[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
CARE WHERE IT COUNTS: ASSESSING VA'S CAPITAL ASSET NEEDS
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HEARING
BEFORE THE
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
WEDNESDAY, JULY 12, 2017
__________
Serial No. 115-22
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Printed for the use of the Committee on Veterans' Affairs
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Available via the World Wide Web: http://www.fdsys.gov
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COMMITTEE ON VETERANS' AFFAIRS
DAVID P. ROE, Tennessee, Chairman
GUS M. BILIRAKIS, Florida, Vice- TIM WALZ, Minnesota, Ranking
Chairman Member
MIKE COFFMAN, Colorado MARK TAKANO, California
BRAD R. WENSTRUP, Ohio JULIA BROWNLEY, California
AMATA COLEMAN RADEWAGEN, American ANN M. KUSTER, New Hampshire
Samoa BETO O'ROURKE, Texas
MIKE BOST, Illinois KATHLEEN RICE, New York
BRUCE POLIQUIN, Maine J. LUIS CORREA, California
NEAL DUNN, Florida KILILI SABLAN, Northern Mariana
JODEY ARRINGTON, Texas Islands
JOHN RUTHERFORD, Florida ELIZABETH ESTY, Connecticut
CLAY HIGGINS, Louisiana SCOTT PETERS, California
JACK BERGMAN, Michigan
JIM BANKS, Indiana
JENNIFFER GONZALEZ-COLON, Puerto
Rico
Jon Towers, Staff Director
Ray Kelley, Democratic Staff Director
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
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Wednesday, July 12, 2017
Page
Care Where It Counts: Assessing VA's Capital Asset Needs......... 1
OPENING STATEMENTS
Honorable David P. Roe, Chairman................................. 1
Honorable Timothy J. Walz, Ranking Member........................ 2
WITNESSES
The Honorable Anthony Principi, Former Secretary , U.S.
Department of Veterans Affairs................................. 4
Prepared Statement........................................... 35
Roscoe G. Butler, Deputy Director for Health Care, Veterans
Affairs and Rehabilitation Division, The American Legion....... 6
Prepared Statement........................................... 36
Debra Draper, Director, Health Care Team, Government
Accountability Office.......................................... 7
Prepared Statement........................................... 38
James M. Sullivan, Director, Office of Asset Enterprise
Management, U.S. Department of Veterans Affairs................ 9
Prepared Statement........................................... 44
Accompanied by:
Regan Crump MSN, DrPH, Assistant Deputy Under Secretary for
Health, Policy, and Planning, Veterans Health
Administration, U.S. Department of Veterans Affairs
CARE WHERE IT COUNTS: ASSESSING VA'S CAPITAL ASSET NEEDS
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Wednesday, July 12, 2017
Committee on Veterans' Affairs,
U. S. House of Representatives,
Washington, D.C.
The Committee met, pursuant to notice, at 10:00 a.m., in
Room 334, Cannon House Office Building, Hon. David P. Roe
[Chairman of the Committee] presiding.
Present: Representatives Roe, Coffman, Wenstrup, Poliquin,
Higgins, Bergman, Banks, Gonzalez-Colon, Walz, Takano,
Brownley, Kuster, O'Rourke, Rice, and Correa.
OPENING STATEMENT OF DAVID P. ROE, CHAIRMAN
The Chairman. Good morning, and the Committee will come to
order. Welcome and thank you all for joining us at today's
hearing entitled, Care where it Counts: Assessing the
Department of Veterans Affairs' Capital Asset Needs.
Though this morning's hearing is ostensibly about VA's
management of its extensive capital asset portfolio, it is
actually about something else altogether: patient care. VA is
one of the Federal government's largest property holding
entities with a capital asset portfolio that includes thousands
of medical facilities spanning hundreds of millions of square
feet in both owned and leased space across the country.
Managing and maintaining those properties and aligning them to
meet the ever changing shifts in patient population and in
healthcare demand and delivery is increasingly complex and
costly. And I might add that the private sector is doing the
same thing with bricks and mortar because of how medicine's
practice today is changing.
The average VA medical facility building is five times
older than the average building in a not for profit hospital
system in this country and was designed and built to meet very
different healthcare needs and delivery models than we see
today. The consequences of this have been well documented in
recent years by entities including the independent assessment,
the Commission on Care, and the Government Accountability
Office. All too often current facilities, including those that
have been well maintained, are not equipped to support the
provisions of modern high quality care and are not well suited
to providing care in the current VA healthcare system. VA does
not consistently allocated capital to projects that address the
greatest areas of veteran needs in the most cost effective and
timely manner. There is a wide and growing gap between VA's
capital need and the antiquated and anticipated resources. And
previous efforts to align and realign VA capital assets have
failed.
What is more, due to shifts in the veteran population VA
spends millions of dollars, taxpayer dollars, every year
maintaining buildings that are empty or largely so. That led
the Commission on Care to include this startling statement in
their final report last year, and I quote, ``VHA's principal
mission is to provide healthcare to veterans, yet over time has
acquire an ancillary mission, caretaker of an extensive
portfolio of vacant buildings.'' That is an extraordinary
statement. VA's primary mission is caring for veterans and it
is those veterans, those veteran patients, who bear the brunt
of the consequences of VA's lack of physical infrastructure.
We can no longer continue to allow VA's outdated,
inflexible, and ill-suited capital asset program to compromise
the department's core mission and the care provided to millions
of our veterans. That is why I am calling this morning a top to
bottom review of all VA Health Administration capital assets.
This is not something for the VA or her champions to fear. As
one of our witnesses, former VA Secretary Anthony Principi will
testify this morning, quotes, ``VA will fail to honor our
Nation's commitment to its veterans if VA's medical systems do
no evolve with the times.''
Rather than continuing to invest valuable resources on
infrastructure in many cases long past its prime, we need to
take an objective view of all VA medical facilities and smartly
plan for where and how we can divest of buildings and property
that are no longer needed, and more importantly for where and
how we can grow to ensure that VA medical facilities maintain
strong assets in communities across the country and are
equipped to provide the care and services veterans need.
As the veteran population continues to shift, care
continues to evolve. VA's infrastructure continues to age and
veteran demand for care in the community continues to grow. A
capital asset review and realignment free of political
influence is critical to ensuring that the VA healthcare system
remains strong and sustainable for veterans today and tomorrow.
I will now yield to Ranking Member Walz for any opening
statements that he may have.
OPENING STATEMENT OF TIMOTHY J. WALZ, RANKING MEMBER
Mr. Walz. Well I thank the Chairman, and I want to thank
our distinguished panel. And Secretary Principi, it is great to
have you back and I think it is worth noting there is probably
no one else in America knows the very issue we are going to
talk about today more than you. And we are grateful you would
find the time to come and help us with this.
I would also like to thank the Chairman. I know it goes
against my Minnesota Lutheran roots to, if you do a good deed
and talk about it, it does not count, is the way we see these
things. But I am going to talk about it. I think it has become
obvious in the short time of this new Congress that this
Committee is committed to tackling the big issues, to finding
bipartisan issues, and to getting them done. And I am certainly
glad that this is one the Chairman decided to take on also. It
is important.
It is a complex and vast issue plaguing VA's ability to
effectively manage its incredibly large capital asset portfolio
are daunting. I do think it is worth noting the numbers even
for those of us up here. VA owns over 6,000 buildings
encompassing over 151 million square feet. If we were as a
Committee to go visit each one of these buildings and spend an
hour getting there and going between each one and we did that
eight hours a day, seven days a week, 365 days of the year, we
would finish in three years getting through them. This is a
massive undertaking and it is one that we need to get our minds
wrapped around.
VA and Congress has been very aware of this issue since the
late 1990s when the CARES Commission was established under the
direction of Secretary Principi. However, GAO's recent report
shows little progress has been made in improving the capital
management. The effective management of VA's vast and aging
capital asset portfolio is intimidating, yet it is incredibly
important and one I hope that we are willing to get done.
Recently GAO has found that VA has neither the process nor
the data necessary to make a long term decision regarding the
alignment of its facilities to the needs of veterans. Today GAO
is going to testify that both the VAIP and the SCIP are
ineffective and significantly flawed. The VAIP process is meant
to determine veteran needs, simply put, while the SCIP process
is meant to produce a long term plan to align VA capital assets
with that need. These processes are absolutely crucial to VA's
ability to strategically determine gaps in VA capacity to meet
veterans' need and then to produce a long term plan to cover
the gaps. But buildings do not deliver care and benefits. VA
staff inside those buildings do. However, VA is unable to
determine the amount of care its staff yields or has the
potential to yield. Therefore, VA is unable to ensure existing
structures are fully utilized by a highly productive staff and
how that translates into veterans' care. In an age of billion
dollar medical facilities, this determination is absolutely
imperative and it is unacceptable we do not have it.
Tomorrow GAO is going to testify in front of the Health
Subcommittee that VHA also lacks the ability to accurately
determine the level of clinical productivity and efficiency of
its healthcare providers. How can VA determine a building is
necessary to meet a veteran's need when VA at this time cannot
determine how much need is being met using the existing
building? Complex problems demand complex solutions.
The failure of the CARES Commission to execute its
recommendation proves that a commission is not enough. The cost
of VA capital asset maintenance proves time is not on our side.
I hope we, along with VA, are able to thoroughly consider
pragmatic and timely solutions to the many costly issues
impacting VA's ability to manage its care. And as the Secretary
said, this is going to take courage. It is going to transcend
politics. If it is not done now, we can no longer kick this can
down the road. Because if we do, the ability to deliver that
care and the capacity to deliver that care will be diminished.
And all of us here have a commitment to making sure that does
not happen.
So Mr. Chairman, I once again thank you for tackling the
tough problems and I look forward to hearing from our
witnesses.
The Chairman. Thank you, Mr. Walz. And joining us on our
first and only panel this morning is the Honorable Anthony
Principi, former Secretary of the U.S. Department of Veterans
Affairs. And welcome, Mr. Secretary. Mr. Roscoe Butler has been
here many times, the Deputy Director of Healthcare for the
Veterans Affairs and Rehabilitation Division of the American
Legion. Thank you for being here. Debra Draper, the Director of
the Health Care Team for the Government Accountability Office.
Again, many times here. And Jim Sullivan, the Executive
Director of the Office of Asset Enterprise Management for the
Department of Veterans Affairs, who is accompanied by Dr. Regan
Crump, the Assistant Deputy Under Secretary for Health Policy
and Planning at the Veterans Administration, and welcome. Thank
you all for being here. And Secretary Principi, we will begin
with you and you are now recognized for five minutes.
STATEMENT OF ANTHONY PRINCIPI
Mr. Principi. Thank you, Mr. Chairman and Ranking Member
Walz, Members of the Committee, it is certainly an honor to be
back before you this morning. And I just commend you for the
working relationship that all Members have. And veterans should
be reassured that you are tackling the tough issues. So thank
you very, very much.
Medical care is a key component of the benefits and
services enacted by Congress in recognition of the sacrifices
of the men and women whose service in uniform preserved and
protected our Nation's freedoms. Neither medical science nor
the veteran population is static and unchanging and VA must
always provide veterans with modern, high tech facilities to
offer them high quality healthcare. The department will fail to
honor our Nation's commitment to its veterans if VA's medical
system does not evolve with the times.
VA is a proud organization with a great history. The
department has made enormous contributions to American
healthcare across the spectrum of care, research,
rehabilitation, and has been a lifeline for tens of millions of
veterans returning to our shores. But many VA medical centers
were designed and built in an era in which medical care was
synonymous with hospital care and long term psychiatric care,
facilities built in the twenties and thirties, 1,700 beds,
still in existence today, with an average daily census of maybe
166 patients. American medicine and VA healthcare has
transformed itself from hospital centered to patient centered
treatment. Most veterans, like most Americans, see their
physicians on an outpatient basis and much treatment is
provided by prescription drugs.
However, while the practice of VA medicine has evolved, VA
medical infrastructure has not kept pace. VA facilities are out
of step with changes in the practice of medicine and with the
statutory changes in VA's healthcare benefits package. In
addition millions of veterans following the population
migration patterns of the Nation have moved to different parts
of the country. And as GAO noted in its recent report on VA
real property, the new Choice program has also reduced the need
for some VA facilities and services VA offers. If VA does not
realign itself, the current decline in the veteran population
will make many VA medical centers museums of the past, not the
guideposts for the future they should be to care for our
Nation's veterans.
When I became Secretary in 2001, President George Bush
reminded me that every dollar my agency spends is a dollar
taken out of someone else's hard-earned pay. It is not how much
money you are given in your budge, he told me that is
important. He said it is whether you spend the money wisely. We
are stewards of the public trust, he reminded me, and we must
never forget that. I had an opportunity to recall his words a
short time later when I was stuck in traffic in New York City.
As my car idled in front of VA's Manhattan Hospital, I looked
up at the hospital's enormous bed tower. Among the hundreds of
windows looking out on First Avenue, only a handful were lit. I
did not know what to make of it.
I learned a short time later when I returned to Washington
that the hospital was one of many built in the 1940s and
fifties to handle the influx of ill and injured World War II
and Korean War veterans. It once held 800 veterans, as did
nearby hospitals in the Bronx and Brooklyn. I was told that the
three hospitals that night were caring for only 283 veteran
patient's altogether. All the other beds were empty and there
were tens of thousands of empty beds throughout VA's system.
Accordingly I commissioned a comprehensive assessment of
VA's capital infrastructure and the demand for VA healthcare.
The process was called Capital Asset Realignment for Enhanced
Services, CARES, and was modeled on DoD's infrastructure review
process. The CARES Commission offered sound recommendations for
realignment and reallocation of the department's capital assets
to meet demand of VA's services over the next 20 years.
Unfortunately the CARES and DoD processes differed in one
way. Under CARES there was no requirement for Congress to adopt
or reject the commission's final recommendations as a package.
As a result, recommendations for some needed new hospitals and
outpatient clinics were accepted. Most of those to change,
realign, or maybe close the mission of other facilities were
rejected.
I know that the difficulties of agreeing to such a
procedure for Members of Congress cannot be overstated. Having
served as the Chairman of the 2005 Defense Base Closure and
Realignment Commission, BRAC, I know firsthand from visiting
many of the military installations slated for closure or
realignment now trying this process can be for you and your
states. The closure and realignment are easy to write on paper
but they have profound effects on communities and the people
who bring those communities to life. But VA is simply spending
too much money on bricks and mortar rather than doctors and
nurses.
VA's current budget request is $186.5 billion. In my last
year as Secretary, in 2005, that figure was $69.4 billion, a
268 percent increase. We are doing a disservice to the veterans
VA is charged to serve and to the American people if those
resources are not used wisely and well. Our Nation simply
cannot afford to maintain a vast infrastructure built for a
different time and healthcare delivery that was to care for
tens of millions of veterans as they returned from World War
II, Korea, and Vietnam, and even from earlier conflicts.
One other area in which there is an opportunity for both
enhancing and using taxpayer dollars more wisely is for VA and
DoD to more widely share facilities and services at local
levels. There are many DoD hospitals that have very low
inpatient census as well. This is one of the CARES Commission's
recommendations and more can be done in this area.
A full review of VA's infrastructure, Members of the
Committee, is the right thing to do. A review that is open,
transparent, and apolitical. Those impacted by the decisions
deserve no less. Thank you very much.
[The prepared statement of Anthony Principi appears in the
Appendix]
The Chairman. Thank you, Mr. Secretary. Mr. Butler, you are
recognized for five minutes.
STATEMENT OF ROSCOE G. BUTLER
Mr. Butler. Thank you, Mr. Chairman. Each year since 2003
the American Legion System Worth Saving Program has conducted
site visits to VA healthcare facilities across the country. One
thing we find in common is that VA has enormous amounts of
aging buildings that are either underutilized or vacant. VA has
a large inventory of buildings that are over a half century
old, resulting in significant costs for upgrades and needed
replacements of many parts of the facilities' aging
infrastructures.
As I mention in my written statement, GAO has been
reporting on this issue dating back to 1991, or probably even
earlier. GAO published a report title, VA Struggling to Respond
to Asset Realignment Challenges. It has been 26 years since the
1991 GAO report was issued and we are here again today to have
an open and candid discussion on how to address VA's capital
asset needs.
