VA Health Care: Food Service Operations and Costs at Inpatient Facilities
(Letter Report, 11/19/1999, GAO/HEHS-00-17).

Pursuant to a congressional request, GAO provided information on the
Department of Veterans Affairs' (VA) food service operations, focusing
on: (1) the type and volume of food services; (2) how VA provides food
services; (3) the cost VA incurs; and (4) the revenues VA generates from
sales of excess food services.

GAO noted that: (1) VA provides a variety of food services to meet the
widely varying needs of patients; (2) for example, patients frequently
need specialized food services, such as diet-restricted meals, snacks
for special conditions like diabetes, and liquid nourishment for those
unable to eat solid food; (3) most hospital patients need food delivery
to their bedside; (4) many nursing home residents also require food
service in their rooms, although a larger portion of nursing home
patients eat in congregate dining areas; (5) the volume of food service
at individual locations also varies, with most locations serving between
100 and 400 patients a day, although 25 percent serve less than 100
patients a day; (6) in fiscal year (FY) 1998, VA employees provided food
services at 172 of 175 VA inpatient locations; private contractors
provided food services at the 3 remaining locations; (7) VA-operated
food service locations buy most of their food supplies from prime
vendors who provide discounts for high-volume purchases; (8)
VA-furnished meals and snacks include food cooked from scratch;
pre-prepared foods that are purchased; and food cooked in advance and
chilled for later use; (9) VA locations also use traditional and
advanced food delivery methods to maintain proper temperatures when food
is distributed; (10) the mix of these methods varies by location; (11)
VA spent about $429 million on inpatient food services in FY 1998; (12)
of this amount, VA spent about $337 million to produce and distribute
inpatient food and nourishments, with the rest for patient-related
activities such as nutrition needs assessment and counseling; (13) about
72 percent of production and distribution costs were for the wages and
benefits of about 7,348 full-time-equivalent wage-rate employees; (14)
VA's daily food service production and delivery costs averaged about
$24.50 per patient, with individual locations' daily costs ranging
between $8 to $51 per patient; (15) the range in costs partly reflects
the range in nutritional needs, which are generally less in
domiciliaries than in hospital and nursing home settings; (16) in FY
1998, 27 VA locations generated modest revenues of +$739,000 by using
excess food capacity to produce food service for 44 non-VA
organizations; and (17) most sales were to private, nonprofit
organizations; the other VA sales were primarily to federal, state, and
local government agencies.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-00-17
     TITLE:  VA Health Care: Food Service Operations and Costs at
	     Inpatient Facilities
      DATE:  11/19/1999
   SUBJECT:  Veterans hospitals
	     Veterans benefits
	     Food services
	     Health services administration
	     Patient care services
IDENTIFIER:  VA Veterans Integrated Service Network
	     VA Nutrition and Food Services Program
	     VA Canteen Service Program

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Cover
================================================================ COVER

Report to the Chairman, Subcommittee on Oversight and Investigations,
Committee on Veterans' Affairs, House of Representatives

November 1999

VA HEALTH CARE - FOOD SERVICE
OPERATIONS AND COSTS AT INPATIENT
FACILITIES

GAO/HEHS-00-17

Food Services at VA Inpatient Facilities

(406163)

Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  NFS - Nutrition and Food Services
  VA - Department of Veterans Affairs
  VISN - Veterans Integrated Service Network

Letter
=============================================================== LETTER

B-281940

November 19, 1999

The Honorable Terry Everett
Chairman
Subcommittee on Oversight and Investigations
Committee on Veterans' Affairs
House of Representatives

Dear Mr.  Chairman: 

The Department of Veterans Affairs' (VA) health care system requires
a number of nonclinical services, such as food services, laundry, and
housekeeping, to support the delivery of clinical care.  About
one-third of VA's health budget is spent on support services. 
Because these services make up a sizeable share of health care
operating expenses, one focus of health care systems in the 1990s has
been on reinventing the way they provide support services as a part
of their overall efforts to increase the efficiency of health care
delivery.  Health care systems have used a variety of methods in
their efforts to increase efficiency.  These methods include
consolidation of services, changes in technology, reinvention of work
processes, and outsourcing of services. 

