie outside the construction process. 

VA must better use its fee-basis care program and the recent initiatives passed by Congress such as the mobile health care vans or 

the rotating satellite clinics in some areas to fix some of the demand problems that these veterans face. 

Mr. Chairman, that concludes my statement. I thank you very 

much for this opportunity. 

[The prepared statement of Mr. Cullinan appears on p. 57.] 

Mr. MICHAUD. Thank you very much. 

Mr. Weidman. 

STATEMENT OF RICHARD F. WEIDMAN 

Mr. WEIDMAN. Mr. Chairman, thank you for your leadership, 

yours and Mr. Brown’s in holding this hearing today and to take 

a look at this process of CARES and the whole construction milieu 

within VA. 

VVA supports the concept behind CARES given that it is a concept of stewardship and each Administration is a steward of the 

Nation’s physical facility to care for veterans. 

Unfortunately, that stewardship was not very well met during 

various periods since it was first constructed following World War 

II. And many of the facilities have become dilapidated when they 

started to change from outpatient to inpatient. In the early 1990s, 

they had renovated spaces that then lay dormant. 

Frankly, we were always skeptical of GAO’s estimate that it was 

as high as has been reputed to care for outmoded facilities. All of 

the projections at that point were that the veterans’ population 

served by the Veterans Health Administration would continue to 

decline on into the future. That has not proven to be the case, however. 

The veterans’ population VA formula, which is for estimating 

workload in the future, which is based on many of the same formula from Milliman that was used in CARES, has consistently underestimated the number of veterans who are seeking services. 


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Five years in a row, they have grossly underestimated the number 

of OIF/OEF veterans who would be seeking services and they have 

underestimated the number of veterans of older generations who 

found need to and were eligible to seek services from the VA even 

before the Congress began easing the requirements for Category 8s 

to seek services at VA hospitals. 

So the assumption, one of the key assumptions behind it, which 

was that there was a great deal of excess space and we had a declining veterans’ population has proven not to be the case today. 

The second major problem that we have with CARES that we 

have had from the very beginning was that the formula was a civilian formula that did not take into account that wounds, maladies, 

injuries, and conditions that derive from military service, particularly wartime service, and is detailed at VA, at the veterans health 

initiative, the 32 curricula that look into the special medical, longrange medical problems that veterans have as a result of their 

military service or the military history card that people say that we 

are fanatics about that, frankly, needs to be incorporated into the 

computerized patient treatment record and taken account of in the 

diagnosis and treatment modalities at VA. 

All of those things lead to a problem with underestimating the 

number and types of resources that individual veterans will utilize. 

Second, because the Milliman formula was a civilian formula, it 

estimates one to three presentations or things wrong with them 

that need to be addressed by a clinician of each person walking 

across the door sill. And, in fact, at VA hospitals, it ranges from 

five to seven presentations per person, not one to three. 

In addition to that, it does not fully take into account the VA formulas of not only wartime exposures but who is in a geographic 

area. Many who can and who have the resources who are middle 

class, as they age, they move south when they retire. Those who 

are left are older and sicker and poorer, quite frankly, so that the 

burden rate, the number of presentations per person is going to go 

up in the north. 

So both the Vera formula, which is not the subject of this particular hearing, but also the CARES formula are going to be somewhat askew when it comes to estimating what are going to be the 

future needs of the physical structure within which the health care 

is delivered. 

There are four things that we recommend that be done from this 

point on. The first thing is that the basic CARES formula must be 

improved to take into account military service and things that happened to people in the course of that and to adjust that formula 

to the reality of who we see at VA hospitals in terms of the number 

of presentations. 

Second, we believe that the whole process needs to be much more 

transparent. In the last 5 to 6 years, Veterans Health Administration has, in fact, become much less transparent if indeed not secretive and shown virtual contempt for the Congress, for the veterans 

service organizations, for the union and its members, and for virtually anyone outside who would dare question any of their decisions no matter how wrong-headed or how off base they were as 

an example in terms of the lack of preparation for dealing with 

PTSD among all generations but particularly OIF/OEF veterans. 


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Third, VVA urges that the major construction budget be set at a level of at least $1.5 to $2 billion a year and possibly even higher. 

This is the time to, for those who have the money, to invest in construction. Why? Because so many people cannot get financing, that 

the cost of material and labor is more competitive now than it will 

be in 4 or 5 years when the economy rebounds. 

Number four, VVA strongly recommends that the Secretary and 

the Deputy Secretary review the lines of authority and accountability for CARES, who is responsible for what, define those roles, 

and make it clear who is going to be held accountable, a novel concept within the Veterans Health Administration, who is actually 

going to be held accountable for delivering what should be delivered and decisions on time that actually results in enhanced services for veterans. 

Mr. Chairman, I thank you for the opportunity for VVA to 

present here today and for your leadership of you and your distinguished Committee in holding this hearing. Thank you. 

[The prepared statement of Mr. Weidman appears on p. 60.] 

Mr. MICHAUD. Thank you very much. 

Ms. Ilem. 

STATEMENT OF JOY J. ILEM 

Ms. ILEM. Mr. Chairman and Members of the Subcommittee, 

thank you for inviting DAV to testify at this oversight hearing. We 

appreciate the opportunity to offer our views on CARES and to discuss the future of VA’s health care infrastructure. 

DAV concluded at the completion of CARES it was a comprehensive and fully justified road map for VA’s infrastructure needs. 

However, once the plan was released media backlash developed to 

the proposed recommendations affecting the operating missions of 

a number of VA facilities. Many veterans, fearful that they would 

lose VA health care services, opposed the plans for changes in their 

States and at their facilities irrespective of the validity of the findings or the value of the plan as a whole. Local and political pressure became intense and in many cases, the proposed CARES recommendations were abandoned. 

Unfortunately, the past decade of deferred and underfunded construction budgets has meant that VA has not adequately recapitalized its facilities, now leaving the health care system with a large 

backlog of major construction projects totaling more than $6 billion, 

with an accompanying urgency to deal with this growing dilemma. 

Recently VA began to discuss the necessity to consider alternative means to address the growing capital infrastructure backlog 

and the significant challenge of funding it. VA broached the idea 

of a new model for health care delivery, the Health Care Center 

Facility or HCCF leasing program. 

VA has argued that this model in lieu of the traditional approach 

to major medical facility construction would allow VA to quickly establish new facilities that would provide 95 percent of the care and 

specialty services veterans will need. The HCCF model seems to 

offer a number of benefits in addressing this capital infrastructure 

problem. 

However, while it offers some obvious advantages, we are concerned about the overall impact of this new model on the future of 


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VA’s system of care, including the potential unintended consequences on continuity of care and delivery of comprehensive services, its biomedical research and development programs, and particularly the impact on VA’s renowned graduate medical education 

and health professions training programs. 

DAV is also concerned with VA’s plan for obtaining inpatient 

services under the model and we question the ability for maintaining existing specialized services. 

In November 2008, VA responded to a Senate request for more 

information on VA’s plans for the newly proposed HCCF leasing 

initiative. In a letter, VA addressed a number of key questions that 

may be of interest to the Subcommittee, including whether studies 

have been carried out to determine the effectiveness of the HCCF 

approach, the full extent of the current construction backlog, the 

engagement of community health care providers in the proposal, 

the ramifications on the delivery of long-term care and inpatient 

specialty care, and whether VA would be able to ensure that needed inpatient capacity will remain available. 

What is not clear is to the extent which VA plans to deploy the 

HCCF model. In areas where existing community-based outpatient 

clinics need to be replaced or expanded due to the need to modernize, add services, or increase capacity, the model would seem 

appropriate and beneficial to veterans. 

On the other hand, if VA plans to replace the majority or even 

a large fraction of all VA medical centers with HCCFs, such a radical shift would pose a number of concerns for DAV. 

Fully addressing these and other related questions are important, but we see this challenge as only a small part of the overall 

picture related to VA health care infrastructure needs in the 21st 

century. The emerging HCCF plan does not address the fate of 

VA’s 153 medical centers that are on average 55 years of age or 

older. 

As we grapple with the issue of health care reform in America, 

we must make every effort to protect the VA system for future generations of sick and disabled veterans. A well thought-out capital 

and strategic plan is urgently needed and the tough decisions must 

be made and not avoided as in the response to the seemingly 

stalled CARES process. 

Congress and the Administration must work together to secure 

VA’s future to design a VA of the 21st century. Regardless of the 

direction VA takes, first and foremost, we want to ensure VA’s infrastructure plan maintains the integrity of the VA health care system and all the benefits VA brings to its enrolled population. 

While we agree that the VA health care system is not its buildings, VA must be able to maintain an adequate infrastructure 

around which to build and sustain its patient care system. 

Although it is a significant challenge and costly prospect, VA’s 

infrastructure issues must be addressed now. Our Nation’s veterans deserve no less than our best effort. 

Mr. Chairman, thank you again for the opportunity to testify. 

[The prepared statement of Ms. Ilem appears on p. 62.] 

Mr. MICHAUD. Thank you very much. 

Once again, I would like to thank all the witnesses for your testimony this morning. 


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Several of you expressed a concern with VA’s health care center 

facilities (HCCF) leasing programs. What do each of your organizations believe that the health care delivery system for the VA should 

look like for the 21st century? 

Mr. CULLINAN. Mr. Chairman, with respect to the HCCF model, 

we think that could be invaluable in providing health care access 

to veterans. 

I guess we have two primary concerns with it. First that it not 

overreach in size and scope. I mean, at a certain point, it makes 

sense to build as opposed to leasing. The leasing option could really 

be invaluable in parts of the country where building just is not an 

option. 

The other thing has to do with the quality of the care that is 

going to be provided through the HCCF model. And specifically referring to contracting issues, there was this situation, it was in 

Grand Island, Nebraska, where such a facility was established, a 

contract was established with a local health care provider hospital 

for the inpatient service, and then the contract was backed out of 

which left it adrift for a while. 

Now, I understand that has been remedied at this point in time, 

but these are the kinds of things that we would want to carefully 

monitor. 

Mr. BLAKE. Go ahead, Rick. 

Mr. WEIDMAN. I was going to say that used in moderation, the 

HCCF can make some sense. Unfortunately, good ideas often are 

given to the VA and they are like an 18-year-old who gets a hold 

of a bottle of whiskey and they run amuck. 

And the example would be so-called Project HERO where the 

Congress instructed VA to rationalize the contracting out. And instead, VA has tried to turn it into a fire sale of contracting out as 

opposed to increasing and strengthening the organizational capacity within the hospitals themselves. And there are still problems 

with that. And in some areas of the country, it is as much as 40 

percent of the patients are involved in Project HERO or HCCF type 

activities. 

We have a real problem with utilizing something that makes 

sense in some areas and then using that as a Trojan horse to try 

and undermine and destroy the overall veterans’ health care system. 

Mr. BLAKE. Mr. Chairman, what I would say is the question 

seems to suggest that there is a one-size-fits-all solution to meeting 

overall health care demand issues in the VA, and I am not sure 

that that is the case. I think that is part of the concern with HCCF 

is that, as Rick mentioned, there are places where it is meant to 

work or where it should be used. But I do not think you can apply 

that universally to the VA health care system. 

Additionally, as rural health care sort of becomes a larger issue, 

I do not think you can just simply say we are going to do this or 

we are going to do this. 

Honestly, I believe that the VA in its recent release as part of 

its rural health care initiative is starting to take the right tact in 

addressing that particular demand issue by using CBOCs, by using 

HCCF, by using direct contract. I mean, I think it is going to have 


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to be sort of a fluid delivery model. I do not think HCCF in and 

of itself is the answer to the whole problem. 

Mr. WILSON. Mr. Chairman, HCCF would have to accommodate 

that respective particular venue. As I have traveled throughout VA 

facilities this year, I found so many different areas, I found variations in those areas when we are speaking of urban as opposed 

to rural areas. And we had issues with contracts out in—with contract issues out in Sepulveda as well. 

I think overall the American Legion is concerned about the culture of care and the culture of care bringing about quality, quality 

of care, understanding the veteran. The uniqueness of the veteran 

must remain. And business as usual should not filter into the veteran, as I said, who is a unique patient. 

Ms. ILEM. And I would just add to the remarks of all my colleagues, you know, we just want to make sure the integrity of the 

VA health care system, the type of care that is delivered, the highquality care delivered is maintained. And, you know, there need to 

be changes for the future for the 21st century. And a one size, I 

think that I agree with Carl, you know, is not going to fit every 

place, but there needs to be an overall plan that is well thought 

out and can really take into account all of these specialized services 

VA has been able to provide to our Nation’s veterans. We just want 

to make sure that those are there for the future veterans. 

Mr. MICHAUD. Thank you. 

My next question is for Mr. Wilson and Mr. Weidman. You both 

had talked about the importance of openness, transparency, and accountability in the CARES implementation process and, hopefully, 

the VA will be more open and transparent. 

What do you think will have to be done for them to do that? 

What would you consider to be openness and accountability and 

transparency in the CARES implementation process? 

Mr. WILSON. I think a continuous assessment. I think there is 

too much time in between inspections or assessments and not 

just—well, there is one inspection that the big group, Jayco, and 

I have gotten calls from VA employees who say, oh, we get through 

that because we plan for it. We know what they are going to do 

and we plan accordingly. We can respond to them with a general 

question. 

So I am thinking, you know, throughout the American Legion’s 

visits are they doing the same. So I am looking at some things 

within various VISNs. They are uniform questions. We can look at 

it. We have roundtables over this and we are looking at it. 

And it is like, okay, this is just a general response that they have 

given us and they are not—we take them through a line of questioning and we find out more things are going on. We talk to employees. We find out something differently. 

So we feel that it has to be more transparent because the bottom 

line is the veteran is going to suffer, you know, if they are trying 

to make the system look perfect when they know, you know, the 

system is fallible or it is—well, we have also discovered complacency as well because of shortage of employees and other things 

and space as well. 


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So we think and that is how we come to the conclusion that there 

needs to be more transparency, some type of system of checks and 

balances where they can pretty much open up. 

Mr. MICHAUD. Thank you. 

Mr. WEIDMAN. Mr. Chairman, we increasingly over the last 5 

years have been able to find out a great deal more about what is 

going on by talking to union members around the country than we 

can find out by meeting with the Under Secretary for Health. And 

this is not the kind of partnership that certainly the veterans service organizations envisioned nor the Hill nor people who want to 

make this system work. 

And it is not because we have all the answers. We do not. But 

we have significant input that make the decisions better. And so 

that is one aspect of the openness of starting to regard veterans at 

the local level and at the VISN level as well as at the national level 

as true partners, the veterans’ organizations in the process of how 

do we build and continually rebuild, reinvent the best health care 

possible for our Nation’s veterans. That is one. 

Second, the Milliman formula, no one has ever successfully explained to us how it works. And the Milliman technicians time and 

again said to us, well, we cannot really explain it to you, it is too 

complicated, to which my response is, young lady, contrary to what 

you seem to believe, those of us who served in Vietnam were not 

too stupid to know where Canada was. We served because we believe it was correct. Try us. 

But we still have not gotten a successful iteration, if you will, of 

how it works within that black box. But one thing we do know is 

that it does not take into account the special experience of veterans 

and having to do with everything from toxic exposures to all the 

other kinds of things that one is subject to in military service in 

the projections of the formulas. 

And we believe we need to have a task force appointed by Secretary Shinseki to look into this and involve the veterans’ organizations as well as outside experts and not just folks within the VA 

in every step of the process. 

When they first formulated the CARES formula, they met with 

the veterans’ organizations a couple of times to say that they met 

with us. And they said we are not to the point where we can share 

any details with you, but we will call you together as soon as we 

can. 

Then Dennis Duffy, then with the Office of Planning and Policy, 

called us all together and said this is what we are going to do 

based on the report from all of our consultants. And so a number 

of us had questions about it and said, once again, what about the 

special problems that veterans have ranging from SCI to much 

higher rates of visual impairment to all kinds of other things and 

prosthetics, et cetera, to which the response was it is too late, we 

are on a schedule, we have got to stick with what we have got now. 

Whereupon, our response from VVA was when was the 1.2 seconds for the veterans service organizations to make their input into 

this process. Do not go back and tell the Secretary and the Congress that you consulted with the veterans service organizations 

when, in fact, all you did was inform us and said too bad, this is 

the way it is going to be, you folks. 


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That partnership, I am not sure how you can legislate that, Mr. 

Chairman. I do believe that Secretary Shinseki is going to approach this process differently because he and Deputy Secretary 

Gould understand that you make better decisions when you consult 

with labor, when you consult with the stakeholders, with the patients, and when you consult with people outside of the system who 

have a legitimate stake in seeing that we have the best health care 

for our Nation’s veterans. 

Mr. MICHAUD. Thank you very much. 

Mr. Boozman. 

Mr. BOOZMAN. Thank you, Mr. Chairman. I have enjoyed the testimony. 

I am an optometrist, so those of you that are having problems 

with your eyes or whatever, I will be able to give you some free 

advice later. 

But I was listening. My brother was an ophthalmologist, an eye 

surgeon. We went into practice many years ago, and one of the procedures he did was cataract surgery. Thirty years ago when he did 

that, it was probably about a 2-hour procedure. The results were 

not very good. 

If that were still going on today as it was then, as I look out, 

many in the audience would have the big old cataract glasses. You 

know, the ones that magnified your eyes and restricted your vision. 

The surgery was done and then you were put in the hospital for 

3, 4, or 5 days with sandbags around your head. That procedure 

is now done in about 15 minutes. You immediately go home, and 

probably miss a day of work and then go back. 

That procedure is that way and so many of our procedures are 

heading in that direction or have already headed in that direction. 

So, I think that we would all agree that there is a need for looking 

at the way that we do things and adapting. 

I guess the key is that as we start doing that, when we talk to 

GAO just in visiting with you guys, visiting with the CARES Commission, whatever, there really is a resistance to change. In the 

communities, there is a fear. I agree that certainly the number one 

thing is the quality of care. That is without a given. 

I understand also the culture. I think that is very, very important, the things that you all have mentioned. But I guess, and you 

mentioned the task force some ideas and things. Give me some 

more ideas or let us go further with that. 

How do we, as we go forward, and I think we all agree that 

things are changing and we have got to get into the present, how 

do we break down the resistance to change? You know, how can 

you all be helpful in that? 

You mentioned the transparency issue is so important. And I 

agree with that. 

You know, again, on the other side, they are probably a little bit 

hesitant in the sense because there has been such a resistance to 

change sometimes that you immediately get shot down regardless 

of what you are doing. 

So, if you all would discuss a little bit about maybe some other— 

kind of dwell a little bit on how we can get—transparency. You 

mentioned task force. What other things are out there? How can 

you guys help us, like I said, look without—to kind of break down 


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this both at the community level, the district level, and then at the 

VA level? 

Mr. CULLINAN. Mr. Boozman, if I may, the VFW handles the construction portion of the IB. We have been doing it for a number of 

years and we are happy to do it. It is such an important issue. 

A big concern of ours is that this be a highly dynamic process 

and we believe the CARES system is that. Yes, in the early stages 

of CARES implementation, there was a lot of murkiness. 

I remember when the CARES document was finally released, I 

got a PDF version of it and a hard copy. And it was an avalanche 

of information. It really defied my ability and my staff’s to even 

begin to entertain what was said in there. But over the years, with 

respect to the implementation, yes. 

I talked about Denver earlier. There have been other places 

where the implementation has been murky. First something is 

going to be one thing, then it is going to be another and it changes 

back again. 

But I have to say that with respect to our dealings with VA in 

dealing with trying to get the explanations of how the actuarial 

models work, the budget model, the Milliman, and then beyond because VA has gone quite beyond the—VA has been quite forthcoming actually formally and informally, I have to say that while 

their budget model certainly is beyond what I can really apprehend, it seems very accurate. 

I spent a day over at VA with a colleague of mine and they went 

through an explanatory process. And they really have this refined 

to an art and it is not a static art. It is something that they continue to work on. 

With respect to the construction needs outside of the modeling 

itself, again, we have had a positive experience with VA. So I just 

want to add that. 

Ms. ILEM. I think some of the things that have been mentioned, 

that communication is the key, especially with CARES. Those of us 

that, have been around from the very beginning of CARES through 

now, one of the biggest problems was the communication issue. 

When things came out and people realized that there may be a 

change or there was a proposed change, there was a panic. And oftentimes just being able to communicate beforehand, before all of 

a sudden you get something that is just sprung on you or seemingly sprung on you, you were not aware of, you know, working 

with Members of Congress, working with the local officials, the 

VISN, and, I mean, all the way down with veterans and really having a good understanding and that they play a key role. 

And if you are talking, sometimes just the language, if they hear 

closure or realignment, they do not understand what that exactly 

means. They just think for me, my services are going away. This 

is what I want. It is here. It is where we need it. 

And people are very protective which is a great thing about what 

you really saw. People really came to show you how important the 

VA is to them and what it really is able to provide. 

But I think just with communication and a much better strategy, 

openness with the veterans service organizations, certainly we can 

help. I mean, we all have chapters and departments throughout the 

Nation. We can get people there, making sure that they are part 


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of the dialogue from the beginning rather than, as Rick mentioned, 

at the end, which is oftentimes, you know, then you are in a defensive position right from the get-go. 

Mr. WEIDMAN. You also have to tell the truth. I mean, that is 

one of the problems with Denver was that there were people there 

and people within 810 Vermont who were not telling the truth to 

the Secretary. And so the Secretary got called out repeatedly, three 

different Secretaries, in what was going on with that process. And 

they did not tell the truth to the veterans. 

The one thing that is, vets will sometimes get mad, but they will 

always accept it if you play straight. The one thing that will make 

veterans madder than hell is if you lie to them. And I do not blame 

them. And it makes me madder than the dickens. And when they 

lie to us, that makes us angry. But people have not been held accountable for that in the past. 

The next panel has on it the Honorable Everett Alvarez, a true 

hero in war and in peace. And as Chair of the CARES Commission, 

it was Mr. Alvarez, Chairman Alvarez who took all the heat from 

all the places around the country and made the necessary change 

to CARES to avoid it being a debacle and he caught all the heat 

for the stupidities of people within the bureaucracy. And he actually did not have white hair until that point and the CARES process did it to him. 

But we do not need to abuse our heroes in order to make steady 

progress in the future if we mandate that every hospital, as an example, have regular meetings with the veterans service organizations about the quality of care and the care service lines at that 

facility and not turn them into dog and pony shows where people 

have 15 minutes to ask questions. And the same thing is true at 

the network level to really assess consultation with the community. 

If you call a Veterans Integrated Services Network, the idea was 

that somehow it is closer to the community, but by and large, that 

has not happened in many of the VISNs or at many of the facilities. And that is a step that needs to be taken. 

And I think that the new Under Secretary for Health, that decision is really going to be key, that that be someone who is as open 

and direct and as straightforward and honest as Secretary Shinseki 

is and is committed to veterans’ health care. So who that individual 

is is going to set the tone. 

And, once again, I am going to hearken back to something Secretary Shinseki told the full Committee at his first hearing over 

here on the House side. When asked was there additional legislation needed, his answer was most of our problems have to do with 

leadership and accountability. And that is still the issue. 

Together, if it was a leadership and accountability within the VA 

and proper respect not only for the individual veteran seeking services but for the veterans’ organizations and expect us to do our part 

of the bargain of doing our homework before we come to meetings 

by sharing good information, then we can make some steady 

progress together and with that openness. 

But I do not know that there are things that you can stipulate 

in statute to get people to act decently. 

Mr. BLAKE. Mr. Boozman, if I might just quickly. You mentioned 

our resistance to change and our longstanding concerns about 


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broad-based contracting notwithstanding. Some of this idea of 

change, our resistance comes from us applying the does this make 

sense test to a recommended change. 

You know, I will use as an example under HCCF, I think we 

have said here today that applied correctly, it is a good thing. 

Early on when this was discussed, Salisbury, North Carolina, 

was put out as a possible HCCF facility. It was going to involve 

contracting for certain services that are already being provided in 

the Salisbury facility. And it is not like they were being contracted 

to an area 50 or 100 miles away. They were being contracted out 

into the local community. 

So we asked ourselves does that really make sense. And from our 

perspective, the answer to that question is no. So then there is no 

other really explanation for why to then apply HCCF to a facility 

like that. 

There was a Booz, Allen, Hamilton report that focused on a number of these HCCF designated facilities that came out last year, 

and if I can find it, I will be glad to submit it for the record, and 

it reads sort of like a multiple choice test. And it has, you know, 

example A and here are A, B, C, and D as the solutions to the 

problem. And you read that and if you pick the answer, at the end, 

the findings of the report completely go against what you think 

make sense. 

So I think as we move forward with change, we have to apply 

a little bit of just common sense to the process and not simply, 

well, this is the model we want to make fit because we think it is 

a good model. 

Mr. WILSON. Mr. Boozman, I think it is consistency when implementing policy, the communication as well throughout the VA system. For example, there was previously 1 million veterans that migrated to rural areas. Now it is 2 million. And that went up pretty 

quickly. 

VA has to track better and they have to be consistent at tracking 

because we found even in our travels that some were tracking, for 

example, those 500,000 who had applied after 2003 who will be in 

the system now, but some have tracked and some have not tracked. 

That is inconsistent. 

And so the American Legion, we think there should be a better 

tracking of veterans period from the time they leave DoD to the 

time they transition into the community. That is not something 

that is as difficult as if you were tracking nonmilitary simply because one issue that a veteran may have is the microcosm of many. 

So when you, for example, as I said, you have 2 million who migrated to, who live in rural areas, and a high number of those recently migrated, not the full 2 million, but a high number of those 

did, so it is pretty much a pattern and it is in huge numbers, so 

it is trackable because we have had some systems who have 

tracked and some said they were unable to track. We need to know 

why. 

Mr. BOOZMAN. Thank you, Mr. Chairman, very much. 

Mr. MICHAUD. Thank you. 

Mrs. Halvorson. 

Mrs. HALVORSON. Thank you, Mr. Chairman. 

Thank you, panelists, for being here. 


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Mrs. Ilem, you mentioned in your testimony that some of the facilities are outdated. One of them you mentioned is near my district, Hines in Chicago. 

With the need and probably too much need basically to get it up 

to the 21st century needs, do you think that it might be better to 

put the money and the needs to expand more CBOCs because, as 

Mr. Boozman said, we need to adapt to change? And now people 

are not spending as much time in the hospitals and maybe we need 

to do more to the outpatient clinics. 

So I do not know. Since you had it in your testimony, we can 

start with you. And I do not know if anybody else wants to mention 

that as we have more challenges in new health care, whether it be 

mental health or some of the other traumatic brain injuries or 

women challenges, should we be putting our emphasis more on the 

CBOCs? 

Ms. ILEM. Well, I would just say one thing—I remember sticks 

out in mind from our Independent Budget were PVA has architects 

and people available within their organization who have expertise 

in construction issues. And when we have talked about renovating 

or updating or modernizing a facility, one of the things that sticks 

out is that they continue to say, oftentimes, that it costs more to 

try and renovate a place than to build a new facility. 

And because of the new types of equipment that are available 

today, the rewiring, the ceiling heights, there is just a number of 

issues like that that come into play. 

So the assessment, which was nice about CARES, was it really 

gave you—I mean, when you opened the books and as we said, we 

got volumes of books on each location, you can really get a feel, if 

you have not been there, for each of those facilities. 

But certainly many of us travel around for our organizations. We 

visit the VA facilities. And they are doing the best that they can. 

They have retrofitted these almost outpatient clinics within medical facilities which used to be wards and different things. And they 

have tried the best they can to make renovations with the money 

that they have gotten. 

And a lot of them have added new additions on. 

I just came back from New Hampshire this weekend. I visited 

the VA facility and they showed me a new addition. They have not 

opened the new wing yet. It is just night and day between the 

original facility itself and just the look, the feel, the space confinement, and you go to the new addition, the new wing, which was 

just literally brand new, it has not even been furnished yet. They 

have the appropriate size doors, wheelchair accessible, it is very 

modern. It is like you are in another world. And they were talking 

about all the clinics that will be moving down there. 

And I know in your facility, Tammy Duckworth was a big—I remember her testifying in the Senate way back when she first got 

back about her impression just of coming to the facility, the prosthetics department, and how, you know, dungeon-like things were 

there. And even regardless if you are getting good quality care, I 

mean, there gets to be a point where, you know, you have to look 

at the modernization of some of these facilities. 

So I do not know that the HCCF model certainly will be a good 

model for many places. Again, we just have to have VA looking at 


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this big picture of the way care has been delivered for years and 

years with this inpatient capacity and what we lose when we go 

an HCCF model and we outsource care. 

And the big thing that researchers tell us is when care is provided outside the VA, contracted out for it, we do not know what 

the quality of that care is. They tell us that with women’s health 

especially. 

So I think that stands as one thing that we really need to look 

at because that has been—VA has worked very hard to bring up 

the quality of its care and be renowned within our Nation for the 

care it provides. So we just want to ensure that that is maintained 

as these changes come about, whatever they are. 

Mr. BLAKE. Mrs. Halvorson, one thing I would also mention as 

it relates to maybe indirectly Hines is Joy mentioned modernization and modernization of an aging major tertiary care facility does 

not necessarily equate to building 10 CBOCs or 10 super CBOCs 

or whatever because while you may expand capacity and access 

points through some sort of model like that, you may then ultimately diminish the scope of services that are available if you move 

out into that setting away from Hines. 

I am not suggesting that maybe we need to just build a whole 

new hospital in place of Hines, but when you think about the fact 

that from PVA’s perspective there is a spinal cord injury center 

there, but the scope of services that support that SCI center are far 

reaching beyond the immediate SCI delivery model. And if you 

move it out into the community into super CBOCs, which was 

something that was suggested under the Denver plan last year, I 

think you run the risk of diminishing more important services that 

are provided through that tertiary care hospital. And you put at 

risk probably the highest end users of the VA health care system. 

