VA/DOD Federal Health Care Center: Costly Information Technology Delays Continue and Evaluation Plan Lacking
Published: 2012-06-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The NDAA for Fiscal Year 2010 authorized VA and DOD to establish a 5-year demonstration to integrate VA and DOD medical care into a first-of-its-kind FHCC in North Chicago, Illinois. Expectations for the FHCC are outlined in the Executive Agreement signed by VA and DOD in April 2010.
The NDAA for Fiscal Year 2010, as amended by the NDAA for Fiscal Year 2012, directed GAO to report on the FHCC demonstration in 2011, 2012, and 2015. This is the second of the three reports and examines (1) to what extent VA and DOD have continued to implement the Executive Agreement to establish and operate the FHCC and (2) what plan, if any, VA and DOD have to assess the provision of care and operations of the FHCC.
To conduct its work, GAO reviewed FHCC documents; interviewed VA, DOD, and FHCC officials; and reviewed related GAO work.
section_title: What GAO Found
paragraphs: Officials at the Department of Veterans Affairs (VA) and Department of Defense (DOD) Captain James A. Lovell Federal Health Care Center (FHCC) have continued to make progress implementing provisions of the Executive Agreements 12 integration areas, but delays in the information technology (IT) area have proven costly. Specifically, for 6 integration areas, all provisions have been implemented. Some of these areas were implemented at the time of GAOs 2011 report, including establishing the facilitys governance structure and patient priority system, while 2 areasquality assurance and contingency planningwere more recently implemented. In addition, 5 integration areas, such as property and fiscal authority, remain in progress. However, as previously reported by GAO, there have been delays implementing 1 of the integration areasITwhich have resulted in additional costs for the FHCC, although the FHCC has been unable to quantify the total costs resulting from these delays. Despite an investment of more than $122 million for IT capabilities at the FHCC, VA and DOD have not completed work on all components required by the Executive Agreement, which were to have been in place in time for the FHCCs opening in October 2010. These delays have resulted in additional costs and administrative burden for the FHCC because of the need for workarounds to address them. There also are other IT capabilities required by the Executive Agreement that are ill-defined and for which plans have not been established.
Although they are required by the National Defense Authorization Act (NDAA) for Fiscal Year 2010 to assess the FHCC at the end of the 5-year demonstration, VA and DOD officials said the departments have not yet established an evaluation plan. Officials told GAO that in addition to the performance data already being collected from 15 integration benchmarks established by the Executive Agreement, the departments also expect to consider other factors; however, these factors, which may include performance measures, have not yet been established. VA and DOD officials also have not yet established the standards, such as target scores for the benchmarks, the departments will use to evaluate FHCC performance. GAO has previously found that well-defined measures and standards are essential to a sound evaluation plan. Furthermore, without VA and DOD agreement on the measures and standards, FHCC leadership is unable to track progress and make any midcourse adjustments to improve performance in areas VA and DOD have determined are necessary for the FHCCs success. Although including measures of FHCC costs in the evaluation would be consistent with the FHCCs purpose, VA and DOD departmental priorities, and federal financial accounting standards, no such cost measures have been established for evaluating the FHCC.
section_title: What GAO Recommends
paragraphs: GAO recommends that VA and DOD (1) determine the costs associated with the workarounds required because of delays in implementing IT capabilities laid out in the FHCC Executive Agreement; (2) develop plans with clear definitions, specifications, deliverables, and time frames for IT capabilities required by the Executive Agreement but not yet defined; (3) develop and agree to an evaluation plan, to include all performance measures and standards to be used in evaluating the FHCC demonstration; and (4) establish measures related to the cost-effectiveness of the FHCC as part of their evaluation. VA and DOD generally concurred and noted steps to address GAOs recommendations

section_title: Letter
paragraphs: The Departments of Veterans Affairs (VA) and Defense (DOD) expanded  their efforts to share health care resources in 2010 following  congressional authorization of a 5-year demonstration to more fully  integrate VA and DOD facilities located in proximity to one another in the  North Chicago, Illinois, area. As authorized by the National Defense  Authorization Act (NDAA) for Fiscal Year 2010 (NDAA 2010), VA and  DOD facilities in and around North Chicago were integrated into a first-of- its-kind system known as the Captain James A. Lovell Federal Health  Care Center (FHCC). Although DOD and VA have shared resources at  some level since the 1980s, the FHCC is unique in that it is the first fully  integrated federal health care center for use by both VA and DOD  beneficiaries, with an integrated workforce, a joint funding source, and a  single line of governance. In addition to delivering integrated health care  services to both VA and DOD beneficiaries, this unprecedented  partnership is expected to offer lessons for decision makers about  whether this is a model of care that might be effective if replicated at other  VA and DOD locations. Among other things, the NDAA 2010 requires the  Secretaries of VA and Defense to submit a report to the House and  Senate Committees on Armed Services and Veterans’ Affairs by October  2015, the year in which the demonstration ends, to include an  assessment of the demonstration and a recommendation as to whether  the FHCC should continue.