Good morning, Chairman Roe, Ranking Member Walz, and
Members of the Committee. On behalf of our National Commander
Charles E. Schmidt, and the over three million voting members
of our largest wartime veterans service organization, we want
to say thank you for conducting this hearing that addresses
VA's capital asset needs.
Today the Veterans Health Administration is the largest
integrated healthcare system in the United States, providing
care at over 1,233 healthcare facilities, including 168 medical
centers, and 1,065 outpatient sites of care of varying
complexities serving more than 8.9 million veterans. In spite
of the exceptional healthcare VA provides, its aging
infrastructure with a number of buildings being underutilized
or vacant, creates problems for VA to maximize the use of its
capital assets.
According to information provided by VA in fiscal year
2016, VA had 403 vacant buildings at an annual operating cost
of $6,674,227 and 784 underutilized buildings at an annual
operating cost of $20,266,271. VA defines an underutilized
building as an individual building that is occupied and in use,
but the functions housed there do not require the full amount
of space in the building to operate.
If there was unlimited funding the easy answer would be to
dispose of all of VA's vacant buildings and build new modern
facilities. But the reality is that funding is not unlimited
and there are no easy answers to these questions. Which is why
everyone is here today to have an open and candid discussion to
address VA's aging capital asset portfolio.
In 2016 the American Legion renewed Resolution 136,
Strategic Capital Investment Planning Program, which urges
Congress to provide increased appropriations annually to
address Department of Veterans Affairs construction
deficiencies and gaps identified by VA's strategic capital
investment planning program. VA includes activation costs in
their future SCIP cost projections and allocations so that VA's
budget will not have to offset this lack of funding and VA
continues to be transparent about SCIP's progress by publicly
posting information about projects and costs on an annual
basis.
Based on the American Legion's review, addressing VA's
capital asset need is not a new phenomenon. There have been
numerous government reports over the last 26 years addressing
the same topics. However, countries around the world have
placed high value in their historic properties, such as
historic capitals, and the United States visitors frequently
visit Washington's monuments and the Lincoln Memorial for its
historic contributions to this Nation's historic value. In the
past, our System Worth Saving team has visited the Hot Springs,
South Dakota medical facility, which was designated as a
historic national property. Subsequently, VA was pursuing to
close that facility until Dr. Shulkin overturned the former
administration's decision. The American Legion calls on
Congress and VA to place high value on VA's historic national
properties.
The American Legion is concerned that VA has not routinely,
actively engaged veterans service organizations in the
discussion about their plans to address VA's capital asset
needs. VA must do better involving VSOs in these discussions.
Twenty-six years later, we are still trying to find
solutions to VA's capital asset needs. The American Legion
hopes it does not take another 26 years to find solutions to
VA's capital asset needs.
The American Legion thanks this Committee for this
opportunity to explain the position of the over three million
voting members of the American Legion. Thank you.
[The prepared statement of Roscoe G. Butler appears in the
Appendix]
The Chairman. Mr. Butler, thank you. And full disclosure, I
just mailed my 2018 dues in before I came back.
Mr. Butler. Thank you, sir.
The Chairman. Ms. Draper, you are recognized for five
minutes.
STATEMENT OF DEBRA DRAPER
Ms. Draper. Chairman Roe, Ranking Member Walz, and Members
of the Committee, thank you for the opportunity to be here
today to discuss VA's capital asset program, including our
recently issued report that examined VA's efforts to align its
medical facilities with veterans' needs.
VA is one of the largest property holding agencies in the
Federal government. In 2014 VA reported that its inventory
included more than 6,000 owned and 1,500 leased buildings,
together covering approximately 170 million square feet of
space. Many of these facilities are underutilized and outdated,
creating a variety of challenges for alignment.
As we discussed in our recent report, there are a number of
factors that affect the department's alignment efforts. First,
VA projects a 14 percent decrease in the veteran population by
2024. And as the map on the screen shows, up on the board, it
also expects a continued migration of veterans from the
Northeast and Midwest areas of the country to areas in the
South and West, a trend that also mirrors that of the general
population.
Second, similar to trends in the healthcare industry
overall, VA's model of care continues to shift away from
inpatient to outpatient settings of care, the latter of which
VA generally houses in converted inpatient space or in a
growing number of outpatient clinics. The photo is of a closed
inpatient wing at the Brooklyn facility.
Third, although VA has traditionally provided care
primarily through its own facilities, it is increasingly
relying on care provided in the community.
Fourth, an aging infrastructure affects facility alignment
because many VA facilities are not well suited to provide care
in the current environment, as the photo of an outdated double
occupancy room at the Manhattan facility shows. The average age
of a VA medical facility is 60 years, which is five times older
than that of an average not for profit hospital building.
Facility planning officials told us that it is often too
difficult and costly to modernize, renovate, and retrofit older
facilities. Photos from the Waco facility illustrate these
challenges.
And finally, the historic status of some VA properties adds
to the complexity of alignment. VA has approximately 3,000
historic buildings, structures, and land parcels, the third
most in the Federal government. In some instances renovations
may be more expensive but demolition and rebuilding may not be
an option given the historic designation. These photos of
buildings, of structures designated as historic from the
Kerrville, Chillicothe, and Waco facilities provide good
examples.
VA has recognized the need to improve planning and
budgeting for modernizing its aging infrastructure and aligning
its facilities with veterans' needs. A previous effort at doing
this, known as CARES, was never fully implemented and was
halted about eight years ago. VA has more current efforts to
align its facilities with veterans' needs, including the SCIP
process and the integrating planning process. However, both of
these have limitations.
VA relies on the SCIP process to plan and prioritize its
capital projects. But limitations, such as subjective
narratives, long timeframes, and restricted access to
information underlie VA's ability to achieve its goals. For
example, the time between when facility planning officials
begin developing the SCIP narratives and when they are notified
that a project is funded has taken between 17 and 23 months
over the past six fiscal years' SCIP submissions. While some of
the budget timing is outside of VA's control, delays in
reporting of the SCIP results has made it difficult for local
officials to understand the likelihood that their projects
would be funded.
The integrated planning process also has limitations. Among
other goals, it is intended to produce facility master plans
for every VA medical center at a total cost of more than $100
million when complete. A significant limitation to this process
is that it assumes that all future growth in services will be
provided directly through VA facilities, an inaccurate
assumption given the increasing role of care in the community.
Some local VA officials told us that they bypass the integrated
planning process and instead contract for their own facility
master plans.
Additionally, VA has faced stakeholder challenges to its
facility alignment actions, including from veterans, state,
local, and Federal officials, employees, historic preservation
groups, and others. We found that VA has not consistently
followed best practices for effectively engaging stakeholders
in these decisions or evaluated the effectiveness of their
stakeholder communication strategies.
In conclusion we have made several recommendations that if
implemented could improve VA's ability to plan for and
facilitate its alignment efforts. Specifically we recommended
that VA improve the SCIP process; discontinue or improve the
utility of the integrated planning process; and improve
communications with stakeholders.
Mr. Chairman, this concludes my opening remarks. I am happy
to answer any questions.
[The prepared statement of Debra Draper appears in the
Appendix]
The Chairman. Thank you, Ms. Draper. Thanks very much. And
Mr. Sullivan, you are now recognized for five minutes.
STATEMENT OF JAMES M. SULLIVAN
Mr. Sullivan. Good morning, Chairman Roe, Ranking Member
Walz, and Members of the Committee. I am joined by my
colleague, Dr. Regan Crump, and we are here today to discuss
VA's capital asset needs, and we acknowledge the many
challenges that face us as we attempt to modernize the VA
healthcare system.
VA's mission is distinct compared to other agencies. We
operate the largest integrated healthcare system in the Nation,
with 135 national cemeteries, 1,700 hospitals, clinics, and
facilities used to provide benefits and services to our
veterans. Our portfolio consists of approximately 180 million
square feet, 86 percent of which is owned, and in many cases
the average age of a facility exceeds 60 years.
Most of our infrastructure is in need of repair and
replacement and requires considerable investment. VA has more
than $50 billion in capital needs to upgrade existing
facilities or replace existing facilities to meet modern
healthcare standards.
Secretary Shulkin has made it one of his top five
priorities to modernize the VA system. We are supporting his
priority by getting rid of buildings that are no longer needed
to provide services to veterans. We have identified 430
individual vacant buildings, totaling six million square feet
across the country. It costs VA an average of $7 million a year
to operate these buildings and we want to redirect these
resources to services.
We are initializing disposal and reuse actions for these
430 vacant buildings over the next two years. VA will begin
performing due diligence, ensuring compliance with applicable
laws and regulations, and initiate disposal or reuse
transactions. In the last 30 days alone, we commenced the
process for 71 vacant buildings through an enhanced use lease
for repurposing buildings at Perry Point, Maryland, 54
buildings, and we completed the excessing process to GSA of the
hospital in Pittsburgh, Pennsylvania, which was 17 buildings.
While we are working with an aggressive timeline to address
our vacant buildings, we anticipate hurdles that may slow us
down. Some challenges that can impact our timeline include the
lengthy processes associated with the National Historic
Preservation Act, the National Environmental Policy Act, and
the location and condition of buildings, and local and national
stakeholder concerns. VA welcomes any support from Congress to
streamline these processes so that we can more efficiently and
effectively manage our assets.
While challenges do exist, and there are many, we have made
some progress in reducing unneeded buildings. Since 2004 we
have disposed or reused over 1,000 buildings, totaling
approximately eight million square feet and about 1,000 acres.
One of the most successful tools we have experienced using is
our enhanced use lease authority. EUL allows VA to out-lease
assets to private and public sector entities for repurposing.
Currently we can out-lease vacant buildings and excess land in
return for supportive housing for homeless veterans and their
families. This program has provided significant benefits to VA
in terms of cost savings, improved facilities, and increased
services to our veterans.
To date over four million square feet has been out-leased
through EUL and we have in place 2,700 operational housing
units across the country. VA previously had a broader EUL
authority but that expired in 2011, and our 2018 budget
includes legislation requesting the reintroduction of a broader
scoped EUL.
VA needs your help and welcomes any new or expanded tools
to address our most challenging issues that we have. Our 2018
budget includes proposed legislation to increase VA's
flexibility to meet some of these needs. The budget includes
proposals, one, to increase the threshold for the minor
construction program to $20 million; eliminate statutory
impediments acquiring joint VA facilities, much as Secretary
Principi mentioned in his testimony; expanded EUL authority;
and providing for the authorization of 28 major medical leases
to serve the outpatient needs of our veterans. In terms of
addressing recommendations of the independent assessment, the
Commission on Care, and GAO, VA agrees with the majority of
these recommendations and recognizes we need to do better. We
are working towards that goal of a high performing healthcare
network that takes into account current and future veteran
demand. VA partnered with private sector experts to conduct
objective assessments and develop local healthcare
modernization optimization plans. The primary outcomes of this
assessment will be plans for each market across the country to
develop a high performing healthcare network which will then
feed into VA's capital planning process, SCIP. Once the market
assessments are complete, recommendations may include needed
capital investments, divestitures, partnerships, and other
approaches to modernize VA's infrastructure. These investments
then will be prioritized and included in future budget
requests. VA expects the market area optimization plans will
address many of the issues raised by GAO, the commission, and
the independent assessment.
Mr. Chairman, Ranking Member, and Members of this
Committee, this concludes my statement. We welcome any
suggestion and as we confront this major challenge facing the
VA. I am happy to respond to any of your questions.
[The prepared statement of James M. Sullivan appears in the
Appendix]
The Chairman. Thank you, Mr. Sullivan. And I thank all of
the members of the group that is here today. And I want to
start by just saying a couple of things.
One, this is very hard. And this is not glitzy stuff but
this has got to be done. And I appreciate what each one of you
bring to the table. And as I said in my opening remarks, that
the private sector is undergoing exactly the same thing. The
hospital that my two children were born in in Memphis was at
the time the largest private hospital in the world, 2,000 beds,
Baptist Memorial Hospital. That hospital is gone. It has been
dropped. And they have now downsized to a more efficient, you
know, 21st Century model where care can be given. And there
were just hundreds and hundreds of empty beds in that hospital.
And they realized years ago they had to change their model. And
I think the VA is undergoing exactly the same thing as the
private sector is doing now.
And Mr. Butler, you brought up some great points about the
historic buildings. And I think we need to look at public-
private partnerships, what we can do with these. We have one in
my local VA at home that is a medical, basically a museum that
could be used. But if you engage the private sector and let
them maintain the building, there are a lot of options out
there that we could do to maintain these historic buildings and
have them used for other purposes. And certainly not just
bulldoze them. I think there are many communities that would
love to do that and share that rich culture in their community.
I think Walter Reed is an example. We realized that fixing
Walter Reed just was not, I mean, as much as I loved going over
there, it was just too much of an investment for modern
healthcare. So we moved it out to Bethesda and to a more modern
facility. So I think the DoD has done some of that and I think
VA is going to do that.
And let me just ask, any of you can answer that, how can
you elaborate on how patient care is impacted by aging
infrastructure? And would it be fair to say that access to care
is in some cases negatively impacted by the limitations of an
aging VA medical facility? And any one of you can take that
question.
Mr. Principi. I will start, Mr. Chairman. I certainly think
that is the case. If you are devoting scarce resources to
bricks and mortar, you are taking care away from veterans. And
I think first and foremost we have to provide high quality care
to veterans, whether it be in a high tech inpatient facility,
outpatient clinic, or the community. Public-private
partnership, as this Committee has advocated. So I think there
is an impact on quality of care. And unless changes are made I
think it will continue to do so.
The Chairman. Mr. Butler? Yes, sir?
Mr. Butler. Hot Springs, South Dakota is a prime example,
where that facility is a national historic designated facility.
And it was a facility that was designated to be closed. The
community was in uproar because of that decision. It would
place veteran having to drive much further to other facilities
to obtain their care because care in the local community was
not available for them. And so I think you have to look at
everything in totality to make sure that when you make those
decisions, you are taking everything that needs to be
considered in play to make sure that the veterans' care, they
can receive the best care. Regardless of it is in a VA facility
or it is outside the VA facility. But you have to ensure that
if you are closing, if the recommendation is to close a
facility, that the veteran can obtain that quality care
elsewhere that is convenient for the veteran and does not cause
hardship to the veteran.
The Chairman. I could not agree more. I think if you are
doing that, you should be able to show that actually that
quality of the care will go up, not lose quality. I could not
agree more with that.
Mr. Sullivan, how much total resources are spent
maintaining space that is either vacant or largely vacant
across the entire, you may not know this, across the entire VA
system?
Mr. Sullivan. The cost we are spending is about $7 million
annually. If we include what is underutilized as well, it comes
to about $29 million.
The Chairman. And so that is a building that is there, that
is very underutilized or--
Mr. Sullivan. It is a building, if you look at the example,
if you had a clinic that had 100,000 square feet and your real
requirement based upon veteran need is 10,000 square feet, but
you are using 100,000 to serve them, then that is what an
underutilized facility would be.
The Chairman. They did not start the clock on me until some
time, so I think I have run out of time. I am not sure. So I am
going to yield to Mr. Walz.
Mr. Walz. He is kind, I agree. So well thank you all. And
great testimony, and I think teeing up where we are at. So I am
going to cut right to the chase, Mr. Secretary, with you is in
your opinion, I think we all probably know the answer but it is
important I think to hear it in this setting, what was the
biggest barrier towards the implementation of the full CARES
Commission? And how would you suggest we do not make that same
mistake?
Mr. Principi. Well I think the clearest limitation, and I
might add I was very proud of the CARES process. I think the
team did an extraordinary job. It was data driven. It was based
on sound information. And very importantly, I insisted that
there be listening sessions. That they travel around the
country and talk to the communities, talk to labor, talk to
management, and really get their insight because it is a
difficult process. But the clearest, and the veterans
organizations were fully behind the CARES process and they
stood with me when the decisions were made. But obviously
unlike the DoD process, when you do not have some teeth behind
it, it will fail. The pluses were good but those that wanted to
realign or close a facility became difficult because of the
political process, which I enormously respect. It becomes very,
very difficult. And I tried to point that out in my testimony.
