[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




 
                  ASSESSING CAPITAL ASSET REALIGNMENT
                  FOR ENHANCED SERVICES AND THE FUTURE
                   OF THE U.S. DEPARTMENT OF VETERANS
                     AFFAIRS' HEALTH INFRASTRUCTURE

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 9, 2009

                               __________

                           Serial No. 111-27

                               __________

       Printed for the use of the Committee on Veterans' Affairs



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                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

CORRINE BROWN, Florida               STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas                 CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine            JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South     HENRY E. BROWN, Jr., South 
Dakota                               Carolina
HARRY E. MITCHELL, Arizona           JEFF MILLER, Florida
JOHN J. HALL, New York               JOHN BOOZMAN, Arkansas
DEBORAH L. HALVORSON, Illinois       BRIAN P. BILBRAY, California
THOMAS S.P. PERRIELLO, Virginia      DOUG LAMBORN, Colorado
HARRY TEAGUE, New Mexico             GUS M. BILIRAKIS, Florida
CIRO D. RODRIGUEZ, Texas             VERN BUCHANAN, Florida
JOE DONNELLY, Indiana                DAVID P. ROE, Tennessee
JERRY McNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota
JOHN H. ADLER, New Jersey
ANN KIRKPATRICK, Arizona
GLENN C. NYE, Virginia

                   Malcom A. Shorter, Staff Director

                                 ______

                         Subcommittee on Health

                  MICHAEL H. MICHAUD, Maine, Chairman

CORRINE BROWN, Florida               HENRY E. BROWN, Jr., South 
VIC SNYDER, Arkansas                 Carolina, Ranking
HARRY TEAGUE, New Mexico             CLIFF STEARNS, Florida
CIRO D. RODRIGUEZ, Texas             JERRY MORAN, Kansas
JOE DONNELLY, Indiana                JOHN BOOZMAN, Arkansas
JERRY McNERNEY, California           GUS M. BILIRAKIS, Florida
GLENN C. NYE, Virginia               VERN BUCHANAN, Florida
DEBORAH L. HALVORSON, Illinois
THOMAS S.P. PERRIELLO, Virginia

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                              June 9, 2009

                                                                   Page
Assessing Capital Asset Realignment for Enhanced Services and the 
  Future of the U.S. Department of Veterans Affairs' Health 
  Infrastructure.................................................     1

                           OPENING STATEMENTS

Chairman Michael Michaud.........................................     1
    Prepared statement of Chairman Michaud.......................    51
Hon. Henry E. Brown, Jr., Ranking Republican Member..............     2
    Prepared statement of Congressman Brown......................    51

                               WITNESSES

U.S. Department of Veterans Affairs:
    Hon. Everett Alvarez, Jr., Chairman, Capital Asset 
      Realignment for Enhanced Services Commission...............    29
        Prepared statement of Hon. Alvarez.......................    70
    Donald H. Orndoff, AIA, Director, Office of Construction and 
      Facilities Management......................................    38
        Prepared statement of Mr. Orndoff........................    82
U.S. Government Accountability Office, Mark L. Goldstein, 
  Director, Physical Infrastructure..............................    31
    Prepared statement of Mr. Goldstein..........................    73

                                 ______

American Legion, Joseph L. Wilson, Deputy Director, Veterans 
  Affairs and Rehabilitation Commission..........................     3
    Prepared statement of Mr. Wilson.............................    52
Disabled American Veterans, Joy J. Ilem, Assistant National 
  Legislative Director...........................................    11
    Prepared statement of Ms. Ilem...............................    62
Paralyzed Veterans of America, Carl Blake, National Legislative 
  Director.......................................................     5
    Prepared statement of Mr. Blake..............................    54
Veterans of Foreign Wars of the United States, Dennis M. 
  Cullinan, Director, National Legislative Service...............     7
    Prepared statement of Mr. Cullinan...........................    57
Vietnam Veterans of America, Richard F. Weidman, Executive 
  Director for Policy and Government Affairs.....................     9
    Prepared statement of Mr. Weidman............................    60

                   MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Questions and Responses for the Record:
    Hon. Michael H. Michaud, Chairman, Subcommittee on Health, 
      Committee on Veterans' Affairs, to Hon. Eric K. Shinseki, 
      Secretary, U.S. Department of Veterans Affairs, letter 
      dated June 18, 2009, including questions from Hon. Joe 
      Donnelly, and VA responses.................................    85


                  ASSESSING CAPITAL ASSET REALIGNMENT
                  FOR ENHANCED SERVICES AND THE FUTURE
                   OF THE U.S. DEPARTMENT OF VETERANS
                     AFFAIRS' HEALTH INFRASTRUCTURE

                              ----------                              


                         THURSDAY, JUNE 9, 2009

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
                                    Subcommittee on Health,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:09 a.m., in 
Room 334, Cannon House Office Building, Hon. Michael Michaud 
[Chairman of the Subcommittee] presiding.

    Present: Representatives Michaud, Teague, Halvorson, 
Perriello, Brown of South Carolina, Boozman, and Bilirakis.

             OPENING STATEMENT OF CHAIRMAN MICHAUD

    Mr. Michaud. I call the Subcommittee on Health to order and 
while we are giving our opening remarks, I would ask the first 
panel to come forward.
    I would like to thank everyone for attending this morning's 
hearing. Today's hearing marks the fifth anniversary of the 
CARES decision, otherwise known as the Capital Asset 
Realignment for Enhanced Services.
    The purpose of this hearing is to assess the U.S. 
Department of Veterans Affairs' (VA's) implementation of CARES 
and to investigate the effectiveness of CARES as a capital 
planning tool.
    In addition, today's hearing will explore whether CARES 
should continue in the future or if the VA should adapt to an 
alternative capital planning mechanism.
    When the VA embarked on the CARES process 5 years ago, over 
5 years actually, the VA's health infrastructure was thought to 
be unresponsive to the needs of current and future veterans.
    While about 24 percent of the veterans' population was 
enrolled in the VA for health care, the CARES plan assumed the 
enrollment population would increase to 33 percent by the end 
of 2022.
    In addition, there were concerns about the ability of the 
existing health care infrastructure to meet the demand of the 
aging veteran 
population who opt for warmer climates in the south and southwes
t.
    CARES was intended to eliminate or downsize unused 
facilities, convert older, massive hospitals to more efficient 
clinics, and build hospitals where they are needed in more 
populated areas. In essence, CARES was to direct resources in a 
sensible way to increase access to care for many veterans and 
to improve the efficiency of health care operations across the 
VA facilities.
    Over the years, there have been challenges of implementing 
the CARES decision in numerous locations. Most notably, the VA 
actually has reversed the CARES decision under the leadership 
of different VA Secretaries.
    Too often we hear stories of veterans who have been waiting 
for new facilities for over 10 or more years.
    In addition, there is a new concept of health care centers, 
which provide primary and specialty care and is a hybrid of a 
Community-Based Outpatient Clinic (CBOC) and full-fledged 
hospital. Because this is a relatively new concept the VA is 
rolling out, it is important that we fully understand how it 
fits into the overall CARES plan.
    I look forward to hearing the testimony of our panels today 
as we determine the path forward to continue to build a strong 
health infrastructure for the VA system.
    One of the reasons why this Committee continues to receive 
legislation dealing with contracting out VA health care 
services is because VA has not moved as aggressively as we 
would like to see them move forward under the CARES process. 
Hence, Members of Congress are concerned and they are trying to 
do what they can to make sure that veterans in their State have 
access to that health care that they need to take care of their 
needs.
    I would now like to recognize Ranking Member Brown for an 
opening statement that he may have.
    [The prepared statement of Chairman Michaud appears on p. 51
.]

         OPENING STATEMENT OF HON. HENRY E. BROWN, JR.

    Mr. Brown of South Carolina. Thank you, Mr. Chairman, and 
thanks to the panel for coming and sharing their knowledge with 
us this morning.
    Today, more than 80 percent of the primary, specialty, and 
mental health care of our veterans' needs can be provided in an 
outpatient setting. Yet, much of the Department of Veterans 
Affairs' health care infrastructure was built more than 50 
years ago when VA care meant hospital care.
    A review of VA's real property by the U.S. Government 
Accountability Office (GAO) in 1999 found that VA was wasting a 
million dollars a day on the maintenance of outdated and 
underutilized health care facilities.
    In response to this report and in recognition of the need 
to update facilities to deliver 21st century health care, VA 
established the Capital Asset Realignment for Enhancement 
Services (CARES) process.
    CARES was designed to be the capital planning blueprint for 
the future, to modernize and better align VA health care 
facilities for the changing veterans' population.
    The CARES Commission identified several ways to improve 
access and enhance quality of care, including increased 
collaboration and partnership with the U.S. Department of 
Defense (DoD) and VA's academic affiliates.
    Specifically, in my home State of South Carolina, the CARES 
Commission supported a concept for a joint venture with the 
Medical University of South Carolina and the Ralph H. Johnson 
VA medical center in Charleston.
    The Secretary's May 2004 CARES decision also stated that VA 
will continue to consider options for sharing opportunities 
with the Medical University of South Carolina.
    Since the leadership of the Medical University came to VA 
with this proposal more than 6 years ago, I and this Committee 
have taken significant steps to study and move forward with 
this historic opportunity to establish a new innovative model 
of care.
    The ``Charleston Model'' would ensure high-quality health 
care for veterans in the Charleston area and could be leveraged 
to improve access to care in other areas.
    A significant milestone was reached in advancing the 
project with the passage of Public Law 109-461, the Veterans 
Benefit Health Care and Information Technology Act of 2006.
    Section 804 of this law authorized $36.8 million for VA to 
enter into an agreement with the Medical University to design, 
construct, and operate a collocated, joint-use medical facility 
in Charleston, South Carolina. However, much to my dismay, the 
VA has not yet set aside any funding to implement the law.
    As we evaluate the effectiveness of CARES, it is also vital 
that we reevaluate the importance of collaborative 
partnerships. Building on the close relationships that VA 
already has with medical schools across the Nation is a 
powerful tool that VA can use to achieve greater health care 
quality and further efficiencies while still preserving the 
identify of a veterans' health care system.
    I look forward to our discussion today and yield back the 
balance of the time.
    [The prepared statement of Congressman Brown appears on 
p. 51.]
    Mr. Michaud. Thank you, Mr. Brown.
    I would like to recognize the individuals on panel one: 
Joseph Wilson, who is with the American Legion; Carl Blake, the 
Paralyzed Veterans of America (PVA); Dennis Cullinan, who is 
with the Veterans of Foreign Wars of the United States (VFW); 
Rick Weidman, who is with the Vietnam Veterans of America 
(VVA); and Joy Ilem, the Disabled American Veterans (DAV).
    So I want to thank all of you for coming here this morning. 
Look forward to your testimony. And we will start with Mr. 
Wilson.

   STATEMENTS OF JOSEPH L. WILSON, DEPUTY DIRECTOR, VETERANS 
 AFFAIRS AND REHABILITATION COMMISSION, AMERICAN LEGION; CARL 
  BLAKE, NATIONAL LEGISLATIVE DIRECTOR, PARALYZED VETERANS OF 
  AMERICA; DENNIS M. CULLINAN, DIRECTOR, NATIONAL LEGISLATIVE 
SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES; RICHARD 
   F. WEIDMAN, EXECUTIVE DIRECTOR FOR POLICY AND GOVERNMENT 
    AFFAIRS, VIETNAM VETERANS OF AMERICA; AND JOY J. ILEM, 
  ASSISTANT NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN 
                            VETERANS

                 STATEMENT OF JOSEPH L. WILSON

    Mr. Wilson. Good morning, Mr. Chairman and Members of the 
Subcommittee. Thank you for this opportunity to present the 
American Legion's views on the future of the Department of 
Veterans Affairs' infrastructure.
    It is the American Legion's position that Congress keep in 
mind the importance of continuity of care during a 
servicemember's transition from active duty to the community.
    Within the VA medical system are various divisions that 
accommodate a high demand of services.
    In 2004, the VA completed the Capital Asset Realignment for 
Enhanced Services or CARES process, which called for the 
critical construction needs for outdated VA hospitals and 
clinics throughout the Nation, throughout the VA system.
    The Secretary of VA reported Congress would have to include 
$1 billion annually for 6 years to ensure the success of CARES. 
The American Legion has recommended the same figure in its 
annual budget recommendation since the CARES decision.
    Due to lack of funding over the years, it is believed VA 
has been playing fiscal catch-up. Although the VA had begun 
implementing CARES decisions, a Government Accountability 
Office or GAO report found implementation was not being 
centrally tracked or monitored to determine the impact the 
CARES process has or has not had on the mission.
    GAO was also tasked with examining how CARES contributes to 
the Veterans Health Administration (VHA) capital planning 
process, the extent to which the CARES process considered 
capital asset alignment alternatives and the extent to which VA 
had implemented CARES decisions and how the application has 
helped VA carry out its mission.
    Through CARES, the VA developed a model to estimate the 
demand for health care services as well as ascertained the 
capacity or availability of infrastructure to meet the demand. 
It was the recommendation of the VA to meet future health care 
demand by building medical facilities and opening more 
community-based outpatient clinics or CBOCs.
    GAO further examined the CARES process by other means such 
as conducting six site visits to VA facilities in Walla Walla; 
El Paso; Big Spring, Texas; Orlando, Florida; Pittsburgh, 
Pennsylvania; and Los Angeles, California, but they found 
critical infrastructure problems at the following facilities, 
Walla Walla, greater Los Angeles, Orlando, and Pittsburgh.
    As a result of the GAO report, it was recommended that VA 
provide the information necessary to monitor the implementation 
and impact of CARES decisions.
    It was also recommended VA provide outcome measures that 
report the progress of CARES as it relates to access to medical 
services for veterans.
    Since fiscal year 2002, approximately 945,000 Operation 
Enduring Freedom/Operation Iraqi Freedom (OEF/OIF) veterans 
have left active duty and become eligible for VA health care. 
Approximately 51 percent of the returnees were active duty 
while 49 percent were Reserve and National Guard. Many are also 
returning with various injuries and illnesses to include 
traumatic brain injury (TBI), spinal cord injury (SCI), blind 
eye injury, post-traumatic stress disorder (PTSD), and loss of 
limbs to name a few.
    The American Legion presents the above-mentioned numbers to 
evoke to the Congress and other pertinent stakeholders to 
determine the adequacy or lack thereof of care to veterans when 
there is lack of funding and/or inadequate accommodations, 
namely infrastructure that houses VA services.
    While the decision to assess and plan and construct or 
reconstruct VA medical facilities has been underway since the 
CARES decision in 2004, the aforementioned figures also suggest 
veterans' issues have and continue to increase.
    With the average age of VA facilities remaining at 49 
years, the American Legion questions whether these facilities 
can sustain new medical technology for years to come. During 
that time, we must remain conscious that veterans' issues are 
patterned to rise. It is, therefore, imperative Congress 
support the demand for timely construction of these facilities.
    It is the position of the American Legion that during the 
improvement/enhancement of VA facilities, a base of health care 
services must not only be maintained but must be increased to 
accommodate influxes.
    In order for the CARES plan to work successfully, there 
must be adequate funding to accommodate every project as 
implemented by the Commission. To play fiscal catch-up from 
this point would adversely affect the intent of the CARES 
project or VA infrastructure and all veterans who rely on VA 
health care.
    The American Legion also supports the mission of the CARES 
initiative if it provides a continuous, up-to-date 
infrastructure for an ever-changing veterans' community. 
However, we express descent and concern if the intent is aimed 
at the effort to reduce VA expenditures under the pretext of 
cost savings without regard to the needs of the veterans' 
population.
    Finally, the preparation to construct and/or reconstruct VA 
medical facilities must be planned in accordance with service 
alignment decisions to fulfill the promise of continuity of 
care and prevent other inadequacies such as fragmentation of 
care throughout the women veterans' population.
    The American Legion maintains that the CARES implementation 
process must be an open and transparent process that 
continually and fully informs the veterans service 
organizations (VSOs) of CARES initiatives, criteria proposals, 
and timeframes.
    This also includes an accurate assessment of the demand for 
all medical services which gauges how much infrastructure is 
required to accommodate this Nation's veterans.
    Through this form of checks and balances, the maintenance 
of quality stands to uphold the effectiveness of CARES as it 
pertains to strategic planning and the future of the entire VA 
system.
    Mr. Chairman and Members of the Subcommittee, the American 
Legion sincerely appreciates the opportunity to submit 
testimony. Thank you.
    [The prepared statement of Mr. Wilson appears on p. 52.]
    Mr. Michaud. Thank you, Mr. Wilson.
    Mr. Blake.

                    STATEMENT OF CARL BLAKE

    Mr. Blake. Chairman Michaud and Ranking Member Brown, on 
behalf of Paralyzed Veterans of America, I would like to thank 
you for the opportunity to testify today.
    I will limit my comments to CARES recommendations as they 
directly impacted care for spinal cord injured veterans and 
veterans with spinal cord dysfunction.
    In reflecting on the CARES report, we believe that the 
health care concerns of veterans with catastrophic disabilities 
and particularly veterans with spinal cord injury or 
dysfunction (SCI/D) were adequately addressed.
    Emphasis was placed on expansion of the SCI hub-and-spoke 
delivery model to fill geographic gaps in SCI/D services. 
Specifically the CARES Commission called for the construction 
of four new SCI centers in the VA system. Those locations were 
targeted for new centers in Syracuse, New York, Veterans 
Integrated Services Network (VISN) 2; VISN 16, which was later 
pinpointed to Jackson, Mississippi, by the VA and PVA 
officials; Denver, Colorado located in VISN 19; and 
Minneapolis, Minnesota, which was previously in VISN 23.
    With regards to Denver, the Subcommittee is probably aware 
that it has been a long and difficult process to determine what 
the health care infrastructure plan for this region would be. 
The CARES planning called for a 30-bed SCI center to be located 
at a new Denver VA medical center to be built on the Fitzsimons 
Campus. However, the larger facility planning process moved 
forward in bits and starts.
    The plan for Denver has taken many controversial turns 
spread out over many years with no plan being more troublesome 
than the new plan that was released in early 2008 by then VA 
Secretary Peake.
    Fortunately the VA finally announced in March that a new 
stand-alone hospital will be built on the Fitzsimons Campus and 
a new SCI center will be included in that facility.
    PVA was pleased that the final CARES Commission report 
included several recommendations for the expansion of long-term 
care services directed at spinal cord injured veterans as well.
    Prior to the CARES initiative, the VA system of care 
provided only 125 long-term care staff nursing home beds 
dedicated to veterans with spinal cord injury. These SCI long-
term care beds were located in four VA facilities, at Brockton, 
Massachusetts; Hampton, Virginia; Castle Point, New York, and 
at the Hines VA medical center in Chicago, Illinois.
    Interestingly, the VA had no institutional long-term care 
beds for SCI veterans located west of the Mississippi River at 
that time.
    While some progress has been made to expand VA's capacity 
for dedicated SCI long-term care, much work remains to be done. 
Despite the CARES Commission recommendations to increase SCI 
long-term care capacity, we believe that particular emphasis 
needs to be placed on expansion into the western United States.
    In 2007, VA released a copy of its long-term care strategic 
plan that in the opinion of the co-authors of the Independent 
Budget and outlined in the fiscal year 2010 Independent Budget 
was lacking in specific planning detail regarding the future 
direction of its long-term care program.
    In 2008, PVA understood that VA was working on the 
development of a second more comprehensive long-term care 
strategic plan. However, to the best of our knowledge, no 
follow-up plan has ever been released. We would encourage the 
Subcommittee to investigate this issue further.
    The CARES Commission emphasized in its final report that 
strategic planning for aging veterans and veterans with serious 
mental illness will be essential going forward.
    The Subcommittee has posed the question about the viability 
of CARES in assessing the future health care needs of veterans. 
As pointed out in the Independent Budget for fiscal year 2010, 
despite the fact that CARES was completed in 2004, the VA 
continues to assess its needs and priorities for infrastructure 
by using concepts derived from the CARES model.
    PVA actually sees this question as being one about whether 
or not the CARES recommendations made then appropriately 
address new demands on the system, particularly as it relates 
to the younger generation of veterans returning from Operation 
Enduring Freedom and Operation Iraqi Freedom.
    Moreover, the question seems to suggest that CARES did not 
take into account that new demands to be growing in rural 
communities and that the infrastructure changes outlined by 
CARES do not reflect this change.
    While we certainly understand this concern, we believe that 
the CARES model appropriately addressed where the greatest 
demand for care comes from.
    Moreover, the CARES model provided a blueprint for aligning 
VA's infrastructure to best meet the needs of the most veterans 
possible.
    Recognizing that certain demand has changed since 2004, the 
VA has moved forward on other major and minor construction 
initiatives outside of the CARES recommendations.
    Mr. Chairman, we would again like to thank you and the 
Subcommittee for examining this issue. We look forward to 
working with the Subcommittee going forward to assist the VA in 
accomplishing this difficult task. And I would be happy to take 
any questions that you might have.
    [The prepared statement of Mr. Blake appears on p. 54.]
    Mr. Michaud. Thank you, Mr. Blake.
    Mr. Cullinan.

                STATEMENT OF DENNIS M. CULLINAN

    Mr. Cullinan. Thank you. Chairman Michaud, Mr. Brown, 
distinguished Members of the Subcommittee, on behalf of the men 
and women of the Veterans of Foreign Wars and our auxiliaries, 
I want to thank you for inviting us to participate in today's 
very important oversight hearing.
    In April 1999, GAO issued a report on the challenges that 
VA faced in transforming the health care system. At the time, 
VA was in the midst of reorganizing and modernizing after 
passage of the ``Veterans Eligibility Health Care Reform Act of 
1996.''
    VA then developed a 5-year plan to update and modernize the 
system, including introduction of systemwide managed care 
principles such as the uniform benefits package.
    In response to the enormous challenges brought about in 
implementing this plan, VA began the Capital Asset Realignment 
for Enhanced Services or CARES process. It was the first 
comprehensive, long-range assessment of the VA's health care 
system's infrastructure, since 1981.
    CARES was VA's systematic, data-driven assessment of its 
infrastructure that evaluated the present and future demands 
for health care services, identified changes that would help 
meet veterans' need.
    The CARES process necessitated the development of actuarial 
models to forecast future demand for health care and the 
calculation of the supply of care and the identification of 
future gaps in infrastructure capacity.
    Throughout the process, we were generally supportive and we 
continue to emphasize our support for the ES or enhanced 
services portion of the CARES acronym. We wanted to see that VA 
planned and delivered services in a more efficient manner, it 
also properly balanced the needs of veterans. And for the most 
part, that process did just that.
    The 2004 CARES decision document gave VA a broad road map 
for the future. It called for the construction of many new 
medical facilities over the 100 major construction projects to 
realign or renovate current facilities and the creation of 150 
new CBOCs to expand health care in areas where the CARES 
process had identified gaps.
    The strength of CARES in our view is not its resultant one-
time blueprint, but in the decisionmaking framework it 
produced. It created a methodology for future construction 
decisions.
    VA's construction priorities are reassessed annually, all 
based on the basic methodology created to support the CARES 
decisions. These decisions are created systemwide, taking into 
account what is best for the totality of health care and what 
its priorities should be.
    We continue to have a strong faith that this basic 
framework serves the needs of veterans in most cases. Despite 
its strengths, there are certainly some challenges.
    While a huge number of projects are underway, a number of 
these, they are still in the planning and design phase. As 
such, they are subject to changes, but they have also not 
received full funding.
    The Congress and Administration must continue to provide 
full funding for the major construction account to reduce this 
backlog, but also begin funding future construction priorities.
    With the twin problems of funding and speed in mind, VA has 
recently been exploring ways to improve the process. Last year, 
they unveiled the Health Care Center Facility (HCCF) or leasing 
concept.
    As we understand it, HCCF was intended to be an acute care 
center somewhere in size and scope between a large VA medical 
center and a CBOC. It is intended to be a leased facility, 
enabling a shorter time for it to be up and running, that 
provides outpatient care. Inpatient care would be provided on a 
contracted basis, typically in partnership with a local health 
care facility.
    While supportive of more quickly providing greater health 
care access to veterans on a cost-effective basis, we expressed 
our concerns with the HCCF concept in the Independent Budget. 
Primarily we are concerned that this concept, which relies 
heavily on widespread contracting, would be done in place of 
needed major construction.
    Acknowledging that with the changes taking place in health 
care VA needs to look very carefully before building new 
medical facilities, cost plus projected usage must justify 
full-blown medical centers, that leasing is the right thing to 
do only if the agreements make sense.
    VA needs to do a better job explaining to veterans and the 
Congress what their plans are for every location based on the 
facts. The misconception that plagued the Denver construction 
project amply demonstrates this point.
    We have seen the importance of leasing facilities with 
certain CBOCs and Vet Centers, especially when it comes to 
expanding care to veterans in rural areas.
    CARES did an excellent job of identifying locations with 
gaps in care and VA has continued to refine its statistics, 
especially with the improved data it is receiving from DoD on 
OEF/OIF veterans.
    Providing more care to rural veterans is a major challenge 
for the system and the expansion of CBOCs and other initiatives 
can only help. We do believe, however, that much of what will 
improve access for these veterans will lie outside the 
construction process.
    VA must better use its fee-basis care program and the 
recent initiatives passed by Congress such as the mobile health 
care vans or the rotating satellite clinics in some areas to 
fix some of the demand problems that these veterans face.
    Mr. Chairman, that concludes my statement. I thank you very 
much for this opportunity.
    [The prepared statement of Mr. Cullinan appears on p. 57.]
    Mr. Michaud. Thank you very much.
    Mr. Weidman.

                STATEMENT OF RICHARD F. WEIDMAN

    Mr. Weidman. Mr. Chairman, thank you for your leadership, 
yours and Mr. Brown's in holding this hearing today and to take 
a look at this process of CARES and the whole construction 
milieu within VA.
    VVA supports the concept behind CARES given that it is a 
concept of stewardship and each Administration is a steward of 
the Nation's physical facility to care for veterans.
    Unfortunately, that stewardship was not very well met 
during various periods since it was first constructed following 
World War II. And many of the facilities have become 
dilapidated when they started to change from outpatient to 
inpatient. In the early 1990s, they had renovated spaces that 
then lay dormant.
    Frankly, we were always skeptical of GAO's estimate that it 
was as high as has been reputed to care for outmoded 
facilities. All of the projections at that point were that the 
veterans' population served by the Veterans Health 
Administration would continue to decline on into the future. 
That has not proven to be the case, however.
    The veterans' population VA formula, which is for 
estimating workload in the future, which is based on many of 
the same formula from Milliman that was used in CARES, has 
consistently underestimated the number of veterans who are 
seeking services. Five years in a row, they have grossly 
underestimated the number of OIF/OEF veterans who would be 
seeking services and they have underestimated the number of 
veterans of older generations who found need to and were 
eligible to seek services from the VA even before the Congress 
began easing the requirements for Category 8s to seek services 
at VA hospitals.
    So the assumption, one of the key assumptions behind it, 
which was that there was a great deal of excess space and we 
had a declining veterans' population has proven not to be the 
case today.
    The second major problem that we have with CARES that we 
have had from the very beginning was that the formula was a 
civilian formula that did not take into account that wounds, 
maladies, injuries, and conditions that derive from military 
service, particularly wartime service, and is detailed at VA, 
at the veterans health initiative, the 32 curricula that look 
into the special medical, long-range medical problems that 
veterans have as a result of their military service or the 
military history card that people say that we are fanatics 
about that, frankly, needs to be incorporated into the 
computerized patient treatment record and taken account of in 
the diagnosis and treatment modalities at VA.
    All of those things lead to a problem with underestimating 
the number and types of resources that individual veterans will 
utilize.
    Second, because the Milliman formula was a civilian 
formula, it estimates one to three presentations or things 
wrong with them that need to be addressed by a clinician of 
each person walking across the door sill. And, in fact, at VA 
hospitals, it ranges from five to seven presentations per 
person, not one to three.
    In addition to that, it does not fully take into account 
the VA formulas of not only wartime exposures but who is in a 
geographic area. Many who can and who have the resources who 
are middle class, as they age, they move south when they 
retire. Those who are left are older and sicker and poorer, 
quite frankly, so that the burden rate, the number of 
presentations per person is going to go up in the north.
    So both the Vera formula, which is not the subject of this 
particular hearing, but also the CARES formula are going to be 
somewhat askew when it comes to estimating what are going to be 
the future needs of the physical structure within which the 
health care is delivered.
    There are four things that we recommend that be done from 
this point on. The first thing is that the basic CARES formula 
must be improved to take into account military service and 
things that happened to people in the course of that and to 
adjust that formula to the reality of who we see at VA 
hospitals in terms of the number of presentations.
    Second, we believe that the whole process needs to be much 
more transparent. In the last 5 to 6 years, Veterans Health 
Administration has, in fact, become much less transparent if 
indeed not secretive and shown virtual contempt for the 
Congress, for the veterans service organizations, for the union 
and its members, and for virtually anyone outside who would 
dare question any of their decisions no matter how wrong-headed 
or how off base they were as an example in terms of the lack of 
preparation for dealing with PTSD among all generations but 
particularly OIF/OEF veterans.
    Third, VVA urges that the major construction budget be set 
at a level of at least $1.5 to $2 billion a year and possibly 
even higher. This is the time to, for those who have the money, 
to invest in construction. Why? Because so many people cannot 
get financing, that the cost of material and labor is more 
competitive now than it will be in 4 or 5 years when the 
economy rebounds.
    Number four, VVA strongly recommends that the Secretary and 
the Deputy Secretary review the lines of authority and 
accountability for CARES, who is responsible for what, define 
those roles, and make it clear who is going to be held 
accountable, a novel concept within the Veterans Health 
Administration, who is actually going to be held accountable 
for delivering what should be delivered and decisions on time 
that actually results in enhanced services for veterans.
    Mr. Chairman, I thank you for the opportunity for VVA to 
present here today and for your leadership of you and your 
distinguished Committee in holding this hearing. Thank you.
    [The prepared statement of Mr. Weidman appears on p. 60.]
    Mr. Michaud. Thank you very much.
    Ms. Ilem.

