VA manages a large health system for veterans, providing health care services to over 5 million beneficiaries. The cost of these services in fiscal year 2005 was over $30 billion. According to VA, its health care system now includes 157 medical centers, 862 ambulatory care and community-based outpatient clinics, and 134 nursing homes. VA health care facilities provide a broad spectrum of medical, surgical, and rehabilitative care. The management of VA’s facilities is decentralized to 21 regional networks referred to as Veterans Integrated Service Networks (networks). The Charleston facility is part of Network 7, or the Southeast Network, and the Denver facility is located in Network 19, or the Rocky Mountain Network. To meet its mission of serving the needs of the nation’s veterans, VA partners with medical universities and DOD. In 1946, VA established a program to enter into partnerships with medical universities, now referred to as academic affiliations, to provide high quality health care to America’s veterans and to train new health professionals. Today, VA maintains affiliations with 107 of the nation’s 126 medical schools. In addition to academic affiliation agreements, VA purchases clinical services from medical schools for the treatment of veterans. Similarly, in 1982, the VA and DOD Health Resources Sharing and Emergency Operations Act (Sharing Act) was enacted to provide for more efficient use of medical resources through greater interagency sharing and coordination. For example, the VA Medical Center in Louisville and the Ireland Army Community Hospital in Fort Knox, Kentucky, have engaged in sharing activities to provide services to beneficiaries that include primary care, acute care pharmacy, ambulatory, blood bank, intensive care, pathology and laboratory, audiology, podiatry, urology, internal medicine, and ophthalmology. Given the importance of these partnerships to VA’s ability to meet its mission, VA’s 2003-2008 strategic plan includes goals for sustaining partnerships with medical universities and sharing resources with DOD. VA’s Denver and Charleston medical facilities have long-standing affiliations with local medical universities. VA’s facility in Denver is affiliated with the University of Colorado’s School of Medicine—through the University of Colorado at Denver and Health Sciences Center and UCH—and VA’s facility in Charleston is affiliated with MUSC. These affiliations provide both VA facilities with the majority of VA’s medical residents who rotate through all VA clinical service areas. Both VA facilities also purchase a significant amount of medical services from their affiliates. Specifically, the Denver facility annually obtains $9 million worth of services from UCH, and the Charleston VA facility buys $13 million in services annually from MUSC. The medical services purchased are in such areas as gastroenterology, infectious disease, internal medicine, neurosurgery, anesthesia, pulmonary, and cardiovascular perfusion. In addition to these services, VA also has a medical research partnership with MUSC for a mutually supported biomedical research facility, the Thurmond Biomedical Research Center. Table 1 provides more detailed information about the VA facilities in Charleston and Denver and their medical affiliates. VA evaluated the joint venture proposals for its facilities in Denver and Charleston on an ad hoc basis because it lacks criteria at the departmental level to evaluate such proposals consistently. VA has decided against a joint facility in Denver, but it is still in the process of considering such a facility in Charleston. In both locations, multiple iterations of the joint venture proposals have been considered, and negotiations between VA and its medical affiliates have stretched over a number of years. Negotiations in both locations were hampered by limited communication and collaboration, a lack of top VA leadership support for the proposals, and no single VA point of contact for the medical affiliates. VA does not have criteria at the departmental level that could be used to evaluate joint venture proposals on a consistent basis. Consequently, VA officials identified factors for considering the specific joint venture proposals in Charleston and Denver. Some of the identified factors were consistent between the two locations, and others were site-specific, but it is not clear how any of the factors weighed in VA’s consideration of the proposals. In studies and correspondence regarding the joint venture proposal in Denver, VA officials identified several factors that they believed to be important in considering the joint venture proposal. In particular, in correspondence between VA and UCH in 2002, and again in 2004, the Secretary of VA identified four major considerations—(1) maintaining VA’s identity; (2) maintaining VA’s governance; (3) balancing and evaluating priorities within VA’s capital asset program, including the CARES process; and (4) securing funding. In 2002, a VA taskforce composed of headquarters, network, and facility officials examined the potential for a VA-UCH joint facility and identified additional factors critical to the decision-making process. These factors included maintaining VA’s commitment to providing health care to meet veterans’ unique needs and research programs, VA’s aging infrastructure, and