VA and DOD signed an Executive Agreement in April 2010 that outlined  the FHCC’s structure. Beginning October 1, 2010, the new structure  integrated services previously provided by the former North Chicago VA  Medical Center (NCVAMC) and its community-based outpatient clinics  and the Naval Health Clinic Great Lakes (NHCGL) and its associated  clinics, as well as services provided by a new ambulatory care center  constructed by DOD. The FHCC reported providing care to more than  86,000 patients in its first year of operation (October 2010 through  September 2011), including about 25,000 veterans and 59,000 DOD  beneficiaries, including Navy recruits.
NDAA 2010—Pub. L. No. 111-84, § 1701(e), 123 Stat. 2190, 2568 (2009)—required  GAO to report annually beginning in 2011; NDAA 2012—Pub. L. No. 112-81, § 1098,   125 Stat. 1298, 1609 (2011)—amended that reporting requirement to include reports in  2011, 2012, and 2015. challenges that arose because the FHCC lacked such a designation.Specifically, we reported that the FHCC encountered challenges in the  areas of managing beneficiary co-payments, contracting to meet  temporary staffing needs, using drug pricing arrangements, and clarifying  providers’ authority to sign medical readiness forms for active duty Navy  servicemembers.
In this second required report, we address the following questions:  1.  To what extent have VA and DOD continued to implement the  Executive Agreement to establish and operate the FHCC?  2.  What plan, if any, do VA and DOD have to assess the provision of  care and operations of the FHCC?
To determine the extent to which VA and DOD have continued to make  progress in establishing and operating the FHCC, we examined the 12  integration areas (and the provisions within each area) outlined in the  Executive Agreement and assessed the FHCC’s progress in meeting  them. Specifically, we reviewed VA and DOD policies pertaining to FHCC  operations; meeting minutes documenting discussions of FHCC, VA, and  DOD officials about patient care and operations; and financial planning  documents, such as the operating plan and budget. For the areas we  noted in our prior report as having been implemented, we reexamined  these for any changes that might affect their current status. We also  reviewed our earlier work, including our first report on implementation  progress, and a separate 2011 report specifically examining IT  capabilities and planning for the FHCC integration.interviewed officials at VA, DOD, and the FHCC about continued progress  in establishing and operating the FHCC.
In addition, we  To determine what plan, if any, VA and DOD have to assess the provision  of care and operations of the FHCC, we interviewed officials at the FHCC,  VA, and DOD regarding the provision of care and operations, standards  used to measure and assess performance, and plans to evaluate and  report results. We also reviewed relevant documents that describe the  plans for measuring the FHCC’s performance in delivering care to  patients and for assessing the operations in support of care delivery. In  addition, we examined best practices for program evaluation, mainly within federal agencies, including some specific to demonstrations.
We conducted this performance audit from November 2011 to June 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: VA and DOD have a long-standing history of sharing health care  resources to provide services to their beneficiaries. However, the FHCC  is unique among VA and DOD collaborations to deliver health care  services in several ways, notably its level of integration, the way it is  funded, and its governance structure. The Executive Agreement, signed  by the Secretaries of both departments, contains provisions to be met in  12 integration areas regarding specific aspects of FHCC operations,  including establishing a governance structure and combining VA and  DOD staff into a single, joint workforce. The FHCC’s leadership remains  directly accountable to VA and DOD individually, through formal reporting  relationships, and jointly, through oversight and advisory entities  comprising VA and DOD officials.
subsections: section_title: FHCC Established a New Level of Sharing for VA and DOD
paragraphs: VA and DOD have been authorized since the 1980s to enter into sharing  agreements with each other to improve access to, and the quality and  cost-effectiveness of, health care provided by the two departments. Since  that time, VA and DOD have entered into a number of sharing  agreements to provide services—such as emergency, specialty, inpatient,  and outpatient care—to VA and DOD beneficiaries and to reimburse one  another for the cost of such services. Starting in the 1990s, VA and DOD  expanded their sharing efforts to include “joint ventures”—locations where  sharing agreements are in place that encompass multiple health care  services for VA and DOD beneficiaries. The FHCC is one of 10 joint  venture locations across the country.
