VA Health Care: VA Should Better Monitor Implementation and	 
Impact of Capital Asset Alignment Decisions (21-MAR-07, 	 
GAO-07-408).							 
                                                                 
Through its Veterans Health Administration (VHA), the Department 
of Veterans Affairs (VA) operates one of the largest health care 
systems in the country. In 1999, GAO reported that better	 
management of VA's large inventory of aged capital assets could  
result in savings that could be used to enhance health care	 
services for veterans. In response, VA initiated a process known 
as Capital Asset Realignment for Enhanced Services (CARES).	 
Through CARES, VA sought to enhance veteran care by the 	 
appropriate sizing, upgrading, and locating of VA facilities. GAO
was asked to examine the CARES process. Specifically, GAO	 
examined (1) how CARES contributes to VHA's capital planning	 
process, (2) the extent to which the CARES process considered	 
capital asset alignment alternatives, and (3) the extent to which
VA has implemented CARES decisions and how this implementation	 
has helped VA carry out its mission. To address these issues, we 
analyzed CARES documents, interviewed VA officials, and conducted
six site visits, among other things.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-408 					        
    ACCNO:   A67086						        
  TITLE:     VA Health Care: VA Should Better Monitor Implementation  
and Impact of Capital Asset Alignment Decisions 		 
     DATE:   03/21/2007 
  SUBJECT:   Assets						 
	     Health care facilities				 
	     Health care planning				 
	     Health care programs				 
	     Health care services				 
	     Performance measures				 
	     Program evaluation 				 
	     Strategic planning 				 
	     Veterans hospitals 				 
	     Veterans' medical care				 
	     Capital investment planning			 
	     Program implementation				 
	     GAO High Risk Series				 
	     VA Capital Asset Realignment for			 
	     Enhanced Services Initiative			 
                                                                 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-07-408

   

     * [1]Results in Brief
     * [2]Background
     * [3]CARES Process and Modeling Tools Drive VHA's Capital Plannin

          * [4]CARES Process Has Enhanced VA's Capital Planning Process
          * [5]CARES Process Serves as the Foundation of VHA's Capital Plan

     * [6]Range of Alignment Alternatives Considered throughout the CA

          * [7]Range of Alignment Alternatives Considered for VA Facilities
          * [8]DNCP, Commission, and VA Secretary Generally Agreed on Align
          * [9]A Number of Factors Influenced the Alignment Alternatives Co

     * [10]Some CARES Decisions Implemented, but VA Does Not Use Perfor

          * [11]VA Has Begun Implementing CARES Capital Decisions and Has Ta
          * [12]Despite Cost and Importance of CARES, VA Does Not Use Perfor

     * [13]Conclusions
     * [14]Recommendation for Executive Action
     * [15]Agency Comments
     * [16]Big Spring VA Medical CenterBig Spring, Texas

          * [17]Overview of Capital Asset Alignment Issues
          * [18]Capital Asset Alignment Alternatives Considered
          * [19]Secretary's Decision

     * [20]Jonathan M. Wainwright Memorial VA Medical Center Walla Wall

          * [21]Overview of Capital Asset Alignment Issues
          * [22]Capital Asset Alignment Alternatives Considered
          * [23]Secretary's Decision

     * [24]El Paso VA Health Care CenterEl Paso, Texas

          * [25]Overview of Capital Asset Alignment Issues
          * [26]Capital Asset Alignment Alternatives Considered
          * [27]Secretary's Decision

     * [28]Greater Los Angeles Healthcare System Los Angeles, Californi

          * [29]Overview of Capital Asset Alignment Issues
          * [30]Capital Asset Alignment Alternatives Considered
          * [31]Secretary's Decision

     * [32]Orlando Outpatient Healthcare Clinic Orlando, Florida

          * [33]Overview of Capital Alignment Issues
          * [34]Capital Asset Alignment Alternatives Considered
          * [35]Secretary's Decision

     * [36]VA Pittsburgh Healthcare System Pittsburgh, Pennsylvania

          * [37]Overview of Capital Alignment Issues
          * [38]Capital Asset Alignment Alternatives Considered
          * [39]Secretary's Decision

     * [40]GAO Contact
     * [41]Staff Acknowledgments
     * [42]GAO's Mission
     * [43]Obtaining Copies of GAO Reports and Testimony

          * [44]Order by Mail or Phone

     * [45]To Report Fraud, Waste, and Abuse in Federal Programs
     * [46]Congressional Relations
     * [47]Public Affairs

Report to the Ranking Minority Member, Committee on Veterans' Affairs,
House of Representatives

United States Government Accountability Office

GAO

March 2007

VA HEALTH CARE

VA Should Better Monitor Implementation and Impact of Capital Asset
Alignment Decisions

GAO-07-408

Contents

Letter 1

Results in Brief 4
Background 6
CARES Process and Modeling Tools Drive VHA's Capital Planning Efforts 8
Range of Alignment Alternatives Considered throughout the CARES Process,
and Resulting Decisions Will Result in an Expansion of VA's Capital Assets
13
Some CARES Decisions Implemented, but VA Does Not Use Performance Measures
to Assess and Track Their Implementation and Impact 23
Conclusions 30
Recommendation for Executive Action 30
Agency Comments 31
Appendix I Objectives, Scope, and Methodology 32
Appendix II Comparison of the BRAC Process to the CARE Process 35
Appendix III Capital Planning Principles 37
Appendix IV Information on Visited VA Facilities 38
Big Spring VA Medical Center Big Spring, Texas 38
Jonathan M. Wainwright Memorial VA Medical Center Walla Walla, Washington
40
El Paso VA Health Care Center El Paso, Texas 42
Greater Los Angeles Healthcare System Los Angeles, California 43
Orlando Outpatient Healthcare Clinic Orlando, Florida 45
VA Pittsburgh Healthcare System Pittsburgh, Pennsylvania 47
Appendix V Comments from the Department of Veterans Affairs 49
Appendix VI GAO Contact and Staff Acknowledgments 51

Tables

Table 1: Steps of the CARES Process 2
Table 2: Milestones in VA's CARES Process 7
Table 3: Capital Asset Alignment Alternatives Considered throughout the
CARES Process 14
Table 4: Percentage of Secretary's Agreement with the Commission's
Recommendation, by Capital Asset Alignment Alternative 17
Table 5: Status of 18 Facilities That Required Further Study 19
Table 6: Status of Major CARES Capital Projects, as of February 200724
Table 7: Comparison of BRAC and CARES Processes 36

Figures

Figure 1: Major Steps of VHA's Capital Planning Process 12
Figure 2: Capital Asset Alignment Alternatives Considered during the CARES
Process 16

Abbreviations

BRAC Base Realignment and Closure CARES Capital Asset Realignment for
Enhanced Services
CBOC community-based outpatient clinic
DNCP Draft National CARES Plan
DOD Department of Defense
EUL enhanced use lease
OAEM Office of Asset Enterprise Management
OMB Office of Management and Budget
VA Department of Veterans Affairs
VHA Veterans Health Administration

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

United States Government Accountability Office
Washington, DC 20548

March 21, 2007

The Honorable Steve Buyer
Ranking Minority Member
Committee on Veterans' Affairs
House of Representatives

Dear Mr. Buyer: 

The Department of Veterans Affairs (VA) operates one of the largest health
care systems in the country. VA, through its Veterans Health
Administration (VHA), anticipates providing health care to 5 million
veterans in fiscal year 2007.^1 To support its mission, VA has a diverse
inventory of real property--including over 6,500 buildings and 32,000
acres of land as of June 2006. However, many of VA's facilities were built
more than 50 years ago and are not well suited to providing accessible,
high-quality, cost-effective health care in the 21st century. In 1999, we
reported that better management of VA's large, aged capital assets could
significantly reduce funds used to operate and maintain underused,
unneeded, or inefficient properties. We further noted that these funds
could be used to enhance health care services for veterans.^2 Thus, we
recommended that VA develop market-based plans for realigning its capital
assets.^3123The Department of Veterans Affairs (VA) operates one of the
largest health care systems in the country. VA, through its Veterans
Health Administration (VHA), anticipates providing health care to 5
million veterans in fiscal year 2007. To support its mission, VA has a
diverse inventory of real property--including over 6,500 buildings and
32,000 acres of land as of June 2006. However, many of VA's facilities
were built more than 50 years ago and are not well suited to providing
accessible, high-quality, cost-effective health care in the 21st century.
In 1999, we reported that better management of VA's large, aged capital
assets could significantly reduce funds used to operate and maintain
underused, unneeded, or inefficient properties. We further noted that
these funds could be used to enhance health care services for veterans.
Thus, we recommended that VA develop market-based plans for realigning its
capital assets.

In response, VA initiated a process known as Capital Asset Realignment for
Enhanced Services (CARES)--the first comprehensive, long-range assessment
of VA's health care system's capital asset requirements since 1981. CARES
was designed to assess the appropriate function, size, and location of VA
facilities in light of expected demand for VA inpatient and outpatient
health care services through fiscal year 2022. Through CARES, In response,
VA initiated a process known as Capital Asset Realignment for Enhanced
Services (CARES)--the first comprehensive, long-range assessment of VA's
health care system's capital asset requirements since 1981. CARES was
designed to assess the appropriate function, size, and location of VA
facilities in light of expected demand for VA inpatient and outpatient
health care services through fiscal year 2022. Through CARES, VA sought to
enhance outpatient and inpatient care, as well as special programs, such
as spinal cord injury, through the appropriate sizing, upgrading, and
locating of VA facilities. The CARES process included nine distinct steps
and required the time and expertise of many VA officials at the
departmental and network levels.^4 VA has completed steps 1 through 7. The
remaining two steps are implementing the CARES decisions and integrating
the CARES process into VA's strategic planning efforts. The steps of the
CARES process are summarized in table 1.

^1VA's three organizations are the Veterans Health Administration,
Veterans Benefits Administration, and the National Cemetery
Administration. VHA is primarily responsible for VA's health care delivery
to the veterans enrolled for VA health care services and operates the
majority of VA's capital assets.

^2See GAO, VA Health Care: Capital Asset Planning and Budgeting Need
Improvement, [48]GAO/T-HEHS-99-83 (Washington, D.C.: Mar. 10, 1999), and
VA Health Care: Improvements Needed in Capital Asset Planning and
Budgeting, [49]GAO/HEHS-99-145 (Washington, D.C.: Aug. 13, 1999).

^3 [50]GAO/T-HEHS-99-83 .

Table 1: Steps of the CARES Process

      o Step 1: VA officials at the departmental and network level develop    
      market areas and submarkets as the planning units for analyzing         
      veterans' needs.                                                        
      o Step 2: VA officials at the departmental level conduct market         
      analyses of veterans' health care needs using standardized forecasts of 
      enrollment and service needs and actuarial data.                        
      o Step 3: VA officials at the departmental level identify planning      
      initiatives that address apparent gaps between supply and demand in     
      resources for each market area.                                         
      o Step 4: Network officials consider different alignment alternatives   
      and develop specific plans for individual markets that addressed all    
      the planning initiatives identified by VA officials at the departmental 
      level.                                                                  
      o Step 5: The Under Secretary of Health uses the market plans to        
      prepare a Draft National CARES Plan (DNCP) and the DNCP's               
      recommendations.                                                        
      o Step 6: The Secretary of Veterans Affairs appoints a commission       
      composed of non-VA executives to make recommendations to the Secretary  
      to accept, present alternatives to, or reject the recommendations       
      contained in the DNCP. According to VA, the commission will help ensure 
      objectivity and independence in the process and bring an external       
      perspective to the recommendations contained in the DNCP.               
      o Step 7: The Secretary of Veterans Affairs decides whether to accept,  
      reject, or modify the commission's recommendations regarding the DNCP.  
      o Step 8: Network officials may implement the Secretary's decisions.    
      o Step 9: VA officials at the departmental level refine and incorporate 
      CARES planning initiatives into the annual strategic planning cycle.    

Source: VA.

According to VA, the CARES process was a onetime major initiative.
However, its lasting result was to provide a set of tools and processes
that allow VA to continually plan for the future resources needed to
provide health care to our nation's veterans. In announcing his decisions
in May 2004, the Secretary stated that implementing CARES decisions will
require an additional investment of approximately $1 billion per year for
at least the next 5 years, with substantial infrastructure investments
then continuing for the indefinite future, to modernize VA's aging
infrastructure.^5 Although CARES will require substantial investment, the
Secretary noted that not proceeding with CARES would require funding to
maintain or renovate obsolete facilities and would leave VA with numerous
redundant, outmoded, or poorly located facilities. The Secretary further
stated that through the CARES process, VA had developed more complete
information about the demand for VA health care and a more comprehensive
assessment of its capital assets than it 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 tools developed for CARES into its 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.

^4VA's health care delivery system is divided into 21 health care delivery
networks.