VA provides many of these support services in inpatient settings.  In
fiscal year 1998, VA spent approximately $8.4 billion on inpatient
services--which include clinical and support services--for about
650,000 inpatients admitted to its facilities.  VA provides inpatient
health care in 175 locations in its hospitals, nursing homes, and
domiciliaries. 

You expressed concern that VA may not have focused adequately on
increasing the efficiency of services that support its delivery of
patient care.  To address this concern, you asked us to develop a
body of work providing baseline data on major VA support services and
assessing options for increasing the efficiency of these services. 
You asked that we begin this work by examining VA's inpatient food
service operations.  This report provides fiscal year 1998 baseline
information on (1) the type and volume of food service VA provides,
(2) how VA provides food services, (3) the cost VA incurs, and (4)
the revenues VA generates from sales of excess food services.  We
will assess options for increasing the efficiency of VA food services
in a subsequent report. 

To conduct our work, we surveyed the 22 Veterans Integrated Service
Networks (VISN) to obtain data on food services at VA's 175 inpatient
locations.  We also obtained data from VA headquarters officials and
conducted site visits and telephone interviews with local VA
officials.  (See app.  I for a complete description of our scope and
methodology.) Our work was performed between December 1998 and
October 1999 in accordance with generally accepted government
auditing standards. 

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

VA provides a variety of food services to meet the widely varying
needs of patients.  For example, patients frequently need specialized
food services, such as diet-restricted meals, snacks for special
conditions like diabetes, and liquid nourishment for those unable to
eat solid food.  Most hospital patients need food delivery to their
bedside.  Many nursing home residents also require food service in
their rooms, although a larger proportion of nursing home patients
eat in congregate dining areas.  The volume of food service at
individual locations also varies, with most locations serving between
100 and 400 patients a day, although 25 percent serve fewer than 100
patients a day. 

In fiscal year 1998, VA employees provided food services at 172 of
175 VA inpatient locations; private contractors provided food
services at the 3 remaining locations.  VA-operated food service
locations buy most of their food supplies from prime vendors who
provide discounts for high-volume purchases.  VA-furnished meals and
snacks include food cooked from scratch; pre-prepared foods that are
purchased; and food cooked in advance and chilled for later use.  VA
locations also use traditional and advanced food delivery methods to
maintain proper temperatures when food is distributed.  The mix of
these methods varies by location. 

VA spent about $429 million on inpatient food services in fiscal year
1998.  Of this amount, VA spent about $337 million to produce and
distribute inpatient food and nourishments, with the rest for
patient-related activities such as nutrition needs assessment and
counseling.  About 72 percent of production and distribution costs
were for the wages and benefits of about 7,348 full-time-equivalent
wage-rate employees.  VA's daily food service production and delivery
costs averaged about $24.50 per patient, with individual locations'
daily costs ranging between $8 and $51 per patient.  The range in
costs partly reflects the range in nutritional needs, which are
generally less in domiciliaries than in hospital and nursing home
settings. 

In fiscal year 1998, 27 VA locations generated modest revenues of
$739,000 by using excess food capacity to produce food service for 44
non-VA organizations.  Most sales were to private, nonprofit
organizations; the other VA sales were primarily to federal, state,
and local government agencies. 

   BACKGROUND
------------------------------------------------------------ Letter :2

VA operates 172 hospitals, 131 nursing homes, and 40 domiciliaries.\1
These facilities--singly or in combination--are located in 175
inpatient locations.  Over the last decade, VA has dramatically
decreased its use of inpatient hospital care by about 58 percent,
with most of the decline occurring in the last 3 years.  At the same
time, VA has increased its emphasis on outpatient care by
establishing community-based clinics and increasing outpatient care
at hospitals.  The downsizing of inpatient care has created
additional pressures on minimizing the costs of support services, as
there are fewer patients who need these services in most locations.\2

VA provides food services at each inpatient delivery location to
patients, visitors, volunteers, and employees through its Nutrition
and Food Services (NFS) program and its Canteen Service.  The NFS
program is responsible for ensuring that VA's inpatients receive
appropriate and quality nutrition as an integrated part of VA health
care.  The Canteen Service is generally responsible for providing
food and other retail services to outpatients, visitors, and
employees at VA's delivery locations.  NFS services are funded by
appropriations; Canteen Service operations are funded by revenue from
sales. 

