VA Health Care: Key Challenges to Aligning Capital Assets and	 
Enhancing Veterans' Care (05-AUG-05, GAO-05-429).		 
                                                                 
The Department of Veterans Affairs (VA) operates one of the	 
nation's largest health care systems. In 1999, GAO reported on	 
VA's aged, obsolete capital assets, noting that better management
of these assets could significantly reduce VA's operating costs. 
GAO also noted that VA could reinvest the savings to enhance	 
veterans' health care. In response, VA initiated its Capital	 
Asset Realignment for Enhanced Services (CARES) process to	 
identify what health care services it should provide in which	 
locations through fiscal year 2022. CARES resulted in decisions  
to realign inpatient services at some VA facilities and to leave 
services as currently aligned at others. VA did not complete	 
inpatient alignment decisions across VA for long-term care and	 
mental health services and for inpatient services at some	 
facilities because VA lacked sufficient information on demand for
such care and other factors. GAO was asked to examine key	 
challenges VA will face in completing and implementing CARES.	 
This report discusses three key challenges: (1) developing	 
information to complete inpatient alignment decisions, (2)	 
improving management of excess property, and (3) determining	 
priorities for purchasing care to improve access. GAO's analysis 
is based on its prior CARES work, review of CARES documents, and 
interviews with VA officials.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-429 					        
    ACCNO:   A32158						        
  TITLE:     VA Health Care: Key Challenges to Aligning Capital Assets
and Enhancing Veterans' Care					 
     DATE:   08/05/2005 
  SUBJECT:   Assets						 
	     Federal property					 
	     Federal property management			 
	     Health care planning				 
	     Health care services				 
	     Property and supply management			 
	     Property disposal					 
	     Strategic planning 				 
	     Veterans benefits					 
	     Decision making					 
	     VA Capital Asset Realignment for			 
	     Enhanced Services Initiative			 
                                                                 

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GAO-05-429

United States Government Accountability Office

GAO

Report to the Honorable Christopher S.

                               Bond, U.S. Senate

August 2005

VA HEALTH CARE

     Key Challenges to Aligning Capital Assets and Enhancing Veterans' Care

GAO-05-429

[IMG]

August 2005

VA HEALTH CARE

Key Challenges to Aligning Capital Assets and Enhancing Veterans' Care

  What GAO Found

VA faces a key challenge in developing sufficient information to complete
inpatient service alignment decisions. VA concluded that it did not have
sufficient information to complete such decisions across VA for long-term
care (including nursing home care) and mental health services (including
acute psychiatric care). VA also concluded that it did not have sufficient
information to complete alignment decisions for inpatient services at 12
facilities. VA faces this challenge for several reasons. For example, it
is unclear whether VA has adequate information on the number of veterans
who will seek nursing home care and inpatient mental health services from
VA on a daily basis because it concluded that its models were inadequate
to forecast demand and it has not finalized revised models. VA has taken
steps to address the challenge of developing the information needed such
as working to develop improved models of demand for these services.

Improving the management of VA's large inventory of excess property-
including 8.5 million square feet of vacant space-poses another key
challenge. This challenge results from disincentives associated with
administrative complexity and costs of the disposal of federal property.
Like all federal agencies, VA must comply with federal requirements
governing property disposal that are intended, for example, to protect
subsequent users of the property from environmental hazards. Some VA
managers have retained excess property because the complexity and costs of
complying with these requirements were disincentives to disposal. Congress
has given VA authority to use disposal proceeds for construction and
renovation of VA patient facilities and disposal activities, to the extent
specified in appropriations acts. VA is taking steps to address this
challenge, including hiring network-level capital asset managers to
facilitate disposal.

VA faces another key challenge in determining priorities for the purchase
of inpatient services to improve access to care. While VA determined that
purchasing inpatient services from non-VA health care providers in 25
health care markets would be a reasonable option for providing care closer
to where veterans live, VA's network managers have to balance the costs
and benefits of purchasing care against competing priorities. VA has taken
steps to facilitate managers' development of information they need to
decide among priorities, including information on the cost effectiveness
of proposed contracts and their impact on other health care priorities.

To improve its management of capital assets and enhance veterans' health
care by reinvesting resources now spent on excess property, VA must
overcome challenges in completing and implementing decisions reached
through CARES. Furthermore, institutionalizing the CARES process into its
ongoing strategic planning will be crucial to VA's effectiveness as a
steward of national resources and a health care provider for the nation's
veterans.

VA concurred with GAO's findings and conclusions.

                 United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
VA Faces a Challenge in Developing Information Needed to

Complete Decisions on the Alignment of Inpatient Services VA Faces a
Challenge in Improving Management of Excess Property

VA Faces a Challenge in Determining Priorities for the Purchase of
Inpatient Services from Non-VA Providers to Improve Access to Care

Concluding Observations Agency Comments

                                       1

                                      4 6

                                       8

14

18 20 21

Appendix I 	25 Markets Where VA Identified the Purchase of Inpatient Care
as an Option to Improve Access

        Appendix II Comments from the Department of Veterans Affairs 24

Appendix III GAO Contact and Acknowledgments

Related GAO Products

  Tables

Table 1: Milestones in VA's CARES Process 7

Table 2: Twelve VA Medical Facilities and Their Networks Where Decisions
on the Alignment of Inpatient Services Are Incomplete 11

Abbreviations

CARES Capital Asset Realignment for Enhanced Services
DOD Department of Defense
GSA General Services Administration
VA Department of Veterans Affairs

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separately.

United States Government Accountability Office Washington, DC 20548

August 5, 2005

The Honorable Christopher S. Bond United States Senate

Dear Senator Bond:

The Department of Veterans Affairs (VA) operates one of the largest health
care systems in the country. In fiscal year 2004, VA provided health care
to nearly 4.7 million of the 7.4 million veterans who were enrolled for VA
health care services. To support its mission, VA has a diverse inventory
of real property-VA reported in February 2005 that its capital assets
included more than 5,600 buildings and about 32,000 acres of land.1
However, many of VA's facilities were built more than 50 years ago and are
no longer well-suited to providing accessible, high-quality,
cost-effective health care in the 21st century. In numerous reports and
testimonies, we found that better management of VA's buildings and land
could significantly reduce operating and maintenance costs and that these
resources could be reinvested to enhance veterans' health care services.2
Because of similar shortcomings in the management of capital assets across
the government, we designated real property management as a high-risk area
in order to highlight the need for federal agencies, including VA, to
address long-standing problems with excess real property. These problems
include underutilized and vacant building space and unneeded land.3

1Department of Veterans Affairs, 5-Year CapitalPlan 2005-2010(Washington,
D.C.: February 2005).

2See Related GAO Products at the end of this report.

