VA Health Care: Need for Brevard Hospital Not Justified (Letter Report,
08/29/95, GAO/HEHS-95-192).

Pursuant to a congressional request, GAO reviewed the Department of
Veterans Affairs' (VA) plans to provide accessible medical and other
services to veterans in East Central Florida, focusing on: (1) VA
acquisition of the former Orlando Naval Hospital; (2) whether the
conversion of the hospital to a nursing home is the most economical use
of VA resources; and (3) whether more prudent and economical options
exist to meet VA service delivery goals for Florida veterans.

GAO found that: (1) VA conversion of the former Naval hospital to a
nursing home and the construction of a hospital and nursing home in
Brevard County are not the most prudent and economical use of VA
resources; (2) VA planning assumptions are questionable, particularly
those regarding the availability of community nursing home beds and
unused VA hospital beds, and the potential decrease in future demand for
VA hospital beds; (3) VA could meet its service delivery goals by using
existing capacity, which would result in lower costs and greater
convenience for the veterans; (4) preserving the Orlando hospital as a
hospital would improve the geographic accessibility of VA medical and
psychiatric services at a lower cost; (5) the number of unused VA
hospital beds is expected to increase because of the projected decline
in the veteran population; (6) VA could convert some of the unused
medical and surgical beds in the 3 Central Florida hospitals to
psychiatric beds to make those beds more geographically accessible to
all Florida veterans rather than concentrating them at the new hospital
in Brevard County; (7) construction of the Brevard hospital is not
justified, since VA greatly overestimated veterans' potential use of
Florida VA facilities; and (8) VA needs to focus its strategy on the
most prudent and economical use of its limited resources and avoid
unnecessary expenditures while meeting its service delivery goals in a
more timely manner.

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

 REPORTNUM:  HEHS-95-192
     TITLE:  VA Health Care: Need for Brevard Hospital Not Justified
      DATE:  08/29/95
   SUBJECT:  Veterans hospitals
             Cost effectiveness analysis
             Government facility construction
             Health care cost control
             Health care planning
             Community health services
             Nursing homes
             Health resources utilization
             Evaluation methods
             Mental health care services
IDENTIFIER:  Orlando (FL)
             Brevard County (FL)
             VA Integrated Planning Model
             Gainesville (FL)
             Tampa (FL)
             Bay Pines (FL)
             Daytona Beach (FL)
             Lake City (FL)
             Miami (FL)
             West Palm Beach (FL)
             VA Veterans Integrated Service Network
             Orange County (FL)
             Seminole County (FL)
             Volusia County (FL)
             
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Cover
================================================================ COVER


Report to the Honorable
Bill McCollum, House of Representatives

August 1995

VA HEALTH CARE - NEED FOR BREVARD
HOSPITAL NOT JUSTIFIED

GAO/HEHS-95-192

VA's Florida Network Planning


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

  VA - Department of Veterans Affairs
  ABC - TEST

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


B-257477

August 29, 1995

The Honorable Bill McCollum
House of Representatives

Dear Mr.  McCollum: 

The Department of Veterans Affairs (VA) assumed control of the former
Naval Hospital in Orlando, Florida, in June 1995.  VA plans to
convert the hospital into a nursing home, while continuing to operate
the existing outpatient clinic.  VA also plans to construct a new
hospital and nursing home in Brevard County, 50 miles from Orlando. 

These facilities are to serve veterans in six counties in East
Central Florida, providing medical, surgical, psychiatric, and
nursing home services.  VA's goal is to provide more geographically
accessible services than are now available in its three hospitals
serving veterans in Central Florida.  Moreover, the Brevard hospital
is to provide psychiatric services to veterans living in all parts of
Florida. 

You asked us to examine VA's acquisition of the former Orlando Naval
Hospital and intended use of this facility.  More specifically, you
questioned whether the conversion of the former Naval Hospital to a
nursing home is the most economical and prudent use of resources in
light of VA's plans to build a nearby 470-bed hospital.  Also, you
asked us to explore available options and, if possible, suggest a
more prudent and economical way for VA to meet its service delivery
goals for Florida veterans. 

We reviewed VA's hospital and nursing home planning methodologies,
assumptions, and data pertaining to East Central Florida.  We visited
VA's medical centers in Tampa, Bay Pines, and Gainesville and the
former Orlando Naval Hospital.  We also reviewed applicable VA
studies.  In addition, we interviewed Florida state officials
concerning hospital and nursing home care.  We used data from VA's
1994 Integrated Planning Model to update information pertaining to
VA's hospitals in Florida.  We conducted our review between June 1994
and June 1995 in accordance with generally accepted government
auditing standards.  Our methodology is discussed in more detail in
appendix I. 

We presented our preliminary observations to you and your staff on
March 21, 1995.  At your request, we provided a similar briefing for
Representative Weldon and his staff on March 23, 1995.  In addition,
we provided similar briefings to Representative Jerry Lewis and his
staff; and the congressional staffs of Senators Christopher S.  Bond,
Bob Graham, Connie Mack, and Alan K.  Simpson and Representative Bob
Stump.  This report presents the final results of our work.\1


--------------------
\1 We responded in writing to a series of 10 questions relating to
VA's planning activities, as requested by you and Representative
Weldon on April 7, 1995 (See GAO/HEHS-95-160R, May 16, 1995). 


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

VA's conversion of the former Orlando Naval Hospital into a nursing
home and construction of a new hospital and nursing home in Brevard
County is not the most prudent and economical use of its resources. 
These construction projects are based on questionable planning
assumptions that may result in the unneeded expenditure of federal
dollars.  Specifically, VA inadequately considered the availability
of hundreds of community nursing home beds and unused VA hospital
beds as well as potential decreases in future demand for VA hospital
beds. 

VA could achieve its service goals in Central Florida by using
existing capacity rather than building a 470-bed VA hospital and
120-bed nursing home in Brevard County and converting the former
Naval Hospital to a nursing home.  For example, VA could purchase
care from community nursing homes to meet veterans' needs more
conveniently and at a lower cost.  This would allow VA to use the
former Orlando Naval Hospital to improve the geographic accessibility
of VA medical and psychiatric care.  Also, VA's three Central Florida
hospitals have over 400 unused medical and surgical beds; many of
these could be converted to psychiatric beds.  VA's existing
hospitals may be more geographically accessible to veterans, given
that about 59 percent of the expected psychiatric use of the proposed
Brevard hospital would be generated by veterans from other areas of
Florida. 

VA's consideration of such alternatives would ensure that its
planning strategy focuses on the most prudent and economical use of
resources throughout the network of Florida VA facilities.  VA's use
of a lower-cost alternative would also avoid the unneeded expenditure
of government resources and provide the opportunity for VA to meet
its service delivery goals in a more timely manner. 


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

VA provides health care services nationwide through a direct delivery
system of 172 hospitals, 365 outpatient clinics, and 128 nursing
homes.  In addition to operating its own nursing homes, VA pays for
care provided to veterans by community and state veterans' nursing
homes.  VA's goal is to have 40 percent of those veterans needing VA
assistance receive care through contracts with community nursing
homes, 30 percent through agreements with state homes, and 30 percent
in VA nursing homes. 

VA has 1,595 hospital beds and 600 nursing home beds in Central
Florida that veterans in Orlando and Brevard County may use.  These
beds are located at VA medical centers\2 in Gainesville, Tampa, and
Bay Pines and serve a geographic area commonly referred to as Central
Florida.  VA also operates outpatient clinics in Orlando and Daytona
Beach.  The VA hospital in Tampa is about 125 miles west of Brevard
and 80 miles west of Orlando.  The VA hospital in Gainesville is
about 175 miles northwest of Brevard and 109 miles northwest of
Orlando.  The VA hospital in Bay Pines is about 30 miles west of
Tampa. 

In addition, VA has hospitals and nursing homes in Lake City, Miami,
and West Palm Beach, which have a total of 1,367 hospital beds and
480 nursing home beds.  VA also operates several outpatient clinics. 
These facilities, along with those in Central Florida, comprise VA's
Florida facilities.  Figure 1 shows the locations of the facilities
in Florida, including the former Orlando Naval Hospital and the
planned Brevard Hospital. 

   Figure 1:  VA Facilities in
   Florida

   (See figure in printed
   edition.)


--------------------
\2 Each VA medical center includes a hospital, nursing home, and an
outpatient clinic. 


      VETERANS INTEGRATED SERVICE
      NETWORK
---------------------------------------------------------- Letter :2.1

VA's Under Secretary for Health plans to restructure the Veterans
Health Administration and fundamentally change the way that veterans'
health care is provided.  His plans include increasing ambulatory
care access points, emphasizing primary care, decentralizing
decisionmaking, and integrating the delivery assets to provide an
interdependent, interlocking system of care.  The structural vehicle
to do this will be the Veterans Integrated Service Network.  The
basic budgetary and planning units of health care delivery shifts
from individual medical centers to integrated service networks
providing for populations of veteran beneficiaries in defined
geographical areas.  The network director is responsible for
consolidating and realigning services within the network.  The
integrated network for Florida includes all six VA medical centers in
Florida plus the medical center in San Juan, Puerto Rico. 


      VA'S CONSTRUCTION PLANNING
      IN CENTRAL FLORIDA
---------------------------------------------------------- Letter :2.2

VA has two basic goals for serving Central Florida veterans.  First,
VA plans to provide hospital beds comparable to the national level of
availability to serve the health care needs of veterans.  Second, VA
expects to improve the geographic accessibility of VA hospital beds
for as many veterans as possible. 

VA uses an Integrated Planning Model when developing strategic
management and operational plans, including construction.  VA's model
is primarily driven by three variables to estimate veterans' future
use of VA hospital beds.  These variables include veteran population
by age groups, average lengths of hospital stays for selected medical
services (such as surgery or psychiatry), and the number of patients
treated in the selected medical services. 

In 1982, VA planners conducted a study of the health care needs of
Florida veterans, including the projected future use of VA facilities
through 1995.  In 1991, VA planners updated this study and determined
that 710 hospital and nursing home beds were needed in six counties,
commonly referred to as East Central Florida.  The planners concluded
that these beds were needed to make VA health care more
geographically accessible to veterans in East Central Florida. 

VA developed plans to build a 470-bed hospital and 120-bed nursing
home in Brevard County and a 120-bed nursing home and outpatient
clinic in Orlando.  In July 1993, the Defense Base Closure and
Realignment Commission recommended closing the Orlando Naval
Hospital.  In May 1994, the Orlando Naval Training Center Reuse
Commission accepted VA's proposal to convert the 153-bed Naval
Hospital into a nursing home and outpatient clinic after the Navy
moved out in June 1995.  VA announced that this conversion would be
done in lieu of its plan to build a new nursing home and clinic. 