VA has managed its inpatient delivery locations through 22 VISNs
since fiscal year 1996.  These VISNs have the responsibility to make
basic budgetary, planning, and operating decisions to meet the health
care needs of veterans living within the geographic area, including
the food service needs of VA inpatients.  VISNs vary in the extent to
which they direct or delegate initiatives regarding VA food service
operations at their inpatient delivery locations. 

--------------------
\1 A VA domiciliary is a residential rehabilitation and health
maintenance center for veterans who do not require hospital or
nursing home care but are unable to live independently because of
medical or psychiatric disabilities. 

\2 See VA Health Care:  Challenges Facing VA in Developing an Asset
Realignment Process (GAO/T-HEHS-99-173, July 22, 1999). 

   VA'S FOOD SERVICE NEEDS VARY
   WIDELY
------------------------------------------------------------ Letter :3

VA's food service needs vary widely based primarily on individual
patient needs as determined by VA's dietitians and the numbers of
patients at each of the 175 inpatient delivery locations.  NFS
dietitians identify patient nutrition needs, specify the food service
appropriate to meet those needs, and ensure the quality of food and
special nourishments that patients receive. 

VA inpatients need regular meals, diet-restricted meals, snacks for
those with special conditions such as diabetes, and special liquid
nourishments for those unable to eat solid food.  Diet-restricted
meals, snacks, and special nourishments are most commonly required
for hospital patients and nursing home patients.  Less specialized
food services are more common for domiciliary patients. 

VA inpatients have food provided in different ways.  Many hospital
patients are bed-bound and need food delivered to their rooms. 
Bed-bound patients in nursing homes also need food delivered to their
rooms, but a greater proportion of nursing home patients are able to
eat in congregate dining areas than are hospital patients. 
Domiciliary patients are generally ambulatory and do not need special
assistance with eating. 

VA served approximately 40,000 inpatients in its facilities on any
given day in fiscal year 1998.  Of these, approximately half received
hospital care and half received extended care in nursing homes or
domiciliaries (see fig.  1).  VA provided inpatient food services in
every state, the District of Columbia, and Puerto Rico. 

   Figure 1:  Average Proportion
   of Patients Receiving Food
   Service by Type of VA Inpatient
   Facility, Fiscal Year 1998

   (See figure in printed
   edition.)

Note:  N=175 inpatient health care delivery locations. 

Source:  GAO survey of VA's VISNs. 

The volume of food service needed also varies widely by delivery
location because of differences in the size of inpatient population. 
The average daily population ranged between a low of 18 and a high of
778.  Most locations had an average daily inpatient population of 100
to 400 in fiscal year 1998 (see fig.  2).  However, about one-quarter
of the locations had a average daily inpatient population of less
than 100 and about one-seventh had a daily population above 400. 

   Figure 2:  Percentage of VA
   Locations by Size of Average
   Daily Inpatient Population,
   Fiscal Year 1998

   (See figure in printed
   edition.)

Note:  N=175 inpatient health care delivery locations. 

Source:  GAO survey of VA's VISNs. 

   VA PREPARES FOOD FOR NEARLY ALL
   LOCATIONS
------------------------------------------------------------ Letter :4

VA meets its food service needs through its NFS-operated kitchens and
Canteen-Service-operated kitchens and through private contractors. 
VA uses a variety of methods to produce and distribute food. 

      NFS PROVIDED INPATIENT FOOD
      SERVICES AT 168 LOCATIONS
---------------------------------------------------------- Letter :4.1

NFS fulfilled 99 percent of VA's food inpatient service needs in
fiscal year 1998 through the operation of 158 kitchens.  In providing
these services, VA requires NFS kitchens to purchase most food items
from prime vendors to save on procurement costs.  Prime vendors agree
to sell supplies to purchasers, such as VA, at discounted prices when
the purchaser agrees to buy a large volume of specified products
exclusively from the vendor.  VA headquarters awards contracts to
different prime vendors by region.  VA's NFS kitchens, however,
purchase some items, such as milk and bread, from other suppliers. 