3We have reported that over 30 federal agencies, including VA, control a
valuable portfolio of facilities and land that is at high risk due to
vulnerabilities to waste, fraud, abuse, and mismanagement or major
challenges associated with their economy, efficiency, or effectiveness.
See GAO, High-Risk Series: Federal Real Property, GAO-03-122 (Washington,
D.C.: January 2003); High-Risk Series: AnUpdate,GAO-05-207 (Washington,
D.C.: January 2005); and Federal Real Property:
FurtherActionsNeededtoAddressLong-standing and Complex Problems,
GAO-05-848T (Washington, D.C.: June 22, 2005).

In response to our recommendations in 1999 for improving VA's capital
asset planning and budgeting,4 VA initiated a process known as Capital
Asset Realignment for Enhanced Services (CARES). CARES was designed to
assess VA's buildings and land ownership in light of expected demand for
VA inpatient and outpatient health care services through fiscal year 2022.
Through CARES, VA sought to determine what health care services veterans
would need in what locations. VA existing locations included VA's 172
medical facilities,5 77 health care markets,6 and 21 health care
networks.7

In May 2004, the Secretary of Veterans Affairs announced decisions
resulting from the CARES process. This announcement included decisions to
realign VA's inpatient health care services at a number of facilities to
improve quality, efficiency, or accessibility and to leave inpatient
services as currently aligned at other facilities.8 Among these inpatient
services were tertiary care; the acute inpatient services of medicine,
surgery, and psychiatry; nursing home care; long-term psychiatric care;
residential rehabilitation; domiciliary care;9 and specialized inpatient
services treatment of spinal cord injury and disorder. However, VA did not
complete all its inpatient alignment decisions in the CARES process

4See GAO, VA Health Care: Improvements Needed inCapitalAsset Planning and
Budgeting, GAO/HEHS-99-145 (Washington, D.C.: Aug. 13, 1999).

5In this report, we consider medical facilities to be the capital assets
owned by VA at which it provides inpatient health care services to
veterans. Medical facilities include acute and tertiary hospitals, nursing
homes, and other extended care assets.

6VA defines a health care market as a geographic area having sufficient
population and geographic size to (1) benefit from the coordination and
planning of health care services delivered by either VA facilities or
non-VA facilities and (2) support a continuum of care for veterans,
including inpatient and outpatient care.

7VA health care facilities are organized into 21 regional networks, known
as Veterans Integrated Service Networks, that are structured to manage and
allocate resources to VA health care facilities. VA had 22 networks until
January 2002, when it merged Networks 13 and 14 to form a new network,
Network 23.

8In this report, we define realignment of an inpatient service as (1)
eliminating the service in its entirety at a facility where VA provided
it, (2) adding an inpatient service to an existing VA facility where VA
did not provide the service, or (3) establishing a new VA medical facility
where VA did not own capital assets.

9Domiciliary care involves coordinated rehabilitative and restorative
clinical care in an inpatient setting, with the goal of helping veterans
achieve and maintain the highest level of functioning and independence
possible. Domiciliary care differs from other types of inpatient care in
that bedside nursing is not required.

because it concluded that it lacked sufficient information to do so. VA
did not complete inpatient alignment decisions across VA for long-term
care (including nursing home care) and mental health services (including
acute and long-term psychiatry, residential rehabilitation, and
domiciliary care). VA also did not complete inpatient alignment decisions
at some facilities. In his May 2004 announcement of CARES decisions, the
Secretary stated that VA would improve its management of excess property
by pursuing options to dispose of or lease excess property and reinvest
resources now used to maintain excess property to enhance health care to
veterans.10 The Secretary also announced that VA planned to improve access
to acute inpatient services-which include medicine, surgery, and
psychiatry-and access to tertiary care11 by purchasing services from
non-VA providers in 25 markets. In these markets, where VA determined that
a large number of veterans face lengthy driving times from their homes to
the nearest VA inpatient facility, the Secretary indicated that a
reasonable option for providing these services closer to where veterans
live is to purchase acute inpatient and tertiary care services rather than
provide these inpatient services in VA-owned facilities.

In your former capacity as Chairman of the Subcommittee on VA, HUD, and
Independent Agencies, Committee on Appropriations, U.S. Senate, you asked
that as part of our review of the CARES process, we examine key challenges
VA will encounter when completing and implementing CARES decisions.12 This
report examines three key challenges-(1) developing information needed to
complete inpatient alignment decisions, (2) improving management of VA's
large inventory of excess property, and (3) determining priorities for the
purchase of inpatient services from non-VA providers to improve access to
care.

10The Secretary's CARES announcement also included other decisions to
better align VA's capital assets with projected needs, such as
reconfiguring facility space to meet projected demand for services,
modernizing facilities to provide services more appropriately, and
improving the alignment of outpatient services.

11Tertiary care includes specialized diagnostic and treatment procedures,
such as openheart surgery or neurosurgery, that are not necessarily
available at all medical facilities that provide acute inpatient care.

12Earlier this year, we provided a summary of locations where VA (1)
identified a need to evaluate alternative ways to align inpatient health
care services and (2) made decisions to realign inpatient services or
leave inpatient services as aligned, or deferred decisions pending further
study. See GAO, VAHealth Care: ImportantStepsTakentoEnhance Veterans'
Careby Aligning Inpatient Serviceswith ProjectedNeeds,GAO-05-160
(Washington, D.C.: Mar. 2, 2005).

  Results in Brief

To examine these challenges, we relied on our prior work on the CARES
process and the conditions in VA's health care system that led to the
CARES process. To track key planning issues as they emerged during the
CARES process, we attended CARES-related meetings, such as those held by
the CARES Commission, an independent Commission appointed by VA that was
charged with making CARES recommendations to the Secretary. We also
reviewed major CARES documents and interviewed CARES Commission and VA
CARES program office officials. To identify what actions VA is taking to
address these challenges, we reviewed VA's capital asset and CARES
documents and interviewed VA officials involved in implementing the
Secretary's decisions. We conducted our work from October 2003 through
July 2005 in accordance with generally accepted government auditing
standards.