So I think that this Committee, I urge this Committee to
create a commission. Allow the Secretary, who I think is doing
a great job, allow him to come up with the recommendations,
submit them to a bipartisan commission, and give the commission
some teeth based on their decisions. Submit the plan to
Congress and let the Congress vote on the plan up or down,
rather than singling out individual facilities.
Mr. Walz. No, I appreciate that. Mr. Butler, I am, up here
I was just showing the photo around. I am very familiar with
Hot Springs. I lived in Chadron, Nebraska and then in Pine
Ridge for a while. I think people need to know that facility is
drawing from South Dakota, Nebraska, and Wyoming and it is
pretty open out there. And that is probably one of the most
beautiful VA buildings. The administration building is
gorgeous. So I think trying to balance these things about how
do we save some of these assets in terms of their historic
value but that one always comes up with me because of the
massive number of beds. And I think that one might be utilized
three beds a night because of this change. So I am very
cognizant of that.
I want to come back to the process, and maybe this is for
Ms. Draper, and to you, Mr. Sullivan, about what we are trying
to get to. And Ms. Draper, first of all, based on what you
know, are either the VAIP or the SCIP processes truly
reflective of veteran need, VA resources, and stakeholder
concerns when managing capital assets? Is this the best
practice way to do this?
Ms. Draper. Well we have found limitations with both, as I
talked about. But one of the issues with the SCIP process, it
is supposed to be a ten-year planning process but the emphasis
is really on the first year. So what local facilities told us
is they often to address gaps identified through the SCIP
process, they often put projects in out years that they never
intend to actually undertake. So really the focus is on the
first year. It is not a long term planning process, as we found
and we talked about in our report.
There are also many limitations with the integrated
planning process. One is that it does not account for the care
in the community, which is a major assumption that should be
considered because you do not want to simultaneously develop
new capacity while you are also getting it delivered in the
community. But it also has other limitations. For example, the
costs do not include all the life cycle costs of a project. So
there are operating costs that are not included that, you know,
which OMB recommends they be included. There is a lack of
standardization in the facility master plans. So they have
different contractors doing the master plans. And so there is a
lot of variation. So it is really difficult to determine how
comparable they are. And then the other thing, and I think we
have talked about this, is accountability. So there are
recommendations that come out of the integrated planning
process but there are no requirements for those to be
implemented.
Mr. Walz. That is the question, and I think, ma'am, I am
going to leave it to my colleagues. They will have questions to
ask because obviously in this, and I am sure Mr. Coffman will
bring up, in this planning process was certainly the Denver VA
facility. And this year I am wondering how does all this fit
together? When we see the VA's budget request a cut to
construction by 4.3 percent, was that budget crafted by looking
at these things, putting it together, deciding how we are going
to dispose of these buildings? How we are going to repurpose?
And what we need to do to build? I just wonder, and I know it
is out there and I do not want to be that person who drives by
a construction project and thinks, I know better than how it is
done, or why it was decided to do that, but I as a Member of
this Committee am having a hard time understanding how we are
making those decisions. So I want to just leave that lay out
there. That I think we need to know how did we come up with our
budgeting number? How do we know what we really need? Because I
am still not convinced we know how to utilize that. And I yield
back.
The Chairman. I thank the gentleman for yielding. Dr.
Wenstrup, you are up.
Mr. Wenstrup. Thank you, Mr. Chairman. Thank you all for
being here today. And I think it is important to note that this
Committee is dedicated to the care of our veterans as well as
respecting the history of the VA and this Nation. So as we move
forward, we are going to be facing challenges.
One of the things I have harped on since I have been here
is really knowing how productive we are when it comes to
patient care. And I have always talked about relative value
units, RVUs, and using that as one standard of measure. So Mr.
Sullivan or Dr. Crump, maybe you can answer for everyone, how
exactly doctors that are providing for our veterans in the
Choice program, how are they paid?
Mr. Crump. Today in the Choice program doctors are paid
based on a fee basis. And so we are using the Medicare rates
for--
Mr. Wenstrup. Which is RVUs, correct? Relative value units?
Mr. Crump. Well some of the basis of the fees is RVUs.
Mr. Wenstrup. Right.
Mr. Crump. But it is a fee basis.
Mr. Wenstrup. Okay. So we are tracking that. We know how we
are paying them and what they are producing. So do we track
RVUs for all of our producers across the entire VA? Do we know
what they are producing? And I am going back to something I
think GAO did a couple of years that ended up evaluating what
it cost in certain facilities for a primary care visit. And it
came down to when you add up all the expenses of the facility,
etcetera, that it was really around $400 to $600 per office
visit in certain locations. So I think it is important that we
are tracking productivity as we do this review. So are we able
at this time to track RVUs of every provider in the VA?
Mr. Crump. What we are doing right now is changing some of
our methodologies for tracking productivity and we are
incorporating the use of RVUs on a national basis.
Mr. Wenstrup. But so far that has not been done as like a
requirement?
Mr. Crump. It has been done to some extent.
Mr. Wenstrup. Because I think, to some extent, I think that
is really something we have to look at when we are looking at
our assets, is how much is actually being produced in a certain
facility. Maybe it is a physical limitation, or maybe we are
just spending way too much. It is I think an important tool as
we are taking on this challenge to understand what is going on.
Because for example, if I was paid $100 per RVU to pay all of
my bills in a private practice, I could not sustain that very
long. And so I think that we have to look at that and say, you
know, look at our productivity per cost. And the other question
I have is are there incentives right now in the VA management
to reduce costs or increase productivity? In other words,
reduce costs without reducing productivity? Or to increase
productivity in some way that we are getting more bang for out
buck? Are there incentives for that in our management?
Mr. Crump. Dr. Wenstrup, there are provider incentives for
productivity. And we are also in the process of one of the
largest modernizations of VA healthcare in history. And so
improving employee performance and productivity is a part of
that process.
Mr. Wenstrup. But can you take a second to describe what
that incentive is for a provider?
Mr. Crump. I do not think I would be able to describe the
exact specification of that methodology today. But we can get
back to you on it.
Mr. Wenstrup. And does it vary? Or is it across the board,
do you know?
Mr. Crump. It is across the board.
Mr. Wenstrup. Okay. Well thank you. Because I think this is
going to be an important thing going forward. And if it takes
us mandating that this be one of the tools that we have as we
evaluate our assets, then I think that we should do that right
here and put that into legislation where we understand what we
are actually producing. And then hopefully at a local level you
will have people be able to make some decisions that make
sense, where you are actually looking at what you are getting.
What is your bang for the dollar, bang for the buck that we are
getting?
So with that, I want to yield back. But I thank you for
that input. And I do not know if you have anything to add to
that, Ms. Draper?
Ms. Draper. I do not. I know that they are working on, you
talked about productivity, but they do not measure RVUs for
every specialty that way. So I think they are in the process of
looking at that, as Dr. Crump talked about.
Mr. Wenstrup. Thank you. And I yield back.
The Chairman. I thank the gentleman for yielding. Mr.
Takano, you are recognized for five minutes.
Mr. Takano. Thank you, Mr. Chairman. Mr. Sullivan, of the
430 buildings that the VA has designated as vacant, how many
provide some type of direct care to veterans?
Mr. Sullivan. None.
Mr. Takano. None? Okay. How many, how does the VA plan to
ensure the veterans' ability, so really, since none of them
provide direct care, we do not really have a concern about how
the VHA is going to provide, the veterans, who have, so we do
not have veterans that are receiving direct care--
Mr. Sullivan. No. A few of them have some support, some
administrative support in them. That will be relocated.
Mr. Takano. Okay.
Mr. Sullivan. But there is no direct care in any of those
buildings.
Mr. Takano. Okay. How was the VA able to determine the
percentage of utilization for the 430 vacant buildings?
Mr. Sullivan. It was based upon the folks on the ground, in
the field, identifying those buildings as vacant or having
minimal use.
Mr. Takano. Okay. And of these buildings, so that we
mentioned that we intend to either dispose or reuse, how many
have been determined to be unsuitable for the provision of
services to homeless veterans?
Mr. Sullivan. In conducting the due diligence, that is one
of the items that will be looked at.
Mr. Takano. Okay. So it has not really been determined yet?
Mr. Sullivan. There has been an initial review annually to
see if any of those buildings are candidates for homeless
housing. And some of them, for example in Perry Point, as I
mentioned earlier, 54 of those buildings are in the 430, came
off because we could reach a private sector developer to handle
the housing of those buildings. So there are some, but a lot of
them are such condition that it really becomes cost effective--
Mr. Takano. So the evaluation is not really complete for
all of the 430?
Mr. Sullivan. Correct.
Mr. Takano. Okay. Are there current barriers regarding the
usage of an EUL to ensure the property is determined to be
suitable for the purpose of providing services to homeless
veterans? This question is kind of wordy. So are there barriers
regarding the usage of an EUL to ensure that the property is
determined to be suitable for the purpose of providing services
to homeless veterans are utilized quickly and efficiently?
Mr. Sullivan. The only barriers are actually the financing.
So from a legislative standpoint, the fix that was made to this
program a couple of years eliminated most of the barriers in
terms of housing. What the barrier would be is if you wanted to
go to a medical EUL model, which is I think what people have
talked about earlier, which really probably is the future at
VA. If we can bring in private sector expertise and private
financing to provide state of the art facilities, that would
require a change to that program or additional authority to
that program or a complementary program so that we could use
that to go out and get needed medical facilities right now
where we are restricted to just homeless housing or support
housing.
Mr. Takano. So , the current statutory framework kind of
constrains us to serving the homeless. But if we were to expand
into a--
Mr. Sullivan. That is correct.
Mr. Takano [continued]. --partnership in the health area,
this would greatly expand our ability to--
Mr. Sullivan. That would be one of the tools to fill the
gap, especially as I believe GAO and others have testified
here, we know there is not a limitless pot of money to deal
with VA facilities. So we have to look at another source. And I
think tapping private sector financing is the long term
solution to our capital needs. And not only the capital piece
of it in terms of their finance ability that they would bring
to it, but also using some of their expertise using local codes
and standards, using local practices in the community, so when
we came in and put a clinic in or a support facility we use
those standards and those practices there. So that they would
be financeable and they would also, should VA not have a use
for them in the future or as time went on, they would easily be
reusable by the private sector because we were using their
script for doing this. And I think that is absolutely key as we
go forward. And I know we are working within the administration
hopefully in the President's infrastructure bill to submit that
kind of a proposal to Congress.
Mr. Takano. Well Mr. Sullivan, with this in mind, what is
the status of the public-private partnership pilot program?
Mr. Sullivan. Right now we do not have a true public-
private partnership program. What we have is the CHIP IN Act,
which is a donation program that Congress gave us which we
really appreciate for five pilot sites. What we would see is a
better model, or not a better model, but an additional model
would be an expanded EUL or a true P3 program that would allow
us to tap private sector financing and private sector
expertise. And I think in this instance there is not one single
tool that is going to give us this. I think we need to look at
it with multiple tools, whether it is EUL, P3, other models
which other folks on the Committee may have ideas on as well. I
mean, we need to look at a whole suite of tools to be able to
deal with this huge challenge we have.
Mr. Takano. Speaking to Members who have districts with
some of these aging facilities, I mean, I think you are right.
I think there is a lot of folks that are looking at all sorts
of ways they can reuse these properties which I believe would
not have to be to the detriment of providing the current
healthcare needs of the veterans that are being served. I yield
back, Mr. Chairman.
The Chairman. I thank the gentleman for yielding. Mr.
Coffman, you are recognized for five minutes.
Mr. Coffman. Thank you, Mr. Chairman. And I thank you, Mr.
Principi, for being here today and for your service to our
country as the former Secretary of the VA. There are 430
buildings, VA buildings, vacant for the most part. Now it is my
understanding that the Secretary, when you were Secretary, and
the Secretary now, does not have the unilateral authority to
close any of these facilities or dispose of any of these
facilities, am I correct in that?
Mr. Principi. I believe he does have the authority.
Mr. Coffman. He does have the authority?
Mr. Principi. Yes, absolutely. And again, it could be
stopped or rescinded by Congress if they elect to do so. But I
believe I had the authority to close or realign VA facilities
or buildings subject to certain limitations.
Mr. Coffman. Okay. Mr. Sullivan?
Mr. Sullivan. Yes. That is absolutely correct. What we are
talking about here are individual buildings, and there is no
prohibition on the closing of individual buildings, except
complying with historic, environmental--
Mr. Coffman. Right.
Mr. Sullivan [continued]. --and other regulatory issues
that do take some time. But there is no prohibition on those.
Mr. Coffman. But I understand closing, but disposing of?
Mr. Sullivan. There is no prohibition.
Mr. Coffman. Okay.
Mr. Sullivan. We will either reuse it through one of our
tools or we will do a report of excess and give it to GSA as we
have, for example, just on the Pittsburgh hospital.
Mr. Coffman. So why have you not moved on the 430 buildings
that now stand vacant?
Mr. Sullivan. We have. In this case, we have moved on, in
the last 30 days we have moved on about, I can give you the
exact number, it was about 71 of them. We expect to move on an
additional 71 of them within six months, and within another
year about 288 additional ones. So by the end of two years we
will do the entire 430 will be commenced in that process,
whatever it is.
Mr. Coffman. And how long does that process take to go
through? Or is it fairly variable--
Mr. Sullivan. It is really market driven--
Mr. Coffman. Yeah.
Mr. Sullivan [continued]. --based upon, if we are going to
GSA to sell it, it is going to be based upon the market, what
GSA can get for those buildings and how hard they find to do
it. If we find a partner to reuse it, it could move pretty
quickly. If it is a simple demolition, depending upon historic
and environmental issues at the site, it can, you know, be
anywhere from six months to 18 months depending upon that
process. It is very locally driven and in each state, for
example, the historic preservation entity in some states are
very cooperative with VA and look to move forward. In other
states it is more of a challenge and that takes more time.
Mr. Coffman. Does GSA, once you turn it over to GSA, do
they take it from there? Or is it, do you have to, is it a
cooperative--
Mr. Sullivan. It is cooperative but they really have the
ball.
Mr. Coffman. Okay. Good.
Mr. Sullivan. They are the ones who do this all the time.
They have an office set up that just does this as their single
focus. And that is why we took Pittsburgh, for example, and
gave it to them. We plan to have two or three other hospitals
that have been vacant for a long time moving to GSA pretty
quickly.
Mr. Coffman. Why has it taken so long to get this process
started? It just seems like you have identified the 430 but
then we are just, it seems like we are just starting on this
process.
Mr. Sullivan. Well now since 2004, I think I can give you
the figures--
Mr. Coffman. Right.
Mr. Sullivan [continued]. --I think we have gotten rid of
eight million square feet through this process. We did not use
GSA, quite honestly, until the last year or two because prior
experiences with GSA were not very receptive to moving
properties. But I think they have retooled and refocused so I
think it is a good opportunity.
Mr. Coffman. Okay. What is the point of having a hotel in
Paris?
Mr. Sullivan. VA--I think you are referring to the Pershing
Hall facility?
Mr. Coffman. Yes.
Mr. Sullivan. Yes. Congress gave it to VA because at the
time it had fallen dormant. There were squatters in the
building. They gave it to VA after several other agencies
attempted to maintain it. And we used a EUL like authority to
put a hotel in place and VA receives $300,000 to $400,000 a
year in rent from that hotel. And I know there is a proposal
for folks who want to sell it. VA supports selling that. We do
not have the authority to do it. And if it is, if we are given
the authority, we would hope that the basis for the sale would
be the market value of that asset, which we believe is
somewhere between $30 million and $35 million, which we would
hopefully in that legislation be given the authority to
reinvest that money in care for veterans or in infrastructure
improvements. So we were tasked by Congress to take it over and
we did it. And there is no pride in ownership of that asset, I
mean.
Mr. Coffman. Thank you. Mr. Principi--
Mr. Principi. Yes.
Mr. Coffman [continued]. --was that under your watch? Or
was that under--
Mr. Principi. Actually, Mr. Sullivan knows it was on my
watch when I was Deputy Secretary during Bush 41 and Chairman
Montgomery of this Committee urged me to take possession. It
was actually an American Legion, it is called Pershing Hall, it
was an American Legion building. An absolutely extraordinary
structure in the heart of Paris. And it was in really, as Mr.