VA uses a variety of methods to produce and distribute food, and many
locations use a combination of these methods to provide inpatient
food services.  Historically, NFS has produced most food in kitchens
located at health delivery locations where the food is consumed. 
Typically, this is conventional food production or cooking from
scratch, using raw ingredients and recipes.  Food production
generally takes place just prior to meals.  Some locations use
convenience foods primarily or exclusively to reduce or eliminate
cooking on site.  Convenience foods are purchased already cooked or
processed.  Food items that are served hot are reheated or cooked
just prior to meal time.  Although convenience foods are generally
more costly than raw food products, some VA locations believe that
this method is less expensive overall than cooking from scratch
because VA reduces its labor costs for food preparation. 

Some locations cook food in advance and chill until needed.  There
are two cook/chill options, which may be used independently or
together.  The first option, blast chill, can be used for most food
items and can chill foods for up to 5 days before being consumed. 
This option can, for example, eliminate the need for weekend hours
for many food preparation staff.  The second cook/chill option chills
food for 21 to 40 days, but this option is suitable for fewer types
of food than blast chill.  The second option involves one of two
processes, depending upon the type of food.  The tumble chill process
chills items, such as pasta, that can be pumped into various sized
packets.  The cook tank process chills items, such as roasts, that
are vacuumed sealed.  Tumble and tank chill processes can produce a
high volume of food in one location--sometimes called food factories
or central production units--for distribution to multiple locations. 

After food production, VA must distribute food to patients.  This
consists of two steps--assembly and delivery.  Most VA locations
assemble food centrally in or near the kitchen where the food was
produced.  Staff put the food on plates and trays, usually in a tray
line where different food items are placed on a plate by staff at
different food stations.  Some health care delivery locations use a
decentralized approach, where food is conveyed in bulk to serving
galleys in patient areas where staff assemble individual trays. 

After food assembly, VA delivers food to patients--using traditional
or advanced food delivery methods--to serve food at the appropriate
serving temperature.  A common traditional method is the pellet
system which consists of a heated pellet (constructed of sealed
stainless steel shells) on which a plate of food is placed and then
covered to hold heat.  Staff deliver food on these pellets to
patients.  Advanced food delivery systems heat and refrigerate food
that was prepared at an earlier time.  This method is designed to
serve as an extension of the advanced food preparation systems,
although it can also be used with traditional food preparation. 

VA uses these various food delivery systems to deliver meals in
several ways at its inpatient locations.  VA, for example, provides
food at bedside to patients unable to leave their rooms, in
congregate dining areas when patients can leave their rooms but may
need assistance with getting their food, and in cafeteria lines for
many domiciliary patients who do not need assistance with eating. 

      VA'S CANTEEN SERVICES
      PROVIDED INPATIENT FOOD
      SERVICES AT FOUR LOCATIONS
---------------------------------------------------------- Letter :4.2

Kitchens operated by VA's Canteen Service provided less than 1
percent of VA's inpatient food services needs in fiscal year 1998. 
Canteen Service workers prepared food at these locations, although
NFS dietitians continued to have responsibility for assessing
patients' nutritional needs and monitoring the adequacy of food the
Canteen Service prepares to meet these needs.  Canteen Service food
operations use a variety of methods of food production and
distribution similar to those used by NFS.  The Canteen Service
provided inpatient food services at Marion, Illinois; Poplar Bluff,
Missouri; Wichita, Kansas; and at the Martinez, California, nursing
home. 

      PRIVATE CONTRACTORS PROVIDED
      FOOD SERVICES AT THREE
      LOCATIONS
---------------------------------------------------------- Letter :4.3

Private contractors provided inpatient food services to meet less
than 1 percent of VA inpatient needs in fiscal year 1998.  Private
contractors provided food service at three locations, although NFS
dietitians continued to have responsibility for assessing patients'
nutritional needs and monitoring the adequacy of food prepared to
meet those needs.  Private contractors used methods similar to those
of NFS to produce and distribute food.  Sodexho Marriott provided
food services for the Anchorage, Alaska, domiciliary; Sky Chef
provided food services for the Honolulu, Hawaii, nursing home; and G
& A Professional Services provided food services for VA and
Department of Defense (DOD) inpatients at the joint VA/Air Force
hospital (Mike O'Callaghan Federal Hospital) at Nellis Air Force Base
in Nevada. 