VA faces a key challenge in developing sufficient information to complete
inpatient service alignment decisions. VA did not complete all its
inpatient alignment decisions in the CARES process because it concluded
that it lacked sufficient information to do so. VA did not complete
inpatient alignment decisions across VA for long-term care (including
nursing home care) and mental health services (including acute and
long-term psychiatry, residential rehabilitation, and domiciliary care).
VA also lacked sufficient information to complete its inpatient alignment
decisions for services at 12 facilities. VA faces the challenge of
developing sufficient information to complete its inpatient alignment
decisions for several reasons. First, it is unclear whether VA has
adequate information on the number of veterans who will seek inpatient
long-term care and mental health services from VA on a daily basis. In
VA's May 2004 announcement of CARES decisions, VA concluded that that its
models were inadequate to forecast demand. While VA officials told us they
are developing models and forecasts of demand for VA care, these revised
models and forecasts are not completed. Second, VA does not know what
portion of this demand it will meet because it has not made the policy
determinations that would allow it to generate information concerning
which veterans it will serve among those seeking nursing home care and
which services it will offer. Third, VA has not finalized its strategic
plan for long-term care, which would provide information for determining
where VA needs to provide these services. VA also faces information
challenges in completing inpatient alignment decisions for services at 12
of VA's 172 facilities. Development of this information will be
challenging because VA concluded in its May 2004 announcement of CARES
decisions that it does not have sufficiently precise information on the
potential costs and benefits of various alignment options to make
decisions for these facilities

and address related concerns of veterans and stakeholders. VA has taken
several steps to address the challenge of developing sufficient
information to complete its remaining inpatient alignment decisions. These
steps include working to develop improved models of future demand for
longterm care and mental health services, proposing policies about which
veterans it will provide long-term care to, and hiring a contractor to
obtain information on the costs and benefits of alternative ways to align
inpatient services at 12 facilities where these decisions were not
completed.

Improving the management of VA's large inventory of excess real
property-including 8.5 million square feet of vacant space-poses another
key challenge for VA. This challenge results from the disincentives
associated with the administrative complexity and costs of disposing of
federal property. Like all federal agencies, VA must comply with federal
laws and regulations governing property disposal that are intended, for
example, to protect subsequent users of the property from environmental
hazards and to preserve historically significant sites. Federal agencies
are required by law to assess and pay for any environmental cleanup that
may be needed before disposing of property-an administrative process that
may require years of study and result in significant costs. As valuable as
these legal requirements are, their administrative complexity and the
associated costs of complying with them create disincentives to the
disposal of excess property. For example, some VA managers have retained
excess property because the administrative complexity and costs of
complying with these requirements were disincentives to disposal. Congress
has given VA authority to use disposal proceeds for construction and
renovation of VA patient facilities and for disposal activities, to the
extent specified in appropriations acts. VA also faces difficulties in the
leasing process. These include the long amount of time needed to establish
leases and some local managers' lack of expertise in negotiating these
leases. VA is taking steps to better manage excess property by
strengthening its disposal process through such measures as establishing
network-level capital asset managers, who will facilitate the disposal of
excess property. VA is also taking steps to expedite its leasing process
by granting authority to the capital asset managers to make some leasing
decisions.

VA faces another key challenge in determining priorities for the purchase
of inpatient services from non-VA providers to improve access to care by
making these services available closer to where veterans live. While VA
determined that in 25 markets purchasing acute and tertiary inpatient
services from non-VA providers would be a reasonable option for providing
these services closer to where veterans live, VA's network

Background

managers in these markets have to balance the costs and benefits of
purchasing non-VA care against competing priorities. These managers have
to determine whether, when, and to what extent they should use their
resources to purchase acute and tertiary care services from non-VA
providers and to what extent resources should be spent on other competing
priorities, such as improving access to long-term care, mental health, and
primary care services. VA's purchase of acute and tertiary care services
could reduce driving times for such care for about 800,000 enrolled
veterans, although only a small number of these veterans will need
inpatient services in a given year. To help network managers, VA is
developing guidance that requires them to develop information on the cost
effectiveness of proposed contracts and on the potential impact of these
contracts on other health care services in the network.

VA concurred with our findings and conclusions.

VA dramatically transformed its health care delivery system over the last
decade. A central goal of this transformation has been to reduce the need
for, and the length of, inpatient hospital stays by providing primary care
in outpatient settings and taking advantage of technological advances that
reduce the need for hospitalization. VA developed a continuum of care
grounded in outpatient settings; made available a broader array of
services, including preventive care; and opened hundreds of
community-based outpatient clinics. As a result, VA reduced the length of
inpatient stays while providing health care to a growing number of
veterans. From fiscal year 1996 through fiscal year 2004, VA's national
acute inpatient daily census fell by nearly 40 percent while the number of
veterans who received health care from VA increased by about 76 percent (2
million). As VA increased its emphasis on outpatient care rather than
inpatient care, VA was left with an increasingly obsolete infrastructure,
including many hospitals built or acquired more than 50 years ago in
locations that are sometimes far from where veterans live.

To address its obsolete infrastructure, VA initiated its CARES process-
the first comprehensive, long-range assessment of its health care system's
capital asset requirements since 1981. Since its inception in 1999, VA's
CARES process has reached several major milestones (see table 1).

Table 1: Milestones in VA's CARES Process

Date Milestone Description

February 2002 VA announced the results of The pilot study assessed current
and a pilot CARES study. future use of health care assets in the three
markets of Network 12, which includes parts of five states: Illinois,
Indiana, Michigan, Minnesota, and Wisconsin. It resulted in decisions to
realign health care services and renovate or dispose of several buildings.

August 2003 	VA's Under Secretary for The Under Secretary's Draft National
Health presented the Draft CARES Plan included recommendations National
CARES Plan. about health care services and capital

assets in VA's remaining 74 markets. These recommendations reflected input
from managers of VA's health care networks.

February 2004	An independent CARES An independent 16-member commission
Commission issued appointed by the Secretary of Veterans recommendations.
Affairs issued recommendations to the

Secretary based on its review of the Draft National CARES Plan and related
documents and information obtained through public hearings, site visits,
public meetings, written comments from veterans and other stakeholders,
and consultations with experts.

May 2004 	VA's Secretary announced The Secretary based his decisions on a
the CARES decisions. review of the CARES Commission's

                                recommendations.

Source: GAO analysis of VA data.

The remaining steps in the CARES process include completing alignment
decisions for inpatient services, implementing decisions that have been
completed, and institutionalizing CARES. Institutionalizing CARES will
involve integrating the CARES process-a systematic, data-driven framework
for evaluating VA's capital assets in light of projected demand for VA
health care services-into VA's ongoing strategic planning efforts. In the
announcement of CARES decisions in May 2004, the Secretary of Veterans
Affairs stated that through the CARES process VA had developed more
complete information about the demand for VA health care and a more
comprehensive assessment of its capital assets than it ever had before.
The Secretary noted that this information, along with the experience
gained through conducting CARES, positioned VA to continue to expand the
accuracy and scope of its planning efforts. The Secretary stressed that VA
would focus on integrating the CARES process into its

  VA Faces a Challenge in Developing Information Needed to Complete Decisions on
  the Alignment of Inpatient Services

annual strategic and capital planning efforts in order to ensure that VA
uses the best information available when making plans to meet the health
care needs of current and future veterans.13

VA faces a key challenge in developing sufficient information to complete
inpatient service alignment decisions. VA did not complete all its
inpatient alignment decisions in the CARES process because it concluded
that it lacked sufficient information to do so. VA did not complete
inpatient alignment decisions across VA for long-term care (including
nursing home care) and mental health services (including acute and
long-term psychiatry, residential rehabilitation, and domiciliary care).
VA also lacked sufficient information to complete its inpatient alignment
decisions for services at 12 facilities.