The October 2010 launch of the FHCC demonstration established a new  level of sharing and integration for VA and DOD. Specifically, the FHCC is  unique among other VA and DOD joint ventures in three key ways:  1.  The FHCC’s integration of the provision of care and operations  represents the highest level of collaboration among the 10 VA and  DOD joint ventures. For example, the FHCC has a more integrated  staffing structure than any other joint venture site.  2.  The FHCC has a joint funding source, to which VA and DOD  contribute, unlike the other joint venture sites, which each have  separate VA and DOD funding sources. NDAA 2010 established the  Joint DOD-VA Medical Facility Demonstration Fund (Joint Fund) as  the funding mechanism for the FHCC, with VA and DOD both making  transfers to the Joint Fund from their respective appropriations.  3.  The FHCC operates under a single line of governance to manage  medical and dental care, and has an integrated workforce of  approximately 3,100 civilian and active duty military employees from  both VA and DOD.integrated governance structures; rather, they maintain separate VA  and DOD lines of authority.
section_title: Executive Agreement
paragraphs: In April 2010, the Secretaries of VA and Defense signed the Executive  Agreement that established the FHCC and defined the relationship  between VA and DOD for operating the new, integrated facility, in  accordance with NDAA 2010. The Executive Agreement contained  provisions in 12 integration areas regarding specific aspects of FHCC  operations (see table 1).
Each of the 12 integration areas contains a number of specific provisions  describing how the FHCC should be jointly operated by VA and DOD.  Some provisions have designated deadlines, while others do not. For  example, within the IT integration area, the Executive Agreement included  provisions identifying three specific IT capabilities that VA and DOD were  to have in place by opening day of the FHCC, October 1, 2010 (for  example, medical single sign-on, which would allow staff to use one  screen to access both the VA and DOD electronic health record systems)  while other provisions (such as those for financial management and  outpatient appointment enhancement solutions) had no scheduled due  dates.
section_title: FHCC Oversight
paragraphs: As established in the Executive Agreement, the FHCC’s leadership and  workforce remain directly accountable to both VA and DOD (see fig. 1).  The FHCC Director, a VA executive, is accountable to VA for the  fulfillment of the FHCC mission, while the Deputy Director and  Commanding Officer, a Navy Captain, is accountable to DOD. In addition,  the Joint Executive Council (JEC) and the Health Executive Council  (HEC) provide oversight for all of the joint ventures, including the FHCC.  The JEC is made up of senior VA and DOD officials and provides broad  strategic direction for collaboration and resource sharing between the two  departments. The HEC, a sub-council of the JEC, provides oversight for  the specific cooperative efforts of each department’s health care  organizations—VA’s Veterans Health Administration and DOD’s Military  Health System. The HEC has organized itself into a number of work  groups to carry out its work and focus on specific high-priority areas of  national interest.
The FHCC Advisory Board, a HEC workgroup co-chaired by and  comprising senior officials from VA and DOD, was created specifically to  provide guidance and support to FHCC leaders and to resolve issues that  arise at the FHCC. The Advisory Board provides guidance for the  integration and operations of the facility, including monitoring the FHCC’s  performance and advising on issues related to strategic direction,  mission, vision, and policy. It also serves as a communication link  between the FHCC and VA and DOD executive leadership by reporting  on FHCC activities to the HEC. FHCC issues that are not able to be  resolved by the Advisory Board are elevated to the HEC for final  resolution. The Stakeholders Advisory Council also provides feedback on  how well the FHCC is meeting customers’ needs and VA and DOD  missions. The Stakeholders Advisory Council is made up of members  from various regional and local organizations representing FHCC  interests, including representation from local government, TRICARE, and  two nearby VA medical facilities.
section_title: Further Progress Has Been Made Implementing the Executive Agreement, but Costly IT Delays and Lack of MTF Designation Continue to Pose Challenges
paragraphs: Eleven of 12 integration areas are now either “implemented” or “in  progress.” The remaining integration area, IT, remains “delayed,” as it  was at our last review, resulting in costly and time-consuming  workarounds. DOD’s decision not to seek an MTF designation for the  FHCC, as we had recommended in our July 2011 report, has resulted in  continued implementation challenges.
