VA Health Care: Effects of Facility Realignment on Construction Needs Are
Unknown (Letter Report, 11/17/95, GAO/HEHS-96-19).

Pursuant to a congressional staff request, GAO provided information on
nine proposed Department of Veterans' Affairs (VA) construction
projects, focusing on: (1) the projects' benefits to veterans; (2) VA
efforts to realign all of its facilities into new service networks; and
(3) the potential effects of funding delays an VA contract award dates
and costs.

GAO found that: (1) the nine proposed construction projects would
primarily enhance VA inpatient care capacity within designated target
areas; (2) the two new medical centers would improve veterans' access to
quality care and attract new users; (3) the seven renovation projects at
existing medical centers would benefit users by correcting fire and
safety deficiencies and improving patient environment; (4) the medical
centers undergoing renovation need an additional $308 million to correct
all of their deficiencies; (5) VA has not considered all available
alternatives to the construction projects, partially because planned
realignment criteria have not been finalized; (6) the construction of
new and renovated facilities will likely limit future VA realignment
decisions, since the facilities have an expected useful life of 25 years
or more; and (7) delaying funding until fiscal year (FY) 1997 is likely
to have a minimal affect on VA contract award dates and costs, but
longer delays could significantly increase costs and award date
slippage.

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

 REPORTNUM:  HEHS-96-19
     TITLE:  VA Health Care: Effects of Facility Realignment on 
             Construction Needs Are Unknown
      DATE:  11/17/95
   SUBJECT:  Government facility construction
             Veterans hospitals
             Veterans benefits
             Construction costs
             Health care facilities
             Facility repairs
             Cost effectiveness analysis
             Hospital planning
             Health resources utilization
             Hospital care services
IDENTIFIER:  VA Northern California Health Care System
             Martinez (CA)
             Travis (CA)
             Brevard County (FL)
             Boston (MA)
             Reno (NV)
             Marion (IN)
             Salisbury (NC)
             Perry Point (MD)
             Marion (IL)
             Lebanon (PA)
             VA Vision for Change Plan
             VA Veterans Integrated Service Network
             Sacramento (CA)
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Hospitals and Health Care,
Committee on Veterans' Affairs, House of Representatives

November 1995

VA HEALTH CARE - EFFECTS OF
FACILITY REALIGNMENT ON
CONSTRUCTION NEEDS ARE UNKNOWN

GAO/HEHS-96-19

VA Major Construction Projects

(406106)


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

  ADA - Americans With Disabilities Act
  HUD - Department of Housing and Urban Development
  HVAC - heating, ventilation, and air conditioning
  JCAHO - Joint Commission on Accreditation of Healthcare
     Organizations
  NCHCS - Northern California Health Care System
  VA - Department of Veterans Affairs
  VISN - veterans integrated service networks

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


B-265679

November 17, 1995

The Honorable Y.  Tim Hutchinson
Chairman, Subcommittee on
 Hospitals and Health Care
Committee on Veterans' Affairs
House of Representatives

Dear Mr.  Chairman: 

As part of the fiscal year 1996 budget, the President requested that
the Congress appropriate $514 million for Department of Veterans
Affairs (VA) major construction projects.\1 These projects include
the construction of two new VA medical facilities and major
renovations at seven existing facilities. 

This report responds to a request from your office for information
about VA's nine proposed projects.  It discusses how the projects are
expected to benefit veterans and the relationships between the
proposed projects and VA's recent efforts to realign all of its
facilities into new service networks.  This report also discusses the
potential effects of funding delays on VA's construction contract
award dates and costs. 

To address these issues, we reviewed key VA documents, such as the
fiscal year 1996 major construction budget justifications, the
proposed realignment plan, and plans for future construction in the
target area.  We visited the seven medical centers with proposed
renovation projects and the Northern California Health Care System
(NCHCS), where we discussed the issues with VA officials and reviewed
project-specific plans, budgets, and other documents.\2 In addition,
we discussed the issues with officials at VA headquarters and its
Western Region.  We did our work between June and October 1995, in
accordance with generally accepted government auditing standards. 
Appendix I presents additional details on the scope and methodology
of our work. 


--------------------
\1 Major construction projects cost $3 million or more. 

\2 NCHCS is the network of VA medical facilities that serves the area
that will be served by one of the proposed new medical centers and
that was formerly served by VA's Martinez, California, medical center
before being closed in 1991 due to earthquake safety concerns.  We
used information gathered during recently completed audit work on
another assignment to address the issues on the other proposed
medical center. 


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

The nine proposed projects would enhance VA's inpatient care capacity
for veterans within designated target areas.  The two new medical
centers would attract new users by improving veterans' accessibility
to VA care.  The seven renovation projects would primarily benefit
current users by making fire, safety, patient environment, and
efficiency improvements at existing medical centers.  The renovation
projects would not, however, correct all deficiencies at the seven
medical centers; these centers estimate that they need an additional
$308 million to correct the deficiencies. 

VA officials did not rigorously consider available alternatives to
construction.  Alternatives that VA now expects medical center
directors to consider were not analyzed, primarily because planned
realignment criteria, such as merging services with nearby VA
facilities, were proposed in August 1995 and have not been finalized. 
As a result, how application of these criteria would have affected
VA's decisions about the proposed projects is uncertain.  Moreover,
construction of the proposed projects will likely limit future
realignment decisions for the medical centers because the new or
renovated facilities should be expected to have useful lives of 25
years or more on the basis of operating experiences of other VA
hospitals. 

Our analysis of project construction documents also indicates that
VA's construction contract award dates and costs would likely be
insignificantly affected if funding for the construction of the
projects is delayed until fiscal year 1997.  VA's construction
contracts would slip by 3 months or fewer for all but two projects if
design work continues.  These short delays should have a minimal
effect on such cost factors as inflation or potential savings
attributable to expected improved service efficiency.  If, on the
other hand, funding for the projects is delayed for longer periods of
time, the effects of the delays would likely be more significant. 
According to medical center officials, veterans will continue
receiving health care regardless of how long project funding is
delayed. 


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

VA's health care system was established in 1930 primarily to provide
rehabilitation and continuing care for veterans injured during
wartime.  Now, VA's health care system serves about as many
low-income veterans with medical conditions unrelated to wartime
service as service-connected veterans. 

VA's system comprises one of the nation's largest networks of direct
delivery health care providers.  It includes 173 hospitals, 376
outpatient clinics, 133 nursing homes, and 39 domicilaries.  These
facilities are organized into a system of medical centers that
typically include one or more hospitals as well as some of the other
types of health care facilities.  These facilities provided care to
about 2.2 million veterans at a cost of about $16 billion in fiscal
year 1995. 


   VA HOSPITAL INPATIENT USAGE
   DECLINING
------------------------------------------------------------ Letter :3

VA has experienced a dramatic decline in its hospital inpatient
workload.  Over the past 25 years, the average daily workload in VA
hospitals dropped by about 56 percent (from 91,878 in 1969 to 39,953
in 1994).  VA reduced its operating beds by about 50 percent, closing
or converting to other uses about 50,000 hospital beds. 

A number of factors could lead to a continued decline in VA hospital
inpatient workload.  For example: 

  The veteran population is estimated to decline by one-half over the
     next 50 years.  The downsizing of the military will likely make
     the decline even more dramatic. 

  The number of veterans with health insurance coverage is expected
     to increase, which will likely decrease demand for VA acute
     hospital care. 

  The nature of insurance coverage is changing.  For example,
     increased enrollment in health maintenance organizations--from 9
     million in 1982 to 50 million in 1994--is likely to reduce the
     use of VA hospitals. 

  VA hospitals too often serve patients whose care could be more
     efficiently provided in alternative settings.  The major
     veterans service organizations noted in their 1996 Independent
     Budget that a recent study indicated that VA could reduce its
     hospital inpatient workload by up to 44 percent if it treated
     patients in more appropriate settings. 

VA's Under Secretary for Health testified in April 1995 that it will
not be that many years before acute care hospitals become primarily
intensive care units taking care of only the sickest and most
complicated cases, having switched all other medical care to other
settings, including ambulatory care settings, hospices, and extended
care facilities.\3


--------------------
\3 Statement of Dr.  Kenneth W.  Kizer, Under Secretary for Health,
VA, before the Subcommittee on Hospitals and Health Care, House
Committee on Veterans' Affairs, April 6, 1995. 


   VA'S CONSTRUCTION PLANS
------------------------------------------------------------ Letter :4

For fiscal year 1996, VA medical centers proposed to headquarters
more than $3 billion in funding requests for major construction
projects.  VA headquarters officials reviewed and prioritized these
projects.  In the fiscal year 1996 budget request, the President
asked the Congress to appropriate $514 million for nine projects. 
The projects range in size from $9 million to renovate nursing units
in one hospital to $211.1 million to build a new medical center, as
shown in table 1. 