    Developing Information Needed to Complete Inpatient Alignment Decisions for
    Long-Term Care and Mental Health Will Be Challenging

Developing information needed to complete inpatient alignment decisions
for long-term care and mental health services across VA will be difficult
for three reasons. First, it is unclear whether VA has adequate
information on the number of veterans who will need and seek inpatient
long-term care and mental health services from VA on a daily basis because
VA has not finalized models for projecting future demand for these
services. In VA's May 2004 announcement of CARES decision, VA concluded
that its models were inadequate to forecast demand. As a result, VA did
not complete its inpatient alignment decisions for these services across
VA.14 While VA officials told us that they have subsequently revised
models and forecasts of demand for care from VA, these models and
forecasts are not finalized.

13As VA implements the decisions it reached and integrates the CARES
process into its ongoing strategic planning efforts, its options for
studying certain alignment options may be affected by a statutory
limitation on its use of health care funds. Section 8110(a)(5) of title
38, United States Code, prohibits VA from using funds appropriated for
"medical care, medical and prosthetic research, and medical administration
and miscellaneous operating expenses" for any studies comparing the costs
of services provided by private contractors with those provided by VA,
including as part of the CARES process, unless the funds are specifically
made available for that purpose. VA may, however, use other funds to
conduct such studies, for example, funds for construction of major
projects. See GAO, Veterans Health Administration-Appropriations for CARES
CostComparisonStudies,B-302973 (Washington, D.C.: Oct. 6, 2004).

14VA, however, made some inpatient long-term care and mental health
alignment decisions for some locations.

Second, VA has not made the policy determinations that would allow it to
generate information concerning which veterans it will serve in the future
among those seeking long-term care-including nursing home care-and the
nursing home care services it will offer. Completing inpatient alignment
decisions for nursing home care requires having a technical forecast of
how many veterans will need and seek care from VA, and requires
information generated from policy decisions concerning which veterans VA
will serve and which nursing home services VA will provide.15 VA lacks
this information because it has not determined criteria to be used to
identify which veterans it will serve as a matter of policy, in addition
to those required by law, criteria such as a veteran's level of
serviceconnected disability or income.16 In addition, VA lacks information
on which services will be provided, such as specifying to whom it will
provide nursing home care for short-stay care rehabilitation of post-acute
conditions such as hip replacement and to whom it will provide long-stay
support and supervision for chronic conditions such as dementia. VA
officials told us that such policy decisions have not been made and, as a
result, VA's long-term care model cannot provide the forecasts of workload
demand that are needed to make inpatient alignment decisions.

Third, VA has not finalized its strategic plan for long-term care, which
would provide information for determining where VA needs to provide these
services and the types of services needed.17 Developing adequate models
for forecasting likely demand and resolving policy issues for inpatient
long-term care would provide key information needed to develop a long-term
care strategic plan. According to the Secretary's May 2004 summary of
CARES decisions, an important element of the strategic plan for long-term
care will be the goal of ensuring that veterans' access to an appropriate
range of these services is equitable. This plan would help VA decide
whether its current facilities and inpatient services are in the best

15VA estimates indicate that it does not provide nursing home services to
most veterans who need them. Instead most veterans who need nursing home
care rely on other payers such as Medicaid and Medicare for nursing home
services. VA provided or paid for nursing home care for over 33,000
veterans daily in fiscal year 2003.

16The Veterans Millennium Health Care and Benefits Act requires that VA
provide nursing home care to those veterans with a service-connected
disability rated at 70 percent or greater, those requiring nursing home
care because of a condition related to their military service who do not
have a service-connected disability rating of 70 percent or greater, and
those who were admitted to VA nursing homes on or before the effective
date of the act. Pub. L. No. 106-117, S:101(a), 113 Stat. 1545, 1547
(1999).

17VA approved its Mental Health Strategic Plan in November 2004.

locations to meet future demand or whether changes are needed to better
align these facilities and services with demand.

    Developing Information Needed to Complete Inpatient Alignment Decisions at
    12 Facilities Will Be Challenging

Developing information needed to complete inpatient alignment decisions at
12 of VA's 172 facilities will be challenging because VA does not have
sufficiently precise information to evaluate tradeoffs between the costs
and benefits of various alignment options.18 (See table 2 for a list of
these facilities and their corresponding networks.) In some cases, these
alignment decisions include inpatient long-term and mental health
services. In general, VA concluded in its May 2004 announcement of CARES
decisions that it does not have sufficient information to determine
whether to maintain inpatient services as currently aligned at these
facilities or to realign the services. For example, in the Boston area, VA
provides inpatient care in 4 outdated facilities.19 VA concluded that it
did not have sufficient information about the cost-effectiveness and
benefits of building a replacement hospital in the area. VA also lacked
sufficient information about how to preserve veterans' access to nursing
home services if such services in the Boston area are realigned.

18Inpatient alignment decisions were not completed at five other locations
as noted in the Secretary's May 2004 CARES announcement. VA considered
these inpatient alignment decisions less challenging to complete than such
decisions at other locations. VA conducted studies needed for decisions at
three of these locations (at facilities in Chillicothe, Ohio; Detroit,
Michigan; and Tampa, Florida), had not completed a study for another
location (Network 16, which is headquartered in Jackson, Mississippi) as
of March 2005, and plans a study for the fifth location (Lake City,
Florida).

19The four facilities require renovations to meet health care delivery,
mechanical, privacy, and safety standards.

Table 2: Twelve VA Medical Facilities and Their Networks Where Decisions
on the Alignment of Inpatient Services Are Incomplete

VA medical facility

Network

Bedford, Mass. Brockton, Mass. Jamaica Plain, Mass. West Roxbury, Mass.

Brooklyn, N.Y. Manhattan, N.Y.

Montgomery, Ala.

Poplar Bluff, Mo.

Muskogee, Okla.

Waco, Tex.a

Big Spring, Tex.

Walla Walla, Wash.

Source: GAO analysis of VA data.

aA decision to realign inpatient services at VA's medical facility in Waco
could result in the addition of inpatient services at other VA medical
facilities, such as the one in Temple, Texas.