                    STATEMENT OF JOY J. ILEM

    Ms. Ilem. Mr. Chairman and Members of the Subcommittee, 
thank you for inviting DAV to testify at this oversight 
hearing. We appreciate the opportunity to offer our views on 
CARES and to discuss the future of VA's health care 
infrastructure.
    DAV concluded at the completion of CARES it was a 
comprehensive and fully justified road map for VA's 
infrastructure needs. However, once the plan was released media 
backlash developed to the proposed recommendations affecting 
the operating missions of a number of VA facilities. Many 
veterans, fearful that they would lose VA health care services, 
opposed the plans for changes in their States and at their 
facilities irrespective of the validity of the findings or the 
value of the plan as a whole. Local and political pressure 
became intense and in many cases, the proposed CARES 
recommendations were abandoned.
    Unfortunately, the past decade of deferred and underfunded 
construction budgets has meant that VA has not adequately 
recapitalized its facilities, now leaving the health care 
system with a large backlog of major construction projects 
totaling more than $6 billion, with an accompanying urgency to 
deal with this growing dilemma.
    Recently VA began to discuss the necessity to consider 
alternative means to address the growing capital infrastructure 
backlog and the significant challenge of funding it. VA 
broached the idea of a new model for health care delivery, the 
Health Care Center Facility or HCCF leasing program.
    VA has argued that this model in lieu of the traditional 
approach to major medical facility construction would allow VA 
to quickly establish new facilities that would provide 95 
percent of the care and specialty services veterans will need. 
The HCCF model seems to offer a number of benefits in 
addressing this capital infrastructure problem.
    However, while it offers some obvious advantages, we are 
concerned about the overall impact of this new model on the 
future of VA's system of care, including the potential 
unintended consequences on continuity of care and delivery of 
comprehensive services, its biomedical research and development 
programs, and particularly the impact on VA's renowned graduate 
medical education and health professions training programs.
    DAV is also concerned with VA's plan for obtaining 
inpatient services under the model and we question the ability 
for maintaining existing specialized services.
    In November 2008, VA responded to a Senate request for more 
information on VA's plans for the newly proposed HCCF leasing 
initiative. In a letter, VA addressed a number of key questions 
that may be of interest to the Subcommittee, including whether 
studies have been carried out to determine the effectiveness of 
the HCCF approach, the full extent of the current construction 
backlog, the engagement of community health care providers in 
the proposal, the ramifications on the delivery of long-term 
care and inpatient specialty care, and whether VA would be able 
to ensure that needed inpatient capacity will remain available.
    What is not clear is to the extent which VA plans to deploy 
the HCCF model. In areas where existing community-based 
outpatient clinics need to be replaced or expanded due to the 
need to modernize, add services, or increase capacity, the 
model would seem appropriate and beneficial to veterans.
    On the other hand, if VA plans to replace the majority or 
even a large fraction of all VA medical centers with HCCFs, 
such a radical shift would pose a number of concerns for DAV.
    Fully addressing these and other related questions are 
important, but we see this challenge as only a small part of 
the overall picture related to VA health care infrastructure 
needs in the 21st century. The emerging HCCF plan does not 
address the fate of VA's 153 medical centers that are on 
average 55 years of age or older.
    As we grapple with the issue of health care reform in 
America, we must make every effort to protect the VA system for 
future generations of sick and disabled veterans. A well 
thought-out capital and strategic plan is urgently needed and 
the tough decisions must be made and not avoided as in the 
response to the seemingly stalled CARES process.
    Congress and the Administration must work together to 
secure VA's future to design a VA of the 21st century. 
Regardless of the direction VA takes, first and foremost, we 
want to ensure VA's infrastructure plan maintains the integrity 
of the VA health care system and all the benefits VA brings to 
its enrolled population.
    While we agree that the VA health care system is not its 
buildings, VA must be able to maintain an adequate 
infrastructure around which to build and sustain its patient 
care system.
    Although it is a significant challenge and costly prospect, 
VA's infrastructure issues must be addressed now. Our Nation's 
veterans deserve no less than our best effort.
    Mr. Chairman, thank you again for the opportunity to 
testify.
    [The prepared statement of Ms. Ilem appears on p. 62.]
    Mr. Michaud. Thank you very much.
    Once again, I would like to thank all the witnesses for 
your testimony this morning.
    Several of you expressed a concern with VA's health care 
center facilities (HCCF) leasing programs. What do each of your 
organizations believe that the health care delivery system for 
the VA should look like for the 21st century?
    Mr. Cullinan. Mr. Chairman, with respect to the HCCF model, 
we think that could be invaluable in providing health care 
access to veterans.
    I guess we have two primary concerns with it. First that it 
not overreach in size and scope. I mean, at a certain point, it 
makes sense to build as opposed to leasing. The leasing option 
could really be invaluable in parts of the country where 
building just is not an option.
    The other thing has to do with the quality of the care that 
is going to be provided through the HCCF model. And 
specifically referring to contracting issues, there was this 
situation, it was in Grand Island, Nebraska, where such a 
facility was established, a contract was established with a 
local health care provider hospital for the inpatient service, 
and then the contract was backed out of which left it adrift 
for a while.
    Now, I understand that has been remedied at this point in 
time, but these are the kinds of things that we would want to 
carefully monitor.
    Mr. Blake. Go ahead, Rick.
    Mr. Weidman. I was going to say that used in moderation, 
the HCCF can make some sense. Unfortunately, good ideas often 
are given to the VA and they are like an 18-year-old who gets a 
hold of a bottle of whiskey and they run amuck.
    And the example would be so-called Project HERO where the 
Congress instructed VA to rationalize the contracting out. And 
instead, VA has tried to turn it into a fire sale of 
contracting out as opposed to increasing and strengthening the 
organizational capacity within the hospitals themselves. And 
there are still problems with that. And in some areas of the 
country, it is as much as 40 percent of the patients are 
involved in Project HERO or HCCF type activities.
    We have a real problem with utilizing something that makes 
sense in some areas and then using that as a Trojan horse to 
try and undermine and destroy the overall veterans' health care 
system.
    Mr. Blake. Mr. Chairman, what I would say is the question 
seems to suggest that there is a one-size-fits-all solution to 
meeting overall health care demand issues in the VA, and I am 
not sure that that is the case. I think that is part of the 
concern with HCCF is that, as Rick mentioned, there are places 
where it is meant to work or where it should be used. But I do 
not think you can apply that universally to the VA health care 
system.
    Additionally, as rural health care sort of becomes a larger 
issue, I do not think you can just simply say we are going to 
do this or we are going to do this.
    Honestly, I believe that the VA in its recent release as 
part of its rural health care initiative is starting to take 
the right tact in addressing that particular demand issue by 
using CBOCs, by using HCCF, by using direct contract. I mean, I 
think it is going to have to be sort of a fluid delivery model. 
I do not think HCCF in and of itself is the answer to the whole 
problem.
    Mr. Wilson. Mr. Chairman, HCCF would have to accommodate 
that respective particular venue. As I have traveled throughout 
VA facilities this year, I found so many different areas, I 
found variations in those areas when we are speaking of urban 
as opposed to rural areas. And we had issues with contracts out 
in--with contract issues out in Sepulveda as well.
    I think overall the American Legion is concerned about the 
culture of care and the culture of care bringing about quality, 
quality of care, understanding the veteran. The uniqueness of 
the veteran must remain. And business as usual should not 
filter into the veteran, as I said, who is a unique patient.
    Ms. Ilem. And I would just add to the remarks of all my 
colleagues, you know, we just want to make sure the integrity 
of the VA health care system, the type of care that is 
delivered, the high-quality care delivered is maintained. And, 
you know, there need to be changes for the future for the 21st 
century. And a one size, I think that I agree with Carl, you 
know, is not going to fit every place, but there needs to be an 
overall plan that is well thought out and can really take into 
account all of these specialized services VA has been able to 
provide to our Nation's veterans. We just want to make sure 
that those are there for the future veterans.
    Mr. Michaud. Thank you.
    My next question is for Mr. Wilson and Mr. Weidman. You 
both had talked about the importance of openness, transparency, 
and accountability in the CARES implementation process and, 
hopefully, the VA will be more open and transparent.
    What do you think will have to be done for them to do that? 
What would you consider to be openness and accountability and 
transparency in the CARES implementation process?
    Mr. Wilson. I think a continuous assessment. I think there 
is too much time in between inspections or assessments and not 
just--well, there is one inspection that the big group, Jayco, 
and I have gotten calls from VA employees who say, oh, we get 
through that because we plan for it. We know what they are 
going to do and we plan accordingly. We can respond to them 
with a general question.
    So I am thinking, you know, throughout the American 
Legion's visits are they doing the same. So I am looking at 
some things within various VISNs. They are uniform questions. 
We can look at it. We have roundtables over this and we are 
looking at it.
    And it is like, okay, this is just a general response that 
they have given us and they are not--we take them through a 
line of questioning and we find out more things are going on. 
We talk to employees. We find out something differently.
    So we feel that it has to be more transparent because the 
bottom line is the veteran is going to suffer, you know, if 
they are trying to make the system look perfect when they know, 
you know, the system is fallible or it is--well, we have also 
discovered complacency as well because of shortage of employees 
and other things and space as well.
    So we think and that is how we come to the conclusion that 
there needs to be more transparency, some type of system of 
checks and balances where they can pretty much open up.
    Mr. Michaud. Thank you.
    Mr. Weidman. Mr. Chairman, we increasingly over the last 5 
years have been able to find out a great deal more about what 
is going on by talking to union members around the country than 
we can find out by meeting with the Under Secretary for Health. 
And this is not the kind of partnership that certainly the 
veterans service organizations envisioned nor the Hill nor 
people who want to make this system work.
    And it is not because we have all the answers. We do not. 
But we have significant input that make the decisions better. 
And so that is one aspect of the openness of starting to regard 
veterans at the local level and at the VISN level as well as at 
the national level as true partners, the veterans' 
organizations in the process of how do we build and continually 
rebuild, reinvent the best health care possible for our 
Nation's veterans. That is one.
    Second, the Milliman formula, no one has ever successfully 
explained to us how it works. And the Milliman technicians time 
and again said to us, well, we cannot really explain it to you, 
it is too complicated, to which my response is, young lady, 
contrary to what you seem to believe, those of us who served in 
Vietnam were not too stupid to know where Canada was. We served 
because we believe it was correct. Try us.
    But we still have not gotten a successful iteration, if you 
will, of how it works within that black box. But one thing we 
do know is that it does not take into account the special 
experience of veterans and having to do with everything from 
toxic exposures to all the other kinds of things that one is 
subject to in military service in the projections of the 
formulas.
    And we believe we need to have a task force appointed by 
Secretary Shinseki to look into this and involve the veterans' 
organizations as well as outside experts and not just folks 
within the VA in every step of the process.
    When they first formulated the CARES formula, they met with 
the veterans' organizations a couple of times to say that they 
met with us. And they said we are not to the point where we can 
share any details with you, but we will call you together as 
soon as we can.
    Then Dennis Duffy, then with the Office of Planning and 
Policy, called us all together and said this is what we are 
going to do based on the report from all of our consultants. 
And so a number of us had questions about it and said, once 
again, what about the special problems that veterans have 
ranging from SCI to much higher rates of visual impairment to 
all kinds of other things and prosthetics, et cetera, to which 
the response was it is too late, we are on a schedule, we have 
got to stick with what we have got now.
    Whereupon, our response from VVA was when was the 1.2 
seconds for the veterans service organizations to make their 
input into this process. Do not go back and tell the Secretary 
and the Congress that you consulted with the veterans service 
organizations when, in fact, all you did was inform us and said 
too bad, this is the way it is going to be, you folks.
    That partnership, I am not sure how you can legislate that, 
Mr. Chairman. I do believe that Secretary Shinseki is going to 
approach this process differently because he and Deputy 
Secretary Gould understand that you make better decisions when 
you consult with labor, when you consult with the stakeholders, 
with the patients, and when you consult with people outside of 
the system who have a legitimate stake in seeing that we have 
the best health care for our Nation's veterans.
    Mr. Michaud. Thank you very much.
    Mr. Boozman.
    Mr. Boozman. Thank you, Mr. Chairman. I have enjoyed the 
testimony.
    I am an optometrist, so those of you that are having 
problems with your eyes or whatever, I will be able to give you 
some free advice later.
    But I was listening. My brother was an ophthalmologist, an 
eye surgeon. We went into practice many years ago, and one of 
the procedures he did was cataract surgery. Thirty years ago 
when he did that, it was probably about a 2-hour procedure. The 
results were not very good.
    If that were still going on today as it was then, as I look 
out, many in the audience would have the big old cataract 
glasses. You know, the ones that magnified your eyes and 
restricted your vision.
    The surgery was done and then you were put in the hospital 
for 3, 4, or 5 days with sandbags around your head. That 
procedure is now done in about 15 minutes. You immediately go 
home, and probably miss a day of work and then go back.
    That procedure is that way and so many of our procedures 
are heading in that direction or have already headed in that 
direction. So, I think that we would all agree that there is a 
need for looking at the way that we do things and adapting.
    I guess the key is that as we start doing that, when we 
talk to GAO just in visiting with you guys, visiting with the 
CARES Commission, whatever, there really is a resistance to 
change. In the communities, there is a fear. I agree that 
certainly the number one thing is the quality of care. That is 
without a given.
    I understand also the culture. I think that is very, very 
important, the things that you all have mentioned. But I guess, 
and you mentioned the task force some ideas and things. Give me 
some more ideas or let us go further with that.
    How do we, as we go forward, and I think we all agree that 
things are changing and we have got to get into the present, 
how do we break down the resistance to change? You know, how 
can you all be helpful in that?
    You mentioned the transparency issue is so important. And I 
agree with that.
    You know, again, on the other side, they are probably a 
little bit hesitant in the sense because there has been such a 
resistance to change sometimes that you immediately get shot 
down regardless of what you are doing.
    So, if you all would discuss a little bit about maybe some 
other--kind of dwell a little bit on how we can get--
transparency. You mentioned task force. What other things are 
out there? How can you guys help us, like I said, look 
without--to kind of break down this both at the community 
level, the district level, and then at the VA level?
    Mr. Cullinan. Mr. Boozman, if I may, the VFW handles the 
construction portion of the IB. We have been doing it for a 
number of years and we are happy to do it. It is such an 
important issue.
    A big concern of ours is that this be a highly dynamic 
process and we believe the CARES system is that. Yes, in the 
early stages of CARES implementation, there was a lot of 
murkiness.
    I remember when the CARES document was finally released, I 
got a PDF version of it and a hard copy. And it was an 
avalanche of information. It really defied my ability and my 
staff's to even begin to entertain what was said in there. But 
over the years, with respect to the implementation, yes.
    I talked about Denver earlier. There have been other places 
where the implementation has been murky. First something is 
going to be one thing, then it is going to be another and it 
changes back again.
    But I have to say that with respect to our dealings with VA 
in dealing with trying to get the explanations of how the 
actuarial models work, the budget model, the Milliman, and then 
beyond because VA has gone quite beyond the--VA has been quite 
forthcoming actually formally and informally, I have to say 
that while their budget model certainly is beyond what I can 
really apprehend, it seems very accurate.
    I spent a day over at VA with a colleague of mine and they 
went through an explanatory process. And they really have this 
refined to an art and it is not a static art. It is something 
that they continue to work on.
    With respect to the construction needs outside of the 
modeling itself, again, we have had a positive experience with 
VA. So I just want to add that.
    Ms. Ilem. I think some of the things that have been 
mentioned, that communication is the key, especially with 
CARES. Those of us that, have been around from the very 
beginning of CARES through now, one of the biggest problems was 
the communication issue.
    When things came out and people realized that there may be 
a change or there was a proposed change, there was a panic. And 
oftentimes just being able to communicate beforehand, before 
all of a sudden you get something that is just sprung on you or 
seemingly sprung on you, you were not aware of, you know, 
working with Members of Congress, working with the local 
officials, the VISN, and, I mean, all the way down with 
veterans and really having a good understanding and that they 
play a key role.
    And if you are talking, sometimes just the language, if 
they hear closure or realignment, they do not understand what 
that exactly means. They just think for me, my services are 
going away. This is what I want. It is here. It is where we 
need it.
    And people are very protective which is a great thing about 
what you really saw. People really came to show you how 
important the VA is to them and what it really is able to 
provide.
    But I think just with communication and a much better 
strategy, openness with the veterans service organizations, 
certainly we can help. I mean, we all have chapters and 
departments throughout the Nation. We can get people there, 
making sure that they are part of the dialogue from the 
beginning rather than, as Rick mentioned, at the end, which is 
oftentimes, you know, then you are in a defensive position 
right from the get-go.
    Mr. Weidman. You also have to tell the truth. I mean, that 
is one of the problems with Denver was that there were people 
there and people within 810 Vermont who were not telling the 
truth to the Secretary. And so the Secretary got called out 
repeatedly, three different Secretaries, in what was going on 
with that process. And they did not tell the truth to the 
veterans.
    The one thing that is, vets will sometimes get mad, but 
they will always accept it if you play straight. The one thing 
that will make veterans madder than hell is if you lie to them. 
And I do not blame them. And it makes me madder than the 
dickens. And when they lie to us, that makes us angry. But 
people have not been held accountable for that in the past.
    The next panel has on it the Honorable Everett Alvarez, a 
true hero in war and in peace. And as Chair of the CARES 
Commission, it was Mr. Alvarez, Chairman Alvarez who took all 
the heat from all the places around the country and made the 
necessary change to CARES to avoid it being a debacle and he 
caught all the heat for the stupidities of people within the 
bureaucracy. And he actually did not have white hair until that 
point and the CARES process did it to him.
    But we do not need to abuse our heroes in order to make 
steady progress in the future if we mandate that every 
hospital, as an example, have regular meetings with the 
veterans service organizations about the quality of care and 
the care service lines at that facility and not turn them into 
dog and pony shows where people have 15 minutes to ask 
questions. And the same thing is true at the network level to 
really assess consultation with the community.
    If you call a Veterans Integrated Services Network, the 
idea was that somehow it is closer to the community, but by and 
large, that has not happened in many of the VISNs or at many of 
the facilities. And that is a step that needs to be taken.
    And I think that the new Under Secretary for Health, that 
decision is really going to be key, that that be someone who is 
as open and direct and as straightforward and honest as 
Secretary Shinseki is and is committed to veterans' health 
care. So who that individual is is going to set the tone.
    And, once again, I am going to hearken back to something 
Secretary Shinseki told the full Committee at his first hearing 
over here on the House side. When asked was there additional 
legislation needed, his answer was most of our problems have to 
do with leadership and accountability. And that is still the 
issue.
    Together, if it was a leadership and accountability within 
the VA and proper respect not only for the individual veteran 
seeking services but for the veterans' organizations and expect 
us to do our part of the bargain of doing our homework before 
we come to meetings by sharing good information, then we can 
make some steady progress together and with that openness.
    But I do not know that there are things that you can 
stipulate in statute to get people to act decently.
    Mr. Blake. Mr. Boozman, if I might just quickly. You 
mentioned our resistance to change and our longstanding 
concerns about broad-based contracting notwithstanding. Some of 
this idea of change, our resistance comes from us applying the 
does this make sense test to a recommended change.
    You know, I will use as an example under HCCF, I think we 
have said here today that applied correctly, it is a good 
thing.
    Early on when this was discussed, Salisbury, North 
Carolina, was put out as a possible HCCF facility. It was going 
to involve contracting for certain services that are already 
being provided in the Salisbury facility. And it is not like 
they were being contracted to an area 50 or 100 miles away. 
They were being contracted out into the local community.
    So we asked ourselves does that really make sense. And from 
our perspective, the answer to that question is no. So then 
there is no other really explanation for why to then apply HCCF 
to a facility like that.
    There was a Booz, Allen, Hamilton report that focused on a 
number of these HCCF designated facilities that came out last 
year, and if I can find it, I will be glad to submit it for the 
record, and it reads sort of like a multiple choice test. And 
it has, you know, example A and here are A, B, C, and D as the 
solutions to the problem. And you read that and if you pick the 
answer, at the end, the findings of the report completely go 
against what you think make sense.
    So I think as we move forward with change, we have to apply 
a little bit of just common sense to the process and not 
simply, well, this is the model we want to make fit because we 
think it is a good model.
    Mr. Wilson. Mr. Boozman, I think it is consistency when 
implementing policy, the communication as well throughout the 
VA system. For example, there was previously 1 million veterans 
that migrated to rural areas. Now it is 2 million. And that 
went up pretty quickly.
    VA has to track better and they have to be consistent at 
tracking because we found even in our travels that some were 
tracking, for example, those 500,000 who had applied after 2003 
who will be in the system now, but some have tracked and some 
have not tracked. That is inconsistent.
    And so the American Legion, we think there should be a 
better tracking of veterans period from the time they leave DoD 
to the time they transition into the community. That is not 
something that is as difficult as if you were tracking 
nonmilitary simply because one issue that a veteran may have is 
the microcosm of many.
    So when you, for example, as I said, you have 2 million who 
migrated to, who live in rural areas, and a high number of 
those recently migrated, not the full 2 million, but a high 
number of those did, so it is pretty much a pattern and it is 
in huge numbers, so it is trackable because we have had some 
systems who have tracked and some said they were unable to 
track. We need to know why.
    Mr. Boozman. Thank you, Mr. Chairman, very much.
    Mr. Michaud. Thank you.
    Mrs. Halvorson.
    Mrs. Halvorson. Thank you, Mr. Chairman.
    Thank you, panelists, for being here.
    Mrs. Ilem, you mentioned in your testimony that some of the 
facilities are outdated. One of them you mentioned is near my 
district, Hines in Chicago.
    With the need and probably too much need basically to get 
it up to the 21st century needs, do you think that it might be 
better to put the money and the needs to expand more CBOCs 
because, as Mr. Boozman said, we need to adapt to change? And 
now people are not spending as much time in the hospitals and 
maybe we need to do more to the outpatient clinics.
    So I do not know. Since you had it in your testimony, we 
can start with you. And I do not know if anybody else wants to 
mention that as we have more challenges in new health care, 
whether it be mental health or some of the other traumatic 
brain injuries or women challenges, should we be putting our 
emphasis more on the CBOCs?
    Ms. Ilem. Well, I would just say one thing--I remember 
sticks out in mind from our Independent Budget were PVA has 
architects and people available within their organization who 
have expertise in construction issues. And when we have talked 
about renovating or updating or modernizing a facility, one of 
the things that sticks out is that they continue to say, 
oftentimes, that it costs more to try and renovate a place than 
to build a new facility.
    And because of the new types of equipment that are 
available today, the rewiring, the ceiling heights, there is 
just a number of issues like that that come into play.
    So the assessment, which was nice about CARES, was it 
really gave you--I mean, when you opened the books and as we 
said, we got volumes of books on each location, you can really 
get a feel, if you have not been there, for each of those 
facilities.
    But certainly many of us travel around for our 
organizations. We visit the VA facilities. And they are doing 
the best that they can. They have retrofitted these almost 
outpatient clinics within medical facilities which used to be 
wards and different things. And they have tried the best they 
can to make renovations with the money that they have gotten.
    And a lot of them have added new additions on.
    I just came back from New Hampshire this weekend. I visited 
the VA facility and they showed me a new addition. They have 
not opened the new wing yet. It is just night and day between 
the original facility itself and just the look, the feel, the 
space confinement, and you go to the new addition, the new 
wing, which was just literally brand new, it has not even been 
furnished yet. They have the appropriate size doors, wheelchair 
accessible, it is very modern. It is like you are in another 
world. And they were talking about all the clinics that will be 
moving down there.
    And I know in your facility, Tammy Duckworth was a big--I 
remember her testifying in the Senate way back when she first 
got back about her impression just of coming to the facility, 
the prosthetics department, and how, you know, dungeon-like 
things were there. And even regardless if you are getting good 
quality care, I mean, there gets to be a point where, you know, 
you have to look at the modernization of some of these 
facilities.
    So I do not know that the HCCF model certainly will be a 
good model for many places. Again, we just have to have VA 
looking at this big picture of the way care has been delivered 
for years and years with this inpatient capacity and what we 
lose when we go an HCCF model and we outsource care.
    And the big thing that researchers tell us is when care is 
provided outside the VA, contracted out for it, we do not know 
what the quality of that care is. They tell us that with 
women's health especially.
    So I think that stands as one thing that we really need to 
look at because that has been--VA has worked very hard to bring 
up the quality of its care and be renowned within our Nation 
for the care it provides. So we just want to ensure that that 
is maintained as these changes come about, whatever they are.
    Mr. Blake. Mrs. Halvorson, one thing I would also mention 
as it relates to maybe indirectly Hines is Joy mentioned 
modernization and modernization of an aging major tertiary care 
facility does not necessarily equate to building 10 CBOCs or 10 
super CBOCs or whatever because while you may expand capacity 
and access points through some sort of model like that, you may 
then ultimately diminish the scope of services that are 
available if you move out into that setting away from Hines.
    I am not suggesting that maybe we need to just build a 
whole new hospital in place of Hines, but when you think about 
the fact that from PVA's perspective there is a spinal cord 
injury center there, but the scope of services that support 
that SCI center are far reaching beyond the immediate SCI 
delivery model. And if you move it out into the community into 
super CBOCs, which was something that was suggested under the 
Denver plan last year, I think you run the risk of diminishing 
more important services that are provided through that tertiary 
care hospital. And you put at risk probably the highest end 
users of the VA health care system.
    Mr. Weidman. The paradigm that we either have to go to 
CBOCs or live with an outmoded facility, I would suggest is a 
false dilemma. This is the United States of America and if we 
need a brand new hospital in order to properly care for 
veterans in a major urban center in our country, then we should 
do--I did not notice anybody with George Washington University 
Hospital over in Washington Circle suggesting that they open a 
bunch of community clinics. What they did instead was build a 
whole new hospital and blew up the old one. And if we need to 
do that in Hines, then we should do that.
    And somehow we have gotten used to thinking that our best 
days as a Nation and our most powerful days when we can take 
care of the men and women in our democracy who put their lives 
on the line in a first-rate manner in brand new facilities that 
we cannot do that anymore. Frankly, at Vietnam Veterans of 
America, we reject that notion. And we need to move forward. 
And where we need to replace a whole new hospital, then we need 
to do it.
    Mrs. Halvorson. Well, I have a tendency to agree with that. 
However, that is why I am asking all of you where the future is 
and where it is that we need to go. And I have people call me 
every day that they are tired of going there and sitting there 
all day just to be turned away. And what are we going to do 
about that.
    And so we need to do something. Our veterans deserve the 
best care ever. And if we need to build them a new hospital, 
then we need to do that. There are all kinds of things that we 
could be doing for them.
    Mr. Cullinan. Mrs. Halvorson, I would just add to the 
conversation. I mean, again, we need a dynamic process to 
address these issues as has been pointed out. A new hospital is 
not always the answer. Sometimes it is a CBOC. CBOCs are very 
popular where they are established.
    The HCCF model will remedy some of the problems where a 
hospital is not appropriate and a CBOC is not enough. And that 
is the key thing is to address all of the issues as best as 
possible.
    One thing that is contained in our testimony, there are 
certain rural areas where the probability of an HCCF model is 
unlikely. There simply are not the assets in place to even 
construct something like that. There is certainly not the staff 
availability.
    So then you need things like contract care. Mobile vans are 
another solution. There are other satellite type solutions to 
these kind of problems. And that is what needs to be done.
    Years ago, we used to say that about VA medical centers and 
it certainly is still true of some of them, the only way to 
renovate one is by jackhammer. They were concrete bunker-like 
structures. They just do not lend themselves to modification 
for modern medical purposes. So there is that too.
    And the final thing I will say with the shifting patient 
workloads, again a dynamic solution is the only way to go 
because veterans are going to continue to move around and new 
needs will arise.
    Thank you.
    Mrs. Halvorson. Thank you.
    Mr. Wilson. You know----
    Mrs. Halvorson. Go ahead. One last.
    Mr. Wilson [continuing]. When we talk about facilities, 
facilities, and facilities and we must keep in mind the veteran 
at all times. I mean, if we have to write it on the paper 50 
times just to keep in mind who we are serving, I mean, this is 
practical. We are talking about appropriate accommodations, is 
it adequate.
    Those questions we have to continue to ask over and over 
again because now you also have women veterans. Forty-nine 
percent of women veterans are seeking care outside of VA. So 
there is a fragmentation of care amongst women veterans that is 
unprecedented. I mean, just within this past 6 months, it has 
grown. We do not know the numbers now, but that was about 3 or 
4 months ago, we found out it was 49 percent.
    We must keep that in mind when just not--just finishing a 
facility or how nice a facility looks or the location. It is a 
matter of, as I stated previously, the American Legion supports 
better tracking. We are contacting various posts out there, 
sending out various blasts and receiving the information as to 
how many veterans are in that area, what the pattern, you know, 
as far as the pattern and all.
    But a concern when as far as accommodations and building 
these facilities, all those women veterans who for some reason 
are seeking care outside of VA because actually it was one of 
the reasons they are not receiving continuous care.
    Mr. Weidman. May I just add that is poor organization in 
the clinic. And, frankly, the clinic Director should be 
reprimanded. I mean, it should not ever happen anymore at VA 
that somebody--because we know of no guidelines any place in 
the country at any of the 153 medical centers where it is 
supposed to be done--the way they used to do it is you go in at 
7 o'clock in the morning and you wait until whenever you get 
seen. There should be appointments and waiting no longer than 
30 minutes.
    And if it is not happening in Hines, then I would suggest 
that you may want to make a call to General Shinseki and say 
what is happening here that is--what is not happening here that 
is happening elsewhere where people are not being treated well 
in my district.
    Mr. Michaud. Mr. Bilirakis.
    Mr. Bilirakis. Thank you, Mr. Chairman. I have one question 
for the entire panel.
    One of the shortcomings of CARES was the lack of long-term 
care in outpatient mental health services. Do you believe that 
VA has made progress in its ability to model demand for these 
services and improve access to these services?
    That is for the entire panel again. Thank you.
    Mr. Cullinan. Mr. Bilirakis, I will just say one thing 
briefly about that. I think that VA is quite capable, and I 
know there are others who would agree, about modeling demand. 
The problem is actually answering that demand and it comes down 
to resources. It is an expensive proposition.
    You have long-term care and mental care that still really 
are not properly accommodated under CARES. We do not believe 
that they cannot actually model them. We believe that they can. 
It is just where is the money going to come from.
    Mr. Blake. Mr. Bilirakis, I would suggest that there have 
been instances in the past where I think VA senior leadership 
has shown the desire to get out of the business of long-term 
care as a whole. That can be reflected in some of the budget 
requests that were made in the past.
    And I think if you read the GAO report that came out 
earlier this year about long-term care and the modeling and 
funding that, you will see that while it is something the VA 
needs to be doing, their approach to it is broken obviously.
    And as I mentioned in my testimony, our concern remains 
about a long-term care strategic plan going forward. And that 
does not just apply to SCI veterans. That applies to all 
veterans.
    And so if there is definitely a flaw, that would be it.
    Mr. Wilson. You mentioned long-term care. When I think of 
long-term care, I think of the old nursing home care units in 
which VA is transitioning into community living centers.
    We saw good things there because they are trying to 
acclimate the veteran back into the community. There are also 
active duty who are with those needs. If they request, they can 
receive it if it helps that active-duty member as well.
    I think on behalf of the American Legion, I think there has 
been progress, but they have a ways to go because of the 
various injuries and the veterans with the various injuries, 
they are showing up at VA and either they are referring them to 
outside facilities still, so it leaves a big question mark with 
us as to where they are going from here because to this point, 
we feel that they have been reactive.
    Ms. Ilem. Yes. I would just mention long-term care has been 
one of the issues all of the organizations have really talked 
about over the years, that we just have not seen this strategic 
plan materialize, and it just seems to be put off, put off into 
the future.
    When we go out to visit facilities, again I was just in New 
Hampshire, and they did have a nursing home component with an 
inpatient component there. And I asked the medical center 
Director, you know, how did they provide services to support 
the long-term care unit in terms of oftentimes elderly people 
have real hospital care needs and this is not a full scale 
hospital. So they do have to do a lot of the contract care and 
take them by ambulance to a nearby facility for that type of 
care.
    So this is just another issue even though a lot of VA is 
pushed out like the Nation. You know, everybody wants to be 
provided care in their home to the largest extent possible. We 
have many elderly veterans who have either a spouse that is 
their same age in their mid 80s that cannot care for their 
spouse any longer and they do not have the support at home even 
if somebody is coming in a couple days a week. They really need 
inpatient bed care.
    And, you know, these people have been in the VA system for 
their entire life, since they have gotten out of service and 
been a part of that system and they want to stay with VA. So we 
need better collaboration with the State Veteran Home 
community, which is another option in many States.
    But this issue we do not feel has really been addressed and 
should be taken up as part of the infrastructure issue as it 
moves along.
    Mr. Weidman. A couple of things to add to that, if I may, 
Mr. Bilirakis.
    Joy is absolutely correct as we have been waiting on that 
so-called strategic plan on long-term care for a very long 
time. And it needs to be addressed and it needs to be addressed 
in conjunction and cooperation and collaboration with the State 
Directors of Veterans Affairs and the State Homes because a lot 
of the solution in many parts of the country is going to be 
that need is going to be met through the State Homes more 
effectively and probably more efficiently.
    And home health care has great promise for many people, but 
there are instances, as Joy just pointed out, where it is not 
in the cards because of the particular situation.
    In regard to the second half of your question having to do 
with mental health, there are models where we can predict where 
we are going to need services, but they have not been employed. 
Frankly, we believe we need new national leadership in mental 
health and we need it soon.
    There are the clinicians and certainly the folks at the 
National Center for Posttraumatic Stress Disorder who can help 
produce the models where we can make sure that between the Vet 
Centers or the readjustment counseling service and the 
inpatient services that are available that we have the 
inpatient services available when they are available in every 
network in the country and halfway in between outpatient and 
inpatient is residential care which is appropriate to many 
folks, like Canandaigua is a good example of that or, excuse 
me, Batavia in upstate New York. It is much less expensive 
because you do not have 24-hour nursing and you have the 
patient where you need it.
    VA has hired 3,800 new clinicians, 3,800 new mental health 
clinicians. And so we are asking where the heck are they, 
number one?
    Number two, where is the in-service training to make sure 
that they are adhering in every one of the 153 hospitals to the 
best practices guidelines as outlined in the June 2006 report 
from the Institute of Medicine for diagnosis and assessment?
    And, number three, where are the research projects and 
clinical trials to do what the Institute of Medicine said VA 
had been doing which is robust clinical studies to figure out 
what kind of treatment modalities work with what particular 
kinds of veterans because post-traumatic stress disorder, to 
say somebody has PTSD is like saying somebody has cancer? There 
are a zillion different kinds of it and you have got to have an 
accurate diagnosis in order to be able to effectively treat it.
    So the modeling, I think, is there, but the question is 
overall leadership and assessment and accountability. Thirty-
eight hundred new clinicians nationwide is a lot of people. And 
that may not be enough, but right now I am not sure that we 
know exactly how many more we need in order to adequately meet 
the need given the length of the wars where there is no end in 
sight in either Afghanistan or Iraq at the moment.
    Mr. Bilirakis. Anyone else want to address the mental 
health services issue?
    Ms. Ilem. I would just say one thing. This is a particular 
issue. I had a veteran call and they were looking for services. 
They were down in the Florida area. The brother called me and 
said my brother is under a bridge. He is enrolled in VA health 
care. He wants to get into a substance use disorder program. He 
has PTSD. He has some issues, but he needs to detox. He needs 
to get in a facility. He needs an inpatient bed.
    The homeless coordinator went out and picked the veteran 
up, got the veteran. The family was very thankful for that. The 
problem was they were not going to have a bed available for 
this veteran. He was ready. He needed help then. The family 
called in panic and said if they allow my brother to go back 
out, he feels he will die, you know. He cannot make it.
    After I cannot even tell you, I think 10 phone calls and it 
finally went up to Central Office level, they got this person 
into a detox bed and he was there for 24 to 48 hours. The 
family was expecting the veteran would go right into the 
substance use disorder or long-term inpatient program. They 
were told there is no room for that patient by the time he had 
detoxed. And they were going to try and send him out. They were 
trying to find accommodation in the community. They could not 
accommodate him.
    Again, the family in a panic called, said can you please 
help. I was calling up and down the coast, this family said we 
will pay for him to go anywhere in VA. There was no 
coordination of inpatient services where anyone could tell me 
there is a bed available for this person until, you know, again 
it was elevated to the Central Office level.
    Eventually they found a bed in Florida. They were able to 
get this veteran in. But after a certain amount of time, he 
went out--I do not know if they did not have a residential unit 
for him to then transition into and the family called about 6 
months later and said that--they really thanked me for the 
help, but that he had died, the veteran had died.
    So, again, these kind of things, having the inpatient 
services when and where they are needed, especially when we 
have so many returning veterans from OEF/OIF that are having 
mental health issues that really need some sort of support. 
They are not, you know, getting it at home or in an outpatient 
setting.
    So it is so critical within the VISN, as Rick mentioned, to 
be able to have the current services one after the other. Why 
bring them in to detox them to be able to send them out to the 
community again back under the bridge until a bed is available 
in 30 days?
    I mean, we just hate to hear that kind of thing and that 
without any coordination throughout VA, even with different 
people very interested in helping, but not being able to tell 
me, well, there is a bed here or there.
    Mr. Weidman. May I add to that, Mr. Bilirakis. We have 
known for 25 years that Florida veterans' population was going 
to be where it is today in 2009. I can remember when then 
Governor Bob Graham was running for office and talking to him 
about what needed to happen in terms of expansion because by 
2015, Florida, I think, is still projected to have more 
veterans than California. And 10 percent of all veterans in the 
country live in California.
    So it is not that this came upon us as a sudden shock, but 
the expansion of services, particularly for neuropsychiatry 
within Florida, has not kept up with the need.
    We have a hard time figuring out why people from VISN 8 to 
VISN 1 and 2 are telling us that they have a really tight 
budget this year when we got a 12-percent increase in the 
veterans' health care budget. I mean, we have talked to Mr. 
Edwards about it. We have asked VA repeatedly and get no 
straight answers about the 2009.
    So some of the problem that you are alluding to is it is 
not just the overall resources, it is how well are we applying 
those resources within the VA structure itself. Are we getting 
the bang for the buck both on the construction side, but also 
on the services side?
    And I think we have a right to expect some answers about 
where are we in the 2009 budget, where are we with the kind of 
services that Joy is talking about, particularly in an area 
that ostensibly is a quote, unquote winner under the Vera 
allocation model of where the health care dollars actually go. 
Why aren't there any services available?
    I have gone through the same thing with the TBI problems in 
Florida of trying to find a bed and repeatedly having to go 
back at the behest of the family and intercede to keep a 
veteran who could not function on his own with bad TBI from 
hitting the street. I mean, something is wrong in VISN 8, but a 
lot of it has to do with overall organization and 
accountability.
    Mr. Bilirakis. Thank you.
    Mr. Michaud. Thank you very much. This has been really 
helpful.
    Since the next panel has only two witnesses, I just have 
one last question. If you can please keep your answer brief.
    A lot of the discussion this morning has been centered 
around creating new access points for our veterans. There has 
been talk about the current process and how it has to be open 
and transparent, including some of the decisions in Colorado.
    My question is, by the same token, when you look at 
creating new facilities, politics sometimes get involved. But 
also the reverse is true, when you try to close facilities. I 
know when the VA asked PriceWaterhouseCoopers to look at 18 
sites in VISN 1, which is my VISN, they recommended closing 
four medical centers. The VSOs in that region were outraged. 
They wanted their medical facilities there versus having a 
brand new one that could accommodate the needs.
    So, while we want to create new facilities, if the old 
facilities are inefficient facilities and we have to close 
them, that puts the VSOs and elected officials in the awkward 
position of having to say, yes, it should be closed.
    So my question then is, to be more transparent in deciding 
whether, where, and when we should either open or close 
facilities, should we establish a process similar to the Base 
Realignment And Closure (BRAC) process where they will make the 
decision of which facilities are inefficient and should be 
closed and where we should build new facilities?
    Mr. Blake. I do not know if I can honestly answer that, Mr. 
Chairman, but I would say that, you know, even the BRAC process 
is not without flaws, I believe. I think politics still enters 
into even decisions made through BRAC. So I think you run a 
risk whether you create another commission that is going to say 
yea or nay on opening and closing facilities or not.
    I think you point to the fact that all politics is local. 
Denver was a perfect example. The decisions there were 
ultimately made by the local population of veterans and the 
organizations there.
    So it is a tough situation for us to be in. And I 
sympathize with you, Mr. Chairman, with the situation. I do not 
know. We do not have an official position on whether that would 
be a good idea or not. If you propose legislation, we would be 
glad to take a look at it and work on it from there.
    Mr. Wilson. Also, Mr. Chairman, I would like to on behalf 
of the American Legion, I would like to reserve that response 
for a later date.
    Mr. Cullinan. Mr. Chairman, I would just certainly concur 
with my colleague here about the honesty portion of the BRAC 
Commission or a BRAC-like Commission.
    I mean, one thing that needs to happen, though, VA has to 
clearly explain to local veterans what is going to take the 
place of a hospital. The VFW agrees that there are hospital 
facilities out there that need to be closed that are a waste of 
resources.
    The way to do that, though, is to clearly explain to 
veterans, well, not all health care resources are going to go 
away. We may be closing this old, obsolete hospital, but we are 
going to replace it with a CBOC or an HCCF that is going to 
take care of all your needs in a way that is even better than 
what you have got now because we are going to give you, for 
example, three CBOCs instead of one old hospital, and you are 
not going to have to travel as far. They will take care of all 
your needs and more serious inpatient type care is in line. We 
can take care of that too. Just explain the situation.
    Mr. Weidman. It is a difficult thing and I am not sure 
going to BRAC makes sense personally. And I do not think it is 
just because I am biased in favor of it as a former Army medic.
    But the decision to close Walter Reed at its current 
location, given its history and centrality in American military 
medicine, is a bonehead move and hopefully will be undone. That 
is with all due respect to my good friend, Tony Principi and 
his colleagues who worked very hard on the BRAC Commission.
    The green eyeshade boys, if you will, that came up with the 
idea that somehow it would be cheaper to build a new tertiary 
medical facility in Bethesda, a very expensive location, versus 
renovating the current hospital and that they could build a new 
tertiary medical facility for $800 million, I began to laugh. I 
said you are not going to in Bethesda open the key to that 
front door for less than $2 billion plus. And that was even 5 
years ago.
    So I am very dubious of some of the, with all due respect, 
I am not going to pick on PriceWaterhouseCoopers, but the 
consultants, if you will. When they look at northern Maine and 
they say, well, you can travel from Togus down to here. Well, 
they have never been in northern New England during most of the 
year. And as they used to say in northern Vermont where I lived 
for a long time, you cannot get there from here at that time of 
year. And they simply do not understand the local situation. So 
you need to reconfigure and work with the community.
    And, frankly, one of the smartest things was keeping 
Canandaigua open as opposed to closing it in upstate New York 
where it is now the home to the nationwide hotline and those 
jobs are great jobs in Canandaigua. And it does not matter 
whether the hotline is in Chicago or in Canandaigua or it would 
not matter if it was in Toga, Spain.
    So rethinking the use of those facilities about how do you 
serve the overall need of the Nation's veterans in all 50 
States, if we approach it from that point of view, then I think 
you can come up with politically palatable solutions that meets 
the needs of the local community and does not live in the past, 
sir.
    Ms. Ilem. I would concur with many of the comments my 
colleagues made about concern over a BRAC scenario. It just may 
cause a lot of problems just to even use that term or that 
concept.
    But maybe looking more individually, but really working on 
more transparency and communications with veterans in those 
States and the data that is really being used to come up with 
some decisions and why changes are being proposed and they feel 
changes need to be made.
    But, of course, you need to take into account veterans' 
preferences and their concerns in local areas which each one is 
unique.
    Mr. Michaud. Thank you very much once again for your 
testimony this morning. As you can see by the time, there has 
been a lot of discussion and a lot of concern and a lot of 
interest in this very important issue. I really appreciate your 
willingness to come forward today to give us your thoughts and 
ideas on how we should proceed from here. Thank you very much.
    I would like to now invite panel two to come forward. We 
have Everett Alvarez, Jr., who was Chairman of the CARES 
Commission, and Mark Goldstein, who is from the Government 
Accountability Office.
    I want to thank both of you for coming here this morning 
and sitting through our first panel to hear the discussions and 
the questions for the first panel. I look forward to your 
testimony as well as an open dialogue on where we go from here 
when you look at providing access to our veterans throughout 
this great Nation of ours.
    So without any further ado, Mr. Alvarez, would you please 
begin.