Given the important role CARES plays in VA's planning efforts and decision
making, you asked us to examine the CARES process. Accordingly, this
report examines (1) how CARES contributes to VHA's capital planning
process, (2) the extent to which the CARES process considered alignment
alternatives, and (3) the extent to which VA has implemented CARES
decisions and how this implementation has helped VA carry out its mission.
To address these issues, we analyzed the Draft National CARES Plan (DNCP),
the CARES Commission Report, the Secretary's CARES Decision document, VA's
5-Year Capital Plan, and VA's legal authorities and appropriations acts.
We also conducted six site visits to a nonprobability sample of VA
facilities in Big Spring, Texas, El Paso, Texas, Orlando, Florida,
Pittsburgh, Pennsylvania, Walla Walla, Washington, and Los Angeles,
California. We chose these locations because of the variety of capital
asset alignment alternatives considered at each site and to achieve
geographical dispersion. At each site, we interviewed network and local VA
officials as well as local stakeholders, such as representatives from the
VA employee unions, veterans service organizations, Department of Defense
(DOD) affiliates, and medical university affiliates. We also toured the
facilities at each location. We conducted our work from March 2006 through
March 2007 in accordance with generally accepted government auditing
standards. (See app. I for more information on our scope and methodology.)

^5Since 2004, VA has requested over $3.7 billion for capital projects
identified through the CARES process.

Results in Brief

The CARES process provided VA with a blueprint that drives VHA's capital
planning process by developing a model for analyzing VA health care demand
and making recommendations for ways to meet that demand. Specifically, as
part of the CARES process, VA adapted an actuarial model to produce
20-year forecasts of the demand for services, more accurate assessments of
veterans' reliance on VA services and capacity gaps, and market
penetration rates. VA continues to use this model to update its workload
projections, which are used to help develop the annual capital budget
request. In addition, the CARES decisions serve as the foundation for
VHA's capital budget process. For example, the first step in VHA's capital
budget process is for officials from the network level to submit proposals
that identify capital projects that will address service or infrastructure
gaps identified in the CARES process to the department. According to VA
officials, in order to advance through VA's capital planning process, the
capital projects submitted must be based upon demand projections that use
the planning model developed through CARES.

The DNCP, the CARES Commission, and the Secretary considered a range of
capital asset alignment alternatives during the CARES process, and the
decisions that emerged from the process will, if implemented, expand VA's
capital asset portfolio. The most frequently considered alternatives
included renovating or expanding existing sites, conducting additional
analysis, and changing services. The consideration of a range of alignment
alternatives is consistent with capital planning best practices and is an
important step in ensuring appropriate alignment decisions are made.
Although a wide range of alternatives were considered, there was
relatively consistent agreement among the DNCP, the CARES Commission, and
the Secretary as to which were the best alternatives to pursue. For
example, the CARES Commission agreed with about 78 percent of the DNCP
proposals, while the Secretary agreed with about 81 percent of the
commission's recommendations. Although the Secretary tended to agree with
the CARES Commission's recommendations, the extent to which he agreed
varied by alignment alternative. In particular, the Secretary always
agreed with the commission's recommendations to build new facilities,
enter into enhanced use leases and collaborate with DOD and universities,
but was less likely to agree to the CARES Commission's recommendations to
contract out or close facilities. For example, the Secretary only agreed
with about half of the commission's recommendations to contract out. The
resulting capital alignment alternatives that the CARES Commission
recommended and the Secretary agreed to will result in an overall increase
in the number of VA facilities, if implemented. For example, the CARES
decisions include building 3 new medical centers and opening 156
community-based outpatient clinics (CBOC). As a result of the CARES
process, VA will completely close only 1 facility, Gulfport, Mississippi,
which was severely damaged during Hurricane Katrina. According to VA
officials, rather than show that VA should downsize its capital asset
portfolio, the CARES process revealed service gaps and needed
infrastructure improvements. Our analysis of the alternatives considered
and recommended for 6 facilities we visited indicate that a number of
factors shaped and in some cases limited VA's range of alternatives
considered during the CARES process. These factors included competing
stakeholder's interests; facility condition and location; veterans' access
to facilities; established relationships between VA and health care
partners, such as DOD and university medical affiliates; and legal
restrictions.

VA has started implementing some CARES decisions, but does not centrally
track the implementation of all the CARES decisions or monitor the impact
such implementation has had on its mission. VA has begun implementing 32
of the more than 100 capital projects and 32 of the 156 CBOCs approved by
the Secretary during the CARES process.^6 VA has also incorporated into
its strategic planning the principles that were employed in the CARES
process, such as using a model to project future health care and budgetary
needs. Although VA has over 100 performance measures to monitor other
agency programs and activities, these measures either do not directly link
to the CARES goals or VA does not use them to monitor the implementation
and impact of CARES decisions. For example, VA does not centrally track or
monitor the implementation of all CARES decisions--which could be used as
a performance measure for CARES. Without this information, VA cannot
readily assess its progress in implementing the CARES decisions and
determine the impact such decisions are having on veteran care. Moreover,
the lack of CARES-specific performance measures makes it difficult for
stakeholders to hold VA accountable for achieving the intended results of
CARES, such as reducing funds used to operate and maintain underused
facilities while enhancing services for veterans.

To allow VA to better determine the extent of implementation and impact of
CARES, we are recommending that the Secretary develop performance measures
to assess whether the implementation of CARES is achieving the intended
results as well as the impact of these decisions on veterans' health care.
VA and DOD reviewed a draft of this report. VA agreed with the report's
findings and recommendation. VA also provided technical clarifications,
which we incorporated, as appropriate. DOD did not have any comments.

^6CBOCs are VA operated, contracted, or leased health care facilities that
are geographically distinct or separate from the parent VA medical
facility.

Background

Over the past decade, VA's system has undergone a dramatic transformation,
shifting from predominantly hospital-based care to primary reliance on
outpatient care. As VA increased its emphasis on outpatient care rather
than inpatient care, 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. CARES is intended to enhance
outpatient and inpatient care, as well as special programs such as spinal
cord injury, blind rehabilitation, seriously mentally ill, and long-term
care through the appropriate sizing, upgrading, and location of VA
facilities.^7 Since its inception in 1999, the CARES process has reached
several major milestones (see table 2).

^7See appendix II for a comparison of CARES and the Department of
Defense's Base Realignment and Closure process.

Table 2: Milestones in VA's CARES Process

Date          Milestone                Description                         
February 2002 VA announced the results The pilot study assessed current    
                 of a pilot CARES study.  and 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     
                                          consistent with VA mission and      
                                          community zoning issues.            
August 2003   VA's Under Secretary for The Under Secretary's Draft         
                 Health presented the     National CARES Plan included        
                 Draft National CARES     recommendations about health care   
                 Plan.                    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       
                 recommendations.         Veterans 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   
                 the CARES decisions.     on a review of the CARES            
                                          Commission's recommendations.       
January 2005  CARES follow-up studies. VA awarded a contract for           
                                          additional studies at 18 VA         
                                          facilities. These studies will      
                                          include evaluating outstanding      
                                          health care issues, developing      
                                          capital plans, as well as           
                                          determining the best use for        
                                          unneeded VA property consistent     
                                          with VA mission and community       
                                          zoning issues.                      

Source: GAO analysis of VA data.

The challenge of misaligned infrastructure is not unique to VA. We
identified federal real property management as a high-risk area in January
2003 because of the nationwide importance of this issue for all federal
agencies.^8 We did this to highlight the need for broad-based
transformation in this area, which, if well implemented, will better
position federal agencies to achieve mission effectiveness and reduce
operating costs. But VA and other agencies face common challenges, such as
competing stakeholder interests in real property decisions. In VA's case,
this involves achieving consensus among such stakeholders as veterans
service organizations, affiliated medical schools,^9 employee unions, and
communities.

^8GAO, High Risk Series: Federal Real Property, [51]GAO-03-122 ,
(Washington, D.C.: January 2003).

^9VA maintains partnerships or affiliations with 107 university medical
schools to obtain medical services for veterans and provide training and
education to medical residents.

As noted in our high-risk work, having an effective capital planning
process can help to ensure that the needs of veterans are being met.
Effective planning for capital investments is a very important task
because large sums of taxpayer funds are spent on capital assets and
because their performance affects how well agencies are able to achieve
their missions, goals, and objectives. We--as well as Congress and the
Office of Management and Budget (OMB)--have all identified the need for
effective capital planning. (App. III outlines a set of effective capital
planning principles that we, as well as OMB, have identified.) One of
these principles is for agencies to evaluate a wide range of alternatives
before choosing to purchase or construct a capital asset. OMB guidance
also emphasizes the importance of evaluating alternatives. Specifically,
OMB guidelines state that when evaluating capital assets, a comparison of
alternatives is critical for ensuring that the best alternative is
selected. In its guidance, OMB challenges decision makers to consider the
different ways in which various functions, most notably health care
service delivery in VA's case, can be performed. In this regard, OMB
labeled the development of alternatives the single most important element
in that process.

CARES Process and Modeling Tools Drive VHA's Capital Planning Efforts

In developing the model for analyzing VA's health care demand and making
recommendations for ways to meet that demand, the CARES process provided
VA with a blueprint that drives VHA's capital planning process.
Specifically, as part of the CARES process, VA adapted an actuarial model
that it used to project VA budgetary needs. Modifications made for the
CARES process enabled the model to produce 20-year forecasts of the demand
for services. Additional modifications allowed for more accurate
assessments of veterans' reliance on VA services, market penetration
rates, and adjustments for capacity. Using information from the model, VA
could determine current supply and identify current and future gaps in
infrastructure capacity. VA continues to use this model to update its
workload projections, which are used to develop the annual budget request.
In addition, the CARES process serves as the foundation for VHA's capital
budget process. For example, the first step in VHA's capital budget
process is for networks to submit proposals that identify capital projects
that will address service or infrastructure gaps identified in the CARES
process to the department. Additionally, in its fiscal year 2008 budget
submission, VA requested $560 million for VHA major construction projects
and $180 million for minor construction projects--all of which will be
devoted to the continuation of CARES.^10

CARES Process Has Enhanced VA's Capital Planning Process

The CARES process is the latest in a series of initiatives to improve VA's
capital planning process. In 1997, VA started efforts to develop a
systemwide, integrated capital planning process. According to VA, the
fundamental goal of the new process was to ensure that all major capital
investment proposals, including high-risk and mission-critical projects,
were

           o based upon sound business and economic principles;
           o aligned with the overall strategic goals and objectives of VA;
           o addressed the Secretary's priorities; and
           o supported the President's Management Agenda, among other things.

           In 2001, VA took steps to further enhance its capital planning
           process by creating the Office of Asset Enterprise Management
           (OAEM), which is responsible for developing capital asset policy,
           providing guidance and oversight, and ensuring a consistent and
           cohesive agency approach to capital asset acquisition, management,
           and disposal.^11 One of the objectives of creating this
           departmental-level office was to strengthen VA's capital planning
           process and ensure the coordination of planning and investment
           decisions throughout the department. To streamline the process for
           developing capital investment proposals, OAEM developed a new
           process that requires officials to submit and review investment
           proposal data in increasing levels of detail. The goal of this
           streamlined approach was to reduce the laborious data collection
           associated with developing proposals that are not funded and allow
           proposal developers more time to provide senior management with
           the most accurate cost and schedule data.

           Through the CARES process, VA gained the tools and information
           needed to plan capital investments. Despite VA's past efforts and
           progress, VA continued to lack current information on the
           condition of all VA's facilities and information on what services
           veterans would need--and where--in the future. As part of the
           CARES process, VA modified an actuarial model that it used to
           project VA budgetary needs. According to VA, the modifications
           enabled the model to produce 20-year forecasts of the demand for
           services and provided for more accurate assessments of veterans'
           reliance on VA services and capacity gaps, and market penetration
           rates.^12 The information provided by the model allowed VA to
           identify service needs and infrastructure gaps, in part, by
           comparing the expected location of veterans and demand for
           services in years 2012 through 2022 with the current location and
           capacity of VA health care services within each network.^13 In
           addition to modifying the model, facility condition assessments
           were conducted on all of VA's real property holdings as part of
           the CARES process. This provided VA information about the
           condition of its facilities, including infrastructure needs.

           VA continues to use the tools developed through CARES as part of
           its capital planning process. For example, VA conducts facility
           condition assessments for each real property holding every 3 years
           on a rotating basis. In addition, VA uses the modified actuarial
           model to update its workload projections each year, which are used
           to inform the annual capital budget process.^14
			  
			  CARES Process Serves as the Foundation of VHAâs Capital Planning
			  Efforts

           The CARES process serves as the foundation for VHA's capital
           planning efforts. As shown in figure 1, the first step in VHA's
           capital budget process is for networks to submit conceptual
           papers^15 that identify capital projects that will address service
           or infrastructure gaps identified in the CARES process and as
           updated through the incorporation of the CARES forecasting model
           into the strategic and capital planning process. The Capital Asset
           Review Board reviews, scores, and ranks these papers. Over 50
           CARES conceptual papers and business case applications were
           evaluated based on criteria approved by the Secretary for the
           fiscal year 2008 budget process. The Capital Asset Review Board
           identifies the proposals that will be sent forward for additional
           analyses and review, and may ultimately be included as part of
           VA's budget request. According to VA officials, all capital
           projects must be based upon the CARES planning model to advance
           through VHA's capital planning process. On the basis of
           CARES-identified infrastructure needs and service gaps, VA
           identified more than 100 major capital projects in 37 states, the
           District of Columbia, and Puerto Rico.^16 In addition to these
           projects, the CARES planning model identified service needs and
           infrastructure gaps at other locations throughout the VA
           system.^17 These service needs and gaps could translate into other
           proposed major or minor capital projects in the future.

^10Section 812 of the Veterans Benefits, Health Care, and Information
Technology Act of 2006, P.L. 109-461, 120 Stat. 3403, 3447 (2006),
increases the threshold for approval for major medical facilities from $7
million to $10 million.

