VA Health Care: Key Challenges to Aligning Capital Assets and Enhancing Veterans' Care
Published: 2005-08-05T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Veterans Affairs (VA) operates one of the nation's largest health care systems. In 1999, GAO reported on VA's aged, obsolete capital assets, noting that better management of these assets could significantly reduce VA's operating costs. GAO also noted that VA could reinvest the savings to enhance veterans' health care. In response, VA initiated its Capital Asset Realignment for Enhanced Services (CARES) process to identify what health care services it should provide in which locations through fiscal year 2022. CARES resulted in decisions to realign inpatient services at some VA facilities and to leave services as currently aligned at others. VA did not complete inpatient alignment decisions across VA for long-term care and mental health services and for inpatient services at some facilities because VA lacked sufficient information on demand for such care and other factors. GAO was asked to examine key challenges VA will face in completing and implementing CARES. This report discusses three key challenges: (1) developing information to complete inpatient alignment decisions, (2) improving management of excess property, and (3) determining priorities for purchasing care to improve access. GAO's analysis is based on its prior CARES work, review of CARES documents, and interviews with VA officials.
section_title: What GAO Found
paragraphs: VA faces a key challenge in developing sufficient information to complete inpatient service alignment decisions. VA concluded that it did not have sufficient information to complete such decisions across VA for long-term care (including nursing home care) and mental health services (including acute psychiatric care). VA also concluded that it did not have sufficient information to complete alignment decisions for inpatient services at 12 facilities. VA faces this challenge for several reasons. For example, it is unclear whether VA has adequate information on the number of veterans who will seek nursing home care and inpatient mental health services from VA on a daily basis because it concluded that its models were inadequate to forecast demand and it has not finalized revised models. VA has taken steps to address the challenge of developing the information needed such as working to develop improved models of demand for these services. Improving the management of VA's large inventory of excess property--including 8.5 million square feet of vacant space--poses another key challenge. This challenge results from disincentives associated with administrative complexity and costs of the disposal of federal property. Like all federal agencies, VA must comply with federal requirements governing property disposal that are intended, for example, to protect subsequent users of the property from environmental hazards. Some VA managers have retained excess property because the complexity and costs of complying with these requirements were disincentives to disposal. Congress has given VA authority to use disposal proceeds for construction and renovation of VA patient facilities and disposal activities, to the extent specified in appropriations acts. VA is taking steps to address this challenge, including hiring network-level capital asset managers to facilitate disposal. VA faces another key challenge in determining priorities for the purchase of inpatient services to improve access to care. While VA determined that purchasing inpatient services from non-VA health care providers in 25 health care markets would be a reasonable option for providing care closer to where veterans live, VA's network managers have to balance the costs and benefits of purchasing care against competing priorities. VA has taken steps to facilitate managers' development of information they need to decide among priorities, including information on the cost effectiveness of proposed contracts and their impact on other health care priorities. To improve its management of capital assets and enhance veterans' health care by reinvesting resources now spent on excess property, VA must overcome challenges in completing and implementing decisions reached through CARES. Furthermore, institutionalizing the CARES process into its ongoing strategic planning will be crucial to VA's effectiveness as a steward of national resources and a health care provider for the nation's veterans. VA concurred with GAO's findings and conclusions.

section_title: Letter
paragraphs: The Department of Veterans Affairs (VA) operates one of the largest health  care systems in the country. In fiscal year 2004, VA provided health care to  nearly 4.7 million of the 7.4 million veterans who were enrolled for VA  health care services. To support its mission, VA has a diverse inventory of  real property—VA reported in February 2005 that its capital assets  included more than 5,600 buildings and about 32,000 acres of land.  However, many of VA’s facilities were built more than 50 years ago and are  no longer well-suited to providing accessible, high-quality, cost-effective  health care in the 21st century. In numerous reports and testimonies, we  found that better management of VA’s buildings and land could  significantly reduce operating and maintenance costs and that these  resources could be reinvested to enhance veterans’ health care services.  Because of similar shortcomings in the management of capital assets  across the government, we designated real property management as a  high-risk area in order to highlight the need for federal agencies, including  VA, to address long-standing problems with excess real property. These  problems include underutilized and vacant building space and unneeded  land.
In response to our recommendations in 1999 for improving VA’s capital  asset planning and budgeting, VA initiated a process known as Capital  Asset Realignment for Enhanced Services (CARES). CARES was designed  to assess VA’s buildings and land ownership in light of expected demand  for VA inpatient and outpatient health care services through fiscal year  2022. Through CARES, VA sought to determine what health care services  veterans would need in what locations. VA existing locations included  VA’s 172 medical facilities, 77 health care markets, and 21 health care  networks.