  STATEMENTS OF HON. EVERETT ALVAREZ, JR., CHAIRMAN, CAPITAL 
   ASSET REALIGNMENT FOR ENHANCED SERVICES COMMISSION, U.S. 
    DEPARTMENT OF VETERANS AFFAIRS; AND MARK L. GOLDSTEIN, 
      DIRECTOR, PHYSICAL INFRASTRUCTURE, U.S. GOVERNMENT 
                     ACCOUNTABILITY OFFICE

             STATEMENT OF HON. EVERETT ALVAREZ, JR.

    Mr. Alvarez. Thank you. Mr. Chairman, Members of the 
Subcommittee, thank you for the opportunity to be here this 
morning to discuss the work of the CARES Commission.
    And I have provided the Subcommittee with my full statement 
and ask that it be accepted for the record.
    Mr. Michaud. Without objection, so ordered.
    Mr. Alvarez. Let me begin by saying that the CARES 
commissioners, many of whom are veterans themselves, were well 
aware of the enormous implications their efforts may have on 
the veterans and the VA health care system.
    We knew we had a moral obligation to be objective and 
transparent because our review would serve as a blueprint for 
resource planning at the VA and an approach for medical care 
appropriations long after the Commission's work had ended.
    Our efforts are documented in the CARES Commission report 
dated February of 2004.
    Mr. Chairman, let me take a step back to provide some 
historical context that led to the creation of the CARES 
Commission and its body of work.
    CARES was a multifaceted process designed to provide a 
data-driven assessment of the veterans' health care needs. 
Simply stated, the process used projected future demand for 
health care services, compared the projected demand against 
current supply, identified capital requirements, and then 
assessed any realignments the VA would need in order to meet 
future demand for services, improve the access to and quality 
of services, and improve the cost effectiveness of the VA's 
health care system.
    The CARES process consisted of nine distinct steps and I 
have outlined these nine steps in my written testimony. It is 
one of these steps, step six to be exact, that the CARES 
Commission, after reviewing a draft national CARES plan and 
other information, conducted its review and analysis and then 
issued its report to the Secretary with findings and 
recommendations for enhancing health care services through 
alignment of the VA's capital assets.
    Since the CARES process was primarily a VA internal 
planning process, the CARES Commission was established by then 
Secretary Anthony Principi as an independent body to conduct an 
external assessment of the VA's capital asset needs and 
validate the findings and recommendations in the draft national 
plan.
    The Secretary emphasized that the Commission was not 
expected to conduct an independent review of the VA's medical 
system. However, as we conducted our analysis of the draft 
national plan, we were expected to maintain a reliance on the 
views and concerns from individual veterans, veterans service 
organizations, Congress, medical school affiliates, VA 
employees, local government entities, affected community 
groups, Department of Defense, and other interested 
stakeholders.
    The CARES Commission began its journey in February of 2003 
and in fulfilling our obligation, the commissioners visited 81 
VA and Department of Defense medical facilities and State 
Veterans Homes. We held 38 public hearings across the country 
with at least one hearing per VISN. We held 10 public meetings 
and analyzed more than 212,000 comments received from veterans, 
their families, and other stakeholders.
    On February 12th, 2004, I presented the CARES Commission 
report to Secretary Principi. These findings were grounded on 
the compilation of information gathered at these site visits, 
public hearings, and meetings, as well as information obtained 
from the public comments at the VA.
    Mr. Chairman, the Commission established several critical 
goals in order to sustain the highest standard of credibility 
to our efforts.
    First, we maintained an objective point of view in order to 
give an effective external perspective to the VA CARES process.
    We set goals to focus on accessibility, quality, and cost 
effectiveness of care that were needed to serve our Nation's 
veterans.
    We held a clear line of sight on the integrity of the VA's 
health care mission and its other missions.
    Additionally, since the VA is more than bricks and mortar, 
the Commission thoughtfully sought input from stakeholders to 
minimize any adverse impact on VA staff and affected 
communities.
    It was the Commission's desire to make findings and 
recommendations that would provide the VA with a road map for 
strategically evaluating the VA's capital needs in the future.
    During the development of the VISN planning initiatives and 
ultimately the draft national plan, the VA CARES model, demand 
model was the foundation for projecting the future enrollment 
of veterans, their utilization of certain inpatient and 
outpatient health care services, and the unit cost of such 
services.
    The Commission did not participate in the development of 
the model or the application of the model at the VISN level. 
The Commission's role, however, was to review data and analysis 
based on the model.
    And because the model was such an integral component in the 
development of the CARES market plans, we wanted a high level 
of confidence in the reasonableness of the model as an 
analytical approach to projecting enrollment and workload.
    For this reason and to foster the Commission's goal to 
sustain credibility, the Commission engaged outside experts to 
examine and explain the technical aspects of this model.
    Based on the experts' analysis, the Commission found the 
CARES model did, in fact, serve as a reasonable analytical 
approach for estimating VA enrollment, utilization, and 
expenditures.
    However, there were lingering concerns noted in the 
Commission's report relating to project utilization of 
specialized inpatient and outpatient services, notably 
outpatient mental health services, inpatient long-term care 
services, including geriatric and seriously mentally ill.
    To note, the model projected only certain inpatient and 
outpatient services such as surgical services and primary care 
services. And as has been noted before, there were shortcomings 
in the model and these have been addressed in the report 
extensively.
    I would also add that the Commission made numerous 
recommendations for immediate corrective action and development 
of new planning initiatives.
    Mr. Chairman, I hope that my testimony today will help to 
inform the Subcommittee about the historical significance of 
the Commission and its work. I will be happy to answer any 
questions. Thank you.
    [The prepared statement of Hon. Alvarez appears on p. 70.]
    Mr. Michaud. Thank you.
    Mr. Goldstein.

                 STATEMENT OF MARK L. GOLDSTEIN

    Mr. Goldstein. Thank you, Mr. Chairman and Members of the 
Subcommittee. Thank you for the opportunity to testify today on 
the subject of the Department of Veterans Affairs and our 
reports regarding the Department's Capital Asset Program and 
CARES.
    Through its Veterans Health Administration, the Department 
of Veterans Affairs operates one of the largest integrated 
health care systems in the country.
    In 1999, GAO reported that better management of VA's large 
inventory of aged capital assets could result in savings that 
could be used to enhance health care services for veterans.
    In response, VA initiated a process known as Capital Asset 
Realignment for Enhanced Services, CARES. Through CARES, VA 
sought to determine the future resources needed to provide 
health care to our Nation's veterans.
    My complete testimony describes, one, how CARES contributes 
to VHA's capital planning process; two, the extent to which VA 
has implemented CARES decisions; and, three, the type of legal 
authorities that VA has to manage its real property and the 
extent to which VA has used these authorities.
    The testimony is based on GAO's body of work on VA's 
management of its capital assets, including our 2007 report on 
VA's implementation of CARES.
    The findings from our recent work that addressed these 
questions are as follows.
    First, the CARES process provides VA with a blueprint that 
drives VHA's capital planning efforts. As part of the CARES 
process, VA adopted a model to estimate demand for health care 
services and to determine the capacity of its current 
infrastructure to meet this demand. VA continues to use this 
model in its capital planning process.
    The CARES process resulted in capital alignment decisions 
intended to address gaps in services or infrastructure. These 
decisions serve as the foundation for VA's capital planning 
process.
    According to VA officials, all capital projects must be 
based on demand projections that use the planning model 
developed through CARES.
    Second, VA has started implementing some CARES decisions, 
but does not centrally track their implementation or monitor 
the impact of their implementation on mission.
    VA is in varying stages of implementing 34 of the major 
capital projects that were identified in the CARES process and 
has completed eight.
    Our past work found that while VA had over 100 performance 
measures to monitor agency programs and activities, these 
measures either did not directly link to the CARES goals or VA 
did not use them to centrally monitor the implementation and 
impact of CARES decisions.
    Without this information, VA could not readily assess the 
implementation status of the CARES decisions, determine the 
impact of such decisions, or be held accountable for achieving 
the intended results of CARES.
    Third, VA has a variety of legal authorities available such 
as enhanced use leases, sharing agreements, and other items to 
help manage real property. However, legal restrictions and 
administrative and budget-related disincentives associated with 
implementing some authorities affect the VA's ability to 
dispose and reuse property in some locations.
    For example, legal restrictions limit VA's ability to 
dispose of and reuse property in west Los Angeles. Despite 
these challenges, VA has used legal authorities to help reduce 
underutilized space.
    In 2008, we reported that VA had reduced underutilized 
space in its buildings by approximately 64 percent from 15.4 
million square feet in fiscal year 2005 to 5.6 million square 
feet in fiscal year 2007.
    While VA's use of various legal authorities likely 
contributed to VA's overall reduction of underutilized space, 
VA does not track the overall effect of using these authorities 
on space reductions. Not having such information precludes VA 
from knowing what effect these authorities are having on 
reducing underutilized or vacant space or knowing which types 
of authorities have had the greatest effect.
    According to VA officials, they plan to institute a system 
in 2009 that will track square footage reductions at the 
building level.
    GAO is not making recommendations in this testimony, but 
has previously made a number of recommendations regarding VA's 
capital asset management. VA is at various stages of 
implementing those recommendations.
    Mr. Chairman, this concludes my testimony. I would be happy 
to respond to any questions that you or the Subcommittee may 
have.
    [The prepared statement of Mr. Goldstein appears on p. 73.]
    Mr. Michaud. I want to thank both of you very much for your 
testimony this morning.
    Mr. Alvarez, I want to especially thank you for your 
testimony and for the excellent historical content you provided 
the Subcommittee with under the original decisions of what 
CARES has done.
    You noted explicitly that some of the CARES Commission 
findings may be outdated today because the information was 
based on data from 5 years ago.
    Would you recommend that we need to update CARES with a new 
Commission? How should we update the original recommendations 
of CARES?
    Mr. Alvarez. Mr. Chairman, thank you.
    At the time, the CARES Commission's work reviewed what had 
been done and reviewed the model that was used. We felt it was 
the best objective effort to date that the VA had undertaken.
    Also, at the time, we felt that our review really surfaced 
a lot of the current issues that were on the people's minds 
around the country, not only the veterans, but the VA employees 
and leadership as well.
    There were a considerable number of recommendations that we 
recommended go forward. To this date, I have been watching for 
the last 5 years somewhat curiously as to the progress of the 
plans.
    And when I look at this process and compare it with the 
BRAC process, the basic difference is that we were an 
internally appointed Commission. And with that, we really did 
not have much bite.
    So my suggestion would be that if I compare that with the 
BRAC where decisions were made and were held, that if you are 
going to do this again, give the Commission's work to have some 
bite and effect on the outcome and be realistic about it.
    I thought a lot of our recommendations were pretty solid 
and they were objective. But, again, without strong realistic 
backing, they are just not going to go anywhere.
    Mr. Michaud. During your discussion, when you put forward 
the recommendation where some community-based outpatient 
clinics should be located, was there ever any discussion over 
the fact that the CBOC funding comes out of the VISN's 
operating budget? This may create a situation where a VISN 
Director might not want to lose operating money, and, 
therefore, will not put forward a plan to implement what was 
recommended under CARES? Was that ever part of the discussion 
of the Commission?
    Mr. Alvarez. Oh, I am sure it was, Mr. Chairman. Given the 
discussions at the time with regard to the tremendous need for 
outpatient care, we definitely saw that that was the way to go 
in many parts of the country, particularly the rural areas.
    And so there were many, many challenges that surfaced with 
regard to doing that. One, of course, was what you described as 
giving the local leadership the authority to go ahead and do 
that.
    And then, of course, there was really no priority across 
the country in terms of the large requirement. The demand was 
and the need was all over the country. It would have been 
perhaps good if there was some way to come up with a priority 
list, and if you had centralized funding construction, that 
would have been perhaps helpful. But I do not know if that is 
realistic or not either.
    The other thing, of course, is that there was also the 
possibility of looking at combinations of leasing, contracting, 
and so forth with regard to the CBOCs. In addition, I am 
pleased to say that what has surfaced is this super CBOC.
    The HCCF that people referred to is, I think, a step in the 
right direction in terms of meeting the challenges that you 
mentioned with regard to how to fund the local CBOCs, while 
addressing the local issues, the local hurdles, political, what 
have you.
    Mr. Michaud. My other question is, when you look where we 
are today fiscally, with a debt limit to $12 trillion and with 
our huge trade deficit and where we are heading as a country, 
do you think it would make sense to, number one, look at the 
recommendations under CARES to see if they are still valid 
today and if not, update the recommendations? And after that is 
done, would you think it would make more economic sense to 
focus on the community-based outpatient clinics or access 
points in areas of the country that have federally qualified 
health care clinics so if you have an area where it is 
recommended we have a CBOC, but there is a federally qualified 
health care clinic using Federal dollars to build it, that it 
would make more sense to actually work jointly with the clinic 
or rural hospital?
    Mr. Alvarez. I think it would be, to answer the first part 
of your question, it would be probably a good exercise to look 
at the basic work of the CARES Commission and update it to see 
which parts have held true in terms of the purpose and the 
analysis and to do this in an objective manner. I think that 
would be probably a good exercise.
    With regard to looking at other options with regard to the 
CBOCs and outpatient care or perhaps a different form of 
funding these or expanding the outpatient capability around the 
country, it is probably good to look at that. I think what you 
are really looking at is maybe thinking outside of the box in 
terms of possibilities.
    In addition to that, to what you mentioned with regard to 
federally qualified health clinics and other ways of funding 
it, we looked at this rural concept that was just surfacing at 
the time and we really did not understand. But I think that is 
something that has probably developed nicely now.
    I think the important thing would be, which is what was 
mentioned by the previous panel, is to communicate. Once you 
have a good idea, communicate this with the stakeholders, the 
veterans service organizations, and explain to them exactly 
what your thoughts are and have an open dialogue on this.
    We found this to be quite helpful in our meetings and in 
our hearings around the country. A lot of people at the time 
were very concerned that they were going to lose their 
hospital.
    But when they realized that, as Mr. Boozman indicated, 80 
percent of care is done on an outpatient basis and that we 
could take care of the individuals quite well in their 
communities and not require the lengthy travel back and forth 
and what have you, they were in general very positive.
    This happened quite often in places in the western regions. 
Walla Walla, for example, is a good example of a sort of remote 
location in terms of talking about the local clinics, CBOCs 
type concept, what have you.
    So I think that these other ideas in terms of rural health 
and other means of funding local clinics may work quite well, 
but it has to be well communicated and get the cooperation of 
the local veteran groups and other stakeholders.
    Mr. Michaud. Thank you.
    Mr. Goldstein, as you know, the VA continues to use the 
tools developed through the CARES as part of its capital 
planning process.
    Do you think that the tools that they are using continues 
to serve their purpose or are there modifications that are 
needed within the VA to develop a more accurate tool to assess 
what is happening out there within the VA facilities?
    Mr. Goldstein. We are aware that they are still using the 
tool that they developed some time ago and that it has been 
useful to managing the program. Whether it needs a revamping is 
not something that we have specifically studied at this point 
in time.
    Mr. Michaud. When you do your reports, do you think outside 
the box? For instance, under the CARES process, as I mentioned 
earlier, they might recommend that it be located at point X and 
there might be a brand new federally qualified health care 
clinic that is going to be built at point X. So when you do 
your report, do you look at whether it makes more sense to have 
a joint facility at point X for VA as well as a federally 
qualified health care clinic or when you do your evaluation, do 
you just focus on that issue?
    Mr. Goldstein. We tend to look at the processes that were 
undertaken by VA in conjunction with any of its partners, to 
determine whether the process that they have is an effective 
one for determining the best outcome.
    We found in our work in Denver and Charleston that some of 
the challenges and difficulties occurred when the process that 
should have been used was not always used effectively.
    So our approach would be to try and encourage the agencies 
to use effective processes that are transparent and bring in 
all the stakeholders so that agencies can make effective 
decisions.
    Certainly in the CARES process, we did note that VA did 
look at most alternatives for most of the locations that they 
were examining, but quickly ruled many of them out. It is just 
a question of how that was adopted.
    We noted in our report that in most instances, the 
Secretary tended to agree with any option where the 
recommendation was to either keep the facility open or to use 
an enhanced use lease. However, the Secretary agreed only in 
one case to close a facility. That was in Gulfport when both 
the original plan as well as the Commission had suggested that 
a greater number of facilities be closed.
    And that may be a completely appropriate decision on the 
part of the Secretary, but there did appear to be a lack of 
transparency. In addition, it took a lot of time to make 
decisions, and this affected local communities while decisions 
were not being made.
    Mr. Michaud. What would you recommend? How would we put 
forward a model for new facilities that is fluid enough to take 
into account the changing veterans' population as well as the 
service needs out there and a model that would actually ensure 
that VSOs are part of the process. Yes, VA talked to the VSOs, 
but it was only to say that they talked to the VSOs. The VSOs 
really did not feel part of the process.
    What would you recommend for a model from here on out that 
would really take into account the different issues that change 
every day between now and whenever we get a facility built or 
leased and that will actually really put the VSOs in a 
situation where they can have really good effective input?
    Mr. Goldstein. Mr. Chairman, we did not do work looking at 
a specific model, but we did hear everywhere we went in all the 
locations that we visited for our work there were a lot of 
issues of communication.
    These issues of communication were not just between the 
Department and veterans' groups. They were also between the 
Department and other stakeholders, local communities, 
universities, other hospitals, other places that VA might try 
to develop an effective health care solution, and that in many 
instances, the kinds of actions that needed to occur to at 
least get everyone in a room and suggest various ways to move 
forward took a very long time and required the input of other 
parties to ensure that VA was going to honestly come to the 
table.
    Mr. Alvarez. Mr. Chairman, if I may, on that question about 
being heard, what we found in our experience is that giving the 
local veterans' groups around the country the opportunity to 
have input was not always a benefit because when you get into 
these discussions, the level of knowledge required to provide 
input was not always there as you see here in Washington and 
others where you see that level of expertise, in the veterans 
service groups themselves who have that tremendous level of 
expertise, but that level of expertise is not always present at 
the local level.
    And, therefore, when they are invited to come in and 
participate, they really cannot participate much beyond the 
initial phases of these discussions. And that is one of the 
issues that we always dealt with when we were having our 
meetings and our hearings around the country.
    Mr. Michaud. But by the same token--and actually it was 
brought up by Mr. Weidman--and I can attest to that coming from 
the State of Maine, where the Office of Rural Health was 
concerned about a mobile vet clinic, and really did not think 
that it was needed because when looking at a map, you could 
easily get from point A to point B when, in fact, you cannot 
get from point A to point B because of the distance and the way 
the transportation system is located.
    Here, actually, the VA at Togus made very clear that, yes, 
it is a very rural area and you cannot get from point A to 
point B. So, therefore, we were able to get the facility. But 
it is that local input that really made the difference in that 
particular case.
    I can understand from what you are saying that sometimes 
they might not know some other factors. But, quite frankly, if 
you do not have local input along with the other factors, I 
think you have to weed out some of the information that is 
brought forward. It is that local perspective that is very 
important.
    Going through the CARES process now, I know there is one 
VISN where they are going to hopefully have a CBOC. You 
actually might be able to eliminate another access point that 
was originally recommended by CARES, just by moving it around a 
little bit. But it is that local input that definitely is 
helpful.
    By that same token, as I mentioned to the previous panel, 
some of the concerns that I see are the political concerns, 
especially when it comes to closing facilities. It might make 
more sense to close facilities and reconfigure where the new 
facility might be. That is, when you get into some of the 
political problems in that particular area.
    I am not sure how to really address that unless you have a 
BRAC type commission that does that, but I am not recommending 
it. That is just playing the devil's advocate for the first 
panel, to see how they would respond to that particular area.
    But I understand what you had mentioned, Mr. Alvarez, and 
really appreciate your comments.
    Mr. Goldstein. If I may, Mr. Chairman, VA, of course, is 
not the only agency that suffers from what GAO euphemistically 
calls competing stakeholder interests. Many agencies face this 
very same problem.
    And it is among the reasons why GAO years ago put real 
property on the Federal high-risk list. It is one of five 
issues that informed us that it was important for the 
government to determine ways to deal with this because if it 
does not, we are always going to be caught in this bind whether 
it is VA, the Postal Service, or any other Federal agency.
    Mr. Michaud. Thank you.
    Once again, I want to thank both of you for coming. This 
has been extremely helpful. We may have additional questions in 
writing. I really appreciate your taking the time this morning 
to come here to give us your thoughts and to answer the 
questions. So, thank you both very much.
    Mr. Goldstein. Thank you, Mr. Chairman.
    Mr. Alvarez. Thank you, sir.
    Mr. Michaud. I would like to ask the third panel to come 
forward. Donald Orndoff, who is the Director of Office of 
Construction and Facilities Management from the VA. He is 
accompanied by Brandi Fate from the VA as well as Jim Sullivan 
and Lisa Thomas.
    I want to thank you very much for coming here this morning. 
I look forward to your testimony. Hopefully, we will be able to 
have an open dialogue as we move forward with the CARES process 
on how we make sure that veterans have access to health care 
facilities, regardless of where they live.
    So, Mr. Orndoff, would you please begin?

   STATEMENT OF DONALD H. ORNDOFF, AIA, DIRECTOR, OFFICE OF 
  CONSTRUCTION AND FACILITIES MANAGEMENT, U.S. DEPARTMENT OF 
VETERANS AFFAIRS; ACCOMPANIED BY BRANDI FATE, DIRECTOR, OFFICE 
  OF CAPITAL ASSET MANAGEMENT AND PLANNING SERVICE, VETERANS 
  HEALTH ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; 
    JAMES M. SULLIVAN, DIRECTOR, OFFICE OF ASSET ENTERPRISE 
   MANAGEMENT, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND LISA 
 THOMAS, PH.D., FACHE, DIRECTOR, OFFICE OF STRATEGIC PLANNING 
 AND ANALYSIS, VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT 
                      OF VETERANS AFFAIRS

    Mr. Orndoff. Mr. Chairman, I am pleased to appear here to 
discuss the status of the Department of Veterans Affairs health 
care infrastructure.
    I will provide a brief oral statement and request that my 
full written statement be included in the record.
    Mr. Michaud. Without objection, so ordered.
    Mr. Orndoff. Joining me today is James M. Sullivan, 
Director of VA's Office of Asset Enterprise Management; Lisa 
Thomas, Director of VHA's Office of Strategic Planning and 
Analysis; and Brandi Fate, Director of VHA's Office of Capital 
Asset Management and Planning.
    Current medical infrastructure. VA has a real property 
inventory of 5,400 owned buildings, 1,300 leases, 33,000 acres 
of land, and approximately 159 million gross square feet of 
occupied space both owned and leased.
    Our aging facilities were not designed to meet the 
challenging demands of clinical care of the 21st century. 
Continuing our recapitalization program is critical to 
providing world-class health care to veterans now and into the 
future.
    Current major construction program. VA continues the 
largest capital investment program since the immediate post 
World War II period. Since 2004, VA has received appropriations 
totaling $4.6 billion for health care projects, including 51 
major construction projects.
    These projects include new and replacement medical centers, 
polytrauma rehabilitation centers, spinal cord injury centers, 
ambulatory care centers, and new inpatient nursing units.
    Background CARES. In 2000, the Veterans Health 
Administration embarked on the Capital Asset Realignment and 
Enhanced Services study or CARES. CARES assessed veteran health 
care needs and promoted strategic realignment of capital 
assets.
    In 2003, VA released the draft national CARES plan and 
created the CARES Commission for further analysis.
    In May 2004, the Secretary published his CARES decision and 
identified 18 sites whose complexity warranted additional 
study. VA completed these studies in May 2008.
    Today strategic planning facilities process. The tools and 
techniques acquired through CARES are now incorporated in the 
VA's strategic health care facilities planning process. VHA no 
longer distinguishes between CARES and other project planning 
needs.
    Goal, high performance medical facilities. New VA medical 
facilities contribute to world-class health care for veterans 
today, tomorrow, and well into the 21st century. Our design 
goal is to deliver high performance buildings that are 
functional, cost efficient, veteran-centric, adaptable, 
sustainable, energy efficient, and physically secure.
    Our acquisition strategies. VA uses a range of acquisition 
tools that are tailored to best satisfy the unique requirements 
of each project. We partner with industry leaders through 
architect engineer design contracts, design-bid-build 
contracts, design-build contracts, integrated design-construct 
contracts, construction management contracts, and operating 
leases.
    Fiscal year 2010 requirement. VA's fiscal year 2010 budget 
request continues our recapitalization effort supported by our 
strategic planning process. VA requests $1.1 billion in fiscal 
year 2010 for major construction to replace or enhance VA 
medical facilities. VA also requests $196 million authorization 
to provide 15 new medical facility leases.
    In closing, I thank the Committee for its continuing 
support to improve the Department's physical infrastructure to 
meet the changing needs of America's veterans. My colleagues 
and I stand ready to answer your questions.
    [The prepared statement of Mr. Orndoff appears on p. 82.]
    Mr. Michaud. Thank you very much for your testimony.
    As you heard from panel one, there is a lot of concern 
about the lack of transparency in the capital planning process, 
especially as it pertains to CBOCs.
    It is my understanding that CBOCs come out of the VISN's 
operating budget. That being the case, if you have a VISN 
Director who might have other plans on what he wants to do 
within his VISN, even though there is a need for a CBOC, they 
will not proceed forward with that CBOC.
    I think that is a disincentive to help move forward on 
CBOCs, so my question is, number one, do you have any ways that 
we might be able to address that? Should the CBOC operating 
budget be a separate line item so we can actually move forward 
with CBOCs within the CARES process? What would you do to bring 
more transparency to the process?
    As you heard from the first panel, they feel that they have 
not been part of the process. In Maine, for instance, we have 
the Department of Education where the Commissioner does not 
decide they are going to do new school construction. It is the 
State Board of Education that makes that decision.
    Should we have an outside entity make the decision of where 
the VA will be moving on these facilities and the VA just will 
proceed forward with that recommendation?
    Mr. Orndoff. Mr. Chairman, allow me to have Ms. Thomas 
respond to the requirement's generation part.
    Ms. Thomas. Mr. Chairman, I would like to address your 
questions regarding the community-based outpatient clinics.
    As of the end of March of this year, VHA has over 750 
community-based outpatient clinics and they have treated 
approximately 1.8 million veterans already. So I think that 
those numbers alone show that it is not essentially a 
disincentive for the Network Directors to use that tool to 
enhance services to veterans in their local communities.
    Mr. Michaud. I might add, how many have been built 
recently?
    Ms. Thomas. I can tell you that in fiscal year 2009, 13 
have already been activated and there is another 62 planned for 
this fiscal year.
    Mr. Michaud. Another 62?
    Ms. Thomas. Yes, sir, for a total of 75 in fiscal year 
2009.
    Mr. Michaud. Okay. And how many are left under the CARES 
process to be moved forward?
    Ms. Thomas. Sir, we have almost completely implemented all 
of the CARES community-based outpatient clinics. We have 50 
CBOCs that have opened in 13 networks and we have 78 of those 
CBOCs in 14 networks that will open between fiscal year 2009 
and 2011.
    One of the other things that I would like to mention is 
that we have over the past 2 years taken a national deployment 
plan for our community-based outpatient clinics. So we have 
more of a nationwide systemwide perspective. And the 
methodology that we employ looks at looking at those areas of 
the country that have limited access to care in combination 
with those areas that have the highest projected demand for 
services for both primary care and mental health services.
    We then rank order those markets and present those to the 
networks and ask them for the highest ranking markets, if they 
could please develop a plan for how they are going to meet the 
needs of veterans in those areas.
    And that is a combination of CBOCs in addition to other 
strategies that we have such as telehealth and mobile health 
clinics and outreach clinics. So we have over the last 2 years 
increased the rigor with which we look at where the CBOCs need 
to be placed.
    Mr. Michaud. In that process, what have you done to involve 
the VSOs in those regions?
    Ms. Thomas. My understanding is that within every network, 
they have a structure in place to communicate with their 
veterans service organizations and their representatives both 
at the network level in terms of committees as well as the 
local medical center level. We encourage every single medical 
center and VISN to ensure that they are speaking with their 
VSOs and incorporating their input into their strategic 
planning processes.
    Mr. Michaud. Is the process consistent among all the 
different VISNs in how they deal with this or is it left up to 
each VISN on how they are to involve the VSOs in their region?
    Ms. Thomas. There is variability within the networks. 
Different networks have varying governance structures. But I 
believe we can certainly take that for the record and get back 
to you with how each network does accomplish that.
    Mr. Michaud. I did not mean to interrupt. If you could 
finish answering my original question, which I think you mostly 
answered.
    Ms. Thomas. Oh, the transparency issue? I will pass that 
back to Mr. Orndoff.
    Mr. Orndoff. Well, the transparency issue, I think, is best 
addressed, as Ms. Thomas said, in that there is a dialogue with 
stakeholders at the local VISN and Central Office level. 
We do have a continuing process of evaluating requirements and 
setting the priorities for which projects would move forward, 
as Ms. Thomas has talked about.
    So it is always a challenge to communicate enough and we 
try very hard to do that. Could we do better? Sure. We will 
look for opportunities to do that.
    Mr. Michaud. How are the concerns of local facilities 
conveyed to the VISN office?
    For instance, I will use Maine as an example. VISN 1 is 
very large. You can put New England in the State of Maine. And 
you have your Director at Togus and then you have your VISN 1 
Director in Boston.
    How are the concerns from the very local level, say the 
Togus level, conveyed to the VISN level then ultimately 
conveyed to the Central Office? Does the Central Office have an 
opportunity to see what actually is really needed at the local 
level or does that get cut off at the VISN level? Is this dealt 
with consistently throughout the different VISNs?
    Mr. Orndoff. Ms. Fate will answer, sir.
    Ms. Fate. Thank you.
    There are different programs that address the needs at the 
medical centers. We have our nonrecurring maintenance (NRM) 
program, which is a decentralized program that allows the VISNs 
the control as to what decisions are made for renovation within 
the existing medical centers. And each one of the VISNs has 
their own process by which they prioritize their projects.
    For the minor construction and the major construction 
programs, those are at a centralized level where the needs are 
brought forward to Central Office for capital assets. And 
typically those mostly involve new construction. And we have a 
model set for the criteria where each project is scored and 
ranked.
    And I do not know if, Jim, you want to present.
    Mr. Sullivan. If we could, we have a large chart here that 
will show you the prioritization methodology that is applied to 
the major construction program as well as very similarly to the 
minor construction program.
    Mr. Michaud. Would it be possible if you could send that 
also to the Committee----
    Mr. Sullivan. Absolutely, sir.
    Mr. Michaud [continuing]. Electronically?
    Mr. Sullivan. Yes.
    [The VA chart follows:]