subsections: section_title: All but 1 of the 12 Executive Agreement Integration Areas Are Implemented or In Progress
paragraphs: FHCC officials have implemented or made progress implementing 11 of  the 12 Executive Agreement integration areas. Specifically, FHCC  officials have implemented 6 integration areas, meaning all associated  provisions in the Executive Agreement have been met. Five of the  integration areas are in progress, meaning some, but not all, associated  provisions have been met, with FHCC officials maintaining or making  additional progress meeting the provisions in each integration area. The   1 integration area not implemented or in progress is IT, which is delayed,  meaning at least one provision had a deadline provided in the Executive  Agreement that was not met. This integration area is discussed in more  detail later in this report. (See fig. 2.)
FHCC officials have implemented all provisions in 6 of the 12 Executive  Agreement integration areas. Of these 6, 4 were integration areas we  previously reported as implemented: (1) governance structure, (2) access  to health care at the FHCC, (3) research, and (4) contracting. The two  other implemented integration areas, quality assurance and contingency  planning, moved from in progress at the time of our last review to  implemented in this review. Integration areas we previously reported as  implemented have remained in that status by maintaining activities or  policies that meet the associated provisions in the Executive Agreement.
For example, in the area of governance structure, the Stakeholders  Advisory Council meets quarterly as required by the Executive Agreement  and in another integration area, research, existing policies remain in  place. Since our 2011 report, the FHCC met two additional required  provisions for the quality assurance integration area: (1) officials obtained  accreditation for the integrated facility by relevant external accrediting  bodies—the Commission on Accreditation of Rehabilitation Facilities, and  The Joint Commission—and (2) FHCC officials reviewed the FHCC’s  policy on professional practices. In addition, FHCC officials have  established a formal agreement to outline the jurisdiction of VA and DOD  related to the security program for the FHCC campus, as the Executive  Agreement requires. (See table 2.)
Five other integration areas in the Executive Agreement remain in  progress: (1) integration benchmarks, (2) property, (3) reporting  requirements, (4) workforce management and personnel, and (5) fiscal  authority. Each of these integration areas was also in progress at the time  of our first report in July of 2011. FHCC officials have actively maintained  past progress while continuing to work toward implementation of the  provisions in the Executive Agreement associated with these integration  areas.
Some integration areas cannot be met until a certain point in the  integration or depend on other conditions being met. For example, for the  integration benchmarks area and the property area, the Executive  Agreement specifies that in accordance with NDAA 2010, property  transfer may occur upon the earlier of (1) completion of the 15 integration  benchmarks or (2) 5 years from the date the Executive Agreement was  executed. Thus, the FHCC may address the property integration area  prior to the end of the demonstration, in 2015, but it is not required to do  so.
FHCC officials also are in the process of addressing other integration  areas with provisions that do not have specific deadlines associated with  them. For example, for the fiscal authority integration area, FHCC officials  continue to make progress implementing the provisions, although they  have experienced some challenges. Since our last review, the Joint Fund,  into which both VA and DOD contribute, has become operational.  However, the provision of the Executive Agreement in the fiscal authority  integration area that requires the FHCC to develop an operating plan by  month that includes workload data has not yet been met. Specifically, the  FHCC’s operating plan does not include workload data, which officials  reported is because the current VA and DOD IT systems calculate  workload data differently. (See table 3.)
Despite some progress, the FHCC continues to face costly delays in the  IT integration area. The Executive Agreement specified three key IT  capabilities that VA and DOD were required to have in place on opening  day, in October 2010, to facilitate interoperability of VA and DOD  electronic health record systems. In our 2011 report, we found that all  three of these IT components were delayed; some of them continue to  remain so. As a result of these delays, the FHCC has had to implement  costly workarounds to address the needs these capabilities were intended  to serve. In addition to delays in developing these specific IT capabilities,  other IT capabilities required by the Executive Agreement have not been  well defined and implementation plans for them have not been  established.
Specifically, in our 2011 report, we noted that none of the following three  IT capabilities required by the Executive Agreement to be in operation by  October 2010 were implemented by that time: (1) medical single sign-on,  which would allow staff to use one screen to access both the VA and  DOD electronic health record systems; (2) single patient registration,  which would allow staff to register patients in both systems  simultaneously; and (3) orders portability, which would allow VA and DOD  clinicians to place, manage, and update clinical orders from either VA or  DOD electronic health records systems for radiology, laboratory, consults  (specialty referrals), and pharmacy services.