In May 2004, the Secretary of Veterans Affairs announced decisions  resulting from the CARES process. This announcement included decisions  to realign VA’s inpatient health care services at a number of facilities to  improve quality, efficiency, or accessibility and to leave inpatient services  as currently aligned at other facilities. Among these inpatient services  were tertiary care; the acute inpatient services of medicine, surgery, and  psychiatry; nursing home care; long-term psychiatric care; residential  rehabilitation; domiciliary care; and specialized inpatient services  treatment of spinal cord injury and disorder. However, VA did not  complete all its inpatient alignment decisions in the CARES process  because it concluded that it lacked sufficient information to do so. VA did  not complete inpatient alignment decisions across VA for long-term care  (including nursing home care) and mental health services (including acute  and long-term psychiatry, residential rehabilitation, and domiciliary care).  VA also did not complete inpatient alignment decisions at some facilities.  In his May 2004 announcement of CARES decisions, the Secretary stated  that VA would improve its management of excess property by pursuing  options to dispose of or lease excess property and reinvest resources now  used to maintain excess property to enhance health care to veterans. The  Secretary also announced that VA planned to improve access to acute  inpatient services—which include medicine, surgery, and psychiatry—and  access to tertiary care by purchasing services from non-VA providers in  25 markets. In these markets, where VA determined that a large number of  veterans face lengthy driving times from their homes to the nearest VA  inpatient facility, the Secretary indicated that a reasonable option for  providing these services closer to where veterans live is to purchase acute  inpatient and tertiary care services rather than provide these inpatient  services in VA-owned facilities.
In your former capacity as Chairman of the Subcommittee on VA, HUD,  and Independent Agencies, Committee on Appropriations, U.S. Senate, you  asked that as part of our review of the CARES process, we examine key  challenges VA will encounter when completing and implementing CARES  decisions. This report examines three key challenges—(1) developing  information needed to complete inpatient alignment decisions,   (2) improving management of VA’s large inventory of excess property, and  (3) determining priorities for the purchase of inpatient services from non- VA providers to improve access to care.
To examine these challenges, we relied on our prior work on the CARES  process and the conditions in VA’s health care system that led to the  CARES process. To track key planning issues as they emerged during the  CARES process, we attended CARES-related meetings, such as those held  by the CARES Commission, an independent Commission appointed by VA  that was charged with making CARES recommendations to the Secretary.  We also reviewed major CARES documents and interviewed CARES  Commission and VA CARES program office officials. To identify what  actions VA is taking to address these challenges, we reviewed VA’s capital  asset and CARES documents and interviewed VA officials involved in  implementing the Secretary’s decisions. We conducted our work from  October 2003 through July 2005 in accordance with generally accepted  government auditing standards.
subsections: section_title: Background
paragraphs: VA dramatically transformed its health care delivery system over the last  decade. A central goal of this transformation has been to reduce the need  for, and the length of, inpatient hospital stays by providing primary care in  outpatient settings and taking advantage of technological advances that  reduce the need for hospitalization. VA developed a continuum of care  grounded in outpatient settings; made available a broader array of  services, including preventive care; and opened hundreds of  community-based outpatient clinics. As a result, VA reduced the length of  inpatient stays while providing health care to a growing number of  veterans. From fiscal year 1996 through fiscal year 2004, VA’s national  acute inpatient daily census fell by nearly 40 percent while the number of  veterans who received health care from VA increased by about 76 percent  (2 million). As VA increased its emphasis on outpatient care rather than  inpatient care, VA 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. Since its inception in 1999, VA’s  CARES process has reached several major milestones (see table 1).