Similarly, VA faces a challenge developing sufficient information about
the costs and benefits of options to make alignment decisions for
inpatient services at its medical facility in Waco, Texas. In October
2003, network officials estimated that in the absence of a realignment of
services at the Waco facility, which is primarily a psychiatric care
hospital, VA will need about $1.5 million a year to maintain unused space
at the facility, and that through 2022 the facility will require an
additional $61 million for nonrecurring capital costs such as renovation.
Options for realigning inpatient services at the Waco facility include
moving some services, such as acute inpatient psychiatry, to other
locations, such as VA's medical facility in Temple, Texas.20 VA faces a
challenge weighing these options and completing its alignment decision
because VA has concluded that it lacks sufficient information on the
possible savings it would achieve through realignment and the likely costs
of construction at the Temple facility if services are added there. VA
also concluded that it lacked

20Another option proposed was closing the nursing home service at Waco.
However, the CARES Commission did not support closing the nursing home
services at the Waco facility because it was not clear to the Commission
that it would be possible to contract for the type of nursing home
services that VA provides at this facility.

sufficient information on access to inpatient services and continuity of
care for veterans who currently receive health care services at the Waco
facility. This information could help VA weigh options for the alignment
of inpatient services at the Waco facility. This could also help VA
address the concerns of stakeholders-including veterans' service
organizations, elected officials, and employee representatives-who will be
affected by changes at the Waco facility. A group of stakeholders with
concerns has asked to work with VA to develop alternatives for the
facility and to assist in finding ways to lease the facility's unused
buildings and excess property.

VA could use information on the costs and benefits of various alignment
options not only to complete its inpatient alignment decisions for the 12
facilities, but also to address the concerns of stakeholders and others.
Stakeholders-including veterans' service organizations, affiliated medical
schools, employee unions, and communities-as well as decision makers and
veterans are more likely to have confidence in decisions at specific VA
medical facilities when VA can present sufficient information about the
key costs and benefits of alternative options for the alignment of
inpatient services. Costs and benefits to be considered are the impacts
these alternatives would have on the quality of and access to care; the
cost to the government; VA's other strategic goals, such as the medical
education of health care providers and research; and the local community's
economy.21 If VA had this kind of information, it would be better
positioned to make decisions and address concerns raised by veterans and
stakeholders. In the past, some stakeholders have opposed proposed changes
to VA's health care system that they felt were not in the best interests
of their members, even when those changes could have benefited veterans.22
For example, medical schools' reluctance to change longstanding
relationships with VA medical facilities has sometimes been a major factor
inhibiting VA's asset management. Similarly, unions have been reluctant to
support decisions that involve restructuring services when doing so could
result in staffing reductions.

21See GAO, VAHealth Care:Framework forAnalyzing Capital Asset Realignment
for EnhancedServicesDecisions, GAO-03-1103R (Washington, D.C.: Aug. 18,
2003).

22See GAO, VA Health Care: Challenges FacingVA in Developing an Asset
Realignment Process, GAO/T-HEHS-99-173 (Washington, D.C.: July 22, 1999).

    VA Has Taken Steps to Develop Information Needed to Complete Inpatient
    Alignment Decisions

VA has taken several steps to address the challenge of developing
sufficient information to complete its remaining inpatient alignment
decisions. These steps include developing information for completing
inpatient alignment decisions for long-term care and mental health across
VA and information for completing decisions for inpatient services at the
12 facilities.

For long-term care and mental health, VA officials told us that VA has
developed more adequate models to forecast the number of veterans who will
need and seek these services from VA on a daily basis in the future than
the models considered for use in the CARES process. However, VA officials
have not finalized the long-term care and mental health models or
forecasts and said that they will continue to refine these models.
Regarding the policy determinations to generate information for inpatient
long-term care, VA has included a proposal in its current appropriations
request to revise its policy on which veterans it will provide nursing
home services to and the extent to which it will provide short-stay and
long-stay care beginning in fiscal year 2006. However, the proposal has
not yet been made policy. VA officials told us that they are trying to
address whether they can develop the information needed to incorporate
into VA's nursing home model and projected demands for services before
these policy issues are resolved.

VA has taken several steps to develop the information it needs to complete
decisions on the alignment of inpatient services at the 12 medical
facilities where alignment decisions are not complete. VA hired a
contractor in January 2005 who will be responsible for developing
information on the costs and benefits of specific options for aligning
inpatient services at these 12 facilities. To ensure stakeholder
involvement in developing this information, VA gave notice of the
establishment of the Advisory Committee for CARES Business Plan Studies in
October 2004, under the Federal Advisory Committee Act, which includes an
advisory subcommittee for each location. These committees include both
network staff and local stakeholders and will help develop information
about the concerns of veterans, employees, and other stakeholders or
interest groups, for example, by holding public meetings. To further
assist the contractor and carry out other responsibilities, in June 2004,
VA established a new headquarters office, the Office of Strategic
Initiatives, which will oversee the completion of these studies.

  VA Faces a Challenge in Improving Management of Excess Property

Improving the management of VA's large inventory of excess real
property-including 8.5 million square feet of vacant space-poses another
key challenge to VA. This challenge results, in part, from the
disincentives associated with the administrative complexity and costs of
disposing of federal property. In addition, the lengthy process required
to establish leases, along with some local managers' lack of expertise
needed to negotiate these leases, adds to VA's challenge. VA has taken
steps to address some of these difficulties.

Managing excess property is challenging for VA in part because of the
disincentives associated with the administrative complexity and costs
involved in the disposal of federal property. Like all federal agencies
that own facility space or other forms of real property,23 VA must comply
with federal requirements governing property disposal that are intended to
protect subsequent users of the property from environmental hazards and
preserve historically significant sites.24 For example, federal agencies
are required to assess and pay for environmental cleanup that may be
needed before disposing of property25-a process that can require years of
study and result in significant costs. Moreover, federal agencies that own
buildings designated as historic structures must comply with provisions of
the National Historic Preservation Act,26 which requires agencies to
manage historic properties under their control and consider the effects of
their actions on historic preservation. About 30 percent of VA's buildings
have been designated as historically significant. In addition, like other
federal agencies, VA must generally make excess federal facilities
available to other federal agencies and programs for the homeless when
disposing of property. As valuable as these legal requirements are, their
administrative complexity and the associated costs of complying with them
create disincentives to the disposal of excess property. VA officials

23VA, the United States Postal Service, and GSA are the largest holders of
federally owned space after the Department of Defense (DOD).

24VA must also comply with federal requirements governing the leasing of
its property. These requirements can be administratively complex and
costly. For example, VA must comply with federal environmental and
historic preservation requirements before entering into leasing
agreements.

25See 42 U.S.C. S: 9620 (2000). See also GAO-03-122. Additionally, a VA
official explained that the costs of an environmental study for a medical
center could be considerable due to the need to assess, for example, the
presence of radioactive materials left over from nuclear medicine
procedures.