VA estimates that it will spend $1.1 billion over the next 10 years
to build and operate the new Brevard Hospital and the nursing homes
in Brevard and Orlando.  At VA's request, the Congress provided VA
$14 million in fiscal year 1995 to renovate the former Naval Hospital
and $17.2 million to develop preliminary designs for a new 470-bed
hospital and 120-bed nursing home in Brevard County.  VA has
requested $154.7 million in its fiscal year 1996 budget to construct
the new hospital.  VA estimates that it will need $115 million a year
to operate the facilities in Brevard and Orlando. 


      VETERANS' USE OF VA
      HOSPITALS IN CENTRAL FLORIDA
---------------------------------------------------------- Letter :2.3

Veterans' use of the 1,595 beds in the three VA hospitals serving
Central Florida has decreased over the last 4 years.  In 1994,
veterans used 1,060 beds a day on average.  They used 271 beds in the
Gainesville hospital compared with almost 400 beds in both the Tampa
and Bay Pines hospitals.  Appendix II describes veterans' use of VA
hospitals in Central Florida in more detail. 

In contrast, veterans' use of VA nursing home care has increased
gradually over the last 4 years.  In 1994, veterans occupied about
867 beds a day on average.  VA provided about 61.5 percent of this
care in its homes; it contracted with community homes for 34 percent
and a state home for 4.5 percent.  Appendix III describes veterans'
use of VA nursing home care in Central Florida in more detail. 


   EXPANDING USE OF COMMUNITY
   NURSING HOMES APPEARS
   ECONOMICAL
------------------------------------------------------------ Letter :3

Community nursing homes in East Central Florida appear to be able to
provide the 240 beds that VA plans to construct.  There are 60
nursing homes in East Central Florida that are willing to supply beds
for veterans' use or may be willing to supply beds if contacted by
VA.  These homes operate 7,176 beds, including 320 beds that were
empty at the time of VA's 1993 survey. 

VA determined that these 60 homes would be able to provide only 105
beds based on two questionable assumptions concerning bed
availability.  First, VA assumed that a nursing home was fully
occupied if it had an occupancy rate of 95 percent or higher. 
Second, VA assumed that beds occupied at the time of its survey would
not be available for VA's use. 

VA's assumption that community homes are fully occupied at 95 percent
of capacity seems inappropriate because VA routinely contracts with
homes that have occupancy rates of 95 percent or higher.  For
example, VA had contracts with 22 homes in East Central Florida, 17
of which had occupancy rates of 95 percent or higher.  Similarly, VA
had contracts with 86 homes in other parts of Central Florida and 56
of these homes had occupancy rates of 95 percent or higher.  Social
workers at the three Central Florida hospitals told us that they were
able to place veterans in these homes. 

By assuming that community homes are fully occupied at 95 percent of
capacity, VA determined that only 105 of the 320 empty beds in East
Central Florida would be available for its use.  Of the 215 empty
beds that VA excluded, 86 were in the 22 homes with which VA already
had contracts. 

VA's assumption that occupied beds will not be available appears
inappropriate because occupied beds can be expected to turn over
frequently during each year and VA should have a reasonable chance to
place veterans in some of these beds.  The nursing homes in East
Central Florida had 6,856 occupied beds at the time of VA's survey
that were excluded from further consideration.  Nationwide, about
one-half of the patients admitted to community nursing homes stayed
fewer than 83 days, according to the latest government survey of
nursing homes.\3 Moreover, only about one-fourth stayed longer than
12 months. 

Community nursing home beds appear to be available at prices that are
below VA's costs to construct and operate the 120 beds proposed at
the Brevard and Orlando sites.  Nationwide, VA's contract costs
average $106 a day for a bed.  By contrast, VA's costs are estimated
to be $207 a day for a VA-constructed and -operated bed.  These costs
do not include the depreciation charges associated with the costs of
initially constructing the VA nursing homes. 

VA also has some flexibility in placing veterans in community nursing
homes in Florida.  If veterans' needs exceed the capacity of homes in
East Central Florida, VA also has available beds in 204 community
nursing homes in other parts of Central Florida.  For example, VA had
contracts with 86 homes that had 525 empty beds.  Also, 118 other
homes had empty beds that VA had determined to be willing and able or
who may be willing to serve veterans if contacted by VA. 

In our view, it is reasonable to consider these community nursing
homes as part of the available bed supply.  Many of the veterans
using the proposed Brevard hospital will likely reside in parts of
Central Florida other than the six East Central Florida counties and,
thus, would be placed in homes closer to their residences. 

Appendix IV describes VA's assessment of its future need for nursing
homes and its survey of community nursing homes in greater detail. 


--------------------
\3 U.S.  Department of Health and Human Services, Public Health
Service, Centers for Disease Control, National Center for Health
Statistics, The National Nursing Home Survey:  1985 Summary for the
United States, Hyattsville, Md.  (1989), p.  68. 


   USING EXISTING CAPACITY TO
   PROVIDE MEDICAL AND PSYCHIATRIC
   BEDS APPEARS PRUDENT
------------------------------------------------------------ Letter :4

VA has a large supply of unused beds in its three hospitals now
serving Central Florida veterans and the number of unused beds is
expected to increase substantially.  Moreover, VA's use of community
nursing homes, as previously discussed, will allow VA to add the
former Orlando Naval Hospital's beds to this supply of available
hospital beds. 

To achieve the most prudent and economical use of resources, VA's
hospital planning should be guided by two objectives.  First, VA
should make the best use of existing capacity before constructing new
space.  Second, VA should design new construction to meet veterans'
expected use over a facility's useful life as efficiently and
effectively as possible. 

Toward this end, it appears that converting unused beds to
psychiatric care and using the bed capacity in the former Naval
Hospital provide a viable lower-cost option to constructing a new
hospital. 


      LARGE SUPPLY OF UNUSED BEDS
      IN CENTRAL FLORIDA VA
      HOSPITALS
---------------------------------------------------------- Letter :4.1

Veterans use of VA beds in its three Central Florida hospitals has
declined steadily over the last 4 years.  The hospitals have a large
supply of unused beds, totaling about 535 daily.  Each hospital has
more than 160 unused beds.  In addition, these hospitals reduced
their total bed capacity from 1,858 to 1,595 by removing 263 beds
from service and converting the space to other uses, primarily
expanded outpatient services such as ambulatory surgery or dialysis. 

From fiscal year 1991 to 1994, the veteran population in Central
Florida was stable but VA projects the population to decrease
steadily through fiscal year 2010.  An estimated 1.1 million veterans
lived in the Central Florida service area in 1994; about 284,000
lived in East Central Florida.\4

By 2010, VA estimates that the veteran population will decrease by 17
percent.  Figure 2 shows the expected decrease in veterans'
population in Central Florida. 

   Figure 2:  Estimated Decrease
   in Central Florida Veteran
   Population (1995-2010)

   (See figure in printed
   edition.)

Veterans' use of beds in VA's three hospitals in Central Florida is
expected to continue declining, due in large part to the decreasing
veteran population.  VA's 1994 Integrated Planning Model\5 estimates
that veterans will use 350 fewer beds between 1995 and 2010.  Thus,
the three existing hospitals' supply of unused beds is expected to
increase, providing additional surplus capacity that could be
converted to provide the psychiatric care VA plans to construct in
the proposed Brevard hospital. 


--------------------
\4 The service area for VA's hospital in Brevard County includes six
counties, but VA assumes that only one-half of the veterans living in
Orange, Seminole, and Volusia Counties will travel to Brevard.  The
other veterans in these three counties will continue to seek care at
the existing VA hospitals in Tampa and Gainesville. 

\5 VA's Integrated Planning Model takes into consideration the
expected increased inpatient use of its aging veteran population. 


      CONVERTING UNUSED BEDS TO
      PSYCHIATRIC CARE
---------------------------------------------------------- Letter :4.2

Veterans now receive psychiatric care at all VA hospitals in Florida. 
The three hospitals in Central Florida operated a total of 359
psychiatric beds in fiscal year 1994.  Of these, about 94 were
unused.  Also, the other two VA hospitals serving Florida veterans
operated an additional 228 psychiatric beds, of which 39 were unused. 
In addition, the VA hospital in West Palm Beach added 60 more
psychiatric beds for veterans' use. 

These hospitals provide a range of psychiatric services.  For
example, each hospital initially diagnoses and treats veterans so
that their conditions become stabilized.  Available services include
general psychiatric care (186 beds), geropsychiatric care (36 beds),
and substance abuse rehabilitation (90 beds).  Most of the
psychiatric services are short-term with lengths of stay of fewer
than 30 to 90 days. 

The types of inpatient psychiatric care planned for Brevard appear
comparable with care now provided at these hospitals or with care
being considered for implementation at the facilities.  For example,
VA's psychiatric design consultant for the Brevard hospital told us
that most services would be for acute diagnostic stays of fewer than
30 days and that stays would rarely exceed 90 days.  Services are to
include substance abuse and posttraumatic stress disorder.  Moreover,
he stated that veterans in need of further care would be referred to
nursing homes with geropsychiatric capabilities or to other
facilities. 

VA's existing hospitals may be more geographically accessible to
veterans, given that VA expects certain veterans from all parts of
Florida to receive psychiatric care at Brevard.  Using VA's 1994
Integrated Planning Model, we estimated that veterans in the six East
Central Florida counties would account for 41 percent of the expected
use (95 beds) and 59 percent of the use (135 beds) would be generated
by veterans from other parts of Florida.  Therefore, the majority of
expected psychiatric patients apparently reside closer to existing VA
hospitals than they do to the proposed Brevard hospital.  Figure 3
shows the locations of existing VA hospitals and the percentage of
Brevard's 230 psychiatric beds expected to be used by veterans
throughout Florida. 

   Figure 3:  Percent of Brevard's
   Psychiatric Bed Use
   Attributable to Veterans in
   Selected Florida Geographical
   Areas (Fiscal Year 2005)

   (See figure in printed
   edition.)

Appendix V provides additional information on veterans' use of
psychiatric beds in VA's existing Florida hospitals and the types of
psychiatric care that VA plans to provide in its proposed hospital in
Brevard County. 


      USING THE FORMER NAVAL
      HOSPITAL'S CAPACITY TO
      PROVIDE MEDICAL AND
      PSYCHIATRIC BEDS
---------------------------------------------------------- Letter :4.3

The Orlando Naval Hospital has served military beneficiaries for over
20 years.  The hospital has 153 beds that provide a range of medical
services.  On its latest survey, the Joint Commission on the
Accreditation of Hospital Organizations awarded the Naval Hospital
accreditation with commendation.\6

The hospital consists of an outpatient clinic with a large number of
services on the ground floor and three floors of hospital beds. 
Figure 4 depicts the former Naval Hospital. 

   Figure 4:  The Former Orlando
   Naval Hospital

   (See figure in printed
   edition.)

The former Naval Hospital's 153 beds could be used to meet VA's
service goals for veterans in East Central Florida.  Using VA's 1994
Integrated Planning Model, we estimated that East Central Florida
veterans could be expected to use 148 medical and surgical beds in
2005.  For our estimate, we applied veterans' use rates for the three
hospitals in Central Florida to the veteran population in the six
counties in East Central Florida, a methodology consistent with VA
planning policy.\7 This methodology assumes that East Central Florida
veterans' future use would be comparable with Central Florida
veterans' historical use. 