The remaining steps in the CARES process include completing alignment  decisions for inpatient services, implementing decisions that have been  completed, and institutionalizing CARES. Institutionalizing CARES will  involve integrating the CARES process—a systematic, data-driven  framework for evaluating VA’s capital assets in light of projected demand  for VA health care services—into VA’s ongoing strategic planning efforts.  In the announcement of CARES decisions in May 2004, the Secretary of  Veterans Affairs 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 ever had  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. The Secretary  stressed that VA would focus on integrating the CARES process into its  annual strategic and capital planning efforts in order to ensure that VA  uses the best information available when making plans to meet the health  care needs of current and future veterans.
section_title: VA Faces a Challenge in Developing Information Needed to Complete Decisions on the Alignment of Inpatient Services
paragraphs: VA faces a key challenge in developing sufficient information to complete  inpatient service alignment decisions. VA did not complete all its inpatient  alignment decisions in the CARES process because it concluded that it  lacked sufficient information to do so. VA did not complete inpatient  alignment decisions across VA for long-term care (including nursing home  care) and mental health services (including acute and long-term  psychiatry, residential rehabilitation, and domiciliary care). VA also lacked  sufficient information to complete its inpatient alignment decisions for  services at 12 facilities.
subsections: section_title: Developing Information Needed to Complete Inpatient Alignment Decisions for Long-Term Care and Mental Health Will Be Challenging
paragraphs: Developing information needed to complete inpatient alignment decisions  for long-term care and mental health services across VA will be difficult  for three reasons. First, it is unclear whether VA has adequate information  on the number of veterans who will need and seek inpatient long-term  care and mental health services from VA on a daily basis because VA has  not finalized models for projecting future demand for these services. In  VA’s May 2004 announcement of CARES decision, VA concluded that its  models were inadequate to forecast demand. As a result, VA did not  complete its inpatient alignment decisions for these services across VA.  While VA officials told us that they have subsequently revised models and  forecasts of demand for care from VA, these models and forecasts are not  finalized.
Second, VA has not made the policy determinations that would allow it to  generate information concerning which veterans it will serve in the future  among those seeking long-term care—including nursing home care—and  the nursing home care services it will offer. Completing inpatient  alignment decisions for nursing home care requires having a technical  forecast of how many veterans will need and seek care from VA, and  requires information generated from policy decisions concerning which  veterans VA will serve and which nursing home services VA will provide.  VA lacks this information because it has not determined criteria to be used  to identify which veterans it will serve as a matter of policy, in addition to  those required by law, criteria such as a veteran’s level of service- connected disability or income. In addition, VA lacks information on  which services will be provided, such as specifying to whom it will provide  nursing home care for short-stay care rehabilitation of post-acute  conditions such as hip replacement and to whom it will provide long-stay  support and supervision for chronic conditions such as dementia. VA  officials told us that such policy decisions have not been made and, as a  result, VA’s long-term care model cannot provide the forecasts of  workload demand that are needed to make inpatient alignment decisions.
Third, VA has not finalized its strategic plan for long-term care, which  would provide information for determining where VA needs to provide  these services and the types of services needed. Developing adequate  models for forecasting likely demand and resolving policy issues for  inpatient long-term care would provide key information needed to develop  a long-term care strategic plan. According to the Secretary’s May 2004  summary of CARES decisions, an important element of the strategic plan  for long-term care will be the goal of ensuring that veterans’ access to an  appropriate range of these services is equitable. This plan would help VA  decide whether its current facilities and inpatient services are in the best  locations to meet future demand or whether changes are needed to better  align these facilities and services with demand.
section_title: Developing Information Needed to Complete Inpatient Alignment Decisions at 12 Facilities Will Be Challenging
paragraphs: Developing information needed to complete inpatient alignment decisions  at 12 of VA’s 172 facilities will be challenging because VA does not have  sufficiently precise information to evaluate tradeoffs between the costs  and benefits of various alignment options. (See table 2 for a list of these  facilities and their corresponding networks.) In some cases, these  alignment decisions include inpatient long-term and mental health  services. In general, VA concluded in its May 2004 announcement of  CARES decisions that it does not have sufficient information to determine  whether to maintain inpatient services as currently aligned at these  facilities or to realign the services. For example, in the Boston area, VA  provides inpatient care in 4 outdated facilities. VA concluded that it did  not have sufficient information about the cost-effectiveness and benefits  of building a replacement hospital in the area. VA also lacked sufficient  information about how to preserve veterans’ access to nursing home  services if such services in the Boston area are realigned.