Mr. WEIDMAN. The paradigm that we either have to go to CBOCs 

or live with an outmoded facility, I would suggest is a false dilemma. This is the United States of America and if we need a 

brand new hospital in order to properly care for veterans in a 

major urban center in our country, then we should do—I did not 

notice anybody with George Washington University Hospital over 

in Washington Circle suggesting that they open a bunch of community clinics. What they did instead was build a whole new hospital 

and blew up the old one. And if we need to do that in Hines, then 

we should do that. 

And somehow we have gotten used to thinking that our best days 

as a Nation and our most powerful days when we can take care of 

the men and women in our democracy who put their lives on the 

line in a first-rate manner in brand new facilities that we cannot 

do that anymore. Frankly, at Vietnam Veterans of America, we reject that notion. And we need to move forward. And where we need 

to replace a whole new hospital, then we need to do it. 

Mrs. HALVORSON. Well, I have a tendency to agree with that. 

However, that is why I am asking all of you where the future is 

and where it is that we need to go. And I have people call me every 

day that they are tired of going there and sitting there all day just 

to be turned away. And what are we going to do about that. 

And so we need to do something. Our veterans deserve the best 

care ever. And if we need to build them a new hospital, then we 


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need to do that. There are all kinds of things that we could be 

doing for them. 

Mr. CULLINAN. Mrs. Halvorson, I would just add to the conversation. I mean, again, we need a dynamic process to address these 

issues as has been pointed out. A new hospital is not always the 

answer. Sometimes it is a CBOC. CBOCs are very popular where 

they are established. 

The HCCF model will remedy some of the problems where a hospital is not appropriate and a CBOC is not enough. And that is the 

key thing is to address all of the issues as best as possible. 

One thing that is contained in our testimony, there are certain 

rural areas where the probability of an HCCF model is unlikely. 

There simply are not the assets in place to even construct something like that. There is certainly not the staff availability. 

So then you need things like contract care. Mobile vans are another solution. There are other satellite type solutions to these kind 

of problems. And that is what needs to be done. 

Years ago, we used to say that about VA medical centers and it 

certainly is still true of some of them, the only way to renovate one 

is by jackhammer. They were concrete bunker-like structures. They 

just do not lend themselves to modification for modern medical purposes. So there is that too. 

And the final thing I will say with the shifting patient workloads, again a dynamic solution is the only way to go because veterans are going to continue to move around and new needs will 

arise. 

Thank you. 

Mrs. HALVORSON. Thank you. 

Mr. WILSON. You know—— 

Mrs. HALVORSON. Go ahead. One last. 

Mr. WILSON [continuing]. When we talk about facilities, facilities, 

and facilities and we must keep in mind the veteran at all times. 

I mean, if we have to write it on the paper 50 times just to keep 

in mind who we are serving, I mean, this is practical. We are talking about appropriate accommodations, is it adequate. 

Those questions we have to continue to ask over and over again 

because now you also have women veterans. Forty-nine percent of 

women veterans are seeking care outside of VA. So there is a fragmentation of care amongst women veterans that is unprecedented. 

I mean, just within this past 6 months, it has grown. We do not 

know the numbers now, but that was about 3 or 4 months ago, we 

found out it was 49 percent. 

We must keep that in mind when just not—just finishing a facility or how nice a facility looks or the location. It is a matter of, as 

I stated previously, the American Legion supports better tracking. 

We are contacting various posts out there, sending out various 

blasts and receiving the information as to how many veterans are 

in that area, what the pattern, you know, as far as the pattern and 

all. 

But a concern when as far as accommodations and building these 

facilities, all those women veterans who for some reason are seeking care outside of VA because actually it was one of the reasons 

they are not receiving continuous care. 


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Mr. WEIDMAN. May I just add that is poor organization in the 

clinic. And, frankly, the clinic Director should be reprimanded. I 

mean, it should not ever happen anymore at VA that somebody— 

because we know of no guidelines any place in the country at any 

of the 153 medical centers where it is supposed to be done—the 

way they used to do it is you go in at 7 o’clock in the morning and 

you wait until whenever you get seen. There should be appointments and waiting no longer than 30 minutes. 

And if it is not happening in Hines, then I would suggest that 

you may want to make a call to General Shinseki and say what is 

happening here that is—what is not happening here that is happening elsewhere where people are not being treated well in my 

district. 

Mr. MICHAUD. Mr. Bilirakis. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. I have one question 

for the entire panel. 

One of the shortcomings of CARES was the lack of long-term 

care in outpatient mental health services. Do you believe that VA 

has made progress in its ability to model demand for these services 

and improve access to these services? 

That is for the entire panel again. Thank you. 

Mr. CULLINAN. Mr. Bilirakis, I will just say one thing briefly 

about that. I think that VA is quite capable, and I know there are 

others who would agree, about modeling demand. The problem is 

actually answering that demand and it comes down to resources. 

It is an expensive proposition. 

You have long-term care and mental care that still really are not 

properly accommodated under CARES. We do not believe that they 

cannot actually model them. We believe that they can. It is just 

where is the money going to come from. 

Mr. BLAKE. Mr. Bilirakis, I would suggest that there have been 

instances in the past where I think VA senior leadership has 

shown the desire to get out of the business of long-term care as a 

whole. That can be reflected in some of the budget requests that 

were made in the past. 

And I think if you read the GAO report that came out earlier 

this year about long-term care and the modeling and funding that, 

you will see that while it is something the VA needs to be doing, 

their approach to it is broken obviously. 

And as I mentioned in my testimony, our concern remains about 

a long-term care strategic plan going forward. And that does not 

just apply to SCI veterans. That applies to all veterans. 

And so if there is definitely a flaw, that would be it. 

Mr. WILSON. You mentioned long-term care. When I think of 

long-term care, I think of the old nursing home care units in which 

VA is transitioning into community living centers. 

We saw good things there because they are trying to acclimate 

the veteran back into the community. There are also active duty 

who are with those needs. If they request, they can receive it if it 

helps that active-duty member as well. 

I think on behalf of the American Legion, I think there has been 

progress, but they have a ways to go because of the various injuries 

and the veterans with the various injuries, they are showing up at 

VA and either they are referring them to outside facilities still, so 


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it leaves a big question mark with us as to where they are going 

from here because to this point, we feel that they have been reactive. 

Ms. ILEM. Yes. I would just mention long-term care has been one 

of the issues all of the organizations have really talked about over 

the years, that we just have not seen this strategic plan materialize, and it just seems to be put off, put off into the future. 

When we go out to visit facilities, again I was just in New Hampshire, and they did have a nursing home component with an inpatient component there. And I asked the medical center Director, 

you know, how did they provide services to support the long-term 

care unit in terms of oftentimes elderly people have real hospital 

care needs and this is not a full scale hospital. So they do have to 

do a lot of the contract care and take them by ambulance to a nearby facility for that type of care. 

So this is just another issue even though a lot of VA is pushed 

out like the Nation. You know, everybody wants to be provided care 

in their home to the largest extent possible. We have many elderly 

veterans who have either a spouse that is their same age in their 

mid 80s that cannot care for their spouse any longer and they do 

not have the support at home even if somebody is coming in a couple days a week. They really need inpatient bed care. 

And, you know, these people have been in the VA system for 

their entire life, since they have gotten out of service and been a 

part of that system and they want to stay with VA. So we need better collaboration with the State Veteran Home community, which 

is another option in many States. 

But this issue we do not feel has really been addressed and 

should be taken up as part of the infrastructure issue as it moves 

along. 

Mr. WEIDMAN. A couple of things to add to that, if I may, Mr. 

Bilirakis. 

Joy is absolutely correct as we have been waiting on that socalled strategic plan on long-term care for a very long time. And 

it needs to be addressed and it needs to be addressed in conjunction and cooperation and collaboration with the State Directors of 

Veterans Affairs and the State Homes because a lot of the solution 

in many parts of the country is going to be that need is going to 

be met through the State Homes more effectively and probably 

more efficiently. 

And home health care has great promise for many people, but 

there are instances, as Joy just pointed out, where it is not in the 

cards because of the particular situation. 

In regard to the second half of your question having to do with 

mental health, there are models where we can predict where we 

are going to need services, but they have not been employed. 

Frankly, we believe we need new national leadership in mental 

health and we need it soon. 

There are the clinicians and certainly the folks at the National 

Center for Posttraumatic Stress Disorder who can help produce the 

models where we can make sure that between the Vet Centers or 

the readjustment counseling service and the inpatient services that 

are available that we have the inpatient services available when 

they are available in every network in the country and halfway in 


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between outpatient and inpatient is residential care which is appropriate to many folks, like Canandaigua is a good example of 

that or, excuse me, Batavia in upstate New York. It is much less 

expensive because you do not have 24-hour nursing and you have 

the patient where you need it. 

VA has hired 3,800 new clinicians, 3,800 new mental health clinicians. And so we are asking where the heck are they, number 

one? 

Number two, where is the in-service training to make sure that 

they are adhering in every one of the 153 hospitals to the best 

practices guidelines as outlined in the June 2006 report from the 

Institute of Medicine for diagnosis and assessment? 

And, number three, where are the research projects and clinical 

trials to do what the Institute of Medicine said VA had been doing 

which is robust clinical studies to figure out what kind of treatment modalities work with what particular kinds of veterans because post-traumatic stress disorder, to say somebody has PTSD is 

like saying somebody has cancer? There are a zillion different 

kinds of it and you have got to have an accurate diagnosis in order 

to be able to effectively treat it. 

So the modeling, I think, is there, but the question is overall 

leadership and assessment and accountability. Thirty-eight hundred new clinicians nationwide is a lot of people. And that may not 

be enough, but right now I am not sure that we know exactly how 

many more we need in order to adequately meet the need given the 

length of the wars where there is no end in sight in either Afghanistan or Iraq at the moment. 

Mr. BILIRAKIS. Anyone else want to address the mental health 

services issue? 

Ms. ILEM. I would just say one thing. This is a particular issue. 

I had a veteran call and they were looking for services. They were 

down in the Florida area. The brother called me and said my brother is under a bridge. He is enrolled in VA health care. He wants 

to get into a substance use disorder program. He has PTSD. He has 

some issues, but he needs to detox. He needs to get in a facility. 

He needs an inpatient bed. 

The homeless coordinator went out and picked the veteran up, 

got the veteran. The family was very thankful for that. The problem was they were not going to have a bed available for this veteran. He was ready. He needed help then. The family called in 

panic and said if they allow my brother to go back out, he feels he 

will die, you know. He cannot make it. 

After I cannot even tell you, I think 10 phone calls and it finally 

went up to Central Office level, they got this person into a detox 

bed and he was there for 24 to 48 hours. The family was expecting 

the veteran would go right into the substance use disorder or longterm inpatient program. They were told there is no room for that 

patient by the time he had detoxed. And they were going to try and 

send him out. They were trying to find accommodation in the community. They could not accommodate him. 

Again, the family in a panic called, said can you please help. I 

was calling up and down the coast, this family said we will pay for 

him to go anywhere in VA. There was no coordination of inpatient 

services where anyone could tell me there is a bed available for this 


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person until, you know, again it was elevated to the Central Office 

level. 

Eventually they found a bed in Florida. They were able to get 

this veteran in. But after a certain amount of time, he went out— 

I do not know if they did not have a residential unit for him to 

then transition into and the family called about 6 months later and 

said that—they really thanked me for the help, but that he had 

died, the veteran had died. 

So, again, these kind of things, having the inpatient services 

when and where they are needed, especially when we have so 

many returning veterans from OEF/OIF that are having mental 

health issues that really need some sort of support. They are not, 

you know, getting it at home or in an outpatient setting. 

So it is so critical within the VISN, as Rick mentioned, to be able 

to have the current services one after the other. Why bring them 

in to detox them to be able to send them out to the community 

again back under the bridge until a bed is available in 30 days? 

I mean, we just hate to hear that kind of thing and that without 

any coordination throughout VA, even with different people very 

interested in helping, but not being able to tell me, well, there is 

a bed here or there. 

Mr. WEIDMAN. May I add to that, Mr. Bilirakis. We have known 

for 25 years that Florida veterans’ population was going to be 

where it is today in 2009. I can remember when then Governor Bob 

Graham was running for office and talking to him about what 

needed to happen in terms of expansion because by 2015, Florida, 

I think, is still projected to have more veterans than California. 

And 10 percent of all veterans in the country live in California. 

So it is not that this came upon us as a sudden shock, but the 

expansion of services, particularly for neuropsychiatry within Florida, has not kept up with the need. 

We have a hard time figuring out why people from VISN 8 to 

VISN 1 and 2 are telling us that they have a really tight budget 

this year when we got a 12-percent increase in the veterans’ health 

care budget. I mean, we have talked to Mr. Edwards about it. We 

have asked VA repeatedly and get no straight answers about the 

2009. 

So some of the problem that you are alluding to is it is not just 

the overall resources, it is how well are we applying those resources within the VA structure itself. Are we getting the bang for 

the buck both on the construction side, but also on the services 

side? 

And I think we have a right to expect some answers about where 

are we in the 2009 budget, where are we with the kind of services 

that Joy is talking about, particularly in an area that ostensibly is 

a quote, unquote winner under the Vera allocation model of where 

the health care dollars actually go. Why aren’t there any services 

available? 

I have gone through the same thing with the TBI problems in 

Florida of trying to find a bed and repeatedly having to go back at 

the behest of the family and intercede to keep a veteran who could 

not function on his own with bad TBI from hitting the street. I 

mean, something is wrong in VISN 8, but a lot of it has to do with 

overall organization and accountability. 


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Mr. BILIRAKIS. Thank you. 

Mr. MICHAUD. Thank you very much. This has been really helpful. 

Since the next panel has only two witnesses, I just have one last 

question. If you can please keep your answer brief. 

A lot of the discussion this morning has been centered around 

creating new access points for our veterans. There has been talk 

about the current process and how it has to be open and transparent, including some of the decisions in Colorado. 

My question is, by the same token, when you look at creating 

new facilities, politics sometimes get involved. But also the reverse 

is true, when you try to close facilities. I know when the VA asked 

PriceWaterhouseCoopers to look at 18 sites in VISN 1, which is my 

VISN, they recommended closing four medical centers. The VSOs 

in that region were outraged. They wanted their medical facilities 

there versus having a brand new one that could accommodate the 

needs. 

So, while we want to create new facilities, if the old facilities are 

inefficient facilities and we have to close them, that puts the VSOs 

and elected officials in the awkward position of having to say, yes, 

it should be closed. 

So my question then is, to be more transparent in deciding 

whether, where, and when we should either open or close facilities, 

should we establish a process similar to the Base Realignment And 

Closure (BRAC) process where they will make the decision of which 

facilities are inefficient and should be closed and where we should 

build new facilities? 

Mr. BLAKE. I do not know if I can honestly answer that, Mr. 

Chairman, but I would say that, you know, even the BRAC process 

is not without flaws, I believe. I think politics still enters into even 

decisions made through BRAC. So I think you run a risk whether 

you create another commission that is going to say yea or nay on 

opening and closing facilities or not. 

I think you point to the fact that all politics is local. Denver was 

a perfect example. The decisions there were ultimately made by the 

local population of veterans and the organizations there. 

So it is a tough situation for us to be in. And I sympathize with 

you, Mr. Chairman, with the situation. I do not know. We do not 

have an official position on whether that would be a good idea or 

not. If you propose legislation, we would be glad to take a look at 

it and work on it from there. 

Mr. WILSON. Also, Mr. Chairman, I would like to on behalf of the 

American Legion, I would like to reserve that response for a later 

date. 

Mr. CULLINAN. Mr. Chairman, I would just certainly concur with 

my colleague here about the honesty portion of the BRAC Commission or a BRAC-like Commission. 

I mean, one thing that needs to happen, though, VA has to clearly explain to local veterans what is going to take the place of a hospital. The VFW agrees that there are hospital facilities out there 

that need to be closed that are a waste of resources. 

The way to do that, though, is to clearly explain to veterans, 

well, not all health care resources are going to go away. We may 

be closing this old, obsolete hospital, but we are going to replace 


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it with a CBOC or an HCCF that is going to take care of all your 

needs in a way that is even better than what you have got now because we are going to give you, for example, three CBOCs instead 

of one old hospital, and you are not going to have to travel as far. 

They will take care of all your needs and more serious inpatient 

type care is in line. We can take care of that too. Just explain the 

situation. 

Mr. WEIDMAN. It is a difficult thing and I am not sure going to 

BRAC makes sense personally. And I do not think it is just because 

I am biased in favor of it as a former Army medic. 

But the decision to close Walter Reed at its current location, 

given its history and centrality in American military medicine, is 

a bonehead move and hopefully will be undone. That is with all 

due respect to my good friend, Tony Principi and his colleagues 

who worked very hard on the BRAC Commission. 

The green eyeshade boys, if you will, that came up with the idea 

that somehow it would be cheaper to build a new tertiary medical 

facility in Bethesda, a very expensive location, versus renovating 

the current hospital and that they could build a new tertiary medical facility for $800 million, I began to laugh. I said you are not 

going to in Bethesda open the key to that front door for less than 

$2 billion plus. And that was even 5 years ago. 

So I am very dubious of some of the, with all due respect, I am 

not going to pick on PriceWaterhouseCoopers, but the consultants, 

if you will. When they look at northern Maine and they say, well, 

you can travel from Togus down to here. Well, they have never 

been in northern New England during most of the year. And as 

they used to say in northern Vermont where I lived for a long time, 

you cannot get there from here at that time of year. And they simply do not understand the local situation. So you need to reconfigure and work with the community. 

And, frankly, one of the smartest things was keeping 

Canandaigua open as opposed to closing it in upstate New York 

where it is now the home to the nationwide hotline and those jobs 

are great jobs in Canandaigua. And it does not matter whether the 

hotline is in Chicago or in Canandaigua or it would not matter if 

it was in Toga, Spain. 

So rethinking the use of those facilities about how do you serve 

the overall need of the Nation’s veterans in all 50 States, if we approach it from that point of view, then I think you can come up 

with politically palatable solutions that meets the needs of the local 

community and does not live in the past, sir. 

Ms. ILEM. I would concur with many of the comments my colleagues made about concern over a BRAC scenario. It just may 

cause a lot of problems just to even use that term or that concept. 

But maybe looking more individually, but really working on more 

transparency and communications with veterans in those States 

and the data that is really being used to come up with some decisions and why changes are being proposed and they feel changes 

need to be made. 

But, of course, you need to take into account veterans’ preferences and their concerns in local areas which each one is unique. 

Mr. MICHAUD. Thank you very much once again for your testimony this morning. As you can see by the time, there has been a 


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lot of discussion and a lot of concern and a lot of interest in this 

very important issue. I really appreciate your willingness to come 

forward today to give us your thoughts and ideas on how we should 

proceed from here. Thank you very much. 

I would like to now invite panel two to come forward. We have 

Everett Alvarez, Jr., who was Chairman of the CARES Commission, and Mark Goldstein, who is from the Government Accountability Office. 

I want to thank both of you for coming here this morning and 

sitting through our first panel to hear the discussions and the 

questions for the first panel. I look forward to your testimony as 

well as an open dialogue on where we go from here when you look 

at providing access to our veterans throughout this great Nation of 

ours. 

So without any further ado, Mr. Alvarez, would you please begin. 

STATEMENTS OF HON. EVERETT ALVAREZ, JR., CHAIRMAN, 

CAPITAL ASSET REALIGNMENT FOR ENHANCED SERVICES 

COMMISSION, U.S. DEPARTMENT OF VETERANS AFFAIRS; 

AND MARK L. GOLDSTEIN, DIRECTOR, PHYSICAL INFRASTRUCTURE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

STATEMENT OF HON. EVERETT ALVAREZ, JR. 

Mr. ALVAREZ. Thank you. Mr. Chairman, Members of the Subcommittee, thank you for the opportunity to be here this morning 

to discuss the work of the CARES Commission. 

And I have provided the Subcommittee with my full statement 

and ask that it be accepted for the record. 

Mr. MICHAUD. Without objection, so ordered. 

Mr. ALVAREZ. Let me begin by saying that the CARES commissioners, many of whom are veterans themselves, were well aware 

of the enormous implications their efforts may have on the veterans and the VA health care system. 

We knew we had a moral obligation to be objective and transparent because our review would serve as a blueprint for resource 

planning at the VA and an approach for medical care appropriations long after the Commission’s work had ended. 

Our efforts are documented in the CARES Commission report 

dated February of 2004. 

Mr. Chairman, let me take a step back to provide some historical 

context that led to the creation of the CARES Commission and its 

body of work. 

CARES was a multifaceted process designed to provide a datadriven assessment of the veterans’ health care needs. Simply stated, the process used projected future demand for health care services, compared the projected demand against current supply, identified capital requirements, and then assessed any realignments the 

VA would need in order to meet future demand for services, improve the access to and quality of services, and improve the cost 

effectiveness of the VA’s health care system. 

The CARES process consisted of nine distinct steps and I have 

outlined these nine steps in my written testimony. It is one of these 

steps, step six to be exact, that the CARES Commission, after reviewing a draft national CARES plan and other information, conVerDate Nov 24 2008 08:32 Jan 14, 2010 Jkt 051866 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 I:\VA\51866.XXX APPS06 PsN: 51866

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ducted its review and analysis and then issued its report to the 

Secretary with findings and recommendations for enhancing health 

care services through alignment of the VA’s capital assets. 

Since the CARES process was primarily a VA internal planning 

process, the CARES Commission was established by then Secretary 

Anthony Principi as an independent body to conduct an external 

assessment of the VA’s capital asset needs and validate the findings and recommendations in the draft national plan. 

The Secretary emphasized that the Commission was not expected 

to conduct an independent review of the VA’s medical system. However, as we conducted our analysis of the draft national plan, we 

were expected to maintain a reliance on the views and concerns 

from individual veterans, veterans service organizations, Congress, 

medical school affiliates, VA employees, local government entities, 

affected community groups, Department of Defense, and other interested stakeholders. 

The CARES Commission began its journey in February of 2003 

and in fulfilling our obligation, the commissioners visited 81 VA 

and Department of Defense medical facilities and State Veterans 

Homes. We held 38 public hearings across the country with at least 

one hearing per VISN. We held 10 public meetings and analyzed 

more than 212,000 comments received from veterans, their families, and other stakeholders. 

On February 12th, 2004, I presented the CARES Commission report to Secretary Principi. These findings were grounded on the 

compilation of information gathered at these site visits, public 

hearings, and meetings, as well as information obtained from the 

public comments at the VA. 

Mr. Chairman, the Commission established several critical goals 

in order to sustain the highest standard of credibility to our efforts. 

First, we maintained an objective point of view in order to give 

an effective external perspective to the VA CARES process. 

We set goals to focus on accessibility, quality, and cost effectiveness of care that were needed to serve our Nation’s veterans. 

We held a clear line of sight on the integrity of the VA’s health 

care mission and its other missions. 

Additionally, since the VA is more than bricks and mortar, the 

Commission thoughtfully sought input from stakeholders to minimize any adverse impact on VA staff and affected communities. 

It was the Commission’s desire to make findings and recommendations that would provide the VA with a road map for strategically evaluating the VA’s capital needs in the future. 

During the development of the VISN planning initiatives and ultimately the draft national plan, the VA CARES model, demand 

model was the foundation for projecting the future enrollment of 

veterans, their utilization of certain inpatient and outpatient 

health care services, and the unit cost of such services. 

The Commission did not participate in the development of the 

model or the application of the model at the VISN level. The Commission’s role, however, was to review data and analysis based on 

the model. 

And because the model was such an integral component in the 

development of the CARES market plans, we wanted a high level 


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of confidence in the reasonableness of the model as an analytical 

approach to projecting enrollment and workload. 

For this reason and to foster the Commission’s goal to sustain 

credibility, the Commission engaged outside experts to examine 

and explain the technical aspects of this model. 

Based on the experts’ analysis, the Commission found the 

CARES model did, in fact, serve as a reasonable analytical approach for estimating VA enrollment, utilization, and expenditures. 

However, there were lingering concerns noted in the Commission’s report relating to project utilization of specialized inpatient 

and outpatient services, notably outpatient mental health services, 

inpatient long-term care services, including geriatric and seriously 

mentally ill. 

To note, the model projected only certain inpatient and outpatient services such as surgical services and primary care services. And as has been noted before, there were shortcomings in the 

model and these have been addressed in the report extensively. 

I would also add that the Commission made numerous recommendations for immediate corrective action and development of 

new planning initiatives. 

Mr. Chairman, I hope that my testimony today will help to inform the Subcommittee about the historical significance of the 

Commission and its work. I will be happy to answer any questions. 

Thank you. 

[The prepared statement of Hon. Alvarez appears on p. 70.] 

Mr. MICHAUD. Thank you. 

Mr. Goldstein. 

STATEMENT OF MARK L. GOLDSTEIN 

Mr. GOLDSTEIN. Thank you, Mr. Chairman and Members of the 

Subcommittee. Thank you for the opportunity to testify today on 

the subject of the Department of Veterans Affairs and our reports 

regarding the Department’s Capital Asset Program and CARES. 

Through its Veterans Health Administration, the Department of 

Veterans Affairs operates one of the largest integrated health care 

systems in the country. 

In 1999, GAO reported that better management of VA’s large inventory of aged capital assets could result in savings that could be 

used to enhance health care services for veterans. 

In response, VA initiated a process known as Capital Asset Realignment for Enhanced Services, CARES. Through CARES, VA 

sought to determine the future resources needed to provide health 

care to our Nation’s veterans. 

My complete testimony describes, one, how CARES contributes to 

VHA’s capital planning process; two, the extent to which VA has 

implemented CARES decisions; and, three, the type of legal authorities that VA has to manage its real property and the extent 

to which VA has used these authorities. 

The testimony is based on GAO’s body of work on VA’s management of its capital assets, including our 2007 report on VA’s implementation of CARES. 

The findings from our recent work that addressed these questions are as follows. 


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First, the CARES process provides VA with a blueprint that 

drives VHA’s capital planning efforts. As part of the CARES process, VA adopted a model to estimate demand for health care services and to determine the capacity of its current infrastructure to 

meet this demand. VA continues to use this model in its capital 

planning process. 

The CARES process resulted in capital alignment decisions intended to address gaps in services or infrastructure. These decisions serve as the foundation for VA’s capital planning process. 

According to VA officials, all capital projects must be based on 

demand projections that use the planning model developed through 

CARES. 

Second, VA has started implementing some CARES decisions, 

but does not centrally track their implementation or monitor the 

impact of their implementation on mission. 

VA is in varying stages of implementing 34 of the major capital 

projects that were identified in the CARES process and has completed eight. 

Our past work found that while VA had over 100 performance 

measures to monitor agency programs and activities, these measures either did not directly link to the CARES goals or VA did not 

use them to centrally monitor the implementation and impact of 

CARES decisions. 

Without this information, VA could not readily assess the implementation status of the CARES decisions, determine the impact of 

such decisions, or be held accountable for achieving the intended 

results of CARES. 

Third, VA has a variety of legal authorities available such as enhanced use leases, sharing agreements, and other items to help 

manage real property. However, legal restrictions and administrative and budget-related disincentives associated with implementing 

some authorities affect the VA’s ability to dispose and reuse property in some locations. 

For example, legal restrictions limit VA’s ability to dispose of and 

reuse property in west Los Angeles. Despite these challenges, VA 

has used legal authorities to help reduce underutilized space. 

In 2008, we reported that VA had reduced underutilized space in 

its buildings by approximately 64 percent from 15.4 million square 

feet in fiscal year 2005 to 5.6 million square feet in fiscal year 

2007. 

While VA’s use of various legal authorities likely contributed to 

VA’s overall reduction of underutilized space, VA does not track the 

overall effect of using these authorities on space reductions. Not 

having such information precludes VA from knowing what effect 

these authorities are having on reducing underutilized or vacant 

space or knowing which types of authorities have had the greatest 

effect. 

According to VA officials, they plan to institute a system in 2009 

that will track square footage reductions at the building level. 

GAO is not making recommendations in this testimony, but has 

previously made a number of recommendations regarding VA’s capital asset management. VA is at various stages of implementing 

those recommendations. 


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Mr. Chairman, this concludes my testimony. I would be happy to 

respond to any questions that you or the Subcommittee may have. 

[The prepared statement of Mr. Goldstein appears on p. 73.] 

Mr. MICHAUD. I want to thank both of you very much for your 

testimony this morning. 

Mr. Alvarez, I want to especially thank you for your testimony 

and for the excellent historical content you provided the Subcommittee with under the original decisions of what CARES has 

done. 

You noted explicitly that some of the CARES Commission findings may be outdated today because the information was based on 

data from 5 years ago. 

Would you recommend that we need to update CARES with a 

new Commission? How should we update the original recommendations of CARES? 

Mr. ALVAREZ. Mr. Chairman, thank you. 

At the time, the CARES Commission’s work reviewed what had 

been done and reviewed the model that was used. We felt it was 

the best objective effort to date that the VA had undertaken. 

Also, at the time, we felt that our review really surfaced a lot of 

the current issues that were on the people’s minds around the 

country, not only the veterans, but the VA employees and leadership as well. 

There were a considerable number of recommendations that we 

recommended go forward. To this date, I have been watching for 

the last 5 years somewhat curiously as to the progress of the plans. 

And when I look at this process and compare it with the BRAC 

process, the basic difference is that we were an internally appointed Commission. And with that, we really did not have much 

bite. 

So my suggestion would be that if I compare that with the BRAC 

where decisions were made and were held, that if you are going to 

do this again, give the Commission’s work to have some bite and 

effect on the outcome and be realistic about it. 

I thought a lot of our recommendations were pretty solid and 

they were objective. But, again, without strong realistic backing, 

they are just not going to go anywhere. 

Mr. MICHAUD. During your discussion, when you put forward the 

recommendation where some community-based outpatient clinics 

should be located, was there ever any discussion over the fact that 

the CBOC funding comes out of the VISN’s operating budget? This 

may create a situation where a VISN Director might not want to 

lose operating money, and, therefore, will not put forward a plan 

to implement what was recommended under CARES? Was that 

ever part of the discussion of the Commission? 