   VA SPENDS HUNDREDS OF MILLIONS
   OF DOLLARS ON INPATIENT FOOD
   SERVICE
------------------------------------------------------------ Letter :5

VA reported that NFS spent about $429 million for inpatient food
services in fiscal year 1998.  Part of these funds were spent for
professional dietitian services.  For fiscal year 1998, VA reported
that NFS spent $92 million for about 1,613 full-time-equivalent
employee dietitians and related general service staff who determined
patients' nutrition needs, monitored the adequacy of food prepared to
meet patients' dietetic needs, and counseled patients on their
continuing nutrition needs. 

The lion's share of VA's expenses for food service, however, were for
producing and distributing food at VA's 175 inpatient delivery
locations.  In fiscal year 1998, VA reported that it spent
approximately $337 million, or about 80 percent of its inpatient food
service expenditures, on the production and distribution of food to
patients.  This includes the costs of about 46 million meals as well
as snacks and special nourishments.  Most of VA's inpatient food
costs were for labor--the wages and benefits of about 7, 348
full-time-equivalent employee wage-grade staff who prepare and
distribute food (see fig.  3). 

   Figure 3:  Distribution of VA
   Inpatient Food Service Costs by
   Source, Fiscal Year 1998

   (See figure in printed
   edition.)

Source:  GAO calculations based on data from VA. 

The daily costs of producing food services varied widely among the
134 locations for which cost data were available, ranging from about
$8 to about $51 per patient in fiscal year 1998.\3 The range in costs
partly reflects the range in nutritional needs from location to
location.  Locations that have more ambulatory patients with lesser
need for special diets in the domiciliary setting generally have
lower costs than locations that have more bed-bound patients with
more serious illnesses and more need for special diets in tertiary
hospital and nursing home settings.  These costs also include a
measure to incorporate expenditures and workload for meals prepared
for persons other than inpatients where NFS paid for such meals (see
app.  I for details).\4 VA's average daily food service cost was
about $24.50 per patient.  About one-fifth of the locations had
average daily patient costs of at least $5 below VA's average cost,
and about one-fifth had an average daily cost of at least $5 above
VA's average cost (see fig.  4). 

   Figure 4:  Distribution of VA
   Inpatient Locations by Average
   Daily Food Service Costs per
   Patient, Fiscal Year 1998

   (See figure in printed
   edition.)

Note:  N=134 inpatient health care delivery locations. 

Source:  GAO survey of VA's VISNs. 

Among the 134 locations for which cost data were available, average
daily costs per patient were higher in locations with smaller average
daily inpatient populations than in larger locations (see fig.  5). 
These costs are higher, in part, because the fixed costs of food
service operations are spread over a smaller volume of patients. 

   Figure 5:  VA Average Daily
   Food Service Costs per Patient
   by Size of Location, Fiscal
   Year 1998

   (See figure in printed
   edition.)

Note:  N=134 inpatient health care delivery locations. 

Source:  GAO survey of VA's VISNs. 

--------------------
\3 Cost data for the other 41 inpatient locations were available only
at the integrated facility level, which includes two or more
locations.  The average cost at these integrated facilities, however,
is similar to the average cost of the 134 individual locations for
which cost data were available. 

\4 This includes meals provided by NFS locations for outpatients,
volunteers, and employees. 

   VA GENERATES MODEST REVENUES BY
   SELLING FOOD SERVICE TO NON-VA
   ORGANIZATIONS
------------------------------------------------------------ Letter :6

VA received $739,284 in fiscal year 1998 from the sale of food
services by 27 VA locations to 44 non-VA organizations.  Revenues
were less than 1 percent of VA's expenditures on inpatient food
services.  VA sales to non-VA organization ranged from $9 to $75,640. 
The largest customers for VA food sales were private nonprofit
organizations, such as Western South Dakota Senior Services in Hot
Springs, South Dakota, and United Cerebral Palsy Day Care Center in
Canandaigua, New York (see fig.  6).  VA also made sales to
government organizations, including federal agencies, such as
Charleston Air Force Base; state agencies, such as the Idaho State
veterans home; and local government organizations, such as the Los
Angeles Homeless Authority Services.  VA also sold food services to
for-profit organizations, such as the Columbia Douglas Medical Center
in Roseburg, Oregon. 