Similarly, VA faces a challenge developing sufficient information about the  costs and benefits of options to make alignment decisions for inpatient  services at its medical facility in Waco, Texas. In October 2003, network  officials estimated that in the absence of a realignment of services at the  Waco facility, which is primarily a psychiatric care hospital, VA will need  about $1.5 million a year to maintain unused space at the facility, and that  through 2022 the facility will require an additional $61 million for  nonrecurring capital costs such as renovation. Options for realigning  inpatient services at the Waco facility include moving some services, such  as acute inpatient psychiatry, to other locations, such as VA’s medical  facility in Temple, Texas. VA faces a challenge weighing these options  and completing its alignment decision because VA has concluded that it  lacks sufficient information on the possible savings it would achieve  through realignment and the likely costs of construction at the Temple  facility if services are added there. VA also concluded that it lacked  sufficient information on access to inpatient services and continuity of  care for veterans who currently receive health care services at the Waco  facility. This information could help VA weigh options for the alignment of  inpatient services at the Waco facility. This could also help VA address the  concerns of stakeholders—including veterans’ service organizations,  elected officials, and employee representatives—who will be affected by  changes at the Waco facility. A group of stakeholders with concerns has  asked to work with VA to develop alternatives for the facility and to assist  in finding ways to lease the facility’s unused buildings and excess  property.
VA could use information on the costs and benefits of various alignment  options not only to complete its inpatient alignment decisions for the 12  facilities, but also to address the concerns of stakeholders and others.  Stakeholders—including veterans’ service organizations, affiliated medical  schools, employee unions, and communities—as well as decision makers  and veterans are more likely to have confidence in decisions at specific VA  medical facilities when VA can present sufficient information about the  key costs and benefits of alternative options for the alignment of inpatient  services. Costs and benefits to be considered are the impacts these  alternatives would have on the quality of and access to care; the cost to  the government; VA’s other strategic goals, such as the medical education  of health care providers and research; and the local community’s  economy. If VA had this kind of information, it would be better  positioned to make decisions and address concerns raised by veterans and  stakeholders. In the past, some stakeholders have opposed proposed  changes to VA’s health care system that they felt were not in the best  interests of their members, even when those changes could have benefited  veterans. For example, medical schools’ reluctance to change long- standing relationships with VA medical facilities has sometimes been a  major factor inhibiting VA’s asset management. Similarly, unions have  been reluctant to support decisions that involve restructuring services  when doing so could result in staffing reductions.
section_title: VA Has Taken Steps to Develop Information Needed to Complete Inpatient Alignment Decisions
paragraphs: VA has taken several steps to address the challenge of developing  sufficient information to complete its remaining inpatient alignment  decisions. These steps include developing information for completing  inpatient alignment decisions for long-term care and mental health across  VA and information for completing decisions for inpatient services at the  12 facilities.
For long-term care and mental health, VA officials told us that VA has  developed more adequate models to forecast the number of veterans who  will need and seek these services from VA on a daily basis in the future  than the models considered for use in the CARES process. However, VA  officials have not finalized the long-term care and mental health models or  forecasts and said that they will continue to refine these models.  Regarding the policy determinations to generate information for inpatient  long-term care, VA has included a proposal in its current appropriations  request to revise its policy on which veterans it will provide nursing home  services to and the extent to which it will provide short-stay and long-stay  care beginning in fiscal year 2006. However, the proposal has not yet been  made policy. VA officials told us that they are trying to address whether  they can develop the information needed to incorporate into VA’s nursing  home model and projected demands for services before these policy issues  are resolved.
VA has taken several steps to develop the information it needs to complete  decisions on the alignment of inpatient services at the 12 medical facilities  where alignment decisions are not complete. VA hired a contractor in  January 2005 who will be responsible for developing information on the  costs and benefits of specific options for aligning inpatient services at  these 12 facilities. To ensure stakeholder involvement in developing this  information, VA gave notice of the establishment of the Advisory  Committee for CARES Business Plan Studies in October 2004, under the  Federal Advisory Committee Act, which includes an advisory  subcommittee for each location. These committees include both network  staff and local stakeholders and will help develop information about the  concerns of veterans, employees, and other stakeholders or interest  groups, for example, by holding public meetings. To further assist the  contractor and carry out other responsibilities, in June 2004, VA  established a new headquarters office, the Office of Strategic Initiatives,  which will oversee the completion of these studies.
section_title: VA Faces a Challenge in Improving Management of Excess Property
paragraphs: Improving the management of VA’s large inventory of excess real  property—including 8.5 million square feet of vacant space—poses  another key challenge to VA. This challenge results, in part, from the  disincentives associated with the administrative complexity and costs of  disposing of federal property. In addition, the lengthy process required to  establish leases, along with some local managers’ lack of expertise needed  to negotiate these leases, adds to VA’s challenge. VA has taken steps to  address some of these difficulties.