Mr. ALVAREZ. Oh, I am sure it was, Mr. Chairman. Given the 

discussions at the time with regard to the tremendous need for outpatient care, we definitely saw that that was the way to go in 

many parts of the country, particularly the rural areas. 

And so there were many, many challenges that surfaced with regard to doing that. One, of course, was what you described as giving the local leadership the authority to go ahead and do that. 

And then, of course, there was really no priority across the country in terms of the large requirement. The demand was and the 


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need was all over the country. It would have been perhaps good if 

there was some way to come up with a priority list, and if you had 

centralized funding construction, that would have been perhaps 

helpful. But I do not know if that is realistic or not either. 

The other thing, of course, is that there was also the possibility 

of looking at combinations of leasing, contracting, and so forth with 

regard to the CBOCs. In addition, I am pleased to say that what 

has surfaced is this super CBOC. 

The HCCF that people referred to is, I think, a step in the right 

direction in terms of meeting the challenges that you mentioned 

with regard to how to fund the local CBOCs, while addressing the 

local issues, the local hurdles, political, what have you. 

Mr. MICHAUD. My other question is, when you look where we are today fiscally, with a debt limit to $12 trillion and with our huge 

trade deficit and where we are heading as a country, do you think 

it would make sense to, number one, look at the recommendations 

under CARES to see if they are still valid today and if not, update 

the recommendations? And after that is done, would you think it 

would make more economic sense to focus on the community-based 

outpatient clinics or access points in areas of the country that have 

federally qualified health care clinics so if you have an area where 

it is recommended we have a CBOC, but there is a federally qualified health care clinic using Federal dollars to build it, that it 

would make more sense to actually work jointly with the clinic or 

rural hospital? 

Mr. ALVAREZ. I think it would be, to answer the first part of your 

question, it would be probably a good exercise to look at the basic 

work of the CARES Commission and update it to see which parts 

have held true in terms of the purpose and the analysis and to do 

this in an objective manner. I think that would be probably a good 

exercise. 

With regard to looking at other options with regard to the 

CBOCs and outpatient care or perhaps a different form of funding 

these or expanding the outpatient capability around the country, it 

is probably good to look at that. I think what you are really looking 

at is maybe thinking outside of the box in terms of possibilities. 

In addition to that, to what you mentioned with regard to federally qualified health clinics and other ways of funding it, we looked 

at this rural concept that was just surfacing at the time and we 

really did not understand. But I think that is something that has 

probably developed nicely now. 

I think the important thing would be, which is what was mentioned by the previous panel, is to communicate. Once you have a 

good idea, communicate this with the stakeholders, the veterans 

service organizations, and explain to them exactly what your 

thoughts are and have an open dialogue on this. 

We found this to be quite helpful in our meetings and in our 

hearings around the country. A lot of people at the time were very 

concerned that they were going to lose their hospital. 

But when they realized that, as Mr. Boozman indicated, 80 percent of care is done on an outpatient basis and that we could take 

care of the individuals quite well in their communities and not require the lengthy travel back and forth and what have you, they 

were in general very positive. 


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This happened quite often in places in the western regions. 

Walla Walla, for example, is a good example of a sort of remote location in terms of talking about the local clinics, CBOCs type concept, what have you. 

So I think that these other ideas in terms of rural health and 

other means of funding local clinics may work quite well, but it has 

to be well communicated and get the cooperation of the local veteran groups and other stakeholders. 

Mr. MICHAUD. Thank you. 

Mr. Goldstein, as you know, the VA continues to use the tools developed through the CARES as part of its capital planning process. 

Do you think that the tools that they are using continues to 

serve their purpose or are there modifications that are needed 

within the VA to develop a more accurate tool to assess what is 

happening out there within the VA facilities? 

Mr. GOLDSTEIN. We are aware that they are still using the tool 

that they developed some time ago and that it has been useful to 

managing the program. Whether it needs a revamping is not something that we have specifically studied at this point in time. 

Mr. MICHAUD. When you do your reports, do you think outside 

the box? For instance, under the CARES process, as I mentioned 

earlier, they might recommend that it be located at point X and 

there might be a brand new federally qualified health care clinic 

that is going to be built at point X. So when you do your report, 

do you look at whether it makes more sense to have a joint facility 

at point X for VA as well as a federally qualified health care clinic 

or when you do your evaluation, do you just focus on that issue? 

Mr. GOLDSTEIN. We tend to look at the processes that were undertaken by VA in conjunction with any of its partners, to determine whether the process that they have is an effective one for determining the best outcome. 

We found in our work in Denver and Charleston that some of the 

challenges and difficulties occurred when the process that should 

have been used was not always used effectively. 

So our approach would be to try and encourage the agencies to 

use effective processes that are transparent and bring in all the 

stakeholders so that agencies can make effective decisions. 

Certainly in the CARES process, we did note that VA did look 

at most alternatives for most of the locations that they were examining, but quickly ruled many of them out. It is just a question of 

how that was adopted. 

We noted in our report that in most instances, the Secretary 

tended to agree with any option where the recommendation was to 

either keep the facility open or to use an enhanced use lease. However, the Secretary agreed only in one case to close a facility. That 

was in Gulfport when both the original plan as well as the Commission had suggested that a greater number of facilities be closed. 

And that may be a completely appropriate decision on the part 

of the Secretary, but there did appear to be a lack of transparency. 

In addition, it took a lot of time to make decisions, and this affected local communities while decisions were not being made. 

Mr. MICHAUD. What would you recommend? How would we put 

forward a model for new facilities that is fluid enough to take into 

account the changing veterans’ population as well as the service 


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needs out there and a model that would actually ensure that VSOs 

are part of the process. Yes, VA talked to the VSOs, but it was only 

to say that they talked to the VSOs. The VSOs really did not feel 

part of the process. 

What would you recommend for a model from here on out that 

would really take into account the different issues that change 

every day between now and whenever we get a facility built or 

leased and that will actually really put the VSOs in a situation 

where they can have really good effective input? 

Mr. GOLDSTEIN. Mr. Chairman, we did not do work looking at a 

specific model, but we did hear everywhere we went in all the locations that we visited for our work there were a lot of issues of communication. 

These issues of communication were not just between the Department and veterans’ groups. They were also between the Department and other stakeholders, local communities, universities, 

other hospitals, other places that VA might try to develop an effective health care solution, and that in many instances, the kinds of 

actions that needed to occur to at least get everyone in a room and 

suggest various ways to move forward took a very long time and 

required the input of other parties to ensure that VA was going to 

honestly come to the table. 

Mr. ALVAREZ. Mr. Chairman, if I may, on that question about 

being heard, what we found in our experience is that giving the 

local veterans’ groups around the country the opportunity to have 

input was not always a benefit because when you get into these 

discussions, the level of knowledge required to provide input was 

not always there as you see here in Washington and others where 

you see that level of expertise, in the veterans service groups themselves who have that tremendous level of expertise, but that level 

of expertise is not always present at the local level. 

And, therefore, when they are invited to come in and participate, 

they really cannot participate much beyond the initial phases of 

these discussions. And that is one of the issues that we always 

dealt with when we were having our meetings and our hearings 

around the country. 

Mr. MICHAUD. But by the same token—and actually it was 

brought up by Mr. Weidman—and I can attest to that coming from 

the State of Maine, where the Office of Rural Health was concerned 

about a mobile vet clinic, and really did not think that it was needed because when looking at a map, you could easily get from point 

A to point B when, in fact, you cannot get from point A to point 

B because of the distance and the way the transportation system 

is located. 

Here, actually, the VA at Togus made very clear that, yes, it is 

a very rural area and you cannot get from point A to point B. So, 

therefore, we were able to get the facility. But it is that local input 

that really made the difference in that particular case. 

I can understand from what you are saying that sometimes they 

might not know some other factors. But, quite frankly, if you do not 

have local input along with the other factors, I think you have to 

weed out some of the information that is brought forward. It is that 

local perspective that is very important. 


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Going through the CARES process now, I know there is one 

VISN where they are going to hopefully have a CBOC. You actually 

might be able to eliminate another access point that was originally 

recommended by CARES, just by moving it around a little bit. But 

it is that local input that definitely is helpful. 

By that same token, as I mentioned to the previous panel, some 

of the concerns that I see are the political concerns, especially 

when it comes to closing facilities. It might make more sense to 

close facilities and reconfigure where the new facility might be. 

That is, when you get into some of the political problems in that 

particular area. 

I am not sure how to really address that unless you have a 

BRAC type commission that does that, but I am not recommending 

it. That is just playing the devil’s advocate for the first panel, to 

see how they would respond to that particular area. 

But I understand what you had mentioned, Mr. Alvarez, and 

really appreciate your comments. 

Mr. GOLDSTEIN. If I may, Mr. Chairman, VA, of course, is not the 

only agency that suffers from what GAO euphemistically calls competing stakeholder interests. Many agencies face this very same 

problem. 

And it is among the reasons why GAO years ago put real property on the Federal high-risk list. It is one of five issues that informed us that it was important for the government to determine 

ways to deal with this because if it does not, we are always going 

to be caught in this bind whether it is VA, the Postal Service, or 

any other Federal agency. 

Mr. MICHAUD. Thank you. 

Once again, I want to thank both of you for coming. This has 

been extremely helpful. We may have additional questions in writing. I really appreciate your taking the time this morning to come 

here to give us your thoughts and to answer the questions. So, 

thank you both very much. 

Mr. GOLDSTEIN. Thank you, Mr. Chairman. 

Mr. ALVAREZ. Thank you, sir. 

Mr. MICHAUD. I would like to ask the third panel to come forward. Donald Orndoff, who is the Director of Office of Construction 

and Facilities Management from the VA. He is accompanied by 

Brandi Fate from the VA as well as Jim Sullivan and Lisa Thomas. 

I want to thank you very much for coming here this morning. I 

look forward to your testimony. Hopefully, we will be able to have 

an open dialogue as we move forward with the CARES process on 

how we make sure that veterans have access to health care facilities, regardless of where they live. 

So, Mr. Orndoff, would you please begin? 


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STATEMENT OF DONALD H. ORNDOFF, AIA, DIRECTOR, OFFICE OF CONSTRUCTION AND FACILITIES MANAGEMENT, 

U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED 

BY BRANDI FATE, DIRECTOR, OFFICE OF CAPITAL ASSET 

MANAGEMENT AND PLANNING SERVICE, VETERANS HEALTH 

ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; JAMES M. SULLIVAN, DIRECTOR, OFFICE OF ASSET 

ENTERPRISE MANAGEMENT, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND LISA THOMAS, PH.D., FACHE, DIRECTOR, OFFICE OF STRATEGIC PLANNING AND ANALYSIS, VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT OF 

VETERANS AFFAIRS 

Mr. ORNDOFF. Mr. Chairman, I am pleased to appear here to discuss the status of the Department of Veterans Affairs health care 

infrastructure. 

I will provide a brief oral statement and request that my full 

written statement be included in the record. 

Mr. MICHAUD. Without objection, so ordered. 

Mr. ORNDOFF. Joining me today is James M. Sullivan, Director 

of VA’s Office of Asset Enterprise Management; Lisa Thomas, Director of VHA’s Office of Strategic Planning and Analysis; and 

Brandi Fate, Director of VHA’s Office of Capital Asset Management 

and Planning. 

Current medical infrastructure. VA has a real property inventory 

of 5,400 owned buildings, 1,300 leases, 33,000 acres of land, and 

approximately 159 million gross square feet of occupied space both 

owned and leased. 

Our aging facilities were not designed to meet the challenging 

demands of clinical care of the 21st century. Continuing our recapitalization program is critical to providing world-class health care to 

veterans now and into the future. 

Current major construction program. VA continues the largest 

capital investment program since the immediate post World War II 

period. Since 2004, VA has received appropriations totaling $4.6 

billion for health care projects, including 51 major construction 

projects. 

These projects include new and replacement medical centers, 

polytrauma rehabilitation centers, spinal cord injury centers, ambulatory care centers, and new inpatient nursing units. 

Background CARES. In 2000, the Veterans Health Administration embarked on the Capital Asset Realignment and Enhanced 

Services study or CARES. CARES assessed veteran health care 

needs and promoted strategic realignment of capital assets. 

In 2003, VA released the draft national CARES plan and created 

the CARES Commission for further analysis. 

In May 2004, the Secretary published his CARES decision and 

identified 18 sites whose complexity warranted additional study. 

VA completed these studies in May 2008. 

Today strategic planning facilities process. The tools and techniques acquired through CARES are now incorporated in the VA’s 

strategic health care facilities planning process. VHA no longer distinguishes between CARES and other project planning needs. 

Goal, high performance medical facilities. New VA medical facilities contribute to world-class health care for veterans today, tomorVerDate Nov 24 2008 08:32 Jan 14, 2010 Jkt 051866 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 I:\VA\51866.XXX APPS06 PsN: 51866

dkrause on GSDDPC29 with HEARING
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row, and well into the 21st century. Our design goal is to deliver 

high performance buildings that are functional, cost efficient, veteran-centric, adaptable, sustainable, energy efficient, and physically secure. 

Our acquisition strategies. VA uses a range of acquisition tools 

that are tailored to best satisfy the unique requirements of each 

project. We partner with industry leaders through architect engineer design contracts, design-bid-build contracts, design-build contracts, integrated design-construct contracts, construction management contracts, and operating leases. 

Fiscal year 2010 requirement. VA’s fiscal year 2010 budget request continues our recapitalization effort supported by our strategic planning process. VA requests $1.1 billion in fiscal year 2010 

for major construction to replace or enhance VA medical facilities. 

VA also requests $196 million authorization to provide 15 new 

medical facility leases. 

In closing, I thank the Committee for its continuing support to 

improve the Department’s physical infrastructure to meet the 

changing needs of America’s veterans. My colleagues and I stand 

ready to answer your questions. 

[The prepared statement of Mr. Orndoff appears on p. 82.] 

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

As you heard from panel one, there is a lot of concern about the 

lack of transparency in the capital planning process, especially as 

it pertains to CBOCs. 

It is my understanding that CBOCs come out of the VISN’s operating budget. That being the case, if you have a VISN Director who 

might have other plans on what he wants to do within his VISN, 

even though there is a need for a CBOC, they will not proceed forward with that CBOC. 

I think that is a disincentive to help move forward on CBOCs, 

so my question is, number one, do you have any ways that we 

might be able to address that? Should the CBOC operating budget 

be a separate line item so we can actually move forward with 

CBOCs within the CARES process? What would you do to bring 

more transparency to the process? 

As you heard from the first panel, they feel that they have not 

been part of the process. In Maine, for instance, we have the Department of Education where the Commissioner does not decide 

they are going to do new school construction. It is the State Board 

of Education that makes that decision. 

Should we have an outside entity make the decision of where the 

VA will be moving on these facilities and the VA just will proceed 

forward with that recommendation? 

Mr. ORNDOFF. Mr. Chairman, allow me to have Ms. Thomas respond to the requirement’s generation part. 

Ms. THOMAS. Mr. Chairman, I would like to address your questions regarding the community-based outpatient clinics. 

As of the end of March of this year, VHA has over 750 community-based outpatient clinics and they have treated approximately 

1.8 million veterans already. So I think that those numbers alone 

show that it is not essentially a disincentive for the Network Directors to use that tool to enhance services to veterans in their local 

communities. 


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Mr. MICHAUD. I might add, how many have been built recently? 

Ms. THOMAS. I can tell you that in fiscal year 2009, 13 have already been activated and there is another 62 planned for this fiscal 

year. 

Mr. MICHAUD. Another 62? 

Ms. THOMAS. Yes, sir, for a total of 75 in fiscal year 2009. 

Mr. MICHAUD. Okay. And how many are left under the CARES 

process to be moved forward? 

Ms. THOMAS. Sir, we have almost completely implemented all of 

the CARES community-based outpatient clinics. We have 50 

CBOCs that have opened in 13 networks and we have 78 of those 

CBOCs in 14 networks that will open between fiscal year 2009 and 

2011. 

One of the other things that I would like to mention is that we 

have over the past 2 years taken a national deployment plan for 

our community-based outpatient clinics. So we have more of a nationwide systemwide perspective. And the methodology that we employ looks at looking at those areas of the country that have limited access to care in combination with those areas that have the 

highest projected demand for services for both primary care and 

mental health services. 

We then rank order those markets and present those to the networks and ask them for the highest ranking markets, if they could 

please develop a plan for how they are going to meet the needs of 

veterans in those areas. 

And that is a combination of CBOCs in addition to other strategies that we have such as telehealth and mobile health clinics and 

outreach clinics. So we have over the last 2 years increased the 

rigor with which we look at where the CBOCs need to be placed. 

Mr. MICHAUD. In that process, what have you done to involve the 

VSOs in those regions? 

Ms. THOMAS. My understanding is that within every network, 

they have a structure in place to communicate with their veterans 

service organizations and their representatives both at the network 

level in terms of committees as well as the local medical center 

level. We encourage every single medical center and VISN to ensure that they are speaking with their VSOs and incorporating 

their input into their strategic planning processes. 

Mr. MICHAUD. Is the process consistent among all the different 

VISNs in how they deal with this or is it left up to each VISN on 

how they are to involve the VSOs in their region? 

Ms. THOMAS. There is variability within the networks. Different 

networks have varying governance structures. But I believe we can 

certainly take that for the record and get back to you with how 

each network does accomplish that. 

Mr. MICHAUD. I did not mean to interrupt. If you could finish answering my original question, which I think you mostly answered. 

Ms. THOMAS. Oh, the transparency issue? I will pass that back 

to Mr. Orndoff. 

Mr. ORNDOFF. Well, the transparency issue, I think, is best addressed, as Ms. Thomas said, in that there is a dialogue with 

stakeholders at the local VISN and Central Office level. We do have 

a continuing process of evaluating requirements and setting the 


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priorities for which projects would move forward, as Ms. Thomas 

has talked about. 

So it is always a challenge to communicate enough and we try 

very hard to do that. Could we do better? Sure. We will look for 

opportunities to do that. 

Mr. MICHAUD. How are the concerns of local facilities conveyed 

to the VISN office? 

For instance, I will use Maine as an example. VISN 1 is very 

large. You can put New England in the State of Maine. And you 

have your Director at Togus and then you have your VISN 1 Director in Boston. 

How are the concerns from the very local level, say the Togus 

level, conveyed to the VISN level then ultimately conveyed to the 

Central Office? Does the Central Office have an opportunity to see 

what actually is really needed at the local level or does that get cut 

off at the VISN level? Is this dealt with consistently throughout the 

different VISNs? 

Mr. ORNDOFF. Ms. Fate will answer, sir. 

Ms. FATE. Thank you. 

There are different programs that address the needs at the medical centers. We have our nonrecurring maintenance (NRM) program, which is a decentralized program that allows the VISNs the 

control as to what decisions are made for renovation within the existing medical centers. And each one of the VISNs has their own 

process by which they prioritize their projects. 

For the minor construction and the major construction programs, 

those are at a centralized level where the needs are brought forward to Central Office for capital assets. And typically those mostly 

involve new construction. And we have a model set for the criteria 

where each project is scored and ranked. 

And I do not know if, Jim, you want to present. 

Mr. SULLIVAN. If we could, we have a large chart here that will 

show you the prioritization methodology that is applied to the 

major construction program as well as very similarly to the minor 

construction program. 

Mr. MICHAUD. Would it be possible if you could send that also 

to the Committee—— 

Mr. SULLIVAN. Absolutely, sir. 

Mr. MICHAUD [continuing]. Electronically? 

Mr. SULLIVAN. Yes. 

[The VA chart follows:] 


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Mr. MICHAUD. Thank you. 

Mr. SULLIVAN. This shows the criteria that is used to determine 

which is the highest priority. So you can see, there are seven parts 

of criteria starting with issues that address safety, special emphasis which would be TBI, seriously mentally ill, SCI needs, and then 

service delivery gaps, addressing where those gaps are, your portfolio goals, that is getting rid of unneeded space, vacant space, 

things along those lines. 

The facility condition criteria references the large backlog of deficiencies. We have a facility condition assessment process that will 

tell you what each facility has, how many deficiencies, and then 

workload, how much of a workload gap is that investment addressing. And then last, is it in alignment with the strategic plan of the 

Department. 

And a similar process is used for decentralized programs, which 

are minor construction and major construction. 

Mr. MICHAUD. I wish I could say I could see it. The only thing 

I can see is this is the year 2010 VA decision criteria and that is 

it. 

Mr. SULLIVAN. It is in the budget document. 

Mr. MICHAUD. Okay. 

Mr. SULLIVAN. But we will—— 


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43 

Mr. MICHAUD. Yeah. Thank you. I appreciate that. 

My next question is, when you look at the CARES process, some 

of the concerns that I and the Subcommittee have heard are from 

our Members from all around the country and ever since I have 

been here, we have received legislation to require the VA to do 

more contracting out. The reason why we are seeing legislation to 

contract out is veterans all around the country are getting frustrated that they are not getting access to the health care that they 

really need. And, hence, we are seeing legislation to contract out. 

I do not want the VA to become an insurance agency, that is all 

you do is pass through. Part of the problem, I feel, is because the 

CARES process has not been moved forward aggressively, that is 

not necessarily the VA’s problem in that the previous Administration and previous Congress have never provided the adequate funding needed to move forward on the CARES process as originally 

recommended, the billion dollars a year. So that is the lack of foresight among Congress and the Administrations to move forward. 

My question is, however, when you look at the CARES process, 

there are a lot of access points without huge costs to move forward. 

Has the VA looked at those access points where it was recommended that they work collaboratively with the federally qualified health care centers to move forward more aggressively and get 

these up and running so that we can help get the veterans the 

services that they need and hopefully prevent any more legislation 

dealing with contracting out? Has there ever been an overlay of 

where the needs are to CARES compared to where we currently 

have other federally qualified health care clinics? 

Mr. ORNDOFF. Well, certainly the overall process of identifying 

requirements covers the waterfront, all the requirements. And 

where we have gaps, we certainly identify requirements and the 

highest requirements through the process that Mr. Sullivan just 

described would float up. 

We have developed a comprehensive list of requirements for the 

capital investments. They are in the fiscal year 2010 budget submission. There are 66 projects listed in priority order as a result 

of this prioritization process. 

What we have done is try to look for opportunities for leasing a 

facility so we can get more projects moving faster. So we have a 

two-pronged approach, capital investment as well as leasing. 

In terms of creative solutions that you have addressed, certainly 

the opportunities as presented are explored and discussed. 

If there are other thoughts on the panel about that, let me refer 

it to someone else. 

Ms. THOMAS. Sure. I can address a portion of that, Mr. Chairman. 

As we heard the gentleman from GAO report, they did a report 

on VA and criticized us for not centrally tracking and monitoring 

the implementation of CARES. 

As a result of that, our Under Secretary for Health chartered a 

work group. And that work group was a VA-wide body that recommended a report be conducted annually to track both the implementation and the impact of the CARES decisions. 

One of those items that we are currently looking at is the implementation of increased access points through contracted care for 


dkrause on GSDDPC29 with HEARING
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any of those decisions that were identified in the CARES document 

as well as the 18 follow-on business care studies. So we will be 

tracking that and our first annual report will be out this month. 

Mr. MICHAUD. If you make sure that the Committee receives a 

copy of that report—— 

Ms. THOMAS. Absolutely. 

[The VA subsequently submitted the report entitled, ‘‘VA Health 

Care: Implementation Monitoring Report on Capital Asset Realignment for Enhanced Services,’’ dated August 2009. The report will 

be retained in the Committee files.] 

Mr. MICHAUD [continuing]. It would be very much appreciated. 

Under the process you mentioned, there are several new CBOCs 

coming online. 

In moving forward, what are you doing to try to really get them 

aggressively moving forward? It is one thing to start the process 

and say you are going to do it. Are there ways that we can streamline that process to move them forward more aggressively? Do we 

need to change something statutorily or can you do it administratively? And if you can do it administratively, are there bumps in 

the road that we should look at administratively? How we can 

streamline that process to get these facilities up and running? 

Ms. THOMAS. Mr. Chairman, I think there is always room for improvement in terms of effectiveness and efficiency. And I think that 

what I would like to do is take that question for the record and 

consult with my colleagues and identify those areas that can be 

streamlined. There are several levels of review that go on both 

within VHA with the Department and with OMB. 

[The VA subsequently provided the following information:] 

The current Community Based Outpatient Clinic (CBOC) Planning process is aligned with the VHA Capital Planning and Budget cycles as approved by the Office of Management and Budget (OMB). Therefore, a 2-year 

planning scenario is required by which CBOC proposals are submitted 2 

years prior to their planned activation date so that they are included in the 

appropriate budget formulation cycle. For example, right now, at the end 

of FY2009, the CBOCs that VHA plans to open in FY2011 are under the 

review by OMB with VHA’s budget submission. 

The CBOC process begins with a national analysis of the underserved 

populations as defined by limited geographic access in areas with projected 

increases in primary care and mental health services. The Deputy Under 

Secretary for Health for Operations & Management (DUSHOM) issues a 

call memorandum to the Veterans Integrated Service Networks (VISNs) for 

CBOC Business plan submissions for those areas of the country that meet 

the national threshold for having underserved populations. A technical review of each of these business plan proposals is then completed. Those proposals meeting the technical requirements are then reviewed by a CBOC 

National Review Panel (NRP). The NRP reviews the proposed CBOCs 

against national operations criteria. By June of each budget formulation 

year, the National Review Panel recommendations are completed and forwarded to the Under Secretary for Health and ultimately the Secretary approval and inclusion into the Department Budget Submission. 

Mr. MICHAUD. Thank you. 

Mr. SULLIVAN. I think, Mr. Chairman, one of the biggest improvements has been the raising of the threshold that the Committee successfully got through on the lease threshold. 

It used to be we had to get leases authorized at 600,000. For the 

first time with your help, it was raised to a million and I think that 

will speed the process of bringing leases online significantly 

quicker. 


dkrause on GSDDPC29 with HEARING
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Mr. MICHAUD. I am sure it also will save time within the VA system because I know Members of Congress constantly call to find 

out where that project is in the system to try to move it along. The 

more streamlined it is, I think the more efficient it will be. 

Actually, the first panel voiced serious concerns about the HCCF 

leasing concept. Can you share the rationale behind that leasing 

concept and the VA’s plan to deploy that model? How does the concept fit into the overall CARES process? 

Mr. ORNDOFF. Yes, sir. As was mentioned, I think by members 

of that panel, it is not a one size fits all or the ultimate solution. 

It is one of a range of facility solutions that VA intends to employ 

and address and tailor to the need at the particular location. 

What we are seeing is there are opportunities with the shift in 

outpatient care that a very high percentage, as high as 95 percent 

of the health care needs of veterans, can be met in an HCCF environment as opposed to having full-blown hospitals at each of these 

locations. 

So in most cases or in some cases where we do not have capabilities now, maybe the HCCF is the correct solution rather than a series of community-based clinics or a large medical center complex 

which can be, of course, from a capital investment point of view 

very expensive. 

What we are also looking to do with the HCCF is to deliver these 

quicker than the normal capital process through leases. And the 

budget in fiscal 2010, there are seven HCCFs for authorization. 

Those projects would not be before you now if it was not for leasing 

of the HCCF. So it is an opportunity to reach down our priority list 

and move projects forward. 

Because of limitations of leasing, operating leases, working within the guidelines and policies of the Office of Management and 

Budget, we do have some limits on leasing. And so we are basically 

pressing the envelope a bit with HCCFs in terms of getting leasing 

done for HCCFs within the leasing authorities that we have. But 

we are certainly working with all stakeholders to try to move forward on that. 

Maybe Ms. Fate can embellish a little bit on when an HCCF is 

the right facility solution. 

Ms. FATE. We are currently in the process of fully defining the 

HCC. While right now the services that are provided are primary 

care, specialty care, mental health, expanded diagnostics, and ambulatory surgery, we are using it as another mechanism to provide 

the services that we do in VA. 

It can be either through construction or through leasing, but the 

avenue that we tested through the fiscal year 2010 was to take 

seven projects through the major construction project listing and 

try to push those forward through the leasing process so that they 

could be done quicker as opposed to sitting in priority 23 for the 

next several years and not getting funded from the major construction. 

So that was just our attempt to address the needs so that our 

veterans do have a facility that is managed by VA health care and 

providing the quality health care that we do at our facilities. 

Do you have anything? 

Mr. SULLIVAN. Yes. 


dkrause on GSDDPC29 with HEARING
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Mr. Chairman, I would like to add to that that the leases the 

HCCs proposed in the budget, five of them are leases that would 

normally show up in the construction list. With an $11 billion backlog, the theory behind this was to see if some of those could be 

leases. For example, at Loma Linda, it was an outpatient addition 

planned for construction. 

The option here was to say could you lease a facility across the 

street in the neighborhood right next to the medical center where 

you could deliver that facility probably 6 to 8 years earlier than 

waiting for construction. That is one of the advantages of HCCF. 

So it is a way to get facilities, new and adequate facilities 

quicker with our large backlog of facilities. Because I think as Mr. 

Orndoff referenced, we are at an $11 billion backlog. And we know 

that is not the full backlog, but that is probably a pretty good indicator of where we are. 

And we have over $2.2 billion that are partially funded that we 

need to finish before we can start more. So this was a way to look 

at delivering facilities quicker and faster in this budget. 

So, I mean, that was the goal of this now. And also the concept 

itself, as it applies to where we do not have facilities now, is still 

being fully developed. 

Mr. MICHAUD. When you look at that huge backlog and when you 

look at the range in dollars from a CBOC to a large medical facility 

and you look at the rural issues concerning veterans, are you focused more on trying to build a brand new hospital or is the VA 

looking at taking care of a hundred different needs out there by 

doing CBOCs or access points? How do you judge that priority? 

When you look at the huge amount of money it costs to build a 

multi-million dollar huge hospital, it makes a lot more sense to me 

to instead take care of a lot of the smaller access points out there 

where you can take care of a lot more veterans for fewer dollars. 

Mr. SULLIVAN. Right. We separate our infrastructure needs out, 

that the $11 billion backlog is big, major, current facilities that 

exist today. The CBOC process which provides more flexibility is to 

address some of those smaller pockets of need through that process. 