                                Table 1
                
                  VA's Proposed Fiscal Year 1996 Major
                         Construction Projects

                                                                Estima
                                                                   ted
                                         Gross  Estima  Reques    date
                                        square     ted     ted      of
Location            Scope                 feet    cost   funds   award
------------------  ------------------  ------  ------  ------  ------
Travis, California  Build a new VA/     685,95  $211.1  $188.5      --
                     Air Force joint         2      \a
                     medical center
Brevard Co.,        Build new medical   850,41  171.9\   154.7    9/96
 Florida             center/nursing          0       a
                     home
Boston,             Build ambulatory    97,722    28.0  28.0\b    7/96
 Massachusetts       care addition
Reno, Nevada        Replace hospital    108,63  27.4\a    20.1    1/96
                     nursing unit/           9
                     ambulatory care
                     building
Marion, Indiana     Replace building    69,259    17.3  17.3\b    9/96
                     for psychiatric
                     care
Salisbury, North    Renovate hospital   106,87    17.2  17.2\b    9/96
 Carolina            nursing units           1
Perry Point,        Renovate            73,028    15.1  15.1\b    8/96
 Maryland            psychiatric
                     nursing units
Marion, Illinois    Renovate hospital   49,157    11.5  11.5\b   12/96
                     nursing units
Lebanon,            Renovate hospital   50,425     9.0   9.0\b    8/96
 Pennsylvania        nursing units
----------------------------------------------------------------------
\a Includes funds previously appropriated for design.
\b Design funds totaling $4 million for these six projects were
requested as a separate item in fiscal year 1996 budget. 


   VA PLANS TO RESTRUCTURE HEALTH
   CARE DELIVERY
------------------------------------------------------------ Letter :5

On March 17, 1995, VA's Under Secretary for Health announced a plan
called "Vision for Change" to restructure the Veterans Health
Administration.  Essentially, VA's central office and regional office
structure would be replaced with veterans integrated service networks
(VISN) supported by VA headquarters and such other infrastructures as
management assistance councils.  The plan calls for 22 VISNs, each
headed by an accountable director and consisting of 5 to 11 medical
centers.  Each network would cover areas that reflect patient
referral patterns and aggregations of patients and facilities to
support primary, secondary, and tertiary care.  The plan is designed
to increase the efficiency of VA-provided health care by trimming
unnecessary management layers, consolidating redundant medical
services, and using available community resources.  VA began
implementing the plan on October 1, 1995. 

On August 29, 1995, the Under Secretary requested input from top VA
health officials and others on a draft paper containing criteria for
use in realigning medical facilities and programs as well as for
siting new VA health care facilities.  The paper was developed to
help VA management identify opportunities for efficiencies.  For
example, it suggests that medical center directors use community
providers if the same kind of services of equal or higher quality are
available either at lower cost or equal cost but in more convenient
locations for patients.  It also encourages medical center directors
to use nearby VA facilities and to merge, integrate, or consolidate
duplicative or similar services if doing so would yield significant
administrative or staff efficiencies or projected demand for services
is expected to significantly decrease. 


   PROJECTS PRIMARILY BENEFIT
   VETERANS NEEDING INPATIENT CARE
------------------------------------------------------------ Letter :6

The nine projects would, for the most part, benefit veterans needing
VA inpatient care.  The two new medical centers are intended to
reduce veterans' travel distances or times to access VA care.  The
seven renovation projects are intended to improve delivery of
veterans' health care at existing medical centers by correcting fire
and safety deficiencies, improving patient environment, and
increasing efficiency.  The renovation projects would not correct all
the deficiencies at the seven medical facilities.  (See app.  II for
detailed project information.)


      IMPROVED ACCESS TO CARE FOR
      NEW USERS
---------------------------------------------------------- Letter :6.1

The proposed medical centers in Brevard County, Florida, and at
Travis Air Force Base in Fairfield, California, are intended to
improve veterans' geographic access to VA health care in east central
Florida and northern California, respectively.  As we reported in
August 1995, the Brevard project, which includes a 470-bed hospital,
a 120-bed nursing home, and an ambulatory care clinic, would improve
access to VA health care facilities for many of the 258,000 veterans
living in a six-county target area.  The target area currently is
served by VA medical centers in Gainesville, Tampa, Bay Pines
(psychiatric care only), and West Palm Beach that are, respectively,
175, 125, 155, and 120 miles from the Brevard site.\4

Our analysis of VA documents showed that the Travis project would
provide VA with 243 hospital beds\5 and an outpatient clinic and is
intended to improve access to VA health care facilities for many of
the 447,000 veterans living in a 32-county target area.  Veterans in
the area currently receive outpatient care from NCHCS's clinics in
Berkeley, Martinez, Oakland, Redding, and Sacramento; a day treatment
facility in Martinez; and some inpatient care from the Travis Air
Force Base Hospital, with which VA has negotiated for the use of 55
interim beds in anticipation of the Travis project.  They also
receive inpatient care from VA medical centers in San Francisco, Palo
Alto, Livermore, and Fresno, California; and Reno, Nevada.  NCHCS
officials said that northern California veterans find these
facilities difficult to access due to distance, congested highways,
poor public transportation, and such geographic obstacles as the
Sierra Nevada mountain range and San Francisco Bay.\6

Two VA studies showed that inpatient utilization of northern
California and northern Nevada VA medical centers has decreased since
VA closed its Martinez medical center in 1991 for earthquake safety
concerns.\7 The studies recognized that several factors could have
influenced utilization but had no evidence to indicate the extent to
which the decline in utilization was caused by the lack of access to
VA facilities.  NCHCS's acting director believes, however, that the
decline is significantly attributable to the lack of access.\8


--------------------
\4 In VA Health Care:  Need for Brevard Hospital Not Justified
(GAO/HEHS-95-192, Aug.  29, 1995), we discussed how converting the
former Orlando Naval Hospital into a nursing home and constructing a
new hospital and nursing home in Brevard County, Florida, was not the
most prudent and economical use of VA resources. 

\5 This includes 170 new beds and 73 existing beds that the Air Force
would make available for VA use. 

\6 In VA Health Care:  Closure and Replacement of the Medical Center
in Martinez, California (GAO/HRD-93-15, Dec.  1, 1992), we discussed
factors that we believed VA should have considered in selecting a
replacement facility for the Martinez medical center. 

\7 VA Western Region studies titled Northern California Network
Utilization Rate Comparisons and Patient Origin Data (May 1993) and
Regional Special Purpose Site Visit Report Of the Bay Area Task Force
(Jan.  31, 1994). 

\8 In September 19, 1995, correspondence to the Chairman of the
Senate Subcommittee on VA, HUD, and Independent Agencies, Committee
on Appropriations (GAO/HEHS-95-268R), we discussed VA's reasons for
an increased cost estimate for the Travis project and VA's assessment
of where veterans living in the proposed Travis project target area
currently receive VA hospital care. 


      ENHANCED SERVICE DELIVERY
      ENVIRONMENT FOR CURRENT
      USERS
---------------------------------------------------------- Letter :6.2

All seven renovation projects would enhance the delivery of health
care for patients at existing VA medical centers in the seven target
areas, as shown in table 2. 



                                Table 2
                
                Expected Benefits of Proposed VA Fiscal
                 Year 1996 Major Construction Projects


         Improve                             Handica
         access                              p                 Improve
Locatio  to VA                      Patient  accessi           efficie
n        care     Fire     Safety   privacy  bility   Other    ncy
-------  -------  -------  -------  -------  -------  -------  -------
Travis,  X
Califor
nia

Brevard  X
Co.,
Florida

Boston,                    X        X        X        X        X
Massach
usetts

Reno,             X        X        X        X        X        X
Nevada

Marion,           X        X        X        X        X        X
Indiana

Salisbu           X        X        X        X        X        X
ry,
North
Carolin
a

Perry                      X        X        X        X        X
Point,
Marylan
d

Marion,           X        X        X        X        X        X
Illinoi
s

Lebanon           X        X        X        X        X        X
,
Pennsyl
vania
----------------------------------------------------------------------
Medical center officials said that all seven projects would correct
safety deficiencies and five would correct fire deficiencies.  For
example, two projects would widen patient room doors that are too
narrow for beds, thereby allowing bed-ridden patients to be easily
evacuated in case of fire and transported for treatment and other
services without the risk of being dropped when removed from their
beds.  Most projects also would install sinks in patient rooms,
reducing the risk of spreading infection and disease.  One project
would extend fire stairs from the fourth to the top floor of a
five-story hospital, providing an escape route for patients in case
of fire. 