Sullivan indicated, really in a state of disrepair and
magnificent artifacts were being stolen. And so I became the
landlord, so to speak, and it became a hotel. And that is where
it stands today.
Mr. Coffman. Okay. Thank you, Mr. Chairman. I yield back.
The Chairman. I thank the gentleman for yielding. Ms.
Brownley, you are recognized for five minutes.
Ms. Brownley. Thank you, Mr. Chairman. And I too thank the
panelists for being here this morning. I wanted to direct my
line of questioning around leasing and what I believe to be
advantages of leasing versus building brick and mortar
facilities across the country. And particularly, when you look
at our community clinics across the country. I know right now
today we have 30 lease authorizations for facilities for
clinics across the country, but yet we do not seem to get
there. And I think there is a rationale behind that. But I was
just wondering, Mr. Sullivan, you know, with 30 lease
authorizations out there for new facilities but not meeting
that need, I mean, what do you think that delay is with
regarding patient care?
Mr. Sullivan. Right now we have 28 leases that are, 28 that
are pending authorization. And that represents about 2.2
million annual visits of care. Many of these have been
submitted in the budget for the last two years. We believe
that, we have not had a case where a lease has closed. But we
are very fearful that about 50 percent of these are replacement
leases for existing leases that are out there. And through a
lot of good work and diligence by our real property people we
have kept them all open. But at some point an owner of one of
these leases can say, I do not want to, I do not want to stay
anymore. So I mean, there is some risk there. We also, probably
a bigger risk is that once we reach the end of some of these
terms, we are at the mercy of the person who owns it. In a lot
of cases they have increased the rents and we have no choice
but to pay it. So, I mean, it is a big issue for us in terms of
creating that additional access. And we believe leasing is
better, not in every case but in a lot of cases, than building
and owning so that we can walk away at the end of a lease term
if we have it.
Ms. Brownley. Well thank you. And I agree. I think leasing
based on the map that the GAO showed in terms of changing
demographics across the country, I think leasing gives us the
appropriate flexibility that we need to be able to change and
move given the movement and where the greatest needs are. And I
know that currently the GSA scores leasing for veteran
facilities differently than they do for any other Federal
government buildings. And can you comment on, I know I have a
piece of legislation to try to fix that, but that seems to be
one of the big barriers in terms of authorizing these leases,
is that they, if it is a 20-year lease or a 30-year lease it is
scored for the full cost of 20 years or 30 years in the first
year, and that is the barrier. So can you comment on that? And
do you recognize that there needs to be a fix?
Mr. Sullivan. Absolutely recognize there needs to be a fix.
Secretary Shulkin challenged us a couple of months ago to meet
with CBO, who is the scorer, as many people know, of these
transactions. And we met with CBO and they told us in no
uncertain terms that the way our leases are structured, and
even if we change the way they are structured, there is nothing
we can really do to the transaction that would have them change
their score. So that is the legislative holdup. And I think the
score on the legislation is probably around $1 billion, I
think, is what they came up with.
Ms. Brownley. I apologize. I said GSA.
Mr. Sullivan. That--
Ms. Brownley. I mean CBO.
Mr. Sullivan [continued]. --CBO, sorry.
Ms. Brownley. But to Ms. Draper, do you have any comments
on how these leases are scored and where you think improvements
might be, or not?
Ms. Draper. We have, I have not really looked at that. So I
would be unable to comment on that. But I could see if we have
done work on that and provide you some additional information.
Ms. Brownley. Okay. I think, you know, I just, I again just
personally believe that this is something that we have got to
fix. That this, the way it is scored, I do not know if anybody
on the panel, Mr. Principi, maybe you know the history behind
this? And why it was changed? I am not even sure exactly when
it changed. But I have been told that it was changed a while
ago, specifically just for VA facilities and no changes for any
other Federal buildings.
Mr. Principi. Yes. I do not recall exactly when it was
changed. I thought it was done by OMB in the 2000 timeframe, I
believe. Maybe Mr. Sullivan knows. I do not.
Ms. Brownley. Nobody knows the rationale for it, though?
Mr. Sullivan. CBO about four years ago, five years ago,
just changed the way in which they treated these as operating
leases and started scoring them over the entire term of the
lease. I cannot come to explain how they changed their
interpretation. I leave that to them to explain.
Ms. Brownley. Well I think it is an important piece of this
kind of overall discussion, is trying to really focus on this.
And as we move forward in evaluating facilities and evaluating
I think the advantages of leasing over building permanent
structures so that we do have this nimbleness and flexibility.
With that, I will yield back.
The Chairman. I thank the gentle lady for yielding. I will
just make a quick comment that the way this is scored we have
to give the CBO the Forrest Gump Award, stupid is as stupid
does. Nobody in the world would score--anyway, I will yield now
to Mr. Higgins.
Mr. Higgins. Thank you, Mr. Chairman. Mr. Sullivan, you
have addressed the enhanced use lease program greatly to my
colleagues. I would like to add that my office requested data
from the last couple of months regarding identifying actual
structures that were perhaps targeted for sale or destruction
and ultimately last night we found that there was one in my
state and none in my district. So my comment may apply more to
my colleagues than to myself. But during the course of
researching what we would do with those facilities if they
existed in my district, we are concerned about veteran
homelessness and transitional housing for our veteran brothers
and sisters that struggle to, with reentry into civil endeavors
when they leave the military. And many of these facilities
have, you know, many rooms that could be considered a small
apartment. They have kitchen facilities and laundry facilities
and meeting facilities. And they could be remodeled into
transitional housing for homeless veterans. So in the process
of researching this, I spoke with veteran owned construction
companies in my district, and every one of them was adamant
that they would be willing to donate their services and their
own private capital to remodel and restore these facilities. We
also spoke with charitable services that work with homeless and
indigent Americans. And they would be willing to lease the
properties and maintain them once they were remodeled over a
20- or 30-year lease. So I would suggest that common sense
solutions like this be considered regarding the structures that
exist that are targeted for sale or destruction. Perhaps the
relationship between the VA and the VHA and the public and
private sector can include solutions that would cost the
people's treasure virtually nothing and yet would provide an
invaluable service for transitional housing for homeless
veterans across the country. It does not affect my district
because I do not have any structures. But perhaps some of my
colleagues may consider this approach.
Ms. Draper, my question is for you regarding the means by
which money is assessed, and personally I believe the money
should follow the veteran, and I believe that we should move
away from the mother ship structure that historically the VA
and VHA has maintained. My district represents the highest
density of veterans in the state but we do not receive the
highest percentage of money. And this money is assessed
according to the veteran population that is registered within
the VA. But the veterans because of the need to travel to the
mothership hospital, in in my case Alexandria, the veterans
have lost faith in the system so they are not counted. They are
not counted. The veteran himself is not counted. They are only
counted and the money is aligned according to those that are
registered within the system. But we seem to be blind to the
fact that so many thousands and thousands of our veteran
brothers and sisters have become disenfranchised with the
system. That is the problem that we are trying to fix here. So
can you please speak to whether when assessing where assets are
most needed, the VA considered the entire eligible veteran
population or solely the enrolled veteran population? As we
work to expand more care to veterans I think it is important
that this money be assessed based on reality.
Ms. Draper. Well they use a couple of models. One is the
veteran population model, vet pop, and then you know, looked at
another model of demand for care and the resources that would
be needed to supply that demand.
One of the things that we talked about in terms of the SCIP
process, the long term planning process, is that try and match
or align the need of facilities for services for the veteran
population, one of the key weaknesses that we found is that
sometimes writing the SCIP narratives, which is a third of the
scoring process or the score, it really is often dependent on
the ability of the writer to meet some of the goals of what VA
has laid out rather than the merits of the project itself. So
we found cases in the field where some facilities never had a
SCIP project funded. So you know, there needs to be, that is
the limitation of that planning process as well. It needs to
be, you know, looking at the merits of the project itself
versus somebody's ability to write the narrative.
Mr. Higgins. Thank you for your answer, ma'am. In the
interests of time, I would like to ask that could my office
provide questions, more detailed questions to you, ma'am, that
we could expect answers to? And perhaps get to the bottom of
this? Mr. Chairman, thank you for the time. I yield back.
The Chairman. I thank the gentleman for yielding. Ms.
Kuster, you are recognized for five minutes.
Ms. Kuster. Thank you very much. And I just want to pick up
on my colleague's suggestion. We have an opioid crisis in New
Hampshire. And one of the issues is transitional housing after
treatment to continue the intensive outpatient treatment but to
have a place to live. So I like your idea quite a bit.
My question about these 430 buildings that we are trying to
address is that a significant hurdle for disposal of vacant and
underutilized buildings is finding lessees and buyers, as you
talked about, because of the condition of the buildings. And my
question is have you considered whether the VA would actually
spend money to bring some of the buildings up to code? Or make
them more usable perhaps for this type of transitional housing?
Or other uses? And if so, or do you intend to simply demolish
the buildings and use them, just sell the land? And the
question relates to whether you have made any cost projects and
whether you need any additional authorities or appropriations
to take that approach?
Mr. Sullivan. At this point we do look at all the
alternatives. As I think I mentioned earlier, we are going
through a due diligence process on all of these 430-some odd
buildings. And we will, you know, there has been an initial cut
that has looked at the potential for both transitional and
permanent housing and have not found a particular need as
identified at the local level. But that will be double checked
as they go through due diligence. And if there is, then we
would welcome in any of these places if there is a need and we
can put together an operator and a developer to run these and
to finance these that would be the perfect solution to us. We
have encouraged it. We have done about 100 of these projects
across the country. The more we can do and especially since
they are all third party financed, you know, it does not take
away from our core mission of having those resources to
directly to veterans' care. So we would continue to do that. In
terms of a cost estimate we, as we are doing the due diligence
process we are developing a cost estimate based upon what the
chosen course of action is in each of those buildings.
Ms. Kuster. So I would just sing the praises of a program
in my district in Nashua, New Hampshire, Harbor Homes, that has
been a game changer for our veterans. We have recently achieved
a functional zero for homelessness for our veteran population
due in large part because of the transitional housing that is
available. And I certainly know from the incredible stories of
meeting with veterans how this has changed their life. I got to
know one particular veteran, there was sort of a camp, they
were living under a bridge. He was an older gentleman. But come
to find out he was diabetic and he had no access to medication
and no access to treatment. When he got into the transitional
housing, got the treatment he needed, got some counseling, some
job skills training, total turned his life around. And we
learned that he had been middle management in a high company in
our area. So he was reunited with his family. It is an
incredible story.
The question that I have around this that concerns me,
however, is that VA's request to cut the construction budget
for fiscal year 2018 by 4.3 percent, or $45 million, and what
will this do in terms of your capital assessment for these
properties going forward? And how can we help to make sure that
you have both the authorities and the resources that you need?
Mr. Sullivan. Sure. The fiscal year 2018 budget for minor
and major construction is what you are referring to. That would
not have an impact on the disposal of these buildings.
Ms. Kuster. So which budget would you be taking those funds
from?
Mr. Sullivan. Depending upon the amount of money, it would
probably come out of the non-recurring maintenance budget. And
in 2018 I believe it is a $809 million increase in 2018 to, I
can get the exact, I think it is 1.8.
Ms. Kuster. Okay.
Mr. Sullivan. But I do want to, you know, because it was
raised earlier, the budget. I think the major and minor
construction budget figures were based upon a total
discretionary dollar figure that was given to VA. And VA in
these limited budget resource times had to prioritize between
direct medical care, research, and other things. And it was a
functioning of balancing the appropriation request to Congress
to live within a total cap and those, you know, these accounts
were on the lower end of the scale, if you would.
Ms. Kuster. Well I would agree with the Secretary that
every tax dollar is sacred and we need to spend it wisely. But
we want to make sure that you have the resources to serve the
veterans. So thank you. My time is up. I am yielding back.
The Chairman. I thank the gentle lady for yielding. General
Bergman, you are recognized for five minutes.
Mr. Bergman. Thank you, Mr. Chairman, and thanks to all of
you on the panel for being here today. This is so important
because all the questions you have heard everybody is trying to
make a positive difference. Mr. Sullivan, CBOCs, I see as a
drive around the First District of Michigan, we have some nice
new CBOCs that are built. Are they owned or leased?
Mr. Sullivan. They are all, they are all leased I think
except for two or three.
Mr. Bergman. Okay. In the leasing process, could anyone
tell me if they considered, regardless of where in the country,
if they considered possible already existing space? Many of us
have Native American tribes who have the health clinics that
have excess space. Were those facilities in conjunction with
our tribes considered before building or leasing a CBOC?
Mr. Sullivan. When we go out, and I am not the contracting
expert and I can get you more details, but my understanding is
that when we go out for a lease solicitation the first option
that we ask people to consider is existing building, existing
space somewhere rather than having to do a build to suit
project. And some of the smaller leases, we do see that. Most
of what I think people here were talking about earlier were all
leases over a $1 million. The smaller CBOCs that are managed
and contracted for at the local medical center or VISN level,
they do look at existing space first.
Mr. Bergman. But were the tribes given any priority?
Mr. Sullivan. I would have to check with contracting.
Mr. Bergman. Okay. I would like--
Mr. Sullivan. I do not--
Mr. Bergman. I would like you to take that for the record--
Mr. Sullivan. But we can get back to you.
Mr. Bergman [continued]. --and get back to me. Because as
you know, our tribal members have a high, high, high
participation rate, especially in wartime. And I believe we
have a, not only an obligation but an opportunity to partner
with those already existing medical facilities that are
provided for. So that is, I would like you to look at that very
closely going forward.
Mr. Sullivan. And there might also be the opportunity for a
sharing agreement with the tribes or other entities instead of
a real property instrument to be able--
Mr. Bergman. Absolutely. And thank you for using the word,
because the more we get into the idea of shared services,
shared services are something that are, number one, going to
provide a higher quality of care or the housing. And number
two, it is going to save those valuable dollars. We know that.
And thank you for going down the shared pathway.
Different, kind of a different tack here, GAO claims, Mr.
Sullivan, you are still the winner here.
Mr. Sullivan. Sure.
Mr. Bergman. That in, GAO claims that in 2016 VA reported
370 buildings that were either vacant or less than 50 percent
occupied. However, last month the VA announced an initiative to
begin either repurposing or disposing of 430 vacant buildings
over the next two years. Why did so many more buildings become
vacant in the last year? And how many more buildings do you
expect to become vacant or largely so in the next year? And
why?
Mr. Sullivan. I think the reason why is can be fairly
easily explained. Each year we go out to the local users of all
of our facilities and we do an assessment and ask them to give
us the status of their assets. All the spaces we own, all the
owned space, and all the leased space. And in that data call we
go out and ask them to say identify facilities that are vacant.
So each year, and it closes at the end of the fiscal year, we
get a report. And it takes about two months to process. So each
December we put out a number of what the number of vacant
buildings are and it is based upon the submissions that came in
that year. So each year you will see some are added, some are
taken off, because we have been disposing of about 100 of these
a year over the last ten years. So the numbers will flex.
Mr. Bergman. Is there a checklist or anything that you, the
VA works through when you start this process that, you know,
some of us could view if we say, okay, here is what triggers it
and we ask the following questions or the criteria?
Mr. Sullivan. Yes, I believe there is a validation process
when they go out to validate the data in the field. I would be
happy to provide whatever we have to you.
Mr. Bergman. Okay. Ms. Draper, was GAO able to determine
costs for maintaining equipment, beds, and utility usage in
unused portions of the VA medical centers?
Ms. Draper. We did not look at that for this current work.
Mr. Bergman. Okay. Thank you. And that is my last question.
Mr. Chairman, I yield back.
The Chairman. Thank you, General Bergman. Mr. Correa, you
are recognized for five minutes.
Mr. Correa. Thank you, Mr. Chairman. First of all, I want
to thank all of you, the panelists for being here today and to
all the veterans here. Thank you for your service to our
country.
I wanted to follow up on some of the questions of my
colleagues, which are shared services and also in my district
and my state thinking about how many vacant buildings do we
have in California, Southern California? Number two, have we
reached out to local, state, county, city services, governments
to address again the issue of homeless vets? And are we looking
at operating in silos or have we actually worked with a lot of
those folks? Local municipalities, local counties, and the
state, they are all raising taxes right now to address this
homeless issue that continues to explode in our backyards. We
are talking about 430 buildings here underutilized.