^11More recently, section 811 of the Veterans Benefits, Health Care, and
Information Technology Act of 2006, P.L. 109-461, 120 Stat. 3403,
3446-3447 (2006), creates the position of Director of Construction and
Facilities Management, whose responsibilities are, among other things, to
develop and update short- and long-range capital investment strategies and
plans of the department.

^12We did not evaluate the reliability of the model or its projections.

^13VA 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 to do so.

^14As a result of VA's efforts to improve its capital asset management
program, VA achieved Green status on the scorecard for the federal
government's real property initiative in 2006. As part of the President's
Management Agenda, the Executive Branch Management Scorecard is used to
track how well departments and major agencies are executing the
governmentwide management initiatives. The scorecard employs a simple
grading system: Green for success, Yellow for mixed results, and Red for
unsatisfactory.

^15CARES conceptual papers are created at the network level and provide a
detailed description of the project, the problem the project will address,
and other relevant information.

^16The term "major capital projects" refers to the construction,
alteration, or acquisition of a medical facility involving a total
expenditure of more than $10 million. (See Section 812 of P.L.109-461, 120
Stat. 3403, 3447 (2006) and 38 U.S.C. 3108.) In contrast, a "minor capital
project" refers to the construction, alteration, or acquisition of a
medical facility involving a total expenditure of $10 million or less.

^17The CARES planning model is updated annually to reflect new information
such as better projections of Iraqi war veterans.

Figure 1: Major Steps of VHA's Capital Planning Process

VHA's capital plan and budget only contain projects identified through the
CARES planning model. According to VA, the capital plan identifies
priority projects that will improve the environment of care at VA medical
facilities and ensure more effective operations by redirecting resources
from maintenance of vacant and underused buildings and reinvesting them in
veterans' health care. The capital plan identifies 27 priority CARES
projects for major construction funding for fiscal year 2008. In the
accompanying fiscal year 2008 budget submission, VA requested $560 million
for VHA major construction projects and $180 million for minor
construction projects--all of which will be devoted to the continuation of
VA's efforts to address infrastructure needs and service gaps identified
through the CARES process. According to VA's fiscal year 2008 budget
submission, the major construction funding provides for the construction
of 3 new medical facilities, consolidation of services in Pittsburgh, and
a new spinal cord injury center in Syracuse, New York, as well as various
other projects, such as security upgrades, hazardous waste abatement, and
design work. The minor construction funding provides for constructing,
altering, extending, and improving VHA facilities where the estimated cost
is $10 million or less. According to VA's capital budget, this funding
will enable VA to implement the CARES proposals that can be accomplished
through the minor construction program.

Range of Alignment Alternatives Considered throughout the CARES Process, and
Resulting Decisions Will Result in an Expansion of VA's Capital Assets

The DNCP, the CARES Commission, and the Secretary considered a range of
capital asset alignment alternatives throughout the CARES process. The
most frequently considered alternatives included renovating or expanding
existing sites, conducting additional analysis, and changing services. The
least frequently considered alignment alternatives included closing
facilities, collaborating with medical universities, expanding or using
existing CBOCs, and utilizing telemedicine and telehealth.^18 Although a
range of alternatives were considered, there was relatively consistent
agreement among the DNCP, the CARES Commission, and the Secretary as to
which were the best alternatives to pursue. For example, the CARES
Commission agreed with about 78 percent of the DNCP proposals, while the
Secretary agreed with about 81 percent of the commission's
recommendations. Although the Secretary tended to agree with the CARES
Commission's recommendations, the extent to which he agreed varied by
alignment alternative. In particular, the Secretary always agreed with the
commission's recommendations to build new facilities, enter into enhanced
use leases, and collaborate with DOD and universities, but was less likely
to agree to the CARES Commission's recommendations to contract out or
close facilities. For example, the Secretary only agreed with about half
of the commission's recommendations to contract out. The resulting capital
alignment alternatives recommended by the CARES Commission and agreed to
by the Secretary will result in an overall expansion of VA facilities.
According to VA, the expansion reflects expected workload demands, service
gaps, and associated infrastructure needs.

Range of Alignment Alternatives Considered for VA Facilities

Our analysis indicates that a range of alternatives for aligning capital
assets was considered throughout the CARES process. Using the published
reports, we categorized all instances when an alignment alternative was
considered by the DNCP, CARES Commission, or the Secretary for VA
facilities.^19 We identified 14 different alignment alternatives that were
consistently considered during the different phases of the CARES process.
The alternatives ranged from closing a facility to constructing a new
facility (see table 3). For most of the facilities that were assessed in
VA's published reports, the DNCP, CARES Commission, or the Secretary
considered multiple alignment alternatives. The consideration of a range
of alignment alternatives by the DNCP, CARES Commission, and the Secretary
is consistent with capital planning best practices and is an important
step in ensuring appropriate alignment decisions are made.^20

18Telemedicine is providing health care, including medical diagnoses and
patient care, from a distance through the use of telecommunications
technology. Telemedicine includes speech, pathology, radiology, and
patient consultation from a distance. Telehealth is the use of
telecommunications technology to exchange health care information and
provide health care services.

^19Our analysis includes alignment alternatives considered for VA
facilities as documented in the DNCP, CARES Commission Report, or the
Secretary's Decision Report. See appendix I for more information on our
methodology.

Table 3: Capital Asset Alignment Alternatives Considered throughout the
CARES Process

Alternative                 Definition                                     
Status quo                  No changes proposed; current services are      
                               maintained                                     
Close facility or study the Close facility or study the feasibility of     
feasibility of closing      closure                                        
Change services             Services at a VA unit are changed in any way,  
                               such as converting inpatient beds to           
                               outpatient beds                                
Collaboration-DOD           Any collaboration between VA and DOD for       
                               medical services                               
Collaboration-university    Any collaboration between VA and a university  
                               or other educational institutions for medical  
                               services                                       
Contract out                Any occasion where VA contracts in the         
                               community for medical services                 
Renovate/expand             Any renovation or expansion of an existing VA  
                               facility                                       
Build new facility          New construction of any type of medical        
                               facility, such as a hospital, domiciliary,^a   
                               or nursing home                                
Build new CBOC              Construction of any new CBOC of any size to    
                               address health care demands                    
Expand/use existing CBOC    Utilize existing CBOC or add space through     
                               construction, renovation, or leasing to        
                               existing clinics in order to address health    
                               care demands                                   
Consolidate services        Downsizing health care services or             
                               consolidating two or more hospitals/clinics    
                               into fewer facilities                          
Additional analysis needed  The development of plans or policies to        
                               analyze the implementation of health care      
                               services, such as a Facility Master Plan       
Enhanced use lease          VA leases underutilized or unused property to  
                               an outside entity if the agreement enhances    
                               the use of the property or results in an       
                               improvement of services to veterans in the     
                               network in which the property is located^b     
Telemedicine/telehealth     Providing health care from a distance and      
                               exchanging health care information using       
                               telecommunications technology                  

Source: GAO analysis.

^aA domiciliary provides clinical care to patients who suffer from a wide
range of illnesses, or areas of dysfunction, which can be medical,
psychiatric, vocational, educational, or social in a safe, secure,
semistructured homelike environment.

^bEnhanced use leasing authorizes VA to lease real property under the
Secretary's jurisdiction or control to a public or private entity for up
to 75 years. The lease should result in a beneficial redevelopment or
reuse of the VA property such as including space for a VA mission-related
activity or in providing some form of consideration that can be applied to
improve health care services for veterans and their families in the
community where the site is located.

^20See [52]GAO-03-1103R and [53]GAO/AIMD-99-32 .

We also found that a range of alignment alternatives were considered at
the six VA facilities we visited. We visited VA facilities in Big Spring
and El Paso, Texas; Orlando, Florida; Pittsburgh, Pennsylvania; Los
Angeles, California; and Walla Walla, Washington. We found that multiple
alignment alternatives were considered for the VA facility in each
location. For instance, in Pittsburgh, alternatives that were considered
included maintaining the status quo, consolidation of its three separate
campuses, renovation/expansion, contracting out, enhanced use leasing, and
new construction. Similarly, for the VA facility in Los Angeles,
alternatives considered included consolidation, collaboration, new
construction, and renovation/expansion. Appendix IV provides information
on the alignment alternatives considered at each facility we visited.

DNCP, Commission, and VA Secretary Generally Agreed on Alignment
Alternatives for VA Facilities, and Decisions Will Result in an Expansion
of Assets

Although a range of capital asset alignment alternatives were considered
throughout the CARES process, some alternatives were more frequently
considered than others. (See fig. 2.) Our analysis indicates that the most
frequently considered alternatives included renovating or expanding
existing sites, conducting additional analysis, and changing services. For
example, the DNCP, the CARES Commission, and the Secretary considered
renovating and expanding the medical facilities in Pittsburgh to enhance
veteran care. The least frequently considered alignment alternatives
included closing facilities, collaborating with medical universities,
expanding or using existing CBOCs, and utilizing telemedicine and
telehealth. For instance, only 3.9 percent of alternatives considered
involved closing facilities. According to VA officials, closure was
considered for more facilities during the initial CARES planning efforts.
However, the CARES projections indicated that most facilities were
needed.^21 Therefore, closures were not considered as often as had been
expected when CARES was initiated.

^21We did not evaluate the reliability of the model or its projections.

Figure 2: Capital Asset Alignment Alternatives Considered during the CARES
Process

Note: More than one alternative may have been considered for each VA
facility. We included all the alternatives considered for each facility in
our analysis.

Although a range of capital asset alignment alternatives were considered
for VA facilities throughout the CARES process, there was relatively
consistent agreement among the DNCP, the CARES Commission, and the
Secretary as to which were the best alternatives to pursue. According to
our analysis, the CARES Commission agreed with about 78 percent of the
DNCP proposals, while the Secretary agreed with about 81 percent of the
commission's recommendations. Thus, almost three-fourths (73.8 percent) of
the DNCP proposals made it all the way through the process--that is, the
CARES Commission recommended the DNCP proposal and the Secretary agreed to
implement it.

While the Secretary tended to agree with the CARES Commission's
recommendations, the extent to which he agreed varied by alignment
alternative. In particular, the Secretary always agreed with the
commission's recommendations to build new facilities, enter into enhanced
use leases, and collaborate with DOD and universities. For example, the
Secretary agreed with the commission's recommendation to build a new VA
medical facility in the Orlando area and explore enhanced use leasing
options at VA's West Los Angeles facility. In contrast, the Secretary was
less likely to agree to the CARES Commission's recommendations to contract
out or close facilities. For example, the Secretary agreed with the
commission's recommendations to contract out in 8 of 14 instances. Table 4
indicates how often the Secretary agreed to the commission's
recommendations, by selected alternative.

Table 4: Percentage of Secretary's Agreement with the Commission's
Recommendation, by Capital Asset Alignment Alternative

                                                                Percentage of 
                                 Number of Number of times the      times the 
                                     times    Secretary agreed      Secretary 
                               recommended      with the CARES    agreed with 
                              by the CARES        Commission's     commission 
Alignment alternatives       Commission     recommendations recommendation 
Status quo                           33                  26          78.8% 
Close facility or study                                                    
the feasibility of closing            3                 1^a          33.3% 
Change services                      16                  13          81.3% 
Collaboration-DOD                    16                  16         100.0% 
Collaboration-university              4                   4         100.0% 
Contract out                         14                   8          57.1% 
Renovate/expand                      81                  67          82.7% 
Build new facility                   13                  13         100.0% 
Build new CBOC or                                                          
expand/use existing CBOC             67                  62          92.5% 
Consolidate services                 56                  50          89.3% 
Additional analysis needed           79                  74          93.7% 
Enhanced use lease                   27                  27         100.0% 

Source: GAO analysis of the CARES Commission Report and the Secretary's
Decision document.

Note: More than one alternative may have been considered for each VA
facility. We included all the alternatives considered for each facility in
our analysis. ^aIn the 2004 Decision document, the Secretary decided to
conduct feasibility studies to consider closing the Gulfport and Big
Spring facilities. In 2006, the Secretary decided to close the Gulfport
facility (which was damaged by Hurricane Katrina) and keep the Big Spring
facility open.

Our analysis of the capital alignment alternatives recommended by the
CARES Commission and agreed to by the Secretary indicates that an overall
expansion of VA facilities will result. As table 4 indicates, the
Secretary agreed to all of the commission's recommendations for building
new facilities and nearly all of the commission's recommendations for
opening new CBOCs. As a result, VA intends to open 156 new CBOCs by 2012
and, as of February 2006, had submitted proposals to Congress to build 3
new medical centers. In contrast, Gulfport is the only VA facility that
has been completely closed or planned for closure since CARES was
initiated.^22 The DNCP originally proposed closing 10 facilities. However,
the CARES Commission only recommended the Secretary close or consider the
feasibility of closing 3 facilities--Gulfport, Walla Walla, and Big
Spring. When announcing his decisions in May 2004, the Secretary stated
that further study was needed to make a decision regarding the future of
these three facilities.^23 In 2006, the Secretary decided to (1)
completely close the Gulfport facility, which was damaged by Hurricane
Katrina; (2) maintain inpatient services and expand mental health services
in Big Spring; and (3) build a new outpatient clinic, but close and
contract out inpatient services in Walla Walla.