Managing excess property is challenging for VA in part because of the  disincentives associated with the administrative complexity and costs  involved in the disposal of federal property. Like all federal agencies that  own facility space or other forms of real property, VA must comply with  federal requirements governing property disposal that are intended to  protect subsequent users of the property from environmental hazards and  preserve historically significant sites. For example, federal agencies are  required to assess and pay for environmental cleanup that may be needed  before disposing of property—a process that can require years of study  and result in significant costs. Moreover, federal agencies that own  buildings designated as historic structures must comply with provisions of  the National Historic Preservation Act, which requires agencies to  manage historic properties under their control and consider the effects of  their actions on historic preservation. About 30 percent of VA’s buildings  have been designated as historically significant. In addition, like other  federal agencies, VA must generally make excess federal facilities  available to other federal agencies and programs for the homeless when  disposing of property. As valuable as these legal requirements are, their  administrative complexity and the associated costs of complying with  them create disincentives to the disposal of excess property. VA officials  told us these requirements have contributed to some managers’ decisions  to retain excess property rather than pursue disposal. In general, disposal  of VA property, until November 2004, was controlled by the General  Services Administration (GSA). Since 1990, VA disposed of no properties  through this process and few properties through other means.
In November 2004, Congress gave VA greater discretion in managing the  disposal of excess property. VA had requested changes in its disposal  authority to address disincentives that VA managers believed impeded  their progress in disposing of excess property. The disincentives included  administrative complexity and a limitation that allowed use of disposal  proceeds only for nursing home construction and renovation. Changes in  VA’s disposal authority included permitting VA to directly manage the  disposal of excess property instead of using the disposal process managed  by GSA. In addition, VA was granted the authority—to the extent specified  in appropriations acts—to use proceeds from disposal not only for nursing  home construction and renovation but for use in construction or  renovation of other VA patient facilities or to defray expenses associated  with their disposal requirements.
VA officials acknowledge that direct management of the disposal process  gives VA managers more flexibility in managing the disposal of excess  buildings and land. However, they maintain that to dispose of excess  property VA managers still face disincentives associated with legal  requirements to address potential environmental hazards and the  preservation of significant historical sites prior to disposal. In addition, VA  officials acknowledge that even though VA may now use disposal  proceeds for improving or disposing of other VA buildings, they believe  the use of the funds for specific projects is subject to congressional  approval in the appropriations process each year. VA officials also told us  they believe that VA effectively derives no new funds from this authority  because, in practice, funds obtained from the disposal process would be  deducted each year from the amount that Congress appropriates.
Unlike most federal agencies, VA has authority to enter into leases with  other organizations, called enhanced-use leases, but VA managers face  difficulties in leasing excess property to non-VA organizations under this  authority. Specifically, the length of time needed to review and approve  leases poses a challenge to VA in leasing excess property. For example, to  establish leases, VA has had to negotiate with entities in the community  that are interested in leasing VA property and obtain public comment and  perform multiple rounds of review and approval by VA network and  headquarters officials. The leases VA has established include, for example,  partnerships for parking garages, child development centers, and senior  housing. Contributing to the length of the leasing process is a requirement  that VA quantify the benefits that veterans will likely derive from a lease— a task that officials say can be difficult and time consuming. For example,  if VA establishes a lease for a child development center that may help in  the recruitment and retention of VA staff to provide health care, VA is  required to quantify the benefits to veterans of the child development  center.
Another difficulty that has hindered VA’s leasing activities has been that  some local managers lacked the expertise needed to develop, negotiate,  and finalize leases. Such expertise includes legal, real estate, marketing,  and financial skills. The CARES Commission found that the lack of  expertise made it difficult for VA to attract potential investors and  navigate local zoning and land use requirements. Although the  Commission noted that some VA networks had been successful in  arranging leases for excess property, relatively few leases have been  established since 1991, when VA was given authorization to lease excess  property.
VA has taken steps to address the difficulties associated with the disposal  of excess property. For example, VA created a new position—the capital  asset manager—in each of its networks to strengthen its management of  excess property. These managers will be responsible for a number of tasks  involving capital assets, including facilitating the disposal of excess  property. The capital asset managers will also be responsible for ensuring  that VA has current data on the condition and the use of its buildings and  land. VA officials reported that they sought capital asset manager  candidates with experience in the disposal of federal real property as a  means to improve VA’s ability to manage its own disposal process. In  addition, VA is developing an agencywide capital asset disposal policy that  is designed to guide managers’ efforts to reduce VA’s inventory of  unneeded property.