Medical center officials told us that fire or safety deficiencies had
been identified by the Joint Commission on Accreditation of
Healthcare Organizations (JCAHO)--the organization that assesses
medical facilities' capabilities to provide quality care. 

Officials in three centers said that their centers were not cited
because they planned to correct the deficiencies with their proposed
projects.  Officials at three medical centers said that accreditation
might be jeopardized if deficiencies are not corrected.  According to
one medical center director, losing JCAHO accreditation would make
attracting medical staff difficult and could jeopardize the center's
affiliation with its neighboring medical school.  Officials at
another medical center said that they would correct deficiencies with
minor construction funds if the project is not funded. 

Medical center officials also expected all the projects to improve
patient environment.  For example, all would increase patient
privacy, primarily by converting patient rooms now containing as many
as nine beds and congregate bath and toilet facilities to single and
double rooms with private and semiprivate bathrooms.  Five would
improve handicapped accessibility by such modifications as installing
hand and wheelchair rails and increasing the number of
wheelchair-accessible bathrooms.  And most would upgrade heating and
air conditioning, improving air quality and increasing patient
comfort. 

Finally, all the projects are expected to increase the medical
centers' efficiency.  For example, officials at two medical centers
said that nursing staff should save time and energy spent escorting
patients to remote congregate bath and toilet facilities when such
facilities are replaced with private and semiprivate bathrooms. 
Staff at two facilities should save time spent escorting patients to
dining and treatment rooms in remote buildings when these rooms are
relocated to the buildings where patients reside.  In addition, staff
at one medical center would no longer use intensive care beds for
patients requiring only routine monitoring when monitoring equipment
is installed in patient rooms. 


      PROJECTS WOULD NOT CORRECT
      ALL DEFICIENCIES
---------------------------------------------------------- Letter :6.3

Our analysis of VA documents shows that VA has identified major
construction needs in addition to the proposed projects.  We reported
in August 1995 that, along with the new Brevard medical center, VA
plans to spend $14 million to convert a former Naval hospital into a
VA nursing home for veterans in east central Florida.\9 VA studies
indicate that, in addition to the new Travis medical center, VA plans
to build a new 120-bed nursing home and a replacement outpatient
clinic in Sacramento, California.  Also, the 5-year facility plans\10
for the seven medical centers with proposed renovation projects show
that, in addition to the proposed projects, the facilities need about
$308 million for other major and minor projects.  This includes
almost $210 million for 20 major projects and about $98 million for
47 minor projects.  The plans identify at least one major
construction project for each of six medical centers and at least two
minor construction projects for each of the seven centers, as shown
in table 3. 



                                Table 3
                
                Future Construction Needs of VA Medical
                Centers With Planned Renovation Projects



                                        Projec          Projec
Project location                            ts   Costs      ts   Costs
--------------------------------------  ------  ------  ------  ------
Boston, Massachusetts                        4   $59.4      11   $28.9
Reno, Nevada                                 5    35.0       3     6.4
Marion, Indiana                              1     9.0       3     3.5
Salisbury, North Carolina                    5    51.8       6    11.8
Perry Point, Maryland                        1    30.0       9    22.2
Marion, Illinois                            --      --       2     4.2
Lebanon, Pennsylvania                        4    24.3      13    21.2
Total                                       20  $209.5      47   $98.2
----------------------------------------------------------------------

--------------------
\9 VA assumed control of the former Naval hospital in Orlando,
Florida, in June 1995. 

\10 Medical centers' 5-year facility plans list intended major
construction projects, minor improvements, and facility repairs
needed or proposed to support their approved programs within their
assigned medical care mission. 


   RELATIONSHIPS BETWEEN VA'S
   PROPOSED PROJECTS AND ITS
   PLANNED REALIGNMENT EFFORTS
   UNCERTAIN
------------------------------------------------------------ Letter :7

While it is too early to know the effects of VA's planned realignment
efforts, most officials in the seven existing medical centers and
NCHCS do not believe the plan would significantly affect the need for
and scope of their projects.  However, if VA's reorganization plan
changes the medical centers' missions, their physical requirements
would change.  Moreover, if--as VA now contemplates under its
realignment plans--alternatives to the nine projects had been
rigorously analyzed as the project proposals were being developed,
lower cost alternatives to construction may have been identified. 

To the extent that the reorganization plan would change the missions
and service populations of the nine VA medical centers, medical
centers' physical requirements would change.  The plan was announced
in March and has not been fully implemented, so its effects are
unknown.  However, officials in most of the seven medical centers
with proposed renovation projects and NCHCS believe that it should
not significantly affect the need or scope of their proposed
projects.  Officials in the medical centers with proposed renovation
projects believe that their medical centers will continue to provide
the same health care services to veterans in the target areas and
will continue to need renovation.  NCHCS officials also believe that
veterans in the proposed Travis target area continue to need better
access to VA inpatient care. 


      ANALYSIS OF SERVICE DELIVERY
      ALTERNATIVES LIMITED
---------------------------------------------------------- Letter :7.1

Most VA officials said that the nine projects were developed without
rigorously analyzing available alternatives, including the types of
service delivery alternatives that the proposed criteria suggest be
analyzed for realigning existing medical facilities and siting new
ones.  Had they, lower cost alternatives may have been identified. 

In August 1995, we reported that building the new Brevard medical
center is not the most prudent and economical use of VA's
resources.\11 VA did not adequately consider the availability of
hundreds of community nursing home beds and unused VA hospital beds
or the potential decrease in future demand for VA hospital beds.  VA
could achieve its service goals for the target area by using existing
capacity.  For example, it could buy more convenient and less costly
care from community nursing homes and use the former Naval hospital
in Orlando for more accessible medical and psychiatric services. 

Like Brevard, building the proposed Travis medical center also may
not be the most cost-effective option available at this time.  A VA
task force study appropriately determined that it was the best option
in June 1992, when a replacement for the closed Martinez medical
center was being sought.  However, circumstances have changed,
creating an opportunity for more efficient or effective options.  For
example, using the Mather Air Force Base hospital in Sacramento to
serve veterans could be a viable option.  It would provide a 105-bed
facility that is about 30 miles from the Travis site that could be
more accessible to many veterans in the Travis medical center target
area. 

The VA task force rejected the Mather Air Force Base hospital in
Sacramento as a viable option for a joint VA and Department of
Defense venture, but two of the factors that led to the rejection of
that facility have now changed.  First, although the Air Force had
planned to use the Mather Hospital to serve McClellan Air Force Base
beneficiaries,\12 the Department of Defense now plans to close
McClellan.  Second, the hospital at Mather was rejected because it
was too small to meet VA's projected needs for a 243-bed facility. 
However, some of VA's needs are currently being met with 55 beds
negotiated at the Travis Air Force Base hospital, and some needs
could possibly be met with available community hospital space. 
Moreover, the demand for inpatient care in the target area will
likely decline in the future as the veteran population in northern
California declines as it is projected to do throughout the country. 

The VA task force that selected the Travis site for the proposed VA
medical center had ranked other options involving dual inpatient
locations higher than the Travis option for veterans' access to
health care but had rejected these options, in part, because they
were too costly.  Now, however, with the planned closing of McClellan
and the possible availability of the Mather hospital for VA use,
providing some inpatient care at the Travis hospital and some at the
Mather hospital (or another northern California site) may provide
veterans with better and more cost-effective access to VA health care
than can be provided by a single Travis project. 

VA also did not rigorously analyze available alternatives when
developing the seven renovation proposals.  Had criteria similar to
that recently proposed by VA for realigning medical facilities and
siting new ones been used, lower cost alternatives may have been
identified.  The need for the proposed projects was determined on the
basis of the physical needs identified in the medical centers'
facility development plans.\13 These plans indicate that some
alternatives were considered, but officials at most of the seven
medical centers told us that they did not conduct detailed studies or
analyses of all available options.  Some said, for example, that they
did not thoroughly explore the possibility of using community and
other VA medical facilities.  They believe, however, that using other
VA medical centers is infeasible, usually because the other VA
centers are too far away or do not provide the needed medical
services, and that use of community facilities is infeasible, usually
because contracting for care is thought to be too expensive. 


--------------------
\11 VA Health Care (GAO/HEHS-95-192, Aug.  29, 1995). 

\12 The Department of Defense decided to close the Mather Air Force
Base in 1988, but left the hospital open to serve McClellan Air Force
Base beneficiaries. 

\13 Medical centers' facility development plans are their master plan
for the physical development over a long-range planning horizon based
on the centers' approved mission and health care programs assigned
for the veteran population projected now and in 2005. 