In addition to the 3 facilities that the CARES Commission recommended for
closure, the Secretary identified 15 other facilities that required
further study in his announcement in 2004. According to the Secretary, the
additional studies would help him decide whether closure, service changes,
or property disposal was warranted for these facilities. The Secretary has
issued decisions for 14 of these 15 facilities. None of the Secretary's
decisions for these 14 facilities will result in facility closure. Table 5
describes the Secretary's decisions for all 18 facilities identified for
further study.

^22VA plans to close only inpatient services at four other VHA facilities.
For more information about VA's efforts to realign its inpatient services,
see GAO, VA Health Care: Important Steps Taken to Enhance Veterans' Care
by Aligning Inpatient Services with Projected Needs, [54]GAO-05-160
(Washington, D.C.: March 2005).

^23The Secretary indicated that two of these studies, for Big Spring and
Gulfport, would examine whether the facilities should be closed.

Table 5: Status of 18 Facilities That Required Further Study

Facility location         Secretary's decision                             
Big Spring, TX            Maintain inpatient services and expand mental    
                             health services, including construction of a     
                             domiciliary unit.                                
Boston, MA                Rejected proposal to consolidate four medical    
                             facilities into one single facility; conduct     
                             further study of options to modernize and meet   
                             the needs of veterans.                           
Brooklyn-Manhattan, NY    Maintain existing services at Brooklyn VA        
                             Medical Center.                                  
Canandaigua, NY           Continue to provide inpatient and outpatient     
                             services and to build new or renovate buildings. 
Gulfport, MS              Closed facility due to Hurricane Katrina.        
Lexington, KY             Replace inpatient and outpatient facilities, but 
                             conduct further study of options.                
Livermore, CA             Renovate or replace nursing home facilities;     
                             conduct further study of options to modernize    
                             and replace.                                     
Louisville, KY            Build new facility to replace existing medical   
                             center.                                          
Montgomery, AL            Continue to provide inpatient services and       
                             modernize the facility; continue to partner with 
                             Maxwell Air Force Base.                          
Montrose/Castle Point, NY Conduct study of options selected to replace     
                             and/or renovate facilities at each campus.       
Muskogee, OK              Maintain inpatient services and expand           
                             psychiatric services.                            
Perry Point, MD           Develop a capital plan to modernize campus       
                             coordinated with reuse opportunities.            
Poplar Bluff, MO          Maintain inpatient services and add cardiology   
                             services.                                        
St. Albans, NY            Replace existing facility with new nursing home, 
                             outpatient clinic, and domiciliary.              
Waco, TX                  All services will be maintained at Waco; VA will 
                             work to find uses for the underutilized portions 
                             of the Waco campus.                              
Walla Walla, WA           Build new outpatient facility for primary and    
                             specialty care and mental health services; close 
                             and contract out inpatient services.             
Los Angeles, CA           To be decided.                                   
White City, OR            Modernize rehabilitation center and clinics.     

Source: GAO analysis of VA decision memos.

Although facility closure was infrequently chosen as an alignment
alternative in the CARES process, the CARES Commission frequently
recommended consolidating services and the use of enhanced use
leasing--and the Secretary tended to agree with these recommendations.
Consolidating services could position VA to close additional facilities in
the future. For example, when services are consolidated from 3 to 2
campuses in Pittsburgh, VA's Highland Drive facility will become vacant
and could be closed in the future. However, a VA official said that no
decision has been made whether the Highland Drive facility will be
demolished, leased, or sold, among other possibilities. In addition,
entering into enhanced use leases could help VA reduce excess or vacant
space. The CARES Commission noted that the proposals contained in the DNCP
rely heavily on enhanced use leases to reduce VA's vacant space.

According to VA officials, rather than show that VA should downsize its
capital asset portfolio, the CARES process revealed a greater demand for
services and need for infrastructure improvements than originally
expected. Although the CARES projections indicate that the overall number
of veterans enrolled in VA health care will decline from fiscal year 2002
to fiscal year 2022, there are locations that are projected to experience
some growth in the demand of services in the near term. For example, the
number of enrollees in the Sunshine Health Care Network is expected to
increase by about 7 percent from fiscal year 2001 through fiscal year
2012.^24 In addition, VA's aging infrastructure--including many hospitals
built or acquired more than 50 years ago--is not well suited for modern
health care delivery and does not reflect VA's increased emphasis on
outpatient care. Consequently, the CARES process indicated that there was
sufficient demand for services at most VA facilities, thereby validating
the need to maintain or renovate these facilities as well as construct new
facilities, primarily outpatient clinics, according to VA officials.

A Number of Factors Influenced the Alignment Alternatives Considered and
Recommended for Six Locations Studied

Our analysis of the alternatives considered and recommended for the six
facilities we visited indicate that a number of factors shape, and in some
cases, limit capital asset alignment decision making. These factors
include competing stakeholder interests, facility condition and location,
access issues, established relationships with other health care providers,
and legal restrictions. Some of these factors are similar to the
challenges we have identified in our review of real property management
efforts across the government.^25 The factors we identified in our site
visits are summarized below.

           o Competing stakeholder interests. Experiences from Walla Walla
           and Big Spring illustrate the challenges that VA can face when
           considering closing a facility or reducing services. In both
           locations, CARES workload projections indicate that the demand for
           services is decreasing. However, community and veteran groups as
           well as elected officials strongly opposed reducing services or
           closing facilities. Rather, they argued for preserving the status
           quo or increasing services. For instance, Big Spring and Walla
           Walla stakeholders formed community task forces to explore options
           for continuing VA services. According to a former Big Spring VA
           official, approximately 2,000 members of the community attended
           town hall meetings to discuss the future of the Big Spring
           facility. According to VA officials and stakeholders, these
           efforts were intended to influence the Secretary's decision to
           maintain or increase services. Although the CARES Commission
           recommended closing or studying the feasibility of closing the
           facilities in Walla Walla and Big Spring, the Secretary ultimately
           decided to (1) build a new outpatient facility in Walla Walla and
           (2) maintain inpatient services and expand mental health services
           in Big Spring. According to VA, the Secretary's decisions in these
           two locations were based on a variety of factors, including access
           issues, the condition of the facilities, and potential reuse
           options.
           o Facility condition and location. Experiences in Pittsburgh and
           Orlando illustrate how the condition of the facility and its
           location can influence decision making. According to a VA
           official, the Highland Drive facility in Pittsburgh was in poor
           condition and not designed for modern health care--a fact that
           influenced the alignment alternatives considered. The DNCP and the
           CARES Commission recommended consolidating services in
           Pittsburgh--specifically, by shifting services provided at the
           Highland Drive facility to the two other VA medical facilities in
           Pittsburgh. In Orlando, expanding the existing facility to meet
           growing demand was ruled out as an option because there was
           inadequate land available at the existing site to accommodate a
           larger facility.
           o Access issues. Experiences in Walla Walla, Big Spring, and
           Orlando illustrate how access issues influenced the alternatives
           considered and recommended. VA facilities in Walla Walla and Big
           Spring are located in rural areas, and are at least 4 hours drive
           time from other VA facilities, including facilities with mental
           health services.^26 In addition, although the inpatient workloads
           at both facilities are projected to decline, demand for outpatient
           services is expected to remain stable or increase at these
           locations, according to VA. Based on our interviews with VA
           officials and stakeholders, maintaining access to health care
           services was an important factor in deciding not to completely
           close the Big Spring and Walla Walla facilities. Similarly, a VA
           official stated that a new facility was needed in Orlando to meet
           the CARES access proximity standard (i.e., within a 1-hour drive
           of acute patient care). In particular, only 45 percent of the
           veteran population in VA's Sunshine Health Care Network live in an
           area that meets this standard. Building a new facility in the
           Orlando area would increase the percentage of veterans living
           within 1 hour of acute patient care to 78 percent.
           o Established relationships with other health care providers.
           Experiences in El Paso and Big Spring demonstrate how established
           relationships influenced whether collaborative opportunities were
           considered and recommended as an alternative. For example,
           according to VA officials, collaborative opportunities between the
           VA facility in Big Spring, Texas, and Dyess Air Force Base in
           Abilene, Texas, were not pursued, in part, because the two
           entities had no history of sharing services. Conversely, VA and
           DOD have a history of sharing services in El Paso, and as a
           result, considering further collaborative opportunities at this
           location was a natural outgrowth of their current relationship.
           o Legal restrictions. Legal restrictions on the disposal of
           property and the use of enhanced use leasing in Los Angeles
           illustrate how legal restrictions can influence the capital asset
           alignments considered and recommended. A VA official at the West
           Los Angeles facility said that the value of underutilized property
           at the site is considerable given real estate prices in the
           surrounding area. As noted in the Secretary's 2004 Decision
           document, VA is interested in finding uses for underutilized
           property. However, legal restrictions have limited alternatives
           for the reuse or disposal of parcels of the valuable but
           underutilized property. In particular, a 1988 law prohibits VA
           from declaring as excess or taking any other action to dispose of
           approximately 109 acres at the 387-acre VA campus in Los
           Angeles.^27 While only a portion of the restricted 109 acres is
           underutilized, the land could provide opportunities for
           development. Additional legislation prohibits VA from entering
           into any enhanced use lease relating to the 109 acres unless the
           lease is specifically authorized by law.^28 These laws only apply
           to VA's West Los Angeles campus.
			  
			  Some CARES Decisions Implemented, but VA Does Not Use Performance
			  Measures to Assess and Track Their Implementation and Impact

           VA has started implementing some CARES decisions and integrating
           CARES concepts into its strategic planning process. However, VA
           does not use, or in some cases does not have, performance measures
           for CARES. These measures, if used, could help determine the
           extent to which the implementation of CARES is achieving the
           intended results and, more broadly, how it is helping the agency
           carry out its mission of providing health care to the nation's
           veterans. For example, VA does not centrally track or monitor the
           implementation of CARES decisions. This type of information--which
           could be used as a performance measure--could help VA officials
           and stakeholders assess VA's progress in the implementation of
           CARES. It would also help stakeholders hold VA accountable for
           results--which is especially important since VA estimates it will
           need at least $5 billion to implement CARES decisions.
			  
			  VA Has Begun Implementing CARES Capital Decisions and Has Taken
			  Steps to Integrate CARES into Its Strategic Planning Process

           VA has begun implementing some CARES decisions. Specifically, as
           of February 2007, VA was in the process of implementing 32 of more
           than 100 major capital projects that were identified in the CARES
           process.^29 As table 6 shows, most of these projects are in the
           construction phase, although some are in the design phase. For
           instance, VA is in phase I of designing a new hospital in Orlando,
           while it is in the construction phase of consolidating three VA
           facilities into two in Pittsburgh. VA completed construction for
           one CARES-related major capital project.

^24The Sunshine Health Care Network includes Florida (except 7 Panhandle
counties), 19 rural counties in south Georgia, the U.S. Virgin Islands,
and Puerto Rico.

^25GAO-03-122.

^26VA uses drive time as a measure of access to health care services.

^27Section 421(b) of the Veterans' Benefits and Services Act of 1988, P.L.
100-322, 102 Stat. 487, 552-553 (1988).

^28VA is specifically authorized by law to enter into an enhanced use
lease for the 109 acres if the lease is for child care services. See 38
U.S.C. S 8162(c).

^29The major capital CARES projects that are under way were selected and
prioritized through VHA's internal capital planning process as described
earlier in the report.

Table 6: Status of Major CARES Capital Projects, as of February 2007

                                                                Estimated     
VA facility                                                  completion    
location         Project description          Status         date          
Anchorage, AK    Outpatient clinic and        Design phase 1 September     
                    regional office, phase 2                    2008          
                    construction                                              
Atlanta, GA      Modernize patient wards      Design phase 1 To be         
                                                                determined    
                                                                (TBD)         
Biloxi, MS       Restoration of               Design phase 1 January 2012  
                    hospital/consolidation of                                 
                    Gulfport                                                  
Chicago, IL      Bed tower                    Construction   September     
                                                 phase 2        2007          
Cleveland, OH    Cleveland-Brecksville        Construction   February 2010 
                    consolidation                                             
                                                 phase 2                      
Columbus, OH     New outpatient clinic        Construction   February 2008 
                                                 phase 2                      
Denver, CO       Replacement medical center   Design phase 1 TBD           
                    facility                                                  
Des Moines, IA   Extended care building       Construction   March 2008    
                                                 phase 2                      
Durham, NC       Renovate patient ward        Design phase 1 December 2008 
Fayetteville, AR Clinical addition            Design phase 1 TBD           
Gainesville, FL  Correct patient privacy      Design phase 1 August 2009   
                    deficiency                                                
Indianapolis, IN Seventh and eighth floor     Construction   February 2009 
                    wards modernization          phase 2                      
Las Vegas, NV    New medical center facility  Construction   January 2011  
                                                 phase 2                      
Lee County, FL   Outpatient clinic            Design phase 1 TBD           
Long Beach, CA   Seismic                      Design phase 1 September     
                    corrections-Buildings 7 and                 2009          
                    10                                                        
Los Angeles, CA  Seismic                      Design         TBD           
                    corrections-Buildings 500                                 
                    and 501                                                   
Menlo Park, CA   Seismic                      Construction   December 2008 
                    corrections-geropsych        phase 2                      
                    replacement                                               
Minneapolis, MN  Spinal cord injury and       Construction   February 2009 
                    spinal cord disease center   phase 2                      
North Chicago,   Joint VA and Dept. of Navy   Completed      Completed     
IL               medical project                                           
Orlando, FL      New medical center facility  Design phase 1 TBD           
Palo Alto, CA    Seismic corrections-Building Design phase 1 TBD           
                    2                                                         
Pensacola, FL    Joint VA and Dept. of Navy   Construction   September     
                    outpatient clinic            phase 2        2007          
Pittsburgh, PA   Consolidation of campus      Construction   TBD           
                                                 phase 2                      
San Antonio, TX  Ward upgrades and expansion  Design         May 2010      
San Diego, CA    Seismic corrections-Building Construction   August 2008   
                    1                            phase 2                      
San Francisco,   Seismic corrections-Building Construction   August 2008   
CA               203                          phase 2                      
San Juan, PR     Seismic corrections-Building Design phase 1 TBD           
                    1                                                         
Syracuse, NY     Spinal cord injury center    Design         January 2010  
Tampa, FL        Spinal cord injury center    Construction   December 2007 
                    expansion                    phase 2                      
Tampa, FL        Upgrade essential electrical Design         September     
                    distribution systems                        2009          
Temple, TX       Blind rehabilitation and     Design phase 1 TBD           
                    psychiatric beds                                          
Tucson, AZ       Mental health clinic         Construction   February 2008 
                                                 phase 2                      

Source: VA's Five-Year Capital Plan.