    [GRAPHIC] [TIFF OMITTED] T1866A.001
    

    Mr. Michaud. Thank you.
    Mr. Sullivan. This shows the criteria that is used to 
determine which is the highest priority. So you can see, there 
are seven parts of criteria starting with issues that address 
safety, special emphasis which would be TBI, seriously mentally 
ill, SCI needs, and then service delivery gaps, addressing 
where those gaps are, your portfolio goals, that is getting rid 
of unneeded space, vacant space, things along those lines.
    The facility condition criteria references the large 
backlog of deficiencies. We have a facility condition 
assessment process that will tell you what each facility has, 
how many deficiencies, and then workload, how much of a 
workload gap is that investment addressing. And then last, is 
it in alignment with the strategic plan of the Department.
    And a similar process is used for decentralized programs, 
which are minor construction and major construction.
    Mr. Michaud. I wish I could say I could see it. The only 
thing I can see is this is the year 2010 VA decision criteria 
and that is it.
    Mr. Sullivan. It is in the budget document.
    Mr. Michaud. Okay.
    Mr. Sullivan. But we will----
    Mr. Michaud. Yeah. Thank you. I appreciate that.
    My next question is, when you look at the CARES process, 
some of the concerns that I and the Subcommittee have heard are 
from our Members from all around the country and ever since I 
have been here, we have received legislation to require the VA 
to do more contracting out. The reason why we are seeing 
legislation to contract out is veterans all around the country 
are getting frustrated that they are not getting access to the 
health care that they really need. And, hence, we are seeing 
legislation to contract out.
    I do not want the VA to become an insurance agency, that is 
all you do is pass through. Part of the problem, I feel, is 
because the CARES process has not been moved forward 
aggressively, that is not necessarily the VA's problem in that 
the previous Administration and previous Congress have never 
provided the adequate funding needed to move forward on the 
CARES process as originally recommended, the billion dollars a 
year. So that is the lack of foresight among Congress and the 
Administrations to move forward.
    My question is, however, when you look at the CARES 
process, there are a lot of access points without huge costs to 
move forward. Has the VA looked at those access points where it 
was recommended that they work collaboratively with the 
federally qualified health care centers to move forward more 
aggressively and get these up and running so that we can help 
get the veterans the services that they need and hopefully 
prevent any more legislation dealing with contracting out? Has 
there ever been an overlay of where the needs are to CARES 
compared to where we currently have other federally qualified 
health care clinics?
    Mr. Orndoff. Well, certainly the overall process of 
identifying requirements covers the waterfront, all the 
requirements. And where we have gaps, we certainly identify 
requirements and the highest requirements through the process 
that Mr. Sullivan just described would float up.
    We have developed a comprehensive list of requirements for 
the capital investments. They are in the fiscal year 2010 
budget submission. There are 66 projects listed in priority 
order as a result of this prioritization process.
    What we have done is try to look for opportunities for 
leasing a facility so we can get more projects moving faster. 
So we have a two-pronged approach, capital investment as well 
as leasing.
    In terms of creative solutions that you have addressed, 
certainly the opportunities as presented are explored and 
discussed.
    If there are other thoughts on the panel about that, let me 
refer it to someone else.
    Ms. Thomas. Sure. I can address a portion of that, Mr. 
Chairman.
    As we heard the gentleman from GAO report, they did a 
report on VA and criticized us for not centrally tracking and 
monitoring the implementation of CARES.
    As a result of that, our Under Secretary for Health 
chartered a work group. And that work group was a VA-wide body 
that recommended a report be conducted annually to track both 
the implementation and the impact of the CARES decisions.
    One of those items that we are currently looking at is the 
implementation of increased access points through contracted 
care for any of those decisions that were identified in the 
CARES document as well as the 18 follow-on business care 
studies. So we will be tracking that and our first annual 
report will be out this month.
    Mr. Michaud. If you make sure that the Committee receives a 
copy of that report----
    Ms. Thomas. Absolutely.
    [The VA subsequently submitted the report entitled, ``VA 
Health Care: Implementation Monitoring Report on Capital Asset 
Realignment for Enhanced Services,'' dated August 2009. The 
report will be retained in the Committee files.]
    Mr. Michaud [continuing]. It would be very much 
appreciated. Under the process you mentioned, there are several 
new CBOCs coming online.
    In moving forward, what are you doing to try to really get 
them aggressively moving forward? It is one thing to start the 
process and say you are going to do it. Are there ways that we 
can streamline that process to move them forward more 
aggressively? Do we need to change something statutorily or can 
you do it administratively? And if you can do it 
administratively, are there bumps in the road that we should 
look at administratively? How we can streamline that process to 
get these facilities up and running?
    Ms. Thomas. Mr. Chairman, I think there is always room for 
improvement in terms of effectiveness and efficiency. And I 
think that what I would like to do is take that question for 
the record and consult with my colleagues and identify those 
areas that can be streamlined. There are several levels of 
review that go on both within VHA with the Department and with 
OMB.
    [The VA subsequently provided the following information:]

          The current Community Based Outpatient Clinic (CBOC) Planning 
        process is aligned with the VHA Capital Planning and Budget 
        cycles as approved by the Office of Management and Budget 
        (OMB). Therefore, a 2-year planning scenario is required by 
        which CBOC proposals are submitted 2 years prior to their 
        planned activation date so that they are included in the 
        appropriate budget formulation cycle. For example, right now, 
        at the end of FY2009, the CBOCs that VHA plans to open in 
        FY2011 are under the review by OMB with VHA's budget 
        submission.
          The CBOC process begins with a national analysis of the 
        underserved populations as defined by limited geographic access 
        in areas with projected increases in primary care and mental 
        health services. The Deputy Under Secretary for Health for 
        Operations & Management (DUSHOM) issues a call memorandum to 
        the Veterans Integrated Service Networks (VISNs) for CBOC 
        Business plan submissions for those areas of the country that 
        meet the national threshold for having underserved populations. 
        A technical review of each of these business plan proposals is 
        then completed. Those proposals meeting the technical 
        requirements are then reviewed by a CBOC National Review Panel 
        (NRP). The NRP reviews the proposed CBOCs against national 
        operations criteria. By June of each budget formulation year, 
        the National Review Panel recommendations are completed and 
        forwarded to the Under Secretary for Health and ultimately the 
        Secretary approval and inclusion into the Department Budget 
        Submission.

    Mr. Michaud. Thank you.
    Mr. Sullivan. I think, Mr. Chairman, one of the biggest 
improvements has been the raising of the threshold that the 
Committee successfully got through on the lease threshold.
    It used to be we had to get leases authorized at 600,000. 
For the first time with your help, it was raised to a million 
and I think that will speed the process of bringing leases 
online significantly quicker.
    Mr. Michaud. I am sure it also will save time within the VA 
system because I know Members of Congress constantly call to 
find out where that project is in the system to try to move it 
along. The more streamlined it is, I think the more efficient 
it will be.
    Actually, the first panel voiced serious concerns about the 
HCCF leasing concept. Can you share the rationale behind that 
leasing concept and the VA's plan to deploy that model? How 
does the concept fit into the overall CARES process?
    Mr. Orndoff. Yes, sir. As was mentioned, I think by members 
of that panel, it is not a one size fits all or the ultimate 
solution. It is one of a range of facility solutions that VA 
intends to employ and address and tailor to the need at the 
particular location.
    What we are seeing is there are opportunities with the 
shift in outpatient care that a very high percentage, as high 
as 95 percent of the health care needs of veterans, can be met 
in an HCCF environment as opposed to having full-blown 
hospitals at each of these locations.
    So in most cases or in some cases where we do not have 
capabilities now, maybe the HCCF is the correct solution rather 
than a series of community-based clinics or a large medical 
center complex which can be, of course, from a capital 
investment point of view very expensive.
    What we are also looking to do with the HCCF is to deliver 
these quicker than the normal capital process through leases. 
And the budget in fiscal 2010, there are seven HCCFs for 
authorization. Those projects would not be before you now if it 
was not for leasing of the HCCF. So it is an opportunity to 
reach down our priority list and move projects forward.
    Because of limitations of leasing, operating leases, 
working within the guidelines and policies of the Office of 
Management and Budget, we do have some limits on leasing. And 
so we are basically pressing the envelope a bit with HCCFs in 
terms of getting leasing done for HCCFs within the leasing 
authorities that we have. But we are certainly working with all 
stakeholders to try to move forward on that.
    Maybe Ms. Fate can embellish a little bit on when an HCCF 
is the right facility solution.
    Ms. Fate. We are currently in the process of fully defining 
the HCC. While right now the services that are provided are 
primary care, specialty care, mental health, expanded 
diagnostics, and ambulatory surgery, we are using it as another 
mechanism to provide the services that we do in VA.
    It can be either through construction or through leasing, 
but the avenue that we tested through the fiscal year 2010 was 
to take seven projects through the major construction project 
listing and try to push those forward through the leasing 
process so that they could be done quicker as opposed to 
sitting in priority 23 for the next several years and not 
getting funded from the major construction.
    So that was just our attempt to address the needs so that 
our veterans do have a facility that is managed by VA health 
care and providing the quality health care that we do at our 
facilities.
    Do you have anything?
    Mr. Sullivan. Yes.
    Mr. Chairman, I would like to add to that that the leases 
the HCCs proposed in the budget, five of them are leases that 
would normally show up in the construction list. With an $11 
billion backlog, the theory behind this was to see if some of 
those could be leases. For example, at Loma Linda, it was an 
outpatient addition planned for construction.
    The option here was to say could you lease a facility 
across the street in the neighborhood right next to the medical 
center where you could deliver that facility probably 6 to 8 
years earlier than waiting for construction. That is one of the 
advantages of HCCF.
    So it is a way to get facilities, new and adequate 
facilities quicker with our large backlog of facilities. 
Because I think as Mr. Orndoff referenced, we are at an $11 
billion backlog. And we know that is not the full backlog, but 
that is probably a pretty good indicator of where we are.
    And we have over $2.2 billion that are partially funded 
that we need to finish before we can start more. So this was a 
way to look at delivering facilities quicker and faster in this 
budget.
    So, I mean, that was the goal of this now. And also the 
concept itself, as it applies to where we do not have 
facilities now, is still being fully developed.
    Mr. Michaud. When you look at that huge backlog and when 
you look at the range in dollars from a CBOC to a large medical 
facility and you look at the rural issues concerning veterans, 
are you focused more on trying to build a brand new hospital or 
is the VA looking at taking care of a hundred different needs 
out there by doing CBOCs or access points? How do you judge 
that priority?
    When you look at the huge amount of money it costs to build 
a multi-million dollar huge hospital, it makes a lot more sense 
to me to instead take care of a lot of the smaller access 
points out there where you can take care of a lot more veterans 
for fewer dollars.
    Mr. Sullivan. Right. We separate our infrastructure needs 
out, that the $11 billion backlog is big, major, current 
facilities that exist today. The CBOC process which provides 
more flexibility is to address some of those smaller pockets of 
need through that process. And there is a separate process Ms. 
Thomas talked about in terms of how you prioritize those CBOCs. 
The $11 billion is just basically our current infrastructure 
stock and the repairs needed for that.
    Ms. Thomas. I think part of your question, sir, is also how 
do we identify what type of capital solution is appropriate for 
the care that veterans need. And that is based upon services 
and projected demand for those kinds of services.
    So when you look at certain markets and you look for the 
demand and the utilization out into the out-years, if the 
predominant need of the veterans is for primary care or mental 
health services, then it would be appropriate to look toward a 
CBOC or a smaller access point to meet those needs.
    If there is a large population of need for specialty care, 
inpatient care, then that would help dictate what type of 
infrastructure you would need, a larger health care center or a 
hospital in that case. And then through the capital process, we 
would work together to identify with the local network whether 
or not the most cost-effective way to meet that would be 
through a lease or construction.
    Mr. Michaud. If you were to take care of all the needs that 
are currently out there under the CARES process or that came 
about after CARES--I am just talking about the smaller 
facilities--what would that total cost be approximately?
    Mr. Sullivan. In terms of the non-CBOC, it is about $12 
billion in the major program. I believe the minor program is 
$1.5 billion in terms of project backlog. And in the interim--
--
    Mr. Orndoff. The FCA backlog is what, $8 billion?
    Mr. Sullivan. Eight billion dollars. Now, there is some 
overlap between the project backlog and the facility deficiency 
backlog, but it is a large issue.
    Mr. Orndoff. Sir, if I may address your point about either/
or, I think we are making an effort to do both. And we have a 
different facility solution depending on the requirement.
    I think there is a need to recapitalize the infrastructure 
even for the major medical centers. There is a veteran need for 
that level of care in certain high population areas. On the 
other hand, certainly we want to make access available to 
veterans in all locations, including rural areas.
    So I think we are working all those fronts and the spectrum 
of different types of facilities and different acquisition 
strategies are all being put into play to try to address that 
with all the resources available.
    Mr. Michaud. Thank you.
    Also on panel one there were co-authors of the Independent 
Budget who had mentioned that VA's long-term care strategy 
plan, released in 2007, was lacking in specific planning 
details regarding the future direction in long-term care 
programs.
    Could you inform us what you are doing to develop a more 
comprehensive, long-term care strategy plan? Where is that and 
what have you done thus far?
    Mr. Orndoff. Mr. Sullivan or Ms. Thomas.
    Ms. Thomas. Mr. Chairman, VA is working on a population-
based model to project the long-term care needs for both 
residential and noninstitutional long-term care services for 
the needs of our enrolled veteran population.
    As is the cornerstone of our planning, the enrollee health 
care projection model or actuarial model, which the other 
panels had referenced is really the cornerstone for strategic 
planning. And VA has made progress to develop a long-term care 
model that is similar in rigor and assistance that those kinds 
of tools can provide us in planning.
    I do know that there has been progress in the long-term 
care planning since the last time they had submitted an 
official plan to Congress. And we would be happy to get those 
experts to clarify exactly what steps they have made in terms 
of improving that.
    [The VA subsequently provided the following information:]

          The Geriatrics and Extended Care (GEC) Strategic Plan was 
        approved by the Acting Under Secretary for Health on September 
        2, 2009. The plan responds to the challenges facing VA given an 
        increase in the age, number and medical complexity of elderly 
        veterans, and the appearance of a younger, more health-savvy 
        cohort of veterans with immediate and future extended care 
        service needs; and a U.S. health care workforce underequipped 
        to care for those with chronic diseases and disabling 
        conditions.
          The GEC Strategic Plan specifies four goals to be achieved 
        through 10 strategies, and 82 recommendations. The most 
        critical of these recommendations include: ensuring patient-
        centeredness of programs; analyzing the cost/benefit of long-
        term care policies; ensuring a focused and dynamic research 
        program; building national partnerships; appointing a GEC lead 
        for each VISN; developing a practical means of tracking 
        veterans served by GEC programs; and appointing a GEC Workforce 
        Advisory Council of senior VHA leadership to address workforce 
        inadequacies. Implementation of the GEC Strategic Plan covers a 
        7-year planning horizon.

    Mr. Michaud. When you do your planning, whether it is for 
CBOCs or long-term care planning, are you involving not only 
the VSOs but other State entities?
    I am very pleased with the State Veterans Nursing Home in 
Maine. They have a facility. They have been approved for a 
brand new community-based outpatient clinic on the same campus. 
They are going to have a hospice facility there on the same 
campus as well as low-income housing for our veterans.
    So, all on the same campus, you have a community that 
offers the whole continuum of care, and a lot of that was 
because of the leadership of the State Veterans Nursing Home.
    When you are doing your planning process, are you not only 
involving the VSOs but also other entities that might be out 
there that could help move forward in a particular area?
    Ms. Thomas. Yes. The answer is yes, Mr. Chairman. Both at 
the local level and at the national level, our geriatrics and 
extended care service line does very much look to partner and 
learn from the private industry and our local communities.
    One of the large changes that we recently made is we no 
longer refer to our nursing homes as nursing homes. They are 
now CLCs or community living centers. And looking toward the 
innovative strategies that others have developed in terms of a 
greenhouse and approaches like that where they are real living 
communities and a sense of a community and not an 
institutional-like setting for those of our veterans who need 
long-term care.
    We are always looking for input from our partners, our 
veterans service organizations and all of the stakeholders. I 
think that is a very important ingredient to strategic 
planning, particularly for this population.
    Mr. Michaud. Thank you.
    Also on panel one, we heard some concerns about the lack of 
transparency and the lack of involvement from the VSOs.
    What do you think that you can do better to make sure that 
all the stakeholders are at the table and that their concerns 
are heard in a meaningful way, not just to bring them in and 
say we have talked to them, that is the end of it? What can you 
do to address some of the concerns that we heard from panel 
one?
    Mr. Sullivan. I think one thing, Mr. Chairman, on the major 
construction area that we will brief them and sit down with 
them and talk to them about our prioritization process, how 
projects get into it, why projects are where they are on the 
priority list so they can have an understanding of where things 
are for a particular project and how there is a straightforward 
prioritization process.
    Congress required us to do it back in the early 1990s and 
we have refined it. Maybe it needs to be more fully briefed to 
the VSOs and others so they can see at least what the decision 
process is.
    The process was put together to be transparent so you could 
find out why a project is ranked particularly higher than 
another or why one is not ranked higher. And maybe that is an 
education process that is incumbent on us to more fully explore 
with those elements. And we will do that.
    Mr. Michaud. What you just described does not really 
involve them. It is pretty much here is the decision and here 
is how we came to that decision.
    I think, if I understood correctly from panel one, they 
would like to be involved in that process, before you make the 
decision not to say ``here is a decision, here is what we have, 
and this is how we arrived at the decision.'' I think they want 
to be part of that process in moving forward before the 
decision is made. That is the meaningful input that they want.
    Mr. Sullivan, what you have told me is pretty much, I 
think, what they have been complaining about: here is a 
decision, take it or leave it. If you like our methodology, or 
dislike it, that is what you have to live with. I think they 
want to be part of that process, not after the fact. So----
    Mr. Sullivan. Sir, we will take that back to the Secretary 
and discuss that option of finding a way to involve them in 
that process.
    Mr. Orndoff. Sir, I think the opportunity to influence the 
project selection process is basically the process that we used 
to develop this chart over here which says, you know, what are 
the things that are important that should be weighted more 
heavily that float to the top.
    So I think there is an opportunity that we could take to 
discuss that in the development process. It is an annual cycle 
of refreshing that to make sure it is aligned with the current 
strategic vision of the Secretary.
    So as a step in that process, we could have a dialogue 
there that would influence the model that eventually produces 
the list. That way, we can all have some ownership in the 
outcome.
    Mr. Michaud. I would appreciate it because some of the 
frustration that I have heard and seen over the years is a 
desire to really be part of that ownership.
    I know at times, that probably might delay things a little 
bit or might be frustrating at times, but, quite frankly, I 
think any time that you can work with those that are involved 
in the process, it has long term benefits. And I think it gets 
rid of a lot of the frustrations that we have heard today and 
hopefully in the future.
    As I mentioned earlier, I think part of the problem in the 
past has been that VA lacked the financial resources needed to 
move forward on this in an aggressive manner. It is my hope 
that with the new Administration and new Congress that we will 
definitely look forward in this particular area.
    My only disappointment is in the stimulus package, the 
funding for the VA got cut. The additional increase actually 
got cut from the original request that we had. Hopefully we 
will be able to move forward with giving the VA the resources 
they need so you can move forward to take care of our veterans.
    I guess my last question would be, if there is anything 
that Congress could do, other than provide additional resources 
to help make your job a lot easier so we can move forward more 
aggressively as we look at the CARES process and how we can 
meet the facility needs? Is there anything that we can do or 
should do?
    Mr. Orndoff. Sir, I am not aware of any legislative 
proposals that we have for specifically in the area of 
capitalization of projects. We do appreciate the raising of 
thresholds as was mentioned for leasing. That certainly 
facilitates that process moving forward.
    We have a budget, a robust budget before you of $1.2 
billion for major construction, which is a high watermark. And 
we, you know, of course, would appreciate support for that 
going forward.
    Any other issues that anybody on the panel has?
    [No response.]
    That is all I have, sir.
    Mr. Michaud. Well, once again, I want to thank you. There 
will be additional questions for the record.
    I do want to thank you for your testimony this morning, for 
answering the questions. Hopefully, you will take seriously the 
comments made by the first panel about their involvement up 
front, not at the end, because I have been here 7 years and I 
hear a lot of concerns about the VSOs being able to 
meaningfully participate in the process.
    Anything you can do to open that up to make it more 
transparent, would definitely be very helpful. I look forward 
to working with you, and I want to thank each and every one of 
you as well as your staff for what you do for our veterans in 
this great Nation of ours.
    I think all too often elected officials tend to criticize 
the VA because of a lack of services for our veterans, but I 
want to thank you for what you do for our veterans, not only 
the four of you, but also your staff as well. I really 
appreciate it very much.
    So without any further questions, I now adjourn the 
hearing. Thank you.
    [Whereupon, at 12:49 p.m., the Subcommittee was adjourned.]



                            A P P E N D I X

                              ----------                              

             Prepared Statement of Hon. Michael H. Michaud,
                    Chairman, Subcommittee on Health

    The Subcommittee on Health will now come to order. I would like to 
thank everyone for attending this hearing. Today's hearing marks the 5-
year anniversary of the CARES decision, otherwise known as Capital 
Asset Realignment for Enhanced Services.
    The purpose of this hearing is to assess the VA's implementation of 
CARES and to investigate the effectiveness of CARES as a capital 
planning tool. In addition, today's hearing will explore whether CARES 
should continue in the future or if the VA should adopt an alternate 
capital planning mechanism.
    When the VA embarked on the CARES process 5 years ago, the VA's 
health infrastructure was thought to be unresponsive to the needs of 
current and future veterans. While about 24 percent of the veteran 
population was enrolled in the VA for health care, the CARES plan 
assumed that the enrollment population would increase to 33 percent by 
the end of 2022. In addition, there were concerns about the ability of 
the existing health infrastructure to meet the demands of the aging 
veteran population who opt for warmer climates in the south and the 
southwest.
    CARES was intended to eliminate or downsize underused facilities, 
convert older massive hospitals to more efficient clinics, and build 
hospitals where they are needed in more populated areas. In essence, 
CARES was to direct resources in a sensible way to increase access to 
care for many veterans and to improve the efficiency of health care 
operations across VA facilities.
    Over the years, there have been challenges of implementing the 
CARES decision in numerous locations. Most notably, the VA has reversed 
the CARES decision under the leadership of different VA Secretaries. 
Too often, we hear stories of veterans who have been waiting for new 
facilities for 10 or more years. In addition, there is a new concept of 
Health Care Centers which provide primary and specialty care and is a 
hybrid of a CBOC and a full-fledged hospital. Because this is a 
relatively new concept which the VA is rolling out, it is important 
that we fully understand how this fits in with the overall CARES plan.
    I look forward to hearing the testimonies of our panels today, as 
we determine the path forward in continuing to build a strong health 
infrastructure for the VA.

                                 
            Prepared Statement of Hon. Henry E. Brown, Jr.,
           Ranking Republican Member, Subcommittee on Health

    Thank you Mr. Chairman.
    Today, more than 80 percent of the primary, specialty, and mental 
health care our veterans need can be provided in an outpatient setting. 
Yet, much of the Department of Veterans Affairs (VA) health care 
infrastructure was built more than 50 years ago, when VA care meant 
hospital care.
    A review of VA real property by the Government Accountability 
Office (GAO) in 1999 found that VA was wasting a million dollars a day 
on the maintenance of outdated and underutilized health care 
facilities.
    In response to this report and in recognition of the need to update 
facilities to deliver 21st century care, VA established the Capital 
Asset Realignment for Enhanced Services (CARES) process. CARES was 
designed to be a capital planning blueprint for the future--to 
modernize and better align VA's health care facilities with the 
changing veteran population.
    The CARES Commission identified several ways to improve access and 
enhance quality of care including increasing collaborative partnerships 
with the Department of Defense and VA's academic affiliates.
    Specifically, in my home State of South Carolina, the CARES 
Commission supported a concept for a joint venture with the Medical 
University of South Carolina (MUSC) and the Ralph H. Johnson VA medical 
center in Charleston. The Secretary's May 2004 CARES Decision also 
stated that ``VA will continue to consider options for sharing 
opportunities with the Medical University of South Carolina.''
    Since the leadership of MUSC came to VA with this proposal more 
than 6 years ago, I and this Committee have taken significant steps to 
study and move forward with this historic opportunity to establish a 
new innovative model of care. The ``Charleston Model'' would ensure 
high-quality health care for veterans in the Charleston area and could 
be leveraged to improve access to care in other areas. A significant 
milestone was reached in advancing the project with the passage of 
Public Law 109-461, the Veterans Benefits, Health Care, and 
Informational Technology Act of 2006. Section 804 of this law 
authorized $36.8 million for VA to enter into an agreement with the 
MUSC to design, construct and operate a co-located, joint-use medical 
facility in Charleston, South Carolina. However, much to my dismay, the 
VA has not yet set aside any funding to implement the law.
    As we evaluate the effectiveness of CARES, it is also vital that we 
re-evaluate the importance of collaborative partnerships. Building on 
the close relationships that VA already has with medical schools across 
the Nation is a powerful tool that VA can use to achieve greater health 
care quality and further efficiencies, while still preserving the 
identity of a veterans' health care system.
    I look forward to our discussion today, and yield back the balance 
of my time.

                                 
        Prepared Statement of Joseph L. Wilson, Deputy Director,
    Veterans Affairs and Rehabilitation Commission, American Legion

    Mr. Chairman and Members of the Subcommittee:
    Thank you for this opportunity to present The American Legion's 
views on the future of the Department of Veterans Affairs (VA) 
infrastructure. It is The American Legion's position that Congress keep 
in mind the importance of continuity of care during a servicemember's 
transition from active duty to the community.
    Within the VA medical system are various divisions that accommodate 
a high demand of services, to include extended care and rehabilitation, 
mental health, pharmacy, primary care, research, social work, spinal 
cord injury (SCI), and women's health. Quality care throughout those 
divisions may be hindered when buildings that house them aren't 
equipped to accommodate and/or sustain modern technologies and 
medicines.
    Since the late 1990s, VA has gone through a critical transformation 
in its shifting from primarily hospital-based care to outpatient care. 
As the transition occurred, VA's infrastructure surpassed obsolete. 
This brought about the Capital Asset Realignment for Enhanced Services 
(CARES) process in 1999. This process was implemented to enhance 
outpatient and inpatient care and special programs, to include SCI, 
blind rehabilitation, seriously mentally ill and long-term care through 
proper upgrading, sizing, and location of VA facilities. However, once 
CARES was underway, the Commission did not include mental health and 
long-term care needs in its final recommendations, due to the lack of 
sufficient data. As a result, all of the facilities identified for 
closure were providing nationally recognized mental health and long-
term care services.
    In 2004, the VA completed the CARES process, which called for 
critical construction needs for outdated VA hospitals and clinics 
throughout the Nation. The Secretary of VA reported Congress would have 
to include $1 billion annually for 6 years to ensure the success of 
CARES. The American Legion has recommended the same figure in its 
annual budget recommendation since the CARES decision. Due to lack of 
funding over the years, it is believed VA has been playing fiscal 
catch-up.
    Although the VA had begun implementing CARES decisions, a 
Government Accountability Office (GAO) report found implementation was 
not being centrally tracked or monitored to determine the impact the 
CARES process has or hasn't had on the mission. GAO was also tasked 
with examining how CARES contributes to the Veterans Health 
Administration (VHA) capital planning process; the extent to which the 
CARES process considered capital asset alignment alternatives; and the 
extent to which VA had implemented CARES decisions and how the 
application has helped VA carry out its mission.
    Through CARES the VA developed a model to estimate the demand for 
health care services, as well as ascertain the capacity or availability 
of infrastructure to meet the demand. It was the recommendation of the 
VA to meet future health care demand by building medical facilities and 
opening more Community Based Outpatient Clinics (CBOCs).
    GAO further examined the CARES process by other means such as 
conducting six site visits to VA facilities in Walla Walla, El Paso, 
Big Spring, Orlando, Pittsburgh, and Los Angeles.
    They found critical infrastructure problems at the following 
facilities:

      Walla Walla-The facility was in poor and dilapidated 
condition, to include buildings that dated back to the early 1900s. 
They also discovered lead-based paint and seismic issues.
      Greater Los Angeles-Infrastructure and life safety issues 
were discovered as well as seismic structural deficiencies for some of 
the old buildings. Most of the buildings also required major repairs, 
including seismic and structural upgrades, with the main hospital 
building at ``exceptional'' high risk for earthquake damage.
      Orlando-The Orlando facility had the greatest 
infrastructure need of any ``market'' in the country. The new facility 
is transitioning from that which accommodated 90,000 veterans to a 
population of 400,000.
      Pittsburgh-Buildings at the Pittsburgh Highland Drive 
facility were found in poor condition and not designed for modern 
medical health care.

    As a result of the GAO report, it was recommended that VA provide 
the information necessary to monitor the implementation and impact of 
CARES decisions. It was also recommended VA provide outcome measures 
that report the progress of CARES as it relates to access to medical 
services for veterans.
    Since Fiscal Year (FY) 2002, approximately 945,423 Operation 
Enduring Freedom/Operation Iraqi Freedom (OEF/OIF) veterans have left 
active duty and become eligible for VA health care. Approximately 51 
percent of the returnees were active duty, while 49 percent were 
Reserve and National Guard. Many are also returning with various 
injuries and illnesses, to include Traumatic Brain Injury (TBI), SCI, 
Blind Eye Injury, Post-Traumatic Stress Disorder (PTSD), and Loss of 
Limb(s), to name a few.
    The American Legion presents the above-mentioned numbers to evoke 
to the Congress and other pertinent affiliates to determine the 
adequacy, or lack thereof, of care to veterans when there is lack of 
funding and/or inadequate accommodations; namely infrastructure that 
houses VA services.
    While the decision to assess and plan, and construct or reconstruct 
VA medical facilities has been underway since the CARES decision in 
2004, the aforementioned figures also suggests veterans' issues have 
and continue to increase. With the average age of VA facilities 
remaining at 49 years, The American Legion questions whether these 
facilities can sustain new medical technology for years to come. During 
that time, we must remain conscious that veterans' issues are patterned 
to rise. It is therefore imperative Congress support the demand for 
timely construction of these facilities.
    It is the position of The American Legion that during the 
improvement/enhancement of VA facilities, a base for health care 
services must not only be maintained, but must be increased to 
accommodate influxes. In order for the CARES plan to work successfully, 
there must be adequate funding to accommodate every project as 
implemented by the Commission. To play fiscal catch-up from this point 
will adversely affect the intent of the CARES project, VA 
infrastructure, and all veterans who rely on VA health care.
    The American Legion also supports the mission of the CARES 
initiative, if it provides a continuous up-to-date infrastructure for 
an ever-changing veterans' community; however, we express dissent and 
concern if the intent is aimed at an effort to reduce VA expenditures 
under the pretext of cost-savings without regard to the needs of the 
veterans' population.
    In response to a recent GAO report, VA concluded it did not have 
sufficient information to complete decisions throughout VA for various 
services like long-term care and mental health. In order to assess the 
need for the appropriate infrastructure, VA must collect actual numbers 
of veterans' demand for health care and services.
    Other shortcomings included, specifically, the lack of sufficient 
information on the numbers of veterans who were to seek long-term care 
and mental health services from VA on a daily basis. Since 2004, VA has 
maintained that its models were inadequate to forecast demand. In order 
to be successful, VA must address key challenges, to include developing 
information to complete various service alignment decisions.
    Finally, the preparation to construct and/or reconstruct VA medical 
facilities must be planned in accordance with service alignment 
decisions to fulfill the promise of continuity of care and prevent 
other inadequacies, such as fragmentation of care throughout the women 
veterans' population.
    The American Legion maintains that the CARES implementation process 
must be an open and transparent process that continually and fully 
informs the Veterans' Service Organizations of CARES initiatives, 
criteria, proposals and timeframes. This also includes an accurate 
assessment of the demand for all medical services which gauges how much 
infrastructure is required to accommodate this Nation's veterans.
    Through this form of checks and balances, the maintenance of 
quality stands to uphold the effectiveness of CARES as it pertains to 
strategic planning and the future of the entire VA system.
    Mr. Chairman and Members of the Subcommittee, The American Legion 
sincerely appreciates the opportunity to submit testimony and looks 
forward to working with you and your colleagues on the above-mentioned 
matters and issues of similarity. Thank you.