Mr. Sullivan. Yes, we do. One of the hallmarks I think of
working with an enhanced use lease, especially on permanent or
temporary housing, is that we actually work with the local
public housing authority and work with the local cities and
towns. Because in many of the cases some of the funding sources
could come from tax credits locally or from other funding
sources, as well as the operator of the facility has to be
familiar with the local area and with the local providers. And
in almost every case it is a local on the ground community
provider who will come in and do that. I know in California we
have done that in West L.A. We opened up a facility in West
L.A. a couple of weeks ago. We have four more that are slated,
that are in process there, where we have developers--
Mr. Correa. That is the West L.A. UCLA property?
Mr. Sullivan. Yes, working there with developers,
nonprofits, to put in homeless housing for another 300 or 400
units in the next two years.
Mr. Correa. Any other facilities in Southern California
that you are working on?
Mr. Sullivan. I would have to get the list. I--
Mr. Correa. I would love to see that data, if you have it.
Mr. Sullivan. Sure.
Mr. Correa. And also in terms of the 430 facilities, we are
all looking at taxpayer dollars here. We are all looking at
cash flows, annual budgets. Yet I cannot help but think at the
local level where in Southern California, my district, school
districts 30 years ago where enrollment went down, sold a bunch
of the schools. Enrollment went up. We had to go buy properties
back at three or four times the price to make sure we had the
capacity for new and emerging enrollment. I just want to make
sure, and I am sure you are looking at that from a financial
perspective, as you move ahead, you have got to make sure you
budget yourself, save those taxpayer dollars, but also looking
to the future in terms of our capacity to take care of our
vets.
Mr. Sullivan. We are.
Mr. Correa. Thank you, Mr. Chair. I yield back my time.
The Chairman. I thank the gentleman for yielding. Let us
see, Miss Gonzalez-Colon, you are recognized for five minutes.
Miss Gonzalez-Colon. Thank you, Mr. Chairman. And thank
you, all Members of the panel, for being here. Mr. Butler, your
testimony rightly notes that many of the VA medical centers are
landlocked, which prevents them from expanding. Do you have any
recommendations on how to assist those facilities to grow?
Mr. Butler. Well I think the VA should, those facilities
should use existing processes in terms of SCIP and so forth to
evaluate their current needs and then follow that process all
the way through. The concern that we have is that process takes
too long. And so VA needs to refine the process to ensure that
whatever model facilities are using, that model can rapidly
respond to the urgent and emergent needs available at the time.
Miss Gonzalez-Colon. Thank you. Ms. Draper, in terms of
your report, you make some reference to the short term growth
in demand for the VA healthcare services followed by an
eventual decline in the veteran enrollment. How would you
suggest that the VA plan for that in the years ahead? And are
you aware of any other Federal agency that are making plans for
those kinds of declines in those kinds of enrollment, or
similar challenges?
Ms. Draper. I think it gets to a lot of the discussion
about ensuring that there is flexibility in what type of health
services are being provided, either through bricks and mortar
or through care in the community. And you know, as we reported
in our report, there are some limitations with the process as
it currently stands. You know, you are setting up a situation
by not having an assumption in the planning process that a lot
of the care is being shifted to care in the community. So you
are simultaneously developing capacity both in terms of what VA
is doing and then what care in the community is being done. So,
you know, when the population is starting to decrease then you
are going to be left with some situations where you have over
capacity and that is a concern that we explained in our report.
Miss Gonzalez-Colon. Thank you. Mr. Sullivan, and this is
kind of the same matter, with the problems we are facing with
the recruitment of physicians and personnel to attend that
demographic decline we are having in the veteran patients, what
kind of strategic planning is the VA doing for new recruitment
for healthcare services?
Mr. Sullivan. I am sorry. That is a little out of my lane.
I do not know if Dr. Crump here--
Mr. Crump. Is your question about recruitment for
providers?
Miss Gonzalez-Colon. Yes.
Mr. Crump. There is a very aggressive approach. Even Dr.
Shulkin, the Secretary, has been out speaking with medical
schools, speaking with large organizations, requesting that
people apply. We are also looking at flexibilities to be able
to directly appoint medical center directors and VISN
directors. So it is a very aggressive effort to recruit new
providers into VA because we have a constant turnover.
Ms. Draper. And I can also address that. We actually have a
report that will be coming out later this summer that looks at
provider, physician recruitment and retention.
Miss Gonzalez-Colon. We face that problem on the island. We
lack a lot of specialists on the island and we are even
bringing them from so many states. They do not want to move to
the island. And we are attending not only the people from the
island, but from the Virgin Islands, too. And in that manner,
it is a little bit difficult to attend the patients that we
have with the shortage of physicians.
In another area, I was a little bit surprised, Mr.
Sullivan, to hear that VA is behind only from the DoD in terms
of the, and the Department of the Interior, in terms of the
numbers of historic properties. In that matter, are there any
statutory or regulatory changes that could be made to lessen
the burden of historic properties on the VA capital asset
planning that we can make?
Mr. Sullivan. I think there are. I think we want to be
fully compliant with historic preservation goals in the
statutes that are required. I think what we would ask for is
for a more expeditious process to speed that process up. Right
now it can be extensive in some cases, which adds a lot of time
to doing any transaction.
Miss Gonzalez-Colon. If you want to make any direct
recommendation of changes, please provide it.
Mr. Sullivan. Sure, we will. Thank you.
Miss Gonzalez-Colon. Thank you. Thank you, Mr. Chairman. I
yield back.
The Chairman. I thank the gentle lady for yielding. Ms.
Rice, you are recognized for five minutes.
Miss Rice. Thank you, Mr. Chairman. Mr. Principi? Is that
how you say your name? I just want to go back to a comment that
you made when you were asked about what happened with the CARES
program and its elimination. You said that there were some
political concerns. Can you just expound on that?
Mr. Principi. I think the problem is that politics got
involves in some of the tougher decisions to close or realign
medical centers. Canandaigua, New York, a 1,700-bed long term
psychiatric facility built in 1932 at a time when we took
veterans with serious psychiatric needs away from their homes,
away from the cities, and placed them in a long term facility,
much like we did with all Americans, not just veterans. And
during the CARES process I noted that there were only, it had
an average daily census of about 166 patients, less than ten
percent of this magnificent, this huge, 100-acre campus with a
1,700-bed facility. Well when the decision was made to close
that facility, it was stopped. And I think that is part of the
process when there is not some teeth in this process.
But I think it is important to bear in mind,
Representative, that the VA healthcare system, although it
predates World War II, like 1932 and the 1920s when following
treating tuberculosis in sanitariums those facilities became VA
facilities in the twenties. Much of the infrastructure today
was built after World War II to take care of 16 million
veterans coming back from the War and then shortly thereafter
the Korean War. So you have these facilities built in the
forties and fifties when you needed 800-bed hospitals, maybe
2,400-bed hospitals in cities that you no longer need today
because there has been such a significant shift in the way we
care for people today.
So although Mr. Sullivan talked about the cost of empty
buildings and underutilized buildings, I do not think that
takes in to consideration could we do with new, modern, one
new, modern healthcare medical facility in a city, as to three
that were built in 1944? And I do not think the cost, I think
the cost is much greater than the $9 million or $25 million the
VA is spending today. And I think that is going to take a very
comprehensive assessment, careful, open, transparent, data
driven, visits to around the country to do it right. To look at
the assessment, the needs, the medical needs of our veterans
over the next ten to 20 years. I know that is difficult because
healthcare changes daily. But I think you need an assessment
like that and I urge the Committee to consider doing that.
Miss Rice. Well I think it is a very good recommendation.
And I am going to say what you were I think too cautious and
respectful to actually say. You know, we, a lot of us up here
spend a lot of time with panelists like you and say, what can
we do to help you? Well in this instance, in the subject matter
that we are talking about right now, I think it is really clear
what has to be done through all of your hard work,
recommendations, you implementing it, you making the
recommendations, you having, all of you, your recommendations.
What we have to do up here in my humble opinion, and I think
that, I feel very confident that if there is any Committee in
Washington, D.C. that has the political courage to do what is
necessary it is this one. What you are saying, and you were
talking about a facility in New York, is that you need
politicians like us to be courageous enough to make the case
for why certain facilities have to be closed for whatever
reason and not make it about abandoning veterans in their time
of need. And that has always been the hot potato that no one
ever wants to touch. And I think we have to, it is not enough
for us to just sit here and ask you, what can we do to help
you? We know what we can do to help this realignment that has
to happen if we are fully going to enable the VA to go into a
21st Century medical treatment mode. So I just want to throw
that out, Mr. Chairman. And I want to say that I am very
grateful that we have your leadership and the leadership of
Ranking Member Walz to help us do the right thing here. Thank
you, and I yield back.
Mr. Principi. If I can just add very briefly, I think if we
do not do that, and it would be collective, I think the VA will
fail and will fail the needs of veterans. I do not think this
can be sustained ten or 15 years. Looking at the demographics
of the veteran population, World War II, all but gone; Korea,
almost all but gone; my generation that fought in Vietnam,
getting up there. There is going to be a dramatic decline in
demographics of veteran population, the shifts in where they
are moving to, this vast infrastructure, the cost to the
taxpayer. I think we need to look at it very carefully.
The Chairman. Well the Secretary is doing real well. He
started talking about Vietnam here, guys. He is meddling now,
when he was talking about our age guys. Mr. Poliquin, you are
recognized for five minutes.
Mr. Poliquin. Thank you, Mr. Chairman, very much. I would
like to salute Miss Rice for what she said. We have got to have
the guts to do what is right here. And it is all about taking
care of our veterans. You know what really drives me crazy? Is
that we were just dealing, Mr. Chairman, recently with a
similar issue at the entire Federal government level. There are
about 3,120 vacant and unused office buildings owned by the
Federal government, not just the VA. You have about 340 of
them, but it is about 3,100. It is costing the American
taxpayers $1.7 billion per year to maintain 3,120 vacant and
unused office buildings. Office buildings, old barracks and
what have you. You have got to keep, you have got to make sure
they are heated, in some cases, right, if they are in the
northern climates like Maine or Minnesota. Or you have got to
make sure the roofs are not leaking. Then you have the
liability with them. So what the heck could we do with that
$1.7 billion per year? Instead we are hanging on to these darn
things.
Now let us drive down, Mr. Sullivan, a little bit and make
sure I understand this. You folks have about 430 buildings that
are vacant or unused. By the way, six of them are in Togus,
Maine in Augusta, which is our only VA hospital. And we love
Togus. We are watching them closely. But we love Togus.
Mr. Sullivan. We do too.
Mr. Poliquin. Good. And someone said that. I do not know
who said that. But anyway. But we have six right there on
campus. So my question is if you are spending about $7 million
a year, or whatever you said, Mr. Secretary, $7 million a year
to maintain these buildings, and you are going to get rid of
them over the next couple of years. I understand that. Correct?
And you have the authority to do that, right? David does.
Mr. Sullivan. Correct.
Mr. Poliquin. Secretary Shulkin has the authority to do
that. Okay. Then what about this Paris Hotel? I want to close
the loop on this. I think Mike Coffman has a bill, Mr.
Chairman, that gives Mr. Shulkin the authority to sell a hotel
that you said, Mr. Sullivan, is worth $35 million--
Mr. Sullivan. Correct.
Mr. Poliquin [continued]. --and we are getting $350,000 a
year in rent. That is a one percent return. What are we in that
business before? That is the most ridiculous thing I have ever
seen in my life. Right? But you have, Mike is going to drop
that bill, right? So we can get rid of that hotel--okay. Good.
So we are getting there.
Now I think Jack Bergman asked this question, Mr. Sullivan.
I want to make sure I get this. As you proceed along this
process, or Mr. Shulkin does with your help, I want to make
sure this Committee, if I may, Mr. Chairman, is informed on how
you are doing. Because the next time you are going to be here,
I am going to ask you that question. So is there a process in
place so we know you are on schedule to dispose of these
buildings? Because every dollar we save, every asset that we
are not maintaining, can go back into helping our kids that
come back from combat with wounds, and so forth, and so on.
Mr. Sullivan. We plan to have a periodic update. Probably--
Mr. Poliquin. What is periodic?
Mr. Sullivan. Probably quarterly.
Mr. Poliquin. Okay.
Mr. Sullivan. That we are providing directly to the
Secretary. And then we would be happy to provide that to the
Committee if you desire.
Mr. Poliquin. I desire.
Mr. Sullivan. Okay. We will do it.
Mr. Poliquin. Okay. With the Chairman's blessing, I desire.
Mr. Sullivan. And I would like to say, at Togus, you know,
an example of, an enhanced use lease that we just, awarded
about a month ago for these housing facilities that are up
there--
Mr. Poliquin. Great.
Mr. Sullivan [continued]. --is a good example of--
Mr. Poliquin. Yeah.
Mr. Sullivan [continued]. --getting the community to come
in and take in that case it was not unneeded buildings, it was
unneeded land.
Mr. Poliquin. Okay.
Mr. Sullivan. And now they are now having permanent housing
at that site.
Mr. Poliquin. Great. And you know, what happens also, if I
may, is when we are disposing of these buildings that we do not
need and preventing us from taking better care of our men and
women in uniform, is that these assets go back on the tax rolls
in local towns and cities and they generate tax revenues if
they are repurposed. That is good. We do not have a government
unless we have tax revenues. Let us juice the tax revenues,
right? It helps everybody.
Next question. I represent one of the most rural parts of
America. Tell me how you folks are retooling the VA to provide
care for those in rural areas. Let us not forget rural America.
About a third of our country lives in rural America and we
provide a proportionately large number of our veterans, of
those that serve in the military from rural areas because we
know how to use firearms and we know how to shoot straight.
Mr. Sullivan. I would ask Dr. Crump to comment on that.
Mr. Crump. I will give you two examples of what we are
doing to address--
Mr. Poliquin. Speak up, please. My ears are so bad.
Mr. Crump. Sorry. I will give you two examples of what we
are trying to do to address the needs of veterans in rural
areas. First we have an Office of Rural Health. And one of the
things they do is focus primarily on the needs of those
veterans, looking at different methodologies, sometimes
innovative ways. We are putting resources out there to all of
the VA medical centers, giving them the opportunity to request
additional funding for things like telehealth hubs for mental
health, for primary care.
Mr. Poliquin. I am almost out of time and Mr. Roe is very
strict on time. So I am going to get right to the chase.
Mr. Crump. Okay.
Mr. Poliquin. When it comes to these assets that are
underperforming assets and costing us money, how can this issue
help rural veterans?
Mr. Crump. We are conducting a plan for a methodology
that--
Mr. Poliquin. When is that plan going to be ready?
Mr. Crump. September--to look at a market by market
analysis--
Mr. Poliquin [continued]. Okay. So that is three months.
Mr. Crump. --market by market analysis of the services and
the needs. The needs of the veterans and the services available
in every market, and then optimize that plan so that we can
deliver that care. A combination of direct care delivery by
VA--
Mr. Poliquin. Got it.
Mr. Crump [continued]. --telehealth, partnerships, leases--
Mr. Poliquin. Thank you, sir. And early September or late
September?
Mr. Crump. It will begin in September.
Mr. Poliquin. When is it going to be done?
Mr. Crump. Next September. That is to do 90--
Mr. Poliquin. Why do you not start it now and finish it
this September?
Mr. Crump. We are completing the pilot and developing the
methodology now. We need to socialize that with the veteran--
Mr. Poliquin. Good. Our staff will be in touch with you
folks to make sure we can see if there is any way we can speed
this up. Thank you very much, doctor.
The Chairman. Thank you, Mr. Poliquin. Mr. Banks, you are
recognized for five minutes.
Mr. Banks. Thank you, Mr. Chairman. I will be brief. I
know, Mr. Sullivan, you have already addressed questions about
public-private partnerships. But I wonder if you could be more
specific? Get into the weeds with us a little bit as policy
makers on what greater flexibility can we provide you to
enhance public-private partnerships to provide more
opportunities for you to partner with the private sector on
facilities across the country?