And there is a separate process Ms. Thomas talked about in terms 

of how you prioritize those CBOCs. The $11 billion is just basically 

our current infrastructure stock and the repairs needed for that. 

Ms. THOMAS. I think part of your question, sir, is also how do we 

identify what type of capital solution is appropriate for the care 

that veterans need. And that is based upon services and projected 

demand for those kinds of services. 

So when you look at certain markets and you look for the demand and the utilization out into the out-years, if the predominant 

need of the veterans is for primary care or mental health services, 

then it would be appropriate to look toward a CBOC or a smaller 

access point to meet those needs. 

If there is a large population of need for specialty care, inpatient 

care, then that would help dictate what type of infrastructure you 

would need, a larger health care center or a hospital in that case. 

And then through the capital process, we would work together to 

identify with the local network whether or not the most cost-effective way to meet that would be through a lease or construction. 


dkrause on GSDDPC29 with HEARING
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Mr. MICHAUD. If you were to take care of all the needs that are 

currently out there under the CARES process or that came about 

after CARES—I am just talking about the smaller facilities—what 

would that total cost be approximately? 

Mr. SULLIVAN. In terms of the non-CBOC, it is about $12 billion 

in the major program. I believe the minor program is $1.5 billion 

in terms of project backlog. And in the interim—— 

Mr. ORNDOFF. The FCA backlog is what, $8 billion? 

Mr. SULLIVAN. Eight billion dollars. Now, there is some overlap 

between the project backlog and the facility deficiency backlog, but 

it is a large issue. 

Mr. ORNDOFF. Sir, if I may address your point about either/or, 

I think we are making an effort to do both. And we have a different 

facility solution depending on the requirement. 

I think there is a need to recapitalize the infrastructure even for 

the major medical centers. There is a veteran need for that level 

of care in certain high population areas. On the other hand, certainly we want to make access available to veterans in all locations, including rural areas. 

So I think we are working all those fronts and the spectrum of 

different types of facilities and different acquisition strategies are 

all being put into play to try to address that with all the resources 

available. 

Mr. MICHAUD. Thank you. 

Also on panel one there were co-authors of the Independent 

Budget who had mentioned that VA’s long-term care strategy plan, 

released in 2007, was lacking in specific planning details regarding 

the future direction in long-term care programs. 

Could you inform us what you are doing to develop a more comprehensive, long-term care strategy plan? Where is that and what 

have you done thus far? 

Mr. ORNDOFF. Mr. Sullivan or Ms. Thomas. 

Ms. THOMAS. Mr. Chairman, VA is working on a populationbased model to project the long-term care needs for both residential 

and noninstitutional long-term care services for the needs of our 

enrolled veteran population. 

As is the cornerstone of our planning, the enrollee health care 

projection model or actuarial model, which the other panels had 

referenced is really the cornerstone for strategic planning. And VA 

has made progress to develop a long-term care model that is similar in rigor and assistance that those kinds of tools can provide us 

in planning. 

I do know that there has been progress in the long-term care 

planning since the last time they had submitted an official plan to 

Congress. And we would be happy to get those experts to clarify 

exactly what steps they have made in terms of improving that. 

[The VA subsequently provided the following information:] 

The Geriatrics and Extended Care (GEC) Strategic Plan was approved by 

the Acting Under Secretary for Health on September 2, 2009. The plan responds to the challenges facing VA given an increase in the age, number 

and medical complexity of elderly veterans, and the appearance of a younger, more health-savvy cohort of veterans with immediate and future extended care service needs; and a U.S. health care workforce underequipped 

to care for those with chronic diseases and disabling conditions. 


dkrause on GSDDPC29 with HEARING
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The GEC Strategic Plan specifies four goals to be achieved through 10 

strategies, and 82 recommendations. The most critical of these recommendations include: ensuring patient-centeredness of programs; analyzing the cost/benefit of long-term care policies; ensuring a focused and dynamic research program; building national partnerships; appointing a GEC 

lead for each VISN; developing a practical means of tracking veterans 

served by GEC programs; and appointing a GEC Workforce Advisory Council of senior VHA leadership to address workforce inadequacies. Implementation of the GEC Strategic Plan covers a 7-year planning horizon. 

Mr. MICHAUD. When you do your planning, whether it is for 

CBOCs or long-term care planning, are you involving not only the 

VSOs but other State entities? 

I am very pleased with the State Veterans Nursing Home in 

Maine. They have a facility. They have been approved for a brand 

new community-based outpatient clinic on the same campus. They 

are going to have a hospice facility there on the same campus as 

well as low-income housing for our veterans. 

So, all on the same campus, you have a community that offers 

the whole continuum of care, and a lot of that was because of the 

leadership of the State Veterans Nursing Home. 

When you are doing your planning process, are you not only involving the VSOs but also other entities that might be out there 

that could help move forward in a particular area? 

Ms. THOMAS. Yes. The answer is yes, Mr. Chairman. Both at the 

local level and at the national level, our geriatrics and extended 

care service line does very much look to partner and learn from the 

private industry and our local communities. 

One of the large changes that we recently made is we no longer 

refer to our nursing homes as nursing homes. They are now CLCs 

or community living centers. And looking toward the innovative 

strategies that others have developed in terms of a greenhouse and 

approaches like that where they are real living communities and 

a sense of a community and not an institutional-like setting for 

those of our veterans who need long-term care. 

We are always looking for input from our partners, our veterans 

service organizations and all of the stakeholders. I think that is a 

very important ingredient to strategic planning, particularly for 

this population. 

Mr. MICHAUD. Thank you. 

Also on panel one, we heard some concerns about the lack of 

transparency and the lack of involvement from the VSOs. 

What do you think that you can do better to make sure that all 

the stakeholders are at the table and that their concerns are heard 

in a meaningful way, not just to bring them in and say we have 

talked to them, that is the end of it? What can you do to address 

some of the concerns that we heard from panel one? 

Mr. SULLIVAN. I think one thing, Mr. Chairman, on the major 

construction area that we will brief them and sit down with them 

and talk to them about our prioritization process, how projects get 

into it, why projects are where they are on the priority list so they 

can have an understanding of where things are for a particular 

project and how there is a straightforward prioritization process. 

Congress required us to do it back in the early 1990s and we 

have refined it. Maybe it needs to be more fully briefed to the VSOs 

and others so they can see at least what the decision process is. 


dkrause on GSDDPC29 with HEARING
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The process was put together to be transparent so you could find 

out why a project is ranked particularly higher than another or 

why one is not ranked higher. And maybe that is an education 

process that is incumbent on us to more fully explore with those 

elements. And we will do that. 

Mr. MICHAUD. What you just described does not really involve 

them. It is pretty much here is the decision and here is how we 

came to that decision. 

I think, if I understood correctly from panel one, they would like 

to be involved in that process, before you make the decision not to 

say ‘‘here is a decision, here is what we have, and this is how we 

arrived at the decision.’’ I think they want to be part of that process in moving forward before the decision is made. That is the 

meaningful input that they want. 

Mr. Sullivan, what you have told me is pretty much, I think, 

what they have been complaining about: here is a decision, take it 

or leave it. If you like our methodology, or dislike it, that is what 

you have to live with. I think they want to be part of that process, 

not after the fact. So—— 

Mr. SULLIVAN. Sir, we will take that back to the Secretary and 

discuss that option of finding a way to involve them in that process. 

Mr. ORNDOFF. Sir, I think the opportunity to influence the 

project selection process is basically the process that we used to develop this chart over here which says, you know, what are the 

things that are important that should be weighted more heavily 

that float to the top. 

So I think there is an opportunity that we could take to discuss 

that in the development process. It is an annual cycle of refreshing 

that to make sure it is aligned with the current strategic vision of 

the Secretary. 

So as a step in that process, we could have a dialogue there that 

would influence the model that eventually produces the list. That 

way, we can all have some ownership in the outcome. 

Mr. MICHAUD. I would appreciate it because some of the frustration that I have heard and seen over the years is a desire to really 

be part of that ownership. 

I know at times, that probably might delay things a little bit or 

might be frustrating at times, but, quite frankly, I think any time 

that you can work with those that are involved in the process, it 

has long term benefits. And I think it gets rid of a lot of the frustrations that we have heard today and hopefully in the future. 

As I mentioned earlier, I think part of the problem in the past 

has been that VA lacked the financial resources needed to move 

forward on this in an aggressive manner. It is my hope that with 

the new Administration and new Congress that we will definitely 

look forward in this particular area. 

My only disappointment is in the stimulus package, the funding 

for the VA got cut. The additional increase actually got cut from 

the original request that we had. Hopefully we will be able to move 

forward with giving the VA the resources they need so you can 

move forward to take care of our veterans. 

I guess my last question would be, if there is anything that Congress could do, other than provide additional resources to help 


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make your job a lot easier so we can move forward more aggressively as we look at the CARES process and how we can meet the 

facility needs? Is there anything that we can do or should do? 

Mr. ORNDOFF. Sir, I am not aware of any legislative proposals 

that we have for specifically in the area of capitalization of projects. 

We do appreciate the raising of thresholds as was mentioned for 

leasing. That certainly facilitates that process moving forward. We have a budget, a robust budget before you of $1.2 billion for 

major construction, which is a high watermark. And we, you know, 

of course, would appreciate support for that going forward. 

Any other issues that anybody on the panel has? 

[No response.] 

That is all I have, sir. 

Mr. MICHAUD. Well, once again, I want to thank you. There will 

be additional questions for the record. 

I do want to thank you for your testimony this morning, for answering the questions. Hopefully, you will take seriously the comments made by the first panel about their involvement up front, 

not at the end, because I have been here 7 years and I hear a lot 

of concerns about the VSOs being able to meaningfully participate 

in the process. 

Anything you can do to open that up to make it more transparent, would definitely be very helpful. I look forward to working 

with you, and I want to thank each and every one of you as well 

as your staff for what you do for our veterans in this great Nation 

of ours. 

I think all too often elected officials tend to criticize the VA because of a lack of services for our veterans, but I want to thank 

you for what you do for our veterans, not only the four of you, but 

also your staff as well. I really appreciate it very much. 

So without any further questions, I now adjourn the hearing. 

Thank you. 

[Whereupon, at 12:49 p.m., the Subcommittee was adjourned.] 


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(51) 

A P P E N D I X 

Prepared Statement of Hon. Michael H. Michaud, 

Chairman, Subcommittee on Health 

The Subcommittee on Health will now come to order. I would like to thank everyone for attending this hearing. Today’s hearing marks the 5-year anniversary of the 

CARES decision, otherwise known as Capital Asset Realignment for Enhanced Services. 

The purpose of this hearing is to assess the VA’s implementation of CARES and 

to investigate the effectiveness of CARES as a capital planning tool. In addition, today’s hearing will explore whether CARES should continue in the future or if the 

VA should adopt an alternate capital planning mechanism. 

When the VA embarked on the CARES process 5 years ago, the VA’s health infrastructure was thought to be unresponsive to the needs of current and future veterans. While about 24 percent of the veteran population was enrolled in the VA for 

health care, the CARES plan assumed that the enrollment population would increase to 33 percent by the end of 2022. In addition, there were concerns about the 

ability of the existing health infrastructure to meet the demands of the aging veteran population who opt for warmer climates in the south and the southwest. 

CARES was intended to eliminate or downsize underused facilities, convert older 

massive hospitals to more efficient clinics, and build hospitals where they are needed in more populated areas. In essence, CARES was to direct resources in a sensible 

way to increase access to care for many veterans and to improve the efficiency of 

health care operations across VA facilities. 

Over the years, there have been challenges of implementing the CARES decision 

in numerous locations. Most notably, the VA has reversed the CARES decision 

under the leadership of different VA Secretaries. Too often, we hear stories of veterans who have been waiting for new facilities for 10 or more years. In addition, 

there is a new concept of Health Care Centers which provide primary and specialty 

care and is a hybrid of a CBOC and a full-fledged hospital. Because this is a relatively new concept which the VA is rolling out, it is important that we fully understand how this fits in with the overall CARES plan. 

I look forward to hearing the testimonies of our panels today, as we determine 

the path forward in continuing to build a strong health infrastructure for the VA. 

f 

Prepared Statement of Hon. Henry E. Brown, Jr., 

Ranking Republican Member, Subcommittee on Health 

Thank you Mr. Chairman. 

Today, more than 80 percent of the primary, specialty, and mental health care 

our veterans need can be provided in an outpatient setting. Yet, much of the Department of Veterans Affairs (VA) health care infrastructure was built more than 

50 years ago, when VA care meant hospital care. 

A review of VA real property by the Government Accountability Office (GAO) in 

1999 found that VA was wasting a million dollars a day on the maintenance of outdated and underutilized health care facilities. 

In response to this report and in recognition of the need to update facilities to 

deliver 21st century care, VA established the Capital Asset Realignment for Enhanced Services (CARES) process. CARES was designed to be a capital planning 

blueprint for the future—to modernize and better align VA’s health care facilities 

with the changing veteran population. 

The CARES Commission identified several ways to improve access and enhance 

quality of care including increasing collaborative partnerships with the Department 

of Defense and VA’s academic affiliates. 


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Specifically, in my home State of South Carolina, the CARES Commission supported a concept for a joint venture with the Medical University of South Carolina 

(MUSC) and the Ralph H. Johnson VA medical center in Charleston. The Secretary’s May 2004 CARES Decision also stated that ‘‘VA will continue to consider 

options for sharing opportunities with the Medical University of South Carolina.’’ 

Since the leadership of MUSC came to VA with this proposal more than 6 years 

ago, I and this Committee have taken significant steps to study and move forward 

with this historic opportunity to establish a new innovative model of care. The 

‘‘Charleston Model’’ would ensure high-quality health care for veterans in the 

Charleston area and could be leveraged to improve access to care in other areas. 

A significant milestone was reached in advancing the project with the passage of 

Public Law 109–461, the Veterans Benefits, Health Care, and Informational Technology Act of 2006. Section 804 of this law authorized $36.8 million for VA to enter 

into an agreement with the MUSC to design, construct and operate a co-located, 

joint-use medical facility in Charleston, South Carolina. However, much to my dismay, the VA has not yet set aside any funding to implement the law. 

As we evaluate the effectiveness of CARES, it is also vital that we re-evaluate 

the importance of collaborative partnerships. Building on the close relationships 

that VA already has with medical schools across the Nation is a powerful tool that 

VA can use to achieve greater health care quality and further efficiencies, while still 

preserving the identity of a veterans’ health care system. 

I look forward to our discussion today, and yield back the balance of my time. 

f 

Prepared Statement of Joseph L. Wilson, Deputy Director, 

Veterans Affairs and Rehabilitation Commission, American Legion 

Mr. Chairman and Members of the Subcommittee: 

Thank you for this opportunity to present The American Legion’s views on the future of the Department of Veterans Affairs (VA) infrastructure. It is The American 

Legion’s position that Congress keep in mind the importance of continuity of care 

during a servicemember’s transition from active duty to the community. 

Within the VA medical system are various divisions that accommodate a high demand of services, to include extended care and rehabilitation, mental health, pharmacy, primary care, research, social work, spinal cord injury (SCI), and women’s 

health. Quality care throughout those divisions may be hindered when buildings 

that house them aren’t equipped to accommodate and/or sustain modern technologies and medicines. 

Since the late 1990s, VA has gone through a critical transformation in its shifting 

from primarily hospital-based care to outpatient care. As the transition occurred, 

VA’s infrastructure surpassed obsolete. This brought about the Capital Asset Realignment for Enhanced Services (CARES) process in 1999. This process was implemented to enhance outpatient and inpatient care and special programs, to include 

SCI, blind rehabilitation, seriously mentally ill and long-term care through proper 

upgrading, sizing, and location of VA facilities. However, once CARES was underway, the Commission did not include mental health and long-term care needs in its 

final recommendations, due to the lack of sufficient data. As a result, all of the facilities identified for closure were providing nationally recognized mental health and 

long-term care services. 

In 2004, the VA completed the CARES process, which called for critical construction needs for outdated VA hospitals and clinics throughout the Nation. The Secretary of VA reported Congress would have to include $1 billion annually for 6 years 

to ensure the success of CARES. The American Legion has recommended the same 

figure in its annual budget recommendation since the CARES decision. Due to lack 

of funding over the years, it is believed VA has been playing fiscal catch-up. 

Although the VA had begun implementing CARES decisions, a Government Accountability Office (GAO) report found implementation was not being centrally 

tracked or monitored to determine the impact the CARES process has or hasn’t had 

on the mission. GAO was also tasked with examining how CARES contributes to 

the Veterans Health Administration (VHA) capital planning process; the extent to 

which the CARES process considered capital asset alignment alternatives; and the 

extent to which VA had implemented CARES decisions and how the application has 

helped VA carry out its mission. 

Through CARES the VA developed a model to estimate the demand for health 

care services, as well as ascertain the capacity or availability of infrastructure to 

meet the demand. It was the recommendation of the VA to meet future health care 


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demand by building medical facilities and opening more Community Based Outpatient Clinics (CBOCs). 

GAO further examined the CARES process by other means such as conducting six 

site visits to VA facilities in Walla Walla, El Paso, Big Spring, Orlando, Pittsburgh, 

and Los Angeles. 

They found critical infrastructure problems at the following facilities: 

• Walla Walla–The facility was in poor and dilapidated condition, to include 

buildings that dated back to the early 1900s. They also discovered lead-based 

paint and seismic issues. 

• Greater Los Angeles–Infrastructure and life safety issues were discovered as 

well as seismic structural deficiencies for some of the old buildings. Most of the 

buildings also required major repairs, including seismic and structural upgrades, with the main hospital building at ‘‘exceptional’’ high risk for earthquake damage. 

• Orlando–The Orlando facility had the greatest infrastructure need of any 

‘‘market’’ in the country. The new facility is transitioning from that which accommodated 90,000 veterans to a population of 400,000. 

• Pittsburgh–Buildings at the Pittsburgh Highland Drive facility were found in 

poor condition and not designed for modern medical health care. 

As a result of the GAO report, it was recommended that VA provide the information necessary to monitor the implementation and impact of CARES decisions. It 

was also recommended VA provide outcome measures that report the progress of 

CARES as it relates to access to medical services for veterans. 

Since Fiscal Year (FY) 2002, approximately 945,423 Operation Enduring Freedom/ 

Operation Iraqi Freedom (OEF/OIF) veterans have left active duty and become eligible for VA health care. Approximately 51 percent of the returnees were active duty, 

while 49 percent were Reserve and National Guard. Many are also returning with 

various injuries and illnesses, to include Traumatic Brain Injury (TBI), SCI, Blind 

Eye Injury, Post-Traumatic Stress Disorder (PTSD), and Loss of Limb(s), to name 

a few. 

The American Legion presents the above-mentioned numbers to evoke to the Congress and other pertinent affiliates to determine the adequacy, or lack thereof, of 

care to veterans when there is lack of funding and/or inadequate accommodations; 

namely infrastructure that houses VA services. 

While the decision to assess and plan, and construct or reconstruct VA medical 

facilities has been underway since the CARES decision in 2004, the aforementioned 

figures also suggests veterans’ issues have and continue to increase. With the average age of VA facilities remaining at 49 years, The American Legion questions 

whether these facilities can sustain new medical technology for years to come. During that time, we must remain conscious that veterans’ issues are patterned to rise. 

It is therefore imperative Congress support the demand for timely construction of 

these facilities. 

It is the position of The American Legion that during the improvement/enhancement of VA facilities, a base for health care services must not only be maintained, 

but must be increased to accommodate influxes. In order for the CARES plan to 

work successfully, there must be adequate funding to accommodate every project as 

implemented by the Commission. To play fiscal catch-up from this point will adversely affect the intent of the CARES project, VA infrastructure, and all veterans 

who rely on VA health care. 

The American Legion also supports the mission of the CARES initiative, if it provides a continuous up-to-date infrastructure for an ever-changing veterans’ community; however, we express dissent and concern if the intent is aimed at an effort 

to reduce VA expenditures under the pretext of cost-savings without regard to the 

needs of the veterans’ population. 

In response to a recent GAO report, VA concluded it did not have sufficient information to complete decisions throughout VA for various services like long-term care 

and mental health. In order to assess the need for the appropriate infrastructure, 

VA must collect actual numbers of veterans’ demand for health care and services. 

Other shortcomings included, specifically, the lack of sufficient information on the 

numbers of veterans who were to seek long-term care and mental health services 

from VA on a daily basis. Since 2004, VA has maintained that its models were inadequate to forecast demand. In order to be successful, VA must address key challenges, to include developing information to complete various service alignment decisions. 

Finally, the preparation to construct and/or reconstruct VA medical facilities must 

be planned in accordance with service alignment decisions to fulfill the promise of 


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continuity of care and prevent other inadequacies, such as fragmentation of care 

throughout the women veterans’ population. 

The American Legion maintains that the CARES implementation process must be 

an open and transparent process that continually and fully informs the Veterans’ 

Service Organizations of CARES initiatives, criteria, proposals and timeframes. This 

also includes an accurate assessment of the demand for all medical services which 

gauges how much infrastructure is required to accommodate this Nation’s veterans. 

Through this form of checks and balances, the maintenance of quality stands to 

uphold the effectiveness of CARES as it pertains to strategic planning and the future of the entire VA system. 

Mr. Chairman and Members of the Subcommittee, The American Legion sincerely 

appreciates the opportunity to submit testimony and looks forward to working with 

you and your colleagues on the above-mentioned matters and issues of similarity. 

Thank you. 

f 

Prepared Statement of Carl Blake, 

National Legislative Director, Paralyzed Veterans of America 

Chairman Michaud, Ranking Member Brown, and Members of the Subcommittee, 

Paralyzed Veterans of America (PVA) would like to thank you for the opportunity 

to present our views today on the Capital Asset Realignment for Enhanced Services 

(CARES) report. Given that it has been 5 years since the CARES report was released, we believe this is a good benchmark period to review the progress that the 

Department of Veterans Affairs (VA) has made in implementing its recommendations. We also recognize the need to assess whether or not those recommendations 

remain an appropriate tool to align VA’s health care infrastructure to meet the current and future demands on the system. 

PVA would like to focus much of our discussion on how the CARES recommendations targeted the needs of our members—veterans with spinal cord injuries or dysfunctions (SCI/D), such as Multiple Sclerosis. We will outline the current status of 

CARES Commission recommendations with regards to SCI/D. Finally, we will discuss the outcomes of the CARES report regarding the realignment of VA infrastructure to meet changing demand for care and the value of the CARES methodology 

for determining current and future medical care workload and future demand for 

services. 

Delivery of Care Through the SCI System 

In reflecting on the CARES report, we believe that the health care concerns of 

veterans with catastrophic disabilities, and particularly veterans with spinal cord 

injury or dysfunction, were adequately addressed. The report included recommendations that significantly improved the capacity for VA to meet this demand while addressing barriers to access at the same time. Emphasis was placed on expansion of 

the SCI hub-and-spoke delivery model to fill geographic gaps in SCI/D services. Additionally, the report made timely recommendations for SCI/D long-term care designed to be a first step toward meeting the demands of aging veterans with SCI/ 

D. 

Specifically, the CARES Commission called for the construction of four new SCI 

centers in the VA system. Locations targeted for new SCI centers were Syracuse, 

New York (VISN–2); VISN–16 (this location was later pinpointed to Jackson, Mississippi by VA and PVA officials); Denver, Colorado (VISN–19); and, Minneapolis, 

Minnesota (previous VISN–23). 

As to the status of these projects, the Syracuse SCI center is currently in the 

planning phase. A 30-bed unit is being planned for this location. We feel confident 

that this new SCI center will be a state-of-the-art facility that will certainly meet 

the needs of veterans in that region. PVA is also extremely pleased that the new 

30-bed Minneapolis SCI center officially opened last fall and became fully operational in February 2009. 

The CARES plan also called for a 30-bed facility in VISN–16. Prior to the release 

of the final CARES report, the Draft National Cares Plan (DNCP) supported the 

North Little Rock VA facility in VISN–16 for location of an SCI center. However, 

the Commission recognized that North Little Rock did not provide the full range of 

tertiary care services required by VA to be a proper site for an SCI center. Since 

that time, Jackson, Mississippi, has been identified as the optimal location for that 

VISN. While this recommendation has not been advanced at this time, PVA’s Architecture Department has been informed by the VA that it intends to request funding 

to begin this project in FY 2011. 


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With regards to Denver, the Subcommittee is probably aware that it has been a 

long and difficult process to determine what the health care infrastructure plan for 

this region would be. The CARES plan called for a 30-bed SCI center to be located 

at a new Denver VA medical center to be built on the Fitzsimons Campus. However, 

the larger facility planning process moved forward in fits and starts. The plan for 

Denver has taken many controversial turns, spread out over many years, with no 

plan being more troublesome that the new plan released in early 2008 by then VA 

Secretary James Peake. Secretary Peake’s plan would have used Denver as the 

model for the new Health Care Center Facility (HCCF) Leasing Program. 

Fortunately, significant pressure from the VSO community in Colorado along with 

strong support from the Congressional delegation put a hold on this program in 

Denver. PVA was very pleased with the VA’s announcement in March that a new 

stand-alone hospital will be built on the Fitzsimons Campus, and a new SCI center 

will be included in that facility. Current VA Secretary Eric Shinseki also pledged 

in March to see that this project is completed by 2013. 

The CARES report also called for the relocation of the SCI center located in Castle Point, New York (VISN–2) to the Bronx. However, this relocation was contingent 

upon the VA expanding the infrastructure at the Bronx SCI center. The plan then 

called for Castle Point to become an SCI long-term care facility. Currently, the Castle Point facility is under renovation. Meanwhile, the Bronx facility is being replaced 

with a 92-bed SCI center that will include 46 SCI long-term care beds. 

Additionally, CARES called for the placement of an SCI outpatient clinic in 

VISN–4. SCI outpatient clinics, such as the one recommended, serve as spokes in 

the hub-and-spoke SCI system model. The VA embraced this recommendation and 

has since opened an SCI outpatient clinic in Philadelphia, Pennsylvania. 

Finally, the CARES report called for adding 20 additional SCI acute care beds in 

Augusta, Georgia (VISN–7). Under this plan, the VA was to add 11 acute care beds 

immediately with 9 beds to be added by FY 2012. Our Architecture Department has 

informed us that the additional 11 beds are currently under construction and should 

be operational within the next few months. The additional 9 beds have not been formally designed, and no funding for this expansion has currently been requested. 

While the VA did not move on this recommendation as quickly as we would have 

liked, PVA is pleased to see that the VA is finally addressing this issue. 

Long-Term Care Considerations 

PVA was pleased that the final CARES Commission report included several recommendations for the expansion of long-term care services directed at spinal cord 

injured veterans. Prior to the CARES initiative, the VA system of care only provided 

125 long-term care staffed nursing home beds dedicated to veterans with spinal cord 

injury. These SCI long-term care beds were located in four VA facilities—Brockton, 

Massachusetts; Hampton, Virginia; Castle Point, New York; and, Hines VA medical 

center in Chicago, Illinois. Interestingly, the VA had no institutional long-term care 

beds for SCI veterans located west of the Mississippi River. 

While some progress has been made to expand VA’s capacity for dedicated SCI 

long-term care, much work remains to be done. The CARES report called for an additional 100 SCI long-term care beds systemwide to expand capacity and improve 

admission wait times experienced by SCI veterans. Despite the CARES recommendations to increase SCI long-term care capacity, we believe that particular 

emphasis needs to be placed on expansion into the western United States. 

The CARES Commission recommended 30 SCI long-term care beds to be located 

in VISN–8. PVA is pleased to report that 30 SCI long-term care beds have been 

placed adjacent to the SCI center located at the Tampa VA medical center and they 

are fully operational. 

The Commission also recommended 20 SCI long-term care beds to be located at 

the SCI Center in Memphis, Tennessee (VISN–9); 20 SCI long-term care beds at the 

Cleveland VA medical center (VISN–10); and 30 SCI long-term care beds in Long 

Beach, California (VISN–22). 

These three sites are in various stages of the planning process. The long-term care 

beds at Cleveland are currently under construction, and the final project will actually include 26 beds. This facility is anticipated to be operational by late 2010. The 

VA is also moving forward with the Memphis recommendation and is currently in 

the planning phase. Preliminary architectural plans have been reviewed and commented on by PVA. 

The 30-bed long-term care plan for Long Beach has faced significant delays primarily related to space restrictions. However, PVA’s Architecture Program has developed a conceptual plan to convert a currently unused portion of the existing facility into a 17-bed SCI long-term care unit. While this is actually a PVA recommended solution to part of the demand problem at Long Beach, we believe it is 


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a step in the right direction. We remain hopeful that VA will agree with this recommendation while working aggressively to establish the entire 30-bed unit recommended by CARES. We would encourage the VA and Congress to conduct aggressive oversight to ensure that the VA is moving forward on these critical projects expeditiously. 

Additionally, PVA would like to revisit a significant problem concerning the difference between acute SCI center care and SCI long-term residential care that 

evolved as the CARES Commission process moved forward. As the Commission continued its fact finding work it became clear to PVA that the Commission had 

blurred the distinction between acute SCI care and SCI long-term residential care. 

As the Commission made investigative visits throughout the VA health care system, some members of the Commission were concerned with their observations concerning low occupancy rates at SCI Centers. In fact, the Special Disability Program 

section of the Executive Summary of the Commission’s final report quoted current 

occupancy rates among VA facilities with SCI/D units as ranging from approximately 52 percent to 98 percent. PVA felt at the time that this impression led the 

Commission to concoct ways of filling unused SCI acute care beds with SCI longterm care patients. 

One of the significant problems identified during the early stages of the CARES 

process was the exclusion of long-term care, including nursing home, domiciliary 

and non-acute inpatient and residential mental health services, in its projections 

due to the absence of an adequate model to project future need for these services. 

This problem can still be seen in the flawed budget development for long-term care 

identified by the Government Accountability Office in its report released in January 

2009: VA Health Care: Long-Term Care Strategic Planning and Budgeting Need Improvement (GAO–09–145). Despite the lack of adequate data the CARES Commission made several recommendations regarding VA long-term care: 

1. Prior to taking any action to reconfigure or expand long-term care capacity or 

replace existing facilities, VA should develop a long-term care strategic plan. 