2616 U.S.C. S:S: 470 et seq.(2000).

told us these requirements have contributed to some managers' decisions to
retain excess property rather than pursue disposal.27 In general, disposal
of VA property, until November 2004, was controlled by the General
Services Administration (GSA). Since 1990, VA disposed of no properties
through this process and few properties through other means.

In November 2004, Congress gave VA greater discretion in managing the
disposal of excess property.28 VA had requested changes in its disposal
authority to address disincentives that VA managers believed impeded their
progress in disposing of excess property. The disincentives included
administrative complexity and a limitation that allowed use of disposal
proceeds only for nursing home construction and renovation. Changes in
VA's disposal authority included permitting VA to directly manage the
disposal of excess property instead of using the disposal process managed
by GSA. In addition, VA was granted the authority-to the extent specified
in appropriations acts-to use proceeds from disposal not only for nursing
home construction and renovation but for use in construction or renovation
of other VA patient facilities or to defray expenses associated with their
disposal requirements.

VA officials acknowledge that direct management of the disposal process
gives VA managers more flexibility in managing the disposal of excess
buildings and land. However, they maintain that to dispose of excess
property VA managers still face disincentives associated with legal
requirements to address potential environmental hazards and the
preservation of significant historical sites prior to disposal. In
addition, VA officials acknowledge that even though VA may now use
disposal proceeds for improving or disposing of other VA buildings, they
believe the use of the funds for specific projects is subject to
congressional approval in the appropriations process each year. VA
officials also told us they believe that VA effectively derives no new
funds from this authority because, in practice, funds obtained from the
disposal process would be deducted each year from the amount that Congress
appropriates.

Unlike most federal agencies, VA has authority to enter into leases with
other organizations, called enhanced-use leases, but VA managers face

27See GAO, VAHealth Care:ImprovedPlanningNeededfor Managementof Excess
Real Property, GAO-03-326 (Washington, D.C.: Jan. 29, 2003).

28Veterans Health Programs Improvement Act of 2004, Pub. L. No. 108-422,
S: 411, 118 Stat. 2379, 2388-2390.

difficulties in leasing excess property to non-VA organizations under this
authority.29 Specifically, the length of time needed to review and approve
leases poses a challenge to VA in leasing excess property. For example, to
establish leases, VA has had to negotiate with entities in the community
that are interested in leasing VA property and obtain public comment and
perform multiple rounds of review and approval by VA network and
headquarters officials. The leases VA has established include, for
example, partnerships for parking garages, child development centers, and
senior housing. Contributing to the length of the leasing process is a
requirement that VA quantify the benefits that veterans will likely derive
from a lease- a task that officials say can be difficult and time
consuming. For example, if VA establishes a lease for a child development
center that may help in the recruitment and retention of VA staff to
provide health care, VA is required to quantify the benefits to veterans
of the child development center.

Another difficulty that has hindered VA's leasing activities has been that
some local managers lacked the expertise needed to develop, negotiate, and
finalize leases. Such expertise includes legal, real estate, marketing,
and financial skills. The CARES Commission found that the lack of
expertise made it difficult for VA to attract potential investors and
navigate local zoning and land use requirements. Although the Commission
noted that some VA networks had been successful in arranging leases for
excess property, relatively few leases have been established since 1991,
when VA was given authorization to lease excess property.30

VA has taken steps to address the difficulties associated with the
disposal of excess property. For example, VA created a new position-the
capital asset manager-in each of its networks to strengthen its management
of excess property. These managers will be responsible for a number of
tasks involving capital assets, including facilitating the disposal of
excess property. The capital asset managers will also be responsible for
ensuring that VA has current data on the condition and the use of its
buildings and

2938 U.S.C. S:S: 8161-8169 (2000). VA has authority to enter into leases
with non-VA organizations to create partnerships in which VA contributes
real property and the non-VA organization contributes financial capital
and borrowing ability to redevelop or renovate real property to benefit
veterans and others. Most federal agencies do not have similar authority.

30At the time the Commission conducted its review, VA had awarded 30
leases. As of March 2005, VA had awarded 45 leases, of which 41 are
active.

land. VA officials reported that they sought capital asset manager
candidates with experience in the disposal of federal real property as a
means to improve VA's ability to manage its own disposal process. In
addition, VA is developing an agencywide capital asset disposal policy
that is designed to guide managers' efforts to reduce VA's inventory of
unneeded property.

VA is also taking steps to address the difficulties it faces in developing
enhanced-use leases of its excess property. To streamline VA's preparation
of leasing proposals, VA recently granted authority to its capital asset
managers to make some enhanced-use leasing decisions, such as conducting
feasibility studies, creating enhanced-use lease business plans, and
writing leases and memoranda of understanding. VA expects this will
expedite its leasing process. The new capital asset managers will also be
responsible for identifying leasing opportunities and negotiating leases.
To facilitate leasing activities, including some that were identified in
CARES, VA is making real estate, legal, marketing, financial, and other
types of expertise available to network managers through a contract
awarded in April 2005. According to VA officials, this expertise will help
network managers develop key information, such as the potential market
value of VA's excess property.31

31In addition, VA will conduct formal studies of 28 of its medical
facilities to develop proposals for leasing and disposal of excess
property. Studies of 3 of the 28 facilities are under way and a contract
was awarded in April 2005 for the study of 22 other facilities. Studies of
the 3 remaining facilities have been postponed pending future VA action at
a nearby VA medical facility.

  VA Faces a Challenge in Determining Priorities for the Purchase of Inpatient
  Services from Non-VA Providers to Improve Access to Care

VA faces another key challenge in determining priorities for the purchase
of inpatient services from non-VA providers to improve access to care by
making these services available closer to where veterans live. While VA
determined that in 25 markets purchasing acute and tertiary inpatient
services from non-VA providers would be a reasonable option for providing
these services closer to where veterans live, VA's network managers, who
are responsible for making such decisions, have to balance these efforts
against competing priorities.32 Improving veterans' access to inpatient
acute and tertiary care through purchased care is one of many priorities
that VA managers may support with their available resources.33 As a
result, VA managers have to weigh the costs and benefits of various uses
of their resources to determine whether, when, and to what extent they
should purchase acute and tertiary care services from non-VA providers and
to what extent resources should be spent instead, for example, on
improving access to long-term care, mental health, and primary care
services.

VA determined that in 25 markets a large number of enrolled veterans face
driving times that exceed VA standards in order to obtain inpatient acute
and tertiary care services at the nearest VA-owned or VA-affiliated
medical facility.34 VA also determined that in these 25 markets the number
of veterans facing lengthy driving times35 was not sufficient to justify
building a new VA facility and that a reasonable option for reducing these
driving

32VA's network managers have many responsibilities, including allocating
resources for health care services in their network.

33VA already purchases inpatient care in locations across the country.