   Figure 6:  Non-VA Organizations
   Buying VA Food Services, Fiscal
   Year 1998

   (See figure in printed
   edition.)

Note:  N=134 inpatient health care delivery locations. 

Source:  GAO survey of VA's VISNs. 

   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

In an October 25, 1999, letter in response to a draft of this report
(see app.  II), VA said that our report provides an essentially
accurate description of food service delivery in the Veterans Health
Administration. 

---------------------------------------------------------- Letter :7.1

As arranged with your staff, we are sending copies of this report to
the Secretary of Veterans Affairs, interested congressional
committees, and other interested parties.  We will make copies of
this report available to others upon request. 

If you have any questions about this report, please call me at (202)
512-7101 or Paul R.  Reynolds, Assistant Director, at (202) 512-7109. 
Other major contributors to this report were James C.  Musselwhite,
Senior Social Science Analyst; John R.  Kirstein, Evaluator; Elsie M. 
Picyk, Senior Evaluator, Computer Science; and Susan Lawes, Senior
Social Science Analyst. 

Sincerely yours,

Stephen P.  Backhus
Director, Veterans' Affairs and
 Military Health Care Issues

SCOPE AND METHODOLOGY
=========================================================== Appendix I

We focused our work on VA's inpatient food services for fiscal year
1998 to provide baseline information on (1) the type and volume of
food service VA provides, (2) how VA provides food services, (3) the
cost VA incurs, and (4) the revenues VA generates from sales of food
services. 

To obtain this information, we interviewed VA headquarters officials
in NFS, Canteen Services, the Office of the General Council, and
other offices.  We obtained documents from headquarters on food
service roles in VA, how food service is provided, and national data
on total costs and employees. 

We obtained location-specific data through surveys and survey
follow-ups to each VISN on food services at each inpatient location. 
Specifically, we obtained information on food service needs, how VA
provides services, VA costs, and revenues from food sales at each VA
inpatient location.  VISNs and locations also provided us with
reports and studies on various food service changes in food
production and cost that were under way or planned.  We tested need,
financial, and other data provided in the survey by comparing data
from the inpatient locations in various ways.  We compared the data
over time in the same location, compared data for locations of
similar size, and compared location data with other published data,
where available.  Where differences were found that were material to
our analysis, we conducted telephone follow-ups to VISNs, locations,
and headquarters and reconciled conflicting data.  We also did
additional comparisons with locations whose costs were unusually high
or low and followed up where necessary to confirm the accuracy of
information.  In addition, we compared our survey totals to
nationwide VA data on average inpatient population and NFS costs and
employees.  We also obtained additional data through interviews,
documents, and physical inspections of kitchen facilities and food
delivery at VA locations.  We visited VISN 8 (Bay Pines) and its
Tampa and Bay Pines locations.  We also visited VISN 15 (Kansas City)
and its Marion, St.  Louis Jefferson Barracks, and St.  Louis John
Cochran locations. 

We used the average daily cost per patient in our analysis as our
measure of unit costs.  We used this measure because it incorporates
all nutrition and food service costs and provides for more
comparability of costs across VA.  This measure includes all costs of
each patient for 1 day--all meals, the number of which can vary
depending upon definition; snacks; and special nourishments.  In
addition, we incorporated the cost of NFS meals provided to persons
other than inpatients to avoid overstating the food service costs at
locations where the number of such meals is significant.  To do so,
we assumed that three meals to persons other than inpatients equaled
1 day of inpatient food service.  This somewhat understates the daily
cost per patient in locations that provided a substantial number of
meals to persons other than inpatients because this assumption
includes no costs for snacks and special nourishments.  These
additional meals were primarily for outpatients but also included
meals for volunteers and employees. 

We also conducted a literature review of the food services industry
and interviewed selected non-VA food service officials.  These
included officials from the private sector, food service industry
organizations, and DOD health care. 

We performed our review between December 1998 and October 1999 in
accordance with generally accepted government auditing standards. 

(See figure in printed edition.)Appendix II
COMMENTS FROM THE DEPARTMENT OF
VETERANS AFFAIRS
=========================================================== Appendix I

*** End of document. ***