Using the former Naval Hospital's beds would provide a significant
opportunity for new users to access VA's hospital beds.  In 1994,
about 1 percent of East Central Florida veterans received VA care
either at VA hospitals or at community hospitals (at VA's expense). 
These veterans used an estimated 80 beds a day, which leaves a
sizable number of beds for new users.  Of the 80, about 70 were in VA
hospitals. 

East Central Florida veterans' hospital use in fiscal year 2005 will
not precisely equal the projected use based on Central Florida
veterans' historical use.  If veterans' use of the former Orlando
Naval Hospital should exceed its capacity, veterans could be referred
to one of the other Central Florida VA hospitals that have a large
supply of unused beds.  In general, this would appear to be a
short-term situation, given the decreasing veteran population and
VA's shifting emphasis from inpatient to outpatient services.  If
veterans' use is lower than estimated, there would be unused beds and
VA could convert them to other uses, such as nursing home care. 


--------------------
\6 The 3-year accreditation expired on October 9, 1994, and the Navy
pulled its renewal application.  In June 1995, the Navy transferred
the hospital to VA. 

\7 VA's policy of using local VA hospital use rates appears
reasonable because it provides the best available measure of usage by
a population that is likely to resemble the target population. 


   CONSTRUCTING THE BREVARD VA
   HOSPITAL APPEARS UNJUSTIFIED
------------------------------------------------------------ Letter :5

VA's justification for the hospital in Brevard County is based on
questionable work load assumptions that if unfulfilled could result
in a large supply of unused beds.  In addition, VA did not adequately
consider the potentially significant effect that the decreasing
veteran population may have on veterans' long-term use.  Nor did VA
adequately consider the effect that this hospital will likely have on
unused beds at existing VA and community hospitals in Central
Florida. 


      VETERANS' PAST USE OF VA
      HOSPITALS INADEQUATELY
      CONSIDERED
---------------------------------------------------------- Letter :5.1

VA's decision to build 470 medical, surgical, and psychiatric beds in
the Brevard hospital is based on the assumption that East Central
Florida veterans' demand for care will equal veterans' use of VA
hospitals nationwide.  By using national VA hospital use rates from
its 1993 Integrated Planning Model, VA estimated that veterans in
East Central Florida would use 360 beds in fiscal year 2005.  VA
added an additional 110 beds based on its decision that Brevard would
be a statewide resource for psychiatric care. 

VA rarely uses national VA hospital use rates as a substitute for
veterans' local hospital use rates when projecting potential future
hospital use.  National VA hospital use rates are almost 50 percent
higher than the rates at which Central Florida veterans use existing
VA hospitals.  For example, veterans' estimated use would be 199 beds
(148 medical and surgical and 51 psychiatric beds), based on Central
Florida veterans' past use of the three VA hospitals. 


         VA'S USE OF NATIONAL
         RATES NOT ADEQUATELY
         JUSTIFIED
-------------------------------------------------------- Letter :5.1.1

VA asserts that East Central Florida veterans' use will equal
veterans' national use because it assumes that Florida veterans' past
use was suppressed because of the lack of adequate resources in the
state and the geographic inaccessibility of VA facilities.  VA
concluded that resources were inadequate based largely on a bed-
availability analysis in which VA showed that the number of VA
hospital beds available for Florida veterans was below the national
average--about 1.40 beds per 1,000 Florida veterans compared with
2.02 beds per 1,000 veterans nationwide. 

We do not believe that this comparative analysis demonstrates that
resources are inadequate.  As previously discussed, there are over
500 unused beds in VA's Central Florida hospitals and the hospitals
have converted 263 beds for outpatient care and other uses.  Also, VA
hospitals in Central Florida do not have waiting lists.  In addition,
VA hospital officials told us that sometimes elective surgeries might
have to be delayed or some veterans referred to other hospitals, but
the veterans get the care they need.  Finally, VA's Central Florida
hospitals reported providing or scheduling more discretionary
veterans\8 for hospital care in 1993 on average than other VA
hospitals nationwide (see fig.  II.3). 

These factors suggest that the availability of VA hospital beds may
not be a key factor affecting veterans' use of VA hospitals in
Florida.  In this regard, VA has not adequately considered other key
factors that may explain lower use rates for Florida veterans. 
Without information on these factors, VA's need to build a 470-bed
hospital is uncertain.  Among the factors that we believe are likely
to have contributed to Florida VA hospitals' lower utilization rates
are differences among Florida veterans' health status, economic
status, and insurance coverage and those of veterans nationwide.  For
example, Florida has the third largest total Medicare population;
about 40 percent of Florida veterans are eligible for Medicare, which
affords them choices for selecting health care providers. 

In addition, the rate disparities may be attributable to differences
in the availability of private sector health care among Florida and
other states.  For example, 15 percent of Florida's Medicare
beneficiaries are enrolled in health maintenance organizations; only
four other states have a higher percentage.  Such enrollment reduces
or eliminates the cost differences (copayments) between VA and
private providers. 

Also, the disparity may be related to differences in operating
practices among VA's hospitals in Florida and its hospitals in other
states.  For example, our visits to the three Central Florida
hospitals suggest that these hospitals may be more aggressively
adopting private sector efficiency initiatives, such as shifting
inpatient care to lower-cost outpatient settings or shortening
lengths of hospital stays by moving patients to alternative settings. 


--------------------
\8 Higher-income veterans who have no medical condition related to
military service. 


         VA'S 1983 STUDY
         OVERESTIMATED BED NEED BY
         USING NATIONAL RATES
-------------------------------------------------------- Letter :5.1.2

The reliability of national use rates as an indicator of future bed
use in Florida also seems to be undermined by the results of VA's
1983 study of veterans' bed needs in Florida.  VA's Final Report on
Future Bed Need and Potential Sites for New VA Hospitals in Florida
significantly overestimated the number of beds needed.  At the time
of its report, VA had 2,916 hospital beds in Florida.  The report
estimated that veterans would need 5,037 beds in VA hospitals in the
state in 1995, an increase of 2,121 beds. 

By 1994, however, VA reported having 2,642 beds in Florida--274 fewer
beds than were cited in VA's report.  Of the 2,642 beds, veterans
used, on average, 1,722 beds a day in VA hospitals in Florida,
leaving 920 beds unused.  With the new 400-bed hospital in West Palm
Beach, VA has a total of 3,042 hospital beds in Florida.  Our review
of the report has identified two factors that may help to explain
this disparity. 

First, VA deviated from its policy of using local VA hospital
utilization rates (for example, those for Florida), and instead used
nationwide average utilization rates for VA hospitals to project the
future need for hospital beds in Florida.  Because the average VA
national rates were higher than Florida's rates, VA's report
contained bed estimates that were higher than they would have been if
rates for Florida had been used. 

Second, VA's report relied solely on historical use to estimate
future use.  However, changes in medical practice have occurred, such
as reduced lengths of stay and shifts from inpatient to outpatient
care.  These and other changes, in the nation's rapidly evolving
health care delivery practices have contributed to a considerable
reduction in hospital bed use. 

To achieve the increased utilization in VA's report, Florida VA
hospitals would have needed to serve a larger share of the veteran
population than they previously did.  In our view, the hospitals were
unable to achieve the expected level of utilization growth, possibly
because VA could not attract enough new veterans or the changing
nature of medical care delivery may have reduced veterans' need for
hospital care. 


      DECREASING VETERAN
      POPULATION NOT ADEQUATELY
      CONSIDERED
---------------------------------------------------------- Letter :5.2

VA has evaluated the future use of its Brevard hospital by East
Central Florida veterans through the year 2005, about 5 years after
the Brevard hospital is expected to open.  Using 2005 as the target
planning year gives VA its highest estimate of future use.  By using
the year 2005 without any adjustments for the expected future
decrease in veteran population and increased emphasis on outpatient
care, VA has essentially assumed that hospital usage will remain
fixed over the useful life of the hospital.  This would require the
hospital to attract an increasingly larger share of a decreasing
veteran population that will be receiving outpatient care intended to
keep patients out of the hospital. 

VA's proposed hospital in Brevard can be expected to have a 25- to
45-year useful life, based on the operating experiences of other VA
hospitals.  Even if veterans' use meets VA's expectations in 2005, it
seems likely, based on VA's estimates, that the Brevard hospital will
face a decreasing work load for most of its useful life.  This would
result in an increasing supply of unused beds, as is now being
experienced by the three VA hospitals in Central Florida as well as
others throughout the nation.  If veterans' use falls below VA's
expectations, the surplus of unused beds will be exacerbated. 


      EFFECTS ON EXISTING
      HOSPITALS NOT ADEQUATELY
      CONSIDERED
---------------------------------------------------------- Letter :5.3

VA has not adequately evaluated the economic impact of shifting large
numbers of veterans from private care and other VA hospitals to
Brevard.  As previously discussed, East Central Florida veterans used
about 70 beds a day in VA hospitals during 1994.  Thus, VA hospitals
would appear to lose this work load because the veterans could be
expected to use the Brevard hospital, which would be closer to their
residence. 

Moreover, many new veterans will need to use the Brevard hospital in
order to fill the remaining 400 beds.  Because these veterans would
likely use community hospitals in the absence of Brevard, the local
hospitals may realize a comparable decrease in work load.  Currently,
these hospitals have over 2,300 unused beds, on average, with almost
all 22 local hospitals reporting occupancy rates of 56 percent or
lower. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

VA's decision to convert the former Orlando Naval Hospital to a
nursing home and build a new hospital in Brevard County was driven by
its Integrated Planning Model data.  VA's plans, however, rely on
several questionable assumptions concerning the future availability
and use of hospital and nursing home beds in Central Florida. 
Foremost of these is VA's assumption that its proposed hospital in
Brevard County will serve almost twice the number of veteran users as
are now served in existing VA hospitals in Central Florida.  VA's
ability to attract such a large supply of new users appears
uncertain, given the large supply of unused hospital beds in VA and
private hospitals in Central Florida as well as the decreasing
veteran population and the rapid shifting of medical care from
inpatient to outpatient settings.  Such uncertainties subject VA to
the risk of spending federal dollars to build a hospital with a large
supply of beds that may not be used in future years. 

VA's use of lower-cost alternatives could meet its service delivery
goals and would also avoid the unneeded expenditure of government
resources.  For example, using available beds at the former Orlando
Naval Hospital and converting unused beds at existing VA hospitals
for psychiatric or nursing home care will reduce the risk of large
unused bed capacity at the proposed Brevard hospital, which appears
likely because of expected decreases in the veteran population and
VA's increased reliance on outpatient care to serve veterans.  Also,
this approach appears consistent with VA's new network planning
strategy, in that it will help to maintain the viability of existing
VA hospitals.  Without such planning, the existing VA hospitals'
viability may be jeopardized by declining work loads associated with
a shifting of veterans to the new Brevard hospital. 