                                 
                   Prepared Statement of Carl Blake,
      National Legislative Director, Paralyzed Veterans of America

    Chairman Michaud, Ranking Member Brown, and Members of the 
Subcommittee, Paralyzed Veterans of America (PVA) would like to thank 
you for the opportunity to present our views today on the Capital Asset 
Realignment for Enhanced Services (CARES) report. Given that it has 
been 5 years since the CARES report was released, we believe this is a 
good benchmark period to review the progress that the Department of 
Veterans Affairs (VA) has made in implementing its recommendations. We 
also recognize the need to assess whether or not those recommendations 
remain an appropriate tool to align VA's health care infrastructure to 
meet the current and future demands on the system.
    PVA would like to focus much of our discussion on how the CARES 
recommendations targeted the needs of our members--veterans with spinal 
cord injuries or dysfunctions (SCI/D), such as Multiple Sclerosis. We 
will outline the current status of CARES Commission recommendations 
with regards to SCI/D. Finally, we will discuss the outcomes of the 
CARES report regarding the realignment of VA infrastructure to meet 
changing demand for care and the value of the CARES methodology for 
determining current and future medical care workload and future demand 
for services.

Delivery of Care Through the SCI System
    In reflecting on the CARES report, we believe that the health care 
concerns of veterans with catastrophic disabilities, and particularly 
veterans with spinal cord injury or dysfunction, were adequately 
addressed. The report included recommendations that significantly 
improved the capacity for VA to meet this demand while addressing 
barriers to access at the same time. Emphasis was placed on expansion 
of the SCI hub-and-spoke delivery model to fill geographic gaps in SCI/
D services. Additionally, the report made timely recommendations for 
SCI/D long-term care designed to be a first step toward meeting the 
demands of aging veterans with SCI/D.
    Specifically, the CARES Commission called for the construction of 
four new SCI centers in the VA system. Locations targeted for new SCI 
centers were Syracuse, New York (VISN-2); VISN-16 (this location was 
later pinpointed to Jackson, Mississippi by VA and PVA officials); 
Denver, Colorado (VISN-19); and, Minneapolis, Minnesota (previous VISN-
23).
    As to the status of these projects, the Syracuse SCI center is 
currently in the planning phase. A 30-bed unit is being planned for 
this location. We feel confident that this new SCI center will be a 
state-of-the-art facility that will certainly meet the needs of 
veterans in that region. PVA is also extremely pleased that the new 30-
bed Minneapolis SCI center officially opened last fall and became fully 
operational in February 2009.
    The CARES plan also called for a 30-bed facility in VISN-16. Prior 
to the release of the final CARES report, the Draft National Cares Plan 
(DNCP) supported the North Little Rock VA facility in VISN-16 for 
location of an SCI center. However, the Commission recognized that 
North Little Rock did not provide the full range of tertiary care 
services required by VA to be a proper site for an SCI center. Since 
that time, Jackson, Mississippi, has been identified as the optimal 
location for that VISN. While this recommendation has not been advanced 
at this time, PVA's Architecture Department has been informed by the VA 
that it intends to request funding to begin this project in FY 2011.
    With regards to Denver, the Subcommittee is probably aware that it 
has been a long and difficult process to determine what the health care 
infrastructure plan for this region would be. The CARES plan called for 
a 30-bed SCI center to be located at a new Denver VA medical center to 
be built on the Fitzsimons Campus. However, the larger facility 
planning process moved forward in fits and starts. The plan for Denver 
has taken many controversial turns, spread out over many years, with no 
plan being more troublesome that the new plan released in early 2008 by 
then VA Secretary James Peake. Secretary Peake's plan would have used 
Denver as the model for the new Health Care Center Facility (HCCF) 
Leasing Program.
    Fortunately, significant pressure from the VSO community in 
Colorado along with strong support from the Congressional delegation 
put a hold on this program in Denver. PVA was very pleased with the 
VA's announcement in March that a new stand-alone hospital will be 
built on the Fitzsimons Campus, and a new SCI center will be included 
in that facility. Current VA Secretary Eric Shinseki also pledged in 
March to see that this project is completed by 2013.
    The CARES report also called for the relocation of the SCI center 
located in Castle Point, New York (VISN-2) to the Bronx. However, this 
relocation was contingent upon the VA expanding the infrastructure at 
the Bronx SCI center. The plan then called for Castle Point to become 
an SCI long-term care facility. Currently, the Castle Point facility is 
under renovation. Meanwhile, the Bronx facility is being replaced with 
a 92-bed SCI center that will include 46 SCI long-term care beds.
    Additionally, CARES called for the placement of an SCI outpatient 
clinic in VISN-4. SCI outpatient clinics, such as the one recommended, 
serve as spokes in the hub-and-spoke SCI system model. The VA embraced 
this recommendation and has since opened an SCI outpatient clinic in 
Philadelphia, Pennsylvania.
    Finally, the CARES report called for adding 20 additional SCI acute 
care beds in Augusta, Georgia (VISN-7). Under this plan, the VA was to 
add 11 acute care beds immediately with 9 beds to be added by FY 2012. 
Our Architecture Department has informed us that the additional 11 beds 
are currently under construction and should be operational within the 
next few months. The additional 9 beds have not been formally designed, 
and no funding for this expansion has currently been requested. While 
the VA did not move on this recommendation as quickly as we would have 
liked, PVA is pleased to see that the VA is finally addressing this 
issue.

Long-Term Care Considerations
    PVA was pleased that the final CARES Commission report included 
several recommendations for the expansion of long-term care services 
directed at spinal cord injured veterans. Prior to the CARES 
initiative, the VA system of care only provided 125 long-term care 
staffed nursing home beds dedicated to veterans with spinal cord 
injury. These SCI long-term care beds were located in four VA 
facilities--Brockton, Massachusetts; Hampton, Virginia; Castle Point, 
New York; and, Hines VA medical center in Chicago, Illinois. 
Interestingly, the VA had no institutional long-term care beds for SCI 
veterans located west of the Mississippi River.
    While some progress has been made to expand VA's capacity for 
dedicated SCI long-term care, much work remains to be done. The CARES 
report called for an additional 100 SCI long-term care beds systemwide 
to expand capacity and improve admission wait times experienced by SCI 
veterans. Despite the CARES recommendations to increase SCI long-term 
care capacity, we believe that particular emphasis needs to be placed 
on expansion into the western United States.
    The CARES Commission recommended 30 SCI long-term care beds to be 
located in VISN-8. PVA is pleased to report that 30 SCI long-term care 
beds have been placed adjacent to the SCI center located at the Tampa 
VA medical center and they are fully operational.
    The Commission also recommended 20 SCI long-term care beds to be 
located at the SCI Center in Memphis, Tennessee (VISN-9); 20 SCI long-
term care beds at the Cleveland VA medical center (VISN-10); and 30 SCI 
long-term care beds in Long Beach, California (VISN-22).
    These three sites are in various stages of the planning process. 
The long-term care beds at Cleveland are currently under construction, 
and the final project will actually include 26 beds. This facility is 
anticipated to be operational by late 2010. The VA is also moving 
forward with the Memphis recommendation and is currently in the 
planning phase. Preliminary architectural plans have been reviewed and 
commented on by PVA.
    The 30-bed long-term care plan for Long Beach has faced significant 
delays primarily related to space restrictions. However, PVA's 
Architecture Program has developed a conceptual plan to convert a 
currently unused portion of the existing facility into a 17-bed SCI 
long-term care unit. While this is actually a PVA recommended solution 
to part of the demand problem at Long Beach, we believe it is a step in 
the right direction. We remain hopeful that VA will agree with this 
recommendation while working aggressively to establish the entire 30-
bed unit recommended by CARES. We would encourage the VA and Congress 
to conduct aggressive oversight to ensure that the VA is moving forward 
on these critical projects expeditiously.
    Additionally, PVA would like to revisit a significant problem 
concerning the difference between acute SCI center care and SCI long-
term residential care that evolved as the CARES Commission process 
moved forward. As the Commission continued its fact finding work it 
became clear to PVA that the Commission had blurred the distinction 
between acute SCI care and SCI long-term residential care.
    As the Commission made investigative visits throughout the VA 
health care system, some members of the Commission were concerned with 
their observations concerning low occupancy rates at SCI Centers. In 
fact, the Special Disability Program section of the Executive Summary 
of the Commission's final report quoted current occupancy rates among 
VA facilities with SCI/D units as ranging from approximately 52 percent 
to 98 percent. PVA felt at the time that this impression led the 
Commission to concoct ways of filling unused SCI acute care beds with 
SCI long-term care patients.
    One of the significant problems identified during the early stages 
of the CARES process was the exclusion of long-term care, including 
nursing home, domiciliary and non-acute inpatient and residential 
mental health services, in its projections due to the absence of an 
adequate model to project future need for these services. This problem 
can still be seen in the flawed budget development for long-term care 
identified by the Government Accountability Office in its report 
released in January 2009: VA Health Care: Long-Term Care Strategic 
Planning and Budgeting Need Improvement (GAO-09-145). Despite the lack 
of adequate data the CARES Commission made several recommendations 
regarding VA long-term care:

    1.  Prior to taking any action to reconfigure or expand long-term 
care capacity or replace existing facilities, VA should develop a long-
term care strategic plan. This plan should be based on well-articulated 
policies, address access to serv- 
ices, and integrate planning for the long-
term care of the seriously mentally ill.
    2.  An integral part of the strategic plan should maximize the use 
of State Veterans Homes.
    3.  Domiciliary care programs should be located as close as 
feasible to the population they serve.
    4.  Freestanding long-term care facilities should be permitted as 
an acceptable care model.
    5.  VA should implement the VISN-specific recommendations for 
upgrading existing long-term care and chronic psychiatric care units, 
recognizing that some renovations are needed to improve the safety and 
maintenance of the facilities' infrastructure and to modernize patient 
areas.

    In 2007, VA released a copy of its Long-Term Care Strategic Plan 
that, in the opinion of the co-authors of The Independent Budget, was 
lacking in specific planning detail regarding the future direction of 
its long-term care program. In 2008, PVA understood that VA was working 
on the development of a second, more comprehensive, Long-Term Care 
Strategic Plan; however, to the best of our knowledge that followup 
plan has never been released. We would encourage the Subcommittee to 
investigate this issue further. The CARES Commission emphasized in its 
final report, that strategic planning for aging veterans and veterans 
with serious mental illness will be essential going forward.
Meeting Future Health Care Demand
    The Subcommittee has posed the question about the viability of 
CARES in assessing the future health care needs of veterans. As pointed 
out in The Independent Budget for FY 2010, despite the fact that CARES 
was completed in 2004, the VA continues to assess its needs and 
priorities for infrastructure by using concepts derived from the CARES 
model.
    PVA actually sees this question as being one about whether or not 
the CARES recommendations made then appropriately address new demands 
on the system, particularly as it relates to the younger generation of 
veterans returning from Operation Enduring Freedom and Operation Iraqi 
Freedom. Moreover, the question seems to suggest that CARES did not 
take into account that new demand seems to be growing in rural 
communities and that the infrastructure changes outlined by CARES do 
not reflect this change.
    While we certainly understand this concern, we believe that the 
CARES model appropriately addressed where the greatest demand for care 
comes from. Moreover, the CARES model provided a blueprint for aligning 
VA's infrastructure to best meet the needs of the most veterans 
possible. Existing statutory authority, particularly Fee-for-Service, 
allows the VA to address health care demand and need outside the 
immediate infrastructure alignment. Furthermore, recognizing that 
certain demand has changed since 2004, the VA has moved forward on 
other major and minor construction initiatives outside of the CARES 
recommendations.
    Recent activities of the VA seem to suggest that it might like to 
address health care demand outside of its infrastructure alignment, 
whether justified or not. As mentioned earlier, PVA, and many of its 
VSO partners, expressed serious concerns about the VA's HCCF leasing 
program developed under Secretary Peake. Under the HCCF, the VA would 
lease larger outpatient clinics (often referred to as super-CBOCs) 
instead of investing in new major construction initiatives. These large 
clinics would provide a broad range of services, including primary and 
specialty care as well as outpatient mental health services and same-
day surgery. This proposal seemed to outline a different approach that 
some senior leadership in VA wanted to take in expanding health care 
capacity in the future.
    However, as expressed in The Independent Budget, the HCCF leasing 
program has serious flaws that do not necessarily address the future 
health care needs of veterans. As explained in The Independent Budget:

          CARES required years to complete and consumed thousands of 
        hours of effort and millions of dollars to study. The IBVSOs 
        believe it to be a comprehensive and fully justified road map 
        for VA's infrastructure as well as a model VA can apply 
        periodically to assess and adjust those priorities. Given the 
        strengths of the CARES process and the lessons VA learned and 
        has applied from it, why is the HCCF model, which to our 
        knowledge has not been based on any sort of model or study of 
        the long-term needs of veterans, the superior one? We have yet 
        to see evidence that it is and until we see more convincing 
        evidence that it will truly serve the best interests of 
        veterans, the IBVSOs will have a difficult time supporting it.

    PVA also realizes that facility closures were a part of the CARES 
report recommendations. We certainly understand the focus on reducing 
excess capacity, particularly if it is clearly demonstrated that space 
is significantly underutilized. However, we must emphasize that careful 
thought must go into these decisions. Facility closures may have an 
adverse impact on certain SCI veterans as well as those other veterans 
with specialized health care needs and that rely so heavily on the VA 
for care. For some PVA members who live long distances from an SCI hub 
or spoke facility, particularly in rural areas, these VA hospitals 
represent their only health care option. If facility closures become 
necessary, VA must take action to ensure the availability of inpatient 
hospital care to meet the specialized health care needs of these 
affected veterans.
    Mr. Chairman, PVA would again like to thank the Subcommittee for 
examining this issue. We all agree that the VA of the future must be 
aligned in such a fashion to best meet the demands of a changing 
veterans' population while ensuring that those same veterans receive 
the absolute best care possible. We look forward to working with the 
Subcommittee going forward to assist the VA in accomplishing this 
difficult task. I would be happy to answer any questions that you might 
have.

                                 
          Prepared Statement of Dennis M. Cullinan, Director,
 National Legislative Service, Veterans of Foreign Wars of the United 
                                 States

    MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE:
    On behalf of the 2.4 million men and women of the Veterans of 
Foreign Wars of the U.S. (VFW) and our Auxiliaries, I would like to 
thank you for the opportunity to testify today.
    In April 1999, the Government Accountability Office (GAO) issued a 
report on the challenges the Department of Veterans Affairs (VA) faced 
in transforming the health care system. At the time, VA was in the 
midst of reorganizing and modernizing after passage of the Veterans 
Health Care Eligibility Reform Act in 1996.
    With passage of that bill, VA developed a 5-year plan to update and 
modernize the system, including the introduction of systemwide managed 
care principles such as the uniform benefits package. As part of the 
overall plan, VA increasingly began to rely on outpatient medical care. 
Technological improvements, improved pharmaceutical options and 
management initiatives all combined to lessen the need for as many 
inpatient services. Additionally, the expansion of VA clinics--notably 
the Community Based Outpatient Clinics (CBOCs)--brought care closer to 
veterans.
    These widespread changes represented a management challenge for VA, 
GAO argued:

          ``VA's massive, aged infrastructure could be the biggest 
        obstacle confronting VA's ongoing transformation efforts. VA's 
        challenges in this arena are twofold: deciding how its assets 
        should be restructured, given the dramatic shifts in VA's 
        delivery practices, and determining how a restructuring can be 
        financed in a timely manner.''

    GAO also testified before the House Veterans' Affairs Committee's 
Subcommittee on Health in March 1999 on VA's capital asset planning 
process. They concluded that, ``VA could enhance veterans' health care 
benefits if it reduced the level of resources spent on underused or 
inefficient buildings and used these resources, instead, to provide 
health care, more efficiently in existing locations or closer to where 
veterans live.'' Further, GAO found that VA was spending about 1 in 4 
Medical Care dollars on asset ownership with only about one-quarter of 
its then-1,200 buildings being used to provide direct health care. 
Additionally, the Department had over 5 million square feet of unused 
space, which GAO claims cost VA $35 million per year to operate.
    From these findings, VA began the Capital Asset Realignment for 
Enhanced Services (CARES) process. It was the first comprehensive, 
long-range assessment of the VA health care system's infrastructure 
needs since 1981.
    CARES was VA's systematic, data-driven assessment of its 
infrastructure that evaluated the present and future demands for health 
care services, identifying changes that would help meet veterans' 
needs. The CARES process necessitated the development of actuarial 
models to forecast future demand for health care and the calculation of 
the supply of care and the identification of future gaps in 
infrastructure capacity.
    The plan was a comprehensive multi-stage process.

      February 2002-VA announced the results of the pilot 
program of VISN-12.
      August 2003-Draft National CARES Plan submitted to the 
Under Secretary for Health.
      February 2004-16-member independent CARES Commission 
submits recommendations based upon its review of the Draft Nationals 
CARES Plan.
      May 2004-VA Secretary announces releases final CARES 
Decision Document, but leaves several facilities up for further study.
      May 2008-Final Business Plan Study released, completing 
the CARES process.

    Throughout the process, we were generally supportive. We 
continuously emphasized that our support was contingent on the primary 
emphasis being on the ``ES''--enhanced services--portion of the CARES 
acronym. We wanted to see that VA planned and delivered services in a 
more efficient manner that also properly balanced the needs of 
veterans. And, for the most part, the process did just that.
    Our main concern with the plans as they unfolded was the lack of 
emphasis on mental health care and long-term care. The early stages of 
the CARES process excluded many of these services for the most part 
because they lacked an adequate model to project the need for these 
services in the future.
    The CARES Commission called for VA to develop a long-term care 
strategic plan, to address the needs of veterans and all care options 
available to them, including State veterans homes. As we discussed in 
the Independent Budget, VA's 2007 Long-Term Care Strategic Plan did not 
address these issues in a comprehensive manner; going forward, this 
must be rectified.
    The 2004 CARES Decision Document gave VA a road map for the future. 
It called for the construction of many new medical facilities, over 100 
major construction projects to realign or renovate current facilities, 
and the creation of over 150 new CBOCs to expand cares into areas where 
the CARES process identified gaps.
    Since FY 2004, 50 major construction projects have been funded for 
either design or actual construction. Eight of those projects are 
complete. Six more are expected to be completed by the end of FY 2009, 
and 14 others are currently under construction. So CARES has produced 
results.
    The strength of CARES in our view is not the one-time blueprint it 
created, but in the decisionmaking framework it created. It created a 
methodology for future construction decisions. VA's construction 
priorities are reassessed annually, all based on the basic methodology 
created to support the CARES decisions. These decisions are created 
systemwide, taking into account what is best for the totality of the 
health care system, and what its priorities should be.
    VA's Capital Investment Panel (VACIP) is the organization within 
the department responsible for these decisions. VA's capital decision 
process requires the VACIP to review each project and evaluate it using 
VA's decision model on a yearly basis to ensure that potential projects 
are fully justified under current policy and demographic information. 
These projects are assigned a priority score and ranked, with the top 
projects being first inline for funding.
    It is a dynamic process that depoliticizes much of the 
decisionmaking process. The projects selected for funding are by and 
large the projects that need the most immediate attention. Because it 
is a dynamic process, some of the projects VA has moved forward with 
were not part of the original CARES Decision Document, but they were 
identified, prioritized and funded through the methodology developed by 
CARES. We continue to have strong faith that this basic framework 
serves the needs of the majority of veterans. Despite its strengths, 
there are certainly some challenges.
    First is that the very nature of the report required a large 
infusion of funding for VA's infrastructure. While a huge number of 
projects are underway, a number of these are still in the planning and 
design phase. As such, they are subject to changes, but they have also 
not received full funding.
    This has resulted in a sizable backlog of construction projects 
that are only partially funded. Were the Administration's construction 
request to move forward, VA would have a backlog in funding for major 
construction of nearly $4 billion. This means that to just finish up 
what is already in the pipeline, it would take approximately 5 full 
fiscal years of funding--based on the recent historical funding 
levels--just to clear the backlog.
    This Congress and this Administration must continue to provide full 
funding to the Major Construction account to reduce this backlog, but 
also to begin funding future construction priorities.
    Another difficulty has been the slow pace of construction. Major 
construction projects are huge undertakings, and in areas--such as New 
Orleans or Denver--where land acquisition or site planning have 
presented challenges, construction is slower than we would like. There 
are, however, many cases where there have been fewer challenges, and 
when the money was appropriated, construction has moved quickly.
    With these twin problems of funding and speed in mind, VA has 
recently been exploring ways to improve the process. Last year, they 
unveiled the Health Care Center Facility (HCCF) leasing concept.
    As we understand it, the HCCF was intended to be an acute care 
center somewhere in size and scope between a large medical center and a 
CBOC. It is intended to be a leased facility--enabling a shorter time 
for it to be up and running--that provides outpatient care. Inpatient 
care would be provided on a contracted basis, typically in partnership 
with a local health care facility.
    We expressed our concerns with the HCCF concept in the Independent 
Budget (IB). Primarily, we are concerned that this concept--which 
heavily relies on widespread contracting--would be done in lieu of an 
investment of major construction.
    Acknowledging that with the changes taking place in health care, VA 
needs to look very carefully before building new facilities. Cost plus 
occupancy must justify full-blown medical centers. But leasing is the 
right thing to do only if the agreements make sense.
    VA needs to do a better job explaining to veterans and the Congress 
what their plans are for every location based on facts. The ruinous 
miscommunication that plagued the Denver construction project amply 
demonstrates this point.
    While promising, the HCCF model presents many questions that need 
answers before we can fully support it. Chief among these is why, given 
the strengths of the CARES process and the lessons VA has learned and 
applied from it, is the HCCF model, which to our knowledge has not been 
based on any sort of model or study of the long-term needs of veterans, 
the superior one?
    We also have major concerns with the widespread contracting that 
would be mandated by this type of proposal. The lessons from Grand 
Island, NE--where the local hospital later canceled the contract, 
leaving veterans without local inpatient care--or from Omaha--where 
some veterans seeking specialized services are flown to Minneapolis--
show the potential downfall of large-scale contracting.
    Leasing clinical space is certainly a viable option. It does 
provide for quicker expansion into areas with gaps in care, and it does 
provide the Department with flexibility in the future.
    But when it is combined with the contracting issue, and presented 
without information and supporting documentation that is as rigorous or 
comprehensive as CARES was, it will be difficult for the VFW and the 
veteran's community to support it.
    We have seen the importance of leasing facilities with certain 
CBOCs and Vet Centers, especially when it comes to expanding care to 
veterans in rural areas. CARES did an excellent job of identifying 
locations with gaps in care, and VA has continued to refine its 
statistics, especially with the improved data it is getting from the 
Department of Defense about OEF/OIF veterans.
    Providing care to these rural veterans is the latest challenge for 
the system, and the expansion of CBOCs and other initiatives can only 
help. We do believe, however, that much of what will improve access for 
these veterans will lie outside the construction process. VA must 
better use its fee-basis care program, and the recent initiatives 
passed by Congress--such as the mobile health care vans or the rotating 
satellite clinics in some areas--are going to fix some of the demand 
problems these veterans face.
    We can always certainly do more, but thanks to the CARES blueprint, 
VA has greatly improved the ability of veterans around the country to 
access the care they earned by virtue of their service to this country. 
And with the annual adjustments and reassessments that account for 
changes within the veterans' population, we can assure that veterans 
are receiving the best possible care long into the future.
    The VFW thanks you and the Subcommittee for looking at this most 
important issue.

                                 
    Prepared Statement of Richard F. Weidman, Executive Director for
       Policy and Government Affairs, Vietnam Veterans of America

    Good morning, Mr. Chairman, Ranking Member Brown and distinguished 
Members of this Subcommittee, on behalf of Vietnam Veterans of America 
(VVA) National President John Rowan and all our officers we thank you 
for the opportunity for VVA to present our views on Assessing CARES and 
the Future of VA's Health Infrastructure. I ask that you enter our full 
statement in the record, and I will briefly summarize the most 
important points of our statement.
    VVA has long advocated for proper stewardship of our Nation's 
veterans health care system. By this we mean stewardship in the sense 
that one is conscious of leaving the physical plant as well as the 
quality and the quantity of medical services delivered therein better 
than one found it. Our first National President was on a dirty, rat 
infested ward for Spinal Cord Injured veterans at the old Bronx VA 
medical center that was the cover story of an issue of LIFE magazine in 
1970. As a result of the publicity and furor generated by that article, 
the momentum was created that led to the construction of a brand new 
modern and much larger VA facility in Bronx, New York, and led to the 
antiquated one being torn down.
    The concept of the Capital Asset Realignment for Enhanced Service 
(CARES) is ostensibly one of stewardship, and therefore VVA endorses 
the concept. However, VVA continues to be very concerned about the 
actual process that is currently in place. Many of the most gross 
mistakes and errors created by the process created by VHA and their 
outside contractor were corrected by the good work and intrepid efforts 
of the Honorable Everett Alvarez and his distinguished colleagues who 
served on the CARES Commission some 5 years ago.
    Other particularly poor recommendations of the initial report from 
VHA were corrected by the Secretary of Veterans Affairs when he 
accepted the report of the CARES Commission. However the basic formula 
and process remain basically for the future, and therein lays the core 
of the problem. The formula developed by the Milliman-USA people is a 
civilian formula designed for basically healthy middle class people 
that can afford to purchase access to an HMO or PPO. It does not take 
into account the wounds or diseases that are attendant to military 
service, particularly for those deployed overseas and/or in a war zone.
    Despite common sense that would mandate it, and despite earnest 
entreaties from VVA and others, the VA Veterans Health Administration 
(VHA) still does not take a military history from each veteran, make it 
part of the veteran's medical record on the Central Patient Records 
System (CPRS) in the VISTA system at VHA, and use it as a significant 
part of the basis for the diagnosis procedure or in the process of 
crafting a successful treatment modality (or modalities). Because of 
this, the VA constantly underestimates the chronic diseases and long 
term health care problems that veterans are likely to experience. It is 
not that VA does not know what the wounds, maladies, injuries, and 
conditions are that veterans, depending on when and where they served, 
are more likely to experience than their civilian cohort. As Attachment 
I please find enclosed the title page to www.va.gov/vhi that leads one 
to the Veterans Health Initiative (VHI), which is a set of curricula in 
many of the conditions for which veterans face increased risks. So VA 
knows what most of these increased risks are, and even distributes the 
``pocket card'' to new medical residents and interns at VA medical 
centers and other VHA facilities, as well as providing it to others 
(see Appendix II or go to http://va.gov/oaa/pocketcard/), as well as 
having had it in the M1A1 Medical Procedures Manual since 1982.
    What bearing does all of this have on the CARES formula? Well, the 
Milliman formula, which as noted above is basically a civilian formula, 
does not take any of these special conditions that veterans are subject 
to into account. Further, the Milliman formula is based on one to three 
``presentations'' per individual who comes to the medical facility for 
service, whereas VA medical centers average between five and nine 
``presentations'' per individual. What this means is that each unique 
individual consumes more resources per person than the Milliman formula 
allows for in its computations. Therefore, the formula, which has come 
to affect all of resource planning at the VHA, will perennially leave 
the VHA short of the needed resources to deliver timely, quality 
medical care to each veteran eligible and seeking such services. The 
same holds true when it comes to estimating what will be needed in the 
way of physical facilities to deliver health care in the future.
    CARES was funded on the premise that there was a great deal of 
unutilized space at VA facilities across the Nation, and that because 
the population of veterans eligible for services who were likely to 
seek such services, that the census of patients would be in precipitous 
decline from 2000 to 2020 (later changed to 2002 to 2022). That has 
proven to be an erroneous assumption. Not only have the ranks of 
veterans risen because of the wars in Iraq, Afghanistan, and elsewhere, 
but even the size of our standing force of active duty military has 
been increased for the foreseeable future.
    Using all of the supposedly great tools of projection, VHA has 
dramatically underestimated the number of OIF/OEF veterans who would 
seek medical services from VA in each of the last 5 years. Further, 
even before the new Administration and the Congress began easing the 
restrictions on so-called category 8 veterans, the VA underestimated 
the number of veterans of earlier generations who would seek and 
receive medical services. Some of that increase comes from previously 
service connected disabled veterans who lost eligibility for other 
private sector medical options as a result of job loss or retirement, 
or their employer could no longer afford to have medical insurance for 
their employees. For others, they are ``new'' older veterans who after 
years of delay were finally awarded service connected disabled status, 
and therefore access to medical care. All of these have led to an 
increase not only in the gross number of veterans seeking help from 
VHA, but at most VHA facilities the number of veterans seeking services 
has remained constant or risen in the past 7 years. Even at those 
facilities where the number seeking services has remained essentially 
constant (mostly in the northern climates of the Nation), the number of 
medical needs has risen because those who could afford to move to a 
warmer climate as they got older and/or retired did so. Those that 
stayed were/are older, poorer, and sicker, and therefore need more 
resources to take care of per person than those who had the ability to 
move.
    It is time to re-examine all of the original assumptions of the 
CARES process now that it is clear that the number of veterans seeking 
services is not generally declining, and that the needed services per 
individual will likely continue to rise, at least for another decade or 
so, as the average age of the Vietnam veterans rises (currently the 
mean average age of Vietnam veterans, who constitute 60% of VA 
patients, is 63 years old, while the median age of Vietnam veterans is 
almost 61 years old). What the growth of the younger cohorts, and the 
increase in use by the Vietnam cohort means is that the notion of many 
empty buildings across America that are not needed just is not the 
case. In most cases, that space is needed and more. Further, the notion 
advanced by the now former Under Secretary of Health that ``we cannot 
afford any more new hospitals for veterans'' is a notion that was out 
of step with both the clear and apparent need, and was clearly not in 
keeping with fulfilling the obligation of the American people to ``care 
for he (and she) who hath borne the battle.''
    The 2007 GAO Report (GAO-07-408) from March 2008 criticized VA for 
not following through on making the goals, objectives, and timetables 
for the CARES implementation plan clear to all. It also sharply 
criticized VA for CARES not being a transparent process at every step. 
GAO noted that VA did not build meeting the specific goals of CARES 
into the set of metrics by which managers are rated and scored on their 
performance ratings within the VHA, which meant that it was unclear who 
is supposed to be doing what to get on track with upgrading the 
physical structures of VHA. VVA also criticized VA for a lack of 
clarity in just who was in charge of implementation, and the role of 
the many players in the process.
    VVA would also note that until the 110th Congress, there was 
nowhere near the minimum of $1 billion per year upon which the CARES 
plan was predicated which was actually provided to VA in the 
appropriation. This means that the schedule is seriously behind because 
it was not fully funded in the early years of implementation.
    So, where are we today? VVA recommends the following steps to 
ensure that the physical plant needed for the effective and efficient 
provision of quality medical services to veterans is in place for those 
currently in need of these services, and for the future:

    1.  VVA strongly believes that the basic CARES formula must be 
improved by making it a ``veterans' health care formula'' that takes 
into account the actual situation of veterans, and likely rate of use 
of resources per person, so that it provides for the request for 
resources it will take to properly serve all of the needs, of the 
veterans population that seeks medical services at VHA, particularly 
the conditions that are a direct or indirect result of military 
service.
    2.  VVA believes that the entire process, like much of the rest of 
activities and planning at VA, needs to be much more transparent, with 
respect to involvement at every level of ALL of the stakeholders. The 
previous Administration, and particularly those who have occupied the 
top leadership positions of VHA in the past 7 years, showed veritable 
contempt for the Congress, for veterans service organizations, for the 
VA labor unions and their members, and for individual veterans by the 
secretive and patronizing manner in which business was all too often 
conducted. This must be dramatically changed, and the process and the 
way of doing business transformed.
    3.  VVA urges that the major construction budget be set at a level 
of at least $1.5 billion to $2 billion per year for the next few years 
to begin to make up for all that did not happen during the previous 
decades, and particularly in the first few years of the CARES process. 
As imperfect as the formula and the process are, at least we know that 
what has been recommended is the bare minimum that is needed to 
properly care for veterans. Even while work goes on to improve both the 
formula and the overall process, we can speed up the pace of 
implementation. Because of the financial crisis, we can frankly get 
buildings built today for much less than will be the case in a few 
years with worldwide liquidity.
    4.  VVA recommends that the Secretary and the Deputy Secretary 
review the lines of authority and accountability for implementing CARES 
is clear to all parties, and the role of each is clear, from the Office 
of Policy & Planning in the central VA office to the VISN Directors and 
VAMC Directors.

    While there are no doubt other useful steps that can and should be 
taken to improve the CARES process, these are in the view of VVA the 
four most important steps. Mr. Chairman, thank you for the opportunity 
to provide our brief remarks. I will be happy to answer any questions.