   EFFECTS OF DELAYED PROJECT
   FUNDING DEPEND ON LENGTH OF
   DELAY
------------------------------------------------------------ Letter :8

The effects of delaying the proposed projects on construction award
dates and costs would depend on the length of the delay.  Delaying
project funding until fiscal year 1997 should have a negligible
effect on construction award dates for the projects if current design
schedules are met.  Because construction schedules for all but two
projects show that construction award dates would be July 1996 or
later, the dates for starting construction would be delayed only 1 to
3 months; the Reno, Nevada, project would be delayed 11 months, and
the Travis project has no single award date because it has several
phases.  Delaying the projects longer would extend the construction
award dates.  Moreover, VA headquarters officials expressed concern
that, if delayed, the projects may not be selected for VA's fiscal
year 1997 major construction budget because VA may identify other
higher priority projects. 

Most medical center officials believe that delaying the awards of
construction contracts would increase costs due to inflation. 
However, delaying the awards until fiscal year 1997 would have
minimal effects on costs because cost increases from inflation would
involve time periods of fewer than 3 months for most projects. 
Similarly, savings expected from increased efficiencies would be lost
for only a short time.  In addition, VA would defer for a relatively
short time the project activation costs, which are estimated at more
than $100 million for the Brevard and Travis projects, and the costs
associated with providing such new services as air conditioning.  The
effects on costs would increase if the project award dates slip
beyond fiscal year 1997. 

VA officials told us that veterans would continue receiving health
care regardless of how long project funding is delayed. 


   CONCLUSIONS
------------------------------------------------------------ Letter :9

Long-term commitments for any major construction or renovation of
predominantly inpatient facilities in today's rapidly changing health
care environment accompany high levels of financial risk.  VA's
recent commitment to a major realignment of its health care system
magnifies such risk by creating additional uncertainty.  For example,
our assessment of the proposed Brevard project shows the potential
for lower cost alternatives to new construction for meeting veterans'
needs.  In addition, we believe that analyzing such alternatives in
connection with the other major construction projects in VA's budget
proposal is entirely consistent with VA's suggested realignment
criteria.  Delaying funding for these projects until the alternatives
can be fully analyzed may result in more prudent and economical use
of already scarce federal resources. 


   MATTER FOR CONGRESSIONAL
   CONSIDERATION
----------------------------------------------------------- Letter :10

The Congress may wish to consider delaying funding for all major VA
construction projects until VA has completed its criteria for
assessing alternatives to such projects and applied the criteria to
projects that it proposes for congressional authorization and
funding.  If it wants to avoid significant delays of construction
awards for projects that are ultimately justified under VA's pending
assessment criteria, the Congress may wish to make design funds
available in fiscal year 1996 for the proposed projects. 


   AGENCY COMMENTS AND OUR
   EVALUATION
----------------------------------------------------------- Letter :11

We obtained comments on a draft of this report from VA officials,
including the Deputy Under Secretary for Health. 

VA officials disagree with our suggestion that the Congress may wish
to consider delaying funding of all major construction projects until
VA has completed and applied criteria for assessing alternatives to
projects proposed for congressional authorization and funding.  VA
officials reiterated that the proposed new medical center in Brevard
County, Florida, should not be delayed because they believe the
facility is needed, as explained in comments on our report, VA Health
Care:  Need for Brevard Hospital Not Justified (GAO/HEHS-95-192, Aug. 
29, 1995).  They also said that the proposed replacement medical
center at Travis Air Force Base should be fully funded in fiscal year
1996.  In addition, they do not believe that the remaining seven
projects should be delayed because the projects would correct fire,
safety, and environmental deficiencies in some of VA's most
antiquated facilities.  They said that without needed attention, fire
and safety code violations at these facilities could conceivably
result in catastrophic consequences. 

VA officials said that the inference in our report that the planned
realignment creates uncertainty in construction needs is misleading. 
They recognize that the VISN concept is new but do not believe that
the planned realignment will preclude the need to upgrade the
facilities.  Officials in the seven medical centers scheduled for
renovation and NCHCS do not believe that the realignment will
significantly affect the need for and scope of their projects.  The
VA officials told us that VA managers recently validated the
projects' consistency with the needs of a network organization and
with anticipated facility missions and workloads.  These officials
believe that veterans will continue to be served at the facilities. 
They said that any uncertainty about construction needs is created by
the uncertain future direction of health care in general, not by VA's
planned realignment. 

Despite these arguments, we continue to believe that the Congress
should consider delaying funding for construction of major projects
until VA has had time to implement its planned realignment efforts. 
This implementation is expected to include completing and applying
criteria for assessing all alternatives for serving veterans, such as
using community or other VA facilities.  VA's planned realignment
efforts have merit, and VISN directors need time to determine what
changes should be made to improve the effectiveness and efficiency of
VA health care delivery. 

We believe that the planned realignment creates uncertainty because
it appears to suggest that medical centers may not operate in the
future as they do today.  However, our review showed that VA
determined the medical centers' construction needs on the basis of
the assumption that the centers would continue to operate essentially
as they do today.  Our concern is that VA may determine, as part of
the realignment effort, that services provided by one or more of the
facilities could be provided more effectively or efficiently through
sharing or contracting with other providers or consolidating with
services of other VA medical centers.  If the proposed construction
projects are under way, VA may continue providing services as usual,
even though doing so may be less effective or efficient than other
potential service alternatives. 

Delaying construction funding should provide VA the time needed to
assess available alternatives to the proposed renovation projects and
to reexamine the Travis project in view of the changed circumstances,
such as the closure of McClellan Air Force Base in Sacramento.  If
the assessment shows that the facilities would operate for 25 or more
years, the projects would be justified.  Our position that the
proposed Brevard project is unjustified remains unchanged. 

VA officials are concerned that delaying project funding could
significantly affect construction award dates.  They said that design
funds for most projects have already been delayed and have not been
approved.  Without congressional approval of design funding, no
awards of construction document contracts will be made for fiscal
year 1996.  According to VA officials, this will delay project
schedules for at least 1 year.  We have revised our "Matter for
Congressional Consideration" to clarify that the Congress may wish to
make design funds available in fiscal year 1996 for the proposed
projects if it wants to avoid significant delays of construction
awards for projects that are ultimately justified under VA's pending
assessment criteria.  Our observation that delaying project funding
until fiscal year 1997 should have a negligible effect on
construction award dates for projects if design schedules are met is
based on the premise that design funds will be available for the
projects in fiscal year 1996. 

VA officials also said that the projects were not intended to correct
all the deficiencies at the seven medical centers scheduled for
renovation.  They said that the size and number of projects in the
fiscal year 1996 request were constrained by anticipated budget
levels and that VA managers were instructed to limit the size of
projects to address only the most pressing patient environment,
ambulatory care, and infrastructure needs.  Moreover, they said that
the six projects involving renovation of inpatient areas purposely
affect 50 percent or less of the total inpatient space at most
facilities to recognize the downsizing of inpatient care capability. 

We reported that the projects would not correct all deficiencies to
discuss the projects in proper perspective--not to criticize VA for
failing to make all corrections at once.  Appendix II shows that the
proposed projects would affect only a fraction of the inpatient beds
in most of the facilities scheduled for renovation.  While the
renovation projects generally would reduce the number of upgraded
inpatient beds, the fact remains that VA's fiscal year 1996 major
construction budget focuses on inpatient care. 


--------------------------------------------------------- Letter :11.1

We are sending copies of this report to the Ranking Minority Member
of the Subcommittee on Hospitals and Health Care; the Chairmen and
Ranking Minority Members of the House and Senate Committees on
Veterans' Affairs; the Chairmen and Ranking Minority Members of the
House and Senate Subcommittees on VA, HUD, and Independent Agencies,
Committees on Appropriations; and the Secretary of Veterans Affairs. 
Copies also will be made available to others on request. 

Please call me at (202) 512-7101 if you or your staff have any
questions about this report.  Other contributors to this report are
listed in appendix III. 

Sincerely yours,

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


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

To obtain information about the projects included in VA's fiscal year
1996 budget request, including a description of the projects and
expected benefits, we reviewed key VA documents, such as VA's fiscal
year 1996 major construction budget request and the facility
development plans and 5-year facility plans for the seven medical
centers where renovation projects are planned.  We also visited the
seven medical centers with proposed renovation projects and the
NCHCS, where we interviewed VA officials and reviewed such
project-specific documents as the architect and engineer plans,
schematic drawings, and project space programs.\14 For the remaining
project, we used information gathered during recently completed work
on another assignment.\15 Further, we discussed the projects with
officials in the medical centers and NCHCS.  In addition, we
discussed the Travis project; the Reno, Nevada, project; and VA
construction procedures with officials in VA's Western Region and
headquarters. 