   RECOMMENDATIONS TO THE CONGRESS
------------------------------------------------------------ Letter :7

We recommend that the Congress deny VA's request for funds to
construct a new hospital and nursing home in Brevard County, Florida. 
Instead, the Congress should direct the Secretary of Veterans Affairs
to develop a lower-cost alternative that reflects a network planning
strategy.  In this regard, the Secretary should consider using
available beds at the former Orlando Naval Hospital, converting
unused medical and surgical beds at existing hospitals for
psychiatric use, and purchasing care in community nursing homes when
beds are unavailable in existing VA nursing homes. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

We obtained comments on a draft of this report from VA officials,
including the Deputy Under Secretary for Health.  The officials
disagreed with our overall conclusion that there is a more prudent
and economical way to achieve VA's service delivery goals in Central
Florida than building a new 470-bed hospital and 120-bed nursing home
in Brevard County and converting the former Naval Hospital in Orlando
to a nursing home.  They stated that their planning efforts clearly
documented the need for a new hospital in Brevard to provide access
to care for a veteran population that currently does not have
reasonable access and gave strong justification for additional
nursing home beds in East Central Florida by the year 2005. 


      NURSING HOMES
---------------------------------------------------------- Letter :8.1

VA specifically disagreed that it should be able to obtain 240 beds
by contracting with community nursing homes.  Rather, VA strongly
contends that the beds will not be available.  This difference of
opinion revolves around the soundness of two key assumptions as well
as concerns over the adequacy of VA's survey of current and future
community nursing home beds.  As previously discussed, VA assumes
that more than 6,856 beds will always be unavailable to VA because
they were occupied at the time of VA's survey and that 215 empty beds
in homes will always be unavailable to VA because the homes have
occupancy rates of 95 percent or higher.  VA agreed that its survey
had missed homes but argues that the 580 beds would have been
unavailable because the homes had an occupancy rate of 95 percent or
higher.  On this basis, VA determined that it could obtain only 105
beds for veterans in community nursing homes. 

VA's assertion does not appear sound given the large number of
community nursing home beds in East Central Florida.  At the time of
its nursing home survey, VA was using about two-tenths of 1 percent
of the 7,100 existing community beds.  At issue is whether VA could
increase its use to 3 to 4 percent (240 beds) of these beds.  Our
report clearly demonstrates that hundreds of beds in community
nursing homes will become available during each year and that VA has
a reasonable opportunity to secure needed nursing home beds for
veterans.  Should this demand exceed supply, our evidence suggests
that it is likely that more community nursing homes will be built;
thereby providing beds for veterans and nonveterans.  VA assumed that
it is the one responsible to build new nursing home bed capacity,
rather than allowing the private sector to provide the beds as
needed. 

VA agreed with us that occupied beds will turn over during a year,
but VA asserts that such turnover will be infrequent.  VA officials
stated that patient stays in Florida nursing homes average 247 days a
year.  We believe that it is misleading to use an average length of
stay when assessing nursing home turnover.  This is because patients
with long stays tend to skew the average.  As previously discussed,
about one-half of the patients admitted to community nursing homes
stayed fewer then 83 days, according to the latest government survey
of nursing homes.\9 We used the median duration of nursing home stays
because it represents one-half of all patients that used nursing
homes.  The study that we cited had reported an average length of
stay of 401 days. 

VA stated that it excluded the 215 empty community nursing home beds
because the maximum occupancy rate for efficient operation of a
nursing home in VA and the private sector is 95 percent.  The 60
nursing homes in East Central Florida had an average occupancy rate
of 96 percent, and 50 had rates over 95 percent.  Given the community
nursing homes' operating practices, it seems reasonable that VA would
be able to place some veterans in these beds.  Therefore, VA should
not exclude such beds from its consideration when planning for
nursing home care.  These beds seem to be a resource that can be used
by VA. 

VA also stated that its methodology adequately considered future
construction of new community nursing homes.  For East Central
Florida, VA's methodology for factoring in new community nursing home
construction resulted in an increased use of 14 additional community
nursing home beds.  As discussed in our report, East Central Florida
has 7 additional community nursing homes with a capacity of 900 beds
that VA had not included in its survey.  In addition, in 1994 the
state of Florida approved for construction 1,546 additional community
nursing home beds for East Central Florida.  We do not believe that
VA's addition of 14 community nursing home beds adequately considers
new community nursing home beds. 


--------------------
\9 The National Nursing Home Survey:  1985 Summary for the United
States (1989), p.  68. 


      HOSPITAL CARE
---------------------------------------------------------- Letter :8.2

VA disagreed that there was a lower-cost way to improve veterans'
access to VA inpatient care than to construct a new hospital in
Brevard.  VA expressed concern that we reached our conclusions based
on misleading use of data.  First, VA questioned our analysis of
hospital bed use at the three existing hospitals in Central Florida
and its usefulness in evaluating lower-cost alternatives to meet VA's
service goals in Central Florida.  Second, VA questioned our use of
data on unused beds in community hospitals.  Third, VA questioned our
assumption that unused beds in VA hospitals will increase over time. 

VA pointed out, and we agree, that providing VA hospital beds in East
Central Florida would give veterans more reasonable access to VA
inpatient care than now exists.  VA stated that our references to
unused beds in the three existing hospitals leave the impression that
those hospitals are readily accessible to veterans in East Central
Florida.  It is not our intent to suggest that the three VA hospitals
are readily accessible and we have added the distances between the
hospitals and East Central Florida to the report.  Rather, our
analysis shows that there are beds available for East Central Florida
veterans if they desire to use them. 

However, we intended to demonstrate that the former Orlando Naval
hospital would give veterans more reasonable access to VA inpatient
care than now exists.  Moreover, our analysis shows that the
availability of unused beds in the three existing VA hospitals, when
used in conjunction with the former Naval Hospital, could
substantially enhance the availability of inpatient care to East
Central Florida veterans. 

Our assessment of veterans' use of the existing VA hospitals in
Central Florida was twofold.  First, we examined veterans use of
existing VA hospitals in Central Florida to have a basis for
assessing the adequacy of VA's projections of veterans' future demand
for hospital beds in East Central Florida.  Historical use data for
existing VA hospitals show that VA's use of national rather than
local use rates may greatly overestimate the potential use of the
proposed hospital in Brevard.  Second, we identified unused beds in
VA's existing Central Florida hospitals to determine the potential
bed capacity that could be available for (1) referrals if demand
exceeds the capacity of the planned hospital in Brevard or the former
Orlando Naval Hospital or (2) conversion for other uses, such as
psychiatric care. 

VA stated that it was unclear why we used a work load projection
methodology focusing on three existing VA hospitals in Central
Florida.  VA asserts that our analysis was not focused on the same
planning assumptions used by VA, which focused on East Central
Florida demographics.  We used VA's work load projection methodology
without adjustment.  We did, however, apply different veteran
utilization data to VA's East Central Florida demographics; that is,
we used historical use rates for three existing VA hospitals in
Central Florida, while VA used historical VA hospital use rates for
veterans nationwide.  As our report shows, the number of beds
projected based on national rates is about double the number of beds
projected based on local rates. 

VA stated that we have overestimated the numbers of unused beds in
existing VA hospitals.  VA contends that there are 158 available
unused beds rather than the 535 beds we cited.  VA's adjustment is
based on (1) an occupancy rate of 85 percent, which it states is the
maximum occupancy rate for operating an efficient hospital, and (2)
1,433 beds in-service at the three existing VA hospitals.  While we
recognize that using an 85-percent occupancy rate standard may
provide a reasonable means of estimating unused beds, we believe that
it should be applied to the hospital's total bed capacity rather than
to just those beds now in-service.  In this regard, VA's three
hospitals had 162 beds out of service.  Using VA's suggested
methodology, this would result in about 300 unused beds in the three
hospitals rather than the 158 VA estimated.  In any case, our
assessment of unused beds was intended to determine whether beds
would be available for referrals from Brevard or the former Orlando
Naval Hospital or for conversion to other uses, such as psychiatric
care.  By either VA's or our estimate, a significant number of beds
appear to be available for those purposes. 

VA also questioned whether the number of unused beds will increase
over time.  VA stated that whether this will occur due to unresolved
issues of health care and eligibility reform or VA's initiatives to
improve patient privacy and increase ambulatory care activities is
not known.  Our position that unused beds will increase is based on
VA's future bed use estimates derived from its 1994 Integrated
Planning Model.  We share VA's concern about the potential effects of
such outside factors on the accuracy of its bed projections.  As
discussed in our report, such uncertainties raise concerns about the
usefulness of basing VA's estimate of future bed needs solely on
veterans' historical use of VA facilities. 

VA also expressed concern that our estimate of 2,300 unused beds in
local community hospitals was overstated for the same reasons as
previously expressed for VA's unused beds.  VA also stated that these
beds may not be totally suitable for its use.  Our discussion of
community beds was focused on the potential economic impact of VA
adding more hospital beds in areas that appear to have excess beds
and VA's failure to consider such impact in its planning process. 


      PSYCHIATRIC SERVICES
---------------------------------------------------------- Letter :8.3

VA disagrees that "unused" beds at VA hospitals in Tampa, Bay Pines,
and Gainesville, Florida, could be converted to meet estimated
psychiatric bed needs.  VA states that there are not enough beds in
contiguous space available at these VA hospitals to meet the
projected need of 230 psychiatric beds, which are proposed for
inclusion in the Brevard facility.  Second, VA states that the
psychiatry programs planned at Brevard are not comparable to care now
provided at existing Florida VA hospitals. 

VA has 10 years to convert beds at its existing hospitals in order to
achieve projected use of 230 psychiatric beds proposed for Brevard in
the year 2005.  While we agree that there are not now 230 unused beds
in contiguous space at any one hospital, more beds will become
available if VA's inpatient work load continues to decrease as it has
over the last 4 years.  We believe that VA has the flexibility to
consolidate wards at each hospital to provide a portion of the 230
beds.  This would appear to better meet veterans' needs, because VA
expects the veterans to travel from all over the state of Florida to
use Brevard's psychiatric beds. 

The existing VA hospitals provide some of the same services proposed
for Brevard even though these services are not available as separate
programs.  In discussing these programs with the officials of the
existing hospitals, we found that they were planning to introduce
some of the programs planned for Brevard or believed that they could
introduce them if resources were available. 

In addition, VA may not need to provide hospital beds to serve
chronically mentally ill veterans.  Three of the four programs
designed for the chronically mentally ill (a total of 80 long-term
care beds) are residential treatment programs.  These residential
psychiatric treatment programs may be on VA medical center grounds or
on VA-owned, -rented, or -donated property in the community,
according to VA's manual for mental health programs; that is, this
care is not considered to be hospital care. 


