VA operates one of the nation’s largest health care systems, spending about $26.5 billion a year to provide care to approximately 5.2 million veterans who receive health care through 158 VA medical centers (VAMC) and almost 900 outpatient clinics nationwide. DOD spends about $26.7 billion on health care for over 8.9 million beneficiaries, including active duty personnel and retirees, and their dependents. Most DOD health care is provided at more than 530 Army, Navy, and Air Force military treatment facilities (MTF) worldwide, supplemented by civilian providers. To encourage sharing of federal health resources between VA and DOD, in 1982, Congress passed the Sharing Act. Previously, VA and DOD health care facilities, many of which are collocated or in close geographic proximity, operated virtually independent of each other. The Sharing Act authorizes VAMCs and MTFs to become partners and enter into sharing agreements to buy, sell, and barter medical and support services. The head of each VA and DOD medical facility can enter into local sharing agreements. However, VA and DOD headquarters officials review and approve agreements that involve national commitments such as joint purchasing of pharmaceuticals. Agreements can be valid for up to 5 years. The intent of the law was not only to remove legal barriers, but also to encourage VA and DOD to engage in health resource sharing to more effectively and efficiently use federal health resources. VA and DOD sharing activities fall into three categories: Local sharing agreements allow VA and DOD to take advantage of their capacities to provide health care by being a provider of health services, a receiver of health services, or both. Health services shared under these agreements can include inpatient and outpatient care; ancillary services, such as diagnostic and therapeutic radiology; dental care; and specialty care services such as service for the treatment of spinal cord injury. Other services shared under these agreements include support services such as administration and management, research, education and training, patient transportation, and laundry. The goals of local sharing agreements are to allow VAMCs and MTFs to exchange health services in order to maximize their use of resources and provide beneficiaries with greater access to care. Joint venture sharing agreements, as distinguished from local sharing agreements, aim to avoid costs by pooling resources to build a new facility or jointly use an existing facility. Joint ventures require more cooperation and flexibility than local agreements because two separate health care systems must develop multiple sharing agreements that allow them to operate as one system at one location. National sharing initiatives are designed to achieve greater efficiencies, that is, lower cost and better access to goods and services when they are acquired on a national level rather than by individual facilities—for example, VA and DOD’s efforts to jointly purchase pharmaceuticals for nationwide distribution. VA and DOD are realizing benefits from sharing activities, specifically greater access to care, reduced federal costs, and better facility utilization at the 16 sites we reviewed. While all 16 sites were engaged in health resource sharing activities, some sites share significantly more resources than others. In 1994 VA and DOD opened a joint venture hospital in Las Vegas, Nevada, to provide services to VA and DOD beneficiaries. The joint venture improved access for VA beneficiaries by providing an alternative source for care other than traveling to VA facilities in Southern California. It also improved access to specialized providers for DOD beneficiaries. Examples of the types of services provided include vascular surgery, plastic surgery, cardiology, pulmonary, psychiatry, ophthalmology, urology, computed tomography scan, magnetic resonance imaging (MRI); nuclear medicine, emergency medicine and emergency room, and respiratory therapy. The site is currently in the process of enlarging the emergency room. In Pensacola, Florida, under a sharing agreement entered into in 2000, VA buys most of its inpatient services from Naval Hospital Pensacola. Through this agreement VA is able to utilize Navy facilities and reduce its reliance on civilian providers, thus lowering its purchased care cost by about $385,000 annually. Further, according to a VA official, the agreement has allowed VA to modify its plans to build a new hospital and instead build a clinic at significantly reduced cost to meet increasing veteran demand for health care services. Using VA’s cost per square foot estimates for hospital and clinic construction, the agency estimates that it will cost $45 million to build a new clinic compared to $100 million for a hospital. In Louisville, Kentucky, since 1996, VA and the Army have been engaged in sharing activities to provide services to beneficiaries that include primary care, audiology, radiology, podiatry, urology, internal medicine, and ophthalmology. For fiscal year 2003, a local VA official estimated that VA reduced its cost by $1.7 million as compared to acquiring the same services in the private sector through its agreements with the Army; he also estimated that the Army reduced its cost by about $1.25 million as compared to acquiring the same services in the private sector. As an example of