                                 
                   Prepared Statement of Joy J. Ilem,
  Assistant National Legislative Director, Disabled American Veterans

    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting the Disabled American Veterans (DAV) to 
testify at this oversight hearing of the Subcommittee on Health. We 
appreciate the opportunity to offer our views on progress by the 
Department of Veterans Affairs (VA) in delivering on the 
recommendations outlined in the 2004 Capital Asset Realignment for 
Enhanced Services (CARES) report, and to discuss the future of VA's 
health care infrastructure.
    As we near the end of the first decade of the 21st century, we find 
ourselves at a critical juncture with respect to how VA health care 
will be delivered and what the VA of the future will be like in terms 
of its health care facility infrastructure. Although admittedly this 
vision is yet to gain clarity, one fact is certain--our Nation's sick 
and disabled veterans deserve and have earned a stable, accessible VA 
health care system that is dedicated to their unique needs and can 
provide high-quality, timely care where and when they need it.

                              CARES BEGINS

    Mr. Chairman, based on preliminary work by the professional staff 
of this Subcommittee, VA initiated CARES in 1999 with a pilot program 
in Veterans Integrated Service Network (VISN) 12, through the auspices 
of a contract with the firm of Booz Allen Hamilton. In 2001, that 
contract was canceled and VA integrated the CARES process within its 
own staff and other resources. The process took years to complete and 
required tens of thousands of staff-hours of effort and millions of 
dollars in studies. At its conclusion, with issuance of the so-called 
``Draft National CARES Plan,'' the VA Secretary chartered and appointed 
a CARES Commission to independently evaluate and consider its outcomes 
and recommendations. These processes were largely conducted and 
reported in public.
    As a general principle, the Independent Budget Veterans Service 
Organizations (IBVSOs), DAV, AMVETS, Paralyzed Veterans of America, and 
Veterans of Foreign Wars of the United States, concluded that CARES was 
a comprehensive and fully justified road map for VA's infrastructure 
needs, as well as a model that VA could apply periodically to assess 
and adjust those priorities. However, once the Draft National CARES 
Plan was released in 2004, an immediate backlash developed to the 
proposed recommendations affecting the operating missions of a number 
of VA facilities. Many veterans, fearful that they would lose VA health 
care services, and selected Members of Congress, opposed the plans for 
changes in their States--and in their VA facilities, irrespective of 
the validity of the findings or the value of the plan as a whole. Local 
political pressure became intense, and in many cases the proposed CARES 
recommendations were scuttled. In one respect, it became clear that 
veterans and their Members of Congress were passionate and committed in 
keeping targeted VA facilities intact. Unfortunately, this passionate 
defense of the status quo stymied the CARES implementation phase, and 
caused VA to become much more reserved about sharing information about 
any strategic infrastructure planning.

                             CARES STALLED

    Upon completion of the Draft National CARES Plan in 2004, then-VA 
Secretary Anthony Principi testified before this Subcommittee. His 
testimony noted that CARES ``reflects a need for additional investments 
of approximately $1 billion per year for the next 5 years to modernize 
VA's medical infrastructure and enhance veterans' access to care.'' VA 
reports that through fiscal year (FY) 2009, Congress actually has 
appropriated $4.9 billion for construction projects since FY 2004.
    On July 18, 2008, then-VA Secretary James Peake wrote to two 
Members of Congress that the planned Denver, Colorado replacement VA 
medical center was ``. . . not affordable . . .'' as a traditional 
government-owned, VA-operated facility of the size, scope and price 
that had been designed. That same day, while not declaring CARES 
officially ``dead,'' Secretary Peake spoke before a large audience at 
the National Press Club and indicated, in answer to a question, that VA 
would be looking at factors beyond CARES to determine its future 
capital infrastructure planning needs.
    For nearly a decade, the IBVSOs have argued that the VA must be 
protected from deterioration of its health infrastructure, and the 
consequent decline in VA's capital asset value. Year after year, we 
have urged Congress and the Administration to ensure that appropriated 
funding is adequate in VA's capital budget so that VA can properly 
invest in its physical assets, protect their value, and ensure health 
care in safe and functional facilities long into the future. Likewise, 
we have stressed that VA's facilities have an average age of more than 
55 years; therefore, it is essential that funding be routinely 
dedicated to renovate, repair, and replace VA's aging structures, 
capital, and plant equipment systems as needed.

               CAPITAL FUNDS DEFICIT WORSENED UNDER CARES

    Mr. Chairman, unfortunately, the past decade of deferred and 
underfunded construction budgets has meant that VA has not adequately 
recapitalized its facilities, now leaving the health care system with a 
large backlog of major construction projects totaling between $6.5 
billion to $10 billion, with an accompanying urgency to deal with this 
growing dilemma.
    One of the reasons VA's construction backlog is so large and 
growing today is because both VA and Congress, by agreement with the 
two prior Administrations, allocated little to no capital construction 
funding during the pendency of the CARES process, over a 6-year period. 
Agreeing with VA, the Appropriations Committees in both chambers 
provided few resources during the initial review phase, preferring to 
wait for CARES results, a decision the IBVSOs repeatedly opposed. We 
argued that a de facto moratorium on construction was unnecessary 
because a number of these projects obviously warranted funding and 
would almost certainly be validated through the CARES review process. 
The House agreed with our views as evidenced by its passage of H.R. 
811, the ``Veterans Hospital Emergency Repair Act.'' That bill passed 
unanimously on March 27, 2001, about 2 years into the CARES process. 
Let me quote, in part, what the bill's sponsor, then Chairman 
Christopher H. Smith, had to say in introducing H.R. 811 over 8 years 
ago:

          Mr. Speaker, for the past several years, we have noted that 
        the President's annual budget for VA health care has requested 
        little or no funding for major medical facility construction 
        projects for America's veterans. As we indicated last year in 
        our report to the Committee on the Budget on the 
        Administration's budget request for fiscal year 2001, VA has 
        engaged in an effort through market-based research by 
        independent organizations to determine whether present VA 
        facility infrastructures are meeting needs in the most 
        appropriate manner, and whether services to veterans can be 
        enhanced with alternative approaches. This process, called 
        ``Capital Assets Realignment for Enhanced Services,'' or 
        ``CARES,'' has commenced within the Department of Veterans 
        Affairs, but will require several years before bearing fruit. 
        In the interim, Mr. Speaker, some VA hospitals need additional 
        maintenance, repair and improvements to address immediate 
        dangers and hazards, to promote safety and to sustain a 
        reasonable standard of care for the Nation's veterans. Recent 
        reports by outside consultants and VA have revealed that dozens 
        of VA health care buildings are still seriously at risk from 
        seismic damage. The buildings at American Lake [Washington] 
        damaged in yesterday's earthquake were among those identified 
        as being at the highest levels of risk.
          Also, Mr. Speaker, a report by VA identified $57 million in 
        improvements were needed to address women's health care; 
        another report, by the Price Waterhouse firm, concluded that VA 
        should be spending from 2 percent to 4 percent of its ``plant 
        replacement value'' (PRV) on upkeep and replacement of its 
        health care facilities. This PRV value in VA is about $35 
        billion; thus, using the Price Waterhouse index on maintenance 
        and replacement, VA should be spending from $700 million to 
        $1.4 billion each year. In fact, in fiscal year 2001, VA will 
        spend only $170.2 million for these purposes.
          While Congress authorized a number of major medical 
        construction projects in the past 3 fiscal years, these have 
        received no funding through the appropriations process. I 
        understand that some of the more recent deferrals of major VA 
        construction funding were intended to permit the CARES process 
        to proceed in an orderly fashion, avoiding unnecessary spending 
        on VA hospital facilities that might, in the future, not be 
        needed for veterans. I agree with this general policy, 
        especially for those larger hospital projects, ones that 
        ordinarily would be considered under our regular annual 
        construction authorization authority. We need to resist 
        wasteful spending, especially when overall funds are so 
        precious. But I believe that I have a better plan.

    To our regret, the Senate never considered the proposed bill, 
Congress did not appropriate supportive funding, and the construction 
and maintenance backlog continued to grow unabated for the next several 
years. Incidentally, the needed infrastructure improvements for women 
veterans (for privacy, restroom accommodations, etc.) mentioned by 
Representative Smith were largely never made. The VA projects that the 
number of women veterans turning to VA for care will likely double in 
the next 2-4 years; therefore, it is essential that these 
infrastructure needs are addressed now.
    Another area of concern is VA research capital infrastructure. Over 
the past decade, minimal funding has been appropriated or allocated to 
maintain, upgrade or replace aging VA research facilities. Many VA 
facilities have run out of adequate research space. Plumbing, 
ventilation, electrical equipment and other required maintenance needs 
have been deferred. In some urgent cases, VA medical center Directors 
have been forced to divert medical care appropriations to research 
projects to avoid dangerous or hazardous situations.
    The 2003 Draft National CARES Plan (DNCP) included $142 million for 
renovation of existing research space and to cover build-out costs for 
leased research facilities. However, these capital improvement costs 
were omitted from the VA Secretary's final report on CARES, the so-
called ``CARES Decision Memorandum.'' According to Friends of VA 
Medical Care and Health Research (FOVA), over the past decade, only $50 
million has been spent on VA research construction or renovation in 
VA's nationwide research system. Additionally, FOVA noted in its fiscal 
year 2010 budget proposal, endorsed by DAV, that VA was congressionally 
directed to conduct a comprehensive review of its research facilities 
and report to Congress on the deficiencies found, with recommended 
corrections. During FY 2008, the VA Office of Research and Development 
initiated a 3-year examination of all VA research infrastructure to 
assess physical condition, capacity for current research, as well as 
program growth and sustainability of the space to conduct research. We 
urge the Subcommittee to consider this report when completed, and for 
Congress to address VA's research facilities improvement needs as part 
of a separate VA research infrastructure appropriation. VA's Medical 
and Prosthetic Research program is a national asset to VA and 
veterans--it helps to ensure the highest standard of care for veterans 
enrolled in VA health care, and elevates health care practices and 
standards in all of American health care. That program cannot continue 
its record of achievement without adequate maintenance of the capital 
infrastructure in which it functions.

                         CARES PROJECTION MODEL

    One of the strengths of the CARES process was that it was not just 
a one-time snapshot of needs. As part of the process, VA developed a 
health care projection model to estimate current and future demand for 
health care services, and to assess the ability of its infrastructure 
to meet this demand. VA uses this projection model throughout its 
capital planning process, basing all projected capital projects upon 
the results of the demand model.
    VA's model, was also relied on for VA health care budget, policy 
and planning decisions, produces 20-year forecasts in demand for VA 
health services. It is a complex and sophisticated model that adjusts 
for numerous factors, including demographic shifts, morbidity and 
mortality, changing needs for health care based on aging of the veteran 
population, projections to account for health care innovations, and 
many other relevant factors.
    In a November 2007 hearing before this Subcommittee, VA's testimony 
summed up the process:

          Once a potential project is identified, it is reviewed and 
        scored based on criteria VA considers essential to providing 
        high-quality services in an efficient manner. The criteria VA 
        utilizes in evaluating projects include service delivery 
        enhancements, the safeguarding of assets, special emphasis 
        programs, capital asset priorities, departmental alignment, and 
        financial priorities. VA considers these new funding 
        requirements along with existing CARES decisions in determining 
        the projects and funding levels to request as part of the VA 
        budget submission. Appropriate projects are evaluated for joint 
        needs with the Department of Defense and sharing opportunities.

    VA uses these evaluation criteria to prioritize its projects each 
year, releasing these results in its annual 5-year capital plan. The 
most recent one, covering fiscal years 2009-2013, is part of the 
Congressional budget submission in ``Volume III: Construction 
Activities.'' This plan is central to VA's funding requests and clearly 
lists the Department's highest construction priorities for the current 
year, as well as for the immediate future. The Partnership for VA 
Health Care Budget Reform, in testifying before your full Committee on 
April 29, 2009, provided detailed information and our opinion about 
VA's projection model in support of our proposed reforms in VA health 
care funding. We refer the Subcommittee to that testimony for our 
comments on the model.

                       VA MOVING IN NEW DIRECTION

    Mr. Chairman, over the past several years, VA began to discuss with 
the veterans service organization community, its desire to address its 
health infrastructure needs in a new way. VA acknowledged its 
challenges with aging infrastructure; changing health care delivery 
needs, including reduced demand for inpatient beds and increasing 
demands for outpatient care and medical specialty services; limited 
funding available for construction of new facilities; frequent delays 
in constructing and renovating space needed to increase access, and 
particularly the timeliness of construction projects. VA has noted, and 
we concur, that a decade or more is required from the time VA initially 
proposes a major medical facility construction project, until the doors 
actually open for veterans to receive care in that facility. VA 
indicated to us a necessity to consider alternative means to address 
the growing capital infrastructure backlog and the significant 
challenge of funding it.
    Given these significant challenges, VA has broached the idea of a 
new model for health care delivery, the Health Care Center Facility 
(HCCF) leasing program. Under the HCCF proposal, in lieu of the 
traditional approach to major medical facility construction, VA would 
obtain by long-term lease, a number of large outpatient clinics built 
to VA specifications. These large clinics would provide a broad range 
of outpatient services, including primary and specialty care as well as 
outpatient mental health services and ambulatory surgery.
    VA noted, that in addition to its new HCCF facilities, it would 
maintain its VA medical centers (VAMCs), larger independent outpatient 
clinics, community-based outpatient clinics (CBOCs) and rural outreach 
clinics. VA has argued that the HCCF model would allow VA to quickly 
establish new facilities that will provide 95 percent of the care and 
services veterans will need in their catchment areas, specifically 
primary care, and a variety of specialty services, mental health, 
diagnostic testing and same-day ambulatory surgery. According to VA, 
veterans' inpatient hospital service needed by these HCCFs would be 
provided through additional leases, VA staffed units, or other 
contracts or fee-for-service options with academic affiliates or in 
available community hospitals.
    We concur with VA that the HCCF model seems to offer a number of 
benefits in addressing its capital infrastructure problems including 
more modern facilities that meet current life-safety codes; better 
geographic placements; increased patient safety; reductions in 
veterans' travel costs and increased convenience; flexibility to 
respond to changes in patient loads and technologies; overall savings 
in operating costs and in facility maintenance and reduced overhead in 
maintaining outdated medical centers.

                        CHALLENGES TO HCCF MODEL

    Nevertheless, Mr. Chairman, while it offers some obvious 
advantages, the HCCF model also portends obvious challenges. Outside 
the CBOC environment, contract management in complex leased health care 
facilities is an untested practice in VA. This Subcommittee has spent 
years overseeing efforts to improve VA's contracting performance across 
a range of activities, including obtaining contract health care for 
eligible veterans. Also, we are deeply concerned about the overall 
impact of this new model on the future of VA's system of care, 
including the potential unintended consequences on continuity of high-
quality care, delivery of comprehensive services, VA's electronic 
health record (EHR), its recognized biomedical research and development 
programs, and particularly the impact on VA's renowned graduate medical 
education and health professions training programs, in conjunction with 
longstanding affiliations with nearly every health professions 
university in the Nation. Additionally, we question VA's ability to 
provide alternatives for maintaining its existing 130 nursing home care 
units, homeless programs, domiciliaries, compensated work therapy 
programs, hospice, adult day health care units, the Health Services 
Research and Development Program, and a number of other highly 
specialized services including 24 spinal cord injury centers, 10 blind 
rehabilitation centers, a variety of unique ``centers of excellence'' 
(in geriatrics, gerontology, mental illness, Parkinson's, and multiple 
sclerosis), and critical care programs for veterans with serious and 
chronic mental illnesses. We question if VA has seriously considered 
the probable impact on these programs in developing the HCCF concept.
    In general, the HCCF proposal seems to be a positive development, 
with good potential. Leasing has the advantage of avoiding long and 
costly in-house construction delays and can be adaptable, especially 
when compared to costs for renovating existing VA major medical 
facilities. Leasing options have been particularly valuable for VA as 
evidenced by the success of the leased space arrangements for many VA 
community-based outpatient clinics and Vet Centers. However, VA has 
virtually no experience managing as a tenant in a building owned by 
others, for the delivery of complex, subspecialty VA health care 
services.

                  INPATIENT SERVICES: A MAJOR CONCERN

    The IBVSOs are also concerned with VA's plan for obtaining 
inpatient services under the HCCF model. VA says it will contract for 
these essential inpatient services with VA affiliates or community 
hospitals. First and foremost, we fear this approach could negatively 
impact safety, quality and continuity of care, and permanently 
privatize many services we believe VA should continue to provide. We 
have testified on this topic numerous times, and the IBVSOs have 
expressed objections to privatization and widespread contracting for 
care in the ``Contract Care Coordination'' and ``Community-Based 
Outpatient Clinics'' sections of the Fiscal Year 2010 Independent 
Budget. We call the Subcommittee's attention to those specific 
concerns.
    In November 2008, VA responded to a Senate request for more 
information on VA's plans for the newly proposed HCCF leasing 
initiative. A copy of VA's response is attached to this testimony and I 
ask that it be made a part of the record of this hearing, Mr. Chairman. 
To summarize that response, VA advised it originally identified 22 
sites that could potentially be considered appropriate for adoption of 
the HCCF concept. Following additional analysis, that number was 
reduced to 8 potential sites for review, including Butler, 
Pennsylvania; Lexington, Kentucky; Monterey and Loma Linda, California; 
Montgomery, Alabama; and Charlotte, Fayetteville and Winston-Salem, 
North Carolina.
    VA also addressed a number of other specific questions in the 
November 2008 letter including whether studies had been carried out to 
determine the effectiveness of the current approach; the full extent of 
the current construction backlog of projects and its projected cost 
over the next 5 years to complete; the extent to which national 
veterans organizations were involved in the development of the HCCF 
proposal; the engagement of community health providers related to 
capacity to meet veterans' needs; the ramifications on the delivery of 
long-term care and inpatient specialty care; and whether VA would be 
able to ensure that needed inpatient capacity will remain available.
    I will comment on some of the key responses from VA related to 
these noted questions. Initially, it appears VA has a reasonable 
foundation for assessing capital needs and has been forthright with the 
estimated total costs for ongoing major medical facility projects. For 
this year, VA estimated $2.3 billion in funding needs for existing and 
ongoing projects. The Department estimated that the total funding 
requirement for major medical facility projects over the next 5 years 
would be in excess of $6.5 billion. Additionally, if the new HCCF 
initiative is fully implemented, VA indicated it would need 
approximately $385 million more to execute seven of the eight new HCCF 
leases.
    We agree with VA's assertion that it needs a balanced program of 
capital assets, both owned and leased buildings, to ensure demands are 
met under the current and projected workload. Likewise, we agree with 
VA that the HCCF concept could provide modern health care facilities 
that would not otherwise be available due to the predictable 
constraints of VA's major construction program.
    VA indicated in its letter that the eight sites proposed for the 
HCCF initiative were chosen to ensure there would be little impact on 
VA specialty inpatient services or on delivery of long-term care. 
However, VA made a statement with respect to the HCCF model for the 
proposed sites that is somewhat confounding (VA's response to question 
5), as follows: ``By focusing the outpatient needs through HCCF's, 
major construction funding could then shift to the remaining capital 
needs.'' What is not clear to us is the extent to which VA plans to 
deploy the HCCF model. In areas where existing CBOCs need to be 
replaced or expanded with additional services due to the need to 
increase capacity, the HCCF model would seem appropriate and beneficial 
to veterans. On the other hand, if VA plans to replace the majority or 
even a large fraction of all VAMCs with HCCFs, such a radical shift 
would pose a number of concerns for DAV.
    Mr. Chairman, before the HCCF concept is permitted to go forward on 
a larger scale, and with a major private sector component as described 
by VA, we believe VA must address and resolve a number of challenges. 
Among these questions are:

      Facility governance, especially with respect to the large 
numbers of non-VA employees who would be treating veterans;
      VA directives and rule changes that govern health care 
delivery and ensure safety and uniformity of the quality of care;
      VA space planning criteria and design guides' use in non-
VA facilities;
      VA's critical research activities, most of which improve 
the lives not only of veterans but of all Americans;
      VA's electronic health record, which many observers, 
including the President, have rightly lauded as the EHR standard that 
other health care systems should aim to achieve; and
      Continuity of care within the mix of public/private 
facilities, as well as for those VA-enrolled veterans who relocate to 
other areas from the HCCF environment.

    Fully addressing these and related questions are important, but we 
see this challenge as only a small part of the overall picture related 
to VA health infrastructure needs in the 21st century. The emerging 
HCCF plan does not address the fate of VA's 153 medical centers located 
throughout the Nation that are on average 55 years of age or older. It 
does not address long-term care needs of the aging veteran population, 
treatment of the chronically and seriously mentally ill, the unresolved 
rural health access issues, or the lingering questions on improving 
VA's research infrastructure.

                   HISTORY AS A LESSON FOR THE FUTURE

    Today's VA largely was built during and immediately following World 
War II, to become an exalted place of care for over 500,000 injured war 
veterans. Some of those wounded remained hospitalized in VA for the 
remainder of their lives. VA's spinal cord injury, blind rehabilitation 
and prosthetics and sensory aids programs got their genesis or major 
expansions from World War II veterans' needs. In 1946, Congress 
established the Department of Medicine and Surgery (DM&S), now the 
Veterans Health Administration, and gave many independent powers that 
other Federal agencies lacked, in order to care for those wounded 
heroes. DM&S Memorandum No. 2 formed the VA-medical school affiliation 
relationships, to guarantee the young and energetic physicians-in-
training of that age would turn their full attention to wounded and ill 
veterans. In conjunction with new affiliations, VA made a collective 
decision to locate its new post-war VA hospitals nearby or alongside 
existing medical schools' academic health centers for the potential 
symbiotic effect and to help ensure a high-quality physician workforce 
remained available to sick and disabled veterans. VA's biomedical 
research and development programs and its remarkable academic training 
programs we see in practice today emerged out of these seminal 
decisions and have become instrumental in both aiding VA with stronger 
academic credentials, advancing evidence-based treatments, and 
promoting a higher standard of care for wounded and sick veterans. Even 
with the advent of primary care and VA's other transformations during 
the past decade, this cooperative VA-academic system of care is still 
largely intact more than 60 years after World War II.
    Mr. Chairman, as this Subcommittee and Congress at large consider 
the future of VA's infrastructure, and VA's future overall, it is good 
to remember our history, and to learn from it. Today, the Nation 
confronts two wars that, when concluded, will have likely produced over 
2 million new veterans. While early in the process, we know from VA 
that already more than 400,000 of them have contacted VA for health 
care, for conditions ranging from post-deployment mental health 
conditions to minor musculoskeletal problems to severe brain injury 
with multiple amputations. No less than earlier generations and 
probably more so, these veterans will need VA to be sustained for them. 
The question that confronts the Subcommittee today is--what that VA 
system is going to be, what it will offer, and how it will be managed 
and sustained. We in the veterans service organization community cannot 
plan the future VA, and we would not expect your Subcommittee to do so 
independently. Given the President's pledge to create the VA of the 
21st century, and Chairman Filner's commitment to aid VA in that 
endeavor; however, we do expect that VA should be mandated to establish 
its plan in a transparent way, vet that plan through our community and 
other interested parties, and provide its plan to Congress. We hope 
that all our communities (both inside and outside VA) share our 
concerns and want to help VA mold a strategic capital plan that all can 
accept and help collectively to accomplish. However, until this process 
materializes, we fear that VA's capital programs and the significant 
effects on the system as a whole and on veterans individually, will go 
unchanged, ultimately risking disaster for VA and for America's sick 
and disabled veterans.

                          AVOIDING THE OBVIOUS

    As we grapple with the issue of health care and insurance reform in 
America, we must make every effort to protect the VA system for future 
generations of sick and disabled veterans. A well thought-out capital 
and strategic plan is urgently needed, and the tough decisions must be 
made, not avoided as in the response to the seemingly aborted CARES 
process. We are pleased the current Administration has committed to 
building the VA of the 21st century. However, we are not sure what this 
may mean, nor do we have the value of a VA comprehensive infrastructure 
plan. Regardless of the direction VA takes, we must insist there is 
consideration of all the elements we have described throughout our 
testimony. Critical elements in VA make up what are considered by all 
accounts the ``best care anywhere'' in the United States. We want to 
ensure VA's infrastructure plan maintains the integrity of the VA 
health care system, and all the benefits VA brings to its enrolled 
population. We want to ensure care is not fragmented and that high-
quality, safe health care remains the bulwark of VA's programs.

                      CARES: AN UNFULFILLED VISION

    Mr. Chairman, hitting its apex in 2004, we at DAV believe CARES 
provided a solid foundation for, and a valuable assessment of, what VA 
had in its health care infrastructure portfolio and where VA needed to 
go, but we ask today, what substantive action has been taken since the 
release of the CARES report to overhaul the system to make way for the 
21st century? Currently VA is planning construction of five major VA 
medical centers, in Orlando, Florida; Denver, Colorado; Las Vegas, 
Nevada; Louisville, Kentucky; and New Orleans, Louisiana. None of the 
decisions to build these facilities was affected by the CARES process 
in any way but the most marginal sense. However, the decisions were 
unquestionably affected by the political process. While VA is 
addressing these political demands, it is still ignoring similar 
deficits at facilities such as in Togus, Maine; Sheridan, Wyoming; 
Wichita, Kansas; East Orange, New Jersey; Hines, Illinois; Mountain 
Home, Tennessee; Battle Creek, Michigan; and more than 100 other older 
VA medical centers, some of which are in, or are reaching, dire need 
for infusion of major infrastructure funding.

                              VA: AT RISK

    At this juncture, we believe VA soon may be in a very precarious 
situation. Operations Iraqi and Enduring Freedom continue. Each day we 
see growth in future health care, rehabilitation and post-deployment 
mental health needs in our newest generation of war veterans, and 
record demand for VA care by previous generations of disabled veterans. 
As a Nation, we must be good stewards of taxpayer dollars, yet we must 
also fulfill the commitment of the Nation to care for those who have 
suffered illness or injury as a result of military service and combat 
deployment. Concurrently, the American economy is unstable, Social 
Security, Medicare and Medicaid are seen by many to be unsustainable if 
not changed, and the new Administration and Congress are trying to 
formulate a plan to ensure access to basic health care services for 
every U.S. resident, and simultaneously reform the private insurance 
system. Changes coming from those trends, and that work, will 
undoubtedly affect the viability of VA in the future, but it is 
impossible to know the depth of that impact or its nature. 
Unfortunately, from what we do know, VA is largely uninvolved in the 
health care reform debate, and therefore, VA may be negatively impacted 
by those larger reforms. In our opinion, the VA, as a Cabinet agency, 
cannot be permitted to sit on the sideline of health care reform, but 
must be proactive and fully engaged in the debate.

                    ADVOCATES WANT A 21ST CENTURY VA

    As advocates for veterans, we do not accept VA's contention that 
replacing outdated VA facilities is ``. . . not affordable.'' VA's 
infrastructure needs have been deferred, neglected and delayed for far 
too long, to the advantage of other consumers of Federal dollars; 
therefore, without question facility replacements and updating are 
going to be costly, and both Congress and the Administration are 
confronted with that reality. The FY 2008 VA Asset Management Plan 
provides the most recent estimate of VA's needs. Using the guidance of 
the Federal Government's Federal Real Property Council, the value of 
VA's infrastructure is just over $85 billion. Accordingly, using 
industry standards as a yardstick, VA's capital budget should be 
between $4.25 billion and $6.8 billion annually in order to maintain 
its infrastructure at that value. VA's capital budget request for FY 
2009--which includes major and minor construction, maintenance, leases, 
and equipment--was $3.6 billion.
    The IBVSOs greatly appreciate that Congress provided funding above 
that level this year by an increase over the Administration's request 
of $750 million in Major and Minor Construction alone. That higher 
amount brought the total capital budget for FY 2009 inline with 
industry standards. We strongly urge that these targets continue to be 
met and we would hope that future VA requests use standard guidelines 
as a starting point without requiring Congress to add additional 
funding. We also are mindful that Congress included nearly $1 billion 
in the recent economic stimulus package that will fund VA 
infrastructure improvements and represents a significant re-payment to 
VA of capital funds it should have received years ago while CARES was 
underway.

                           DESIGN THE FUTURE

    Congress and the Administration must work together to secure VA's 
future to design a VA of the 21st century. It will take the joint 
cooperation of Congress and the Administration to support this reform, 
while setting aside resistance to change, even dramatic change, when 
change is demanded and supported by valid data. Accordingly, we urge 
the Administration and the Congress to live up to the President's words 
by making a steady, stable investment in VA's capital infrastructure to 
bring the system up to match the 21st century needs of veterans.

                 COMMUNICATIONS WILL BE KEY TO SUCCESS

    Finally, one of our community's pent-up frustrations with respect 
to VA's infrastructure is lack of information and communication. 
Communications have been sorely lacking for the past several years, and 
VA has seemingly resisted keeping us informed of its planning. In the 
spirit of the President's very first Executive order, on the 
transparency of government, we ask VA do a better job of communicating 
with our community, enrolled veterans, labor organizations and VA's own 
employees, local government and their affected communities, and other 
stakeholders, as the VA capital and strategic planning processes move 
forward. It is imperative that all of these groups understand VA's 
``big picture'' and how it may affect them. Talking openly and 
discussing potential changes will help resolve the understandable angst 
about this complex and important question of VA health care 
infrastructure. While we agree that VA is not its buildings, and that 
the patient should be at the center of VA care and concern, VA must be 
able to maintain an adequate infrastructure around which to build and 
sustain its patient care system. The time to act is now--our Nation's 
veterans deserve no less than our best effort.
    Thank you, Mr. Chairman and Members of the Subcommittee. I will 
address any questions you may have for the DAV.

                                 
       Prepared Statement of Hon. Everett Alvarez, Jr., Chairman,
      Capital Asset Realignment for Enhanced Services Commission,
                  U.S. Department of Veterans Affairs

    Mr. Chairman and Members of the Subcommittee,
    Thank you for the opportunity to appear before the Subcommittee to 
discuss the extraordinary work of the Capital Asset Realignment for 
Enhanced Services (CARES) Commission.
    Let me begin by saying that the Commission believed its mission was 
pioneering--not just in terms of an external board assessing 
allocations of the VA's capital assets and making recommendations how 
these assets should be used, but also doing so while honoring and 
preserving the VA's health care and related missions. The 
Commissioners, many of whom are veterans themselves, were well aware of 
the enormous implications their efforts may have on veterans and the 
state of their health care system. We knew we had a moral obligation to 
be objective and transparent, because our review would serve as a 
blueprint for resource planning at the VA and an approach for medical 
care appropriations long after the Commission's work ended. We were 
guided, gratefully, by leadership and participation from VA officials, 
VA employees across the country, many hundreds of veterans, 
familymembers, stakeholders, including Members of Congress, medical and 
nursing affiliates and communities at large.
    Our efforts are documented in the CARES Commission Report to the 
Secretary of Veterans Affairs (VA) dated February 2004. Before I 
discuss key components of the Commission's Report, let me take a step 
back to provide some historical context that led to the creation of the 
CARES Commission and its body of work.

                       Retrospective Observations

VA CARES Process:
    At the time of the Commission's involvement in the VA CARES 
process, the Commission believed the CARES process itself was the most 
comprehensive assessment ever undertaken by the VA to determine the 
capital infrastructure needed to provide modern health care to 
veterans.
    CARES was a multi-faceted process designed to provide a data-driven 
assessment of veteran's health care needs. The process used projected 
future demand for health care services, compared the projected demand 
against current supply, identified capital requirements and then 
assessed any realignments the VA would need in order to meet future 
demand for services, improve the access to and quality of services, and 
improve the cost effectiveness of the VA's health care system.
    Integrated in the overall CARES process was the reliance on input 
from the individual Veterans Integrated Service Networks (VISNs) and 
local veterans and stakeholders, followed by reviews of the National 
CARES Program Office (NCPO), the Under Secretary for Health, the CARES 
Commission, and the Secretary of VA.
    The CARES process consisted of nine distinct steps. To give you a 
sense of the comprehensiveness of the CARES process, briefly let me 
outline the nine steps of the CARES process:

    Step 1: The NCPO and VISNs created ``markets'' for planning 
purposes within each VISN. Markets were based on veteran population, 
enrollment, and market share data provided by the NCPO, as well as 
local knowledge of transportation and other factors unique to the 
community.
    Step 2: The VISNs conducted an analysis of the current health care 
needs of veterans to identify markets. Future health care needs of 
veterans in those markets were projected using the CARES model.
    Step 3: The VISNs identified ``planning initiatives'' to describe 
the difference between current resources and projected demand.
    Step 4: The VISNs developed market-specific plans to address 
identified initiatives. A planning decision support system was 
developed that included forecasted demand and operating, contracting, 
and capital costs derived from the facilities and markets to create a 
national methodology for costing alternative approaches. Veteran and 
stakeholder input was sought and occurred at the national and field 
levels.
    Step 5: The Under Secretary for Health reviewed market plans and 
developed the Draft National CARES Plan (DNCP), which was issued on 
August 4, 2003.
    Step 6: The CARES Commission, after reviewing the DNCP and other 
information, conducted its review and analysis and then issued its 
report to the Secretary with findings and recommendations for enhancing 
health care services through alignment of VA's capital assets.
    Step 7: Secretary's decision was made to accept, reject, or ask for 
additional information on the Commission's recommendations.
    Step 8: The VISNs prepared detailed implementation plans and 
submitted them to the Secretary for approval.
    Step 9: In the final step, VISN planning initiatives and solutions 
were refined and integrated in the annual VA strategic planning cycle.

CARES Commission:
    Since the CARES process was primarily a VA-internal planning 
process, the CARES Commission was established by the Honorable Anthony 
J. Principi, former VA Secretary, as an independent body to conduct an 
external assessment of the VA's capital asset needs and validate the 
findings and recommendations in the DNCP. The Secretary emphasized that 
the Commission was not expected to conduct an independent review of the 
VA's medical system. However, as we conducted our analysis of the DNCP, 
we were expected to maintain a reliance on the views and concerns from 
individual veterans, veterans service organizations, Congress, medical 
school affiliates, VA employees, local government entities, affected 
community groups, Department of Defense (DoD), and other interested 
stakeholders.
    The CARES Commission's journey began in February, 2003. Even from 
the onset it was clear to the Commission that the goal of CARES was to 
enhance services to veterans; not to save money--rather, to spend 
appropriated funds wisely.
    In fulfilling our obligation, Commissioners:

      visited 81 VA and DoD medical facilities and State 
Veterans Homes;
      held 38 public hearings across the country, with at least 
one hearing per VISN;
      held 10 public meetings; and
      analyzed more than 212,000 comments received from 
veterans, their families, and stakeholders.