---------------------------------------------------------- Letter :8.4

We are sending copies of this report to the Secretary of Veterans
Affairs; the President of the Senate and the Speaker of the House of
Representatives; the Senate and House Committees on Veterans'
Affairs; the Senate and House Committees on Appropriations; and other
interested parties.  We also will make copies available to others
upon request. 

Please call me on (202) 512-7101 if you or your staff have any
questions concerning this report.  Contributors to this report are
listed in appendix VI. 

Sincerely yours,

David P.  Baine
Director, Health Care Delivery
  and Quality Issues


OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I

Representative Bill McCollum asked us to examine VA's acquisition of
the former Orlando Naval Hospital and its intended use for this
facility.  More specifically, he questioned whether the conversion of
the former Naval Hospital to a nursing home is the most economical
and prudent use of resources.  Also, he asked us to explore available
options and, if possible, suggest a more prudent and economical way
for VA to meet its service delivery goals for Florida veterans. 

We reviewed VA's policies and procedures and discussed them with
officials in VA's headquarters and its southern region and Florida
hospitals.  We visited VA's Central Florida facilities-- in Tampa,
Bay Pines, and Gainesville--and the former Orlando Naval Hospital and
discussed operating procedures and practices with directors,
associate directors, and their staff. 

We used VA's data from various soures, such as its Summary of Medical
Programs, bed availability reports, Integrated Planning Model,
Distributed Population Planning Base, strategic management planning
documents, Five Year Medical Facility Development Plans, budget
submissions, annual reports, and medical center documents. 

We also reviewed several VA studies, including

  A Thirty Year Study of the Needs of Veterans in Florida, December
     1982;

  Final Report on Future Bed Need and Potential Sites for New VA
     Hospitals in Florida, June 1983;

  Florida VA Health Care Plan, July 1991;

  East Central Florida Siting Options, September 1991;

  Psychiatric Program Needs in Florida, Results of a Comprehensive
     One-Day Survey, December 1992; and

  Study for Conversion of Orlando Naval Hospital to VA Satellite
     Outpatient Clinic and 120 Bed Nursing Home Care Unit, July 1993. 

To assess VA's nursing home planning for Central Florida, we reviewed
its planning methodology, assumptions, and data.  We reviewed VA's
1993 Community Nursing Home survey and VA's nursing home directives
and guidance.  We interviewed VA's nursing home planners in VA's
central office and its southern region.  In addition, we interviewed
chiefs of social work services at the VA hospitals in Tampa, Bay
Pines, and Gainesville and reviewed their nursing home data.  We
obtained nursing home cost data from the southern region and other VA
documents.  In addition, we contacted Florida state officials from
the Agency for Health Care Administration and the Certificate of Need
Office to obtain information about community nursing home beds
approved for construction and the state's future plans to approve
additional community nursing home beds.  Also, we contacted Florida
state officials from the Department of Veterans Affairs to determine
its future plans for constructing additional state nursing home beds. 

Veterans from East Central Florida are included in service areas of
the VA hospitals in Gainesville, Tampa, and Bay Pines.\10 To
determine the total number of VA hospital beds available in these
hospitals, we reviewed VA's data, interviewed VA officials from these
hospitals, and toured each hospital to observe closed and converted
hospital beds.  Also, we obtained documents from each facility
explaining the changes in the number of beds over time.  In addition,
we obtained information from VA's reports on the number of hospital
beds used by veterans on an average daily basis over the last 4
years.  We compared the total number of hospital beds available with
the number of beds used on an average annual daily basis to determine
the estimated number of unused\11

beds at these VA hospitals.  Unused VA hospital beds include beds in
operating and closed wards. 

VA uses its Integrated Planning Model to project future veteran
inpatient, outpatient, and nursing home work loads.  The model
assists VA in determining the future size and scope of VA health
care, developing construction and operational plans, and contributing
data for budget requests.  The model is applied at the
facility-specific level.  The model is primarily driven by three
variables:  veterans' ages, average lengths of hospital stays for
selected medical services (for example, surgery or psychiatry), and
number of patients treated in the selected medical services.  VA
requires that any deviations must be quantitatively justifiable. 

To compare the number of available VA hospital beds to the expected
future veteran demand for VA hospital care in Gainesville, Tampa, and
Bay Pines, we used the results from VA's 1994 Integrated Planning
Model.  We totaled the VA model's estimates of the number of future
hospital beds for each of these facilities to determine veterans'
future demand for Central Florida hospital beds in the years
1995-2010 (in 5-year increments).  The difference between the number
of VA hospital beds available today and the total estimated future
demand equals the estimated surplus or shortage of VA hospital beds
in the future. 

For estimating the number of future hospital beds for its new
hospital in Brevard County, VA used its national historical hospital
use rates.  To update VA's estimate based on its 1993 Integrated
Planning Model, we used more current information from VA's 1994
Integrated Planning Model and applied it to the veteran population in
VA's defined service area for the hospital in Brevard County.  In
addition, we combined VA's 1994 Integrated Planning Model results
(based on historical facility usage) for Tampa, Bay Pines, and
Gainesville to estimate the future number of beds for VA's proposed
hospital in Brevard County if veterans in the future continue to seek
hospital care at the same level as they have in the past.\12

VA's proposed hospital in Brevard will serve as a statewide
psychiatric resource for Florida.  To assess and compare psychiatric
services at the VA hospitals in Tampa, Bay Pines, and Gainesville and
VA's planned psychiatric services for its hospital in Brevard County,
we interviewed the chiefs of psychiatric services at the hospitals,
VA's regional planners, the psychiatric consultant for the region who
is designing the services for VA's hospital in Brevard (VA's chief of
psychiatry in Dallas).  We reviewed VA manuals and studies pertaining
to psychiatric services and toured psychiatric wards in Tampa, Bay
Pines, and Gainesville. 

In addition, we interviewed chiefs of psychiatry to gain an
understanding about caring for long-term psychiatric patients and to
identify studies that may assist in estimating the number of
long-term care patients that may need hospital beds.  In addition, we
interviewed the chiefs of psychiatry at VA's psychiatric hospitals in
Tuscaloosa, Alabama, and Augusta, Georgia, to obtain information
about bed availability and acceptance of patients from outside their
service areas.  These hospitals also serve as referral centers for
Florida veterans.  Also, we interviewed officials from the four
Florida state psychiatric hospitals about current and future bed
availability. 

We used three basic criteria to guide our assessment of VA's prudent
and economical use of resources in East Central Florida.  First, VA
should make the best use of existing space before constructing new
space.  Second, VA should purchase from private providers rather than
constructing new facilities if needed services can be purchased at a
cost savings.  Third, VA should design new construction to meet
veterans' expected use over a facility's useful life as efficiently
and effectively as possible. 

We conducted our review between June 1994 and June 1995 in accordance
with generally accepted government auditing standards. 


--------------------
\10 VA's hospital in Bay Pines provides psychiatric care to some East
Central Florida veterans, but no medical care. 

\11 Neither VA hospitals nor community hospitals operate at 100
percent occupancy.  VA's ideal occupancy rate for (1) acute care
hospital beds is 85 percent, (2) intermediate care beds is 90
percent, and (3) nonacute care beds is 95 percent.  VA hospitals have
a combination of these beds. 

\12 VA's policy of using local VA hospital use rates appears
reasonable because it provides the best available measure of usage by
a population that is likely to resemble the target population. 


AVAILABILITY OF VA HOSPITAL BEDS
IN CENTRAL FLORIDA
========================================================== Appendix II

Central Florida VA hospitals are located in Bay Pines, Tampa, and
Gainesville.  The current service areas for these hospitals include
the veterans from East Central Florida. 

Recent VA experience shows that: 

  hospital bed use is declining,

  hospital beds are unused, and

  the number of unused VA hospital beds is expected to increase in
     future years. 


   VA HOSPITAL BED USE DECLINING
-------------------------------------------------------- Appendix II:1

VA hospital bed use in Central Florida declined steadily between 1991
and 1994.  The decline in bed use affects medicine, surgery, and
psychiatry, as the figures below illustrate. 

   Figure II.1:  Decline in
   Central Florida VA Medical and
   Surgical Hospital Beds Occupied
   (Fiscal Years 1991-94)

   (See figure in printed
   edition.)

   Figure II.2:  Decline in
   Central Florida VA Psychiatric
   Hospital Beds Occupied (Fiscal
   Years 1991-94)

   (See figure in printed
   edition.)

Almost all veterans receiving hospital care in Central Florida had
medical conditions related to military service or low incomes. 
However, VA's Central Florida hospitals reported providing/scheduling
more discretionary veterans\13 for hospital care in 1993 than other
VA hospitals, on average, nationwide, as figure II.3 shows. 

   Figure II.3:  Percent of VA
   Applications for Discretionary
   Hospital Care
   Received/Scheduled Higher for
   Central Florida Than Nationwide
   (Fiscal Year 1993)

   (See figure in printed
   edition.)

While the veteran population was decreasing nationwide during fiscal
years 1991 to 1994, the veteran population in Central Florida
remained stable, as figure II.4 shows. 

   Figure II.4:  Central Florida
   Veteran Population (Fiscal
   Years 1991-94)

   (See figure in printed
   edition.)

Today, VA places greater emphasis on treating veterans more
efficiently through outpatient clinics rather than through more
expensive VA hospital care.  During fiscal years 1991 to 1994 when
the veteran population was stable and VA hospital use was declining
in Central Florida, the number of outpatient visits increased, as
shown in figure II.5

   Figure II.5:  VA Outpatient
   Visits Increased in Central
   Florida (Fiscal Years 1991-94)

   (See figure in printed
   edition.)


--------------------
\13 Higher-income veterans who have no medical condition related to
military service. 


   LARGE SUPPLY OF UNUSED VA BEDS
-------------------------------------------------------- Appendix II:2

In its 1983 Final Report on Future Bed Need and Potential Sites for
New VA Hospitals in Florida, VA reported a need for additional
hospital beds in Florida.  Since then, however, the Central Florida
VA hospitals converted 263 hospital beds to other uses, most of them
for ambulatory services.  The conversions reduced their total bed
capacity from 1,858 to the present 1,595 beds. 

In addition, as a result of the steadily declining inpatient work
loads, the VA hospitals in Central Florida have unused beds.  If
veterans' hospital usage continues at the 1994 level (average 1,060
hospital beds daily), 535 of the 1,595 VA hospital beds may be unused
in fiscal year 1995. 

All three Central Florida VA hospitals reported having unused beds,
as shown in table II.1. 



                         Table II.1
          
             Central Florida Unused VA Beds, by
                          Hospital

              1994 average
VA               beds used    Average beds      1995 total
hospital             daily    unused daily            beds
----------  --------------  --------------  --------------
Bay Pines              400             169             569
Gainesvill             271             202             473
 e
Tampa                  389             164             553
Total                1,060             535           1,595
----------------------------------------------------------
The unused VA hospital beds are in each of its hospital services, as
depicted in figure II.6. 

   Figure II.6:  Central Florida
   Unused VA Beds, by Hospital
   Service

   (See figure in printed
   edition.)