In addition to these major capital projects, VA has started efforts to
develop new CBOCs. In May 2004, the Secretary decided to implement 156 new
CBOCs by 2012. According to the Secretary, these CBOCs would improve
access to health care for veterans. As of January 2007, 32 CBOCs have
opened or been approved for opening, according to VA officials.

Although VA is moving forward with the implementation of some CARES
decisions, a number of VA officials and stakeholders, including
representatives from veteran service organizations and local community
groups, view the implementation process as too lengthy, not transparent,
and hampered by competing stakeholder interests.^30 For instance,
stakeholders in Big Spring, Texas, noted that it took almost 2 years for
the Secretary to decide whether to close the facility. During this period,
there was a great deal of uncertainty about the future of the facility--as
a result, there were problems in attracting and retaining staff at the
facility, according to network and local VA officials. A VA official
acknowledged that implementation of some CARES decisions, notably the
further studies of the 18 facilities, have taken longer than expected and
time frames have not been established for implementing decisions on those
facilities.

A number of stakeholders we spoke to also indicated that the
implementation of CARES decisions has been influenced by competing
stakeholders' interests--thereby undermining the process. For example,
several stakeholders questioned why certain projects appear to be on the
fast track, while projects in other locations, such as Orlando, have not
moved as quickly--even though CARES data indicate a significant need in
these locations. We have previously reported that competing interests from
local, state, and political stakeholders have often impeded federal
agencies', including VA's, ability to make transparent capital alignment
decisions.^31 As a result of competing stakeholder interests, decisions
about real property often do not reflect the most cost-effective or
efficient alternative that is in the interest of the agency or the
government as a whole but instead reflect other priorities. In particular,
this situation often arises when the federal government attempts to
consolidate facilities or otherwise dispose of unneeded assets. In its
report, the CARES Commission also noted that stakeholder and community
pressure can act as a barrier to change, and can serve to pressure VA to
maintain the status quo, such as maintaining specific services or
facilities.

^30According to VA, the department complied with the open process
requirements of the Federal Advisory Committee Act. For example, VA held
hearings at different locations, and stakeholder comments at the hearings
were recorded and transmitted to the Secretary.

^31GAO-03-122.

VA has also taken steps to integrate CARES decisions into its strategic
planning process. Officials from VHA's Office of Policy and Planning--the
office responsible for VHA's strategic plan--told us that they used the
CARES workload projections in developing the 2006-2011 Strategic Plan and
incorporated CARES principles into the strategic planning process. For
example, VHA incorporated the principle of enhancing access to health care
services for veterans as a strategic initiative in its strategic planning
process and documents.

To help advise the Secretary on integrating CARES into VA's strategic
planning process, the CARES Commission recommended establishing an
independent advisory body. In response, the Secretary established a
permanent, senior-level CARES Implementation Board. According to the
Secretary's May 2004 CARES Decision, the board was to consist of senior
leadership from across the department, would work with the VA networks to
implement CARES decisions, and would report directly to the Secretary. The
board was charged with ensuring that CARES was integrated into strategic
planning and that all CARES decisions were effectively planned,
implemented, and managed. In addition, the board was responsible for
overseeing the additional studies that the Secretary deemed necessary for
18 facilities. However, the board was disbanded in February 2005, less
than 10 months after the Secretary announced its creation. According to VA
officials, the board was disbanded because VA leadership decided to focus
on the key CARES decisions that remained--namely, the 18 facilities the
Secretary identified for further study.

Despite Cost and Importance of CARES, VA Does Not Use Performance Measures to
Assess Implementation and Impact of CARES Decisions

As we have noted in past reports on managing for results, agencies should
have performance measures for significant agency activities, such as
CARES.^32 The CARES process was and continues to be a significant
undertaking for VA. For example:

           o CARES was a lengthy process--over 3 years elapsed between the
           time VA initiated CARES to when the Secretary issued his
           decisions. During this time, VA put a number of decisions on hold
           in anticipation of the CARES decisions. For example, according to
           VA officials at the West Los Angeles facility, they were planning
           to develop a master plan for developing and reusing its property
           prior to the CARES process. However, the development of the master
           plan was suspended until CARES decisions were made.^33 Similarly,
           VA did not pursue a collaborative opportunity with the University
           of Colorado in Denver, Colorado, in part, because VA was waiting
           for the CARES decisions.^34 In particular, after studying a
           possible joint facility between VA and the university for several
           years, in 2002, the President of the university asked VA to make a
           decision within 1 year. The Secretary responded that VA could not
           commit to a joint facility within that time frame because the
           proposal needed to be evaluated in the context of the CARES
           Commission's report, which was not yet released. The Secretary's
           response effectively ended discussions about constructing and
           operating a joint facility in Denver.^35 
           o The CARES process was also a costly undertaking. VA did not
           track many of the costs associated with implementation of the
           CARES process, such as the staff resources spent on the process,
           and therefore could not estimate how much was spent on
           implementing the process. However, VA was able to provide us the
           contracts let in support of the process. The total cost of these
           contracts was about $18.1 million.^36 
           o The implementation of CARES--and the associated investment--is
           expected to yield a number of benefits for VA and our nation's
           veterans. According to the CARES Commission and the Secretary's
           Decision reports, implementing CARES decisions will improve access
           to health care, modernize VA capital assets, decrease operating
           costs, and decrease vacant space, among other things. For
           instance, the Secretary estimated that the implementation of the
           CARES decisions will reduce VHA's vacant space by 42.5 percent by
           fiscal year 2022.

           VA, however, does not use, or in some cases does not have,
           performance measures to assess the agency's progress in
           implementing CARES or whether CARES is achieving the intended
           results. Performance measures allow an agency to track its
           progress in achieving intended results. Performance measures can
           also help inform management decision making, such as the need to
           redirect resources or shift priorities. In addition, performance
           measures can be used by stakeholders, such as veterans service
           organizations or local communities, to hold agencies accountable
           for results. Performance measures for CARES should be
           output-based, measuring the level of activity over a period of
           time that was generated by CARES. An example of an output measure
           would be the progress VA has made in implementing CARES decisions
           within desired time frames. The performance measures should also
           be outcome-based, measuring the impact that CARES has on VA's
           ability to carry out its mission or on the lives of veterans. An
           example of an outcome measure would be the impact the
           implementation of CARES had on access to health care for
           veterans--that is, has access improved? In addition, VA's
           performance should be assessed using nonfinancial and financial
           performance measures, such as program costs or savings.^37 VA,
           however, lacks critical data, including the cost and timelines of
           implementing CARES projects and the potential savings that can be
           generated through alignment of resources. The CARES Commission
           noted these missing data in the DNCP and when developing its
           recommendations.

           VA has over 100 performance measures that it uses to centrally
           monitor agency programs and activities.^38 Examples of these
           measures include the percentage of used space compared to owned
           and leased overall space, the ratio of operating costs per gross
           square foot, and the percentage of patients waiting within 20
           minutes to be seen. Many of these existing measures are related to
           the goals of CARES. However, VA does not use these existing
           measures to monitor the implementation and impact of CARES
           decisions. Thus, VA cannot readily determine whether the
           implementation of certain CARES decisions are achieving the
           intended results.

           In addition, VA does not have some performance measures that could
           be used to monitor the implementation and impact of CARES
           decisions. For example, VA does not centrally monitor or track the
           implementation of CARES decisions, a process that could be used as
           a performance measure for CARES. The lack of such a measure
           hinders VA leadership and stakeholders from assessing the status
           of implementation and making necessary adjustments. Originally, VA
           planned to centrally track CARES decisions--and a senior VA
           official started to collect and assemble this information.
           However, this effort was abandoned because there were concerns it
           would duplicate efforts of officials at the network level and in
           individual program offices within the department. According to
           senior VA officials, individual networks and program offices are
           responsible for tracking the implementation of the CARES decisions
           within their area of responsibility. However, in our interviews
           with senior VA officials within individual program offices and at
           the network level, there was confusion and disagreement as to who
           was tracking what. For example, a senior VA official stated that
           VHA's Office of Policy and Planning was tracking all major CARES
           projects. However, officials from this office stated that this was
           not their responsibility; they stated it was the responsibility of
           the Office of Asset Enterprise Management. Officials from the
           Office of Asset Enterprise Management told us that they had
           information on the status of CARES projects that were included in
           the 5-year capital plan, but that they did not track the status of
           all CARES decisions.

           VA officials from the networks responsible for the six facilities
           we visited told us that they were tracking the CARES decisions
           that affect their networks. For example, VA officials from the
           Sunshine Health Care Network and the Desert Pacific Health Care
           Network stated that they maintain a spreadsheet tracking the
           status of all their major construction projects, including the
           status of CARES decisions.^39 According to officials in some of
           the networks we visited, the department does not require them to
           track the implementation of CARES decisions. Rather, these
           officials stated that they track this information for their own
           purposes. In addition, several network officials stated that they
           suspect that the department will eventually ask for this
           information.
			  
			  Conclusions

           With the CARES process VA has made significant strides in making
           plans for providing medical care to meet the changes occurring in
           the veteran population. Under CARES, VA for the first time adopted
           a systematic approach to its capital asset planning based on the
           projected demand for future health care services. As part of the
           CARES process, a broad range of capital asset alternatives were
           considered to meet this demand, in accordance with best practices.
           However, factors such as competing stakeholder interests and legal
           restrictions constrained VA's ability to make difficult capital
           alignment decisions. Consequently, VA plans to close or downsize
           only a few of its aging and outmoded facilities, making it
           difficult for VA to redeploy and reduce the funds needed to
           maintain and operate such facilities--which was a major impetus of
           CARES.

           VA's challenge now is to ensure that CARES becomes an ongoing and
           effective part of its capital asset management efforts and that
           CARES decisions are carried out. Although VA has taken some steps
           to integrate CARES into its strategic planning efforts, more
           action is needed. Currently, VA does not use, or in some cases
           does not have, performance measures to assess its progress in
           implementing CARES decisions and attaining the goals of CARES.
           Given that VA will seek billions of dollars in additional
           investments to implement CARES decisions, the use of performance
           measures is essential to ensure that these decisions are achieving
           their intended results. Using performance measures to monitor
           CARES-related decisions would also help hold VA accountable for
           results and increase the transparency of CARES implementation.
			  
^32GAO, The Results Act: An Evaluator's Guide to Assessing Agency Annual
Performance Plans, GAO/GGD-10.1.20 (Washington, D.C.: April 1998).

^33Section 707 of P.L. 105-368, the Veterans Programs Enhancement Act of
1988, 112 Stat. 3315, 3351, which was enacted in 1998, required VA to
submit to Congress a report on the master plan for using VA property at
the West Los Angeles campus. To date, VA has not completed the master
plan.

^34GAO, VA Health Care: Experiences in Denver and Charleston Offer Lessons
for Future Partnerships with Medical Affiliates, GAO-06-472 (Washington,
D.C.: April 2006).

^35Section 801 of the Veterans Benefits, Health Care, and Information
Technology Act of 2006, P.L. 109-461, 120 Stat. 3403, 3442, requires the
Secretary of VA to submit a report to Congress on replacing the current VA
facility in Denver by June 20, 2007. The report must include, among other
things, the feasibility of entering into a partnership with a federal,
state, or local government agency or nonprofit organization for the
construction and operation of the new facility.

^36VA engaged in six contracts to assist the agency in implementing the
CARES process. The contractors and their assigned tasks are as follows:
(1) Milliman USA to develop a forecasting model on the future projected
enrollment of veterans; (2) PriceWaterhouseCoopers to conduct CARES
business plan studies at 18 VA facilities; (3) IBM to develop and
implement financial models to determine the costs of meeting the gaps
between supply and demand for capital and operating costs in the forecast
years; (4) 1 of the 5 IDIQs and GTSI for servers and related equipment to
store and utilize CARES data needs; (5) IDIQ (Microtech) to develop reuse
plans for selected CARES business study sites; and (6) CARES Commission to
independently review the Draft National CARES Plan and develop
recommendations for the Secretary.

^37GAO/GGD-10.1.20.

^38In addition to these existing measures, under Executive Order 13327
(Federal Real Property Asset Management Initiative), VA must adopt four
performance measures related to the management of its real property
holdings, such as utilization and operating and maintenance costs. The
executive order establishes new federal guidelines for federal real
property asset management and applies to 24 executive branch departments
and agencies, including VA.