To assess the relationship between the proposed projects and VA's
planned efforts to realign its medical facilities into 22 VISNs and
the effect of delaying the projects, we reviewed the proposed plan;
selected testimony of the Under Secretary for Health; and the August
29, 1995, draft paper containing criteria for realigning VA
facilities and programs.  We discussed how the construction budget
would be affected by this plan with officials in VA Western Region
and headquarters.  We also discussed how individual projects would be
affected by VA's planned restructuring with officials in the seven
medical centers and NCHCS. 

We conducted our review between June and October 1995, following
generally accepted government auditing standards. 


--------------------
\14 After the Martinez, California, VA medical center was closed in
1991, the network of VA medical facilities that served the area
formerly served by the Martinez center was renamed the Northern
California System of Clinics and, subsequently, renamed the Northern
California Health Care System.  The proposed Travis project would
serve this same area. 

\15 Our review of the need for VA's proposed new medical center in
Brevard County, Florida, was conducted between June 1994 and June
1995. 


PROPOSED PROJECTS IN VA'S FISCAL
YEAR 1996 MAJOR CONSTRUCTION
BUDGET REQUEST
========================================================== Appendix II

This appendix contains information on the nine proposed projects in
the President's fiscal year 1996 VA major construction budget
request.  For each proposed project, it provides a general
description, including characteristics on the existing medical center
or target service area, characteristics of the project, and
information on additional construction plans for the target area.  It
also provides the expected veterans' health care benefits and VA
costs, the relationship between the proposed project and VA's planned
reorganization, and the potential effects of delayed project funding
on veterans' health care and VA costs. 

The planned reorganization, called "Vision for Change," was announced
on March 17, 1995, by VA's Under Secretary for Health.  Essentially,
the Veterans Health Administration's central office and regional
office structure would be replaced with VISNs supported by VA
headquarters and such other infrastructures as management assistance
councils.  The plan calls for 22 VISNs, each headed by an accountable
director and consisting of 5 to 11 medical centers.  Each network
would cover areas that reflect patient referral patterns and
aggregations of patients and facilities to support primary,
secondary, and tertiary care.  The plan is designed to increase the
efficiency of VA-provided health care by trimming unnecessary
management layers, consolidating redundant medical services, and
using available community resources.  VA began implementing the plan
on October 1, 1995. 

On August 29, 1995, the Under Secretary requested input from top VA
health officials and others on a draft paper containing criteria for
use in realigning medical facilities and programs, as well as for
siting new VA health care facilities.  The paper was developed to
help VA management identify opportunities for efficiencies.  For
example, it suggests that medical center directors use community
providers if the same kind of services of equal or higher quality are
available either at lower cost or equal cost but at more convenient
locations for patients.  It also encourages using nearby VA
facilities and merging or consolidating duplicative or similar
services if doing so would yield significant administrative or staff
efficiencies or projected demand for services is expected to
significantly decrease. 


   NEW MEDICAL CENTER,
   BREVARD COUNTY, FLORIDA
-------------------------------------------------------- Appendix II:1

The proposed Brevard project would construct a new medical center on
77 acres in Brevard County, Florida.  The target service area would
be six counties in east central Florida, where 258,000 veterans live. 
The new medical center would provide primary and secondary medical,
surgical, and psychiatric care and nursing home care.  It also would
be the psychiatric referral facility for all Florida VA medical
centers.  The center would have 470 hospital beds, including 195
medical, 45 surgical, 230 psychiatric beds, and 120 nursing home
beds.  It would not be affiliated with any medical school or have any
agreements with Department of Defense or other medical institutions. 
The project includes 792,524 gross square footage of hospital and
outpatient clinic space, and 57,886 gross square footage of nursing
home space.  The estimated cost is $171.9 million, of which $17.2
million was previously appropriated for design and other costs. 

The Brevard target area is currently served by VA medical centers in
Gainesville, Tampa, Bay Pines (psychiatric care), and West Palm
Beach, which are, respectively, 175, 125, 155, and 120 miles from the
Brevard site.  When the Brevard medical center is opened, inpatient
workload for these centers would decline, increasing their excess
capacity. 


      EXPECTED BENEFITS AND COSTS
------------------------------------------------------ Appendix II:1.1

Veterans' health care:  The new Brevard medical center is designed to
improve access to VA hospital care for veterans in east central
Florida.  As a state-of-the-art facility, it would comply with all
fire, safety, and other requirements.\16

VA costs:  VA estimates that activation costs would be $34.9 million
and recurring costs, $88.7 million, primarily for 1,329 staff;
resources would be shifted from other medical centers to staff and
operate this center.\17


--------------------
\16 VA medical centers are subject to many requirements.  For
example, JCAHO prescribes standards for virtually all aspects of
medical facility operations; the National Fire Protection Association
and the National Building Code prescribe fire standards; the Uniform
Federal Accessibility Standards set accessibility standards; the
American Society of Heating, Refrigeration, and Air Conditioning
Engineers set heating, ventilation, and air conditioning (HVAC)
standards; and the Underwriters Laboratories prescribe lightening
protection standards.  VA has incorporated some of these standards
into its requirements, prescribed space requirements, and issued
draft guidance in 1994 with privacy goals. 

\17 Activation costs include new equipment and nonrecurring costs;
recurring costs include full-time equivalents, referred to as staff
in this report. 


      POTENTIAL IMPACT OF VA'S
      PLANNED REORGANIZATION
------------------------------------------------------ Appendix II:1.2

The Brevard project manager in VA headquarters said that it is too
early to know the effects of the planned reorganization on the
proposed Brevard medical center or east central Florida veterans. 

VA did not consider all available options when developing the Brevard
proposal.  In August 1995, we reported that converting the former
153-bed Orlando Naval hospital to a nursing home and building a new
hospital and nursing home in Brevard is not the most prudent and
economical use of VA resources.\18 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 by using existing
capacity.  For example, VA could purchase care from community nursing
homes to meet veterans needs more conveniently and at lower costs
($106 verses $207 per patient day) and use the former Naval hospital
to improve veteran's accessibility to medical and psychiatric care. 
VA could also use excess beds in its Gainesville, Tampa, and Bay
Pines medical centers if necessary.  Considering such alternatives
would ensure that VA's planning strategy focuses on the most prudent
and economical use of resources.  Also, such lower cost alternatives
would provide VA the opportunity to meet its service delivery goals
in a more timely manner. 


--------------------
\18 VA Health Care:  (GAO/HEHS-95-192, Aug.  29, 1995). 


      POTENTIAL EFFECTS OF DELAYED
      FUNDING
------------------------------------------------------ Appendix II:1.3

Veterans' health care:  East central Florida veterans would continue
to receive care from community and other less convenient VA medical
facilities. 

VA costs:  Project design is scheduled for completion in February
1996, construction award in September 1996, and construction
completion in December 1999.  The project manager said that if the
project is delayed, inflation would increase construction costs; no
estimates had been made.  Also, the construction boom in Florida
could have an even greater affect on costs because Disney World and
the general housing market place a high demand on construction. 


   NEW MEDICAL CENTER AT TRAVIS
   AIR FORCE BASE,
   FAIRFIELD, CALIFORNIA
-------------------------------------------------------- Appendix II:2

The proposed Travis project, which is a joint venture with the Air
Force, would be a major addition and alteration to the David Grant
Medical Center at Travis Air Force Base.  The target service area is
32 counties in northern California where 447,000 veterans live.  The
project would provide VA with 243 beds, including 170 new ones and 73
existing ones dedicated by the Air Force for VA use; add new
ambulatory care space; and renovate existing radiology, dietetic, and
other support space.  The new medical center would provide primary
and secondary medical, surgical, and psychiatric care.  It would be
affiliated with the University of California at Davis.  The project
includes 560,502 gross square footage of new construction and 125,450
gross square footage of renovation.  The estimated cost is $211.1
million, of which $22.6 million was previously appropriated for
design and other costs. 

Northern California veterans currently receive inpatient care from VA
medical centers in San Francisco, Palo Alto, Livermore, and Fresno,
California; and Reno, Nevada, which, according to NCHCS officials,
are difficult to access due to distance, congested highways, poor
public transportation, and such geographic obstacles as the Sierra
Nevada mountain range and the San Francisco Bay.  When the Travis
medical center opens, inpatient workloads for these VA medical
facilities will likely decline.  VA plans to request funds for an
outpatient clinic to replace a small antiquated clinic and for a new
nursing home, both in Sacramento. 