   UNUSED VA HOSPITAL BEDS
   EXPECTED TO INCREASE
-------------------------------------------------------- Appendix II:3

VA planning data projects that the future veteran population in
Central Florida will be decreasing.  Figure II.7 shows the future
veteran population estimates through fiscal year 2010. 

   Figure II.7:  Estimated
   Decrease in Central Florida
   Future Veteran Population
   (Fiscal Years 1995-2010)

   (See figure in printed
   edition.)

The veteran population nationwide began decreasing (1980) 14 years
before Central Florida (1994).  The veteran population in Central
Florida is expected to decrease at a slower rate from 1995 to 2005
compared with the national rate. 

VA's 1994 Integrated Planning Model estimates that the hospital bed
use at its three facilities in Central Florida will be declining over
the next 15 years.  Figure II.8 shows that the number of unused VA
hospital beds is expected to increase.  The increase is depicted as
the gap between the two lines in figure II.8. 

   Figure II.8:  Estimated
   Increase in Unused VA Hospital
   Beds in Central Florida (Fiscal
   Years 1995-2010)

   (See figure in printed
   edition.)

The decline in future estimated beds is attributable, in part, to the
decreasing veteran population and changes in medical practice, such
as shorter lengths of stay and VA's emphasis on ambulatory care. 


VETERANS' USE OF VA'S NURSING HOME
CARE IN CENTRAL FLORIDA
========================================================= Appendix III

There are three types of nursing home providers and VA has
established target goals to guide hospitals in achieving a desired
mix among the providers.  Generally, VA discharges veterans from its
hospitals to nursing homes for rehabilitation.  VA's cost of
providing veterans nursing home care varies by type of provider. 

The number of nursing home beds that VA provides for veterans in
Central Florida has been increasing over the last 4 years.  The
nursing home bed usage increased by about 16 percent from fiscal year
1991 to 1994, as figure III.1 shows. 

   Figure III.1:  Increase in
   Central Florida Veterans' Use
   of VA Sponsored Nursing Home
   Care (Fiscal Years 1991-94)

   (See figure in printed
   edition.)

VA sponsors nursing home care through three programs:  (1) VA-owned
and -operated nursing homes, (2) contract community nursing homes,
and (3) state veterans' nursing homes.  All three programs treat
veterans with conditions that may be either service-connected or
nonservice-connected, and all can provide either skilled or
intermediate nursing home care. 


   VA NURSING HOME USE
------------------------------------------------------- Appendix III:1

VA-owned nursing homes usage increased in Central Florida.  VA has
three nursing homes in Central Florida with a total of 600 beds. 
These homes served 1,218 veterans in fiscal year 1994.  Figure III.2
shows veterans' usage of VA-owned and -operated nursing homes. 

   Figure III.2:  Central Florida
   Veterans' Use of VA-Owned
   Nursing Homes (Fiscal Years
   1991-94)

   (See figure in printed
   edition.)


   VA'S USE OF COMMUNITY NURSING
   HOMES
------------------------------------------------------- Appendix III:2

As of its 1993 survey, VA had contracts with 108 community nursing
homes in Central Florida that have a total of 13,995 beds.  In fiscal
year 1994, VA's contract nursing homes served 1,040 veterans.  Figure
III.3 shows veterans' use of community nursing homes in Central
Florida for the past 4 years. 

   Figure III.3:  Central Florida
   Veterans' Use of VA's Contract
   Community Nursing Homes (Fiscal
   Years 1991-94)

   (See figure in printed
   edition.)


   VA'S USE OF STATE NURSING HOMES
------------------------------------------------------- Appendix III:3

Florida opened its first state nursing home (120 beds) for veterans
in December 1993.  It reported that 135 veterans used 38 beds on an
average daily basis for fiscal year 1994.  The home is expected to
reach its normal operating capacity in fiscal year 1995. 


   VA'S GOAL FOR NURSING HOME USE
------------------------------------------------------- Appendix III:4

In Central Florida, VA provides much more of the veterans' nursing
home care in its own homes than it pays for in the community or state
homes.  VA nursing home care is more expensive than the other two
programs.  VA's nursing home goals are to provide 30 percent of the
care in VA homes, 40 percent in community homes, and 30 percent in
state homes.  Figure III.4 shows the percentage of nursing home care
that veterans received by type of provider in 1994. 

   Figure III.4:  Percentage of
   Central Florida Veterans'
   Nursing Home Care by Type of
   Provider (Fiscal Year 1994)

   (See figure in printed
   edition.)


   COMMUNITY NURSING HOME CARE
   LESS COSTLY THAN VA NURSING
   HOME CARE
------------------------------------------------------- Appendix III:5

VA's costs of providing nursing home care to veterans varies by the
provider.  Placing veterans in state nursing homes is the cheapest to
VA, followed by community nursing homes.  The most expensive care is
provided at VA nursing homes.  VA's nationwide average costs for
providing nursing home care are shown in table III.1. 



                        Table III.1
          
              VA's Nationwide Average Costs of
          Providing Nursing Home Care (Fiscal Year
                           1994)

              Average cost    Average cost
Nursing        per patient     per patient  Average length
home                   day         treated  of stay (days)
----------  --------------  --------------  --------------
State                  $31          $6,989             222
Community              106          11,708             110
VA                     207          32,371             156
----------------------------------------------------------
According to VA, nursing home costs are higher in VA than in
community nursing homes because

  VA nursing homes are hospital based, with all the clinical
     resources available;

  VA has a much higher ratio of registered nurses;

  VA treats a much higher ratio of patients requiring skilled care;
     and

  VA pays its nurses more than do community nursing homes. 

The state veterans' nursing homes provide a range of nursing home
care that is cost effective to VA in that costs are shared by VA,
veterans, and the states.  The state nursing homes are state-owned
and -operated.  VA makes per diem payments to offset part of the cost
of care for veterans residing in state homes and pays up to 65
percent of the costs of constructing or renovating state homes. 


VA'S PLANNING FOR NURSING HOME USE
IN CENTRAL FLORIDA
========================================================== Appendix IV

VA's planning for nursing home care consists of two principal
activities.  First, VA estimates veterans' future use for a target
year.  Second, VA surveys the availability of community and state
nursing homes.  VA makes its construction decisions based on a
comparison of veterans' projected use and the potential availability
of beds in community and state homes. 


   VA'S ESTIMATED FUTURE USE OF
   NURSING HOME CARE
-------------------------------------------------------- Appendix IV:1

VA has established a national nursing home care goal and VA makes
construction decisions to build new VA facilities based on future
demand estimates required to meet that goal.  Veterans' future demand
for nursing home care is based on the premise that veterans will
require nursing home care at the same rate as did male civilians.\14
Using the male civilian nursing home use rate, VA applies it to the
estimated veteran population to determine the total estimated future
veteran demand for nursing home care.  VA's goal is to provide
nursing home care under VA auspices to 16 percent of the total
estimated future veteran demand--commonly referred to as VA's market
share. 

Although VA's goal is to provide 16 percent of the total estimated
future veteran demand, VA's actual share was about 9.2 percent in the
Central Florida area in fiscal year 1994.  VA's share has remained
stable over the last 4 years, as figure IV.1 shows. 

   Figure IV.1:  VA's Actual
   Nursing Home Market Share in
   Central Florida (Fiscal Years
   1991-94)

   (See figure in printed
   edition.)

The number of nursing home beds needed in East Central Florida
depends on whether veterans will continue to use Florida nursing
homes at the same rate as they have over the past 4 years or whether
their use rate will increase to the higher level that VA is
expecting.\15 Table IV.1 shows the differences in estimated demand
and bed supply shortage. 



                         Table IV.1
          
          Estimate of Nursing Home Bed Demand and
           Supply in East Central Florida (Fiscal
                         Year 2005)

                         Based on East
                     Central Florida's   Based on VA's 16-
                         actual market      percent market
                          share (beds)   share goal (beds)
------------------  ------------------  ------------------
VA demand estimate                 333                 566

VA supply estimate
----------------------------------------------------------
VA nursing homes                     0                   0
Community nursing                  138                 138
 homes
State nursing                      120                 120
 homes
VA supply shortage                  75                 308
----------------------------------------------------------

--------------------
\14 U.S.  Department of Health and Human Services, Public Health
Service, Centers for Disease Control, National Center for Health
Statistics, The National Nursing Home Survey:  1985 Summary for the
United States, Hyattsville, Md.  (1989). 

\15 In general, Florida nursing home use is about one-half of the
national average for all types of persons.  Florida's lower
utilization rate is likely caused by several factors, such as a more
healthier population. 


   VA'S SURVEY OF COMMUNITY
   NURSING HOME BED AVAILABILITY
   IN EAST CENTRAL FLORIDA
-------------------------------------------------------- Appendix IV:2

During 1993, VA evaluated 71 community nursing homes in East Central
Florida.  VA made judgments about future availability of 8,435
community nursing home beds based on the homes' occupancy rates,
personal knowledge, or by contacting selected homes.  Table IV.2
shows the results of VA's assessment in East Central Florida. 



                         Table IV.2
          
          Licensed Community Nursing Home Beds in
                    East Central Florida

                                              Nursing home
                                                      beds
------------------------------------------  --------------
Licensed community                                   8,435
VA determined occupied                               8,020
VA determined empty                                    415
VA determined unsuitable                               310
Suitable for future use                                105
----------------------------------------------------------
VA determined that 11 community nursing homes in East Central Florida
that had 1,259 beds were not suitable for placing veterans because
these homes (1) were not interested in contracting with VA or (2) did
not meet VA standards.  This reduced the number of potential
community nursing homes to 60 and the number of beds to 7,176. 

VA determined that the remaining 60 homes in East Central Florida
would be able to provide 105 beds in the future.  VA excluded from
its consideration for future use the remaining beds based on two
questionable assumptions concerning bed availability.  First, VA
assumed that beds occupied at the time of its survey would not be
available for VA's future use.  Second, VA assumed that a nursing
home was fully occupied if it had an occupancy rate of 95 percent or
higher.  The numbers of occupied and empty community nursing home
beds in East Central Florida are shown in table IV.3. 

VA excluded 6,856 community nursing home beds in East Central Florida
from its consideration based on its assumption that beds occupied
would not be available for future VA use.  Patient turnover in
community nursing homes provides VA opportunities to place veterans
in some of these beds. 



                         Table IV.3
          
          Community Nursing Home Beds Potentially
           Available for VA's Use in East Central
                          Florida

             Community
               nursing    Occupied
                 homes        beds  Empty beds  Total beds
----------  ----------  ----------  ----------  ----------
VA                  22       2,609         113       2,722
 contract
Contacted/           5         503         109         612
 willing
Not                 33       3,744          98       3,842
 contacted
 or
 assessed
==========================================================
Total               60       6,856         320       7,176
----------------------------------------------------------
Source:  VA's 1993 survey. 