VA is also taking steps to address the difficulties it faces in developing  enhanced-use leases of its excess property. To streamline VA’s preparation  of leasing proposals, VA recently granted authority to its capital asset  managers to make some enhanced-use leasing decisions, such as  conducting feasibility studies, creating enhanced-use lease business plans,  and writing leases and memoranda of understanding. VA expects this will  expedite its leasing process. The new capital asset managers will also be  responsible for identifying leasing opportunities and negotiating leases. To  facilitate leasing activities, including some that were identified in CARES,  VA is making real estate, legal, marketing, financial, and other types of  expertise available to network managers through a contract awarded in  April 2005. According to VA officials, this expertise will help network  managers develop key information, such as the potential market value of  VA’s excess property.
section_title: VA Faces a Challenge in Determining Priorities for the Purchase of Inpatient Services from Non-VA Providers to Improve Access to Care
paragraphs: VA faces another key challenge in determining priorities for the purchase  of inpatient services from non-VA providers to improve access to care by  making these services available closer to where veterans live. While VA  determined that in 25 markets purchasing acute and tertiary inpatient  services from non-VA providers would be a reasonable option for  providing these services closer to where veterans live, VA’s network  managers, who are responsible for making such decisions, have to balance  these efforts against competing priorities. Improving veterans’ access to  inpatient acute and tertiary care through purchased care is one of many  priorities that VA managers may support with their available resources.  As a result, VA managers have to weigh the costs and benefits of various  uses of their resources to determine whether, when, and to what extent  they should purchase acute and tertiary care services from non-VA  providers and to what extent resources should be spent instead, for  example, on improving access to long-term care, mental health, and  primary care services.
VA determined that in 25 markets a large number of enrolled veterans face  driving times that exceed VA standards in order to obtain inpatient acute  and tertiary care services at the nearest VA-owned or VA-affiliated medical  facility. VA also determined that in these 25 markets the number of  veterans facing lengthy driving times was not sufficient to justify building  a new VA facility and that a reasonable option for reducing these driving  times would be to purchase inpatient services from non-VA providers.  (See app. I for a list of the 25 markets and a description of the geographic  areas that each market covers.) About 800,000 enrolled veterans could  potentially benefit from the purchase of these inpatient services, according  to our estimate using VA data for fiscal year 2001. The number of enrolled  veterans potentially affected in any one of the 25 markets ranged from  about 13,000 to 76,000. The number of these enrolled veterans who would  actually need inpatient services in a given year would be substantially less  than the total number of enrollees and would depend on a variety of  factors such as age, gender, and health status.
VA’s experience in Chattanooga, Tennessee, although not located in one of  the 25 markets, illustrates the challenge network managers face in  balancing competing priorities. VA does not have an inpatient facility in  Chattanooga, and most veterans in the Chattanooga area face drives of   2 or more hours to obtain inpatient care at VA’s medical centers in  Murfreesboro and Nashville, Tennessee. To reduce these driving times, VA  contracted for acute inpatient services with a non-VA medical center in  Chattanooga from September 2000 through August 2002. This arrangement  did not, however, substantially improve veterans’ access to inpatient care  because network managers restricted referrals to the non-VA facility to  veterans with relatively less severe medical conditions, such as veterans  who did not require surgery or hospital stays longer than 5 days. Although  network managers purchased inpatient services from non-VA providers in  Chattanooga, the managers had to reconcile this effort with other needs.  For example, network managers told us that the restrictions they placed  on referrals to the non-VA facility were necessary to manage resources  effectively as well as to ensure that patient workload at VA’s Murfreesboro  facility remained sufficient to support another priority—graduate medical  education. As a result of the restrictions placed on the referrals, less than   5 percent of Chattanooga veterans’ inpatient workload was provided in  Chattanooga in fiscal year 2002. VA provided most of its inpatient hospital  workload for Chattanooga-area veterans in its medical facilities in  Murfreesboro and Nashville.
VA is developing guidance to address the challenge VA’s network  managers face in determining priorities for purchasing inpatient care. This  guidance specifies information that networks are to provide to  headquarters when seeking approval of contracts with non-VA providers,  including the inpatient services the network will purchase, the amount of  resources needed to purchase these services, a timetable for when the  services will be available, and the source of funding for these services. The  guidance also requires network managers to provide evidence of the cost  effectiveness of the proposed contract as well as a discussion of the  potential impact of contracting on other health care services in the  network.
section_title: Concluding Observations
paragraphs: Through the CARES process, VA has undertaken a critically important  effort to address long-standing problems with the management of its  capital assets. If it completes and successfully implements CARES  decisions, VA may be able to enhance veterans’ health care by reinvesting  resources now spent on excess property. Achieving this will depend on  VA’s success in dealing with the challenges of developing sufficient  information to complete inpatient alignment decisions, improving the  management of excess property, and determining priorities for the  purchase of inpatient services from non-VA providers to improve access to  care. It is too early to know whether the steps VA is taking to address  these challenges will be successful.