^39The Desert Pacific Health Care Network includes the southern parts of
California and Nevada.
			  
			  Recommendation for Executive Action

           To provide the information necessary to monitor the implementation
           and impact of CARES decisions, we recommend that the Secretary use
           existing performance measures as well as develop new performance
           measures for CARES. These measures should include both output
           measures, such as the implementation status of all CARES
           decisions, and outcome measures, such as the degree to which CARES
           has improved access to medical services for veterans, and should
           be explicitly linked to the goals of CARES.

           We provided a draft copy of this report to VA and DOD for review
           and comment. VA provided written comments, which are reprinted in
           appendix V. VA agreed with the report's findings and
           recommendation. VA also provided technical clarifications, which
           we incorporated, as appropriate. DOD did not have any comments.

           We are sending copies of this report to the Secretary of Veterans
           Affairs and other interested parties. We will also make copies
           available to others upon request. In addition, the report is
           available at no charge on the GAO Web site at
           http://www.gao.gov .

           If you or your staff have any questions about this report, please
           contact me on (202) 512-2834 or at [email protected] .
           Contact points for our Offices of Congressional Relations and
           Public Affairs may be found on the last page of this report. Key
           contributors to this report are listed in appendix VI.

           Sincerely yours,

           Mark L. Goldstein
			  Director, Physical Infrastructure Issues
			  
			  Appendix I: Objectives, Scope, and Methodology

           Our overall objective was to determine the extent to which the
           Department of Veterans Affairs' (VA) Capital Asset Realignment for
           Enhanced Services (CARES) process has been implemented and how it
           has contributed to its overall mission of providing health care
           services to veterans. Specifically, our research examined (1) how
           CARES contributes to Veterans Health Administration's (VHA)
           capital planning process, (2) the extent to which the CARES
           process considered alignment alternatives, and (3) the extent to
           which VA has implemented CARES decisions and how this
           implementation has helped VA carry out its mission.

           To address how the CARES process contributed to VA's capital asset
           management efforts, we reviewed CARES documents, including the
           Draft National CARES Plan (DNCP), February 2004 CARES Commission
           Report, and the May 2004 Secretary's CARES Decision document. We
           also reviewed and analyzed VA's Asset Management Plan, Five-Year
           Capital Plan (Fiscal Year 2007-2011), and Strategic Plan to
           determine the extent to which CARES is integrated into VA's
           capital planning efforts. We also reviewed GAO's past work on VA's
           management of its capital assets and leading practices for
           realigning federal agency infrastructure and capital decisions. We
           interviewed VA officials to discuss how the CARES process was
           incorporated into VA's capital planning efforts. We also reviewed
           and analyzed information from VA's budget documents to determine
           how CARES decisions are integrated.

           To determine what CARES capital asset alignment alternatives were
           considered in the CARES process, we developed a spreadsheet to
           record all the capital asset alternatives that were considered in
           the DNCP, the February 2004 CARES Commission Report, and the May
           2004 Secretary's CARES Decision document for each VA facility. We
           identified the capital asset alternatives considered by reviewing
           DNCP proposals, CARES Commission analysis and findings, CARES
           Commission recommendations, and the Secretary's CARES decisions.
           In addition to tracking the number of times different capital
           asset alternatives were considered, we developed a coding system
           that allowed us to determine the extent of the Secretary's
           concurrence with alternatives proposed in the DNCP and recommended
           by the CARES Commission. We also coded any additional alternatives
           proposed by the Secretary.

           We also developed a spreadsheet to track the extent of agreements
           or disagreements on the CARES proposals during the different
           levels of the CARES process. We summarized and inputted all CARES
           proposals that were outlined in the CARES Commission report by
           network. The level of details in the proposals was broken down by
           VA facilities and service levels. We identified and coded each
           proposal to indicate whether the commission concurred or disagreed
           with the CARES proposals in the DNCP, as well as any additional or
           alternative recommendations made by the commission. Similarly, we
           also coded each proposal to indicate whether the Secretary
           concurred or disagreed with the recommendations from the
           commission. We also recorded any alternative or additional CARES
           decisions that the Secretary decided to implement. Crosscutting
           recommendations were also recorded in the spreadsheet.

           Both spreadsheets were pilot-tested and appropriate revisions were
           made to improve the instrument based on pilot results. To ensure
           accuracy and consistency of data entry, a second team member
           independently verified the information that another team member
           had initially entered or coded. This information was verified by
           comparing what was entered or coded with the information in the
           February 2004 CARES Commission Report and May 2004 Secretary's
           CARES Decision document. If the documents did not explicitly
           reflect what was entered in the spreadsheet, data entry
           corrections were made.

           Furthermore, to gain in-depth information on specific alternatives
           that were considered in the CARES process, we conducted six site
           visits to a nonprobability sample of VA health care facilities in
           Big Spring, Texas; El Paso, Texas; Los Angeles, California;
           Orlando, Florida; Pittsburgh, Pennsylvania; and Walla Walla,
           Washington.^1 We selected these six sites based on several
           criteria, including collaborative agreements with the Department
           of Defense (DOD) and medical universities, consolidation of
           facilities and services, expansion of services with new
           facilities, sites identified for additional study by VA, and
           geographic dispersion. At each site, we met with VA officials from
           the facility and respective network to discuss the CARES process,
           including the alternatives that were considered and dismissed for
           the facility as well as the status of implementing the CARES
           decisions. We also obtained the perspectives of local
           stakeholders, including officials from veterans service
           organizations, VA employee unions, medical universities, DOD, and
           local advisory panels. We also toured the facilities at each site.
           In addition, we researched and analyzed relevant legislation and
           legal documents relating to legal issues and restrictions placed
           on some of the VA facilities we visited.

           To determine the extent VA has implemented CARES decisions and how
           implementation of the decisions has helped VA carry out its
           mission, we reviewed and analyzed the May 2004 CARES Decisions
           document, Asset Management Plan, VA's Five-Year Capital Plan and
           Strategic Plan, VA's budget submission documents, and VA's legal
           authorities and appropriations acts. We interviewed VA officials
           and VA stakeholders, such as veteran service organizations, VA
           employees, and collaborating organizations (i.e., DOD and medical
           universities) to obtain their views and perspectives on the CARES
           process and the implementation of CARES decisions. We synthesized
           information obtained from VA documents, VA officials, and VA
           stakeholders to determine the extent VA has implemented CARES
           decisions and helped the agency carry out its mission of providing
           high quality health care to veterans.

           We conducted our work from March 2006 through March 2007 in
           accordance with generally accepted government auditing standards.
			  
^1Information obtained from these site visits is not generalizable as they
are nonprobability samples. Results from nonprobability samples cannot be
used to make inferences about a population because in a nonprobability
sample some elements of the population being studied have no chance or an
unknown chance of being selected as part of the sample.
			  
			  Appendix II: Comparison of the BRAC Process to the CARE Process

           The Department of Defense's (DOD) Base Realignment and Closure
           (BRAC) process and VA's CARES process have a number of
           similarities. These similarities include the basic frameworks
           within which the BRAC and CARES Commissions operate, such as their
           independence and willingness to gather public and stakeholder
           views and concerns. For example, for both BRAC and CARES,
           independent commissions provided an objective, external analysis
           of alignment alternatives. In addition, both the BRAC and CARES
           Commissions received comments and concerns from multiple external
           stakeholders throughout their respective processes. For example,
           the BRAC Commission held numerous regional hearings throughout the
           nation and accepted comments and concerns in writing. Likewise,
           the CARES Commission also received written comments and held
           numerous public hearings where external stakeholders, such as
           individual veterans, veteran service organizations, Congress,
           medical school affiliates, VA employees, local government
           entities, and affected community groups were able to offer their
           perspective.

           Although there are similarities between the BRAC and CARES
           processes, there are fundamental differences--specifically, their
           objectives and implementation of recommendations. The objective of
           the BRAC process is to reorganize DOD's base structure to more
           efficiently and effectively support our armed forces, increase
           operational readiness, and facilitate new ways of doing business
           through the alignment or closure of excess bases. The objective of
           the CARES process is to enhance outpatient and inpatient care, as
           well as special programs, such as spinal cord injury, through the
           appropriate sizing, upgrading, and locating of VA facilities. The
           method in which recommendations are implemented is also different
           in the BRAC and CARES processes. In the BRAC process, the
           Secretary of Defense makes recommendations to a commission that is
           nominated by the President. The commission reviews the
           recommendations and makes its recommendations to the President.
           The President can either reject them or accept them in their
           entirety. If the President accepts the recommendations, they are
           sent to Congress for review. If the recommendations are accepted
           by Congress, then implementation of the recommendations is
           mandatory. With the CARES process, the CARES Commission made
           recommendations to the Secretary of Veterans Affairs. Those
           recommendations were not binding and can be implemented at the
           Secretary's discretion. Table 7 highlights the similarities and
           differences of the BRAC and CARES processes.

Table 7: Comparison of BRAC and CARES Processes

                         BRAC                           CARES                 
Purpose or objective  To reorganize DOD's base       To provide an         
                         structure to more efficiently  assessment of         
                         and effectively support our    veterans' health care 
                         forces, increase operational   needs in order to     
                         readiness, and facilitate new  enhance health care   
                         ways of doing business.        services through the  
                                                        realignment of VA     
                                                        capital assets.       
Commission membership One chairman and 8 members     16 members.           
Recommendations       President of the United States Secretary of Veterans 
addressed to                                         Affairs.              
Decision to accept    The President can either       The Secretary         
recommendations       accept or reject the           determines which      
                         commission's recommendations.  recommendations to    
                         If the President accepts the   implement.            
                         recommendations, then the                            
                         President forwards the list to                       
                         Congress. If the President                           
                         rejects the recommendations                          
                         then the BRAC Commission could                       
                         give the President a revised                         
                         list of recommendations.                             
Decision to implement The recommendations accepted   The Secretary         
                         by the President become final  determines which      
                         within 45 legislative days     recommendations to    
                         after the President transmits  implement.            
                         the list to Congress unless                          
                         Congress enacts a joint                              
                         resolution disapproving the                          
                         list of recommendations.                             

Source: GAO analysis of BRAC and CARES information.

Appendix III: Capital Planning Principles

Planning principle         Description                                     
Strategic linkage          Capital planning is an integral part of an      
                              agency's strategic planning process. It         
                              provides a long-range plan for the capital      
                              asset portfolio in order to meet the goals and  
                              objectives in the agency's strategic and annual 
                              performance plans. Agency strategic and annual  
                              performance plans should identify capital       
                              assets and define how they will help the agency 
                              achieve its goals and objectives. Leading       
                              organizations also view strategic planning as   
                              the vehicle that guides decision making for all 
                              spending.                                       
Needs assessment and gap   A comprehensive needs assessment identifies the 
                              resources needed to fulfill both immediate      
identification             requirements and anticipated future needs based 
                              on the results-oriented goals and objectives    
                              that flow from the organization's mission. A    
                              comprehensive assessment of needs considers the 
                              capability of existing resources and makes use  
                              of an accurate and up-to-date inventory of      
                              capital assets and facilities as well as        
                              current information on asset condition. Using   
                              this information, an organization can properly  
                              determine any performance gap between current   
                              and needed capabilities.                        
Alternatives evaluation    Agencies should determine how best to bridge    
                              performance gaps by identifying and evaluating  
                              alternative approaches, including nonphysical   
                              capital options such as human capital. Before   
                              choosing to purchase or construct a capital     
                              asset or facility, leading organizations        
                              carefully consider a wide range of              
                              alternatives, such as contracting out,          
                              privatizing the activity, leasing, and whether  
                              existing assets can be used.                    
Review and approval        Agencies should establish a formal process for  
framework with established senior management to review and approve         
criteria for selecting     proposed capital assets. The cost of a proposed 
capital investments        asset, the level of risk involved in acquiring  
                              the asset, and its importance to achieving the  
                              agency mission should be considered when        
                              defining criteria for executive review. Leading 
                              organizations have processes that determine the 
                              level of review and analysis based on the size, 
                              complexity, and cost of a proposed investment   
                              or its organizationwide impact. As a part of    
                              this framework, proposed capital investments    
                              should be compared to one another to create a   
                              portfolio of major assets ranked in priority    
                              order.                                          
Long-term capital          The long-term capital plan should be the final  
investment plan            and principal product resulting from the        
                              agency's capital planning process. The capital  
                              plan, covering 5 years or more, should be the   
                              result of an executive review process that has  
                              determined the proper mix of existing assets    
                              and new investments needed to fulfill the       
                              agency's mission, goals, and objectives, and    
                              should reflect decision makers' priorities for  
                              the future. Leading organizations update        
                              long-term capital plans either annually or      
                              biennially. Agencies are encouraged to include  
                              certain elements in their capital plans,        
                              including a statement of the agency mission,    
                              strategic goals and objectives; a description   
                              of the agency's planning process; baseline      
                              assessments and identification of performance   
                              gaps; and a risk management plan.               

Source: GAO analysis based on the Office of Management and Budget's (OMB)
Capital Programming Guide (Version 2.0) and [57]GAO-04-138 .

Appendix IV: Information on Visited VA 	Facilities

Each of the six VA facilities we visited had unique features and issues
concerning capital asset alignment. Several different capital asset
alignment alternatives were considered at each location. While the
Secretary decided on the future development of five of the six VA
facilities we visited, decisions have not been made for the facility in
Los Angeles, California. The following pages provide a brief summary of
each VA facility we visited.