Mr. Sullivan. Sure. A little bit in the weeds. But we
believe that there is a great market for us out-leasing
existing facilities or land to a private entity and having them
either upgrade them or replace them or bring in another
complementary private sector entity on the same campus, which
would allow them to in essence cross-subsidize the development
costs of renovating a building or providing a new building.
Right now we do not have the authority to out-lease any of
our property to undertake that. And if you are looking at
developing or setting up financing, there has to be an interest
in the property that the private entity can take to the bank,
if you will, and get financing. So having that out-lease
authority would allow us to do that and we would enter into an
agreement where we could occupy all of the building or a
portion of the building, or all of the campus or a portion of
the campus, in the long term.
That will work where there is a market for this. It will
not work at every site. So that is when I said earlier we need
a whole, if you will, suite of tools. Because if there is a
market in the private sector for the property and it is
valuable, you can trade off that to have a public-private
venture done at that site. If you have property that is in some
place that has very low real estate value, very low private
interest in anything going on at the site, it is going to be
pretty impossible to do a public-private venture unless someone
is willing to come in and donate all of the money.
Mr. Banks. How can we help you and give you that out-
leasing authority? Is that legislative? Is that--
Mr. Sullivan. Yes, it is. It would require legislation.
Mr. Banks. Okay. Are you aware, have there been--I am the
new kid on the block on the Committee. Have there been efforts
to give you that authority?
Mr. Sullivan. We had that authority at one point. It
expired. It was renewed with this Committee's help to focus on
housing at the time. And again, CBO is a challenge to get this
legislation through, as it is with many capital related items.
So expanding the EUL authority in some form would help do that.
And there are various gradations of that legislation. You know,
the more you give us the higher the score may be for the
legislation.
Mr. Banks. Right. I look forward to working with you on
that.
Mr. Sullivan. I am happy to work with anyone on that.
Mr. Banks. Thank you very much. Mr. Chairman, I yield back.
The Chairman. I thank the gentleman for yielding. First of
all, I want to thank the panel, for you all being here today.
It has been very, very instructive and constructive. And I
think this is the beginning of a dialogue that is going to,
that needs to continue and will continue. I now will yield to
Ms. Brownley for any closing remarks.
Ms. Brownley. Well I thank you, Mr. Chairman, for having
the hearing. I think it has been a productive one and the
beginning of a longer conversation that we are going to have to
have over all of this. But I do think we need to expand the
conversation from not just obsolete facilities but, what are
the opportunities around public-private partnerships? The
leasing issues? All of this I think is, under the same umbrella
of, how we move forward and be in a mode of continuous
improvement as it relates to our facilities. Where we, you
know, as time goes on, how are we going to remove facilities
and enhance facilities where they are needed in a more timely
way? So with that, I would yield back, and thank you again for
the hearing.
The Chairman. Thank you all. And again, I appreciate the
panel being here. You all have been very helpful. And this is a
very complex, emotional issue. And it is going to have to be
done, as Secretary Principi said, in a very thoughtful way, an
open, transparent way, where all, everyone who is involved has
input. And I can just tell you that when you live in rural
America, and Mr. Poliquin mentioned this, you know, in rural
America where I live we are seeing businesses shuttered. We do
not see the growth that you see in other areas. And when you
see a public facility, whether it is a post office or whether
it is a school, an indication that your community is dying, and
not growing. And you see a VA close or taking buildings down,
it affects the whole community. I totally understand that. And
we have to be sensitive to that.
But we also have to be sensitive to the fact that the
mission of the VA is to provide healthcare, the very top
quality healthcare we can to our veterans, our servicemen and
women who have served this great country. And I think Ms.
Brownley brought up a great point, several great points, about
using leasing where you can be more nimble and put the CBOCs
and outpatient clinics where much care is given where the
veterans are, actually are. And the demographics, as I think
was pointed out, Ms. Draper pointed out, are changing. Not just
for veterans, but for the American population. I mean, Texas in
2010 picked up four congressional seats. That is three million
people that moved into Texas. That is more demand. Probably
many of them are veterans.
You know, I think the capital needs and we are looking at a
$4 billion a year, $50 billion deficit, it looks like. And we
are spending around $2 billion a year. I think we need the
information of where do we need those capital assets before we
go out and just build a bunch of stuff and then realize, oops,
we have put this in the wrong place. So I think that needs to
be done. And the VA's track record on capital has been spotty
when you look at Denver, and New Orleans, and Orlando, and so
forth. And we know we can do better. Just the leasing of a
major lease, I read in the documents that I was given that it
takes nine years from the time the VA plans it to the actual
activation of the lease, whereas the private sector is three
years. We have to get better, and we will. I think we certainly
will with the leadership that we have.
And I think one of the things you have to do is involve the
veteran community when we are making these decisions. What do
the veterans want the VA to look like and what services do they
want? And I think they are actually telling us by where they
are going to get their care.
So I cannot thank you enough. This is not something that is
going to get a lot of publicity and nobody is going to go home
to the Kiwanis Club and say I am talking about VA assets. I
mean, that is like talking about the fiduciary rule, what I got
to talk about on the other Committee that I am on. But it is
incredibly important for the future of the VA and how we care
for our veterans.
And with that, I ask unanimous consent that all Members
have five legislative days to revise and extend their remarks
and include extraneous material. Without objection, so ordered.
The hearing is adjourned.
[Whereupon, at 11:46 a.m., the Committee was adjourned.]
A P P E N D I X
----------
Prepared Statement of The Hon. Anthony J. Principi
Mr. Chairman, Ranking Member Waltz and members of the Committee,
good morning. Thank you for this opportunity to testify on an issue of
great importance to the VA and our Nation's veterans.
Medical care is a key component of the benefits and services
enacted by Congress in recognition of the sacrifices of the men and
women whose service in uniform preserved and protected our Nation's
freedoms.
Neither medical science nor the veteran population is static and
unchanging, and VA must always provide veterans with modern, high-tech
facilities to offer them high quality health care.
The department will fail to honor our Nation's commitment to its
veterans if VA's medical system does not evolve with the times.
VA is a proud organization with a great history. I was honored to
be associated with the department, both as Secretary and as Deputy
Secretary.
VA's partnership with medical schools, begun in 1945,
revolutionized the way medicine is taught in America.
VA researchers led the way in developing effective treatments for
tuberculosis, schizophrenia, and hypertension.
Three VA researchers have won Nobel Prizes; seven have won Lasker
awards.
The department has made an enormous contribution to American health
care-and has been a lifeline for tens of millions of veterans.
But while VA has a storied past and a turbulent present, many VA
medical centers were designed and built in an era in which medical care
was synonymous with hospital care. It made sense, in the 20th Century,
to define our nation's health care commitment to most veterans as
access to a hospital bed to the extent beds were available.
But American medicine-and VA health care-has transformed itself
from hospital-centered to patient-centered treatment. Most veterans,
like most Americans, see their physicians on an outpatient basis, and
most treatment is provided by prescription drugs.
VA medicine has kept up with, and sometimes led, these innovations.
As a result, the number of VA outpatient visits increased from 46.5
million in Fiscal Year 2002 to 92.4 million in Fiscal Year 2014, while
in that same period the number of inpatient admissions increased only
from 564,700 to 707,400.
While the practice of VA medicine has evolved, VA's medical
infrastructure has not kept pace. VA facilities are out of step with
changes in the practice of medicine, with demographic changes in the
veteran population, and with statutory changes in VA's health care
benefits packages.
Mentally ill patients, for example, are no longer consigned to
remotely located, thousand-bed asylums for the remainder of their
lives. Treatment for tuberculosis no longer involves lengthy
institutionalization.
In addition, millions of veterans, following the population
migration patterns of the nation, moved to the South, the West, and the
Southwest.
And as GAO noted in its recent report on VA Real Property, the new
Choice program has also reduced the need for some facilities and
services VA offers.
If VA does not realign itself, and close its unneeded facilities,
the current decline in the veteran population will make many VA medical
centers museums of the past-not the guideposts for the future they
should be.
When I became VA Secretary in 2001, President George W. Bush
reminded me that every dollar my agency spent is a dollar taken out of
someone else's hard-earned pay. It's not how much money you are given
in your budget that's important, he said-it's whether you spend that
money wisely.
We are stewards of the public trust, he concluded, and we must
never forget that.
I had the opportunity to recall his words a short time later, when
I was stuck in traffic in New York City. As my car idled in front of
VA's Manhattan hospital, I looked up at the hospital's patient bed
tower. Among the hundreds of windows looking out on First Avenue, only
a handful were lit. I didn't know what to make of it.
I learned the Manhattan VA hospital was one of many VA built in the
1950's to handle the influx of ill and injured World War II and Korean
War veterans. It once held 800 veterans, as did nearby hospitals in
Brooklyn and the Bronx. I was told the three hospitals that night were
caring for only 283 veteran patients-all together. All the other beds
were empty-and there were tens of thousands of empty beds throughout
VA's system.
Accordingly, I commissioned a comprehensive assessment of VA's
capital infrastructure and the demand for VA health care. The process
was called Capital Asset Realignment for Enhanced Services (CARES), and
it was modeled on DoD's infrastructure review process.
The CARES commission, which completed its work in 2004, offered
sound recommendations for realignment and allocation of the
Department's capital assets to meet demand for VA's services over the
next twenty years. Unfortunately, the CARES and DoD processes differed
in one specific way. Under CARES there was no requirement for Congress
to adopt or reject the commission's final recommendations as a package.
As a result recommendations for some needed new hospitals and
outpatient clinics were accepted; most of those to close or realign the
mission of facilities were rejected.
I know that the difficulties of agreeing to such a procedure for
members of Congress cannot be overstated. Having served as Chairman of
the 2005 Defense Base Closure and Realignment Commission I know
firsthand from visiting many of the military installations slated for
closure or realignment how trying this process is for them.
The words ``closure'' and ``realignment'' are easy to write on
paper, but they have profound effects on communities, and the people
who bring those communities to life.
But VA is spending too much money on bricks and mortar, rather than
doctors and nurses. VA's current budget request is for $186.5 billion;
in my last year as Secretary, in Fiscal Year 2005, that figure was
$69.4 billion-a 268 percent increase.
We are doing a disservice to the veterans VA is charged to serve,
and to the American people, if those resources are not used wisely and
well.
Our nation simply cannot afford to maintain a vast infrastructure
built for a different time in health care delivery that was to care for
tens of millions of veterans as they returned from World War II, Korea
and Vietnam-and even from the Civil War, the Spanish American War, and
World War I.
A full review of VA infrastructure is the right thing to do. One
that is open, transparent and apolitical. Those impacted deserve no
less.
Thank you.
Prepared Statement of Roscoe G. Butler
Chairman Roe, Ranking Member Walz, and distinguished members of the
committee, On behalf of our National Commander, Charles E. Schmidt, and
the over 2 million members of The American Legion, we thank you for
this opportunity to testify regarding The American Legion's views on
``Care Where It Counts: Assessing VA's Capital Asset Needs''.
Each year since 2003, The American Legion System Worth Saving (SWS)
program has conducted site visits to VA Health Care facilities across
the country and one thing we find in common is that VA has an enormous
amount of aging buildings that are either underutilized or vacant. VA
has a large inventory of buildings that are over a half-century old
resulting in significant costs for upgrades and needed replacement of
many parts of the facilities aging infrastructure.
In 1866, the United States Congress established the National Home
for Disabled Volunteer Soldiers (NHDVS), the precursor of the VA, to
provide medical and other facilities for veterans of the American Civil
War. Three centers were established in the following years: the Eastern
branch in Togus, Maine, the Central Branch in Dayton, and the
Northwestern Branch in Milwaukee, Wisconsin. The Dayton facility was
the administrative center of the home and its principal commissary.
Today these facilities still deliver health care to our nation's
veterans, and all have been designated by the National Historical
Society as a historical site.
Medical Centers like the Phoenix VA, which first opened its doors
in 1951 was built on 27 acres of the Indian School Reservation. After
the medical center had been built, the community was built around the
medical center leaving the medical center landlocked resulting in VA's
inability to expand their footprint which is the case with a lot of VA
properties.
Today, the Veterans Health Administration (VHA) is the largest
integrated health care system in the United States, providing care at
1,233 health care facilities, including 168 VA Medical Centers and
1,065 outpatient sites of care of varying complexity (VHA outpatient
clinics), serving more than 8.9 million veterans. In spite of the
exceptional health care VA provides, its aging infrastructure with a
number of buildings being underutilized or vacant, creates problems for
VA to maximize the use of its capital assets.
In a 2015 House Veterans Affairs Committee (HVAC) budget hearing,
Secretary McDonald said that the VA had 336 buildings across the
country that are less than half-occupied, and many are not being
utilized to their full potential. Additionally, it apparently costs
more than 24 million dollars a year to maintain these buildings.
Secretary McDonald stated ``VA cannot be a sound steward of the
taxpayers' resources with the asset portfolio that we're currently
carrying,'' McDonald told lawmakers. ``No business would carry such a
portfolio. Veterans deserve much better. It's time to close the VA's
old substandard and underutilized infrastructure.'' \1\
---------------------------------------------------------------------------
\1\ Military Times (February 2017): VA looking at its own version
of BRAC
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According to information provided by VA in FY2016, VA had 403
vacant buildings at an annual operating cost of $6,674,227 and 784
underutilized buildings at an annual operation cost of $20,266,271. VA
defines an underutilized building as an individual building that is
occupied and in use, but the function(s) housed there do not require
the full amount of space in the building to operate.
If there was unlimited funding, the easy answer would be to dispose
of all of VA's vacant buildings and build new modern facilities but the
reality is funding is not unlimited. Based on a June 22, 2017 VA news
release, Dr. Shulkin announced plans to dispose of all of its vacant
buildings over the next 24 months. \2\ According to Dr. Shulkin, if it
cannot sell, re-use or otherwise dispose of the property, the plan is
to knock them down and clear the site for something else. The American
Legion has reviewed the Government Accountability Office (GAO) April
2017 report entitled, VA Should Improve Its Efforts to Align Facilities
with Veterans' Needs. \3\
---------------------------------------------------------------------------
\2\ VA news Release: VA announces plan to dispose of or reuse all
its vacant buildings in 24 months
\3\ GAO Report No. 17-349 (April 2017): VA Should Improve Its
Efforts to Align Facilities With Veterans Needs
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The American Legion agrees that over time there has been many
changes which have impacted VA's ability to align its medical
facilities and services in order to meet the needs of our nation
veterans. According to GAO geographic shifts in the veteran population,
changes in health care delivery, and an aging infrastructure affects
the Department of Veterans Affairs' (VA) efforts to align its services
and real property portfolio to meet the needs of veterans.
Since VA began treating veterans, eligibility has expanded from
treating service-connected veterans to providing care to all veterans
who are eligible to enroll in the VA Health Care System. As a result,
the need for increased space in the VA healthcare systems across the
country has not been able to keep up with the shifting veteran
population.
When The American Legion System Worth Saving team is out conducting
System Worth Saving Site visits, VA employees often express concerns
about the lack of space, the amount of time it takes to acquire lease
space, and the time it takes to build a new facility or community-based
outpatient clinic. VA employees express concerns about VA's Strategic
Capital Investment Planning (SCIP) process. According to GAO, VA is
aware of many of the limitations of the SCIP process-as the Independent
Assessment found many of the same limitations and made recommendations
to address them, but VA has taken little action. Specifically, in 2015,
the Independent Assessment found that SCIP's scoring and approval
processes and time frames undermined VA's capital planning and
prioritization process.