Although none of these capabilities were in place at the time of the  FHCC’s opening, FHCC officials reported that subsequently, in December  2010, medical single sign-on and single patient registration became  operational, as we noted in our 2011 report. Two orders portability  components—pharmacy and consults—remain delayed as of May 2012.  While orders portability for pharmacy remains delayed, VA and DOD  officials have estimated completion of the consults component by March  2013. Since our last review, orders portability for radiology became  operational in June 2011 and for laboratory in March 2012. Officials report  that as of March 2012, VA and DOD have spent more than $122 million  on IT capabilities at the FHCC.
VA and DOD officials reported several reasons for the delays in each of  the orders portability components and described the workarounds  implemented as a result of these delays.
Pharmacy component: Officials have said that they no longer plan to  develop a FHCC-specific capability that will allow VA’s and DOD’s  electronic health record systems to exchange information for  pharmacy orders, as required by the Executive Agreement, until a  more long-term effort to merge the departments’ electronic health  record systems into a single system is complete. In March 2011, the  Secretaries of VA and Defense announced that the two departments  had committed to this broader effort, but the departments have not  determined when this single electronic health record system will be  completed. Officials reported that they have assigned a project team  to address this requirement and estimate that they will award a  contract for the pharmacy solution by November 2012. Meanwhile, the  FHCC continues to maintain the interim orders portability workaround  that we previously reported on, which includes five dedicated, full-time  pharmacists to conduct manual checks of patient records to reconcile  allergy information and identify possible interactions between drugs  prescribed in VA and DOD systems. Additionally, FHCC officials  reported that they have also hired a full-time pharmacy technician to  assist in this process. FHCC officials reported that as of March 2012,  they have spent close to $1 million to institute this workaround and  that they anticipate spending an additional $750,000 to fund this  process from April 2012 through April 2013.
Consults component: VA and DOD officials reported that this  component, which will allow VA’s and DOD’s electronic health record  systems to exchange information for consult orders, remains delayed  because of changes to the requirements for this component in  response to lessons learned since the FHCC opened. Officials  reported that they completed the process of documenting changes to  the requirements in February 2012 and will use that information to  develop the consults component. Until this IT component is  implemented, the FHCC staff in the specialty care clinics manage the  consult orders manually by reviewing daily all consult requests to  determine if care could be provided at the FHCC, in which case the  order is manually entered into the appropriate system.
Radiology component: Officials told us that this area was delayed in  part because they underestimated the amount of work required to  allow VA’s and DOD’s electronic health record systems to exchange  information for radiology orders, and they needed additional time to  resolve software defects related to the work.
Laboratory component: Officials reported that there were delays in  delivering a capability that would allow the VA and DOD systems to  exchange information for laboratory orders because they needed to  address software differences between the VA and DOD systems,  such as how the systems detect and combine duplicate orders. In  addition, they acknowledged that they underestimated the time and  effort required to address such differences. Before the laboratory  component was implemented, the FHCC instituted a workaround that  required health care providers to review both VA and DOD systems  for notifications of laboratory results.
Although they were unable to quantify the total cost for all the  workarounds resulting from delayed IT capabilities, FHCC officials  reported that staff time equivalent to 23 full-time employees is being used  to manage the workarounds as a result of delays in IT capabilities to  support pharmacy, consults, radiology, and laboratory as well as delays  to the other IT components not delivered on time.
In addition to the three delayed IT capabilities that were to be in operation  by opening day, implementation of three other IT capabilities required, but  not defined, by the Executive Agreement—documentation of patient care  to support medical and dental operational readiness, financial  management solutions, and outpatient appointment enhancements—also  have not been implemented, and in some cases work on them has not  begun. The Executive Agreement does not provide clear and specific  definitions of these three capabilities, nor does it outline deadlines or  specific deliverables. Officials reported that as of May 2012, they had not  begun to address the requirements for two of the three capabilities— documentation of patient care to support medical and dental operational  readiness and outpatient appointment enhancements—nor had they  developed plans or time frames for doing so. VA and DOD officials  reported that they have determined the requirements for and have begun  the technical development of the financial management solutions, such as  automated financial reconciliation and billing processes, and they  estimate that testing of the initial capability for the financial reconciliation  requirement will occur in July 2012.