VA excluded 215 of the 320 empty community nursing home beds from its
consideration based on its assumption that community nursing homes
are fully occupied at 95-percent capacity.  Of the 215 empty beds, 86
were in community nursing homes that had contracts with VA.  VA's
determination of available and unavailable empty community nursing
home beds is shown in table IV.4. 



                         Table IV.4
          
           VA's Determination of Empty Community
             Nursing Home Beds in East Central
                          Florida

             Community              Empty beds
               nursing  Empty beds  unavailabl       Total
                 homes   available           e  empty beds
----------  ----------  ----------  ----------  ----------
VA                  22          27          86         113
 contract
Contacted/           5          78          31         109
 willing
Not                 33           0          98          98
 contacted
 or
 assessed
==========================================================
Total               60         105         215         320
----------------------------------------------------------
Source:  VA's 1993 survey. 


      ADDITIONAL COMMUNITY NURSING
      HOME BEDS IN EAST CENTRAL
      FLORIDA
------------------------------------------------------ Appendix IV:2.1

VA overlooked community nursing homes in East Central Florida.  At
the time that VA conducted its survey, four nursing homes with a
total of 580 beds were inadvertently omitted from the list of homes
under consideration. 

In addition, we subsequently identified three new community nursing
homes that are operating in East Central Florida.  The three homes
have a total of 320 beds. 

The total number of community nursing home beds in East Central
Florida is 9,335, some 900 beds higher than the number VA surveyed in
1993. 


   VA'S SURVEY OF COMMUNITY
   NURSING HOME BED AVAILABILITY
   IN CENTRAL FLORIDA
-------------------------------------------------------- Appendix IV:3

During 1993, VA evaluated 322 community nursing homes in Central
Florida.\16 VA made judgments about future availability of 37,892
community nursing home beds based on the homes' occupancy rates
personal knowledge, or by contacting selected homes.  Table IV.5
shows VA's survey determinations concerning licensed community
nursing home beds in Central Florida. 



                         Table IV.5
          
          VA's Determinations Concerning Community
            Nursing Home Beds in Central Florida

                                              Nursing home
                                                      beds
----------------------------------------  ----------------
Licensed community                                  37,892
VA determined occupied                              36,475
VA determined empty                                  1,417
VA determined unsuitable                             1,035
Suitable for future use                                382
----------------------------------------------------------
Source:  VA's 1993 survey. 

VA determined that 58 community nursing homes in Central Florida that
had 6,445 beds were not suitable for placing veterans because these
homes (1) were not interested in contracting with VA, (2) did not
meet VA standards, or (3) were not Medicare/Medicaid certified.  This
reduced the number of community nursing homes to 264 and the number
of beds to 31,447. 

VA determined that the remaining 264 community nursing homes in
Central Florida would be able to provide 382 beds in the future.  VA
excluded from its consideration for future use the remaining beds
based on two questionable assumptions concerning bed availability. 
First, VA assumed that beds occupied at the time of its survey would
not be available for VA's future use.  Second, VA assumed that a
nursing home was fully occupied if it had an occupancy rate of 95
percent or higher.  The numbers of occupied and empty community
nursing home beds in Central Florida are shown in table IV.6. 



                         Table IV.6
          
          Community Nursing Home Beds Potentially
             Available for VA's Use in Central
                          Florida

             Community
               nursing    Occupied
                 homes        beds  Empty beds  Total beds
----------  ----------  ----------  ----------  ----------
VA                 108      13,357         638      13,995
 contract
Contacted/          26       2,722         396       3,118
 willing
Not                130      13,936         398      14,334
 contacted
 or
 assessed
==========================================================
Total              264      30,015       1,432      31,447
----------------------------------------------------------
Source:  VA's 1993 survey. 

VA excluded 30,015 community nursing home beds in Central Florida
from its consideration based on its assumption that beds occupied
would not be available for future VA use.  Patient turnover in
community nursing homes provides VA opportunities to place veterans
in some of these beds. 

VA excluded 1,050 empty community nursing home beds in Central
Florida from its consideration based on its assumption that community
nursing homes are fully occupied at 95-percent capacity.  Of the
1,050 empty beds, 496 were in community nursing homes that had
contracts with VA.  VA's determination of available and unavailable
empty community nursing home beds is shown in table IV.7. 



                         Table IV.7
          
           VA's Determination of Empty Community
            Nursing Home Beds in Central Florida

             Community              Empty beds
               nursing  Empty beds  unavailabl       Total
                 homes   available           e  empty beds
----------  ----------  ----------  ----------  ----------
VA                 108         142         496         638
 contract
Contacted/          26         240         156         396
 willing
Not                130           0         398         398
 contacted
 or
 assessed
==========================================================
Total              264         382       1,050       1,432
----------------------------------------------------------
Source:  VA's 1993 survey. 


--------------------
\16 The East Central Florida community nursing homes are included in
the Central Florida analyses. 


      ADDITIONAL COMMUNITY NURSING
      HOME BEDS IN CENTRAL FLORIDA
------------------------------------------------------ Appendix IV:3.1

VA overlooked community nursing homes in Central Florida.  At the
time VA conducted its survey, nine nursing homes with a total of
1,138 beds were inadvertently omitted from the list of homes under
consideration. 

In addition, we subsequently identified 15 new community nursing
homes that are operating in Central Florida.  The 15 homes have a
total of 1,534 beds. 

The total number of community nursing home beds in Central Florida is
40,564, some 2,672 beds higher than the number VA surveyed in 1993. 


      FLORIDA APPROVED
      CONSTRUCTION OF ADDITIONAL
      COMMUNITY NURSING BEDS
------------------------------------------------------ Appendix IV:3.2

VA's 1993 nursing home survey did not consider the addition of new
community nursing home beds in Florida.  The state's Certificate of
Need Office approved for construction 5,176 community nursing home
beds in the Central Florida area, 1,546 of which will be located in
East Central Florida.  The certificates of need require construction
to commence within one year from approval or the approval becomes
void.  The certificates were effective on July 1, 1994, and September
16, 1994.  When completed, these additional community nursing home
beds will be available to help VA better serve Florida veterans,
enable VA to expand its community nursing home program, and reduce
VA's need to construct new homes of its own. 


   VA'S SURVEY OF STATE NURSING
   HOME BED AVAILABILITY IN
   FLORIDA
-------------------------------------------------------- Appendix IV:4

VA's 1993 survey included consideration of the one state nursing home
in Florida.  However, officials at the Florida Department of Veterans
Affairs told us that their long-term plans include building four more
120-bed state nursing homes by 2010.  Funding for the second state
home is being discussed in the Florida legislature and the remaining
three homes are proposed for the future.  The location of the three
future state nursing homes has not been determined.  According to a
VA official, the state nursing home currently being discussed in the
state legislature will be a state home for veterans with dementia and
Alzheimer's disease. 


VA'S PROVISION OF PSYCHIATRIC CARE
IN FLORIDA
=========================================================== Appendix V

In Florida, VA has hospitals in Tampa, Bay Pines, Gainesville, Lake
City, Miami, and West Palm Beach; each hospital provides psychiatric
care.  Recent experience shows that veterans' use of psychiatric beds
has declined slightly.  The proposed VA hospital in Brevard County
will also provide inpatient psychiatric care, which appears
comparable to care now provided at VA's existing hospitals in
Florida. 

The three levels of psychiatric care traditionally identified by VA
are acute, intermediate, and long-term care.  Acute psychiatric care
is used to diagnose and stabilize psychiatric patients and has a
length of stay of about 30 to 60 days.  Intermediate care is used for
rehabilitation and transitional care and has a length of stay of up
to 90 days.  Long-term care has an indefinite length of stay and is
used for chronically mentally ill veterans. 

VA has no designated long-term care hospital psychiatric beds in its
five Florida hospitals.  Patients requiring long-term psychiatric
care are being evaluated and diagnosed in available hospital beds. 
VA attempts to transfer some of these patients either to one of
Florida's four state psychiatric facilities or to a VA psychiatric
facility out of state.  In addition, some of these patients are being
treated in VA and community nursing homes that have such capability. 
VA plans to treat some of these patients in residential programs. 


   AVAILABILITY OF PSYCHIATRIC
   BEDS IN FLORIDA HAS INCREASED
--------------------------------------------------------- Appendix V:1

The five VA hospitals in Florida operate a total of 587 psychiatric
beds.  Table V.1 shows the number of psychiatric beds in each VA
hospital. 



                         Table V.1
          
          Number of Operating Psychiatric Beds in
            Florida, by VA Hospital (Fiscal Year
                           1994)

                                               Psychiatric
Hospital location                                     beds
------------------------------------------  --------------
Bay Pines                                              149
Gainesville                                             90
Lake City                                               46
Miami                                                  182
Tampa                                                  120
==========================================================
Total                                                  587
----------------------------------------------------------
Since fiscal year 1991, the availability of psychiatric beds has
increased because veterans have used fewer beds, as shown in figure
V.1.  For fiscal year 1994, veterans occupied on average 454 beds
daily, leaving 133 beds unused. 

   Figure V.1:  Decline in Florida
   VA Psychiatric Hospital Beds
   Occupied (Fiscal Years 1991-94)

   (See figure in printed
   edition.)

VA plans to increase its number of psychiatric beds from 587 to 877. 
The new VA hospital in West Palm Beach adds 60 psychiatric beds.  The
proposed VA hospital in Brevard County will add 230 psychiatric beds. 

VA's 1994 Integrated Planning Model estimates that the psychiatric
bed use at its three facilities in Central Florida will be declining
over the next 15 years.  Figure V.2 shows that the number of unused
VA psychiatric beds is expected to increase.  The increase is
depicted as the gap between the two lines in figure V.2. 

   Figure V.2:  Estimated Increase
   in Unused VA Psychiatric Beds
   in Central Florida (Fiscal
   Years 1995-2010)

   (See figure in printed
   edition.)


      NON-VA FACILITIES PROVIDING
      LONG-TERM PSYCHIATRIC CARE
      IN FLORIDA
------------------------------------------------------- Appendix V:1.1

In addition to out-of-state VA facilities, many veterans in Florida
in need of long-term psychiatric care received this care at one of
the four state psychiatric hospitals.  In December 1992, VA
reported\17 that 414 veterans resided in the state facilities,
representing 14 percent of the total population in Florida state
hospitals.  Florida pays for this care. 


--------------------
\17 VA's study entitled, Psychiatric Program Needs in Florida: 
Results of a Comprehensive One-Day Survey (1992). 


      VA'S FOCUS SHIFTED TOWARDS
      REHABILITATION OF
      PSYCHIATRIC PATIENTS
------------------------------------------------------- Appendix V:1.2

Current VA policy emphasizes rehabilitation of psychiatric
patients.\18 Thus, VA's medical practice is shifting away from the
custodial role.  Long-term psychiatry is no longer described as a
level of VA care.  Rehabilitative programs are offered as
alternatives to long-term care.  Outpatient, residential, and
community-based treatment programs are also presented as alternatives
to inpatient psychiatric care. 

