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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.

Summary:
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. 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. 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