    At the public hearings, the Commission had the opportunity to hear 
from approximately 770 invited local speakers, including VISN 
leadership, veterans and their families, veterans service 
organizations, State directors of veterans' affairs, local labor 
organizations, medical schools, nursing schools and other allied health 
professional affiliates, organizations with collaborative relationships 
including the DoD, and local elected officials. Seven Governors and 135 
Members of Congress participated or provided statements for Commission 
hearings.
    On February 12, 2004, I presented The CARES Commission Report to 
Secretary Principi. The Commission's findings were grounded on the 
compilation of information gathered at the site visits, public 
hearings, and meetings as well as information obtained from the public 
comments and the VA. It represented the best collective judgment of the 
Commissioners, who applied their diverse expertise in making decisions 
related to the future of the VA's infrastructure.
    Mr. Chairman, with this historical perspective in mind, I would 
like to now focus my testimony on two key areas that formed the 
foundation, I believe, of the Commission's efforts and that enabled us 
to present the independent assessment demanded by our charter. These 
foundation areas are: the Commission's goals and the review of the VA 
CARES model by outside experts.
Commission's Goals:
    Mr. Chairman, the Commission established several critical goals in 
order to sustain the highest standard of credibility to our efforts. 
First, we maintained an objective point-of-view in order to give an 
effective external perspective to the VA CARES process. We set goals to 
focus on accessibility, quality, and cost effectiveness of care that 
were needed to serve our Nation's veterans. We held a clear line of 
sight on the integrity of VA's health care mission and its other 
missions. Additionally, since the VA is more than bricks and mortar, 
the Commission thoughtfully sought input from stakeholders to minimize 
any adverse impact on VA staff and affected communities. Moreover, it 
was the Commission's desire to make findings and recommendations that 
would provide the VA with a road map for strategically evaluating VA's 
capital needs into the future.
VA CARES Demand Model:
    During the development of the VISN planning initiatives and 
ultimately the DNCP, the VA CARES demand model was the foundation for 
projecting the future enrollment of veterans, their utilization of 
certain inpatient and outpatient health care services, and the unit 
cost of such services. The Commission did not participate in the 
development of the model, or the application of the model at the VISN 
level. The Commission's role, however, was to review data and analyses 
based on the model.
    Because the CARES demand model was such an integral component in 
the development of the VA's CARES market plans, the Commission wanted a 
high level of confidence in the reasonableness of the model as an 
analytic approach to projecting enrollment and workload. For this 
reason and to foster the Commission's goal to sustain credibility, the 
Commission engaged outside experts to examine and explain the technical 
aspects of the model. With the help of outside experts the Commission 
sought assurance that the CARES model was:

      Logical: internally consistent and coherent;
      Auditable: open to scrutiny and examination;
      Comparable: consistent with known methods or techniques 
in common analytical practice;
      Defendable: given the range of alternatives available;
      Robust: flexible to use for projecting uncertain future 
scenarios;
      Timely: data used are applicable to the current 
environment; and
      Verified and Validated: tested to ensure data used were 
not skewed in some way.

    Based on the experts' analyses, the Commission found the CARES 
model did, in fact, serve as a reasonable analytical approach for 
estimating VA enrollment, utilization and expenditures. However, there 
were lingering concerns noted in the Commission's report relating to 
projecting utilization of specialized inpatient and outpatient 
services, notably outpatient mental health services, and inpatient 
long-term care services (including geriatric and seriously mentally ill 
care).
    Let me elaborate. The CARES demand model projected only certain 
inpatient and outpatient services, such as surgical services and 
primary care services. During the Commission's assessment we found that 
the initial CARES projections underestimated the demand for outpatient 
mental health services as well as long-term mental health services. 
Additionally, the Commission noted that projections for long-term care, 
including nursing home, domiciliary, and non-acute inpatient and 
residential mental health services, were not included in the CARES 
projections due to the absence of an adequate model to project future 
need for these services. In the case of these noted areas the 
Commission made recommendations for immediate corrective action and 
development of new planning initiatives.

                        Prospective Observations

    Mr. Chairman, to this point I have provided you and the 
Subcommittee with a retrospective look at CARES and have highlighted 
key areas of the Commission's efforts. In discussing the Commission's 
efforts today, I need to remind everyone that the Commission's findings 
and recommendations were based on data, analyses and information that 
are more than 5 years old. As you can appreciate veterans' medical 
needs, when combined with advances in medicine, psychiatry, medical 
technology and health care in general, could make some of the 
Commission's findings outdated.
    As you are aware, veterans returning home from the wars in Iraq and 
Afghanistan often go to the VA for specialized inpatient and outpatient 
medical care to facilitate their physical and emotional recovery. The 
experience in recent years as a result of the nature of the Iraq and 
Afghanistan wars, and with the advances in combat medicine, have meant 
that VA is caring for patients with injuries far more complex than ever 
before, such as traumatic brain injuries (TBI) and polytraumatic 
injuries. For these visible wounds of war the VA has responded by 
establishing state-of-the art Polytrauma Rehabilitation Centers and a 
diverse supportive system of care that approaches the limits of modern 
medicine and knowledge in treating and caring for these patients.
    Of equal significance, the nature of the Iraq and Afghanistan 
conflicts has placed an emphasis on improving combat and VA health care 
to treat PTSD, suicide prevention, and other mental health concerns--
the invisible wounds of war. Because symptoms of PTSD, suicide and 
other mental illness may manifest over time, effective mental health 
treatment requires appropriate access to a full continuum of mental 
health services. The DoD and VA are responding by enhancing psychiatric 
and mental health programs and policies, particularly for PTSD and 
suicide prevention.
    I would suggest that if a ``CARES Commission'' were chartered 
today, it would likely assess how the VA integrates advancements in 
medicine, psychiatry, science, and health care in the strategic and 
resource planning processes. Reflecting on the importance of the CARES 
demand model in earlier planning efforts, a ``CARES Commission'' would 
likely verify that VA has addressed previously noted shortcomings in 
estimating outpatient mental health and inpatient long-term care 
services to ensure that the infrastructure planning is keeping pace 
with mental health demand and that VA and DoD are capitalizing on 
shared treatment capabilities. A Commission might also review the 
modeling of polytrauma care, including long-term rehabilitation care to 
validate that VA long-term care facilities are being transformed to 
embrace the long-term care for younger generation of veterans with 
young 
families while maintaining a strong sense of commitment to geriatric lon
g-term care.
                                Closing
    Mr. Chairman, this concludes my testimony. I again want to thank 
you for allowing me to address the Subcommittee.

                                 
           Prepared Statement of Mark L. Goldstein, Director,
     Physical Infrastructure, U.S. Government Accountability Office
       VA HEALTH CARE: OVERVIEW OF VA'S CAPITAL ASSET MANAGEMENT

                             GAO Highlights
Why GAO Did This Study
    Through its Veterans Health Administration (VHA), the Department of 
Veterans Affairs (VA) operates one of the largest integrated health 
care systems in the country. In 1999, GAO reported that better 
management of VA's large inventory of aged capital assets could result 
in savings that could be used to enhance health care services for 
veterans. In response, VA initiated a process known as Capital Asset 
Realignment for Enhanced Services (CARES). Through CARES, VA sought to 
determine the future resources needed to provide health care to our 
Nation's veterans.
    This testimony describes (1) how CARES contributes to VHA's capital 
planning process, (2) the extent to which VA has implemented CARES 
decisions, and (3) the types of legal authorities that VA has to manage 
its real property and the extent to which VA has used these 
authorities. The testimony is based on GAO's body of work on VA's 
management of its capital assets, including GAO's 2007 report on VA's 
implementation of CARES (GAO-07-408).

What GAO Recommends
    GAO is not making recommendations in this testimony, but has 
previously made a number of recommendations regarding VA's capital 
asset management. VA is at various stages of implementing those 
recommendations.

What GAO Found
    The CARES process provides VA with a blueprint that drives VHA's 
capital planning efforts. As part of the CARES process, VA adapted a 
model to estimate demand for health care services and to determine the 
capacity of its current infrastructure to meet this demand. VA 
continues to use this model in its capital planning process. The CARES 
process resulted in capital alignment decisions intended to address 
gaps in services or infrastructure. These decisions serve as the 
foundation for VA's capital planning process. According to VA 
officials, all capital projects must be based on demand projections 
that use the planning model developed through CARES.
    VA has started implementing some CARES decisions, but does not 
centrally track their implementation or monitor the impact of their 
implementation on its mission. VA is in varying stages (e.g., planning 
or construction) of implementing 34 of the major capital projects that 
were identified in the CARES process and has completed 8 projects. Our 
past work found that, while VA had over 100 performance measures to 
monitor other agency programs and activities, these measures either did 
not directly link to the CARES goals or VA did not use them to 
centrally monitor the implementation and impact of CARES decisions. 
Without this information, VA could not readily assess the 
implementation status of CARES decisions, determine the impact of such 
decisions, or be held accountable for achieving the intended results of 
CARES. VA has recently created the CARES Implementation Working Group, 
which has identified performance measures for CARES and will monitor 
the implementation and impact of CARES decisions in the future.
    VA has a variety of legal authorities available, such as enhanced-
use leases, sharing agreements, and others, to help it manage real 
property. However, legal restrictions and administrative- and budget-
related disincentives associated with implementing some authorities 
affect VA's ability to dispose and reuse property in some locations. 
For example, legal restrictions limit VA's ability to dispose of and 
reuse property in West Los Angeles and Sepulveda. Despite these 
challenges, VA has used these legal authorities to help reduce 
underutilized space (i.e., space not used to full capacity). In 2008, 
we reported that VA reduced underutilized space in its buildings by 
approximately 64 percent from 15.4 million square feet in fiscal year 
2005 to 5.6 million square feet in fiscal year 2007. While VA's use of 
various legal authorities likely contributed to VA's overall reduction 
of underutilized space since fiscal year 2005, VA does not track the 
overall effect of using these authorities on space reductions. Not 
having such information precludes VA from knowing what effect these 
authorities are having on reducing underutilized or vacant space or 
knowing which types of authorities have the greatest effect. According 
to VA officials, VA will institute a system in 2009 that will track 
square footage reductions at the building level.
                               __________
    Mr. Chairman and Members of the Subcommittee:
    We appreciate the opportunity to testify on the Department of 
Veterans Affairs' (VA) management of its capital assets. As you know, 
VA operates one of the largest health care systems in the country. VA, 
through its Veterans Health Administration (VHA), provided health care 
to almost 5.5 million veterans in 2008.\1\ To support its mission, VA 
has a large inventory of real property--including over 150 medical 
centers and over 900 outpatient and ambulatory care clinics. However, 
many of VA's facilities were built more than 50 years ago and are not 
well suited to providing accessible, high-quality, cost-effective 
health care in the 21st century. In 1999, we reported that with better 
management of its large, aged capital assets, VA could significantly 
reduce the funding used to operate and maintain underused, unneeded, or 
inefficient properties.\2\ We further noted that the savings could be 
used to enhance health care services for veterans. Thus, we recommended 
that VA develop market-based plans for realigning its capital assets. 
In response, VA initiated a process known as Capital Asset Realignment 
for Enhanced Services (CARES)--a comprehensive, long-range assessment 
of its health care system's capital asset requirements. The CARES 
process included nine distinct steps and required the time and 
expertise of many VA officials at the departmental and network 
levels.\3\ (See table 1.)
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    \1\ VHA is primarily responsible for VA's health care delivery to 
the veterans enrolled for VA health care services and operates the 
majority of VA's capital assets.
    \2\ GAO, VA Health Care: Capital Asset Planning and Budgeting Need 
Improvement, GAO/T-HEHS-99-83 (Washington, D.C.: Mar. 10, 1999).
    \3\ VA's health care delivery system is divided into 21 health care 
delivery networks. For example, one network serves veterans in Alabama, 
Georgia, and South Carolina.

                                      Table 1:  Steps of the CARES Process
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Step 1:                                       VA officials at the departmental and network level develop market
                                             areas and submarkets as the planning units for analyzing veterans'
                                                                                                         needs.
----------------------------------------------------------------------------------------------------------------
Step 2:                                       VA officials at the departmental level conduct market analyses of
                                          veterans' health care needs using standardized forecasts of enrollment
                                                                          and service needs and actuarial data.
----------------------------------------------------------------------------------------------------------------
Step 3:                                    VA officials at the departmental level identify planning initiatives
                                            that addressed apparent gaps between supply and demand in resources
                                                                                          for each market area.
----------------------------------------------------------------------------------------------------------------
Step 4:                                          VA officials at the Network level consider different alignment
                                            alternatives and develop specific plans for individual markets that
                                           addressed all the planning initiatives identified by VA officials at
                                                                                        the departmental level.
----------------------------------------------------------------------------------------------------------------



                                 Table 1:  Steps of the CARES Process--Continued
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Step 5:                                   The Under Secretary of Health uses the market plans to prepare a Draft
                                                                National CARES Plan (DNCP) and recommendations.
----------------------------------------------------------------------------------------------------------------
Step 6:                                     The Secretary of Veterans Affairs appoints a commission composed of
                                          non-VA executives to make recommendations to the Secretary to accept,
                                            present alternatives to, or reject the recommendations contained in
                                                                                                      the DNCP.
----------------------------------------------------------------------------------------------------------------
Step 7:                                    The Secretary of Veterans Affairs decides whether to accept, reject,
                                                or modify the commission's recommendations concerning the DNCP.
----------------------------------------------------------------------------------------------------------------
Step 8:                                                  Network officials implement the Secretary's decisions.
----------------------------------------------------------------------------------------------------------------
Step 9:                                     VA officials at the departmental level refine and incorporate CARES
                                                 planning initiatives into the annual strategic planning cycle.
----------------------------------------------------------------------------------------------------------------
Source: VA.


    According to VA, the CARES process was a onetime major initiative. 
However, its lasting result was to provide a set of tools and processes 
that allow VA to continually determine the future resources needed to 
provide health care to our Nation's veterans. In May 2004, the 
Secretary stated that implementing CARES decisions will require an 
additional investment of approximately $1 billion per year for at least 
the next 5 years, with substantial infrastructure investments then 
continuing for the indefinite future, to modernize VA's aging 
infrastructure. Although CARES will require substantial investment, the 
Secretary noted that not proceeding with CARES would require funding to 
maintain or renovate obsolete facilities and would leave VA with 
numerous redundant, outmoded, or poorly located facilities. The 
Secretary further stated that through the CARES process, VA had 
developed more complete information about the demand for VA health care 
and a more comprehensive assessment of its capital assets than it had 
ever done before. The Secretary noted that this information, along with 
the experience gained through conducting CARES, positioned VA to 
continue to expand the accuracy and scope of its planning efforts.
    In my statement today, I will discuss (1) how CARES contributes to 
VHA's capital planning process, (2) the extent to which VA has 
implemented CARES decisions, and (3) the types of legal authorities 
that VA has to manage its real property and the extent to which VA has 
used its authorities to reduce underutilized and vacant property. My 
comments are based on our extensive body of work on VA's management of 
its capital assets, including recent reviews of VA's implementation of 
CARES and management of real property, as well as updated information 
from VA officials.\4\
---------------------------------------------------------------------------
    \4\ GAO, VA Health Care: Capital Asset Planning and Budgeting Need 
Improvement, T-HEHS-99-83 (Washington, D.C.: Mar. 10, 1999); GAO, VA 
Health Care: VA Should Better Monitor Implementation and Impact of 
Capital Asset Alignment Decisions, GAO-07-408 (Washington, D.C.: Mar. 
21, 2007); GAO, VA Health Care: Additional Efforts to Better Assess 
Joint Ventures Needed, GAO-08-399 (Washington, D.C.: Mar. 28, 2008); 
and GAO, Federal Real Property: Progress Made in Reducing Unneeded 
Property, but VA Needs Better Information to Make Further Reductions, 
GAO-08-939 (Washington, D.C.: Sept. 10, 2008). These performance audits 
and our updated work were conducted in accordance with generally 
accepted government auditing standards.
---------------------------------------------------------------------------
Background
    Over the past decade, VA's system of health care for veterans has 
undergone a dramatic transformation, shifting from predominantly 
hospital-based care to primary reliance on outpatient care. As VA 
increased its emphasis on outpatient care rather than inpatient care, 
it was left with an increasingly obsolete infrastructure, including 
many hospitals built or acquired more than 50 years ago in locations 
that are sometimes far from where veterans live.
    To address its obsolete infrastructure, VA initiated its CARES 
process--the first comprehensive, long-range assessment of its health 
care system's capital asset requirements since 1981. CARES was designed 
to assess the appropriate function, size, and location of VA facilities 
in light of expected demand for VA inpatient and outpatient health care 
services through fiscal year 2022. Through CARES, VA sought to enhance 
outpatient and inpatient care, as well as special programs, such as 
spinal cord injury, through the appropriate sizing, upgrading, and 
locating of VA facilities. Table 2 lists key milestones of the CARES 
process.


                                         Table 2:  Key CARES Milestones
----------------------------------------------------------------------------------------------------------------
                     Date                             Milestone                       Description
----------------------------------------------------------------------------------------------------------------
February 2002                                      VA announced the    The pilot study assessed current and fu-
                                                 results of a pilot       ture use of health care assets in the
                                                       CARES study.          three markets of Network 12, which
                                                                       includes parts of five States: Illinois,
                                                                              Indiana, Michigan, Minnesota, and
                                                                         Wisconsin. It resulted in decisions to
                                                                      realign health care services and renovate
                                                                      or dispose of several buildings consistent
                                                                         with VA's mission and community zoning
                                                                                                        issues.
----------------------------------------------------------------------------------------------------------------
August 2003                                      VA Under Secretary         The Under Secretary's DNCP included
                                                    for Health pre-     recommendations about health care serv-
                                                   sented the DNCP.   ices and capital assets in VA's remaining
                                                                              74 markets. These recommendations
                                                                          reflected input from managers of VA's
                                                                                          health care networks.
----------------------------------------------------------------------------------------------------------------
February 2004                                   An independent CARES        An independent 16-member commission
                                                Commis- sion issued      appointed by the Secretary of Veterans
                                                 recom- mendations.       Affairs issued recommendations to the
                                                                      Secretary based on its review of the DNCP
                                                                          and related documents and information
                                                                         obtained through public hearings, site
                                                                      visits, public meetings, written comments
                                                                      from veterans and other stakeholders, and
                                                                                    consultations with experts.
----------------------------------------------------------------------------------------------------------------
May 2004                                               VA Secretary      The Secretary based his decisions on a
                                                announces the CARES            review of the CARES Commission's
                                                         decisions.                            recommendations.
----------------------------------------------------------------------------------------------------------------
January 2005                                        CARES follow-up        VA awarded a contract for additional
                                                           studies.   studies at 18 VA facilities. These studies
                                                                         included evaluating outstanding health
                                                                      care issues, developing capital plans, and
                                                                       determining the best use for unneeded VA
                                                                      property consistent with VA's mission and
                                                                                       community zoning issues.
----------------------------------------------------------------------------------------------------------------
May 2008                                            CARES follow-up               All 18 studies are completed.
                                                           studies.
----------------------------------------------------------------------------------------------------------------
Source: GAO analysis of VA data.


    We have previously reported that a range of capital asset alignment 
alternatives were considered throughout the CARES process, which 
adheres to capital planning best practices.\5\ Moreover, there was 
relatively consistent agreement among the DNCP prepared by VA, the 
CARES Commission appointed by the VA Secretary to make alignment 
recommendations, and the Secretary as to which were the best 
alternatives to pursue. Although the Secretary tended to agree with the 
CARES Commission's recommendations, the extent to which he agreed 
varied by alignment alternative. In particular, the Secretary always 
agreed with the Commission's recommendations to build new facilities, 
enter into enhanced use leases, and collaborate with the Department of 
Defense and universities, but was less likely to agree with the CARES 
Commission's recommendations to contract out or close facilities. The 
decisions that emerged from the CARES process will result in an overall 
expansion of VA's capital assets. According to VA officials, rather 
than show that VA should downsize its capital asset portfolio, the 
CARES process revealed service gaps and needed infrastructure 
improvements. We also reported that a number of factors shaped and in 
some cases limited the range of alternatives VA considered during the 
CARES process. These factors included competing stakeholder interests; 
facility condition and location; veterans' access to facilities; 
established relationships between VA and health care partners, such as 
DoD and university medical affiliates; and legal restrictions.
---------------------------------------------------------------------------
    \5\ GAO-07-408.
---------------------------------------------------------------------------
    The challenge of misaligned infrastructure is not unique to VA. We 
identified Federal real property management as a high-risk area in 
January 2003 because of the nationwide importance of this issue for all 
Federal agencies. We did this to highlight the need for broad-based 
transformation in this area, which, if well implemented, will better 
position Federal agencies to achieve mission effectiveness and reduce 
operating costs. But VA and other agencies face common challenges, such 
as competing stakeholder interests in real property decisions. In VA's 
case, this involves achieving consensus among such stakeholders as 
veterans service organizations, affiliated medical schools, employee 
unions, and communities. We have previously reported that competing 
interests from local, State, and political stakeholders have often 
impeded Federal agencies' ability to make real property management 
decisions. As a result of competing stakeholder interests, decisions 
about real property often do not reflect the most cost-effective or 
efficient alternative that is in the interest of the agency or the 
government as a whole but instead reflect other priorities. In 
particular, this situation often arises when the Federal Government 
attempts to consolidate facilities or otherwise dispose of unneeded 
assets.\6\
---------------------------------------------------------------------------
    \6\ GAO, High-Risk Series: Federal Real Property, GAO-03-122 
(Washington, D.C.: January 2003) and GAO, Federal Real Property: 
Progress Made Toward Addressing Problems, but Underlying Obstacles 
Continue to Hamper Reform, GAO-07-349 (Washington, D.C.: April 2007).
---------------------------------------------------------------------------
CARES Process and Modeling Tools Drive VHA's Capital Planning Efforts
    Through the CARES process, VA gained the tools and information 
needed to plan capital investments. As part of the CARES process, VA 
modified an actuarial model that it used to project VA budgetary needs. 
According to VA, the modifications enabled the model to produce 20-year 
forecasts of the demand for services and provided for more accurate 
assessments of veterans' reliance on VA services, capacity gaps, and 
market penetration rates.\7\ The information provided by the model 
allowed VA to identify service needs and infrastructure gaps, in part 
by comparing the expected location of veterans and demand for services 
in years 2012 through 2022 with the current location and capacity of VA 
health care services within each network. In addition to modifying the 
model, VA conducted facility condition assessments on all of its real 
property holdings as part of the CARES process. These assessments 
provided VA information about the condition of its facilities, 
including their infrastructure needs. VA continues to use the tools 
developed through CARES as part of its capital planning process. For 
example, VA conducts facility condition assessments for each real 
property holding every 3 years on a rotating basis. In addition, VA 
uses the modified actuarial model to update its workload projections 
each year, which are used to inform the annual capital budget process.
---------------------------------------------------------------------------
    \7\ We did not evaluate the reliability of the model or its 
projections.
---------------------------------------------------------------------------
    The CARES process serves as the foundation for VHA's capital 
planning efforts. The first step in VHA's capital budget process is for 
networks to submit conceptual papers that identify capital projects 
that will address service or infrastructure gaps identified in the 
CARES process.\8\ The Capital Investment Panel, which consists of 
representatives from each VA administration and staff offices, reviews, 
scores, and ranks these papers. The Capital Investment Panel also 
identifies the proposals that will be sent forward for additional 
analysis and review, and may ultimately be included as part of VA's 
budget request. According to VA officials, all capital projects must be 
based on the CARES planning model to advance through VHA's capital 
planning process. On the basis of CARES-identified infrastructure needs 
and service gaps, VA identified more than 100 major capital projects in 
37 States, the District of Columbia, and Puerto Rico.\9\ In addition to 
these projects, the CARES planning model identified service needs and 
infrastructure gaps at other locations throughout the VA system. The 
model is updated annually to reflect new information.
---------------------------------------------------------------------------
    \8\ CARES conceptual papers are created at the network level and 
provide a detailed description of the project, the problem the project 
will address, and other relevant information.
    \9\ The term ``major capital project'' refers to a project for the 
construction, alteration, or acquisition of a medical facility 
involving a total expenditure of more than $10 million. (See 38 U.S.C. 
Sec. 8104.) In contrast, a ``minor capital project'' refers to the 
construction, alteration, or acquisition of a medical facility 
involving a total expenditure of $10 million or less.
---------------------------------------------------------------------------
    VHA's 5-year Capital Plan outlines CARES implementation and 
identifies priority projects that will improve the environment of care 
at VA medical facilities and ensure more effective operations by 
redirecting resources from the maintenance of vacant and underutilized 
buildings to investments in veterans' health care. In VA's fiscal year 
2010 budget submission, VA requested about $1.1 billion to fund 12 VHA 
major construction projects and about $507 million for VHA minor 
construction projects.

Some CARES Decisions Implemented, But Additional Information Needed to 
        Fully Assess Status and Impact of Decisions
    VA has begun implementing some CARES decisions. Specifically, VA is 
currently in varying stages (e.g., planning or construction) of 
implementing 34 of the major capital projects that were identified in 
the CARES process. Eight major capital CARES projects are complete.
    Although VA is moving forward with the implementation of some CARES 
decisions, we previously reported that a number of VA officials and 
stakeholders, including representatives from veterans service 
organizations and local community groups, view the implementation 
process as too lengthy and lacking transparency.\10\ For instance, 
stakeholders in Big Spring, Texas, noted that it took almost 2 years 
for the Secretary to decide whether to close the facility. During this 
period, there was a great deal of uncertainty about the future of the 
facility. As a result, there were problems in attracting and retaining 
staff at the facility, according to network and local VA officials. We 
also previously reported that a number of stakeholders we spoke with 
indicated that the implementation of CARES decisions has been 
influenced by competing stakeholders' interests--thereby undermining 
the process.\11\ In its February 2004 report, the CARES Commission also 
noted that stakeholder and community pressure can act as a barrier to 
change, by pressuring VA to maintain specific services or facilities.
---------------------------------------------------------------------------
    \10\ GAO-07-408.
    \11\ GAO-07-408.
---------------------------------------------------------------------------
    In 2007, we reported that VA does not use, or in some cases does 
not have, performance measures to assess its progress in implementing 
CARES or whether CARES is achieving the intended results. Performance 
measures allow an agency to track its progress in achieving intended 
results. Performance measures can also help inform management 
decisionmaking by, for example, indicating a need to redirect resources 
or shift priorities. In addition, performance measures can be used by 
stakeholders, such as veterans service organizations or local 
communities, to hold agencies accountable for results. Although VA has 
over 100 performance measures to monitor other agency programs and 
activities, these measures either do not directly link to the CARES 
goals or VA does not use them to centrally monitor the implementation 
and impact of CARES decisions.\12\ We also reported that VA lacked 
critical data, including data on the cost of and timelines for 
implementing CARES projects and the potential savings that can be 
generated by realigning resources.
---------------------------------------------------------------------------
    \12\ Officials from the Office of Asset Enterprise Management told 
us that they had information on the status of CARES projects that were 
included in the 5-year capital plan, but that they did not track the 
status of all CARES decisions.
---------------------------------------------------------------------------
    Given the importance of the CARES process, we previously 
recommended that VA develop performance measures for CARES. Such 
measures would allow VA officials to monitor the implementation and 
impact of CARES decisions as well as allow stakeholders to hold VA 
accountable for results. In responding to our recommendation, VA 
created the CARES Implementation Monitoring Working Group. This working 
group has identified performance measures for CARES and the group will 
monitor the implementation and impact of CARES decisions.

VA Has a Variety of Legal Authorities to Manage Real Property, But Does 
        Not Track How Using Them Contributes to the Reduction in 
        Underutilized Property
    VA has a variety of legal authorities available to help it manage 
real property. These authorities include enhanced-use leases (EUL), 
sharing agreements, and outleases. (See table 3 for descriptions of 
these authorities.) VA uses these authorities to help reduce 
underutilized and vacant property. For example, in 2005, in Lakeside 
(Chicago), Illinois, VA reduced its underutilized property at the 
medical center by nearly 600,000 square feet by using its EUL authority 
with Northwestern Memorial Hospital. VA also uses these authorities to 
generate financial benefits. For example, the VA Greater Los Angeles 
Healthcare System enters into a number of sharing agreements with the 
film industry. VA officials told us that these agreements are typically 
temporary arrangements--sometimes lasting a few days--during which film 
production companies use VA facilities to shoot television or movie 
scenes. According to VA officials, these agreements generate roughly $1 
million to $2 million a year.


                              Table 3:  Major Types of Authorities Available to VA
----------------------------------------------------------------------------------------------------------------
                    Authority                                Definition                       Proceeds
----------------------------------------------------------------------------------------------------------------
Enhanced-use                                           VA leases underutilized or   Proceeds generated from the
  leases (EUL)                                     vacant property to a public or                            EUL are used to pay for
                                                      private entity for up to 75    expenses incurred by VA in
                                                                            years
38 U.S.C.                                           if the agreement enhances the        connection with the EUL
  Sec. Sec.  8161-8169                             use of the property or results       and can be used for any
                                                  in an improvement of services to      expense incurred in the
                                                  veterans in the network in which     development of future EULs.
                                                  the property is located. The EUL   Any remaining funds are to
                                                           shall be for fair con-        be deposited in the VA
                                                   sideration, and lease payments      Medical Care Collections
                                                   may be monetary or be made for    Fund. At the discretion of
                                                   in-kind consideration, such as    the VA Secretary, proceeds
                                                         construction, repair, or    also may be deposited into
                                                         remodeling of Department    construction major project
                                                    facilities; providing office,        and construction minor
                                                  storage, or other usable space;   project accounts to be used
                                                    or for services, programs, or             for construction,
                                                  facilities that enhance services             alterations, and
                                                                     to veterans.   improvements of any medical
                                                                                                      facility.
----------------------------------------------------------------------------------------------------------------
Sharing                                                 VA may enter into sharing       Proceeds generated from
  agreements                                      agreements to provide the use of  sharing agreements are to be
                                                       VHA space (including park-    credited to the applicable
38 U.S.C.                                           ing, recreational facilities,     Department medical appro-
                                                                              and
  Sec. Sec.  8151-8153                            vacant land) for the benefit of      priation of the facility
                                                       veterans or nonveterans in     that furnished the space.
                                                  exchange for payment or services
                                                   if VA's resources would not be
                                                  used to their maximum effective
                                                  capacity and would not adversely
                                                     affect the care of veterans.
                                                  Sharing agreements do not convey
                                                  an interest in real property and
                                                  can be entered into for up to 20
                                                  years, with the initial term not
                                                               to exceed 5 years.
----------------------------------------------------------------------------------------------------------------
Outlease                                            VA's outlease-related author-       Proceeds generated from
                                                     ities include the following:       outleases of VHA space,
38 U.S.C. Sec.  8122                                                                 minus expenses for mainte-
                                                      Outlease: VA may lease real   nance, operation, and repair
38 U.S.C. Sec.  2412                                property to public or private       of buildings leased for
                                                   interests outside of VA for up      build- ing quarters, are
                                                    to 3 years, or up to 10 years            deposited into the
                                                          for a National Cemetery    Department of the Treasury
                                                  Administra- tion (NCA) property.   as miscellaneous receipts.
                                                                                 Lease pProceeds generated fromor
                                                    mainte- nance, protection, or   outleases of NCA prop- erty
                                                   restoration of the property as   are to be deposited into the
                                                  part of the consideration of the   NCA Facilities Opera- tion
                                                                           lease.    Fund and are available for
                                                                                      costs incurred by NCA for
                                                                                 Licoperations and mainte- nance
                                                   party permission to enter upon     of NCA property. Proceeds
                                                  and do a specific act or series   generated from licenses and
                                                    of acts upon the land without    permits are deposited into
                                                      possessing or acquiring any       the Depart- ment of the
                                                  estate therein. A license can be                    Treasury.
                                                             revoked at any time.

                                                    Permit: Gives another Federal
                                                  agency permission to enter upon
                                                  and do a specific act or series
                                                    of acts upon the land without
                                                      possessing or acquiring any
                                                   estate therein. The permit can
                                                          be revoked at any time.
----------------------------------------------------------------------------------------------------------------
Source: GAO.