VA's policy states that a significant number of patients who now
reside in long-term care facilities may be reintegrated into the
community when a comprehensive, flexible case management policy is
implemented.  Case management is used to provide veterans with an
ongoing connection to VA so that medical, psychosocial, and
vocational services can be planned and maintained for veterans whose
symptoms affect their life management skills.  The approach for case
management involves a planned and systematic use of the full range of
VA and community services and requires a dual focus on meeting the
veterans' needs and conserving agency and community resources.  VA's
policy also states that patients should be encouraged to receive
their treatment near their homes and within one medical center. 

Although VA focuses now on rehabilitative care, it recognizes that
some patients may require prolonged hospital treatment because they
do not respond to current medications and they behave in
unpredictable and destructive ways. 


--------------------
\18 VA Manual M-2, Part X, Chapter 3:  Mental Health Programs (1993),
p.  4. 


      MORE PSYCHIATRIC SERVICES
      WILL BE PROVIDED ON AN
      OUTPATIENT BASIS
------------------------------------------------------- Appendix V:1.3

In addition to focusing on rehabilitative psychiatric care, more
psychiatric services will be provided on an outpatient basis.  These
outpatient services will be provided through clinics, residential,
and community-based care.  For example, the Chief of Psychiatry at
Bay Pines is planning to consolidate and reduce the current number of
psychiatric beds from 149 to 120 to provide more outpatient
psychiatric services.  In another example, the Psychiatric Service at
the VA hospital in Houston, Texas, adopted ambulatory care as the
main mode of treatment and integrated inpatient and ambulatory care
to provide a continuum of care. 

The state psychiatric hospitals are also considering community
programs as a viable alternative to inpatient care.  One state
hospital closed 112 beds to use the savings for community programs. 
A second hospital has diverted money in the budget towards developing
community programs, and a third hospital is considering closing beds
to use the savings for community programs. 


   PSYCHIATRIC SERVICES PLANNED
   FOR BREVARD ARE COMPARABLE TO
   EXISTING SERVICES IN CENTRAL
   FLORIDA
--------------------------------------------------------- Appendix V:2

VA's Florida network officials justify providing psychiatric beds at
the hospital planned for Brevard County on the basis that Florida
currently has a lower ratio of VA psychiatric beds to veterans than
the national average.  The hospital is intended to provide a
statewide resource of long-term care psychiatric beds that are not
currently available in VA's Florida network.  Generally, long-term
psychiatric care requires lengths of stay longer than 12 months. 
However, VA's psychiatric design consultant told us that no long-term
psychiatric hospital beds are planned for the Brevard facility. 
Instead of long-term inpatient care, residential psychiatric
treatment programs will be used when appropriate.  Furthermore, most
of the inpatient psychiatric services planned for the hospital in
Brevard are comparable to existing VA services or are planned at VA's
three facilities in Central Florida. 


      DESCRIPTION OF 230
      PSYCHIATRIC BEDS PLANNED FOR
      VA HOSPITAL IN BREVARD
------------------------------------------------------- Appendix V:2.1

The psychiatric beds planned for Brevard consist of acute,
intermediate, and long-term.  The psychiatric treatment programs
designed for long-term care patients generally have unspecified
lengths of stay.  Of the four programs, the 15-bed sustained
medical/psychiatric unit is the only inpatient program and the
defined length of stay is shorter than 12 months.  The other three
programs are residential programs (nonhospital) having a total of 80
beds; including 20 beds for a substance abuse residential
rehabilitation treatment program, 30 beds for a posttraumatic stress
disorder residential rehabilitation program, and 30 beds for a
psychiatric residential rehabilitation treatment program.  VA's
manual for mental health programs states that residential programs
may be on the VA medical center grounds or on VA-owned, -rented, or
-donated property in the community. 

The following provides a description of psychiatric services planned
for VA's hospital in Brevard County as defined in VA's manual for
mental health programs. 


      GENERAL PSYCHIATRIC UNIT (30
      BEDS)
------------------------------------------------------- Appendix V:2.2

The general psychiatric unit offers psychiatric and psychosocial
diagnosis and treatment in a hospital environment for new patients as
well as for those patients experiencing a recurrence of an illness
who cannot be assessed or treated in a lesser level of care.  The
primary objective is to provide this treatment in a relatively short
duration, such as 10 to 20 days, and occasionally 30 to 40 days, and
then assist in location of appropriate follow-up needed for
successful treatment at a less intensive level of care. 

Length of stay:  Fewer than 30 to 40 days. 


      GENERAL PSYCHIATRIC/DUAL
      DIAGNOSIS (22 BEDS)
------------------------------------------------------- Appendix V:2.3

This unit offers the same diagnosis and treatment described above but
for patients with dual diagnoses of both psychiatric and medical
problems. 

Length of stay:  Fewer than 30 to 40 days. 


      PSYCHIATRIC INTENSIVE CARE
      UNIT (PICU) (8 BEDS)
------------------------------------------------------- Appendix V:2.4

PICU offers a smaller size unit, increased staffing, security (safe
quiet/seclusion rooms), and more specialized clinical expertise than
a general psychiatric ward.  A PICU unit may be within or adjacent to
a 20 to 30 bed admitting or general psychiatric ward.  Patients
admitted to this level of care will have the most severe behavioral
problems including high suicide risk, assaultive behavior, severe
agitation, disorganized behavior secondary to psychosis, confusion,
or other severe psychiatric disorders.  Psychiatric patients with
such symptoms may be rapidly stabilized in such a unit, obviating the
need for transfer to a long-term or more secure facility often some
distance away. 

Length of stay:  Fewer than 30 to 40 days. 


      BRIEF STAY GEROPSYCHIATRIC
      UNIT (30 BEDS)
------------------------------------------------------- Appendix V:2.5

These programs are designed as part of a continuum of care for
elderly patients with depressive, organic brain (for example,
dementia), or other psychiatric disorders, including patients with
medical comorbidities.  Focus is on evaluation, stabilization, and
relatively brief stay.  Programs may include respite beds to relieve
caretakers and a brief-stay Alzheimer's/dementia unit. 

Length of stay:  Fewer than 30 to 40 days. 


      BRIEF STAY
      MEDICAL/PSYCHIATRIC UNIT (15
      BEDS)
------------------------------------------------------- Appendix V:2.6

This program offers a short-term high-quality setting in selected VA
medical centers to veterans with combined medical and psychiatric
problems who are unable to be evaluated, treated, or managed
appropriately in existing medical or psychiatric settings.  The
setting concentrates staff skilled in both medical and psychiatric
areas. 

Length of stay:  Fewer than 30 to 40 days. 


      SUSTAINED
      MEDICAL/PSYCHIATRIC UNIT
      (STAR I) (15 BEDS)
------------------------------------------------------- Appendix V:2.7

The essence of this level of care is its emphasis on sustained
treatment and rehabilitation for varied groups of patients who have
failed to achieve sufficient recovery in 90 days to be discharged to
a nursing home, domiciliary, or community residential level of care. 
Patients in STAR I have medical, neurological, and psychiatric
disorders that interact in such a way as to make care in traditional
long-term psychiatric or medical programs (including traditional
nursing homes) difficult or impossible. 

Length of stay:  Fewer than 12 months. 


      BRIEF SUBSTANCE ABUSE
      TREATMENT (8 BEDS)
------------------------------------------------------- Appendix V:2.8

This program offers patients with drug, alcohol, and other chemical
abuse and dependency disorders an intense, brief treatment of
withdrawal symptoms; evaluation of physical, psychological, social,
and vocational problems; family interventions; and initiation of
individual and group therapies and support groups that may be
continued on an outpatient basis.  Patients who require longer
periods of inpatient treatment may be transferred to a less intensive
level of care or to community Contract Half-Way House Programs. 

Length of stay:  Fewer than 30 days. 


      SUBSTANCE ABUSE
      REHABILITATION (22 BEDS)
------------------------------------------------------- Appendix V:2.9

These programs provide an inpatient rehabilitation setting for
veterans with serious chemical dependency who require more than
detoxification or a brief stay because they still have a significant
risk of resumption of their abuse problems on return to the
community. 

Length of stay:  Fewer than 90 days. 


      PSYCHIATRIC RESIDENTIAL
      REHABILITATION TREATMENT
      PROGRAM (PRRTP) (30 BEDS)
------------------------------------------------------ Appendix V:2.10

Residential programs are structured, supervised, 24-hour-a-day
therapeutic settings that embody strong treatment values with peer
and professional support to chronically mentally ill (CMI) veterans
in need of extended rehabilitation and treatment.  These veterans
have mental disorders such as schizophrenia, depression, and anxiety. 
Residential programs may be on VA medical center grounds or rented or
donated property in the community. 

Length of stay:  Not specified. 


      SUBSTANCE ABUSE RESIDENTIAL
      REHABILITATION TREATMENT
      PROGRAM (SARRTP) (20 BEDS)
------------------------------------------------------ Appendix V:2.11

A residential program\19 that provides intense rehabilitation for
drug and alcohol addictions. 

Length of stay:  Not specified. 


--------------------
\19 Residential programs may be on VA medical center grounds or
rented or donated property in the community. 


      POSTTRAUMATIC STRESS
      DISORDER (PTSD) RESIDENTIAL
      REHABILITATION PROGRAM (30
      BEDS)
------------------------------------------------------ Appendix V:2.12

A residential program that provides treatment for patients with PTSD
who are unable to be treated in an outpatient setting. 

Length of stay:  Not specified. 

For Central Florida, the VA hospitals have or plan to have
psychiatric services similar to the proposed VA hospital in Brevard
County.  The VA hospitals in Central Florida discharge long-term care
psychiatric patients to other facilities or programs.  Table V.2
shows the psychiatric bed sections currently available to veterans in
Central Florida. 



                         Table V.2
          
             Operating Psychiatric Bed Sections
          Available to Veterans in Central Florida
                      as of March 1995

Bed                                 Gainesvill
Section      Bay Pines       Tampa           e       Total
----------  ----------  ----------  ----------  ----------
Acute               66          60          60         186
 general
 psychiatr
 y
Brief stay   6, 8 more          30           0  36, 8 more
 geropsych     planned                             planned
 iatry
Intermedia          16           0           0          16
 te
 rehabilit
 ation
PTSD                20           0           0          20
 rehabilit
 ation
Substance           30          30          30          90
 abuse
 rehabilit
 ation
Brief stay          20       10-15           0       30-35
 medical/      planned     planned                 planned
 psychiatr
 ic
----------------------------------------------------------

GAO CONTACTS AND STAFF
ACKNOWLEDGMENTS
========================================================== Appendix VI

GAO CONTACTS

Paul Reynolds, Assistant Director, (202) 512-7101
Walter Gembacz, Senior Evaluator, (202) 512-6982

ACKNOWLEDGMENTS

In addition to those named above, the following individuals made
important contributions to this report.  Beverly Brooks-Hall provided
the information on VA's nursing home program.  Bonnie Anderson
provided information on VA's psychiatric care. 

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