Big Spring VA Medical Center Big Spring, Texas

The Big Spring facility is part of the VA Southwest Health Care Network,
which includes the states of Arizona and New Mexico and the western part
of Texas. Its campus covers 31 acres and contains 13 buildings, which were
constructed over a period of several years beginning in 1948. The main
hospital opened in 1950. According to VA, the facility is considered to be
in good condition, rating 4.4 out of 5 for critical values such as
accessibility, code, functional space, and facility conditions. The Big
Spring facility is a secondary care level facility offering primary care
and subspecialties in medicine, surgery, and mental health, and provides
nursing home care. Tertiary services, inpatient surgery, acute psychiatry,
and domiciliary care are contracted from the local community or referred
to other VA facilities. By 2023, inpatient medicine bed needs are
projected to decline from 16 to 11, surgery beds to decline from 4 to 2,
and inpatient psychiatry beds to increase from 2 to 18. Projected veteran
enrollment for the New Mexico/West Texas market is projected to decrease
21 percent from 130,960 in 2003 to 103,892 in 2023. ^1

Overview of Capital Asset Alignment Issues

The Big Spring facility had three significant capital asset alignment
issues that were reviewed by the CARES Commission and the Secretary. The
three issues are as follows:

(1) Location of facility in rural West Texas: As part of the CARES
process, the VA assessed how alignment would affect veterans' access to
health care. Although there are five non-VA medical centers within 60
minutes from the Big Spring facility, some veterans would have to travel 5
hours for primary care at a VA facility if the Big Spring facility were to
close, according to a VA official. In addition, a VA official states that
enrollment data suggest that the location of the Big Spring facility is
central to West Texas veterans in the Midland/Odessa area and Abilene.

^1PriceWaterhouse Coopers, Stage I Report Site: Big Spring, December 2005.

(2) Stakeholder input: There was strong support from the community and
local congressional delegates for keeping the Big Spring facility open.
The Big Spring facility is a major employer in the community that offers
above-average salaries. The community formed a task force that developed
its own proposal for Big Spring, which was similar to the Secretary's
final decision.

(3) Workload projections: Workload projections show a decrease in workload
for Big Spring by 2022, demonstrating a need for fewer than 40 beds.^2
However, the West Texas market has capacity issues in specialty care as
well as mental health gaps, which support the VA's plan to construct a
domiciliary in Big Spring. Another proposal to construct a new facility in
the Midland/Odessa area is not supported by projections for veteran
enrollment in the area.

Capital Asset Alignment Alternatives Considered

A number of capital asset alignment alternatives were considered for the
Big Spring facility during the CARES process. The following were some
alternatives considered:

           o status quo;
           o expand inpatient and outpatient mental health services;
           o close acute hospital beds and implement contracting, sharing,
           joint venturing, or referral to another facility;
           o build a critical access hospital in the Midland/Odessa area;
           o contract out inpatient care and renovate existing multispecialty
           clinic in Big Spring; and
           o close Big Spring facility and lease space for a community-based
           outpatient clinic (CBOC). Lease space for inpatient care at the VA
           in Midland, Texas.
			  
			  Secretaryâs Decision

           In April 2006, the Secretary decided to maintain all services
           offered at Big Spring and look to expand inpatient care and
           residential mental health services.
			  
			  Jonathan M. Wainwright Memorial VA Medical Center Walla Walla,
			  Washington

           The Jonathan M. Wainwright Memorial VA Medical Center is located
           on an 88-acre campus in the VA Northwest Network, on the site of
           Fort Walla Walla, which was established in 1858. The US Veterans
           Bureau took over the property in 1921, and the main hospital
           opened in 1929. Fifteen of the fort's buildings are still in use
           and are on the National Historic Register. Of 29 buildings, there
           are 7 wholly or partially vacant on the campus. According to VA,
           many of the buildings on campus are considered to be in poor
           condition and seismically unsafe. The medical center is a primary
           and secondary care facility, serving veterans residing in a
           42,000-square-mile primary service area within the network. The
           facility offers outpatient services and limited inpatient medical
           care, including nursing home services, psychiatry, and substance
           abuse residential rehabilitation programs. Most emergency cases
           are handled by non-VA contractors in the community. Walla Walla's
           workload is projected to decrease 31 percent by 2022.

           The Walla Walla facility had four significant capital asset
           alignment issues that were reviewed by the CARES Commission and
           the Secretary. The four issues are as follows:

           (1) Location in rural Eastern Washington: The facility is located
           in a rural, sparsely populated area. Veterans would have to travel
           long distances--5 hours to Seattle and 4 hours to Portland--to
           receive VA care if the facility closed. Although options exist for
           contracting inpatient medicine and nursing home care in the
           community, no private facilities in the area provide acute
           psychiatric care.

           (2) Facility is in poor and dilapidated condition: Many of the
           buildings on the campus date back to the early 1900s. The
           buildings are in poor condition and have lead-based paint and
           seismic issues. The former Network Director has estimated the cost
           of correcting these deficiencies at approximately $6 million per
           building. While there is excess space on the campus, there is low
           reuse or enhanced use lease (EUL) potential, with the exception of
           the city of Walla Walla's interest in tapping two aquifers on the
           campus.^3

           (3) Underserved patient population relies on the Walla Walla VA:
           The facility serves a large Native-American veteran population as
           well as veterans who rely on mental health services. Nonetheless,
           veteran enrollment rates in the Walla Walla VA primary service
           area are projected to decrease 31 percent by 2022. The facility
           also has a low inpatient average daily census. In addition, low
           patient volume for mental health services makes it difficult for
           practitioners to maintain their competencies.

           (4) Stakeholder input: The community and local congressional
           delegation have expressed a high level of interest in keeping the
           facility open. Congress appropriated $250,000 for the study of
           surplus property at the Walla Walla facility. The community
           organized a task force and conducted this study, which concluded
           that a new hospital with inpatient and outpatient services should
           be built.
			  
			  Capital Asset Alignment Alternatives Considered

           A number of capital asset alignment alternatives were considered
           for the Walla Walla facility during the CARES process. The
           following were some alternatives considered:

           o Status quo.
           o Construct new space for a 10-bed inpatient psychiatric unit.
           Space would be leased for an outpatient residential rehabilitation
           and substance abuse program.
           o Contract all services. Vacate campus and make available for
           reuse.
           o Replace facility with new inpatient care and outpatient care
           facilities on campus or in Tri-City area. Renovate the current
           outpatient medical and mental health facilities for ambulatory
           care and outpatient mental health care.
           o Build new state-of-the-art full-service facility.
           o Replace current nursing home with new facility on site.
           o Build a new outpatient clinic and close inpatient services.
			  
			  Secretaryâs Decision

           In July 2006, the Secretary decided to build a new outpatient
           facility for primary care, specialty care, and mental health care.
           Inpatient services will be provided by the community, although not
           necessarily on the Walla Walla VA campus.
			  
			  El Paso VA Health Care Center El Paso, Texas

           The El Paso VA Health Care Center opened in October 1995,
           replacing a smaller VA outpatient clinic. El Paso is part of the
           New Mexico/West Texas market in the VA Southwest Health Care
           Network, and the El Paso facility has the fastest-growing workload
           in the market. The facility is located in a four-story,
           254,000-square-foot building connected to the William Beaumont
           Army Medical Center. The El Paso VA facility is solely an
           outpatient facility that provides primary and specialized care.
           Inpatient care for acute medical and surgical care and emergencies
           is provided to VA patients through a sharing agreement with the
           William Beaumont Army Medical Center. In 2003, the network
           proposed the expansion of the El Paso facility as a minor
           construction project. The $5.5 million dollar expansion began in
           December 2005 and will add space for physical therapy, behavioral
           health, and podiatry.
			  
			  Overview of Capital Asset Alignment Issues

           The El Paso facility had two significant capital asset alignment
           issues that were reviewed by the CARES Commission and the
           Secretary. The two issues are as follows:

           (1) Joint VA/DOD venture at the William Beaumont Army Medical
           Center: The El Paso facility is connected to the William Beaumont
           Army Medical Center, which facilitates an expansion of the joint
           venture. Collaboration also presents learning opportunities for VA
           medical personnel.

           (2) Growing workload and demand for services: The El Paso area has
           a growing workload for veteran care and the El Paso Health Care
           Center is the only VA health care center in the area. No
           full-service VA Medical Center exists within 250 miles of El Paso.
           The closest VA hospital is in Albuquerque. The increased workload
           supports the expansion of the El Paso Health Care Center and the
           addition of new parking at the facility.
			  
			  Capital Asset Alignment Alternatives Considered

           The following capital asset alignment alternatives were considered
           for the El Paso facility during the CARES process:

           o pursue existing joint venture with William Beaumont Army Medical
           Center;
           o build new CBOC in East El Paso; and
           o shift tertiary care from the El Paso facility to the VA facility
           in Albuquerque, New Mexico.
			  
			  Secretaryâs Decision

           The Secretary decided to expand the existing joint venture with
           the William Beaumont Army Medical Center and develop a new CBOC in
           El Paso, which is targeted for priority implementation by 2012.
			  
			  Greater Los Angeles Healthcare System Los Angeles, California

           The West Los Angeles campus is one of the VA facilities in the
           Greater Los Angeles Healthcare System and part of the VA Desert
           Pacific Health Care Network, which includes the southern parts of
           California and Nevada. The campus is approximately 14 miles west
           of downtown Los Angeles and occupies 387 acres of land, with 91
           structures on the campus totaling 2,807,039 building gross square
           feet. It is a teaching hospital, providing a full range of patient
           care service through primary care, tertiary care, and a nursing
           home in areas of medicine, surgery, psychiatry, physical medicine
           and rehabilitation, neurology, oncology, dentistry, geriatrics,
           and extended care. Additionally, the West Los Angeles campus is
           affiliated with the medical schools of the University of
           California Los Angeles and the University of Southern California.
           The West Los Angeles' workload is projected to decrease 23 percent
           by 2023.
			  
			  Overview of Capital Asset Alignment Issues

           VA's West Los Angeles campus had three significant capital asset
           alignment issues that were reviewed by the CARES Commission and
           the Secretary. The three issues are as follows:

           (1) Alignment/consolidation of services due to proximity: As part
           of the CARES process, VA medical centers within 60 miles of each
           other were required to evaluate whether the services could be
           consolidated. The West Los Angeles facility is about 27 miles
           apart from VA's Long Beach facility, and both offer comprehensive
           health care services and are affiliated with teaching hospitals.
           However, certain complex services are done at the West Los Angeles
           campus, such as neurosurgery, interventional cardiology, and
           cardiac surgery. Despite the short distance between Long Beach and
           West Los Angeles facilities, their location in highly urban,
           congested settings may create extended travel times for veterans.
           Consolidations have already occurred, mainly in the clinical
           support, and administrative functions, and more are under way in
           geriatrics and mental health.

           (2) Infrastructure and life safety issues: The West Los Angeles
           campus needs to correct seismic structural deficiencies for some
           of its old buildings. Most of the buildings on campus require
           major repairs and deferred maintenance, including seismic and
           structural upgrades. The main hospital building is considered
           exceptionally high risk for earthquake damage and has the
           potential to endanger patient and employees housed in the
           building. Ensuring patient safety is a high priority for VA CARES
           funding.

           (3) Excess land use: Interest in the future use of VA's West Los
           Angeles campus is a major issue. Given the size of the campus (387
           acres with 91 buildings), the West Los Angeles facility has excess
           land and vacant space. However, VA is legally restricted from
           taking any action in declaring 109 of the 387 acres on the West
           Los Angeles campus as excess or taking any other action to dispose
           of the property.^4 Additionally, when VA was provided EUL
           authority in 1991, VA was only authorized to enter into an EUL for
           the 109 acres on the West LA campus if the lease is specifically
           authorized by law. Leases relating to child care services for the
           109 acres have been specifically authorized by law.^5 The West Los
           Angeles campus currently has nine land use agreements, including a
           10-year enhanced sharing agreement (to expire in April 2015) with
           the Salvation Army and a 50-year revocable license with the
           American Red Cross, which expires in April 2039.

           The network's CARES market plan proposed a majority of the vacant
           space be reduced through the demolition of vacant buildings. The
           plan called for co-locating with a Veterans Benefits
           Administration field office, developing a new clinical addition to
           accommodate outpatient mental health programs and support staff,
           building a state nursing home, and expanding the Los Angeles
           National Cemetery or other veteran-focused projects. Stakeholders,
           including veteran service organizations and community members,
           expressed strong interest in the future use of the West Los
           Angeles campus, particularly reserving the parklike quality of the
           space.
			  
			  Capital Asset Alignment Alternatives Considered

           A number of capital asset alignment alternatives were considered
           for the development of the West Los Angeles campus. The following
           were some alternatives that were considered for excess land use:

           o use enhanced use lease authority to lease excess land;
           o build a new Veterans Benefit Administration facility and
           columbarium for the National Cemetery Administration;
           o build a replacement hospital;
           o renovate and expand the existing hospital;
           o develop a medical research institute;
           o build affordable veteran housing;
           o build a veteran memorial park; and
           o build new medical office building for VA-affiliated physicians
           and specialists.
			  