the gap between health care demand and capacity and funding. Another consideration that arose through the course of negotiations was VA’s space requirements for a new facility and the associated acreage of land needed and available on the Fitzsimons campus. VA did not indicate how the factors identified in the studies or correspondence weighed in its decision making regarding the joint venture proposal. Similarly, the VA-MUSC steering group identified a set of criteria to help identify and analyze the joint venture proposal for Charleston. As shown in table 2, these criteria include enhanced quality and service and financial viability. The steering group’s report did not indicate how or why these criteria were chosen, provide an explanation of the individual criterion, or indicate the relative importance of the criteria. While the steering group used the criteria in identifying and evaluating options for further consideration, it is not clear how, if at all, these criteria will be used by VA leadership in making a final decision on the joint venture proposal. In meetings with VA officials about the joint venture proposal in Charleston, officials identified other considerations that could influence the decision- making process, including the condition of the existing VA facility and the need to balance investment priorities across the region and nation. VA has decided against a fully-integrated facility with UCH in Denver. Negotiations between VA and the University of Colorado at Denver and Health Services Center and UCH stretched over a number of years, and a number of different options were considered. The lack of leadership buy-in and miscommunication about VA’s intentions regarding the future Denver facility prolonged negotiations and created an atmosphere of mistrust between the parties. Figure 1 provides a time line of key events in the negotiations between VA and UCH. In 1995, the University of Colorado decided to relocate its Health Sciences Center campus, including its affiliated UCH, from downtown Denver to the former Fitzsimons Army Medical Base located in nearby Aurora, Colorado, which was closed as part of DOD’s base realignment and closure process. UCH determined that its facility in downtown Denver lacked the space to accommodate its patient population and that there was little room for expansion. The availability of land at the Fitzsimons site offered an opportunity for UCH to move and expand the size of its campus. When Fitzsimons closed, DOD turned a portion of the 577 acres the base occupied over to the U.S. Department of Education so that it could convey land to public educational institutions. The University of Colorado applied for and received 227 acres from the U.S. Department of Education, and the University leased about 55 acres to UCH for its new inpatient and outpatient pavilions. The majority of the land at Fitzsimons—about 332 acres—was purchased by FRA for $1.85 million. FRA plans to develop a biomedical research park on this land. The remaining land at Fitzsimons is owned by the City of Aurora, a private entity, and a nonprofit organization. In late 1999, VA officials at the facility and network level and UCH officials began to informally discuss the possibility of relocating VA’s Denver medical center to the Fitzsimons campus. UCH and VA officials were concerned that UCH’s move to Fitzsimons, about 6 miles from its downtown Denver location, would strain their affiliation because of the amount of time it would take doctors to travel between the facilities. The UCH president also suggested that colocating the UCH and VA medical center at Fitzsimons could achieve cost efficiencies through integrating inpatient activities, such as medical and surgical specialty labs, and sharing some patient treatment. In considering a possible joint venture, facility and network VA officials worked with UCH officials to examine options for moving VA’s medical center to the Fitzsimons campus as well as sharing services and facilities with UCH. In particular, these officials jointly funded a study to determine the feasibility and cost of different options, including constructing free-standing facilities with limited sharing to jointly constructing and operating a new fully-integrated facility at Fitzsimons. The study, completed in 2001, concluded that a fully integrated, or joint, facility was the most cost-effective option. A second study commissioned by VA’s Network 19 in 2002 also analyzed a range of options, including a joint VA-UCH facility; but this study did not recommend which option to pursue. These studies were shared with VA’s central office, veteran service organizations, and the Congress, and became the basis of the joint venture proposal and negotiations. The Secretary of VA established a task force to examine the joint venture proposal to integrate the Denver medical center and UCH on the Fitzsimons campus in July 2002. The task force was composed of VA officials at the departmental, network, and facility levels. In September 2002, the task force issued a draft report, which examined seven alternatives—ranging from maintaining the status quo to constructing a fully integrated facility with UCH. The task force’s report presented advantages and disadvantages of each alternative. It did not recommend which alternative to pursue.