This plan should be based on well-articulated policies, address access to services, and integrate planning for the long-term care of the seriously mentally ill. 

2. An integral part of the strategic plan should maximize the use of State Veterans Homes. 

3. Domiciliary care programs should be located as close as feasible to the population they serve. 

4. Freestanding long-term care facilities should be permitted as an acceptable 

care model. 

5. VA should implement the VISN-specific recommendations for upgrading existing long-term care and chronic psychiatric care units, recognizing that some 

renovations are needed to improve the safety and maintenance of the facilities’ 

infrastructure and to modernize patient areas. 

In 2007, VA released a copy of its Long-Term Care Strategic Plan that, in the 

opinion of the co-authors of The Independent Budget, was lacking in specific planning detail regarding the future direction of its long-term care program. In 2008, 

PVA understood that VA was working on the development of a second, more comprehensive, Long-Term Care Strategic Plan; however, to the best of our knowledge 

that followup plan has never been released. We would encourage the Subcommittee 

to investigate this issue further. The CARES Commission emphasized in its final 

report, that strategic planning for aging veterans and veterans with serious mental 

illness will be essential going forward. 

Meeting Future Health Care Demand 

The Subcommittee has posed the question about the viability of CARES in assessing the future health care needs of veterans. As pointed out in The Independent 

Budget for FY 2010, despite the fact that CARES was completed in 2004, the VA 

continues to assess its needs and priorities for infrastructure by using concepts derived from the CARES model. 

PVA actually sees this question as being one about whether or not the CARES 

recommendations made then appropriately address new demands on the system, 

particularly as it relates to the younger generation of veterans returning from Operation Enduring Freedom and Operation Iraqi Freedom. Moreover, the question 

seems to suggest that CARES did not take into account that new demand seems 

to be growing in rural communities and that the infrastructure changes outlined by 

CARES do not reflect this change. 

While we certainly understand this concern, we believe that the CARES model appropriately addressed where the greatest demand for care comes from. Moreover, 

the CARES model provided a blueprint for aligning VA’s infrastructure to best meet 


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the needs of the most veterans possible. Existing statutory authority, particularly 

Fee-for-Service, allows the VA to address health care demand and need outside the 

immediate infrastructure alignment. Furthermore, recognizing that certain demand 

has changed since 2004, the VA has moved forward on other major and minor construction initiatives outside of the CARES recommendations. 

Recent activities of the VA seem to suggest that it might like to address health 

care demand outside of its infrastructure alignment, whether justified or not. As 

mentioned earlier, PVA, and many of its VSO partners, expressed serious concerns 

about the VA’s HCCF leasing program developed under Secretary Peake. Under the 

HCCF, the VA would lease larger outpatient clinics (often referred to as superCBOCs) instead of investing in new major construction initiatives. These large clinics would provide a broad range of services, including primary and specialty care 

as well as outpatient mental health services and same-day surgery. This proposal 

seemed to outline a different approach that some senior leadership in VA wanted 

to take in expanding health care capacity in the future. 

However, as expressed in The Independent Budget, the HCCF leasing program 

has serious flaws that do not necessarily address the future health care needs of 

veterans. As explained in The Independent Budget: 

CARES required years to complete and consumed thousands of hours of 

effort and millions of dollars to study. The IBVSOs believe it to be a comprehensive and fully justified road map for VA’s infrastructure as well as 

a model VA can apply periodically to assess and adjust those priorities. 

Given the strengths of the CARES process and the lessons VA learned and 

has applied from it, why is the HCCF model, which to our knowledge has 

not been based on any sort of model or study of the long-term needs of veterans, the superior one? We have yet to see evidence that it is and until 

we see more convincing evidence that it will truly serve the best interests 

of veterans, the IBVSOs will have a difficult time supporting it. 

PVA also realizes that facility closures were a part of the CARES report recommendations. We certainly understand the focus on reducing excess capacity, particularly if it is clearly demonstrated that space is significantly underutilized. However, we must emphasize that careful thought must go into these decisions. Facility 

closures may have an adverse impact on certain SCI veterans as well as those other 

veterans with specialized health care needs and that rely so heavily on the VA for 

care. For some PVA members who live long distances from an SCI hub or spoke facility, particularly in rural areas, these VA hospitals represent their only health 

care option. If facility closures become necessary, VA must take action to ensure the 

availability of inpatient hospital care to meet the specialized health care needs of 

these affected veterans. 

Mr. Chairman, PVA would again like to thank the Subcommittee for examining 

this issue. We all agree that the VA of the future must be aligned in such a fashion 

to best meet the demands of a changing veterans’ population while ensuring that 

those same veterans receive the absolute best care possible. We look forward to 

working with the Subcommittee going forward to assist the VA in accomplishing 

this difficult task. I would be happy to answer any questions that you might have. 

f 

Prepared Statement of Dennis M. Cullinan, Director, 

National Legislative Service, Veterans of Foreign Wars of the United States 

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE: 

On behalf of the 2.4 million men and women of the Veterans of Foreign Wars of 

the U.S. (VFW) and our Auxiliaries, I would like to thank you for the opportunity 

to testify today. 

In April 1999, the Government Accountability Office (GAO) issued a report on the 

challenges the Department of Veterans Affairs (VA) faced in transforming the 

health care system. At the time, VA was in the midst of reorganizing and modernizing after passage of the Veterans Health Care Eligibility Reform Act in 1996. 

With passage of that bill, VA developed a 5-year plan to update and modernize 

the system, including the introduction of systemwide managed care principles such 

as the uniform benefits package. As part of the overall plan, VA increasingly began 

to rely on outpatient medical care. Technological improvements, improved pharmaceutical options and management initiatives all combined to lessen the need for as 

many inpatient services. Additionally, the expansion of VA clinics—notably the 

Community Based Outpatient Clinics (CBOCs)—brought care closer to veterans. 


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These widespread changes represented a management challenge for VA, GAO argued: 

‘‘VA’s massive, aged infrastructure could be the biggest obstacle confronting VA’s ongoing transformation efforts. VA’s challenges in this arena 

are twofold: deciding how its assets should be restructured, given the dramatic shifts in VA’s delivery practices, and determining how a restructuring 

can be financed in a timely manner.’’ 

GAO also testified before the House Veterans’ Affairs Committee’s Subcommittee 

on Health in March 1999 on VA’s capital asset planning process. They concluded 

that, ‘‘VA could enhance veterans’ health care benefits if it reduced the level of resources spent on underused or inefficient buildings and used these resources, instead, to provide health care, more efficiently in existing locations or closer to where 

veterans live.’’ Further, GAO found that VA was spending about 1 in 4 Medical Care 

dollars on asset ownership with only about one-quarter of its then-1,200 buildings 

being used to provide direct health care. Additionally, the Department had over 5 

million square feet of unused space, which GAO claims cost VA $35 million per year 

to operate. 

From these findings, VA began the Capital Asset Realignment for Enhanced Services (CARES) process. It was the first comprehensive, long-range assessment of the 

VA health care system’s infrastructure needs since 1981. 

CARES was VA’s systematic, data-driven assessment of its infrastructure that 

evaluated the present and future demands for health care services, identifying 

changes that would help meet veterans’ needs. The CARES process necessitated the 

development of actuarial models to forecast future demand for health care and the 

calculation of the supply of care and the identification of future gaps in infrastructure capacity. 

The plan was a comprehensive multi-stage process. 

• February 2002–VA announced the results of the pilot program of VISN–12. • August 2003–Draft National CARES Plan submitted to the Under Secretary for 

Health. • February 2004–16-member independent CARES Commission submits recommendations based upon its review of the Draft Nationals CARES Plan. • May 2004–VA Secretary announces releases final CARES Decision Document, 

but leaves several facilities up for further study. • May 2008–Final Business Plan Study released, completing the CARES process. 

Throughout the process, we were generally supportive. We continuously emphasized that our support was contingent on the primary emphasis being on the ‘‘ES’’— 

enhanced services—portion of the CARES acronym. We wanted to see that VA 

planned and delivered services in a more efficient manner that also properly balanced the needs of veterans. And, for the most part, the process did just that. 

Our main concern with the plans as they unfolded was the lack of emphasis on 

mental health care and long-term care. The early stages of the CARES process excluded many of these services for the most part because they lacked an adequate 

model to project the need for these services in the future. 

The CARES Commission called for VA to develop a long-term care strategic plan, 

to address the needs of veterans and all care options available to them, including 

State veterans homes. As we discussed in the Independent Budget, VA’s 2007 LongTerm Care Strategic Plan did not address these issues in a comprehensive manner; 

going forward, this must be rectified. 

The 2004 CARES Decision Document gave VA a road map for the future. It called 

for the construction of many new medical facilities, over 100 major construction 

projects to realign or renovate current facilities, and the creation of over 150 new 

CBOCs to expand cares into areas where the CARES process identified gaps. 

Since FY 2004, 50 major construction projects have been funded for either design 

or actual construction. Eight of those projects are complete. Six more are expected 

to be completed by the end of FY 2009, and 14 others are currently under construction. So CARES has produced results. 

The strength of CARES in our view is not the one-time blueprint it created, but 

in the decisionmaking framework it created. It created a methodology for future construction decisions. VA’s construction priorities are reassessed annually, all based 

on the basic methodology created to support the CARES decisions. These decisions 

are created systemwide, taking into account what is best for the totality of the 

health care system, and what its priorities should be. 

VA’s Capital Investment Panel (VACIP) is the organization within the department 

responsible for these decisions. VA’s capital decision process requires the VACIP to 

review each project and evaluate it using VA’s decision model on a yearly basis to 


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ensure that potential projects are fully justified under current policy and demographic information. These projects are assigned a priority score and ranked, with 

the top projects being first inline for funding. 

It is a dynamic process that depoliticizes much of the decisionmaking process. The 

projects selected for funding are by and large the projects that need the most immediate attention. Because it is a dynamic process, some of the projects VA has moved 

forward with were not part of the original CARES Decision Document, but they 

were identified, prioritized and funded through the methodology developed by 

CARES. We continue to have strong faith that this basic framework serves the 

needs of the majority of veterans. Despite its strengths, there are certainly some 

challenges. 

First is that the very nature of the report required a large infusion of funding 

for VA’s infrastructure. While a huge number of projects are underway, a number 

of these are still in the planning and design phase. As such, they are subject to 

changes, but they have also not received full funding. 

This has resulted in a sizable backlog of construction projects that are only partially funded. Were the Administration’s construction request to move forward, VA 

would have a backlog in funding for major construction of nearly $4 billion. This 

means that to just finish up what is already in the pipeline, it would take approximately 5 full fiscal years of funding—based on the recent historical funding levels— 

just to clear the backlog. 

This Congress and this Administration must continue to provide full funding to 

the Major Construction account to reduce this backlog, but also to begin funding future construction priorities. 

Another difficulty has been the slow pace of construction. Major construction 

projects are huge undertakings, and in areas—such as New Orleans or Denver— 

where land acquisition or site planning have presented challenges, construction is 

slower than we would like. There are, however, many cases where there have been 

fewer challenges, and when the money was appropriated, construction has moved 

quickly. 

With these twin problems of funding and speed in mind, VA has recently been 

exploring ways to improve the process. Last year, they unveiled the Health Care 

Center Facility (HCCF) leasing concept. 

As we understand it, the HCCF was intended to be an acute care center somewhere in size and scope between a large medical center and a CBOC. It is intended 

to be a leased facility—enabling a shorter time for it to be up and running—that 

provides outpatient care. Inpatient care would be provided on a contracted basis, 

typically in partnership with a local health care facility. 

We expressed our concerns with the HCCF concept in the Independent Budget 

(IB). Primarily, we are concerned that this concept—which heavily relies on widespread contracting—would be done in lieu of an investment of major construction. 

Acknowledging that with the changes taking place in health care, VA needs to 

look very carefully before building new facilities. Cost plus occupancy must justify 

full-blown medical centers. But leasing is the right thing to do only if the agreements make sense. 

VA needs to do a better job explaining to veterans and the Congress what their 

plans are for every location based on facts. The ruinous miscommunication that 

plagued the Denver construction project amply demonstrates this point. 

While promising, the HCCF model presents many questions that need answers 

before we can fully support it. Chief among these is why, given the strengths of the 

CARES process and the lessons VA has learned and applied from it, is the HCCF 

model, which to our knowledge has not been based on any sort of model or study 

of the long-term needs of veterans, the superior one? 

We also have major concerns with the widespread contracting that would be mandated by this type of proposal. The lessons from Grand Island, NE—where the local 

hospital later canceled the contract, leaving veterans without local inpatient care— 

or from Omaha—where some veterans seeking specialized services are flown to Minneapolis—show the potential downfall of large-scale contracting. 

Leasing clinical space is certainly a viable option. It does provide for quicker expansion into areas with gaps in care, and it does provide the Department with flexibility in the future. 

But when it is combined with the contracting issue, and presented without information and supporting documentation that is as rigorous or comprehensive as 

CARES was, it will be difficult for the VFW and the veteran’s community to support 

it. 

We have seen the importance of leasing facilities with certain CBOCs and Vet 

Centers, especially when it comes to expanding care to veterans in rural areas. 

CARES did an excellent job of identifying locations with gaps in care, and VA has 


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continued to refine its statistics, especially with the improved data it is getting from 

the Department of Defense about OEF/OIF veterans. 

Providing care to these rural veterans is the latest challenge for the system, and 

the expansion of CBOCs and other initiatives can only help. We do believe, however, 

that much of what will improve access for these veterans will lie outside the construction process. VA must better use its fee-basis care program, and the recent initiatives passed by Congress—such as the mobile health care vans or the rotating 

satellite clinics in some areas—are going to fix some of the demand problems these 

veterans face. 

We can always certainly do more, but thanks to the CARES blueprint, VA has 

greatly improved the ability of veterans around the country to access the care they 

earned by virtue of their service to this country. And with the annual adjustments 

and reassessments that account for changes within the veterans’ population, we can 

assure that veterans are receiving the best possible care long into the future. 

The VFW thanks you and the Subcommittee for looking at this most important 

issue. 

f 

Prepared Statement of Richard F. Weidman, Executive Director for 

Policy and Government Affairs, Vietnam Veterans of America 

Good morning, Mr. Chairman, Ranking Member Brown and distinguished Members of this Subcommittee, on behalf of Vietnam Veterans of America (VVA) National President John Rowan and all our officers we thank you for the opportunity 

for VVA to present our views on Assessing CARES and the Future of VA’s Health 

Infrastructure. I ask that you enter our full statement in the record, and I will briefly summarize the most important points of our statement. 

VVA has long advocated for proper stewardship of our Nation’s veterans health 

care system. By this we mean stewardship in the sense that one is conscious of leaving the physical plant as well as the quality and the quantity of medical services 

delivered therein better than one found it. Our first National President was on a 

dirty, rat infested ward for Spinal Cord Injured veterans at the old Bronx VA medical center that was the cover story of an issue of LIFE magazine in 1970. As a result of the publicity and furor generated by that article, the momentum was created 

that led to the construction of a brand new modern and much larger VA facility in 

Bronx, New York, and led to the antiquated one being torn down. 

The concept of the Capital Asset Realignment for Enhanced Service (CARES) is 

ostensibly one of stewardship, and therefore VVA endorses the concept. However, 

VVA continues to be very concerned about the actual process that is currently in 

place. Many of the most gross mistakes and errors created by the process created 

by VHA and their outside contractor were corrected by the good work and intrepid 

efforts of the Honorable Everett Alvarez and his distinguished colleagues who 

served on the CARES Commission some 5 years ago. 

Other particularly poor recommendations of the initial report from VHA were corrected by the Secretary of Veterans Affairs when he accepted the report of the 

CARES Commission. However the basic formula and process remain basically for 

the future, and therein lays the core of the problem. The formula developed by the 

Milliman-USA people is a civilian formula designed for basically healthy middle 

class people that can afford to purchase access to an HMO or PPO. It does not take 

into account the wounds or diseases that are attendant to military service, particularly for those deployed overseas and/or in a war zone. 

Despite common sense that would mandate it, and despite earnest entreaties from 

VVA and others, the VA Veterans Health Administration (VHA) still does not take 

a military history from each veteran, make it part of the veteran’s medical record 

on the Central Patient Records System (CPRS) in the VISTA system at VHA, and 

use it as a significant part of the basis for the diagnosis procedure or in the process 

of crafting a successful treatment modality (or modalities). Because of this, the VA 

constantly underestimates the chronic diseases and long term health care problems 

that veterans are likely to experience. It is not that VA does not know what the 

wounds, maladies, injuries, and conditions are that veterans, depending on when 

and where they served, are more likely to experience than their civilian cohort. As 

Attachment I please find enclosed the title page to www.va.gov/vhi that leads one 

to the Veterans Health Initiative (VHI), which is a set of curricula in many of the 

conditions for which veterans face increased risks. So VA knows what most of these 

increased risks are, and even distributes the ‘‘pocket card’’ to new medical residents 

and interns at VA medical centers and other VHA facilities, as well as providing 


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it to others (see Appendix II or go to http://va.gov/oaa/pocketcard/), as well as having 

had it in the M1A1 Medical Procedures Manual since 1982. 

What bearing does all of this have on the CARES formula? Well, the Milliman 

formula, which as noted above is basically a civilian formula, does not take any of 

these special conditions that veterans are subject to into account. Further, the 

Milliman formula is based on one to three ‘‘presentations’’ per individual who comes 

to the medical facility for service, whereas VA medical centers average between five 

and nine ‘‘presentations’’ per individual. What this means is that each unique individual consumes more resources per person than the Milliman formula allows for 

in its computations. Therefore, the formula, which has come to affect all of resource 

planning at the VHA, will perennially leave the VHA short of the needed resources 

to deliver timely, quality medical care to each veteran eligible and seeking such 

services. The same holds true when it comes to estimating what will be needed in 

the way of physical facilities to deliver health care in the future. 

CARES was funded on the premise that there was a great deal of unutilized space 

at VA facilities across the Nation, and that because the population of veterans eligible for services who were likely to seek such services, that the census of patients 

would be in precipitous decline from 2000 to 2020 (later changed to 2002 to 2022). 

That has proven to be an erroneous assumption. Not only have the ranks of veterans risen because of the wars in Iraq, Afghanistan, and elsewhere, but even the 

size of our standing force of active duty military has been increased for the foreseeable future. 

Using all of the supposedly great tools of projection, VHA has dramatically underestimated the number of OIF/OEF veterans who would seek medical services from 

VA in each of the last 5 years. Further, even before the new Administration and 

the Congress began easing the restrictions on so-called category 8 veterans, the VA 

underestimated the number of veterans of earlier generations who would seek and 

receive medical services. Some of that increase comes from previously service connected disabled veterans who lost eligibility for other private sector medical options 

as a result of job loss or retirement, or their employer could no longer afford to have 

medical insurance for their employees. For others, they are ‘‘new’’ older veterans 

who after years of delay were finally awarded service connected disabled status, and 

therefore access to medical care. All of these have led to an increase not only in the 

gross number of veterans seeking help from VHA, but at most VHA facilities the 

number of veterans seeking services has remained constant or risen in the past 7 

years. Even at those facilities where the number seeking services has remained essentially constant (mostly in the northern climates of the Nation), the number of 

medical needs has risen because those who could afford to move to a warmer climate as they got older and/or retired did so. Those that stayed were/are older, poorer, and sicker, and therefore need more resources to take care of per person than 

those who had the ability to move. 

It is time to re-examine all of the original assumptions of the CARES process now 

that it is clear that the number of veterans seeking services is not generally declining, and that the needed services per individual will likely continue to rise, at least 

for another decade or so, as the average age of the Vietnam veterans rises (currently 

the mean average age of Vietnam veterans, who constitute 60% of VA patients, is 

63 years old, while the median age of Vietnam veterans is almost 61 years old). 

What the growth of the younger cohorts, and the increase in use by the Vietnam 

cohort means is that the notion of many empty buildings across America that are 

not needed just is not the case. In most cases, that space is needed and more. Further, the notion advanced by the now former Under Secretary of Health that ‘‘we 

cannot afford any more new hospitals for veterans’’ is a notion that was out of step 

with both the clear and apparent need, and was clearly not in keeping with fulfilling 

the obligation of the American people to ‘‘care for he (and she) who hath borne the 

battle.’’ 

The 2007 GAO Report (GAO–07–408) from March 2008 criticized VA for not following through on making the goals, objectives, and timetables for the CARES implementation plan clear to all. It also sharply criticized VA for CARES not being 

a transparent process at every step. GAO noted that VA did not build meeting the 

specific goals of CARES into the set of metrics by which managers are rated and 

scored on their performance ratings within the VHA, which meant that it was unclear who is supposed to be doing what to get on track with upgrading the physical 

structures of VHA. VVA also criticized VA for a lack of clarity in just who was in 

charge of implementation, and the role of the many players in the process. 

VVA would also note that until the 110th Congress, there was nowhere near the 

minimum of $1 billion per year upon which the CARES plan was predicated which 

was actually provided to VA in the appropriation. This means that the schedule is 


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seriously behind because it was not fully funded in the early years of implementation. 

So, where are we today? VVA recommends the following steps to ensure that the 

physical plant needed for the effective and efficient provision of quality medical 

services to veterans is in place for those currently in need of these services, and for 

the future: 

1. VVA strongly believes that the basic CARES formula must be improved 

by making it a ‘‘veterans’ health care formula’’ that takes into account 

the actual situation of veterans, and likely rate of use of resources per 

person, so that it provides for the request for resources it will take to 

properly serve all of the needs, of the veterans population that seeks 

medical services at VHA, particularly the conditions that are a direct 

or indirect result of military service. 

2. VVA believes that the entire process, like much of the rest of activities and 

planning at VA, needs to be much more transparent, with respect to involvement at every level of ALL of the stakeholders. The previous Administration, 

and particularly those who have occupied the top leadership positions of VHA 

in the past 7 years, showed veritable contempt for the Congress, for veterans 

service organizations, for the VA labor unions and their members, and for individual veterans by the secretive and patronizing manner in which business was 

all too often conducted. This must be dramatically changed, and the process 

and the way of doing business transformed. 3. VVA urges that the major construction budget be set at a level of at least $1.5 billion to $2 billion per year for the next few years to begin to make up for 

all that did not happen during the previous decades, and particularly in the 

first few years of the CARES process. As imperfect as the formula and the 

process are, at least we know that what has been recommended is the bare 

minimum that is needed to properly care for veterans. Even while work goes 

on to improve both the formula and the overall process, we can speed up the 

pace of implementation. Because of the financial crisis, we can frankly get 

buildings built today for much less than will be the case in a few years with 

worldwide liquidity. 

4. VVA recommends that the Secretary and the Deputy Secretary review the lines 

of authority and accountability for implementing CARES is clear to all parties, 

and the role of each is clear, from the Office of Policy & Planning in the central 

VA office to the VISN Directors and VAMC Directors. 

While there are no doubt other useful steps that can and should be taken to improve the CARES process, these are in the view of VVA the four most important 

steps. Mr. Chairman, thank you for the opportunity to provide our brief remarks. 

I will be happy to answer any questions. 

f 

Prepared Statement of Joy J. Ilem, 

Assistant National Legislative Director, Disabled American Veterans 

Mr. Chairman and Members of the Subcommittee: 

Thank you for inviting the Disabled American Veterans (DAV) to testify at this 

oversight hearing of the Subcommittee on Health. We appreciate the opportunity to 

offer our views on progress by the Department of Veterans Affairs (VA) in delivering 

on the recommendations outlined in the 2004 Capital Asset Realignment for Enhanced Services (CARES) report, and to discuss the future of VA’s health care infrastructure. 

As we near the end of the first decade of the 21st century, we find ourselves at 

a critical juncture with respect to how VA health care will be delivered and what 

the VA of the future will be like in terms of its health care facility infrastructure. 

Although admittedly this vision is yet to gain clarity, one fact is certain—our Nation’s sick and disabled veterans deserve and have earned a stable, accessible VA 

health care system that is dedicated to their unique needs and can provide highquality, timely care where and when they need it. 

CARES BEGINS 

Mr. Chairman, based on preliminary work by the professional staff of this Subcommittee, VA initiated CARES in 1999 with a pilot program in Veterans Integrated Service Network (VISN) 12, through the auspices of a contract with the firm 

of Booz Allen Hamilton. In 2001, that contract was canceled and VA integrated the 

CARES process within its own staff and other resources. The process took years to 


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complete and required tens of thousands of staff-hours of effort and millions of dollars in studies. At its conclusion, with issuance of the so-called ‘‘Draft National 

CARES Plan,’’ the VA Secretary chartered and appointed a CARES Commission to 

independently evaluate and consider its outcomes and recommendations. These 

processes were largely conducted and reported in public. 

As a general principle, the Independent Budget Veterans Service Organizations 

(IBVSOs), DAV, AMVETS, Paralyzed Veterans of America, and Veterans of Foreign 

Wars of the United States, concluded that CARES was a comprehensive and fully 

justified road map for VA’s infrastructure needs, as well as a model that VA could 

apply periodically to assess and adjust those priorities. However, once the Draft National CARES Plan was released in 2004, an immediate backlash developed to the 

proposed recommendations affecting the operating missions of a number of VA facilities. Many veterans, fearful that they would lose VA health care services, and 

selected Members of Congress, opposed the plans for changes in their States—and 

in their VA facilities, irrespective of the validity of the findings or the value of the 

plan as a whole. Local political pressure became intense, and in many cases the proposed CARES recommendations were scuttled. In one respect, it became clear that 

veterans and their Members of Congress were passionate and committed in keeping 

targeted VA facilities intact. Unfortunately, this passionate defense of the status 

quo stymied the CARES implementation phase, and caused VA to become much 

more reserved about sharing information about any strategic infrastructure planning. 

CARES STALLED 

Upon completion of the Draft National CARES Plan in 2004, then-VA Secretary 

Anthony Principi testified before this Subcommittee. His testimony noted that 

CARES ‘‘reflects a need for additional investments of approximately $1 billion per 

year for the next 5 years to modernize VA’s medical infrastructure and enhance veterans’ access to care.’’ VA reports that through fiscal year (FY) 2009, Congress actually has appropriated $4.9 billion for construction projects since FY 2004. 

On July 18, 2008, then-VA Secretary James Peake wrote to two Members of Congress that the planned Denver, Colorado replacement VA medical center was ‘‘. . . 

not affordable . . .’’ as a traditional government-owned, VA-operated facility of the 

size, scope and price that had been designed. That same day, while not declaring 

CARES officially ‘‘dead,’’ Secretary Peake spoke before a large audience at the National Press Club and indicated, in answer to a question, that VA would be looking 

at factors beyond CARES to determine its future capital infrastructure planning 

needs. 

For nearly a decade, the IBVSOs have argued that the VA must be protected from 

deterioration of its health infrastructure, and the consequent decline in VA’s capital 

asset value. Year after year, we have urged Congress and the Administration to ensure that appropriated funding is adequate in VA’s capital budget so that VA can 

properly invest in its physical assets, protect their value, and ensure health care in 

safe and functional facilities long into the future. Likewise, we have stressed that 

VA’s facilities have an average age of more than 55 years; therefore, it is essential 

that funding be routinely dedicated to renovate, repair, and replace VA’s aging 

structures, capital, and plant equipment systems as needed. 

CAPITAL FUNDS DEFICIT WORSENED UNDER CARES 

Mr. Chairman, unfortunately, the past decade of deferred and underfunded construction budgets has meant that VA has not adequately recapitalized its facilities, 

now leaving the health care system with a large backlog of major construction 

projects totaling between $6.5 billion to $10 billion, with an accompanying urgency 

to deal with this growing dilemma. 

One of the reasons VA’s construction backlog is so large and growing today is because both VA and Congress, by agreement with the two prior Administrations, allocated little to no capital construction funding during the pendency of the CARES 

process, over a 6-year period. Agreeing with VA, the Appropriations Committees in 

both chambers provided few resources during the initial review phase, preferring to 

wait for CARES results, a decision the IBVSOs repeatedly opposed. We argued that 

a de facto moratorium on construction was unnecessary because a number of these 

projects obviously warranted funding and would almost certainly be validated 

through the CARES review process. The House agreed with our views as evidenced 

by its passage of H.R. 811, the ‘‘Veterans Hospital Emergency Repair Act.’’ That bill 

passed unanimously on March 27, 2001, about 2 years into the CARES process. Let 

me quote, in part, what the bill’s sponsor, then Chairman Christopher H. Smith, 

had to say in introducing H.R. 811 over 8 years ago: 


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Mr. Speaker, for the past several years, we have noted that the President’s 

annual budget for VA health care has requested little or no funding for 

major medical facility construction projects for America’s veterans. As we indicated last year in our report to the Committee on the Budget on the Administration’s budget request for fiscal year 2001, VA has engaged in an effort through market-based research by independent organizations to determine whether present VA facility infrastructures are meeting needs in the 

most appropriate manner, and whether services to veterans can be enhanced 

with alternative approaches. This process, called ‘‘Capital Assets Realignment for Enhanced Services,’’ or ‘‘CARES,’’ has commenced within the Department of Veterans Affairs, but will require several years before bearing 

fruit. In the interim, Mr. Speaker, some VA hospitals need additional maintenance, repair and improvements to address immediate dangers and hazards, to promote safety and to sustain a reasonable standard of care for the 

Nation’s veterans. Recent reports by outside consultants and VA have revealed that dozens of VA health care buildings are still seriously at risk 

from seismic damage. The buildings at American Lake [Washington] damaged in yesterday’s earthquake were among those identified as being at the 

highest levels of risk. 

Also, Mr. Speaker, a report by VA identified $57 million in improvements 

were needed to address women’s health care; another report, by the Price 

Waterhouse firm, concluded that VA should be spending from 2 percent to 

4 percent of its ‘‘plant replacement value’’ (PRV) on upkeep and replacement 

of its health care facilities. This PRV value in VA is about $35 billion; thus, 

using the Price Waterhouse index on maintenance and replacement, VA 

should be spending from $700 million to $1.4 billion each year. In fact, in 

fiscal year 2001, VA will spend only $170.2 million for these purposes. 