VA’s ability to meet the goal of providing high-quality, accessible, cost- effective health care to the nation’s veterans will depend largely on the  extent to which VA is successful in institutionalizing the CARES process  into its ongoing strategic and capital planning efforts. In the short term,  institutionalizing the capacity to assess VA services and real property  would provide a framework for making decisions about the alignment of  long-term care and mental health services as VA develops and refines  models for these services. An essential step in completing alignment  decisions is finalizing the models and demand forecasts for long-term care  and mental health services as well as finalizing the long-term care strategic  plan. In the longer term, institutionalizing the CARES process would help  ensure that VA has a systematic, data-driven framework for evaluating  options for managing its real property in order to better meet the future  health care needs of veterans. Such a framework could contribute to VA’s  effectiveness as a steward of national resources and provider of health  care services for our nation’s veterans.
section_title: Agency Comments
paragraphs: In written comments on a draft of this report, VA concurred with our  findings and conclusions and provided a technical correction and  additional information on the CARES process, which we incorporated  where appropriate. VA comments are reprinted in appendix II.
We are sending copies of this report to the Secretary of Veterans Affairs,  appropriate congressional committees, and other interested parties. We  will also make copies available to others upon request. This report will be  available at no charge on GAO’s Web site at http://www.gao.gov. If you or  your staff have any questions, please contact me at (202) 512-7101 or  bascettac@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  GAO staff who made major contributions to this report are listed in  appendix III.
section_title: Appendix I: 25 Markets Where VA Identified the Purchase of Inpatient Care as an Option to Improve Access
subsections: section_title: This market includes most of Alabama and part of western Georgia. VA owns four inpatient medical facilities in this market, located in Birmingham, Montgomery, Tuscaloosa, and Tuskegee, Ala.
paragraphs: 7—South Carolina  This market includes most of South Carolina and part of Georgia. VA  owns two inpatient medical facilities in this market, located in Charleston  and Columbia, S.C.
This market includes part of southwestern Florida. VA owns one  inpatient medical facility in this market, located in Bay Pines, Fla.
This market includes most of northern Florida and part of southern  Georgia. VA owns two inpatient medical facilities in this market, located  in Gainesville and Lake City, Fla.
This market includes the southern central portion of Ohio. VA owns one  inpatient medical facility in this market, located in Chillicothe, Ohio.
This market includes northeastern Ohio. VA owns two inpatient medical  facilities in this market, located in Cleveland, Ohio (Brecksville and  Wade Park).
This market includes the eastern central portion of Illinois and part of  western Indiana. VA owns one inpatient medical facility in this market,  located in Danville, Ill.
This market includes parts of southern Alabama and western Florida.  VA does not own any inpatient medical facilities in this market.
This market includes the central portion of Texas. VA owns two inpatient  medical facilities in this market, located in Temple and Waco, Tex.
This market includes southern Texas. VA does not own any inpatient  medical facilities in this market.
This market includes New Mexico, western Texas, and parts of southern  Colorado and western Oklahoma. VA owns three inpatient medical  facilities in this market, located in Albuquerque, N. Mex., and Amarillo  and Big Spring, Tex.
This market includes eastern Colorado, southeastern Wyoming, and  parts of both Kansas and Nebraska. VA owns two inpatient medical  facilities in this market, located in Denver, Colo., and Cheyenne, Wyo.
This market includes most of Montana and part of western North  Dakota. VA owns two inpatient medical facilities in this market, located  in Fort Harrison and Miles City, Mont.
This market includes Alaska. VA owns one inpatient medical facility in  this market, located in Anchorage, Alaska.
Geographic area covered by market and the VA inpatient medical  facilities within it  20—Inland North  This market includes eastern Washington, northern Idaho, northeastern  Oregon, and part of northwest Montana. VA owns two inpatient medical  facilities in this market, located in Spokane and Walla Walla, Wash.  20—Inland South  This market includes parts of eastern Oregon and southern Idaho. VA  owns one inpatient medical facility in this market, located in Boise,  Idaho.