      EXPECTED BENEFITS AND COSTS
------------------------------------------------------ Appendix II:2.1

Veterans' health care:  NCHCS officials said that the new Travis
medical center would improve access to VA hospital care for northern
California veterans.  It would be a state-of-the-art medical
facility.  As a joint venture with the Air Force, the center would
provide opportunities for savings, through shared equipment and
specialties, and increased opportunities for education, training, and
research. 

VA costs:  VA estimates activation costs would be $67.1 million and
recurring costs, $72.5 million, primarily for 969 staff. 


      POTENTIAL IMPACT OF VA'S
      PLANNED REORGANIZATION
------------------------------------------------------ Appendix II:2.2

NCHCS officials do not believe that VA's planned reorganization would
significantly affect the need for the new Travis medical center. 
They said that NCHCS already extensively coordinates with the medical
centers that would be in the proposed VISN and the need for a medical
center to serve northern California would not change. 

VA considered a number of options before selecting the Travis site as
the best option to provide quality care to the largest number of
veterans with the lowest life-cycle costs.  In December 1992, we
reported that in selecting the replacement site for the closed
Martinez medical center, VA should consider the construction cost,
the time needed to complete construction, effects on veterans' access
to care, potential for affiliation with medical schools,
environmental impact, capabilities of the replacement facility, and
consistency with the long-range needs of VA and the Department of
Defense beneficiaries in the target area.\19 We also noted that VA's
basis for closing the Martinez facility on an emergency basis was
unclear and that analysis leading to a decision to locate the
replacement facility in Davis, California, was flawed, biased against
renovating the Martinez medical center, and did not adequately
consider all available options.  On the basis of an analysis by a
second task force, VA announced on November 10, 1992, that the
replacement facility would be located at Travis Air Force Base. 

In addition to analyzing 10 potential siting options, the task report
discussed opportunities for a sharing or joint venture at the David
Grant Medical Center, Mather Air Force Base, and Letterman Army
Medical Center.  The task force rejected the Mather Air Force Base
hospital as a viable option because the Air Force was planning to use
the hospital to serve McClellan Air Force Base, it was too small (105
beds), and it had seismic and other safety problems. 


--------------------
\19 VA Health Care (GAO/HRD-93-15, Dec.  1, 1992). 


      POTENTIAL EFFECTS OF DELAYED
      FUNDING
------------------------------------------------------ Appendix II:2.3

Veterans' health care:  Northern California veterans would continue
to receive services from community and other less convenient VA
medical centers. 

VA costs:  Project design is scheduled for completion in February
1996 and construction completion in June 2000.  If delayed, inflation
would increase construction costs. 


   AMBULATORY CARE ADDITION,
   BOSTON MEDICAL CENTER
-------------------------------------------------------- Appendix II:3

The Boston medical center is a nine-building campus on 21 acres that
serves the New England states.\20 It is affiliated with Boston
University Medical and Dental, Tufts University Medical and Dental,
and Harvard University Dental schools, and it has sharing agreements
with the New England Baptist Hospital, the Shattuck Hospital, and the
New England Organ Bank.  It is the tertiary medical and surgical
center for VA medical centers in New England and provides psychiatric
care.  In fiscal year 1994, the average number of operating hospital
beds was 215 medical, 117 surgical, and 108 psychiatric; and the
average daily census was 151, 93, and 71, respectively.  The center
admitted 9,156 patients and provided 355,437 outpatient visits, and
about 94.3 percent of its patients were category A veterans,
including 42.6 percent service-connected, 43 percent
nonservice-connected low-income, and 8.7 percent nonservice-connected
with special needs (4.6 percent were other veterans, and 1.1 percent
were nonveterans). 

This $28 million, 97,722-gross-square-foot ambulatory care project
would add a three-story section to the main hospital to replace the
existing operating, recovery, and emergency rooms.  It would provide
130 new outpatient examination rooms; new operating, recovery, and
emergency rooms; and a 170-space parking deck. 

The project would not correct all the medical center's deficiencies. 
Boston's 5-year facility plan also includes $59.4 million for four
major projects for a research addition, a hospital seismic
renovation, and ward renovations and $28.9 million for 11 minor
construction projects. 


--------------------
\20 Most buildings are not used for patient care but for such
activities as storage, laundry, heating boilers, and administrative
offices. 


      EXPECTED BENEFITS AND COSTS
------------------------------------------------------ Appendix II:3.1

Veterans' health care:  The Boston medical center would not serve any
new types of patients or provide any new services.  Medical center
officials said that the project would correct safety deficiencies,
improve patient environment, and increase efficiency.  Expanding the
emergency room would correct deficiencies cited by JCAHO for
insufficient space provided for patient care and privacy.  Colocating
the operating and recovery room would correct infection control
deficiencies cited by JCAHO.  Increasing the number of specialty and
general-purpose examination rooms would improve staff scheduling and
reduce overcrowding and patient inconvenience in accordance with VA's
policy to provide veterans an accessible modern environment; current
outpatient space is adequate for about one-half the workload under VA
space standards.  Relocating the emergency room closer to the
ambulance offload area would eliminate the need to transport patients
through public corridors, reducing the time for treatment and
increasing privacy.  Modernizing the operating rooms would provide
space to accommodate additional medical specialists and the latest
equipment.  Expanding the parking space would reduce crowding and
provide weather protection for patients, increasing customer
satisfaction.  In addition, handicapped accessibility will be
improved. 

VA costs:  VA estimates that activation costs would be $14.6 million
and recurring costs, $3.1 million, partly for four additional staff. 
VA plans to offset some costs by consolidating Boston's outpatient
clinics. 


      POTENTIAL IMPACT OF VA'S
      PLANNED REORGANIZATION
------------------------------------------------------ Appendix II:3.2

The Boston medical center director did not believe that VA's planned
reorganization would significantly affect the medical center because
it should continue to be the tertiary center for the proposed VISN. 
Boston medical center would serve one fewer medical center than is
currently served. 

Medical center officials believe that no feasible alternative exists
but conducted no formal studies or analyses.  Using other VA medical
centers would not be feasible because many do not have the expertise
or equipment to provide the kinds of care provided by Boston, such as
radiation therapy, intensive chemotherapy, and kidney transplants. 
Some, like the Brockton and Bedford medical centers, which primarily
provide psychiatric outpatient care, cannot provide needed services;
some are too far away, such as West Haven medical center, which is
about 150 miles away--a 3-hour drive from Boston; and some, such as
the West Roxbury medical center, are operating at capacity. 

Using community facilities would be infeasible because contracting is
prohibitively expensive; officials estimate that outpatient care in
community facilities would be about $185 per visit versus their cost
of about $69, and emergency room care would cost about $1,000 per
visit versus their cost of about $166.  Renovating the hospital would
be infeasible because all hospital floors are being used, it would be
too costly to move the existing support columns to make room for
larger operating rooms, and there is no overhead space for needed
utilities.  Renovating other buildings would be infeasible because
they are too small, used for research or other specific purposes, or
too far from the hospital.  Finally, segmenting the project would not
be feasible because total costs could increase by up to $6 million;
deleting the ambulatory care facility would render the current
operating, recovery, and emergency rooms too small for outpatient
clinics; and no nearby acreage is available for parking. 


      POTENTIAL EFFECTS OF DELAYED
      FUNDING
------------------------------------------------------ Appendix II:3.3

Veterans' health care:  Boston medical center officials said that the
center would continue to provide ambulatory care in an increasingly
constrained, outmoded physical plant; patient infection risk,
scheduling, and privacy problems would continue; operations would
continue to be performed in a suite that is not suited for current
and future diagnostic and monitoring equipment or procedures; and
parking would remain inadequate. 

VA costs:  Project design is scheduled for completion in December
1995, construction contract award in July 1996, parking lot
completion in September 1996, and building construction completion in
January 1999.  If delayed, inflation would increase costs $1.25
million each year that the project is delayed, according to the chief
of engineering services. 


   NURSING UNIT AND AMBULATORY
   CARE REPLACEMENT BUILDING,
   RENO, NEVADA
-------------------------------------------------------- Appendix II:4

The Reno medical center is a 16-building campus on 14 acres that
serves 23 counties in northern Nevada and northeast California.  It
is affiliated with the University of Nevada School of Medicine and
has sharing agreements with the Nevada Army and Air National Guard
and Sierra Army Depot.  It provides primary and secondary medical and
surgical care, psychiatric care, and nursing home care.  During
fiscal year 1994, the average number of operating beds was 58
medical, 22 surgical, 32 psychiatric, and 60 nursing home beds; and
the average daily census was 40, 18, 17, and 54, respectively.  The
center admitted 3,796 inpatients and provided 122,044 outpatient
visits and about 96 percent of its patients were category A veterans,
including 35.3 percent service-connected, 51 percent
nonservice-connected low-income, and 9.7 percent nonservice-connected
with special needs (0.4 percent were other veterans and 3.5 percent
were not veterans). 