While Congress authorized a number of major medical construction 

projects in the past 3 fiscal years, these have received no funding through 

the appropriations process. I understand that some of the more recent deferrals of major VA construction funding were intended to permit the CARES 

process to proceed in an orderly fashion, avoiding unnecessary spending on 

VA hospital facilities that might, in the future, not be needed for veterans. 

I agree with this general policy, especially for those larger hospital projects, 

ones that ordinarily would be considered under our regular annual construction authorization authority. We need to resist wasteful spending, especially 

when overall funds are so precious. But I believe that I have a better plan. 

To our regret, the Senate never considered the proposed bill, Congress did not appropriate supportive funding, and the construction and maintenance backlog continued to grow unabated for the next several years. Incidentally, the needed infrastructure improvements for women veterans (for privacy, restroom accommodations, etc.) 

mentioned by Representative Smith were largely never made. The VA projects that 

the number of women veterans turning to VA for care will likely double in the next 

2–4 years; therefore, it is essential that these infrastructure needs are addressed 

now. 

Another area of concern is VA research capital infrastructure. Over the past decade, minimal funding has been appropriated or allocated to maintain, upgrade or 

replace aging VA research facilities. Many VA facilities have run out of adequate 

research space. Plumbing, ventilation, electrical equipment and other required 

maintenance needs have been deferred. In some urgent cases, VA medical center Directors have been forced to divert medical care appropriations to research projects 

to avoid dangerous or hazardous situations. 

The 2003 Draft National CARES Plan (DNCP) included $142 million for renovation of existing research space and to cover build-out costs for leased research facilities. However, these capital improvement costs were omitted from the VA Secretary’s final report on CARES, the so-called ‘‘CARES Decision Memorandum.’’ According to Friends of VA Medical Care and Health Research (FOVA), over the past 

decade, only $50 million has been spent on VA research construction or renovation 

in VA’s nationwide research system. Additionally, FOVA noted in its fiscal year 

2010 budget proposal, endorsed by DAV, that VA was congressionally directed to 

conduct a comprehensive review of its research facilities and report to Congress on 

the deficiencies found, with recommended corrections. During FY 2008, the VA Office of Research and Development initiated a 3-year examination of all VA research 

infrastructure to assess physical condition, capacity for current research, as well as 

program growth and sustainability of the space to conduct research. We urge the 

Subcommittee to consider this report when completed, and for Congress to address 

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structure appropriation. VA’s Medical and Prosthetic Research program is a national asset to VA and veterans—it helps to ensure the highest standard of care for 

veterans enrolled in VA health care, and elevates health care practices and standards in all of American health care. That program cannot continue its record of 

achievement without adequate maintenance of the capital infrastructure in which 

it functions. 

CARES PROJECTION MODEL 

One of the strengths of the CARES process was that it was not just a one-time 

snapshot of needs. As part of the process, VA developed a health care projection 

model to estimate current and future demand for health care services, and to assess 

the ability of its infrastructure to meet this demand. VA uses this projection model 

throughout its capital planning process, basing all projected capital projects upon 

the results of the demand model. 

VA’s model, was also relied on for VA health care budget, policy and planning decisions, produces 20-year forecasts in demand for VA health services. It is a complex 

and sophisticated model that adjusts for numerous factors, including demographic 

shifts, morbidity and mortality, changing needs for health care based on aging of 

the veteran population, projections to account for health care innovations, and many 

other relevant factors. 

In a November 2007 hearing before this Subcommittee, VA’s testimony summed 

up the process: 

Once a potential project is identified, it is reviewed and scored based on 

criteria VA considers essential to providing high-quality services in an efficient manner. The criteria VA utilizes in evaluating projects include service 

delivery enhancements, the safeguarding of assets, special emphasis programs, capital asset priorities, departmental alignment, and financial priorities. VA considers these new funding requirements along with existing 

CARES decisions in determining the projects and funding levels to request 

as part of the VA budget submission. Appropriate projects are evaluated for 

joint needs with the Department of Defense and sharing opportunities. 

VA uses these evaluation criteria to prioritize its projects each year, releasing 

these results in its annual 5-year capital plan. The most recent one, covering fiscal 

years 2009–2013, is part of the Congressional budget submission in ‘‘Volume III: 

Construction Activities.’’ This plan is central to VA’s funding requests and clearly 

lists the Department’s highest construction priorities for the current year, as well 

as for the immediate future. The Partnership for VA Health Care Budget Reform, 

in testifying before your full Committee on April 29, 2009, provided detailed information and our opinion about VA’s projection model in support of our proposed reforms in VA health care funding. We refer the Subcommittee to that testimony for 

our comments on the model. 

VA MOVING IN NEW DIRECTION 

Mr. Chairman, over the past several years, VA began to discuss with the veterans 

service organization community, its desire to address its health infrastructure needs 

in a new way. VA acknowledged its challenges with aging infrastructure; changing 

health care delivery needs, including reduced demand for inpatient beds and increasing demands for outpatient care and medical specialty services; limited funding 

available for construction of new facilities; frequent delays in constructing and renovating space needed to increase access, and particularly the timeliness of construction projects. VA has noted, and we concur, that a decade or more is required from 

the time VA initially proposes a major medical facility construction project, until the 

doors actually open for veterans to receive care in that facility. VA indicated to us 

a necessity to consider alternative means to address the growing capital infrastructure backlog and the significant challenge of funding it. 

Given these significant challenges, VA has broached the idea of a new model for 

health care delivery, the Health Care Center Facility (HCCF) leasing program. 

Under the HCCF proposal, in lieu of the traditional approach to major medical facility construction, VA would obtain by long-term lease, a number of large outpatient 

clinics built to VA specifications. These large clinics would provide a broad range 

of outpatient services, including primary and specialty care as well as outpatient 

mental health services and ambulatory surgery. 

VA noted, that in addition to its new HCCF facilities, it would maintain its VA 

medical centers (VAMCs), larger independent outpatient clinics, community-based 

outpatient clinics (CBOCs) and rural outreach clinics. VA has argued that the 

HCCF model would allow VA to quickly establish new facilities that will provide 95 


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percent of the care and services veterans will need in their catchment areas, specifically primary care, and a variety of specialty services, mental health, diagnostic 

testing and same-day ambulatory surgery. According to VA, veterans’ inpatient hospital service needed by these HCCFs would be provided through additional leases, 

VA staffed units, or other contracts or fee-for-service options with academic affiliates 

or in available community hospitals. 

We concur with VA that the HCCF model seems to offer a number of benefits in 

addressing its capital infrastructure problems including more modern facilities that 

meet current life-safety codes; better geographic placements; increased patient safety; reductions in veterans’ travel costs and increased convenience; flexibility to respond to changes in patient loads and technologies; overall savings in operating 

costs and in facility maintenance and reduced overhead in maintaining outdated 

medical centers. 

CHALLENGES TO HCCF MODEL 

Nevertheless, Mr. Chairman, while it offers some obvious advantages, the HCCF 

model also portends obvious challenges. Outside the CBOC environment, contract 

management in complex leased health care facilities is an untested practice in VA. 

This Subcommittee has spent years overseeing efforts to improve VA’s contracting 

performance across a range of activities, including obtaining contract health care for 

eligible veterans. Also, we are deeply concerned about the overall impact of this new 

model on the future of VA’s system of care, including the potential unintended consequences on continuity of high-quality care, delivery of comprehensive services, 

VA’s electronic health record (EHR), its recognized biomedical research and development programs, and particularly the impact on VA’s renowned graduate medical 

education and health professions training programs, in conjunction with longstanding affiliations with nearly every health professions university in the Nation. 

Additionally, we question VA’s ability to provide alternatives for maintaining its existing 130 nursing home care units, homeless programs, domiciliaries, compensated 

work therapy programs, hospice, adult day health care units, the Health Services 

Research and Development Program, and a number of other highly specialized services including 24 spinal cord injury centers, 10 blind rehabilitation centers, a variety 

of unique ‘‘centers of excellence’’ (in geriatrics, gerontology, mental illness, Parkinson’s, and multiple sclerosis), and critical care programs for veterans with serious 

and chronic mental illnesses. We question if VA has seriously considered the probable impact on these programs in developing the HCCF concept. 

In general, the HCCF proposal seems to be a positive development, with good potential. Leasing has the advantage of avoiding long and costly in-house construction 

delays and can be adaptable, especially when compared to costs for renovating existing VA major medical facilities. Leasing options have been particularly valuable for 

VA as evidenced by the success of the leased space arrangements for many VA community-based outpatient clinics and Vet Centers. However, VA has virtually no experience managing as a tenant in a building owned by others, for the delivery of 

complex, subspecialty VA health care services. 

INPATIENT SERVICES: A MAJOR CONCERN 

The IBVSOs are also concerned with VA’s plan for obtaining inpatient services 

under the HCCF model. VA says it will contract for these essential inpatient services with VA affiliates or community hospitals. First and foremost, we fear this approach could negatively impact safety, quality and continuity of care, and permanently privatize many services we believe VA should continue to provide. We have 

testified on this topic numerous times, and the IBVSOs have expressed objections 

to privatization and widespread contracting for care in the ‘‘Contract Care Coordination’’ and ‘‘Community-Based Outpatient Clinics’’ sections of the Fiscal Year 2010 

Independent Budget. We call the Subcommittee’s attention to those specific con- cerns. In November 2008, VA responded to a Senate request for more information on 

VA’s plans for the newly proposed HCCF leasing initiative. A copy of VA’s response 

is attached to this testimony and I ask that it be made a part of the record of this 

hearing, Mr. Chairman. To summarize that response, VA advised it originally identified 22 sites that could potentially be considered appropriate for adoption of the 

HCCF concept. Following additional analysis, that number was reduced to 8 potential sites for review, including Butler, Pennsylvania; Lexington, Kentucky; Monterey 

and Loma Linda, California; Montgomery, Alabama; and Charlotte, Fayetteville and 

Winston-Salem, North Carolina. 

VA also addressed a number of other specific questions in the November 2008 letter including whether studies had been carried out to determine the effectiveness 


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of the current approach; the full extent of the current construction backlog of 

projects and its projected cost over the next 5 years to complete; the extent to which 

national veterans organizations were involved in the development of the HCCF proposal; the engagement of community health providers related to capacity to meet 

veterans’ needs; the ramifications on the delivery of long-term care and inpatient 

specialty care; and whether VA would be able to ensure that needed inpatient capacity will remain available. 

I will comment on some of the key responses from VA related to these noted questions. Initially, it appears VA has a reasonable foundation for assessing capital 

needs and has been forthright with the estimated total costs for ongoing major medical facility projects. For this year, VA estimated $2.3 billion in funding needs for 

existing and ongoing projects. The Department estimated that the total funding requirement for major medical facility projects over the next 5 years would be in excess of $6.5 billion. Additionally, if the new HCCF initiative is fully implemented, 

VA indicated it would need approximately $385 million more to execute seven of the 

eight new HCCF leases. 

We agree with VA’s assertion that it needs a balanced program of capital assets, 

both owned and leased buildings, to ensure demands are met under the current and 

projected workload. Likewise, we agree with VA that the HCCF concept could provide modern health care facilities that would not otherwise be available due to the 

predictable constraints of VA’s major construction program. 

VA indicated in its letter that the eight sites proposed for the HCCF initiative 

were chosen to ensure there would be little impact on VA specialty inpatient services or on delivery of long-term care. However, VA made a statement with respect 

to the HCCF model for the proposed sites that is somewhat confounding (VA’s response to question 5), as follows: ‘‘By focusing the outpatient needs through HCCF’s, 

major construction funding could then shift to the remaining capital needs.’’ What 

is not clear to us is the extent to which VA plans to deploy the HCCF model. In 

areas where existing CBOCs need to be replaced or expanded with additional services due to the need to increase capacity, the HCCF model would seem appropriate 

and beneficial to veterans. On the other hand, if VA plans to replace the majority 

or even a large fraction of all VAMCs with HCCFs, such a radical shift would pose 

a number of concerns for DAV. 

Mr. Chairman, before the HCCF concept is permitted to go forward on a larger 

scale, and with a major private sector component as described by VA, we believe 

VA must address and resolve a number of challenges. Among these questions are: 

• Facility governance, especially with respect to the large numbers of non-VA employees who would be treating veterans; 

• VA directives and rule changes that govern health care delivery and ensure 

safety and uniformity of the quality of care; 

• VA space planning criteria and design guides’ use in non-VA facilities; 

• VA’s critical research activities, most of which improve the lives not only of veterans but of all Americans; 

• VA’s electronic health record, which many observers, including the President, 

have rightly lauded as the EHR standard that other health care systems should 

aim to achieve; and 

• Continuity of care within the mix of public/private facilities, as well as for those 

VA-enrolled veterans who relocate to other areas from the HCCF environment. 

Fully addressing these and related questions are important, but we see this challenge as only a small part of the overall picture related to VA health infrastructure 

needs in the 21st century. The emerging HCCF plan does not address the fate of 

VA’s 153 medical centers located throughout the Nation that are on average 55 

years of age or older. It does not address long-term care needs of the aging veteran 

population, treatment of the chronically and seriously mentally ill, the unresolved 

rural health access issues, or the lingering questions on improving VA’s research infrastructure. 

HISTORY AS A LESSON FOR THE FUTURE 

Today’s VA largely was built during and immediately following World War II, to 

become an exalted place of care for over 500,000 injured war veterans. Some of 

those wounded remained hospitalized in VA for the remainder of their lives. VA’s 

spinal cord injury, blind rehabilitation and prosthetics and sensory aids programs 

got their genesis or major expansions from World War II veterans’ needs. In 1946, 

Congress established the Department of Medicine and Surgery (DM&S), now the 

Veterans Health Administration, and gave many independent powers that other 

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randum No. 2 formed the VA-medical school affiliation relationships, to guarantee 

the young and energetic physicians-in-training of that age would turn their full attention to wounded and ill veterans. In conjunction with new affiliations, VA made 

a collective decision to locate its new post-war VA hospitals nearby or alongside existing medical schools’ academic health centers for the potential symbiotic effect and 

to help ensure a high-quality physician workforce remained available to sick and 

disabled veterans. VA’s biomedical research and development programs and its remarkable academic training programs we see in practice today emerged out of these 

seminal decisions and have become instrumental in both aiding VA with stronger 

academic credentials, advancing evidence-based treatments, and promoting a higher 

standard of care for wounded and sick veterans. Even with the advent of primary 

care and VA’s other transformations during the past decade, this cooperative VAacademic system of care is still largely intact more than 60 years after World War 

II. 

Mr. Chairman, as this Subcommittee and Congress at large consider the future 

of VA’s infrastructure, and VA’s future overall, it is good to remember our history, 

and to learn from it. Today, the Nation confronts two wars that, when concluded, 

will have likely produced over 2 million new veterans. While early in the process, 

we know from VA that already more than 400,000 of them have contacted VA for 

health care, for conditions ranging from post-deployment mental health conditions 

to minor musculoskeletal problems to severe brain injury with multiple amputations. No less than earlier generations and probably more so, these veterans will 

need VA to be sustained for them. The question that confronts the Subcommittee 

today is—what that VA system is going to be, what it will offer, and how it will 

be managed and sustained. We in the veterans service organization community cannot plan the future VA, and we would not expect your Subcommittee to do so independently. Given the President’s pledge to create the VA of the 21st century, and 

Chairman Filner’s commitment to aid VA in that endeavor; however, we do expect 

that VA should be mandated to establish its plan in a transparent way, vet that 

plan through our community and other interested parties, and provide its plan to 

Congress. We hope that all our communities (both inside and outside VA) share our 

concerns and want to help VA mold a strategic capital plan that all can accept and 

help collectively to accomplish. However, until this process materializes, we fear 

that VA’s capital programs and the significant effects on the system as a whole and 

on veterans individually, will go unchanged, ultimately risking disaster for VA and 

for America’s sick and disabled veterans. 

AVOIDING THE OBVIOUS 

As we grapple with the issue of health care and insurance reform in America, we 

must make every effort to protect the VA system for future generations of sick and 

disabled veterans. A well thought-out capital and strategic plan is urgently needed, 

and the tough decisions must be made, not avoided as in the response to the seemingly aborted CARES process. We are pleased the current Administration has committed to building the VA of the 21st century. However, we are not sure what this 

may mean, nor do we have the value of a VA comprehensive infrastructure plan. 

Regardless of the direction VA takes, we must insist there is consideration of all 

the elements we have described throughout our testimony. Critical elements in VA 

make up what are considered by all accounts the ‘‘best care anywhere’’ in the United 

States. We want to ensure VA’s infrastructure plan maintains the integrity of the 

VA health care system, and all the benefits VA brings to its enrolled population. 

We want to ensure care is not fragmented and that high-quality, safe health care 

remains the bulwark of VA’s programs. 

CARES: AN UNFULFILLED VISION 

Mr. Chairman, hitting its apex in 2004, we at DAV believe CARES provided a 

solid foundation for, and a valuable assessment of, what VA had in its health care 

infrastructure portfolio and where VA needed to go, but we ask today, what substantive action has been taken since the release of the CARES report to overhaul 

the system to make way for the 21st century? Currently VA is planning construction 

of five major VA medical centers, in Orlando, Florida; Denver, Colorado; Las Vegas, 

Nevada; Louisville, Kentucky; and New Orleans, Louisiana. None of the decisions 

to build these facilities was affected by the CARES process in any way but the most 

marginal sense. However, the decisions were unquestionably affected by the political 

process. While VA is addressing these political demands, it is still ignoring similar 

deficits at facilities such as in Togus, Maine; Sheridan, Wyoming; Wichita, Kansas; 

East Orange, New Jersey; Hines, Illinois; Mountain Home, Tennessee; Battle Creek, 


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Michigan; and more than 100 other older VA medical centers, some of which are 

in, or are reaching, dire need for infusion of major infrastructure funding. 

VA: AT RISK 

At this juncture, we believe VA soon may be in a very precarious situation. Operations Iraqi and Enduring Freedom continue. Each day we see growth in future 

health care, rehabilitation and post-deployment mental health needs in our newest 

generation of war veterans, and record demand for VA care by previous generations 

of disabled veterans. As a Nation, we must be good stewards of taxpayer dollars, 

yet we must also fulfill the commitment of the Nation to care for those who have 

suffered illness or injury as a result of military service and combat deployment. 

Concurrently, the American economy is unstable, Social Security, Medicare and 

Medicaid are seen by many to be unsustainable if not changed, and the new Administration and Congress are trying to formulate a plan to ensure access to basic 

health care services for every U.S. resident, and simultaneously reform the private 

insurance system. Changes coming from those trends, and that work, will undoubtedly affect the viability of VA in the future, but it is impossible to know the depth 

of that impact or its nature. Unfortunately, from what we do know, VA is largely 

uninvolved in the health care reform debate, and therefore, VA may be negatively 

impacted by those larger reforms. In our opinion, the VA, as a Cabinet agency, cannot be permitted to sit on the sideline of health care reform, but must be proactive 

and fully engaged in the debate. 

ADVOCATES WANT A 21ST CENTURY VA 

As advocates for veterans, we do not accept VA’s contention that replacing outdated VA facilities is ‘‘. . . not affordable.’’ VA’s infrastructure needs have been deferred, neglected and delayed for far too long, to the advantage of other consumers 

of Federal dollars; therefore, without question facility replacements and updating 

are going to be costly, and both Congress and the Administration are confronted 

with that reality. The FY 2008 VA Asset Management Plan provides the most recent estimate of VA’s needs. Using the guidance of the Federal Government’s Federal Real Property Council, the value of VA’s infrastructure is just over $85 billion. 

Accordingly, using industry standards as a yardstick, VA’s capital budget should be 

between $4.25 billion and $6.8 billion annually in order to maintain its infrastructure at that value. VA’s capital budget request for FY 2009—which includes major 

and minor construction, maintenance, leases, and equipment—was $3.6 billion. 

The IBVSOs greatly appreciate that Congress provided funding above that level 

this year by an increase over the Administration’s request of $750 million in Major 

and Minor Construction alone. That higher amount brought the total capital budget 

for FY 2009 inline with industry standards. We strongly urge that these targets continue to be met and we would hope that future VA requests use standard guidelines 

as a starting point without requiring Congress to add additional funding. We also 

are mindful that Congress included nearly $1 billion in the recent economic stimulus package that will fund VA infrastructure improvements and represents a significant re-payment to VA of capital funds it should have received years ago while 

CARES was underway. 

DESIGN THE FUTURE 

Congress and the Administration must work together to secure VA’s future to design a VA of the 21st century. It will take the joint cooperation of Congress and 

the Administration to support this reform, while setting aside resistance to change, 

even dramatic change, when change is demanded and supported by valid data. Accordingly, we urge the Administration and the Congress to live up to the President’s 

words by making a steady, stable investment in VA’s capital infrastructure to bring 

the system up to match the 21st century needs of veterans. 

COMMUNICATIONS WILL BE KEY TO SUCCESS 

Finally, one of our community’s pent-up frustrations with respect to VA’s infrastructure is lack of information and communication. Communications have been 

sorely lacking for the past several years, and VA has seemingly resisted keeping us 

informed of its planning. In the spirit of the President’s very first Executive order, 

on the transparency of government, we ask VA do a better job of communicating 

with our community, enrolled veterans, labor organizations and VA’s own employees, local government and their affected communities, and other stakeholders, as the 

VA capital and strategic planning processes move forward. It is imperative that all 


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of these groups understand VA’s ‘‘big picture’’ and how it may affect them. Talking 

openly and discussing potential changes will help resolve the understandable angst 

about this complex and important question of VA health care infrastructure. While 

we agree that VA is not its buildings, and that the patient should be at the center 

of VA care and concern, VA must be able to maintain an adequate infrastructure 

around which to build and sustain its patient care system. The time to act is now— 

our Nation’s veterans deserve no less than our best effort. 

Thank you, Mr. Chairman and Members of the Subcommittee. I will address any 

questions you may have for the DAV. 

f 

Prepared Statement of Hon. Everett Alvarez, Jr., Chairman, 

Capital Asset Realignment for Enhanced Services Commission, 

U.S. Department of Veterans Affairs 

Mr. Chairman and Members of the Subcommittee, 

Thank you for the opportunity to appear before the Subcommittee to discuss the 

extraordinary work of the Capital Asset Realignment for Enhanced Services 

(CARES) Commission. 

Let me begin by saying that the Commission believed its mission was pioneering—not just in terms of an external board assessing allocations of the VA’s 

capital assets and making recommendations how these assets should be used, but 

also doing so while honoring and preserving the VA’s health care and related missions. The Commissioners, many of whom are veterans themselves, were well aware 

of the enormous implications their efforts may have on veterans and the state of 

their health care system. We knew we had a moral obligation to be objective and 

transparent, because our review would serve as a blueprint for resource planning 

at the VA and an approach for medical care appropriations long after the Commission’s work ended. We were guided, gratefully, by leadership and participation from 

VA officials, VA employees across the country, many hundreds of veterans, familymembers, stakeholders, including Members of Congress, medical and nursing affiliates and communities at large. 

Our efforts are documented in the CARES Commission Report to the Secretary 

of Veterans Affairs (VA) dated February 2004. Before I discuss key components of 

the Commission’s Report, let me take a step back to provide some historical context 

that led to the creation of the CARES Commission and its body of work. 

Retrospective Observations 

VA CARES Process: 

At the time of the Commission’s involvement in the VA CARES process, the Commission believed the CARES process itself was the most comprehensive assessment 

ever undertaken by the VA to determine the capital infrastructure needed to provide modern health care to veterans. 

CARES was a multi-faceted process designed to provide a data-driven assessment 

of veteran’s health care needs. The process used projected future demand for health 

care services, compared the projected demand against current supply, identified capital requirements and then assessed any realignments the VA would need in order 

to meet future demand for services, improve the access to and quality of services, 

and improve the cost effectiveness of the VA’s health care system. 

Integrated in the overall CARES process was the reliance on input from the individual Veterans Integrated Service Networks (VISNs) and local veterans and stakeholders, followed by reviews of the National CARES Program Office (NCPO), the 

Under Secretary for Health, the CARES Commission, and the Secretary of VA. 

The CARES process consisted of nine distinct steps. To give you a sense of the 

comprehensiveness of the CARES process, briefly let me outline the nine steps of 

the CARES process: 

Step 1: The NCPO and VISNs created ‘‘markets’’ for planning purposes within 

each VISN. Markets were based on veteran population, enrollment, and market 

share data provided by the NCPO, as well as local knowledge of transportation and 

other factors unique to the community. 

Step 2: The VISNs conducted an analysis of the current health care needs of veterans to identify markets. Future health care needs of veterans in those markets 

were projected using the CARES model. 

Step 3: The VISNs identified ‘‘planning initiatives’’ to describe the difference between current resources and projected demand. 


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Step 4: The VISNs developed market-specific plans to address identified initiatives. A planning decision support system was developed that included forecasted 

demand and operating, contracting, and capital costs derived from the facilities and 

markets to create a national methodology for costing alternative approaches. Veteran and stakeholder input was sought and occurred at the national and field levels. 

Step 5: The Under Secretary for Health reviewed market plans and developed the 

Draft National CARES Plan (DNCP), which was issued on August 4, 2003. 

Step 6: The CARES Commission, after reviewing the DNCP and other information, conducted its review and analysis and then issued its report to the Secretary 

with findings and recommendations for enhancing health care services through 

alignment of VA’s capital assets. 

Step 7: Secretary’s decision was made to accept, reject, or ask for additional information on the Commission’s recommendations. 

Step 8: The VISNs prepared detailed implementation plans and submitted them 

to the Secretary for approval. 

Step 9: In the final step, VISN planning initiatives and solutions were refined 

and integrated in the annual VA strategic planning cycle. 

CARES Commission: 

Since the CARES process was primarily a VA-internal planning process, the 

CARES Commission was established by the Honorable Anthony J. Principi, former 

VA Secretary, as an independent body to conduct an external assessment of the 

VA’s capital asset needs and validate the findings and recommendations in the 

DNCP. The Secretary emphasized that the Commission was not expected to conduct 

an independent review of the VA’s medical system. However, as we conducted our 

analysis of the DNCP, we were expected to maintain a reliance on the views and 

concerns from individual veterans, veterans service organizations, Congress, medical 

school affiliates, VA employees, local government entities, affected community 

groups, Department of Defense (DoD), and other interested stakeholders. 

The CARES Commission’s journey began in February, 2003. Even from the onset 

it was clear to the Commission that the goal of CARES was to enhance services to 

veterans; not to save money—rather, to spend appropriated funds wisely. 

In fulfilling our obligation, Commissioners: 

• visited 81 VA and DoD medical facilities and State Veterans Homes; 

• held 38 public hearings across the country, with at least one hearing per VISN; 

• held 10 public meetings; and 

• analyzed more than 212,000 comments received from veterans, their families, 

and stakeholders. 

At the public hearings, the Commission had the opportunity to hear from approximately 770 invited local speakers, including VISN leadership, veterans and their 

families, veterans service organizations, State directors of veterans’ affairs, local 

labor organizations, medical schools, nursing schools and other allied health professional affiliates, organizations with collaborative relationships including the DoD, 

and local elected officials. Seven Governors and 135 Members of Congress participated or provided statements for Commission hearings. 

On February 12, 2004, I presented The CARES Commission Report to Secretary 

Principi. The Commission’s findings were grounded on the compilation of information gathered at the site visits, public hearings, and meetings as well as information 

obtained from the public comments and the VA. It represented the best collective 

judgment of the Commissioners, who applied their diverse expertise in making decisions related to the future of the VA’s infrastructure. 

Mr. Chairman, with this historical perspective in mind, I would like to now focus 

my testimony on two key areas that formed the foundation, I believe, of the Commission’s efforts and that enabled us to present the independent assessment demanded by our charter. These foundation areas are: the Commission’s goals and the 

review of the VA CARES model by outside experts. 

Commission’s Goals: 

Mr. Chairman, the Commission established several critical goals in order to sustain the highest standard of credibility to our efforts. First, we maintained an objective point-of-view in order to give an effective external perspective to the VA CARES 

process. We set goals to focus on accessibility, quality, and cost effectiveness of care 

that were needed to serve our Nation’s veterans. We held a clear line of sight on 

the integrity of VA’s health care mission and its other missions. Additionally, since 

the VA is more than bricks and mortar, the Commission thoughtfully sought input 

from stakeholders to minimize any adverse impact on VA staff and affected communities. Moreover, it was the Commission’s desire to make findings and recommendaVerDate Nov 24 2008 08:32 Jan 14, 2010 Jkt 051866 PO 00000 Frm 00075 Fmt 6604 Sfmt 6621 I:\VA\51866.XXX APPS06 PsN: 51866

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tions that would provide the VA with a road map for strategically evaluating VA’s 

capital needs into the future. 

VA CARES Demand Model: 

During the development of the VISN planning initiatives and ultimately the 

DNCP, the VA CARES demand model was the foundation for projecting the future 

enrollment of veterans, their utilization of certain inpatient and outpatient health 

care services, and the unit cost of such services. The Commission did not participate 

in the development of the model, or the application of the model at the VISN level. 

The Commission’s role, however, was to review data and analyses based on the 

model. 

Because the CARES demand model was such an integral component in the development of the VA’s CARES market plans, the Commission wanted a high level of 

confidence in the reasonableness of the model as an analytic approach to projecting 

enrollment and workload. For this reason and to foster the Commission’s goal to 

sustain credibility, the Commission engaged outside experts to examine and explain 

the technical aspects of the model. With the help of outside experts the Commission 

sought assurance that the CARES model was: 

• Logical: internally consistent and coherent; 

• Auditable: open to scrutiny and examination; 

• Comparable: consistent with known methods or techniques in common analytical practice; 

• Defendable: given the range of alternatives available; 

• Robust: flexible to use for projecting uncertain future scenarios; 

• Timely: data used are applicable to the current environment; and 

• Verified and Validated: tested to ensure data used were not skewed in some 

way. 