This market includes western Oregon, southwestern Washington, and  part of northwestern California. VA owns four inpatient medical facilities  in this market, located in Portland, Roseburg, and White City, Oreg., and  Vancouver, Wash.
This market includes northeastern California and western Nevada. VA  owns one inpatient medical facility in this market, located in Reno, Nev.  21—South Coast  This market includes part of central California. VA owns three inpatient  medical facilities in this market, located in Livermore, Menlo Park, and  Palo Alto, Calif.
This market includes most of Iowa and parts of Illinois and Missouri. VA  owns three inpatient medical facilities in this market, located in Des  Moines, Iowa City, and Knoxville, Iowa.
This market includes most of Minnesota and part of northwestern  Wisconsin. VA owns two inpatient medical facilities in this market,  located in Minneapolis and St. Cloud, Minn.  23—North Dakota  This market includes most of North Dakota and parts of both Minnesota  and South Dakota. VA owns one inpatient medical facility in this market,  located in Fargo, N. Dak.  23—South Dakota  This market includes most of South Dakota and parts of five other  states: Iowa, Minnesota, Nebraska, North Dakota, and Wyoming. VA  owns three inpatient medical facilities in this market, located in Fort  Meade, Hot Springs, and Sioux Falls, S. Dak.
VA health care facilities are organized into 21 regional networks, known as Veterans Integrated  Service Networks, that are to coordinate the activities of and allocate resources to VA health care  facilities. VA had 22 networks until January 2002, when it merged Networks 13 and 14 to form a new  network, Network 23. VA defines a health care market as a geographic area having a sufficient  population and geographic size to benefit from the coordination and planning of health care services  and to support a full health care delivery system. Each VA network includes from 2 to 6 markets;  nationwide, VA has 77 markets.
section_title: Appendix II: Comments from the Department of Veterans Affairs
section_title: Appendix III: GAO Contact and Acknowledgments
subsections: section_title: GAO Contact
section_title: Acknowledgments
paragraphs: In addition to the contact named above, James C. Musselwhite, Assistant  Director; Kristen Joan Anderson; Frederick Caison; Krister Friday; Clare  Mamerow; and Paul Reynolds made key contributions to this report.
section_title: Related GAO Products
paragraphs: Federal Real Property: Further Actions Needed to Address Long-standing  and Complex Problems. GAO-05-848T. Washington, D.C.: June 22, 2005.
VA Health Care: Important Steps Taken to Enhance Veterans’ Care by  Aligning Inpatient Services with Projected Needs. GAO-05-160.  Washington, D.C.: March 2, 2005.
High-Risk Series: An Update.GAO-05-207. Washington, D.C.: January 2005.
VA Health Care: Access for Chattanooga-Area Veterans Needs  Improvements. GAO-04-162. Washington, D.C.: January 30, 2004.
Budget Issues: Agency Implementation of Capital Planning Principles Is  Mixed. GAO-04-138. Washington, D.C.: January 16, 2004.
Federal Real Property: Vacant and Underutilized Properties at GSA, VA,  and USPS. GAO-03-747. Washington, D.C.: August 19, 2003.
VA Health Care: Framework for Analyzing Capital Asset Realignment for  Enhanced Services Decisions. GAO-03-1103R. Washington, D.C.: August  18, 2003.
Department Of Veterans Affairs: Key Management Challenges in Health  and Disability Programs. GAO-03-756T. Washington, D.C.: May 8, 2003.
VA Health Care: Improved Planning Needed for Management of Excess  Real Property. GAO-03-326. Washington, D.C.: January 29, 2003.
Major Management Challenges and Program Risks: Department of  Veterans Affairs. GAO-03-110. Washington, D.C.: January 2003.
High-Risk Series: Federal Real Property. GAO-03-122. Washington, D.C.:  January 2003.
VA Health Care: VA Is Struggling to Address Asset Realignment  Challenges. GAO/T-HEHS-00-88. Washington, D.C.: April 5, 2000.
VA Health Care: Improvements Needed in Capital Asset Planning and  Budgeting. GAO/HEHS-99-145. Washington, D.C.: August 13, 1999.
VA Health Care: Challenges Facing VA in Developing an Asset Realignment  Process. GAO/T-HEHS-99-173. Washington, D.C.: July 22, 1999.
VA Health Care: Capital Asset Planning and Budgeting Need Improvement.  GAO/T-HEHS-99-83. Washington, D.C.: March 10, 1999.