section_title: Lack of an MTF Designation for the FHCC Continues to Pose Implementation Challenges
paragraphs: FHCC officials continue to experience implementation challenges related  to the FHCC’s lack of an MTF designation. In our July 2011 report, we  noted several challenges associated with the lack of an MTF designation  at the FHCC, including limits on its ability to access DOD’s drug pricing  arrangements for DOD beneficiaries and to use personal services  contracts to meet staffing needs, as had been done by DOD prior to the   As a result, we recommended that DOD seek a legislative  integration.change to designate the FHCC as an MTF to facilitate sharing of all DOD  authorities and privileges for the facility. Although DOD concurred with  our assessment of challenges based on the lack of an MTF designation,  the department has opted not to pursue our recommendation. DOD  stated that it anticipates that as the FHCC stabilizes and matures, the  confusion caused by the lack of an MTF designation will dissipate and  that the challenges we noted in the last report have been addressed by  workarounds. However, we have found that some of the integration  implementation challenges that could be solved with such a designation  remain. In particular, officials told us the FHCC has been denied access  to DOD’s drug pricing arrangements for its DOD beneficiaries, which has  resulted in the FHCC paying higher prices for certain drugs for DOD  beneficiaries than would be the case if it were an MTF, although FHCC  officials were unable to quantify the added expense. DOD officials told us  that the department continues to explore ways to access DOD’s drug  pricing arrangements, despite the lack of an MTF designation, but that so  far these efforts have not been successful. In addition, FHCC officials  have instituted a workaround to enable them to fulfill staffing needs using  personal services contracts—a preferred method for accommodating  fluctuations in medical and dental workloads resulting from increases in  the number of Navy recruits on-site at any given time. If the FHCC was  designated as an MTF, it would have the authority to use personal  services contracts, making such a workaround unnecessary. We continue  to believe that an MTF designation is important to address the challenges  the FHCC faces based on the lack of such a designation, and because it  would set a precedent for future VA and DOD integrations to help make  the integration process smoother.
section_title: VA and DOD Have Not Yet Established a Plan for Evaluating the FHCC Demonstration
paragraphs: Although they are required by NDAA 2010 to conduct a comprehensive  evaluation of the FHCC at the end of the 5-year demonstration and  submit a report on this evaluation to the House and Senate Committees  on Armed Services and Veterans’ Affairs, VA and DOD officials said the  departments have not yet established an evaluation plan. We have  previously found that developing a sound evaluation plan before a  demonstration program is implemented can increase confidence in results  and facilitate decision making about broader applications of the  demonstration. Without such a plan in place during the demonstration— including well-defined measures and standards, such as target scores, for  determining performance on each measure—FHCC leadership cannot  track progress and make adjustments to improve performance in areas  that VA and DOD determine are necessary for the FHCC’s success.addition, we have previously found that joint agreement on commonly  desired outcomes, such as those established as performance measures  and standards in an evaluation plan, is important for collaborating  agencies, such as VA and DOD, to successfully overcome differences in   In  their agency missions, cultures, and established ways of doing  business.
The 15 integration benchmarks comprise 38 individual performance measures. For  example, the patient satisfaction benchmark is measured using 2 performance  measures—a VA measure and a DOD measure based on separate surveys that assess  beneficiaries’ experience with care at the FHCC. integrated FHCC meet or exceed those of NCVAMC and NHCGL as  separate facilities prior to the integration; an evaluation of whether the services available at the FHCC are  appropriate for the needs of its beneficiary population (for example,  whether the pediatrics workload is sufficient to maintain a pediatrics  department at the FHCC or whether it would be more cost-effective to  contract for pediatrics care in the local community); personnel-related factors, such as whether corpsmen are able to be  used at their full capacity at the FHCC and develop the medical skills  needed for deployment; and
FHCC costs.
Furthermore, VA and DOD have not set specific target scores for  determining successful performance for the existing 15 integration  benchmarks. Officials told us they do not expect to establish these scores  until the end of the 5-year FHCC demonstration.