Based on the experts’ analyses, the Commission found the CARES model did, in 

fact, serve as a reasonable analytical approach for estimating VA enrollment, utilization and expenditures. However, there were lingering concerns noted in the Commission’s report relating to projecting utilization of specialized inpatient and outpatient services, notably outpatient mental health services, and inpatient long-term 

care services (including geriatric and seriously mentally ill care). 

Let me elaborate. The CARES demand model projected only certain inpatient and 

outpatient services, such as surgical services and primary care services. During the 

Commission’s assessment we found that the initial CARES projections underestimated the demand for outpatient mental health services as well as long-term mental health services. Additionally, the Commission noted that projections for longterm care, including nursing home, domiciliary, and non-acute inpatient and residential mental health services, were not included in the CARES projections due to 

the absence of an adequate model to project future need for these services. In the 

case of these noted areas the Commission made recommendations for immediate 

corrective action and development of new planning initiatives. 

Prospective Observations 

Mr. Chairman, to this point I have provided you and the Subcommittee with a 

retrospective look at CARES and have highlighted key areas of the Commission’s 

efforts. In discussing the Commission’s efforts today, I need to remind everyone that 

the Commission’s findings and recommendations were based on data, analyses and 

information that are more than 5 years old. As you can appreciate veterans’ medical 

needs, when combined with advances in medicine, psychiatry, medical technology 

and health care in general, could make some of the Commission’s findings outdated. 

As you are aware, veterans returning home from the wars in Iraq and Afghanistan often go to the VA for specialized inpatient and outpatient medical care to facilitate their physical and emotional recovery. The experience in recent years as a 

result of the nature of the Iraq and Afghanistan wars, and with the advances in 

combat medicine, have meant that VA is caring for patients with injuries far more 

complex than ever before, such as traumatic brain injuries (TBI) and polytraumatic 

injuries. For these visible wounds of war the VA has responded by establishing 

state-of-the art Polytrauma Rehabilitation Centers and a diverse supportive system 

of care that approaches the limits of modern medicine and knowledge in treating 

and caring for these patients. 

Of equal significance, the nature of the Iraq and Afghanistan conflicts has placed 

an emphasis on improving combat and VA health care to treat PTSD, suicide prevention, and other mental health concerns—the invisible wounds of war. Because 

symptoms of PTSD, suicide and other mental illness may manifest over time, effecVerDate Nov 24 2008 08:32 Jan 14, 2010 Jkt 051866 PO 00000 Frm 00076 Fmt 6604 Sfmt 6621 I:\VA\51866.XXX APPS06 PsN: 51866

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tive mental health treatment requires appropriate access to a full continuum of 

mental health services. The DoD and VA are responding by enhancing psychiatric 

and mental health programs and policies, particularly for PTSD and suicide prevention. 

I would suggest that if a ‘‘CARES Commission’’ were chartered today, it would 

likely assess how the VA integrates advancements in medicine, psychiatry, science, 

and health care in the strategic and resource planning processes. Reflecting on the 

importance of the CARES demand model in earlier planning efforts, a ‘‘CARES 

Commission’’ would likely verify that VA has addressed previously noted shortcomings in estimating outpatient mental health and inpatient long-term care services to ensure that the infrastructure planning is keeping pace with mental health 

demand and that VA and DoD are capitalizing on shared treatment capabilities. A 

Commission might also review the modeling of polytrauma care, including long-term 

rehabilitation care to validate that VA long-term care facilities are being transformed to embrace the long-term care for younger generation of veterans with young 

families while maintaining a strong sense of commitment to geriatric long-term care. 

Closing 

Mr. Chairman, this concludes my testimony. I again want to thank you for allowing me to address the Subcommittee. 

f 

Prepared Statement of Mark L. Goldstein, Director, 

Physical Infrastructure, U.S. Government Accountability Office 

VA HEALTH CARE: OVERVIEW OF VA’S CAPITAL ASSET MANAGEMENT 

GAO Highlights 

Why GAO Did This Study 

Through its Veterans Health Administration (VHA), the Department of Veterans 

Affairs (VA) operates one of the largest integrated health care systems in the country. In 1999, GAO reported that better management of VA’s large inventory of aged 

capital assets could result in savings that could be used to enhance health care services for veterans. In response, VA initiated a process known as Capital Asset Realignment for Enhanced Services (CARES). Through CARES, VA sought to determine the future resources needed to provide health care to our Nation’s veterans. 

This testimony describes (1) how CARES contributes to VHA’s capital planning 

process, (2) the extent to which VA has implemented CARES decisions, and (3) the 

types of legal authorities that VA has to manage its real property and the extent 

to which VA has used these authorities. The testimony is based on GAO’s body of 

work on VA’s management of its capital assets, including GAO’s 2007 report on VA’s 

implementation of CARES (GAO–07–408). 

What GAO Recommends 

GAO is not making recommendations in this testimony, but has previously made 

a number of recommendations regarding VA’s capital asset management. VA is at 

various stages of implementing those recommendations. 

What GAO Found 

The CARES process provides VA with a blueprint that drives VHA’s capital planning efforts. As part of the CARES process, VA adapted a model to estimate demand 

for health care services and to determine the capacity of its current infrastructure 

to meet this demand. VA continues to use this model in its capital planning process. 

The CARES process resulted in capital alignment decisions intended to address gaps 

in services or infrastructure. These decisions serve as the foundation for VA’s capital 

planning process. According to VA officials, all capital projects must be based on demand projections that use the planning model developed through CARES. 

VA has started implementing some CARES decisions, but does not centrally track 

their implementation or monitor the impact of their implementation on its mission. 

VA is in varying stages (e.g., planning or construction) of implementing 34 of the 

major capital projects that were identified in the CARES process and has completed 

8 projects. Our past work found that, while VA had over 100 performance measures 

to monitor other agency programs and activities, these measures either did not directly link to the CARES goals or VA did not use them to centrally monitor the implementation and impact of CARES decisions. Without this information, VA could 

not readily assess the implementation status of CARES decisions, determine the impact of such decisions, or be held accountable for achieving the intended results of 


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1 VHA is primarily responsible for VA’s health care delivery to the veterans enrolled for VA 

health care services and operates the majority of VA’s capital assets. 2GAO, VA Health Care: Capital Asset Planning and Budgeting Need Improvement, GAO/T– 

HEHS–99–83 (Washington, D.C.: Mar. 10, 1999). 3 VA’s health care delivery system is divided into 21 health care delivery networks. For example, one network serves veterans in Alabama, Georgia, and South Carolina. 

CARES. VA has recently created the CARES Implementation Working Group, which 

has identified performance measures for CARES and will monitor the implementation and impact of CARES decisions in the future. 

VA has a variety of legal authorities available, such as enhanced-use leases, sharing agreements, and others, to help it manage real property. However, legal restrictions and administrative- and budget-related disincentives associated with implementing some authorities affect VA’s ability to dispose and reuse property in some 

locations. For example, legal restrictions limit VA’s ability to dispose of and reuse 

property in West Los Angeles and Sepulveda. Despite these challenges, VA has used 

these legal authorities to help reduce underutilized space (i.e., space not used to full 

capacity). In 2008, we reported that VA reduced underutilized space in its buildings 

by approximately 64 percent from 15.4 million square feet in fiscal year 2005 to 5.6 

million square feet in fiscal year 2007. While VA’s use of various legal authorities 

likely contributed to VA’s overall reduction of underutilized space since fiscal year 

2005, VA does not track the overall effect of using these authorities on space reductions. Not having such information precludes VA from knowing what effect these authorities are having on reducing underutilized or vacant space or knowing which 

types of authorities have the greatest effect. According to VA officials, VA will institute a system in 2009 that will track square footage reductions at the building level. 

Mr. Chairman and Members of the Subcommittee: 

We appreciate the opportunity to testify on the Department of Veterans Affairs’ 

(VA) management of its capital assets. As you know, VA operates one of the largest 

health care systems in the country. VA, through its Veterans Health Administration 

(VHA), provided health care to almost 5.5 million veterans in 2008.1 To support its 

mission, VA has a large inventory of real property—including over 150 medical centers and over 900 outpatient and ambulatory care clinics. However, many of VA’s 

facilities were built more than 50 years ago and are not well suited to providing 

accessible, high-quality, cost-effective health care in the 21st century. In 1999, we 

reported that with better management of its large, aged capital assets, VA could significantly reduce the funding used to operate and maintain underused, unneeded, 

or inefficient properties.2 We further noted that the savings could be used to enhance health care services for veterans. Thus, we recommended that VA develop 

market-based plans for realigning its capital assets. In response, VA initiated a 

process known as Capital Asset Realignment for Enhanced Services (CARES)—a 

comprehensive, long-range assessment of its health care system’s capital asset requirements. The CARES process included nine distinct steps and required the time 

and expertise of many VA officials at the departmental and network levels.3 (See 

table 1.) 

Table 1: Steps of the CARES Process 

Step 1: VA officials at the departmental and network level develop market 

areas and submarkets as the planning units for analyzing veterans’ 

needs. 

Step 2: VA officials at the departmental level conduct market analyses of 

veterans’ health care needs using standardized forecasts of enrollment 

and service needs and actuarial data. 

Step 3: VA officials at the departmental level identify planning initiatives that 

addressed apparent gaps between supply and demand in resources for 

each market area. 

Step 4: VA officials at the Network level consider different alignment 

alternatives and develop specific plans for individual markets that 

addressed all the planning initiatives identified by VA officials at the 

departmental level. 


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4GAO, VA Health Care: Capital Asset Planning and Budgeting Need Improvement, T–HEHS– 

99–83 (Washington, D.C.: Mar. 10, 1999); GAO, VA Health Care: VA Should Better Monitor Implementation and Impact of Capital Asset Alignment Decisions, GAO–07–408 (Washington, D.C.: 

Mar. 21, 2007); GAO, VA Health Care: Additional Efforts to Better Assess Joint Ventures Needed, 

GAO–08–399 (Washington, D.C.: Mar. 28, 2008); and GAO, Federal Real Property: Progress 

Made in Reducing Unneeded Property, but VA Needs Better Information to Make Further Reductions, GAO–08–939 (Washington, D.C.: Sept. 10, 2008). These performance audits and our updated work were conducted in accordance with generally accepted government auditing standards. 

Table 1: Steps of the CARES Process—Continued 

Step 5: The Under Secretary of Health uses the market plans to prepare a 

Draft National CARES Plan (DNCP) and recommendations. 

Step 6: The Secretary of Veterans Affairs appoints a commission composed of 

non-VA executives to make recommendations to the Secretary to accept, 

present alternatives to, or reject the recommendations contained in the 

DNCP. 

Step 7: The Secretary of Veterans Affairs decides whether to accept, reject, or 

modify the commission’s recommendations concerning the DNCP. 

Step 8: Network officials implement the Secretary’s decisions. 

Step 9: VA officials at the departmental level refine and incorporate CARES 

planning initiatives into the annual strategic planning cycle. 

Source: VA. 

According to VA, the CARES process was a onetime major initiative. However, its 

lasting result was to provide a set of tools and processes that allow VA to continually determine the future resources needed to provide health care to our Nation’s 

veterans. In May 2004, the Secretary stated that implementing CARES decisions 

will require an additional investment of approximately $1 billion per year for at 

least the next 5 years, with substantial infrastructure investments then continuing 

for the indefinite future, to modernize VA’s aging infrastructure. Although CARES 

will require substantial investment, the Secretary noted that not proceeding with 

CARES would require funding to maintain or renovate obsolete facilities and would 

leave VA with numerous redundant, outmoded, or poorly located facilities. The Secretary further stated that through the CARES process, VA had developed more complete information about the demand for VA health care and a more comprehensive 

assessment of its capital assets than it had ever done before. The Secretary noted 

that this information, along with the experience gained through conducting CARES, 

positioned VA to continue to expand the accuracy and scope of its planning efforts. 

In my statement today, I will discuss (1) how CARES contributes to VHA’s capital 

planning process, (2) the extent to which VA has implemented CARES decisions, 

and (3) the types of legal authorities that VA has to manage its real property and 

the extent to which VA has used its authorities to reduce underutilized and vacant 

property. My comments are based on our extensive body of work on VA’s management of its capital assets, including recent reviews of VA’s implementation of 

CARES and management of real property, as well as updated information from VA 

officials.4

Background 

Over the past decade, VA’s system of health care for veterans has undergone a 

dramatic transformation, shifting from predominantly hospital-based care to primary reliance on outpatient care. As VA increased its emphasis on outpatient care 

rather than inpatient care, it was left with an increasingly obsolete infrastructure, 

including many hospitals built or acquired more than 50 years ago in locations that 

are sometimes far from where veterans live. 

To address its obsolete infrastructure, VA initiated its CARES process—the first 

comprehensive, long-range assessment of its health care system’s capital asset requirements since 1981. CARES was designed to assess the appropriate function, 

size, and location of VA facilities in light of expected demand for VA inpatient and 

outpatient health care services through fiscal year 2022. Through CARES, VA 

sought to enhance outpatient and inpatient care, as well as special programs, such 

as spinal cord injury, through the appropriate sizing, upgrading, and locating of VA 

facilities. Table 2 lists key milestones of the CARES process. 


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5GAO–07–408. 

Table 2: Key CARES Milestones 

Date Milestone Description 

February 2002 VA announced the 

results of a pilot 

CARES study. 

The pilot study assessed current and future use of health care assets in the three 

markets of Network 12, which includes 

parts of five States: Illinois, Indiana, 

Michigan, Minnesota, and Wisconsin. It 

resulted in decisions to realign health care 

services and renovate or dispose of several 

buildings consistent with VA’s mission 

and community zoning issues. 

August 2003 VA Under Secretary 

for Health presented the DNCP. 

The Under Secretary’s DNCP included 

recommendations about health care services and capital assets in VA’s remaining 

74 markets. These recommendations 

reflected input from managers of VA’s 

health care networks. 

February 2004 An independent 

CARES Commission issued recommendations. 

An independent 16-member commission 

appointed by the Secretary of Veterans 

Affairs issued recommendations to the 

Secretary based on its review of the DNCP 

and related documents and information 

obtained through public hearings, site 

visits, public meetings, written comments 

from veterans and other stakeholders, and 

consultations with experts. 

May 2004 VA Secretary 

announces the 

CARES decisions. 

The Secretary based his decisions on a 

review of the CARES Commission’s 

recommendations. 

January 2005 CARES follow-up 

studies. 

VA awarded a contract for additional 

studies at 18 VA facilities. These studies 

included evaluating outstanding health 

care issues, developing capital plans, and 

determining the best use for unneeded VA 

property consistent with VA’s mission and 

community zoning issues. 

May 2008 CARES follow-up 

studies. 

All 18 studies are completed. 

Source: GAO analysis of VA data. 

We have previously reported that a range of capital asset alignment alternatives 

were considered throughout the CARES process, which adheres to capital planning 

best practices.5 Moreover, there was relatively consistent agreement among the 

DNCP prepared by VA, the CARES Commission appointed by the VA Secretary to 

make alignment recommendations, and the Secretary as to which were the best alternatives to pursue. Although the Secretary tended to agree with the CARES Commission’s recommendations, the extent to which he agreed varied by alignment alternative. In particular, the Secretary always agreed with the Commission’s recommendations to build new facilities, enter into enhanced use leases, and collaborate with the Department of Defense and universities, but was less likely to agree 

with the CARES Commission’s recommendations to contract out or close facilities. 

The decisions that emerged from the CARES process will result in an overall expansion of VA’s capital assets. According to VA officials, rather than show that VA 

should downsize its capital asset portfolio, the CARES process revealed service gaps 

and needed infrastructure improvements. We also reported that a number of factors 

shaped and in some cases limited the range of alternatives VA considered during 

the CARES process. These factors included competing stakeholder interests; facility 


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6GAO, High-Risk Series: Federal Real Property, GAO–03–122 (Washington, D.C.: January 

2003) and GAO, Federal Real Property: Progress Made Toward Addressing Problems, but Underlying Obstacles Continue to Hamper Reform, GAO–07–349 (Washington, D.C.: April 2007). 7We did not evaluate the reliability of the model or its projections. 

8 CARES conceptual papers are created at the network level and provide a detailed description 

of the project, the problem the project will address, and other relevant information. 9The term ‘‘major capital project’’ refers to a project for the construction, alteration, or acquisition of a medical facility involving a total expenditure of more than $10 million. (See 38 U.S.C. 

§ 8104.) In contrast, a ‘‘minor capital project’’ refers to the construction, alteration, or acquisition 

of a medical facility involving a total expenditure of $10 million or less. 

condition and location; veterans’ access to facilities; established relationships between VA and health care partners, such as DoD and university medical affiliates; 

and legal restrictions. 

The challenge of misaligned infrastructure is not unique to VA. We identified Federal real property management as a high-risk area in January 2003 because of the 

nationwide importance of this issue for all Federal agencies. We did this to highlight 

the need for broad-based transformation in this area, which, if well implemented, 

will better position Federal agencies to achieve mission effectiveness and reduce operating costs. But VA and other agencies face common challenges, such as competing stakeholder interests in real property decisions. In VA’s case, this involves 

achieving consensus among such stakeholders as veterans service organizations, affiliated medical schools, employee unions, and communities. We have previously reported that competing interests from local, State, and political stakeholders have 

often impeded Federal agencies’ ability to make real property management decisions. As a result of competing stakeholder interests, decisions about real property 

often do not reflect the most cost-effective or efficient alternative that is in the interest of the agency or the government as a whole but instead reflect other priorities. 

In particular, this situation often arises when the Federal Government attempts to 

consolidate facilities or otherwise dispose of unneeded assets.6

CARES Process and Modeling Tools Drive VHA’s Capital Planning Efforts 

Through the CARES process, VA gained the tools and information needed to plan 

capital investments. As part of the CARES process, VA modified an actuarial model 

that it used to project VA budgetary needs. According to VA, the modifications enabled the model to produce 20-year forecasts of the demand for services and provided for more accurate assessments of veterans’ reliance on VA services, capacity 

gaps, and market penetration rates.7 The information provided by the model allowed VA to identify service needs and infrastructure gaps, in part by comparing 

the expected location of veterans and demand for services in years 2012 through 

2022 with the current location and capacity of VA health care services within each 

network. In addition to modifying the model, VA conducted facility condition assessments on all of its real property holdings as part of the CARES process. These assessments provided VA information about the condition of its facilities, including 

their infrastructure needs. VA continues to use the tools developed through CARES 

as part of its capital planning process. For example, VA conducts facility condition 

assessments for each real property holding every 3 years on a rotating basis. In addition, VA uses the modified actuarial model to update its workload projections each 

year, which are used to inform the annual capital budget process. 

The CARES process serves as the foundation for VHA’s capital planning efforts. 

The first step in VHA’s capital budget process is for networks to submit conceptual 

papers that identify capital projects that will address service or infrastructure gaps 

identified in the CARES process.8 The Capital Investment Panel, which consists of 

representatives from each VA administration and staff offices, reviews, scores, and 

ranks these papers. The Capital Investment Panel also identifies the proposals that 

will be sent forward for additional analysis and review, and may ultimately be included as part of VA’s budget request. According to VA officials, all capital projects 

must be based on the CARES planning model to advance through VHA’s capital 

planning process. On the basis of CARES-identified infrastructure needs and service 

gaps, VA identified more than 100 major capital projects in 37 States, the District 

of Columbia, and Puerto Rico.9 In addition to these projects, the CARES planning 

model identified service needs and infrastructure gaps at other locations throughout 

the VA system. The model is updated annually to reflect new information. 

VHA’s 5-year Capital Plan outlines CARES implementation and identifies priority 

projects that will improve the environment of care at VA medical facilities and ensure more effective operations by redirecting resources from the maintenance of vacant and underutilized buildings to investments in veterans’ health care. In VA’s fiscal year 2010 budget submission, VA requested about $1.1 billion to fund 12 VHA 


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10GAO–07–408. 11GAO–07–408. 12Officials from the Office of Asset Enterprise Management told us that they had information 

on the status of CARES projects that were included in the 5-year capital plan, but that they 

did not track the status of all CARES decisions. 

major construction projects and about $507 million for VHA minor construction 

projects. 

Some CARES Decisions Implemented, But Additional Information Needed 

to Fully Assess Status and Impact of Decisions 

VA has begun implementing some CARES decisions. Specifically, VA is currently 

in varying stages (e.g., planning or construction) of implementing 34 of the major 

capital projects that were identified in the CARES process. Eight major capital 

CARES projects are complete. 

Although VA is moving forward with the implementation of some CARES decisions, we previously reported that a number of VA officials and stakeholders, including representatives from veterans service organizations and local community groups, 

view the implementation process as too lengthy and lacking transparency.10 For instance, stakeholders in Big Spring, Texas, noted that it took almost 2 years for the 

Secretary to decide whether to close the facility. During this period, there was a 

great deal of uncertainty about the future of the facility. As a result, there were 

problems in attracting and retaining staff at the facility, according to network and 

local VA officials. We also previously reported that a number of stakeholders we 

spoke with indicated that the implementation of CARES decisions has been influenced by competing stakeholders’ interests—thereby undermining the process.11 In 

its February 2004 report, the CARES Commission also noted that stakeholder and 

community pressure can act as a barrier to change, by pressuring VA to maintain 

specific services or facilities. 

In 2007, we reported that VA does not use, or in some cases does not have, performance measures to assess its progress in implementing CARES or whether 

CARES is achieving the intended results. Performance measures allow an agency 

to track its progress in achieving intended results. Performance measures can also 

help inform management decisionmaking by, for example, indicating a need to redirect resources or shift priorities. In addition, performance measures can be used by 

stakeholders, such as veterans service organizations or local communities, to hold 

agencies accountable for results. Although VA has over 100 performance measures 

to monitor other agency programs and activities, these measures either do not directly link to the CARES goals or VA does not use them to centrally monitor the 

implementation and impact of CARES decisions.12 We also reported that VA lacked 

critical data, including data on the cost of and timelines for implementing CARES 

projects and the potential savings that can be generated by realigning resources. 

Given the importance of the CARES process, we previously recommended that VA 

develop performance measures for CARES. Such measures would allow VA officials 

to monitor the implementation and impact of CARES decisions as well as allow 

stakeholders to hold VA accountable for results. In responding to our recommendation, VA created the CARES Implementation Monitoring Working Group. This working group has identified performance measures for CARES and the group will monitor the implementation and impact of CARES decisions. 

VA Has a Variety of Legal Authorities to Manage Real Property, But Does 

Not Track How Using Them Contributes to the Reduction in Underutilized Property 

VA has a variety of legal authorities available to help it manage real property. 

These authorities include enhanced-use leases (EUL), sharing agreements, and 

outleases. (See table 3 for descriptions of these authorities.) VA uses these authorities to help reduce underutilized and vacant property. For example, in 2005, in 

Lakeside (Chicago), Illinois, VA reduced its underutilized property at the medical 

center by nearly 600,000 square feet by using its EUL authority with Northwestern 

Memorial Hospital. VA also uses these authorities to generate financial benefits. For 

example, the VA Greater Los Angeles Healthcare System enters into a number of 

sharing agreements with the film industry. VA officials told us that these agreements are typically temporary arrangements—sometimes lasting a few days—during which film production companies use VA facilities to shoot television or movie 

scenes. According to VA officials, these agreements generate roughly $1 million to 

$2 million a year. 


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Table 3: Major Types of Authorities Available to VA 

Authority Definition Proceeds 

Enhanced-use VA leases underutilized or Proceeds generated from the 

leases (EUL) vacant property to a public or 

private entity for up to 75 years 

EUL are used to pay for 

expenses incurred by VA in 

38 U.S.C. if the agreement enhances the connection with the EUL 

§§ 8161–8169 use of the property or results in 

an improvement of services to 

veterans in the network in 

which the property is located. 

The EUL shall be for fair consideration, and lease payments 

may be monetary or be made 

for in-kind consideration, such 

as construction, repair, or 

remodeling of Department 

facilities; providing office, 

storage, or other usable space; 

or for services, programs, or 

facilities that enhance services 

to veterans. 

and can be used for any 

expense incurred in the 

development of future 

EULs. Any remaining funds 

are to be deposited in the 

VA Medical Care Collections 

Fund. At the discretion of 

the VA Secretary, proceeds 

also may be deposited into 

construction major project 

and construction minor 

project accounts to be used 

for construction, alterations, 

and improvements of any 

medical facility. 

Sharing VA may enter into sharing Proceeds generated from 

agreements agreements to provide the use 

of VHA space (including parksharing agreements are to be credited to the applicable 

38 U.S.C. ing, recreational facilities, and Department medical appro- 

§§ 8151–8153 vacant land) for the benefit of 

veterans or nonveterans in 

exchange for payment or 

services if VA’s resources would 

not be used to their maximum 

effective capacity and would not 

adversely affect the care of 

veterans. Sharing agreements 

do not convey an interest in 

real property and can be 

entered into for up to 20 years, 

with the initial term not to 

exceed 5 years. 

priation of the facility that 

furnished the space. 

Outlease VA’s outlease-related authorities include the following: Proceeds generated from 

outleases of VHA space, 

38 U.S.C. § 8122 minus expenses for mainteOutlease: VA may lease real nance, operation, and repair 

38 U.S.C. § 2412 property to public or private 

interests outside of VA for up to 

3 years, or up to 10 years for a 

National Cemetery Administration (NCA) property. Lease payments may be made for maintenance, protection, or restoration 

of the property as part of the 

consideration of the lease. 

License: Gives a nonfederal 

party permission to enter upon 

and do a specific act or series of 

acts upon the land without 

possessing or acquiring any 

estate therein. A license can be 

revoked at any time. 

of buildings leased for building quarters, are deposited 

into the Department of the 

Treasury as miscellaneous 

receipts. Proceeds generated 

from outleases of NCA property are to be deposited into 

the NCA Facilities Operation Fund and are available 

for costs incurred by NCA 

for operations and maintenance of NCA property. 

Proceeds generated from 

licenses and permits are 

deposited into the Department of the Treasury. 


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13P.L. No. 100–322, Section 421(b)(2), 102 Stat. 487, 553 (1988). 14 38 U.S.C. § 8162(c). 15P.L. No. 110–161, Section 224(a), 121 Stat. 1844, 2272 (2007). 16 38 U.S.C. § 8122. 17 38 U.S.C. § 8164. 18 38 U.S.C. § 8118. 19GAO, Capital Financing: Potential Benefits of Capital Acquisition Funds Can Be Achieved 

through Simpler Means, GAO–05–249 (Washington, D.C.: Apr. 8, 2005). 

Table 3: Major Types of Authorities Available to VA—Continued 

Authority Definition Proceeds 

Permit: Gives another Federal 

agency permission to enter 

upon and do a specific act or 

series of acts upon the land 

without possessing or acquiring 

any estate therein. The permit 

can be revoked at any time. 

Source: GAO. 

However, legal restrictions associated with implementing some authorities affect 

VA’s ability to dispose of and reuse property in some locations. For example, legal 

restrictions limit VA’s ability to dispose of and reuse property in West Los Angeles 

and North Hills (Sepulveda) California. The Cranston Act of 1988 precluded VA 

from taking any action to dispose of 109 of 388 acres in the West Los Angeles medical center and 46 acres of the Sepulveda ambulatory care center.13 In 1991, when 

EUL authority was provided to VA, VA was prohibited from entering into any EUL 

relating to the 109 acres at West Los Angeles unless the lease was specifically authorized by law or for a childcare center.14 The Consolidated Appropriations Act of 

2008 expanded the EUL restrictions to include the entire West Los Angeles medical 

center.15 The Consolidated Appropriations Act of 2008 also prohibits VA from declaring as excess or otherwise taking action to exchange, trade, auction, transfer, 

or otherwise dispose of any portion of the 388 acres within the VA West Los Angeles 

medical center. 

Budgetary and administrative disincentives associated with some of VA’s available authorities may also limit VA’s ability to use these authorities to reduce its inventory of underutilized and vacant property. For example: 

• VA cannot retain revenue that it obtains from outleases, revocable licenses, or 

permits; such receipts must be deposited in the Department of the Treasury.16

VA has said that, except for EUL disposals, restrictions on retaining proceeds 

from disposal of properties are a disincentive for VA to dispose of property.17

• In 2004, VA was authorized until 2011 to transfer real property under its jurisdiction or control and to retain the proceeds from the transfer in a capital asset 

fund for property transfer costs, including demolition, environmental remediation, and maintenance and repair costs.18 In our previous work, we reported 

several administrative and oversight challenges with using capital asset 

funds.19 Moreover, VA officials told us that this authority has significant limitations on the use of any funds generated by disposal. For example, VA officials 

we spoke with reported that the capital asset fund is too cumbersome to be 

used, and VA does not have immediate access to the funds because they have 

to be reappropriated before VA can use them. • The maximum term for an outlease, according to VHA law, is 3 years; according 

to VA officials, this time limit can discourage potential lessees from investing 

in the property. • Implementing an EUL agreement can take a long time. According to VA officials, EULs are a relatively new tool, and every EUL is unique and involves 

a learning process. In addition, VA officials commented that the EUL process 

can be complicated. According to VA officials, the average time it takes to implement an EUL can range generally from 9 months to 2 years. The officials 

noted that land due diligence requirements (such as environmental and historic 

reviews), public hearings, Congressional notification, lease drafting, negotiation, 

and other phases contribute to the length of the overall process. VA has taken 

actions to reduce the time it takes to implement an EUL agreement, but despite 

changes to streamline the EUL process, some officials stated that it is still time 

consuming and cumbersome. 


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20 VA properties that are leased to another party under an EUL are not considered to be unutilized or underutilized for purposes of the McKinney-Vento Act (see 38 U.S.C. § 8162). 21We have reported elsewhere on this process. See GAO, Federal Real Property: Most Public 

Benefit Conveyances Used as Intended, but Opportunities Exist to Enhance Federal Oversight, GAO–06–511 (Washington, D.C.: June 21, 2006). 22See GAO–08–939. The underutilized square footage numbers that we report are different 

from those that VA reports. Our analysis only included underutilized square feet, whereas when 

VA measures its rate of utilization, it adds together underutilized square feet and overutilized 

square feet (additional square feet needed at a facility). 23GAO developed this estimate because VA does not track the cost of operating underutilized 

and vacant building space at the building level and has not developed a reliable method for 

doing so. 24GAO–08–939. 