In 2016, The American Legion renewed Resolution No. 136, Strategic
Capital Investment Planning Program, which urges Congress to provide
increased appropriations annually to address Department of Veterans
Affairs construction deficiencies and gaps identified by VA's Strategic
Capital Investment Planning program; VA includes activation costs in
their future SCIP cost projections and allocations, so VA's budget will
not have to offset this lack of national funding, and VA continues to
be transparent about SCIP's progress by publicly posting information
about projects and costs on an annual basis. \4\
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\4\ The American Legion Resolution No. 136 (Aug. 2016): Strategic
Capital Investment Planning Program
---------------------------------------------------------------------------
Based on The American Legion's review, addressing VA's capital
asset needs is not a new phenomenon. There have been numerous
government reports over the last 26 years addressing this topic to
include the following GAO reports:
1991- GAO/T-HEHS-00-91, VA Is Struggling to Respond to
Asset Realignment Challenges \5\
---------------------------------------------------------------------------
\5\ GAO Report No.T-HEHS-00-91 (April 2000): VA Is Struggling to
Respond to Asset Realignment Challenges
---------------------------------------------------------------------------
2000 - GAO/T-HEHS-00-88 - VA Health Care: VA is
Struggling to Address Asset Realignment Challenges \6\
---------------------------------------------------------------------------
\6\ GAO Report No. T-HEHS-00-88 (April 2000): VA Is Struggling to
Address Asset Realignment Challenges
---------------------------------------------------------------------------
2003 - GAO-03-1103R - VA Health Care: Framework for
Analyzing Capital Asset Realignment for Enhanced Services Decisions \7\
---------------------------------------------------------------------------
\7\ GAO Report (August 2003): VA Health Care: Framework for
Analyzing Capital Asset Realignment for Enhanced Services Decisions
---------------------------------------------------------------------------
2005- GAO-05-429, Key Challenges to Aligning Capital
Assets and Enhancing Veterans' Care \8\
---------------------------------------------------------------------------
\8\ GAO Report No. 05-429: (August 2005): Key Challenges to
Aligning Capital Assets and Enhancing Veterans' Care
---------------------------------------------------------------------------
2007 - GAO-07-048, Overview of VA's Capital Asset
Management
2009 - GAO-09-686T, Overview of VA's Capital Asset
Management \9\
---------------------------------------------------------------------------
\9\ GAO Report No -09-686T (June 2009) Overview of VA's Capital
Asset Management
---------------------------------------------------------------------------
2017 - GAO-17-349, VA Should Improve Its Efforts to Align
Facilities with Veterans' Needs \10\
---------------------------------------------------------------------------
\10\ GAO report No. 17-349 (April 2017): VA Should Improve Its
Efforts to Align Facilities with Veterans' Needs
In 2004, the Veterans Affairs Capital Asset Realignment for
Enhanced Services Commission (CARES) delivered their report to
Congress. \11\ All of these reports included recommendations for
improvements. Since the 1999 report was issued, GAO continues to report
on deficiencies in the Department of Veterans Affairs Capital Alignment
and Asset Needs.
---------------------------------------------------------------------------
\11\ http://www.goldenwest.net/veteranstown/doc/CARES--Final--
Report.pdf
---------------------------------------------------------------------------
The American Legion is concerned that VA has not routinely engaged
Veteran Service Organizations (VSOs) in discussions about their plans
to address VA's capital asset needs. VA must do a better job in
engaging VSOs in these discussions. Twenty-six years later, and we are
still trying to find solutions to VA's Capital Asset Needs. For God and
Country, The American Legion hopes it doesn't take another twenty-six
years to find solutions to VA's Capital Asset Needs.
Conclusion
As always, The American Legion thanks this Committee for the
opportunity to explain the position of the over 2 million veteran
members of this organization. For additional information regarding this
testimony, please contact Mr. Matthew Shuman, Director at The American
Legion's Legislative Division at (202) 861-2700 or [email protected].
Prepared Statement of Debra Draper
VA REAL PROPERTY
Planning and Communication Improvements Could Help Better Align
Facilities with Veterans' Needs
Chairman Roe, Ranking Member Walz, and Members of the Committee:
I am pleased to be here today to discuss our April 2017 report on
the Department of Veterans Affairs' (VA) efforts to align its medical
facilities and services. \1\ As you know, VA operates one of the
largest health care systems in the United States, providing care to
more than 8.9 million veterans each year. VA is also one of the largest
federal property-holding agencies. In September 2014, VA's reported
inventory included 6,091 federally-owned and 1,586 leased buildings.
However, in recent decades, the veteran population and preferences have
shifted. VA has recognized this and the need to modernize its aging
infrastructure and align its real property assets to provide
accessible, high-quality and cost-effective services to veterans.
---------------------------------------------------------------------------
\1\ GAO, VA Real Property: VA Should Improve Its Efforts to Align
Facilities with Veterans' Needs, GAO 17 349 (Washington, D.C.: Apr. 5,
2017).
---------------------------------------------------------------------------
Aligning VA facilities to improve veteran access to services
integrates two of GAO's high risk areas: veterans' health care and
federal real property. In 2015, GAO placed veterans' health care on its
High Risk List due to persistent weaknesses and systemic problems with
timeliness, cost-effectiveness, quality, and safety of the care
provided to veterans. \2\ In 2003, GAO placed federal real property
management-including management of VA real property-on its High Risk
List due to long-standing challenges including effectively disposing of
excess and underutilized federal property. \3\
---------------------------------------------------------------------------
\2\ GAO, High-Risk Series: An Update, GAO 15 290 (Washington, D.C.:
February 2015). GAO maintains a high-risk program to focus attention on
government operations that it identifies as high risk due to their
greater vulnerabilities to fraud, waste, abuse, and mismanagement or
the need for transformation to address economy, efficiency, or
effectiveness challenges. See, for example, GAO, VA Health Care:
Actions Needed to Improve Newly Enrolled Veterans' Access to Primary
Care, GAO 16 328 (Washington, D.C.: Mar. 18, 2016) and GAO, VA Mental
Health: Clearer Guidance on Access Policies and Wait-Time Data Needed,
GAO 16 24 (Washington, D.C.: Oct. 28, 2015). See also, for example,
Department of Veterans Affairs, Office of Inspector General, Veterans
Health Administration, Review of Alleged Patient Deaths, Patient Wait
Times, and Scheduling Practices at the Phoenix VA Health Care System,
Report No. 14-02603-267 (Washington, D.C.: Aug. 26, 2014) and VA,
Department of Veterans Affairs Access Audit, System-Wide Review of
Access, Results of Access Audit Conducted May 12, 2014, through June 3,
2014.
\3\ See GAO, High-Risk Series: Federal Real Property, GAO 03 122
(Washington, D.C.: January 2003).
---------------------------------------------------------------------------
Today I will summarize the findings from our April 2017 report
including (1) the factors that affect VA facility alignment, (2) the
extent to which VA's capital-planning process facilitates the alignment
of facilities with the veteran population, and (3) the challenges VA
faces in its alignment activities. In addition, I will highlight key
actions that we recommended in our report that VA can take to improve
its ability to plan for and facilitate the alignment of its facilities
with veterans' needs.
For our report, we reviewed VA's facility-planning documents and
data and interviewed VA officials in headquarters and at seven medical
facilities selected for their geographic location, veteran population,
and past alignment efforts. We also evaluated VA's actions against
federal standards for internal control, federal capital-acquisition
guidance, and GAO-identified best practices for capital planning. \4\
Additional information on our scope and methodology is available in our
report. The work on which this testimony is based was conducted in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
---------------------------------------------------------------------------
\4\ See GAO, Standards for Internal Control in the Federal
Government, GAO/AIMD-00-21.3.1 (Washington, DC: November 1999), and
GAO, Standards for Internal Control in the Federal Government, GAO 14
704G (Washington, D.C.: September 2014), Office of Management and
Budget, Circular No. A-11: Preparation, Submission, and Execution of
the Budget, July 2016, and GAO, Streamlining Government: Questions to
Consider When Evaluating Proposals to Consolidate Physical
Infrastructure and Management Functions, GAO 12 542 (Washington, D.C.:
May 23, 2012).
Facility Alignment Is Affected by Shifting Veteran Populations,
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Evolving Health Care Delivery, and an Aging Infrastructure
Geographic shifts in the veteran population, changes in health care
delivery, and an aging infrastructure affect VA's efforts to align its
services and real property portfolio to meet the needs of veterans. For
example, a shift over time from inpatient to outpatient care will
likely result in underutilized space once used for inpatient care. In
such instances, it is often difficult and costly for VA to modernize,
renovate, and retrofit these older facilities. In June 2017, VA
reported that its facility inventory includes 430 vacant or mostly-
vacant buildings that are, on average, more than 60 years old, and an
additional 784 buildings are underutilized.
The historic status of some VA facilities adds to the complexity of
converting or disposing of them. In 2014, VA reported holding 2,957
historic buildings, structures, or land parcels-the third most in the
federal government after the Department of Defense and the Department
of the Interior. In some instances, it may be more expensive to
renovate than demolish and rebuild outdated facilities. In other cases,
however, there may not be an option to demolish if these buildings are
designated as historic. For example, planning officials at four medical
facilities in our review told us that state historic preservation
efforts prevented them from demolishing vacant buildings, even though
these buildings require upkeep costs and pose potential safety hazards.
(See fig. 1.)
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Note: Kerrville VA Medical Center, Kerrville, Texas: These pictures
show a dwelling formerly used for medical staff housing that has been
designated as a historic building. The outside of the building shows
broken windows, missing bricks, and gutters that have nearly detached
from the building. On the inside, portions of the ceiling have
collapsed, spraying debris onto the floors and walls.Limitations in
VA's Capital-planning Processes Impede Its Alignment of Facilities
Two of the planning processes VA uses to align its facilities-VA's
Strategic Capital Investment Planning (SCIP) and the VA Integrated
Planning (VAIP)-have limitations. \5\
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\5\ Established in 2010, the goal of SCIP is to identify the full
capital needed to address VA's service and infrastructure gaps and to
demonstrate that all project requests are centrally reviewed in an
equitable and consistent way throughout VA, including across market
areas within VA's health care system. Annually, planners at the medical
facilities develop 10-year action plans for their respective
facilities, which include projects to address gaps in service
identified by the SCIP process. Medical facility officials then develop
more detailed business plans for the capital improvement projects that
are expected to take place in the first year of the 10-year action
plan. These projects are validated, scored, and ranked centrally based
on the extent to which they address the annual VA-approved SCIP
criteria using the assigned weights.
---------------------------------------------------------------------------
Implemented in fiscal year 2011 as a pilot project, the VAIP
process's goal was to identify the best distribution of health care
services for veterans; where the services should be located based on
the veterans' locations and referral patterns; and where VA should
adapt services, facilities, and health care delivery options to better
meet these needs as determined by locations and referral patterns.
SCIP Process
VA relies on the SCIP process to plan and prioritize capital
projects system-wide, but SCIP's limitations-including subjective
narratives, long timeframes, and restricted access to information-
undermine VA's ability to achieve its goals. For example, the time
between when planning officials at VA medical facilities begin
developing the SCIP narratives and when they are notified that a
project is funded has taken between 17 and 23 months over the past 6
fiscal-year SCIP submissions. \6\ (See fig. 2.) As such, VA routinely
asks its facility planners to submit their next year's planned project
narratives before knowing if their project submissions from the
previous year have been funded.
---------------------------------------------------------------------------
\6\ The scoring of submitted projects includes both narrative
responses that are evaluated (about one-third of the overall score) and
data-driven scoring based on gap closure (the remaining two-thirds of
the overall score).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
(a) Although planning officials at VA medical facilities obtain initial
information from SCIP about what gaps they need to address, they do
not officially start developing the narratives until they receive a
request from VA to submit a project for SCIP scoring and approval.
Officials from the office that oversees SCIP told us that
facilities usually have access to the tools for submission about a
---------------------------------------------------------------------------
week prior to the request date.
(b) Medical facilities officially find out which major (over $10
million) and minor construction (under $10 million) SCIP projects
are approved and will be funded when Congress passes the
department's budget for that fiscal year. Non-recurring maintenance
SCIP projects-repairs and renovations within the existing square
footage of a facility that total more than $25,000-are available
for funding on the first day of the fiscal year for that project's
submission because they have advance appropriations.
An official from the office that oversees SCIP told us that the
timing of the budgeting process, which is outside VA's control,
contributes to these delays. While these aspects are outside of its
control, VA has chosen to wait about 6 to 10 months to report the
results of the SCIP scoring process to the medical facilities. This
situation makes it difficult for local officials to understand the
likelihood that their projects will receive funding. A VA official said
that for future SCIP cycles, VA plans to release the scoring results
for minor construction and non-recurring maintenance projects to local
officials earlier in the process. At the time of our review, however,
the official did not have a timeframe for when VA would do this.
Although VA acknowledges many of these limitations, it has taken little
action in response. Federal standards for internal control state that
agencies should evaluate and determine appropriate corrective action
for identified limitations on a timely basis. \7\ If VA does not
address known limitations with the SCIP process, it will not have
reasonable assurance that SCIP can be used to accurately identify the
capital necessary to address its service and infrastructure gaps. In
our April 2017 report, we recommended that VA address identified
limitations to the SCIP process, including limitations to scoring and
approval, and access to information. VA partially concurred, noting
that it generally concurred with the recommendation to address
limitations in the SCIP process, but limited its concurrence to
addressing the limitations that are within its control.
---------------------------------------------------------------------------
\7\ See GAO 14 704G.
---------------------------------------------------------------------------
VAIP Process
The VAIP process produces a market-level health services delivery
plan for each Veterans Integrated Service Network (VISN) and a facility
master plan for each medical facility-which VA has estimated to cost
$108 million when fully complete. \8\ However, the VAIP process's
facility master plans assume all future growth in services will be
provided directly through VA facilities. This assumption is not
accurate given that VA obligated about $10.1 billion to purchase care
from non-VA providers in fiscal year 2015. VA can provide care directly
through its medical facilities or purchase health care services from
non-VA providers through both the Non-VA Medical Care Program (referred
to as ``care in the community'' by VA) and clinical contracts. \9\
---------------------------------------------------------------------------
\8\ VA organizes its system of care into regional networks (VISNs),
which are responsible for coordination and oversight of all
administrative and clinical activities within its specified geographic
region. As of January 2017, VA officials told us they had mostly
completed the VAIP process in 6 of the 18 VISNs and had plans to start
or complete the remaining VISNs by October 2018.
\9\ VA uses the services of non-VA providers in non-VA facilities
under the following statutory authorities: 38 U.S.C. Sec. Sec. 1703,
1725, 1728, 8111, and 8153. The Non-VA Medical Care Program includes
the Choice Program and Patient-Centered Community Care. The Choice
Program was authorized under the Veterans Access, Choice, and
Accountability Act of 2014 (Choice Act), which appropriated $10 billion
for the furnishing of non-VA care when veterans' access to VA health
care does not meet applicable timeliness or travel requirements. Pub.
L. No.113-146, 128 Stat. 1754 (2014). VA may authorize Choice Program
care until such funds are exhausted. Pub. L. No. 115-26, Sec. 1, 131
Stat. 129 (2017). Patient-Centered Community Care is a nationwide
program where VA may authorize non-VA care when a VA facility is unable
to provide certain specialty care services, such as cardiology or
orthopedics, or under other conditions. To implement the program, VA
utilizes two contractors, Health Net and TriWest, to establish networks
of providers in a number of specialties-including primary care,
inpatient specialty care, and mental health care.
---------------------------------------------------------------------------
The Office of Management and Budget's acquisition guidance notes
that investments in major capital assets should be made only if no
alternative private sector source can support the function at a lower
cost. \10\ This consideration is particularly relevant as VA's data
projects that the number of enrolled veterans will begin to fall after
2024. Officials who oversee the VAIP process said that they were still
awaiting other VA offices to complete analyses required by recently
released VA guidance, but as a result of this and other limitations,
some local VA officials said that they already bypass the VAIP process
and contract for their own facility master plans. In our April 2017
report, we recommended that VA assess the value of the VAIP's facility
master plans as a facility-planning tool, and based on conclusions from
the review, either (1) discontinue the development of VAIP's facility
master plans or (2) address the limitations of VAIP's facility master
plans. VA concurred with the recommendation and noted that all future
VAIP facility master plans will embrace all recent and evolving
guidance, especially regarding care in the community opportunities.
---------------------------------------------------------------------------
\10\ See Office of Management and Budget, Circular No. A-11.
VA Has Faced Challenges When Not Fully Engaging Stakeholders in Its
---------------------------------------------------------------------------
Facility Alignment Efforts
VA has encountered challenges to its facility alignment efforts, in
part, because it has not consistently followed best practices for
effectively engaging stakeholders. VA may align its facilities to meet
veterans' needs by expanding or consolidating facilities or services.