This $27.4 million ($7.3 million was previously appropriated for
design), 108,639-gross-square-foot patient environment project would
add a five-story medical, surgical, and psychiatric nursing unit to
the main hospital to replace existing nursing units.  It would
replace four-bed rooms and congregate bath and toilet facilities with
single and double rooms with private, wheelchair-accessible
bathrooms; upgrade HVAC and other utility systems; install medical
gases (oxygen and suction) and nurses' call systems in patient rooms;
expand ambulatory care capabilities; relocate the loading dock, trash
compactor, generator and research buildings, and bulk oxygen storage
tanks; and demolish and replace existing engineering quonset huts. 
The project would decrease the number of beds from 112 to 110 and,
according to VA headquarters officials, could be scoped down if
demand for inpatient care decreases.  It would not affect nursing
home beds. 

The project would not correct all the medical center's deficiencies. 
Reno's 5-year facility plan also includes $35.0 million for five
major construction projects to build and expand the ambulatory care
facilities, expand nursing home care, and replace HVAC in two
buildings and $6.4 million for three minor construction projects. 


      EXPECTED BENEFITS AND COSTS
------------------------------------------------------ Appendix II:4.1

Veterans' health care:  The Reno medical center would not serve any
new types of patients or provide any new services.  Reno medical
center officials said that the project would correct fire and safety
deficiencies and improve patient environment.  Installing a sprinkler
system and adding in-wall medical gases and suction would correct
JCAHO life and safety standards and meet VA requirements.  Adding
isolation rooms designed for patients with such highly infectious
diseases as tuberculosis and acquired immunodeficiency syndrome and
installing sinks in every patient room would help decrease the spread
of infection and disease.  Replacing existing four-bed rooms and
congregate bath and toilet facilities with single and double rooms
with private bathrooms not only complies with VA privacy goals and
JCAHO patient rights standards, it also improves staff efficiency and
eliminates the need to close bathrooms when in use by the opposite
sex.  Widening doors and hallways complies with JCAHO
environment-of-care requirements.  Upgrading air conditioning would
increase patient comfort. 

VA costs:  VA estimates that activation costs would be $5.6 million
and recurring costs, $10.1 million; no staff changes are planned. 
Medical center officials believe that operating costs would increase
due to the addition of air conditioning, but maintenance costs would
decrease because of more efficient equipment and design; no cost
estimates have been made. 


      POTENTIAL IMPACT OF VA
      PLANNED REORGANIZATION
------------------------------------------------------ Appendix II:4.2

Reno officials believe that the planned reorganization would have no
significant affect on the medical center or the proposed project. 
Reno's relationship with other VA medical centers in the proposed
VISN would remain essentially as it is now.  For example, Reno would
continue to send patients to San Francisco for cardiology and Palo
Alto for psychiatric services. 

Reno officials also believe that no feasible alternative exists but
conducted limited cost studies when developing the proposed project. 
Using other VA medical centers would not be feasible because other
facilities are too far away (the closest is over 200 miles away) and
are too difficult to access, especially in the winter for patients
who must cross the Sierra Nevada mountain range.  Using community
facilities would be infeasible because Reno's medical school
affiliate does not have its own medical facility; the affiliation
would be threatened because no opportunity would exist for resident
training; the continuity of care would be disrupted because patients
would be treated by physicians who do not follow them in both
inpatient and outpatient care; and contracting for community care is
believed to be too expensive--officials estimated that the annual
cost of contracting for all inpatient care, excluding physician fees,
would range between $34 million and $71 million.  Acquiring an
existing facility would not be feasible because ambulatory care would
be provided at the existing medical center and inpatient care would
be provided at the acquired facility, requiring the transportation of
patients, staff, and equipment between facilities, which would
increase operational costs, inconvenience patients, and increase
contract hospital costs.  Renovating the facility would not be
feasible because doing so would not eliminate narrow doors and
hallways or correct certain other deficiencies and patients would
have to be put into costly community facilities during the
renovation.  Finally, segmenting the project would be infeasible
because building only two or three of the five floors would not allow
Reno to meet all JCAHO standards and would likely increase costs due
to inflation.  No estimates were made.  Moreover, no guarantee exists
that funding would be available to complete the project. 


      POTENTIAL EFFECTS OF DELAYED
      FUNDING
------------------------------------------------------ Appendix II:4.3

Veterans' health care:  The Reno medical center would continue to
provide inefficient care in facilities that do not meet industry
standards.  In addition, medical center management and VA Western
Region officials believe that a funding delay could result in losing
JCAHO accreditation after the upcoming October 1995 accreditation
review.  Medical center management believes that losing accreditation
would result in losing affiliation with the University of Nevada,
causing university doctors, nursing staff, and other professionals to
refuse to practice in the nonaccredited facility; research
opportunities and funding also could be lost. 

VA costs:  Design is scheduled for completion in November 1995,
construction contract award in January 1996, and construction
completion in January 1999, although the director believes that
construction would be completed in late summer 1998.  Cost estimates
for funding delay have not been computed. 


   PSYCHIATRIC CARE REPLACEMENT
   BUILDING,
   MARION, INDIANA
-------------------------------------------------------- Appendix II:5

The Marion, Indiana, medical center is an 88-building campus on 151
acres that serves north central Indiana and northwestern Ohio.  It is
affiliated with Indiana University and four other state universities
for education and training experience.  It provides primary and
secondary medical and surgical care, nursing home care, and tertiary
psychiatric care for other VA medical centers in Indiana.  For fiscal
year 1994, the average number of operating beds was 124 medical, 320
psychiatric, and 69 nursing home; and the average daily census was
97, 285, and 65, respectively.  The center admitted 2,037 inpatients
and provided 54,701 outpatient visits, and about 93 percent of its
patients were category A veterans, including 33.8 percent
service-connected, 48.2 percent nonservice-connected low-income, and
11.2 percent nonservice-connected with special needs (3.1 percent
were other veterans and 3.6 percent were nonveterans). 

This $17.3 million, 69,259-gross-square-foot patient environment
project would construct a new two-story psychiatric nursing care
building to replace three existing buildings that would remain
vacant.  The project would replace rooms with up to four beds and
congregate bath and toilet facilities with single and double rooms
with private bathrooms (12 single rooms and 16 double rooms would be
wheelchair-accessible); locate nursing stations on the same floor
with patient rooms; and add dining facilities, elevators, and central
heat and air conditioning to the building.  The project would
decrease acute psychiatric beds from 141 to 100.  The project would
not affect other buildings on the campus. 

The project would not correct all the medical center's deficiencies. 
Marion's 5-year facility plan also includes a $9 million major
construction project and $3.5 million for three minor projects.\21
Moreover, Marion received $45.8 million in fiscal year 1992 for a new
240-bed geropsychiatric facility. 


--------------------
\21 Three other minor projects would be required if the proposed
project is not funded. 


      EXPECTED BENEFITS AND COSTS
------------------------------------------------------ Appendix II:5.1

Veterans' health care:  The Marion, Indiana, medical center would not
serve any new types of patients or provide any new services.  Medical
center officials said that the project would construct a modern
building that would correct fire and safety deficiencies, improve
patient environment, and improve efficiency.  The buildings' attic
floors currently do not meet fire code.  Replacing existing four-bed
rooms with single and double rooms with private baths would meet VA
privacy goals.  Increasing the number of handicapped-accessible rooms
and installing elevators would meet VA accessibility criteria. 
Installing central heating and air conditioning would increase
patient and staff comfort.  Locating dining facilities and other
support services in the patient building would save staff time
transporting patients and traveling between buildings, and locating
nursing stations on patient floors would improve patient monitoring
and supervision.  Providing all acute psychiatric care in one
building saves staff time traveling between buildings.  Strategically
locating nursing stations allows more efficient patient monitoring. 

VA costs:  VA estimates that activation costs would be $3.2 million
and recurring costs, almost $800,000 annually, primarily for 12
additional staff.\22


--------------------
\22 Marion officials said that staff needs are calculated with a
formula based on gross square footage, so the number of staff needed
would increase because the project would increase gross square
footage for the new building; no offsetting adjustments were made for
the replaced buildings because no plans have been made for them. 


      POTENTIAL IMPACT OF VA'S
      PLANNED REORGANIZATION
------------------------------------------------------ Appendix II:5.2

Marion medical center officials believe that VA's planned
reorganization would not significantly affect the medical center. 
They believe that Marion would be the psychiatric referral facility
for the seven other VA medical centers that would be in the proposed
VISN.  Further, workload may increase, not only as a result of the
plan but also because Indiana closed a large state mental health
facility this year; Indiana state officials have already tried to
place veterans in the Marion facility. 