			  Secretaryâs Decision

           In May 2004, the Secretary decided to maintain the West Los
           Angeles and Long Beach campuses as separate facilities, but
           consolidate administrative and clinical services between both
           facilities. The Secretary also decided to correct seismic
           deficiencies of the West Los Angeles buildings and conduct further
           studies on the options for reusing the excess land.
			  
			  Orlando Outpatient Healthcare Clinic Orlando, Florida

           The VA Orlando Outpatient Healthcare Clinic is part of the VA
           Sunshine Health Care Network, which includes Florida (except 7
           Panhandle counties), 19 rural counties in southern part of
           Georgia, the U.S. Virgin Islands, and Puerto Rico. The clinic is
           located on approximately 44 acres of land, is 360,000 square feet,
           and includes a nursing home and domiciliary. The facility provides
           care to veterans who reside in the counties surrounding Orlando.
           The facility currently treats over 40,000 patients per year. The
           Orlando facility offers numerous services, including outpatient
           surgery, radiology, mobile MRI, nuclear medicine, laboratory, eye
           clinic, prosthetics, and women health care services.
			  
			  Overview of Capital Alignment Issues

           VA's Orlando Outpatient Health Care Clinic had three significant
           capital asset alignment issues that were reviewed by the CARES
           Commission and the Secretary. The three issues are as follows:

           (1) Large growth of veteran population: According to CARES data,
           the Central Market, which includes Orlando, has the largest
           workload gap and greatest infrastructure need of any market in the
           country.

           (2) Lack of access to VA acute patient care: Only 45 percent of
           the veteran population in VA's Sunshine Network in Florida live
           within a 1-hour drive of acute patient care services, a condition
           that does not meet the CARES travel access requirement of 65
           percent. Building a new facility in the Orlando area would
           increase the percentage of veterans living within 1-hour of acute
           patient care to 78 percent.

           (3) Location of new facility: The existing site of the Orlando
           Outpatient Clinic does not have adequate land available to
           accommodate a larger facility.
			  
			  Capital Asset Alignment Alternatives Considered

           Several capital asset alignment alternatives were considered for
           the Orlando market during the CARES process. The following were
           some alternatives that were considered:

           o Expand current facility at existing location.
           o Build new VA hospital in Orlando area, which may also include:

           collaboration with the University of Florida or the University of
           Central Florida, which is contingent on the construction of a new
           hospital, or

           collaboration with Patrick Air Force Base, which is contingent on
           the construction of a new hospital.
			  
			  Secretaryâs Decision

           In May 2004, the Secretary decided to build a new VA owned and
           operated medical facility in Orlando. The new medical center will
           have 134 inpatient beds, outpatient services, a nursing home, and
           a domiciliary.
			  
			  VA Pittsburgh Healthcare System Pittsburgh, Pennsylvania

           VA Pittsburgh Healthcare System (VAPHS) is an integrated health
           care system, serving veterans throughout the tristate area of
           Western Pennsylvania, Ohio, and West Virginia.^6 VAPHS is part of
           the VA Stars and Stripes Health Care Network and consists of three
           facilities, which operate under one management in the metropolitan
           Pittsburgh area. The three facilities are Heinz Progressive Care
           Center, Highland Drive, and University Drive. Consolidation of the
           Highland Drive and University Drive facilities has been occurring
           for several years, and since 1996 the two facilities have had one
           administration and fully integrated service lines and support
           activities.

           The Heinz Drive facility (formerly called Aspinwall) was
           originally constructed in 1925, and an additional replacement
           structure was constructed in 1994 on 51 acres in a residential
           area. It has 336 nursing home beds, primary care, and hospice
           care. According to VA, all patient care buildings are in excellent
           condition, while other buildings at the facility are older and in
           moderate to poor condition.

           The Highland Drive facility is a 50-year-old, campus-style setting
           on approximately 168 acres. It has 210 psychiatry beds, including
           101 patients in a homeless veteran domiciliary unit. Over the last
           few years, services at Highland Drive have been consolidated with
           University Drive, resulting in Highland Drive having the most
           vacant space of the three facilities of VAPHS. According to VA,
           the main patient care buildings are in overall good condition,
           while some areas are functionally and aesthetically antiquated.

           University Drive is a 50-year-old facility, on almost 14 acres,
           located adjacent to the University of Pittsburgh, with which it
           has an academic affiliation. The facility has 146 medicine,
           surgery, neurology, and critical care beds as well as primary and
           specialty care outpatient clinics and ambulatory surgery.
           According to VA, the main building where all patient care services
           are delivered is in good to moderate condition. The remaining
           space, which is used primarily for research activities, is in poor
           condition, and is not usable for patient care. Additionally,
           according to VA, the parking available at the facility is not
           adequate for the current volume of patient care activity.
			  
			  Overview of Capital Alignment Issues

           Pittsburgh VA had two significant capital asset realignment issues
           that were reviewed by the CARES Commission and the Secretary. The
           two issues are as follows:

           (1) Facility condition: Some buildings at the Highland Drive
           facility are in poor condition and not designed for modern health
           care.

           (2) Vacant space: The Highland Drive facility has a considerable
           amount of vacant space.
			  
			  Capital Asset Alignment Alternatives Considered

           Several capital asset alignment alternatives were considered for
           the Pittsburgh facility during the CARES process. The following
           were some alternatives considered:

           o Status quo.
           o Consolidate the three Pittsburgh facilities into two facilities,
           which may also include:

           closure of the Highland Drive facility,

           renovate/expand, or

           use EUL authority to lease space at Highland Drive facility.

           o Contract out, which may also include:

           closure of the Highland Drive facility, or

           use EUL authority to lease space at Highland Drive facility.
			  
			  Secretaryâs Decision

           The Secretary decided to develop a master plan to guide the
           transition of closure of the Highland Drive facility and
           integration of the three facilities to two facilities. The plan
           will also consider disposal or reuse of the campus to enhance the
           department's mission.
			  
^2CARES Planning Initiatives. VISN 18: VA Southwest Healthcare Network.

^3Enhanced used leasing authorizes VA to lease real property under the
Secretary's jurisdiction or control to a public or private entity for up
to 75 years. The lease should result in a beneficial redevelopment or
reuse of the VA property, such as including space for a VA mission-related
activity or in providing some form of consideration that can be applied to
improve health care services for veterans and their families in the
community where the site is located.

^4Section 421(b) of the Veterans' Benefits and Services Act of 1988, P.L.
100-322, 102 Stat. 487, 552-553 (1988).

^538 U.S.C. S 8162(c).

^6The VA Stars and Stripes Health Care Network includes the states of
Pennsylvania, Delaware, Ohio, West Virginia, New York, and New Jersey.
			  
			  Appendix V: Comments from the Department of Veterans Affairs
			  
			  Appendix VI: GAO Contact and Staff Acknowledgments
			  
			  GAO Contact

           Mark Goldstein (202) 512-2834
			  
			  Staff Acknowledgments

           In addition to the individual named above, Nikki Clowers and Ed
           Laughlin, Assistant Directors; Teresa Abruzzo; Mireya Almazan;
           Colin Fallon; Cindy Gilbert; Emily Hampton-Manley; Daniel Hoy;
           Jennifer Kim; Susan Michal-Smith; and James Musselwhite Jr. made
           key contributions to this report.
			  
			  GAOâs Mission

           The Government Accountability Office, the audit, evaluation and
           investigative arm of Congress, exists to support Congress in
           meeting its constitutional responsibilities and to help improve
           the performance and accountability of the federal government for
           the American people. GAO examines the use of public funds;
           evaluates federal programs and policies; and provides analyses,
           recommendations, and other assistance to help Congress make
           informed oversight, policy, and funding decisions. GAO's
           commitment to good government is reflected in its core values of
           accountability, integrity, and reliability.
			  
			  Obtaining Copies of GAO Reports and Testimony

           The fastest and easiest way to obtain copies of GAO documents at
           no cost is through GAO's Web site ( www.gao.gov ). Each
           weekday, GAO posts newly released reports, testimony, and
           correspondence on its Web site. To have GAO e-mail you a list of
           newly posted products every afternoon, go to www.gao.gov and
           select "Subscribe to Updates."
			  
			  Order by Mail or Phone

           The first copy of each printed report is free. Additional copies
           are $2 each. A check or money order should be made out to the
           Superintendent of Documents. GAO also accepts VISA and Mastercard.
           Orders for 100 or more copies mailed to a single address are
           discounted 25 percent. Orders should be sent to:

           U.S. Government Accountability Office 441 G Street NW, Room LM
           Washington, D.C. 20548

           To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax:
           (202) 512-6061
			  
			  To Report Fraud, Waste, and Abuse in Federal Programs

           Contact:

           Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail:
           [email protected] Automated answering system: (800) 424-5454 or
           (202) 512-7470
			  
			  Congressional Relations

           Gloria Jarmon, Managing Director, [email protected] (202)
           512-4400 U.S. Government Accountability Office, 441 G Street NW,
           Room 7125 Washington, D.C. 20548
			  
			  Public Affairs

           Paul Anderson, Managing Director, [email protected] (202)
           512-4800 U.S. Government Accountability Office, 441 G Street NW,
           Room 7149 Washington, D.C. 20548

(543162)

www.gao.gov/cgi-bin/getrpt?GAO-07-408 .

To view the full product, including the scope
and methodology, click on the link above.

For more information, contact Mark L. Goldstein, 202-512-2834,
[email protected].

Highlights of [65]GAO-07-408 , a report to the Ranking Minority Member,
Committee on Veterans' Affairs, House of Representatives

March 2007

VA HEALTH CARE

VA Should Better Monitor Implementation and Impact of Capital Asset
Alignment Decisions

Through its Veterans Health Administration (VHA), the Department of
Veterans Affairs (VA) operates one of the largest health care systems in
the country. In 1999, GAO reported that better management of VA's large
inventory of aged capital assets could result in savings that could be
used to enhance health care services for veterans. In response, VA
initiated a process known as Capital Asset Realignment for Enhanced
Services (CARES). Through CARES, VA sought to enhance veteran care by the
appropriate sizing, upgrading, and locating of VA facilities.

GAO was asked to examine the CARES process. Specifically, GAO examined (1)
how CARES contributes to VHA's capital planning process, (2) the extent to
which the CARES process considered capital asset alignment alternatives,
and (3) the extent to which VA has implemented CARES decisions and how
this implementation has helped VA carry out its mission. To address these
issues, we analyzed CARES documents, interviewed VA officials, and
conducted six site visits, among other things.

[66]What GAO Recommends

GAO recommends that VA develop performance measures for assessing whether
CARES is achieving the intended results. VA agreed with the report's
findings and recommendation.

The CARES process provided VA with a blueprint that drives VHA's capital
planning efforts. As part of the CARES process, VA adapted a model  to
estimate demand for health care services and to determine the capacity of
its current infrastructure to meet this demand. VA continues to use this
model in its capital planning process. The CARES process resulted in
capital alignment decisions intended to address gaps in services or
infrastructure. These decisions serve as the foundation for VA's capital
planning process. According to VA officials, all capital projects must be
based upon demand projections that use the planning model developed
through CARES.

A range of capital asset alignment alternatives were considered throughout
the CARES process, which adheres to capital planning best practices. There
was relatively consistent agreement among the Draft National CARES Plan
prepared by VA, the CARES Commission appointed by the VA Secretary to make
alignment recommendations, and the Secretary as to which were the best
alternatives to pursue. Although the Secretary tended to agree with the
CARES Commission's recommendations, the extent to which he agreed varied
by alignment alternative. In particular, the Secretary always agreed with
the commission's recommendations to build new facilities, enter into
enhanced use leases, and collaborate with the Department of Defense and
universities, but was less likely to agree to the CARES Commission's
recommendations to contract out or close facilities. The decisions that
emerged from the CARES process will result in an overall expansion of VA's
capital assets. For example, the capital alignment alternatives the
Secretary chose to meet future health care demand includes building 3 new
medical centers and opening 156 outpatient clinics. In contrast, VA will
completely close one facility. A number of factors, including competing
stakeholders interests and legal restrictions, shaped and in some cases
limited VA's range of alternatives considered during the CARES process.

VA has started implementing some CARES decisions, but does not centrally
track the implementation of all the CARES decisions or monitor the impact
such implementation has had on its mission. VA has begun implementing 32
of the more than 100 capital projects and 32 of the 156 outpatient care
centers approved by the Secretary during the CARES process. Although VA
has over 100 performance measures to monitor other agency programs and
activities, these measures either do not directly link to the CARES goals
or VA does not use them to centrally monitor the implementation and impact
of CARES decisions. Without this information, VA cannot readily assess the
implementation status of CARES decisions, determine the impact such
decisions are having on veterans' care, or be held accountable for
achieving the intended results of CARES.

References

Visible links
  48. http://www.gao.gov/cgi-bin/getrpt?GAO/T-HEHS-99-83
  49. http://www.gao.gov/cgi-bin/getrpt?GAO/HEHS-99-145
  50. http://www.gao.gov/cgi-bin/getrpt?GAO/T-HEHS-99-83
  51. http://www.gao.gov/cgi-bin/getrpt?GAO-03-122
  52. http://www.gao.gov/cgi-bin/getrpt?GAO-03-1103R
  53. http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-99-32
  54. http://www.gao.gov/cgi-bin/getrpt?GAO-05-160
  57. http://www.gao.gov/cgi-bin/getrpt?GAO-04-138
  65. http://www.gao.gov/cgi-bin/getrpt?GAO-07-408
*** End of document. ***