    However, legal restrictions associated with implementing some 
authorities affect VA's ability to dispose of and reuse property in 
some locations. For example, legal restrictions limit VA's ability to 
dispose of and reuse property in West Los Angeles and North Hills 
(Sepulveda) California. The Cranston Act of 1988 precluded VA from 
taking any action to dispose of 109 of 388 acres in the West Los 
Angeles medical center and 46 acres of the Sepulveda ambulatory care 
center.\13\ In 1991, when EUL authority was provided to VA, VA was 
prohibited from entering into any EUL relating to the 109 acres at West 
Los Angeles unless the lease was specifically authorized by law or for 
a childcare center.\14\ The Consolidated Appropriations Act of 2008 
expanded the EUL restrictions to include the entire West Los Angeles 
medical center.\15\ The Consolidated Appropriations Act of 2008 also 
prohibits VA from declaring as excess or otherwise taking action to 
exchange, trade, auction, transfer, or otherwise dispose of any portion 
of the 388 acres within the VA West Los Angeles medical center.
---------------------------------------------------------------------------
    \13\ P.L. No. 100-322, Section 421(b)(2), 102 Stat. 487, 553 
(1988).
    \14\ 38 U.S.C. Sec. 8162(c).
    \15\ P.L. No. 110-161, Section 224(a), 121 Stat. 1844, 2272 (2007).
---------------------------------------------------------------------------
    Budgetary and administrative disincentives associated with some of 
VA's available authorities may also limit VA's ability to use these 
authorities to reduce its inventory of underutilized and vacant 
property. For example:

      VA cannot retain revenue that it obtains from outleases, 
revocable licenses, or permits; such receipts must be deposited in the 
Department of the Treasury.\16\ VA has said that, except for EUL 
disposals, restrictions on retaining proceeds from disposal of 
properties are a disincentive for VA to dispose of property.\17\
---------------------------------------------------------------------------
    \16\ 38 U.S.C. Sec. 8122.
    \17\ 38 U.S.C. Sec. 8164.
---------------------------------------------------------------------------
      In 2004, VA was authorized until 2011 to transfer real 
property under its jurisdiction or control and to retain the proceeds 
from the transfer in a capital asset fund for property transfer costs, 
including demolition, environmental remediation, and maintenance and 
repair costs.\18\ In our previous work, we reported several 
administrative and oversight challenges with using capital asset 
funds.\19\ Moreover, VA officials told us that this authority has 
significant limitations on the use of any funds generated by disposal. 
For example, VA officials we spoke with reported that the capital asset 
fund is too cumbersome to be used, and VA does not have immediate 
access to the funds because they have to be reappropriated before VA 
can use them.
---------------------------------------------------------------------------
    \18\ 38 U.S.C. Sec. 8118.
    \19\ GAO, Capital Financing: Potential Benefits of Capital 
Acquisition Funds Can Be Achieved through Simpler Means, GAO-05-249 
(Washington, D.C.: Apr. 8, 2005).
---------------------------------------------------------------------------
      The maximum term for an outlease, according to VHA law, 
is 3 years; according to VA officials, this time limit can discourage 
potential lessees from investing in the property.
      Implementing an EUL agreement can take a long time. 
According to VA officials, EULs are a relatively new tool, and every 
EUL is unique and involves a learning process. In addition, VA 
officials commented that the EUL process can be complicated. According 
to VA officials, the average time it takes to implement an EUL can 
range generally from 9 months to 2 years. The officials noted that land 
due diligence requirements (such as environmental and historic 
reviews), public hearings, Congressional notification, lease drafting, 
negotiation, and other phases contribute to the length of the overall 
process. VA has taken actions to reduce the time it takes to implement 
an EUL agreement, but despite changes to streamline the EUL process, 
some officials stated that it is still time consuming and cumbersome.
      VA can dispose of underutilized and vacant property under 
the McKinney-Vento Act to other Federal agencies and programs for the 
homeless.\20\ However, VA officials stated that disposing of property 
under the McKinney-Vento Act also can be time-consuming and 
cumbersome.\21\ According to VA officials, the process can average 2 
years. Under this law, all properties that the Department of Housing 
and Urban Development deems suitable for use by the homeless go through 
a 60-day holding period, during which the property is ineligible for 
disposal for any other purpose. Interested representatives of the 
homeless submit to the Department of Health and Human Services (HHS) a 
written notice of their intent to apply for a property for homeless use 
during the 60-day holding period. After applicants have given notice of 
their intent to apply, they have up to 90 days to submit their 
application to HHS, and HHS has the discretion to extend the timeframe 
if necessary. Once HHS has received an application, it has 25 days to 
review, accept, or decline the application.
---------------------------------------------------------------------------
    \20\ VA properties that are leased to another party under an EUL 
are not considered to be unutilized or underutilized for purposes of 
the McKinney-Vento Act (see 38 U.S.C. Sec. 8162).
    \21\ We have reported elsewhere on this process. See GAO, Federal 
Real Property: Most Public Benefit Conveyances Used as Intended, but 
Opportunities Exist to Enhance Federal Oversight, GAO-06-511 
(Washington, D.C.: June 21, 2006).

    Furthermore, according to VA officials, VA may not receive 
compensation from agreements entered into under the McKinney-Vento Act.
    Despite these challenges, VA has used these legal authorities to 
help reduce its inventory of unneeded space. In 2008, we reported that 
VA reduced underutilized space (i.e., space not used to full capacity) 
in its buildings by approximately 64 percent from 15.4 million square 
feet in fiscal year 2005 to 5.6 million square feet in fiscal year 
2007.\22\ Although the number of vacant buildings decreased over the 
period, the amount of vacant space remained relatively unchanged at 7.5 
million square feet. We estimated VA spent $175 million in fiscal year 
2007 operating underutilized or vacant space at its medical 
facilities.\23\
---------------------------------------------------------------------------
    \22\ See GAO-08-939. The underutilized square footage numbers that 
we report are different from those that VA reports. Our analysis only 
included underutilized square feet, whereas when VA measures its rate 
of utilization, it adds together underutilized square feet and 
overutilized square feet (additional square feet needed at a facility).
    \23\ GAO developed this estimate because VA does not track the cost 
of operating underutilized and vacant building space at the building 
level and has not developed a reliable method for doing so.
---------------------------------------------------------------------------
    While VA's use of various legal authorities, such as EULs and 
sharing agreements, likely contributed to VA's overall reduction of 
underutilized space since fiscal year 2005, VA does not track the 
overall effect of using these authorities on its space reductions. 
Without such information, VA does not know what effect these 
authorities are having on its effort to reduce underutilized or vacant 
space or which types of authorities have the greatest effect. We 
concluded that further reductions in underutilized and vacant space 
will largely depend on VA developing a better understanding of why 
changes occurred and what impact these agreements had. Therefore, we 
recommended in our 2008 report that VA track, monitor, and evaluate 
square footage reductions and financial and nonfinancial benefits 
resulting from new agreements at the building level by fiscal year in 
order to better understand the usefulness of these authorities and 
their overall effect on VA's inventory of underutilized and vacant 
property from year to year.\24\ The officials said that tracking 
financial benefits will require a real property cost accounting system 
which VA is in the process of developing. According to VA officials, VA 
will institute a system in June 2009 that will track square footage 
reductions at the building level, but the system will not track 
financial benefits at this level.
---------------------------------------------------------------------------
    \24\ GAO-08-939.
---------------------------------------------------------------------------
    Mr. Chairman, this concludes my prepared statement. I would be 
pleased to respond to questions from you or other Members of the 
Subcommittee.

GAO Contact and Staff Acknowledgments
    For further information on this statement, please contact Mark L. 
Goldstein at (202) 512-2834 or [email protected]. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this statement. Individuals making key 
contributions to this testimony were Nikki Clowers, Hazel Gumbs, Edward 
Laughlin, Susan Michal-Smith, and John W. Shumann.

                                 
                Prepared Statement of Donald H. Orndoff,
    AIA Director, Office of Construction and Facilities Management,
                  U.S. Department of Veterans Affairs

    Mr. Chairman and Members of the Committee, I am pleased to appear 
today to discuss the status of the Department of Veteran Affairs' (VA) 
health care infrastructure, our strategic facilities planning process, 
our facility design objectives, our acquisition strategies, and our 
proposed Fiscal Year 2010 budget. Joining me today are Brandi Fate, 
Director of the Veterans Health Administration's (VHA's) Office of 
Capital Asset Management and Planning Service; James M. Sullivan, 
Director of VA's Office of Asset Enterprise Management; and Lisa 
Thomas, Ph.D., FACHE, Director of VHA's Office of Strategic Planning 
and Analysis.

Current Medical Infrastructure
    VA has a real property inventory of more than 5,400 owned 
buildings, 1,300 leases, 33,000 acres of land and approximately 159 
million gross square feet (owned and leased). The average age of VA 
facilities is well over 50 years. Our older facilities were not 
designed to meet the changing demands of clinical care in the 21st 
century. Therefore, VA's continuing program of recapitalization of 
these aging assets is very important to providing world-class health 
care to veterans now and into the future.

Current Major Construction Program
    The Department is currently implementing its largest capital 
investment program since the immediate post-World War II period. Since 
2004, VA has received appropriations totaling $4.6 billion for health 
care projects, including 51 major construction projects for new or 
improved facilities across the Nation. These projects include new and 
replacement medical centers; polytrauma rehabilitation centers, spinal 
cord injury centers; ambulatory care centers; new inpatient nursing 
units; and projects to improve the safety of VA facilities. Thirty-six 
of the 51 projects have been fully funded at a total cost of 
approximately $3.1 billion. The remaining 15 projects have received 
partial funding totaling $1.6 billion against a total estimated cost of 
$4.5 billion. For these larger projects, VA requests design and 
construction funding in increments aligned with the projected multi-
year acquisition schedule.

Background: CARES
    In 2000, the Veterans Health Administration (VHA) embarked on the 
Capital Asset Realignment for Enhanced Services (CARES) process to 
provide a data-driven assessment of veterans' health care needs and to 
guide the strategic allocation of capital assets to support delivery of 
health care services over the next 20 years. The CARES program assessed 
veterans' health care needs in each Veterans Integrated Service Network 
(VISN), identified service delivery options to meet those needs, and 
promoted strategic realignment of capital assets to satisfy identified 
needs. The goal was to improve access and quality of health care in the 
most cost effective manner, while mitigating impacts on staffing, 
communities, and on other VA missions.
    VA began the CARES process in 2000 with a regional pilot, then in 
2002 expanded nationally. In 2003, VA released its Draft National CARES 
plan and created the CARES Commission, an independent panel established 
to review VA's plans. The Secretary published his decisions in May 2004 
and identified 18 sites whose complexity warranted additional study. VA 
completed these studies in May 2008. One output of the CARES process is 
the development of a Five-Year Capital Plan that lists and ranks 
specific major construction projects.

Today: Strategic Facilities Planning Process
    The lessons learned through CARES are now incorporated into VA's 
strategic health care and facilities planning process. VHA no longer 
distinguishes between CARES and non-CARES planning as the tools and 
techniques acquired through CARES have become part of our standard 
operating procedures for strategic planning within our health care 
system.
    VA uses a multi-characteristic decision methodology in prioritizing 
its capital investment needs. Appropriate ``joint'' VA-DoD projects are 
evaluated to promote sharing and efficiency opportunities. Through this 
strategic facilities planning process, VA annually updates its Five-
Year Capital Plan, which supports the development of VA's annual 
capital acquisition funding request.
    VHA employs its Health Care Planning Model to strategically assess 
demographic data, anticipated workload, and actuarial projections for 
health care services. VHA compares this data to its capital asset 
inventory to identify gaps in capability. To close gaps, VHA develops 
investment solutions that may become capital infrastructure projects. 
All proposed projects undergo thorough cost effectiveness, risk, and 
alternatives analyses.
    The Department's Capital Investment Panel (CIP) reviews, scores, 
and priority ranks potential projects based on criteria considered 
essential to providing high-quality health care services. The scoring 
criteria include enhancement of service delivery, meeting workload 
projections, safeguarding assets, supporting special emphasis programs, 
addressing capital asset management priorities, promoting department 
alignment, and eliminating facility deficiencies. The CIP integrates 
both new and existing program requirements into a single prioritized 
project list.
    The CIP reports its analysis to the Strategic Management Council 
(SMC) for review. The SMC is VA's governing body responsible for 
overseeing VA's capital programs and initiatives. The SMC submits its 
recommendations to the Secretary, who makes the final decision on which 
projects to include in the budget.

Project Design Goal: High-Performance Medical Facilities
    New VA medical facilities will contribute to world-class health 
care for veterans today, tomorrow, and well into the 21st century. Our 
design goal is to deliver high-performance buildings that are:

      Functional, providing cutting-edge clinical spaces that 
leverage the latest medical technologies to produce the highest 
possible health care outcomes.
      Cost efficient, incorporating evidence-based design for 
clinical spaces that are efficiently sized and configured to maximize 
clinical capability for invested capital.
      Veteran-centric, placing special emphasis on design that 
is veteran patient and family centered. Buildings welcome patients and 
visitors with effective way finding, open circulation and waiting 
areas, and expected amenities.
      Adaptable, creating buildings that will serve generations 
of veterans not yet born. Our buildings must be flexible to adapt and 
support continual changing clinical practices, advancing technology, 
and medical research. Buildings are designed with engineering systems 
organized in interstitial levels between occupied floors to enable 
rapid and less expensive reconfiguration of clinical spaces.
      Sustainable, setting a standard of designing our medical 
centers to a minimum Leadership in Environmental and Energy Design 
(LEED) Silver level as defined by the U.S. Green Building Council, and 
following all relevant Executive Orders, including the High Performance 
& Sustainable Buildings Guidance required under E.O. 13423.
      Energy efficient, designing new facilities to meet or 
exceed energy reduction targets of the Energy Policy Act of 2005 and 
related Executive Orders, shrinking energy use 30 percent below 
American Society of Heating, Refrigerating and Air-Conditioning 
Engineers (ASHRAE) standards. VA is committed to incorporating 
renewable energy technologies in the design of new or renovated 
facilities.
      Physically secure, ensuring medical facilities are 
designed to fully comply with stringent physical security guidelines 
for mission critical, high-occupancy Federal facilities. This includes 
hardened structures, perimeter and access control, redundancy and 
modularity. Water storage, emergency power, and fuel supplies are sized 
to enable continued health care operations for 4 days in the face of 
natural or man-made disaster.

Acquisition Strategies
    VA uses a range of acquisition tools that are tailored to best 
satisfy the unique requirements of each project.
    For design acquisition, VA selects partners through a targeted 
Architect/Engineer (A/E) contract solicitation. Our selection process 
values past performance and experience on health care projects of 
similar complexity. We carefully evaluate the experience and 
capabilities of the key members of the proposed design team. We require 
our design partners to leverage the power of Building Information 
Modeling (BIM) as a common communication and collaboration tool. We 
engage peer review from separate A/E firms to assist the owner's review 
of proposed design solutions in meeting required design criteria and 
standards.
    For construction acquisition, VA uses a range of contract vehicles, 
including:

      Design-Bid-Build, where we fully develop the project 
design and use best value selection process, which assesses both 
technical and cost proposals. We typically use this contract vehicle 
for large, complex medical facility projects, such as large medical 
clinics.
      Design-Build, where a single contractor performs both the 
design development and the construction. We typically use this approach 
for smaller, less complex projects, such as parking structures.
      Integrated Design-Construct, where we bring the general 
contractor on board early in the design process, initially performing 
construction management functions, then construction work as design 
packages become available. This is VA's version of CM@Risk approach 
that is widely used in the private sector of the construction industry. 
We plan to use this use approach on our largest, most complex projects, 
such as new medical centers.
      Operating Leases, where we engage a developer to act as 
owner, designer, and constructor of ``build to suit'' leases. VA pays 
annual lease payments for terms up to 20 years. We typically use this 
strategy for smaller projects where VA does not currently own property, 
such as outpatient clinics.
      Construction Management, where we augment our capacity to 
perform the important owner role for cost analysis, schedule control, 
and field testing. We typically use CM support on larger, more complex 
projects, such as new medical centers.

    VA is a leader among Federal agencies in meeting socio-economic 
goals for small business categories. We place special emphasis on 
contracting with veteran-owned businesses, especially service disabled 
veteran-owned businesses.

Fiscal Year 2010 Request
    VA's FY10 budget request continues our recapitalization effort 
supported by our strategic facilities planning process.
    VA requests $1.1 billion in FY 2010 for major construction to 
replace or enhance VA medical facilities. Of this amount, $649 million 
provides construction funding for five ongoing projects at Denver, CO; 
Orlando, FL; San Juan, PR; St. Louis (JB), MO; and Bay Pines, FL. 
Another $211 million will design seven new projects at Livermore, CA; 
Canandaigua, NY; San Diego, CA; Long Beach, CA; St. Louis (JC), MO; 
Brockton, MA; and Perry Point, MD. The remainder of the major 
construction request will provide funds for advance planning, facility 
security, judgment fund and land acquisition needs.
    VA requests $196 million authorization for 15 new major medical 
leases. Lease projects are located at Anderson, SC; Atlanta, GA; 
Bakersfield, CA; Birmingham, AL; Butler, PA; Charlotte, NC; 
Fayetteville, NC; Huntsville, AL; Kansas City, KS; Loma Linda, CA; 
McAllen, TX; Monterey, CA; Montgomery, AL; Tallahassee, FL; and 
Winston-Salem, NC.

Conclusion
    In closing, I thank the Committee for its continued support to 
improve the Department's physical infrastructure to meet the changing 
needs of America's veterans. We look forward to continuing to work with 
the Committee on these important issues. Thank you for the opportunity 
to appear before the Committee today. My colleagues and I stand ready 
to answer your questions.

          POST-HEARING QUESTIONS AND RESPONSES FOR THE RECORD

                                     Committee on Veterans' Affairs
                                             Subcommittee on Health
                                                    Washington, DC.
                                                      June 18, 2009

Honorable Eric K. Shinseki
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, D.C. 20420

Dear Secretary Shinseki:

    Thank you for the testimony of Donald H. Orndoff, Director of the 
Office of Construction and Management at the U.S. House of 
Representatives Committee on Veterans' Affairs Subcommittee on Health 
Oversight Hearing on ``Assessing CARES and the Future of VA's Health 
Infrastructure'' that took place on June 9, 2009.
    Please provide answers to the following questions by July 30, 2009, 
to Jeff Burdette, Legislative Assistant to the Subcommittee on Health.

    1.  How does VA collaborate and coordinate with Federal Qualified 
Health Care Centers to increase the access points for obtaining health 
care?

    2.  In their testimony, GAO highlighted that VA has a variety of 
legal authorities to manage real property, but does not track how using 
them contributes to the reduction in underutilized property. What is 
your response?

    3.  Since the release of the May 2004 CARES report, has VA 
delivered on the CARES promise?
      a.  Which decisions has VA implemented and which have yet to be 
implemented? What are the reasons for the delay in moving forward with 
the decisions which have not been implemented, to date?
      b.  Which CARES decisions has VA changed course on? What are the 
reasons for this reversal?

    4.  The prolonged implementation process leads to a great deal of 
uncertainty about the future of the facility so that it leads to staff 
retention issues and, more importantly, leaves our veterans without 
access to a health care facility. What is your response to these 
concerns? What steps is VA taking to ensure timely construction of VA 
medical facilities?

    5.  How much did VA spend to develop the CARES report? At the time 
of the CARES report, did VA estimate the funding needed to fully 
implement each of the capital planning decisions for inpatient and 
outpatient care? How much has VA spent, to date, on the implementation 
of the CARES decision? What additional funding is needed to complete 
the implementation of the CARES decision?

    6.  VA's testimony states that ``the tools and techniques acquired 
through CARES'' have been integrated into VA's standard operating 
procedure with regard to strategic planning. How has this process 
changed from before CARES?

    7.  VA's testimony stresses the importance of ensuring that VA 
facilities are adaptable so that they may seamlessly accommodate the 
development of new clinical practices and technology. Can you elaborate 
on how VA ensures that its facilities meet this standard of 
flexibility?

    Additionally, please answer the following question from Congressman 
Joe Donnelly for Lisa Thomas, Director of the Veterans Health 
Administration's Office of Strategic Analysis and Planning.
    Dr. Lisa Thomas, I am a firm believer in optimizing health care and 
making sure veterans get the most accessible, highest-quality care we 
can give them with the resources with which we are entrusted. 
Accessibility to specialty care is an issue of particular concern to my 
district and to many districts nationwide. For example, St. Joseph 
County in my district has a population of more than a quarter million 
people, yet area veterans must too often drive more than 2 hours each 
way to get to the nearest VA hospital for specialty care. While there 
is an excellent outpatient clinic in South Bend, it is unable to 
provide many needed services.
    I am very pleased that the VA will open a new expanded health 
center in South Bend for outpatient and specialty care in 2012. The 
authorized facility will be 60-70,000 square feet and more than 10 
times bigger than our current CBOC. The outpatient facility will 
provide comprehensive examination services in cardiology, podiatry, 
outpatient surgery and other medical specialties, wellness programs and 
ultrasound exams. Special services will also be available for newly 
returning veterans from Iraq and Afghanistan. Further, VA will contract 
with local hospitals in the South Bend area to provide inpatient 
services for area veterans.
    I would like to know if the arrangement announced for South Bend 
might be a model that constitutes future health care that the VA plans 
to expand on as it looks in the near and long-term for opportunities to 
provide enhanced quality care and greater access to veterans?
    What is the future of enhanced use lease agreements as it pertains 
to strategic planning and please elaborate on these agreements' worth 
to VA and possible uses in the future?
    Thank you again for taking the time to answer these questions. The 
Committee looks forward to receiving your answers by July 30, 2009.

            Sincerely,

                                                 MICHAEL H. MICHAUD
                                                           Chairman

                               __________

                        Questions for the Record
               The Honorable Michael H. Michaud, Chairman
      Subcommittee on Health, House Committee on Veterans' Affairs
                              June 9, 2009
      Accessing CARES and the Future of VA's Health Infrastructure

    Question 1: How does VA collaborate and coordinate with Federal 
Qualified Health Care Centers to increase the access points for 
obtaining health care?

    Response: When the Department of Veterans Affairs (VA) identifies 
an area with a demonstrated health care need and engages to expand care 
in that area, the method for care delivery is determined at the local 
level, and avenues for delivery of care are considered to close the 
service gap. The range of initiatives include providing direct care 
through VA staffed clinics and telehealth, as well as purchasing 
services with local providers. When the decision is made to purchase 
care, VA considers all eligible available health care provider options, 
including Federal Qualified Health Centers (FQHC), to meet the health 
care needs of veterans living in rural and highly rural areas. In the 
majority of instances, service delivery decisions are made at the local 
level.
    Although the service delivery decisions are made at the local 
level, Office of Rural Health (ORH) has collaborated with the Veterans 
Integrated Service Networks (VISN) and recently funded two projects (in 
executing of appropriations provided under Public Law 110-329) that 
collaborate with FQHCs to increase access points to health care.
    The Veterans Health Administration (VHA) Office of Geriatrics and 
Extended Care (GEC) was awarded funding to implement a national 
initiative to expand Home-Based Primary Care (HBPC) to Community-Based 
Outpatient Clinics (CBOC). This initiative will support implementation 
of HBPC in rural and highly rural CBOCs and non-VA community clinics, 
located across VA's health care system. The expanded service delivery 
will help to address issues of access and quality of health care for 
some of our most medically complex veterans. Of the chosen sites, GEC 
proposes to co-locate their HBPC satellite team in FQHCs and 
cooperatively recruit staff when feasible.
    ORH also awarded funding to VISN 1 for an initiative to extend 
telemental health in rural Vermont. This initiative will create a 
partnership with non-Federal entities through a community-based 
telemental health program and provide access to specialized VA mental 
health services for veterans where travel to a CBOC is difficult or 
prohibitive. Services will be provided within existing non-VA community 
primary care practices in the most rural and inaccessible areas of 
Vermont and New Hampshire. Interactive audiovisual telecommunications 
will be used to provide direct care to veterans as well as educate 
local providers to enhance their ability to recognize veteran-specific 
psychological difficulties. The first year will pilot a telemental 
health link between the White River Junction VA medical center to a 
FQHC and a community mental health center in Northern Vermont. During 
the second year, another FQHC will be added in Northern Vermont along 
with an additional site in New Hampshire. Application of the model to 
other clinics will be assessed during the second year.
    ORH fully supports increasing access points and has implemented 
several other initiatives to address the needs of veterans in rural 
areas. Ongoing initiatives include the four rural mobile health clinics 
located in VISNs 1, 4, 19, and 20, as well as the network of outreach 
clinics that serve to increase the access to health care for thousands 
of veterans across the country.
    VA and ORH will continue to develop relationships with experts in 
rural health and in veterans' health to explore, assess, and develop 
collaborative approaches to providing services for veterans in rural 
areas.

    Question 2: In their testimony, GAO highlighted that VA has a 
variety of legal authorities to manage real property, but does not 
track how using them contributes to the reduction in underutilized 
property. What is your response?

    Response: VA uses its various legal authorities for managing its 
real property, such as enhanced-used leasing (EUL) and disposal 
authority. VA then tracks the property reductions through the EUL 
report and the EUL and disposal sections of the capital plan in the 
annual budget submissions.
    GAO in its report entitled Federal Real Property: Progress Made in 
Reducing Unneeded Property, but VA Needs Better Information to Make 
Further Reductions (GAO-08-939) recommended that VA track, monitor, and 
evaluate square footage reductions and financial and non-financial 
benefits when recording new agreements as of FY 2008. VA agreed with 
GAO's recommendation and VA does track revenue generated, square 
footage reductions, and services received through agreements, although 
this is not accomplished systematically. VA produces an annual report 
on EULs for Congress that describes the financial and non-financial 
impacts of its EULs. The report includes estimates of the amount of 
money VA saves on purchasing energy and parking and the value of new 
services available to veterans or employees as a result of EULs. 
However, VA does not conduct a similar analysis for other types of 
agreements, which greatly outnumber the EULs and VA's data systems do 
not provide information on the non-financial benefits it receives from 
those agreements. VA will track, monitor, maintain and evaluate square 
foot reductions and financial and non-financial benefits resulting from 
agreements for FY 2008 and beyond second quarter FY 2009 to ascertain 
the cumulative effect of its authorities on underused and vacant 
property square footage. We will identify baseline space for the 
buildings and metrics for reductions resulting from agreements.


----------------------------------------------------------------------------------------------------------------
                                                                       Planned       Actual
                             Milestone                                 Complete     Complete         Status
----------------------------------------------------------------------------------------------------------------
Identify buildings and agreements                                      3/3/2009    3/30/2009           Complete
  for tracking
----------------------------------------------------------------------------------------------------------------
Establish baseline space and costs                                    5/30/2009    5/30/2009           Complete
  for buildings to be tracked
----------------------------------------------------------------------------------------------------------------
Establish reporting and analysis for                                  9/30/2009                      Pending BI
  building impacts resulting from                                                               release 1.5 and
  agreements                                                                                        CAI upgrade
----------------------------------------------------------------------------------------------------------------
Collect detailed building level costs                                 9/30/2012                       Pending FLITE
  for tracking agreement impact                                                                  implementation
----------------------------------------------------------------------------------------------------------------


    Disposal of underutilized space is a major focus area in VA 5-year 
disposal plans. VA issues a yearly call for disposals, identifying 
underused and non-mission dependent buildings as potential disposals to 
the field/Administrations. As summarized below, over the period FY 2009 
through FY 2013, VA plans to dispose of 414 buildings (7,145,741 square 
feet) and 313.5 acres of land.


----------------------------------------------------------------------------------------------------------------
                                          VA Disposal Plan FY 2009-2013
-----------------------------------------------------------------------------------------------------------------
                                           Planned                        Total #                      Planned
                   FY                     Buildings     Total Planned       Land       Total Acres    Disposals
                                           Total #           GSF          Parcels                      Total #
----------------------------------------------------------------------------------------------------------------
2009                                            139         2,109,466            7          175.46          146
----------------------------------------------------------------------------------------------------------------
2010                                             78           765,853            2           66.00           80
----------------------------------------------------------------------------------------------------------------
2011                                            111         1,678,038            1           60.00          112
----------------------------------------------------------------------------------------------------------------
2012                                             55           827,293            1           12.00           56
----------------------------------------------------------------------------------------------------------------
2013                                             31         1,765,091            0               0           31
----------------------------------------------------------------------------------------------------------------
  Total:                                        414         7,145,741           11          313.46          425
----------------------------------------------------------------------------------------------------------------


    Question 3(a): Since the release of the May 2004 CARES report, has 
VA delivered on the CARES promise? Which decisions has VA implemented 
and which have yet to be implemented? What are the reasons for the 
delay in moving forward with the decisions which have not been 
implemented, to date?

    Response: VA has made significant progress since 2004 and continues 
to plan for health care delivery improvements. Since the publication of 
the Capital Asset Realignment for Enhanced Services (CARES) Decision 
document in 2004, VA has increased access to primary care, decreased 
the amount of excess space, and increased the number of special 
disability programs for veterans. CARES decisions have been delayed for 
the purposes of additional study and as limited resources have required 
the prioritization of projects based on service delivery goals.
    Further information on the status of individual CARES decisions 
will be provided in the CARES Implementation Monitoring Report, which 
is pending release.

    Question 3(b): Which CARES decisions has VA changed course on? What 
are the reasons for this reversal?

    Response: CARES identified capital and program requirements at a 
macro level using health care demand projections for services such as 
inpatient medicine, surgery and psychiatry, and outpatient primary 
care, mental health, and specialty care. As analyses of the decisions 
continued from an operational perspective using updated data, some 
CARES decisions changed based on feasibility and access improvements 
where the need was greatest. Further information on the status of 
individual CARES decisions will be provided in the CARES Implementation 
Monitoring Report.

    Question 4: The prolonged implementation process leads to a great 
deal of uncertainty about the future of the facility so that it leads 
to staff retention issues and, more importantly, leaves our veterans 
without access to a health care facility. What is your response to 
these concerns? What steps is VA taking to ensure timely construction 
of VA medical facilities?

    Response: Once major construction projects are approved for design, 
VA is committed to fully funding to completion. There are various 
reasons the construction appears and realistically is delayed:

      The design phase takes approximately 18 to 24 months; 
therefore, the construction funds typically follow 2 years after the 
design year.
      Based on the complexity of the construction and 
associated equipment, contractors may require the project to be broken 
into phases, with each phase being funded in annual increments.
      It is expected that the phases listed in VA's major 
construction budget submission be awarded by year's end. This requires 
only those buildings and structures that can be obligated by September 
2009 be included, which is why we have projects that only construct the 
energy center and/or parking garage.

    It is VA's intent to fully fund all major construction projects as 
quickly as possible to ensure the most economical cost for each 
project.

    Question 5: How much did VA spend to develop the CARES report? At 
the time of the CARES report, did VA estimate the funding needed to 
fully implement each of the capital planning decisions for inpatient 
and outpatient care? How much has VA spent, to date, on the 
implementation of the CARES decision? What additional funding is needed 
to complete the implementation of the CARES decision?

    Response: VA engaged in six contracts to assist the agency in 
developing the CARES process and report. The total cost of these 
contracts was approximately $18 million. The additional costs of staff 
resources spent on CARES were not tracked; therefore a total of VA 
resources spent to develop the CARES report are not available.
    In the 2004 CARES Decision document, it was estimated that 
implementing CARES decisions would require an additional investment of 
approximately $1 billion per year for at least the next 5 years. 
Through FY 2008, VA has obligated approximately $2.4 billion on 
implementing construction projects identified in the 2004 CARES 
Decision document and in 17 business plan study decisions. An estimate 
for additional funding needed to complete the implementation of these 
decisions is approximately $3 billion.

    Question 6: VA's testimony states that ``the tools and techniques 
acquired through CARES'' have been integrated into VA's standard 
operating procedure with regard to strategic planning. How has this 
process changed from before CARES?

    Response: Through the CARES process, VA adapted its actuarial model 
to produce 20-year forecasts of the demand for veteran health care 
services. Ongoing updates allow for more accurate projections of 
veteran reliance on VA services. The data from the model is used to 
identify gaps between current and projected demand in services within 
each market using the health care planning model (HCPM) implemented as 
part of the 2008 VHA strategic planning guidance cycle. The 10-step 
HCPM planning model facilitates the planning of strategic initiatives 
to address the projected gaps. The initiatives include contracting for 
services, facility expansions, Department of Defense (DoD) 
collaboration, and other initiatives developed as a result of the CARES 
process.
    As part of the annual VHA strategic planning guidance cycle, a 
methodology was developed to identify strategic locations for CBOCs and 
other health care delivery approaches across the system. The 
methodology evaluates the convergence of low access (measured by drive 
time guidelines for primary care services as established by the CARES 
process) and increasing projected demand for primary care and mental 
health services. The methodology guides the initial step in the CBOC 
approval process and/or in planning for the provision of health care 
through other solutions.

    Question 7: VA's testimony stresses the importance of ensuring that 
VA facilities are adaptable so that they may seamlessly accommodate the 
development of new clinical practices and technology. Can you elaborate 
on how VA ensures that its facilities meet standards of flexibility?

    Response: Although health care facilities are inherently more 
complex and less adaptable than other building types such as office 
buildings, VA makes every effort to plan for the inevitable change that 
occurs due to new advances in health care, technology, and changes in 
patient populations that occur over the life of a VA medical facility. 
VA has instituted a rigorous focus on the planning phase of new 
projects, so that projected change and growth over the next 20 years is 
accounted for at the beginning. This planning reviews the requirements 
for accommodating the changes in functional space use within the 
building as well as land for expansion so that its new facilities can 
accommodate future needs.
    VA's design and construction specifications require that mechanical 
systems, equipment rooms, component arrangements, and pipe and ducts be 
sized for change and to accommodate future growth. Where possible, VA 
incorporates the VA hospital building system, which provides for 
greater flexibility by modular design with accessible interstitial 
mechanical space in a level above occupied space for distribution of 
engineering services, allowing maintenance, repair, and mechanical 
system changes to be made without disrupting activities on the occupied 
floor below.

                                 
                       The Honorable Joe Donnelly

    Question 1: Dr. Lisa Thomas, I am a firm believer in optimizing 
health care and making sure that veterans get the most accessible, 
highest-quality care we can give them with the resources with which we 
are entrusted. Accessibility to specialty care is an issue of 
particular concern to my district and to many districts nationwide. For 
example, St. Joseph County in my district has a population of more than 
a quarter million people, yet area veterans must too often drive more 
than 2 hours each way to get to the nearest VA hospital for specialty 
care. While there is an excellent outpatient clinic in South Bend, it 
is unable to provide many needed services. I am very pleased that the 
VA will open a new expanded health center in South Bend for outpatient 
and specialty care in 2012. The authorized facility will be 60-70,000 
square feet and more than 10 times bigger than our current CBOC. The 
outpatient facility will provide comprehensive examination services in 
cardiology, podiatry, outpatient surgery and other medical specialties, 
wellness programs and ultrasound exams. Special services will also be 
available for newly returning veterans from Iraq and Afghanistan. 
Further, VA will contract with local hospitals in the South Bend area 
to provide inpatient services for area veterans. I would like to know 
if the arrangement announced for South Bend might be a model that 
constitutes future health care that the VA plans to expand on as it 
looks in the near and long-term for opportunities to provide enhanced 
quality care and greater access to veterans?

    Response: VA has a comprehensive strategic planning process for 
actively identifying and appropriately planning for the full continuum 
of veteran health care needs. The expanded health care center in South 
Bend is just one example of VA initiatives that enhance the quality of 
and access to health care for veterans.

                                 