the site’s efforts to improve access to care and reduce costs, in 2003 VA and DOD jointly leased a MRI unit. The unit reduces the need for VA and DOD beneficiaries to travel to more distant sources of care. A Louisville VA official stated that the purchase reduced the cost by 20 percent as compared to acquiring the same services in the private sector. In San Antonio, Texas, VA and the Air Force share a blood bank. Under a 1991 sharing agreement, VA provides the staff to operate the blood bank and the Air Force provides the space and equipment. According to VA, the blood bank agreement saves VA and DOD about $400,000 per year. Further, VA entered into a laundry service agreement with Brooke Army Medical Center in 2002 to utilize some of VA’s excess laundry capacity. Under the contract VA processes 1.7 million pounds of laundry each year for the Army at an annual cost of $875,000. Sites such as Las Vegas, Nevada; Pensacola, Florida; Louisville, Kentucky; and San Antonio, Texas shared significant resources compared to sites at Los Angeles, California and Charleston, South Carolina. For example, the sharing agreement at Los Angeles provided for the use of a nurse practitioner to assist with primary care and the sharing of a psychiatrist and a psychologist. See appendix II for the VA and DOD partners at each of the 16 sites and examples of the sharing activities taking place. The primary obstacle cited by officials at 14 of 16 sites we interviewed was the inability of computer systems to communicate and share patient health information between departments. Furthermore, local VA and DOD officials involved with sharing activities raised a concern that security check-in procedures implemented since September 11, 2001, have increased the time it takes to gain entry to medical facilities located on military installations during periods of heightened security. VA’s and DOD’s patient record systems cannot share patient health information electronically. The inability of VA’s and DOD’s patient record systems to quickly and readily share information on the health care provided at medical facilities is a significant obstacle to sharing activities. One critical challenge to successfully sharing information will be to standardize the data elements of each department’s health records. While standards for laboratory results were adopted in 2003, VA and DOD face a significant undertaking to standardize the remaining health data. According to the joint strategy that VA and DOD have developed, VA will have to migrate over 150 variations of clinical and demographic data to one standard, and DOD will have to migrate over 100 variations of clinical data to one standard. The inability of VA and DOD computer systems to share information forces the medical facilities involved in treating both agencies’ patient populations to expend staff resources to maintain patient records in both systems. For example, at Travis Air Force Base, both patient records systems have been loaded on to a single workstation in each department, so that nurses and physicians can enter patient encounter data into both systems. However, the user must access and enter data into each system separately. In addition to VA and DOD officials’ concerns about the added costs in terms of staff time, this method of sharing medical information raises the potential for errors—including double entry and transcription— possibly compromising medical data integrity. VA and DOD have been working since 1998 to modify their computer systems to ensure that patient health information can be shared between the two departments. In May 2004, we reported that they have accomplished a one-way transfer of limited health data from DOD to VA for separated service members. Through the transfer, health care data for separated service members are available to all VA medical facilities. This transfer gives VA clinicians the ability to access and display health care data through VA’s computerized patient record system remote data views about 6 weeks after the service member’s separation. The health care data include laboratory, pharmacy, and radiology records, and are available for approximately 1.8 million personnel who separated from the military between 1987 and June 2003. A second phase of the one-way transfer, completed in September 2003, added to the base of health information available to VA clinicians by including discharge summaries, allergy information, admissions information, and consultation results. VA and DOD are developing a two-way transfer of health information for patients who obtain care from both systems. Patients involved include those who receive care and maintain health records at multiple VA or DOD medical facilities within and outside the United States. Upon viewing the medical record, a VA clinician would be provided access to clinical information on the patient residing in DOD’s computerized health record systems. In the same manner, when a veteran seeks medical care at an MTF, the attending DOD clinician would be provided access to the veteran’s health information existing in VA’s computerized health record systems. In May 2004, we reported that VA’s and DOD’s approach to achieving the two-way transfer of health information lacks a solid foundation and that the departments have made little progress toward defining how they intend to accomplish it.