Although federal financial accounting standards, VA and DOD  departmental priorities, and the Executive Agreement—which lays out the  purpose of the FHCC—indicate that reliable cost information is important  for evaluating the FHCC, VA and DOD officials have not determined what  cost measures, if any, will be used in the FHCC’s evaluation. In particular,  federal financial accounting standards state that Congress and federal  executives need reliable cost information to compare alternative courses  of action and evaluate program performance.Veterans Health Administration’s vision statement and the Military Health  System’s core values statement highlight the importance of cost or value  of health care to VA and DOD. Furthermore, VA and DOD jointly agreed  through the Executive Agreement that the FHCC itself was designed to   In addition, both the  improve cost-effectiveness of health care delivery, along with access and  quality, for the beneficiaries of NHCGL and NCVAMC. Prior to the  integration, FHCC officials reported that cost savings, mainly one-time  construction savings, were one of the original considerations in deciding  to integrate the two facilities, but FHCC officials told us that they are  unable to determine whether these savings were actually realized. We  have previously reported that cost-effectiveness information is important  for ensuring that a program produces sufficient benefits in relation to its  costs. Although the existing FHCC integration benchmarks include  measures related to access and quality, they do not include any  measures related to cost-effectiveness, and while VA and DOD officials  said they are considering incorporating cost into the evaluation, they still  have not determined whether to do so or what cost measures will be  used.
section_title: Conclusions
paragraphs: The FHCC is a 5-year demonstration that has the potential to be a model  for future VA and DOD collaborations to deliver high-quality and cost- effective integrated health care services. However, the demonstration has  notable problems. The lack of an MTF designation; costly delays in IT  implementation and the lack of clear definitions, deliverables, and time  frames for certain IT capabilities; and the lack of an overall evaluation  plan for the demonstration pose challenges to VA, DOD, and FHCC  officials.
Because the FHCC does not have an MTF designation, FHCC officials  continue to experience additional costs and administrative burden. The  FHCC is unable to use DOD drug pricing arrangements for DOD  beneficiaries, which has resulted in additional costs for the FHCC, and  also cannot use personal services contracts without the need for a  workaround. Because of these ongoing problems, we continue to believe  that the Secretary of Defense should seek a legislative change to  designate the FHCC as an MTF, even if only for the period of the 5-year  demonstration.
Delays in the implementation of key IT components required by the  Executive Agreement to be in place by October 2010 have resulted in the  FHCC establishing workarounds in an effort to maintain patient care and  safety. In some cases, these workarounds have been costly and  inefficient, necessitating the hiring of additional staff or using additional  staff time to do manually what the IT systems are intended to automate.  After spending more than $122 million on IT capabilities needed for the  FHCC, key deliverables remain delayed, resulting in additional costs to  the FHCC. For example, officials have spent more than $1 million as of  May 2012 on workarounds for the pharmacy component alone, with an  additional $750,000 of spending expected through April 2013. Having a  clear understanding of the costs associated with workarounds needed  when IT systems are not in place is essential in planning any future VA  and DOD integration efforts. In addition, the lack of clarity for time frames  and deliverables for two other IT requirements included in the Executive  Agreement may pose challenges for implementing them during the  demonstration.
Despite the fact that the demonstration is in its second of 5 years, DOD  and VA have yet to develop and implement an overall evaluation plan.  Without such a plan, decision makers at all levels lack the information  needed to evaluate the FHCC in a transparent way that ensures  confidence in the results. Establishing an evaluation plan, including  relevant measures and standards, such as target scores for the  benchmarks, as early as possible during the demonstration also provides  FHCC officials the opportunity to make informed midcourse changes to  better ensure the delivery of high-quality and cost-effective care. It also  will better facilitate decision making about whether replicating the model  in other locations is prudent. Finally, without assessing the cost- effectiveness of the FHCC, VA and DOD decision makers, as well as  Congress, will be unable to adequately assess whether the integrated  health care delivery model of the FHCC produces sufficient benefits in  relation to its costs.
section_title: Recommendations for Executive Action
paragraphs: To clarify IT requirements within the Executive Agreement, to enable VA  and DOD to make an informed recommendation about whether the FHCC  should continue after the end of the demonstration, and to provide useful  information for other integrations that may be considered in the future, we  recommend that the Secretaries of Veterans Affairs and Defense take the  following four actions: determine the costs associated with the workarounds required  because of delayed IT capabilities at the FHCC for each year of the  demonstration, including the costs of hiring additional staff and of  managing the administrative burden caused by the workarounds; develop plans with clear definitions and specific deliverables,  including time frames for two IT capabilities—documentation of patient  care to support medical and dental operational readiness and  outpatient appointment enhancements—and formalize these plans,  for example, by incorporating them into the Executive Agreement; expeditiously develop and agree to an evaluation plan, including the  performance measures and standards, such as target scores, to be  used to evaluate the FHCC demonstration, and formalize the plan, for  example, by incorporating it into the Executive Agreement; and establish measures related to the cost-effectiveness of the FHCC’s  care and operations to be included as a part of the evaluation plan.