34For acute care, VA considers driving times to be lengthy if they exceed
60 minutes in urban areas, 90 minutes in rural areas, or 120 minutes in
highly rural areas. For tertiary care, VA considers driving times to be
lengthy if they exceed 240 minutes for urban areas, 240 minutes in rural
areas, and the community standard for highly rural areas. VA used a
zip-code-based analysis to calculate driving times from veterans' homes to
the nearest VAowned or VA-affiliated medical facility that provided acute
or tertiary care. VA-affiliated medical facilities include hospitals that
are owned by non-VA providers where VA has arranged for VA staff to
provide care to veterans.

35VA considered a market to have a large number of veterans facing lengthy
driving times when more than 35 percent-and at least 12,000-of the
veterans enrolled for VA health care in that market had driving times that
exceeded VA standards.

times would be to purchase inpatient services from non-VA providers.36
(See app. I for a list of the 25 markets and a description of the
geographic areas that each market covers.) About 800,000 enrolled veterans
could potentially benefit from the purchase of these inpatient services,
according to our estimate using VA data for fiscal year 2001. The number
of enrolled veterans potentially affected in any one of the 25 markets
ranged from about 13,000 to 76,000. The number of these enrolled veterans
who would actually need inpatient services in a given year would be
substantially less than the total number of enrollees and would depend on
a variety of factors such as age, gender, and health status.

VA's experience in Chattanooga, Tennessee, although not located in one of
the 25 markets, illustrates the challenge network managers face in
balancing competing priorities.37 VA does not have an inpatient facility
in Chattanooga, and most veterans in the Chattanooga area face drives of 2
or more hours to obtain inpatient care at VA's medical centers in
Murfreesboro and Nashville, Tennessee. To reduce these driving times, VA
contracted for acute inpatient services with a non-VA medical center in
Chattanooga from September 2000 through August 2002. This arrangement did
not, however, substantially improve veterans' access to inpatient care
because network managers restricted referrals to the non-VA facility to
veterans with relatively less severe medical conditions, such as veterans
who did not require surgery or hospital stays longer than 5 days. Although
network managers purchased inpatient services from non-VA providers in
Chattanooga, the managers had to reconcile this effort with other needs.
For example, network managers told us that the restrictions they placed on
referrals to the non-VA facility were necessary to manage resources
effectively as well as to ensure that patient workload at VA's
Murfreesboro facility remained sufficient to support another
priority-graduate medical education. As a result of the restrictions
placed on the referrals, less than

36In some of the 25 markets, VA identified sharing agreements as another
means that could be used to improve veterans' access to acute and tertiary
care services. Sharing agreements are arrangements where VA buys or
barters services from DOD. VA may also opt to lease inpatient facilities
in some of these 25 markets and furnish VA staff to provide care in these
facilities. In addition to these 25 markets, there are 3 other markets in
which VA determined that a large number of enrolled veterans face lengthy
driving times to access acute inpatient care at VA facilities. VA decided
to build a new facility in one of these markets. In the other 2 markets VA
determined that entering into sharing agreements with DOD was a reasonable
option for improving access to care rather than purchasing care from
non-VA providers.

37See GAO, VA Health Care: Access for Chattanooga-Area
VeteransNeedsImprovement, GAO-04-162 (Washington, D.C.: Jan. 30, 2004).

5 percent of Chattanooga veterans' inpatient workload was provided in
Chattanooga in fiscal year 2002. VA provided most of its inpatient
hospital workload for Chattanooga-area veterans in its medical facilities
in Murfreesboro and Nashville.

VA is developing guidance to address the challenge VA's network managers
face in determining priorities for purchasing inpatient care. This
guidance specifies information that networks are to provide to
headquarters when seeking approval of contracts with non-VA providers,
including the inpatient services the network will purchase, the amount of
resources needed to purchase these services, a timetable for when the
services will be available, and the source of funding for these services.
The guidance also requires network managers to provide evidence of the
cost effectiveness of the proposed contract as well as a discussion of the
potential impact of contracting on other health care services in the
network.

  Concluding Observations

Through the CARES process, VA has undertaken a critically important effort
to address long-standing problems with the management of its capital
assets. If it completes and successfully implements CARES decisions, VA
may be able to enhance veterans' health care by reinvesting resources now
spent on excess property. Achieving this will depend on VA's success in
dealing with the challenges of developing sufficient information to
complete inpatient alignment decisions, improving the management of excess
property, and determining priorities for the purchase of inpatient
services from non-VA providers to improve access to care. It is too early
to know whether the steps VA is taking to address these challenges will be
successful.

VA's ability to meet the goal of providing high-quality, accessible,
costeffective health care to the nation's veterans will depend largely on
the extent to which VA is successful in institutionalizing the CARES
process into its ongoing strategic and capital planning efforts. In the
short term, institutionalizing the capacity to assess VA services and real
property would provide a framework for making decisions about the
alignment of long-term care and mental health services as VA develops and
refines models for these services. An essential step in completing
alignment decisions is finalizing the models and demand forecasts for
long-term care and mental health services as well as finalizing the
long-term care strategic plan. In the longer term, institutionalizing the
CARES process would help ensure that VA has a systematic, data-driven
framework for evaluating options for managing its real property in order
to better meet the future

health care needs of veterans. Such a framework could contribute to VA's
effectiveness as a steward of national resources and provider of health
care services for our nation's veterans.

Agency Comments 	In written comments on a draft of this report, VA
concurred with our findings and conclusions and provided a technical
correction and additional information on the CARES process, which we
incorporated where appropriate. VA comments are reprinted in appendix II.

We are sending copies of this report to the Secretary of Veterans Affairs,
appropriate congressional committees, and other interested parties. We
will also make copies available to others upon request. This report will
be available at no charge on GAO's Web site at http://www.gao.gov. If you
or your staff have any questions, please contact me at (202) 512-7101 or
[email protected]. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this report.
GAO staff who made major contributions to this report are listed in
appendix III.

Sincerely yours,

Cynthia A. Bascetta Director, Health Care

Appendix I: 25 Markets Where VA Identified the Purchase of Inpatient Care as an
Option to Improve Access

                             Type of inpatient care

Network and marketa

Geographic area covered by market and the VA inpatient medical
facilities within it Acute careb Tertiary carec

1-Far North This market includes Maine. VA owns one inpatient medical    X 
               facility in                                                  
               this market, located in Togus, Maine.                        
1-North     This market includes New Hampshire and Vermont. VA owns two  X 
               inpatient medical facilities in this market, located in      
               Manchester, N.H.,                                            
               and White River Junction, Vt.                                
7-Alabama   This market includes most of Alabama and part of western     X 
               Georgia. VA                                                  
               owns four inpatient medical facilities in this market,       
               located in                                                   
               Birmingham, Montgomery, Tuscaloosa, and Tuskegee, Ala.       