Stakeholders-including veterans; local, state, and federal officials;
Veterans Service Organizations; historic preservation groups; VA staff;
and Congress-often view changes as working against their interests or
those of their constituents, especially when services are eliminated or
shifted from one location to another.
We have previously identified best practices for stakeholder
engagement in facility consolidation actions, recommending that
stakeholder outreach begin well in advance of any facility changes and
developing a two-way communication strategy to address concerns and
explain the data, the rationale, and the overarching benefits behind
decisions. \11\ Failure to effectively engage with stakeholders about
alignment changes can undermine or derail facility alignment. We found
that VA has not consistently engaged stakeholders, and, in some cases,
this resulted in adversarial relationships that reduced VA's ability to
better align facilities with the needs of the veteran population. In
other cases, we observed two-way communication with stakeholders that
resulted in more productive relationships and effective alignment
efforts, such as with a medical facility that successfully closed an
underutilized inpatient wing, closed a leased community based
outpatient clinic, and relocated a domiciliary.
---------------------------------------------------------------------------
\11\ See GAO 12 542.
---------------------------------------------------------------------------
This inconsistency in communication practices may result, in part,
from a lack of VA guidance for incorporating best practices into
stakeholder communication. Further, VA officials stated that they do
not monitor and evaluate their communication methods for effectiveness
in reaching their intended audiences. This runs counter to federal
standards for internal control, which note that agencies should monitor
and evaluate their activities. \12\ Without guidance that adheres to
best practices for fully integrating stakeholders and without
monitoring and evaluation of this process, VA does not have reasonable
assurance that its staff are meaningfully or effectively engaging
stakeholders in the capital alignment decisions that affect them. In
our April 2017 report, we recommended that VA (1) develop and
distribute guidance for VISNs and facilities using best practices on
how to effectively communicate with stakeholders about alignment
change, and (2) develop and implement a mechanism to evaluate VISN and
facility communication efforts with stakeholders to ensure that these
communication efforts are working as intended and align with guidance
and best practices. VA concurred with our recommendations and outlined
a plan to implement these recommendations.
---------------------------------------------------------------------------
\12\ See GAO 14 704G.
---------------------------------------------------------------------------
Chairman Roe, Ranking Member Walz, and Members of the Committee,
this concludes my prepared statement. I am happy to answer any
questions related to our work on VA's efforts to align its medical
facilities and services.
GAO Contact and Staff Acknowledgments
If you or your staff members have any questions concerning this
testimony, please contact me at (202) 512-7114 or [email protected].
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this statement. Other
individuals who made key contributions to this testimony include Dave
Wise, Director; Keith Cunningham, Assistant Director; Jacquelyn
Hamilton; Jeff Mayhew; Malika Rice, Michelle Weathers; and Crystal
Wesco.
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Prepared Statement of James M. Sullivan
Thank you, Chairman Roe, Ranking Member Walz, and Members of the
Committee, for the opportunity to appear today to discuss the
Department of Veterans Affairs (VA) capital asset program and address
VA's responses the findings in the Commission on Care report, the
Independent Assessment, and Government Accountability Office (GAO)
Report 17-349 ``VA REAL PROPERTY - VA Should Improve its Efforts to
Align Facilities with Veterans' Needs.'' Additionally, I would like to
discuss VA's ongoing efforts to dispose or reuse vacant buildings and
the need for additional tools that will provide extended opportunities
to reduce VA's portfolio of vacant assets.
VA Real Property Portfolio
VA's mission is distinct from other Federal agencies, in that we
operate the nation's largest integrated healthcare system, with more
than 1,700 health service delivery sites, including hospitals, clinics,
community living centers, domiciliaries, residential rehabilitation
sites, and other types of facilities. Additionally, VA administers a
variety of benefits and services, and operates 135 national cemeteries
nationwide.
The Department owns and leases real property in hundreds of
communities across the U.S., and overseas. Overall, VA maintains
approximately 155 million square feet (SF) in 6,274 owned buildings,
and more than 35,000 acres of land. Approximately 24.6 million SF of
space has been acquired through over 1,926 leases for the Department.
VA's portfolio of nearly 180 million SF is one of the largest in the
Federal Government and is unlike many Federal agencies; VA owns the
majority of its portfolio - 86 percent of its square footage - which
means real estate plays an important role in our overall asset
management. Another aspect that separates VA from other Federal
agencies is the fact that the average age of a VA owned building is
approaching 60 years old. Managing a portfolio of that size and age is
complex, takes a significant amount of resources, and requires a great
deal of flexibility to both modernize and adjust to changing
demographics of the Veteran population.
VA's Capital Asset Needs
Most of the VA's infrastructure portfolio is dated, in need of
repair/replacement, and requires considerable investment. The need is
exacerbated because the majority of VA facilities have out-lived their
useful life-cycle. VA has more than $50 billion in capital needs,
identified through VA's Strategic Capital Investment Planning (SCIP)
process, over the next 10 years to modernize and maintain its
infrastructure. Specifically, VA's fiscal year (FY) 2018 budget
requests $512 million for major construction, $342 million for minor
construction, $1.9 billion for non-recurring maintenance and $954
million in medical facilities funds for VA real property leases. VA's
FY 2018 request reflects VA's commitment to modernize and fix its
existing infrastructure by directing significant resources to projects
that correct critical building and infrastructure deficiencies that are
in need of repair. VA will also need flexibility to repurpose some
facilities and develop partnerships or joint ventures with academic
affiliates, the Department of Defense, and the private sector where
appropriate. This flexibility will allow VA to assure both access and
quality of care, and even expand access to care for Veterans in some
markets.
VA Real Property Disposal
One of Secretary Shulkin's top five priorities is ``Modernizing
(VA) Systems'' which includes focusing on infrastructure improvements
and streamlining. In support of this priority, VA has identified 430
individual vacant buildings totaling 5.9 million gross SF that are
geographically dispersed through VA campuses nationwide. On June 20,
2017, the Secretary announced VA's plans to initiate disposal through
demolition, sale or transfer; or reuse actions for these vacant
buildings totaling 5.9 million square feet, over the next 24 months.
These buildings are not being used to serve Veterans, and the $7
million in annual capital and operating expenses currently used to
maintain these vacant buildings can be better utilized to serve
Veterans.
VA evaluated the 430 vacant buildings and categorized them for
disposal based on data regarding several factors. These factors
included whether the buildings were classified as historic or historic
eligible, had environmental concerns, or if there were more complex
issues preventing disposal or reuse of the buildings. VA welcomes
support from Congress to streamline approval timelines and processes in
order for VA to better align owned assets and make business decisions
without undue statutory or regulatory constraints from environmental
and historic preservation stakeholders who might unintentionally
negatively impact cost effective disposal or reuse actions, while still
maintaining good environmental outcomes. On June 20, 2017, Secretary
Shulkin also announced that VA will review another 784 non-vacant, but
underutilized buildings to determine if additional efficiencies can be
identified to be reinvested in veterans' services. This effort will be
incorporated as the Department works towards the goal of high
performing healthcare networks
Available Outleasing Tools
VA has made progress in its efforts to reduce its vacant building
footprint, and is continuing to aggressively pursue reuse and disposal
strategies. Since 2004, VA has disposed or reused 1,059 assets totaling
approximately 8.3 million gross SF and 932 acres. One of VA's most
successful real property asset management tools is its Enhanced-Use
Lease (EUL) authority. The EUL authority currently allows VA to
outlease assets to private and public sector entities, and to transform
vacant buildings into housing for homeless Veterans, at little or no
long-term carrying cost to VA. The program has provided significant
benefits to VA in terms of annual cost savings; improved facilities
consistent with VA's mission and operations; increased healthcare
services; substantial private investment in VA's capital facilities and
infrastructure; creation of jobs; and increased tax revenues for local
communities.
VA is one of the few Federal agencies with an EUL authority, and VA
manages one of the most successful versions of these programs within
the Federal Government. Approximately 4.5 million SF of VA building
space has been outleased in public-private partnerships through VA's
EUL authority. This has resulted in over 2,700 operational housing
units for homeless Veterans, Veterans that are at-risk for
homelessness, and in some situations, their families.
VA previously had broader EUL authority that allowed for mixed-use
and other wide-ranging partnerships beyond supportive housing. Such
uses were consistent with VA's mission and operations. While that
authority lapsed in December 2011, VA has submitted draft legislation
to Congress that proposes to expand the EUL authority beyond the scope
of supportive housing. This would allow greater reuse flexibility of
unneeded assets, and to improve services for Veterans.
Additionally, VA is embarking on a program authorized through the
National Historic Preservation Act (NHPA) for Historic Outleasing and
Exchange Actions that allows expanded ability for reuse of historic
properties beyond housing.
Public-Private Partnerships
In addition to utilizing the EUL program, VA welcomes opportunities
to explore other forms of public-private partnerships that can provide
additional tools to supplement VA's capital requirements and offer new
methods to enhance the facilities used to serve Veterans and their
families. VA could utilize additional public-private partnerships
opportunities to support the right-sizing and adaptation of VA's owned
infrastructure. Further flexibility to engage potential partnerships to
renovate or reuse existing facilities could provide VA with cost
savings upfront and help support improved services for Veterans.
Choice Act - Independent Assessment
The Independent Assessment Recommendations related to facilities
(Section K) focused on VA capital project selection/project portfolio;
capital project delivery; utilization of existing infrastructure; and
the use of transformative options to address unfunded capital
requirements. In response to language in the Fiscal Year 2017
Appropriations Bill requiring a National Realignment Strategy, VA began
efforts to conduct objective assessments of the markets within the VA
healthcare system.
Commission on Care
VA agreed that the Commission on Care's recommendation on
facilities was critical to enabling a successful transformation of VA's
healthcare system to a modern high-performing integrated network to
better serve the needs of Veterans now and in the future. VA stated
that a strong suite of capital planning programs, tools, resources,
modernized facilities where appropriate, and proper dispositioning of
outdated facilities, consistent with the Commission's recommendations,
would be needed to fully realize the benefits and Veteran outcomes
expected from implementing an integrated healthcare network.
Specifically, VA agreed with the Commission that it is critical for VA
to determine the optimal mix of healthcare services to meet Veterans
needs at the market level before realigning its infrastructure in
concert with partner resources in the market. VA also agreed that
greater statutory authority and tools are needed to address the
Department's real property needs and realign VA's capital assets,
including divestiture of outdated properties where appropriate.
GAO Report 17-349 - VA REAL PROPERTY
The report highlighted GAO's findings related to VA's SCIP process,
the VA Integrated Planning (VAIP) process, and VA's stakeholder
communication efforts related to facility alignment decisions. In
response to GAO's report, VA partially concurred with the
recommendation regarding the SCIP process, and agreed to address the
limitations that are within VA's control. Many of the items noted by
GAO are found outside of the SCIP program's purview, in areas where VA
has limited ability to influence changes. The SCIP process is a data-
driven, long-range planning tool that integrates all capital investment
needs across VA. SCIP informs investment and annual budget decisions by
annually setting capital investment policy direction and project
priorities, but it is not a budget tool. It does not guarantee whether
or when necessary levels of funding will be received or otherwise made
available.
To the extent possible, VA is implementing changes to the SCIP
process to support better access to project data, improve the
visibility and prioritization of sequenced projects, minimize
administrative burdens, rationalize proposals based on the realities of
Veteran Choice and shifting demographics, and to improve communication
of SCIP results to VA planners as early as possible in the process.
This also includes reducing the administrative burden of providing SCIP
documents.
Through the VAIP process, an estimated 60 Facility Master Plans
(FMP) were completed on a Veterans Integrated Service Network (VISN)
basis following development of Service Delivery Plans. These FMPs
provided a guide for planning and development over a 10-year period.
The FMPs were considered highly valuable at the time of inception. VA
has considered the feedback from GAO's report and in support of
emphasis on Care in the Community, there will be a strategic pause in
the VAIP process. VA is in the process of reassessing facility needs as
a consequence of the assessment of local health systems during the
market based health system optimization process. VA will evaluate
service delivery opportunities in each market to build local high-
performing integrated healthcare networks.
GAO also stated that VA needs to enhance communication with
stakeholders. To ensure consistency in stakeholder engagement efforts
and address GAO's recommendations, the Veterans Health Administration's
(VHA) Office of Communications is developing a standard operating
procedure (SOP) for all VISN and facility public affairs officers to
follow when there is a change in mission and/or realignment. The SOP
directs that VHA use the template communications plan, including
timeline for notifications, target audiences, and example key
messaging. In addition, the SOP provides guidance for facilities to
implement evaluation tools to measure the return on their
communications investment in sharing information with stakeholders,
including after action reports, media monitoring tools, and direct
feedback from target audiences. The VHA Deputy Under Secretary for
Health for Operations and Management disseminated the SOP through a
memorandum to facility and VISN leadership on June 30, 2017, and the
topic will be discussed on Network Director monthly conference calls
and facility leadership calls, providing an opportunity for discussion
and questions. VHA has also established a mechanism for sharing best
practices.
Way Forward - High Performing Healthcare Networks
VA is working collaboratively to address the Independent Assessment
Recommendations, the Commission on Care's recommendation on facilities,
and GAO Report 17-349. VA is working towards the goal of high
performing healthcare networks that take into account current and
future Veteran demand for medical care, and responsive services by
integrating community care, telehealth services and VA-provided
healthcare. VA is partnering with private sector healthcare experts to
conduct objective assessments and develop local health system
optimization plans.
The assessment methodology was developed between the VHA Office of
Policy and Planning, VHA Clinical Operations and the VHA Office of
Community Care. The assessment methodology was subsequently tested in
three pilot markets between April and July 2017. An acquisition process
is underway to select a contractor to assist VA with using the pilot
results to create a final methodology for use beginning in September
2017 to assess and recommend health system optimization in all 96
markets of the VA healthcare system by the first quarter of FY 2019.
The primary outcomes of the assessments will be a plan for each
market to develop a high performing healthcare network. Creating a high
performing network will include an evaluation and potential use
assessment of all market capabilities including VA, Department of
Defense (DoD), Academic Affiliates, Federally Qualified Health Centers,
and other community providers. Once the market assessment is complete,
recommendations may include capital investments, divestments, leasing,
public-private partnerships, and other approaches for modernizing VA
services and infrastructure. In addition to the capital component, the
plan will include programmatic/service-line recommendations, as well as
opportunities to increase capacity from process improvement and
integration of telehealth services.
VA expects that these market area optimization plans will address
the Independent Assessment, the Commission on Care recommendations, and
GAO concerns by balancing demand for and supply of services in each
local market by using government partners, academic affiliates, and
private sector resources to provide Veterans improved access, excellent
quality care, and greater satisfaction. In addition, the plans will
encourage cost effective strategies for coordinating all aspects of a
high performing healthcare network while eliminating duplicative and
inefficient processes.
Support from Congress
In order to build upon VA's success, continued support from
Congress is needed. As the Secretary stated at his recent FY 2018
budget hearings, VA's budget submission includes proposed legislative
requests that, if enacted, would increase the Department's flexibility
to meet its capital needs. VA included proposals to: (1) increase from
$10 million to $20 million the dollar threshold for minor construction
projects; (2) modify title 38 to eliminate statutory impediments to
acquiring joint facility projects with DoD and other Federal agencies;
and (3) expand VA's EUL authority beyond supportive housing. VA is also
seeking Congressional authorization of 27 major medical leases in order
to establish new points of care, expand sites of care, replace expiring
leases, and expand VA's research capabilities. The majority of these
leases have been included in previous budget requests, some dating back
to the FY 2015 budget submission.
Conclusion
VA has a complex real estate portfolio, and seeks to maintain the
optimal mix of assets needed to provide high quality care, readily
accessible services, and outstanding benefits to our Nation's Veterans.
VA welcomes new or expanded tools and the necessary flexibilities to
address its infrastructure needs and reduce vacant real property
assets, including establishing viable reuses where possible and saving
taxpayer dollars. The Department will keep the Committee informed as
progress is made on healthcare market assessments.
Mr. Chairman, Ranking Member, and Members of the Committee, this
concludes my statement. Thank you for the opportunity to testify before
the Committee today. I would be happy to respond to any questions you
may have.
[all]