• VA can dispose of underutilized and vacant property under the McKinney-Vento 

Act to other Federal agencies and programs for the homeless.20 However, VA 

officials stated that disposing of property under the McKinney-Vento Act also 

can be time-consuming and cumbersome.21 According to VA officials, the process 

can average 2 years. Under this law, all properties that the Department of 

Housing and Urban Development deems suitable for use by the homeless go 

through a 60-day holding period, during which the property is ineligible for disposal for any other purpose. Interested representatives of the homeless submit 

to the Department of Health and Human Services (HHS) a written notice of 

their intent to apply for a property for homeless use during the 60-day holding 

period. After applicants have given notice of their intent to apply, they have up 

to 90 days to submit their application to HHS, and HHS has the discretion to 

extend the timeframe if necessary. Once HHS has received an application, it 

has 25 days to review, accept, or decline the application. 

Furthermore, according to VA officials, VA may not receive compensation from 

agreements entered into under the McKinney-Vento Act. 

Despite these challenges, VA has used these legal authorities to help reduce its 

inventory of unneeded space. In 2008, we reported that VA reduced underutilized 

space (i.e., space not used to full capacity) in its buildings by approximately 64 percent from 15.4 million square feet in fiscal year 2005 to 5.6 million square feet in 

fiscal year 2007.22 Although the number of vacant buildings decreased over the period, the amount of vacant space remained relatively unchanged at 7.5 million 

square feet. We estimated VA spent $175 million in fiscal year 2007 operating underutilized or vacant space at its medical facilities.23

While VA’s use of various legal authorities, such as EULs and sharing agreements, likely contributed to VA’s overall reduction of underutilized space since fiscal 

year 2005, VA does not track the overall effect of using these authorities on its 

space reductions. Without such information, VA does not know what effect these authorities are having on its effort to reduce underutilized or vacant space or which 

types of authorities have the greatest effect. We concluded that further reductions 

in underutilized and vacant space will largely depend on VA developing a better understanding of why changes occurred and what impact these agreements had. 

Therefore, we recommended in our 2008 report that VA track, monitor, and evaluate 

square footage reductions and financial and nonfinancial benefits resulting from 

new agreements at the building level by fiscal year in order to better understand 

the usefulness of these authorities and their overall effect on VA’s inventory of underutilized and vacant property from year to year.24 The officials said that tracking 

financial benefits will require a real property cost accounting system which VA is 

in the process of developing. According to VA officials, VA will institute a system 

in June 2009 that will track square footage reductions at the building level, but the 

system will not track financial benefits at this level. 

Mr. Chairman, this concludes my prepared statement. I would be pleased to respond to questions from you or other Members of the Subcommittee. 

GAO Contact and Staff Acknowledgments 

For further information on this statement, please contact Mark L. Goldstein at 

(202) 512–2834 or goldsteinm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. 

Individuals making key contributions to this testimony were Nikki Clowers, Hazel 

Gumbs, Edward Laughlin, Susan Michal-Smith, and John W. Shumann. 

f 


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Prepared Statement of Donald H. Orndoff, 

AIA Director, Office of Construction and Facilities Management, 

U.S. Department of Veterans Affairs 

Mr. Chairman and Members of the Committee, I am pleased to appear today to 

discuss the status of the Department of Veteran Affairs’ (VA) health care infrastructure, our strategic facilities planning process, our facility design objectives, our acquisition strategies, and our proposed Fiscal Year 2010 budget. Joining me today 

are Brandi Fate, Director of the Veterans Health Administration’s (VHA’s) Office of 

Capital Asset Management and Planning Service; James M. Sullivan, Director of 

VA’s Office of Asset Enterprise Management; and Lisa Thomas, Ph.D., FACHE, Director of VHA’s Office of Strategic Planning and Analysis. 

Current Medical Infrastructure 

VA has a real property inventory of more than 5,400 owned buildings, 1,300 

leases, 33,000 acres of land and approximately 159 million gross square feet (owned 

and leased). The average age of VA facilities is well over 50 years. Our older facilities were not designed to meet the changing demands of clinical care in the 21st 

century. Therefore, VA’s continuing program of recapitalization of these aging assets 

is very important to providing world-class health care to veterans now and into the 

future. 

Current Major Construction Program 

The Department is currently implementing its largest capital investment program 

since the immediate post-World War II period. Since 2004, VA has received appropriations totaling $4.6 billion for health care projects, including 51 major construction projects for new or improved facilities across the Nation. These projects include 

new and replacement medical centers; polytrauma rehabilitation centers, spinal cord 

injury centers; ambulatory care centers; new inpatient nursing units; and projects 

to improve the safety of VA facilities. Thirty-six of the 51 projects have been fully 

funded at a total cost of approximately $3.1 billion. The remaining 15 projects have 

received partial funding totaling $1.6 billion against a total estimated cost of $4.5 

billion. For these larger projects, VA requests design and construction funding in increments aligned with the projected multi-year acquisition schedule. 

Background: CARES 

In 2000, the Veterans Health Administration (VHA) embarked on the Capital 

Asset Realignment for Enhanced Services (CARES) process to provide a data-driven 

assessment of veterans’ health care needs and to guide the strategic allocation of 

capital assets to support delivery of health care services over the next 20 years. The 

CARES program assessed veterans’ health care needs in each Veterans Integrated 

Service Network (VISN), identified service delivery options to meet those needs, and 

promoted strategic realignment of capital assets to satisfy identified needs. The goal 

was to improve access and quality of health care in the most cost effective manner, 

while mitigating impacts on staffing, communities, and on other VA missions. 

VA began the CARES process in 2000 with a regional pilot, then in 2002 expanded nationally. In 2003, VA released its Draft National CARES plan and created 

the CARES Commission, an independent panel established to review VA’s plans. 

The Secretary published his decisions in May 2004 and identified 18 sites whose 

complexity warranted additional study. VA completed these studies in May 2008. 

One output of the CARES process is the development of a Five-Year Capital Plan 

that lists and ranks specific major construction projects. 

Today: Strategic Facilities Planning Process 

The lessons learned through CARES are now incorporated into VA’s strategic 

health care and facilities planning process. VHA no longer distinguishes between 

CARES and non-CARES planning as the tools and techniques acquired through 

CARES have become part of our standard operating procedures for strategic planning within our health care system. 

VA uses a multi-characteristic decision methodology in prioritizing its capital investment needs. Appropriate ‘‘joint’’ VA–DoD projects are evaluated to promote 

sharing and efficiency opportunities. Through this strategic facilities planning process, VA annually updates its Five-Year Capital Plan, which supports the development of VA’s annual capital acquisition funding request. 

VHA employs its Health Care Planning Model to strategically assess demographic 

data, anticipated workload, and actuarial projections for health care services. VHA 

compares this data to its capital asset inventory to identify gaps in capability. To 

close gaps, VHA develops investment solutions that may become capital infrastrucVerDate Nov 24 2008 08:32 Jan 14, 2010 Jkt 051866 PO 00000 Frm 00086 Fmt 6604 Sfmt 6621 I:\VA\51866.XXX APPS06 PsN: 51866

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ture projects. All proposed projects undergo thorough cost effectiveness, risk, and alternatives analyses. 

The Department’s Capital Investment Panel (CIP) reviews, scores, and priority 

ranks potential projects based on criteria considered essential to providing highquality health care services. The scoring criteria include enhancement of service delivery, meeting workload projections, safeguarding assets, supporting special emphasis programs, addressing capital asset management priorities, promoting department alignment, and eliminating facility deficiencies. The CIP integrates both new 

and existing program requirements into a single prioritized project list. 

The CIP reports its analysis to the Strategic Management Council (SMC) for review. The SMC is VA’s governing body responsible for overseeing VA’s capital programs and initiatives. The SMC submits its recommendations to the Secretary, who 

makes the final decision on which projects to include in the budget. 

Project Design Goal: High-Performance Medical Facilities 

New VA medical facilities will contribute to world-class health care for veterans 

today, tomorrow, and well into the 21st century. Our design goal is to deliver highperformance buildings that are: 

• Functional, providing cutting-edge clinical spaces that leverage the latest medical technologies to produce the highest possible health care outcomes. 

• Cost efficient, incorporating evidence-based design for clinical spaces that are 

efficiently sized and configured to maximize clinical capability for invested capital. 

• Veteran-centric, placing special emphasis on design that is veteran patient and 

family centered. Buildings welcome patients and visitors with effective way 

finding, open circulation and waiting areas, and expected amenities. 

• Adaptable, creating buildings that will serve generations of veterans not yet 

born. Our buildings must be flexible to adapt and support continual changing 

clinical practices, advancing technology, and medical research. Buildings are designed with engineering systems organized in interstitial levels between occupied floors to enable rapid and less expensive reconfiguration of clinical spaces. 

• Sustainable, setting a standard of designing our medical centers to a minimum 

Leadership in Environmental and Energy Design (LEED) Silver level as defined 

by the U.S. Green Building Council, and following all relevant Executive Orders, including the High Performance & Sustainable Buildings Guidance required under E.O. 13423. 

• Energy efficient, designing new facilities to meet or exceed energy reduction targets of the Energy Policy Act of 2005 and related Executive Orders, shrinking 

energy use 30 percent below American Society of Heating, Refrigerating and 

Air-Conditioning Engineers (ASHRAE) standards. VA is committed to incorporating renewable energy technologies in the design of new or renovated facilities. 

• Physically secure, ensuring medical facilities are designed to fully comply with 

stringent physical security guidelines for mission critical, high-occupancy Federal facilities. This includes hardened structures, perimeter and access control, 

redundancy and modularity. Water storage, emergency power, and fuel supplies 

are sized to enable continued health care operations for 4 days in the face of 

natural or man-made disaster. 

Acquisition Strategies 

VA uses a range of acquisition tools that are tailored to best satisfy the unique 

requirements of each project. 

For design acquisition, VA selects partners through a targeted Architect/Engineer 

(A/E) contract solicitation. Our selection process values past performance and experience on health care projects of similar complexity. We carefully evaluate the experience and capabilities of the key members of the proposed design team. We require 

our design partners to leverage the power of Building Information Modeling (BIM) 

as a common communication and collaboration tool. We engage peer review from 

separate A/E firms to assist the owner’s review of proposed design solutions in meeting required design criteria and standards. 

For construction acquisition, VA uses a range of contract vehicles, including: 

• Design-Bid-Build, where we fully develop the project design and use best value 

selection process, which assesses both technical and cost proposals. We typically 

use this contract vehicle for large, complex medical facility projects, such as 

large medical clinics. 


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• Design-Build, where a single contractor performs both the design development 

and the construction. We typically use this approach for smaller, less complex 

projects, such as parking structures. 

• Integrated Design-Construct, where we bring the general contractor on board 

early in the design process, initially performing construction management functions, then construction work as design packages become available. This is VA’s 

version of CM@Risk approach that is widely used in the private sector of the 

construction industry. We plan to use this use approach on our largest, most 

complex projects, such as new medical centers. 

• Operating Leases, where we engage a developer to act as owner, designer, and 

constructor of ‘‘build to suit’’ leases. VA pays annual lease payments for terms 

up to 20 years. We typically use this strategy for smaller projects where VA 

does not currently own property, such as outpatient clinics. 

• Construction Management, where we augment our capacity to perform the important owner role for cost analysis, schedule control, and field testing. We typically use CM support on larger, more complex projects, such as new medical 

centers. 

VA is a leader among Federal agencies in meeting socio-economic goals for small 

business categories. We place special emphasis on contracting with veteran-owned 

businesses, especially service disabled veteran-owned businesses. 

Fiscal Year 2010 Request 

VA’s FY10 budget request continues our recapitalization effort supported by our 

strategic facilities planning process. 

VA requests $1.1 billion in FY 2010 for major construction to replace or enhance 

VA medical facilities. Of this amount, $649 million provides construction funding for 

five ongoing projects at Denver, CO; Orlando, FL; San Juan, PR; St. Louis (JB), MO; 

and Bay Pines, FL. Another $211 million will design seven new projects at Livermore, CA; Canandaigua, NY; San Diego, CA; Long Beach, CA; St. Louis (JC), MO; 

Brockton, MA; and Perry Point, MD. The remainder of the major construction request will provide funds for advance planning, facility security, judgment fund and 

land acquisition needs. 

VA requests $196 million authorization for 15 new major medical leases. Lease 

projects are located at Anderson, SC; Atlanta, GA; Bakersfield, CA; Birmingham, 

AL; Butler, PA; Charlotte, NC; Fayetteville, NC; Huntsville, AL; Kansas City, KS; 

Loma Linda, CA; McAllen, TX; Monterey, CA; Montgomery, AL; Tallahassee, FL; 

and Winston-Salem, NC. 

Conclusion 

In closing, I thank the Committee for its continued support to improve the Department’s physical infrastructure to meet the changing needs of America’s veterans. We look forward to continuing to work with the Committee on these important issues. Thank you for the opportunity to appear before the Committee today. 

My colleagues and I stand ready to answer your questions. 


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POST–HEARING QUESTIONS AND RESPONSES FOR THE RECORD 

Committee on Veterans’ Affairs 

Subcommittee on Health 

Washington, DC. 

June 18, 2009 

Honorable Eric K. Shinseki 

Secretary 

U.S. Department of Veterans Affairs 

810 Vermont Avenue, NW 

Washington, D.C. 20420 

Dear Secretary Shinseki: 

Thank you for the testimony of Donald H. Orndoff, Director of the Office of Construction and Management at the U.S. House of Representatives Committee on Veterans’ Affairs Subcommittee on Health Oversight Hearing on ‘‘Assessing CARES 

and the Future of VA’s Health Infrastructure’’ that took place on June 9, 2009. 

Please provide answers to the following questions by July 30, 2009, to Jeff 

Burdette, Legislative Assistant to the Subcommittee on Health. 

1. How does VA collaborate and coordinate with Federal Qualified Health Care 

Centers to increase the access points for obtaining health care? 

2. In their testimony, GAO highlighted that VA has a variety of legal authorities 

to manage real property, but does not track how using them contributes to the 

reduction in underutilized property. What is your response? 

3. Since the release of the May 2004 CARES report, has VA delivered on the 

CARES promise? 

a. Which decisions has VA implemented and which have yet to be implemented? What are the reasons for the delay in moving forward with the decisions which have not been implemented, to date? 

b. Which CARES decisions has VA changed course on? What are the reasons 

for this reversal? 

4. The prolonged implementation process leads to a great deal of uncertainty 

about the future of the facility so that it leads to staff retention issues and, 

more importantly, leaves our veterans without access to a health care facility. 

What is your response to these concerns? What steps is VA taking to ensure 

timely construction of VA medical facilities? 

5. How much did VA spend to develop the CARES report? At the time of the 

CARES report, did VA estimate the funding needed to fully implement each 

of the capital planning decisions for inpatient and outpatient care? How much 

has VA spent, to date, on the implementation of the CARES decision? What 

additional funding is needed to complete the implementation of the CARES decision? 

6. VA’s testimony states that ‘‘the tools and techniques acquired through CARES’’ 

have been integrated into VA’s standard operating procedure with regard to 

strategic planning. How has this process changed from before CARES? 

7. VA’s testimony stresses the importance of ensuring that VA facilities are 

adaptable so that they may seamlessly accommodate the development of new 

clinical practices and technology. Can you elaborate on how VA ensures that 

its facilities meet this standard of flexibility? 

Additionally, please answer the following question from Congressman Joe Donnelly for Lisa Thomas, Director of the Veterans Health Administration’s Office of 

Strategic Analysis and Planning. 

Dr. Lisa Thomas, I am a firm believer in optimizing health care and making sure 

veterans get the most accessible, highest-quality care we can give them with the resources with which we are entrusted. Accessibility to specialty care is an issue of 

particular concern to my district and to many districts nationwide. For example, St. 

Joseph County in my district has a population of more than a quarter million people, yet area veterans must too often drive more than 2 hours each way to get to 


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the nearest VA hospital for specialty care. While there is an excellent outpatient 

clinic in South Bend, it is unable to provide many needed services. 

I am very pleased that the VA will open a new expanded health center in South 

Bend for outpatient and specialty care in 2012. The authorized facility will be 60– 

70,000 square feet and more than 10 times bigger than our current CBOC. The outpatient facility will provide comprehensive examination services in cardiology, podiatry, outpatient surgery and other medical specialties, wellness programs and 

ultrasound exams. Special services will also be available for newly returning veterans from Iraq and Afghanistan. Further, VA will contract with local hospitals in 

the South Bend area to provide inpatient services for area veterans. 

I would like to know if the arrangement announced for South Bend might be a 

model that constitutes future health care that the VA plans to expand on as it looks 

in the near and long-term for opportunities to provide enhanced quality care and 

greater access to veterans? 

What is the future of enhanced use lease agreements as it pertains to strategic 

planning and please elaborate on these agreements’ worth to VA and possible uses 

in the future? 

Thank you again for taking the time to answer these questions. The Committee 

looks forward to receiving your answers by July 30, 2009. 

Sincerely, 

MICHAEL H. MICHAUD 

Chairman 

Questions for the Record 

The Honorable Michael H. Michaud, Chairman 

Subcommittee on Health, House Committee on Veterans’ Affairs 

June 9, 2009 

Accessing CARES and the Future of VA’s Health Infrastructure 

Question 1: How does VA collaborate and coordinate with Federal Qualified 

Health Care Centers to increase the access points for obtaining health care? 

Response: When the Department of Veterans Affairs (VA) identifies an area with 

a demonstrated health care need and engages to expand care in that area, the method for care delivery is determined at the local level, and avenues for delivery of care 

are considered to close the service gap. The range of initiatives include providing 

direct care through VA staffed clinics and telehealth, as well as purchasing services 

with local providers. When the decision is made to purchase care, VA considers all 

eligible available health care provider options, including Federal Qualified Health 

Centers (FQHC), to meet the health care needs of veterans living in rural and highly rural areas. In the majority of instances, service delivery decisions are made at 

the local level. 

Although the service delivery decisions are made at the local level, Office of Rural 

Health (ORH) has collaborated with the Veterans Integrated Service Networks 

(VISN) and recently funded two projects (in executing of appropriations provided 

under Public Law 110–329) that collaborate with FQHCs to increase access points 

to health care. 

The Veterans Health Administration (VHA) Office of Geriatrics and Extended 

Care (GEC) was awarded funding to implement a national initiative to expand 

Home-Based Primary Care (HBPC) to Community-Based Outpatient Clinics 

(CBOC). This initiative will support implementation of HBPC in rural and highly 

rural CBOCs and non-VA community clinics, located across VA’s health care system. 

The expanded service delivery will help to address issues of access and quality of 

health care for some of our most medically complex veterans. Of the chosen sites, 

GEC proposes to co-locate their HBPC satellite team in FQHCs and cooperatively 

recruit staff when feasible. 

ORH also awarded funding to VISN 1 for an initiative to extend telemental health 

in rural Vermont. This initiative will create a partnership with non-Federal entities 

through a community-based telemental health program and provide access to specialized VA mental health services for veterans where travel to a CBOC is difficult 

or prohibitive. Services will be provided within existing non-VA community primary 

care practices in the most rural and inaccessible areas of Vermont and New Hampshire. Interactive audiovisual telecommunications will be used to provide direct care 

to veterans as well as educate local providers to enhance their ability to recognize 


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veteran-specific psychological difficulties. The first year will pilot a telemental 

health link between the White River Junction VA medical center to a FQHC and 

a community mental health center in Northern Vermont. During the second year, 

another FQHC will be added in Northern Vermont along with an additional site in 

New Hampshire. Application of the model to other clinics will be assessed during 

the second year. 

ORH fully supports increasing access points and has implemented several other 

initiatives to address the needs of veterans in rural areas. Ongoing initiatives include the four rural mobile health clinics located in VISNs 1, 4, 19, and 20, as well 

as the network of outreach clinics that serve to increase the access to health care 

for thousands of veterans across the country. 

VA and ORH will continue to develop relationships with experts in rural health 

and in veterans’ health to explore, assess, and develop collaborative approaches to 

providing services for veterans in rural areas. 

Question 2: In their testimony, GAO highlighted that VA has a variety of legal 

authorities to manage real property, but does not track how using them contributes 

to the reduction in underutilized property. What is your response? 

Response: VA uses its various legal authorities for managing its real property, 

such as enhanced-used leasing (EUL) and disposal authority. VA then tracks the 

property reductions through the EUL report and the EUL and disposal sections of 

the capital plan in the annual budget submissions. 

GAO in its report entitled Federal Real Property: Progress Made in Reducing 

Unneeded Property, but VA Needs Better Information to Make Further Reductions 

(GAO–08–939) recommended that VA track, monitor, and evaluate square footage 

reductions and financial and non-financial benefits when recording new agreements 

as of FY 2008. VA agreed with GAO’s recommendation and VA does track revenue 

generated, square footage reductions, and services received through agreements, although this is not accomplished systematically. VA produces an annual report on 

EULs for Congress that describes the financial and non-financial impacts of its 

EULs. The report includes estimates of the amount of money VA saves on purchasing energy and parking and the value of new services available to veterans or 

employees as a result of EULs. However, VA does not conduct a similar analysis 

for other types of agreements, which greatly outnumber the EULs and VA’s data 

systems do not provide information on the non-financial benefits it receives from 

those agreements. VA will track, monitor, maintain and evaluate square foot reductions and financial and non-financial benefits resulting from agreements for FY 

2008 and beyond second quarter FY 2009 to ascertain the cumulative effect of its 

authorities on underused and vacant property square footage. We will identify baseline space for the buildings and metrics for reductions resulting from agreements. 

Milestone 

Planned 

Complete 

Actual 

Complete Status 

Identify buildings and agreements 3/3/2009 3/30/2009 Complete 

for tracking 

Establish baseline space and costs 5/30/2009 5/30/2009 Complete 

for buildings to be tracked 

Establish reporting and analysis for 9/30/2009 Pending BI 

building impacts resulting from release 1.5 and 

agreements CAI upgrade 

Collect detailed building level costs 9/30/2012 Pending FLITE 

for tracking agreement impact implementation 

Disposal of underutilized space is a major focus area in VA 5-year disposal plans. 

VA issues a yearly call for disposals, identifying underused and non-mission dependent buildings as potential disposals to the field/Administrations. As summarized 

below, over the period FY 2009 through FY 2013, VA plans to dispose of 414 buildings (7,145,741 square feet) and 313.5 acres of land. 


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VA Disposal Plan FY 2009–2013 

FY 

Planned 

Buildings 

Total # 

Total 

Planned GSF 

Total # 

Land 

Parcels Total Acres 

Planned 

Disposals 

Total # 

2009 139 2,109,466 7 175.46 146 

2010 78 765,853 2 66.00 80 

2011 111 1,678,038 1 60.00 112 

2012 55 827,293 1 12.00 56 

2013 31 1,765,091 0 0 31 

Total: 414 7,145,741 11 313.46 425 

Question 3(a): Since the release of the May 2004 CARES report, has VA delivered on the CARES promise? Which decisions has VA implemented and which have 

yet to be implemented? What are the reasons for the delay in moving forward with 

the decisions which have not been implemented, to date? 

Response: VA has made significant progress since 2004 and continues to plan for 

health care delivery improvements. Since the publication of the Capital Asset Realignment for Enhanced Services (CARES) Decision document in 2004, VA has increased access to primary care, decreased the amount of excess space, and increased 

the number of special disability programs for veterans. CARES decisions have been 

delayed for the purposes of additional study and as limited resources have required 

the prioritization of projects based on service delivery goals. 

Further information on the status of individual CARES decisions will be provided 

in the CARES Implementation Monitoring Report, which is pending release. 

Question 3(b): Which CARES decisions has VA changed course on? What are the 

reasons for this reversal? 

Response: CARES identified capital and program requirements at a macro level 

using health care demand projections for services such as inpatient medicine, surgery and psychiatry, and outpatient primary care, mental health, and specialty care. 

As analyses of the decisions continued from an operational perspective using updated data, some CARES decisions changed based on feasibility and access improvements where the need was greatest. Further information on the status of individual 

CARES decisions will be provided in the CARES Implementation Monitoring Report. 

Question 4: The prolonged implementation process leads to a great deal of uncertainty about the future of the facility so that it leads to staff retention issues and, 

more importantly, leaves our veterans without access to a health care facility. What 

is your response to these concerns? What steps is VA taking to ensure timely construction of VA medical facilities? 

Response: Once major construction projects are approved for design, VA is committed to fully funding to completion. There are various reasons the construction appears and realistically is delayed: 

• The design phase takes approximately 18 to 24 months; therefore, the construction funds typically follow 2 years after the design year. 

• Based on the complexity of the construction and associated equipment, contractors may require the project to be broken into phases, with each phase being 

funded in annual increments. 

• It is expected that the phases listed in VA’s major construction budget submission be awarded by year’s end. This requires only those buildings and structures that can be obligated by September 2009 be included, which is why we 

have projects that only construct the energy center and/or parking garage. 

It is VA’s intent to fully fund all major construction projects as quickly as possible 

to ensure the most economical cost for each project. 


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Question 5: How much did VA spend to develop the CARES report? At the time 

of the CARES report, did VA estimate the funding needed to fully implement each 

of the capital planning decisions for inpatient and outpatient care? How much has 

VA spent, to date, on the implementation of the CARES decision? What additional 

funding is needed to complete the implementation of the CARES decision? 

Response: VA engaged in six contracts to assist the agency in developing the CARES process and report. The total cost of these contracts was approximately $18 

million. The additional costs of staff resources spent on CARES were not tracked; 

therefore a total of VA resources spent to develop the CARES report are not available. 

In the 2004 CARES Decision document, it was estimated that implementing CARES decisions would require an additional investment of approximately $1 billion per year for at least the next 5 years. Through FY 2008, VA has obligated approximately $2.4 billion on implementing construction projects identified in the 2004 

CARES Decision document and in 17 business plan study decisions. An estimate for 

additional funding needed to complete the implementation of these decisions is approximately $3 billion. 

Question 6: VA’s testimony states that ‘‘the tools and techniques acquired 

through CARES’’ have been integrated into VA’s standard operating procedure with 

regard to strategic planning. How has this process changed from before CARES? 

Response: Through the CARES process, VA adapted its actuarial model to 

produce 20-year forecasts of the demand for veteran health care services. Ongoing 

updates allow for more accurate projections of veteran reliance on VA services. The 

data from the model is used to identify gaps between current and projected demand 

in services within each market using the health care planning model (HCPM) implemented as part of the 2008 VHA strategic planning guidance cycle. The 10-step 

HCPM planning model facilitates the planning of strategic initiatives to address the 

projected gaps. The initiatives include contracting for services, facility expansions, 

Department of Defense (DoD) collaboration, and other initiatives developed as a result of the CARES process. 

As part of the annual VHA strategic planning guidance cycle, a methodology was 

developed to identify strategic locations for CBOCs and other health care delivery 

approaches across the system. The methodology evaluates the convergence of low access (measured by drive time guidelines for primary care services as established by 

the CARES process) and increasing projected demand for primary care and mental 

health services. The methodology guides the initial step in the CBOC approval process and/or in planning for the provision of health care through other solutions. 

Question 7: VA’s testimony stresses the importance of ensuring that VA facilities 

are adaptable so that they may seamlessly accommodate the development of new 

clinical practices and technology. Can you elaborate on how VA ensures that its facilities meet standards of flexibility? 

Response: Although health care facilities are inherently more complex and less 

adaptable than other building types such as office buildings, VA makes every effort 

to plan for the inevitable change that occurs due to new advances in health care, 

technology, and changes in patient populations that occur over the life of a VA medical facility. VA has instituted a rigorous focus on the planning phase of new 

projects, so that projected change and growth over the next 20 years is accounted 

for at the beginning. This planning reviews the requirements for accommodating the 

changes in functional space use within the building as well as land for expansion 

so that its new facilities can accommodate future needs. 

VA’s design and construction specifications require that mechanical systems, 

equipment rooms, component arrangements, and pipe and ducts be sized for change 

and to accommodate future growth. Where possible, VA incorporates the VA hospital building system, which provides for greater flexibility by modular design with 

accessible interstitial mechanical space in a level above occupied space for distribution of engineering services, allowing maintenance, repair, and mechanical system 

changes to be made without disrupting activities on the occupied floor below. 

f 

The Honorable Joe Donnelly 

Question 1: Dr. Lisa Thomas, I am a firm believer in optimizing health care and 

making sure that veterans get the most accessible, highest-quality care we can give 

them with the resources with which we are entrusted. Accessibility to specialty care 


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is an issue of particular concern to my district and to many districts nationwide. 

For example, St. Joseph County in my district has a population of more than a 

quarter million people, yet area veterans must too often drive more than 2 hours 

each way to get to the nearest VA hospital for specialty care. While there is an excellent outpatient clinic in South Bend, it is unable to provide many needed services. 

I am very pleased that the VA will open a new expanded health center in South 

Bend for outpatient and specialty care in 2012. The authorized facility will be 60– 

70,000 square feet and more than 10 times bigger than our current CBOC. The outpatient facility will provide comprehensive examination services in cardiology, podiatry, outpatient surgery and other medical specialties, wellness programs and 

ultrasound exams. Special services will also be available for newly returning veterans from Iraq and Afghanistan. Further, VA will contract with local hospitals in 

the South Bend area to provide inpatient services for area veterans. I would like 

to know if the arrangement announced for South Bend might be a model that constitutes future health care that the VA plans to expand on as it looks in the near 

and long-term for opportunities to provide enhanced quality care and greater access 

to veterans? 

Response: VA has a comprehensive strategic planning process for actively identifying and appropriately planning for the full continuum of veteran health care 

needs. The expanded health care center in South Bend is just one example of VA 

initiatives that enhance the quality of and access to health care for veterans. 

Æ 


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