7-South Carolina 	This market includes most of South Carolina and part of
Georgia. VA X owns two inpatient medical facilities in this market,
located in Charleston and Columbia, S.C.

       8-Gulf      This market includes part of southwestern Florida. VA  X 
                                          owns one                          
                   inpatient medical facility in this market, located in    
                                      Bay Pines, Fla.                       
       8-North     This market includes most of northern Florida and part X 
                                        of southern                         
                    Georgia. VA owns two inpatient medical facilities in    
                                    this market, located                    
                             in Gainesville and Lake City, Fla.             
     10-Central     This market includes the southern central portion of  X 
                                     Ohio. VA owns one                      
                   inpatient medical facility in this market, located in    
                                     Chillicothe, Ohio.                     
     10-Eastern     This market includes northeastern Ohio. VA owns two   X 
                                     inpatient medical                      
                   facilities in this market, located in Cleveland, Ohio    
                                      (Brecksville and                      
                                        Wade Park).                         
     11-Central     This market includes the eastern central portion of   X 
                                    Illinois and part of                    
      Illinois         western Indiana. VA owns one inpatient medical       
                                  facility in this market,                  
                                 located in Danville, Ill.                  
     16-Eastern      This market includes parts of southern Alabama and   X 
                                      western Florida.                      
      Southern      VA does not own any inpatient medical facilities in     
                                        this market.                        
     17-Central    This market includes the central portion of Texas. VA  X 
                                     owns two inpatient                     
                    medical facilities in this market, located in Temple    
                                       and Waco, Tex.                       
                    This market includes southern Texas. VA does not own  X 
     17-Valley -                       any inpatient                        
    Coastal Bend             medical facilities in this market.             
18-New Mexico -  This market includes New Mexico, western Texas, and   X X 
                                     parts of southern                      
     West Texas    Colorado and western Oklahoma. VA owns three inpatient   
                                          medical                           
                   facilities in this market, located in Albuquerque, N.    
                                     Mex., and Amarillo                     
                                    and Big Spring, Tex.                    

19-Eastern This market includes eastern Colorado, southeastern Wyoming,
and X Rockies parts of both Kansas and Nebraska. VA owns two inpatient
medical

facilities in this market, located in Denver, Colo., and Cheyenne, Wyo.

19-Montana  This market includes most of Montana and part of western   X X 
                                         North                              
               Dakota. VA owns two inpatient medical facilities in this     
                                    market, located                         
                        in Fort Harrison and Miles City, Mont.              
20-Alaska  This market includes Alaska. VA owns one inpatient medical    X 
                                      facility in                           
                      this market, located in Anchorage, Alaska.            

Appendix I: 25 Markets Where VA Identified the Purchase of Inpatient Care
as an Option to Improve Access

                             Type of inpatient care

Network and marketa

Geographic area covered by market and the VA inpatient medical
facilities within it Acute careb Tertiary carec

20-Inland North   This market includes eastern Washington, northern    X X 
                                    Idaho, northeastern                     
                     Oregon, and part of northwest Montana. VA owns two     
                                     inpatient medical                      
                     facilities in this market, located in Spokane and      
                                     Walla Walla, Wash.                     
20-Inland South    This market includes parts of eastern Oregon and      X 
                                     southern Idaho. VA                     
                    owns one inpatient medical facility in this market,     
                                     located in Boise,                      
                                           Idaho.                           
      20-South       This market includes western Oregon, southwestern    X 
                                      Washington, and                       
      Cascades         part of northwestern California. VA owns four        
                                inpatient medical facilities                
                     in this market, located in Portland, Roseburg, and     
                                   White City, Oreg., and                   
                                      Vancouver, Wash.                      
      21-Sierra       This market includes northeastern California and      X 
                                     western Nevada. VA                     
       Nevada       owns one inpatient medical facility in this market,     
                                   located in Reno, Nev.                    
21-South Coast   This market includes part of central California. VA   X 
                                    owns three inpatient                    
                       medical facilities in this market, located in        
                                 Livermore, Menlo Park, and                 
                                     Palo Alto, Calif.                      
       23-Iowa         This market includes most of Iowa and parts of     X 
                                 Illinois and Missouri. VA                  
                      owns three inpatient medical facilities in this       
                                   market, located in Des                   
                          Moines, Iowa City, and Knoxville, Iowa.           
    23-Minnesota     This market includes most of Minnesota and part of   X 
                                        northwestern                        
                   Wisconsin. VA owns two inpatient medical facilities in   
                                        this market,                        
                        located in Minneapolis and St. Cloud, Minn.         
23-North Dakota This market includes most of North Dakota and parts of X X 
                                       both Minnesota                       
                      and South Dakota. VA owns one inpatient medical       
                                  facility in this market,                  
                                 located in Fargo, N. Dak.                  

23-South Dakota 	This market includes most of South Dakota and parts of
five other X states: Iowa, Minnesota, Nebraska, North Dakota, and Wyoming.
VA owns three inpatient medical facilities in this market, located in Fort
Meade, Hot Springs, and Sioux Falls, S. Dak.

Source: GAO analysis of VA data.

aVA health care facilities are organized into 21 regional networks, known
as Veterans Integrated Service Networks, that are to coordinate the
activities of and allocate resources to VA health care facilities. VA had
22 networks until January 2002, when it merged Networks 13 and 14 to form
a new network, Network 23. VA defines a health care market as a geographic
area having a sufficient population and geographic size to benefit from
the coordination and planning of health care services and to support a
full health care delivery system. Each VA network includes from 2 to 6
markets; nationwide, VA has 77 markets.

bVA identified limitations in geographic access to acute inpatient care in
a market when more than 35 percent, and at least 12,000 of the veterans
enrolled for VA health care who reside in that market exceeded VA's
driving time standards for reaching a VA health care facility of 60
minutes for urban areas, 90 minutes for rural areas, and 120 minutes for
highly rural areas.

cVA identified limitations in geographic access to tertiary care in a
market when more than 35 percent, and at least 12,000 of the veterans
enrolled for VA health care who reside in that market exceeded VA's
driving time standards for reaching a VA health care facility of 240
minutes for urban and rural areas or the community standard for highly
rural areas.

Appendix II: Comments from the Department of Veterans Affairs

Page 24 GAO-05-429 VA Capital Asset Alignment Challenges

Appendix III: GAO Contact and Acknowledgments

GAO Contact Cynthia A. Bascetta, (202) 512-7101 or [email protected]

Acknowledgments 	In addition to the contact named above, James C.
Musselwhite, Assistant Director; Kristen Joan Anderson; Frederick Caison;
Krister Friday; Clare Mamerow; and Paul Reynolds made key contributions to
this report.

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