section_title: Agency Comments and Our Evaluation
paragraphs: DOD and VA each provided comments on a draft of this report. In their  comments, both agencies generally concurred with each of the four  recommendations to the Secretaries of Defense and Veterans Affairs.  (DOD’s comments are reprinted in app. II; VA’s comments are reprinted  in app. III.) In addition, both VA and DOD provided technical comments  which we have incorporated as appropriate. The agencies’ specific  responses to each of our recommendations are as follows:
To determine the costs associated with the workarounds required  because of delayed IT capabilities at the FHCC, DOD indicated that it  will collaborate with VA to determine these costs. VA stated the FHCC  will convene a workgroup to review these costs and to identify any  additional needs associated with IT development delays. VA  suggested changing “workaround” to “impacts and changes to  business practices.” We maintain that “workaround” is used  appropriately in the context of this report because we use it to  describe processes that are temporarily in place for the purpose of  mitigating IT delays rather than permanent changes to business  practices.
To develop plans with clear definitions and specific deliverables,  including time frames for two IT capabilities, both VA and DOD stated  that they are working together through their joint Interagency Program  Office to develop and formalize these plans. DOD added that the  Interagency Program Office will also consider how these plans relate  to the larger effort to implement an integrated electronic health record.  Both agencies noted that formalization of these plans does not require  incorporation into the Executive Agreement. We offered amending the  Executive Agreement as an example of how plans could be  formalized and leave it to the agencies’ discretion how best to do so.
To expeditiously develop and agree to an evaluation plan, VA and  DOD mentioned that although a methodology and framework for a  final evaluation have not been determined, they are tracking some  measures of performance through the 15 integration benchmarks. In  addition, VA stated that the JEC has directed the HEC to outline an  evaluation plan to include analysis of personnel, logistics, resources,  and regulatory issues. Again, both agencies noted that formalizing of  the evaluation plan does not require incorporation into the Executive  Agreement. As we noted above, amending the Executive Agreement  is one option for how the plan could be formalized and the agencies  may determine the most effective way to do so.
To establish measures related to the cost-effectiveness of the FHCC’s  care and operations to be included as a part of the evaluation plan,  VA stated that it will develop a process to expedite creation of an  evaluation plan. Both agencies concurred with the recommendation to  include cost-related measures.
VA provided an additional comment regarding the issue of MTF  designation at the FHCC. They suggest that VA and DOD agree on the  matter of seeking an MTF designation before any action is taken  regarding establishing the FHCC as an MTF.
We are sending copies of this report to the Secretary of Defense,  Secretary of Veterans Affairs, and appropriate congressional committees.  In addition, the report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or draperd@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 IV.
section_title: Appendix I: Federal Health Care Center Integration Benchmarks, by Number of Reported Measures
paragraphs: Appendix I: Federal Health Care Center  Integration Benchmarks, by Number of  Reported Measures Integration benchmarks  1.  Patient satisfaction measures meet Federal Health Care Center (FHCC) targets.
Number of individual performance  measures to be reported  2  3.  Health profession trainee satisfaction measures meet FHCC targets.  4.  Stakeholders Advisory Council determination that the FHCC meets both Department  of Veterans Affairs (VA) and Department of Defense (DOD) missions.  5.  Clinical and administrative performance measures meet FHCC targets.  6.  Patient access to care meets FHCC targets.  7.  Evidence-based health care measures meet FHCC targets.  8.  Clinical/dental productivity meets FHCC targets.
Information technology solution timeline is met and has no negative impact on  patient safety.  10.  Pre-FHCC academic and clinical research missions are maintained.   11.  Navy servicemember medical readiness for duty meets Navy targets.  12.  Navy advancement/retention meets Navy targets.  14.  Validation of FHCC fiscal reconciliation model by an annual independent audit.  15.  Satisfactory facility and clinical inspection, accreditation, and compliance outcomes  from several external oversight/groups, such as VA and DOD Offices of the  Inspector General and The Joint Commission.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: Comments from the Department of Veterans Affairs
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Marcia A. Mann, Assistant  Director; Jill K. Center; Regina Lohr; and Rasanjali Wickrema made key  contributions to this report. Lisa A. Motley provided legal support, and  Jennie F. Apter assisted in message and report development.