Marion officials also believe that no feasible alternative exists to
the new center.  Using other VA medical centers would not be feasible
because the Fort Wayne medical center does not provide psychiatric
care; the Indianapolis medical center, with only 20 acute psychiatric
beds, has limited capacity; and psychiatric facilities in VA medical
centers in Chillicothe, Cleveland, and Dayton, Ohio, are more than 4
hours away, and Indiana law prohibits referring patients with
court-ordered treatment across state lines.  Using community
facilities would not be feasible because northern Indiana has no
comparable community inpatient psychiatric facilities.  Officials
rejected renovating the existing buildings because doing so would be
too expensive, but they had made no cost estimates.  In addition,
renovation would not correct patient privacy problems and would only
partly improve inefficient operations--staff would continue to spend
time transporting patients across the campus for treatment, meals,
and other activities--and installation of elevators would reduce
space available for patient rooms.  Finally, segmenting a new
building is not practical because an entire new building must be
built. 


      POTENTIAL EFFECTS OF DELAYED
      FUNDING
------------------------------------------------------ Appendix II:5.3

Veterans' health care:  The Marion, Indiana, medical center would
continue to provide inefficient care in facilities that do not meet
industry standards.  Medical center officials noted, however, that
some deficiencies would be corrected by installing elevators and
central heat and air conditioning with minor construction funds in
fiscal year 1997.  In addition, Marion officials are concerned that
JCAHO accreditation could be lost if the project is not funded. 

VA costs:  Project design is scheduled for completion in August 1995,
construction award in September 1996, and construction completion in
November 1998.  If delayed, inflation would increase construction
costs; no estimates have been made. 


   NURSING UNIT RENOVATION,
   SALISBURY, NORTH CAROLINA
-------------------------------------------------------- Appendix II:6

The Salisbury medical center is a 27-building campus on 155 acres
that serves 17 counties in southern North Carolina.  It is affiliated
with eight institutions and has agreements with Bowman Gray School of
Medicine for ophthalmology services and Rowan Memorial Hospital for
treatment of patients when the VA system has no space or transferring
patients to another VA facility is too risky.  It provides primary
and secondary medical and surgical care and nursing home care and is
the psychiatric referral center for all VA medical centers in North
Carolina.  During fiscal year 1994, the average number of operating
beds was 330 medical, 24 surgical, 235 psychiatric, and 93 nursing
home beds; and the average daily census was 320, 22, 181, and 89,
respectively.  The center admitted 3,457 inpatients and provided
93,196 outpatient visits and about 95.3 percent of its patients were
category A veterans, including 49.3 percent service-connected, 35.8
percent nonservice-connected low-income, and 10.2 percent
nonservice-connected with special needs (4.5 percent were other
veterans and 0.3 percent were nonveterans). 

The proposed $17.2 million, 106,871-gross-square-foot patient
environment project would renovate medical and surgical nursing units
in one building.  It would expand all three floors over the entrance;
convert rooms with up to four beds and shared or congregate toilet
and bath facilities to single rooms with private,
handicapped-accessible bathrooms; upgrade air circulation,
electrical, and plumbing systems; and expand the fire stairs at the
end of the corridors from the fourth floor to the fifth floor.  It
would decrease the number of beds in the renovated area from 174 to
162.  The project would not affect other buildings on campus. 

The project would not correct all the medical centers' deficiencies. 
Salisbury's 5-year facility plan also includes $51.8 million for five
major construction projects and $11.8 million for six minor projects. 
In addition, Salisbury received fiscal year 1987 funds for a
geropsychiatric center and fiscal year 1993 funds for a new nursing
home. 


      EXPECTED BENEFITS AND COSTS
------------------------------------------------------ Appendix II:6.1

Veteran's health care:  The Salisbury medical center would not serve
any new types of patients or provide any new services.  Medical
center officials said that the project would correct fire and safety
deficiencies, improve patient environment, and increase efficiency. 
Extending the fire stairs up to the fifth floor to eliminate dead-end
corridors would comply with the National Fire Protection Association
and National Building Code standards.  Upgrading plumbing and
electrical systems would comply with Underwriters Laboratories,
National Electrical Code, and National Fire Protection Association
standards.  Overhauling the fresh air exchange and replacing the fan
coil system with an all-air system to eliminate potential risks
associated with recirculating water-cooled air and improve indoor air
quality would meet the American Society of Heating, Refrigeration,
and Air Conditioning Engineers standards.  Converting to single rooms
with private, handicapped-accessible bathrooms would increase
privacy, improve handicapped accessibility, decrease the risk of
infectious disease, and eliminate the need for staff to carry patient
waste to inconvenient congregate facilities.  Increasing patient room
space would make room for furniture and medical equipment so that
mechanical lifts can be properly operated, reducing risk of injury to
patients and staff.  Relocating nurses' stations would provide better
line of sight and improve the monitoring of the patients.  Increasing
storage space would allow halls and offices to be used as intended. 

VA costs:  VA estimates that activation costs would be $2.8 million
and recurring costs would be $3.2 million annually, primarily for 52
added staff. 


      POTENTIAL IMPACT OF VA'S
      PLANNED REORGANIZATION
------------------------------------------------------ Appendix II:6.2

Salisbury medical center officials said that it is too soon to know
the effect of the planned reorganization, but they believe that it
would have little effect on the medical center's operations.  They do
not think that the medical center's mission or the need for the
project would change significantly; that is, the statewide VA network
would remain intact, with the four VA medical centers in North
Carolina continuing to function as in the past. 

Medical center officials also believe that no feasible alternative
exists but conducted no cost or feasibility studies.  They believe
that using other VA medical centers would not be feasible because the
centers are more than 100 miles away.  Leasing space, establishing
sharing agreements, and contracting for community care would be
infeasible because of the lack of available facilities or high cost. 
New construction would not be feasible because it would be too
expensive.  The project could be segmented, but doing so would not be
practical because patient floors would be disrupted for long periods
of time and costs would be higher. 


      POTENTIAL IMPACT OF DELAYED
      FUNDING
------------------------------------------------------ Appendix II:6.3

Veterans' health care:  The Salisbury medical center would continue
to provide inefficient care in facilities that do not meet industry
standards.  In addition, Salisbury officials said that JCAHO
accreditation could be jeopardized, although Salisbury has not
received any citations in the past.  They also said that veterans may
choose not to seek care from Salisbury. 

VA costs:  Project design is scheduled for completion in August 1995,
construction contract award in September 1996, and construction
completion in December 1999.  If delayed, the chief engineer said
that deficiencies would be corrected with a series of smaller
projects that would take longer and be less efficient and more
costly; no estimates have been made. 


   PSYCHIATRIC NURSING UNIT
   RENOVATION,
   PERRY POINT, MARYLAND
-------------------------------------------------------- Appendix II:7

The Perry Point medical center is a 208-building campus on 478 acres
that serves Maryland, the District of Columbia, and parts of
Delaware, Pennsylvania, Virginia, and West Virginia.  It is
affiliated with the University of Maryland and Johns Hopkins
University medical schools, has sharing agreements with the
Department of Defense to provide cardiology services and Harford
Memorial Hospital to provide specialized diagnostic testing, and
provides training programs with over 20 colleges and universities. 
It provides primary and secondary medical care, long-term care, and
tertiary psychiatric care.  In fiscal year 1994, the average number
of operating beds was 248 medical and 340 psychiatric, and the
average daily census was 167 and 246, respectively.  The center
admitted 3,056 inpatients and provided 92,646 outpatient visits and
about 92.2 percent of its patients were category A veterans,
including 36 percent service-connected, 46.2 percent
nonservice-connected low-income, and 10.1 percent
nonservice-connected with special needs (7.5 percent were other
veterans and 0.3 percent were nonveterans). 

This $15.1 million, 73,028-gross-square-foot patient environment
project would renovate psychiatric nursing units in two buildings. 
It would convert rooms with up to six beds and congregate bath and
toilet facilities in single and double rooms with private and
semiprivate handicapped-accessible bathrooms, relocate nursing
stations; upgrade HVAC systems, add therapeutic support space to both
buildings, remodel one cafeteria and relocate another, and correct
basement flooding problems.  The number of beds in the two buildings
would decrease from 160 to 108. 

The project would not correct all the medical center's deficiencies. 
Perry Point's 5-year facility plan also includes $30 million for a
major construction project to build a new nursing unit building and
$22.2 million for nine minor construction projects for clinical
improvements, patient environment improvements, and fire and safety
deficiency corrections. 


      EXPECTED BENEFITS AND COSTS
------------------------------------------------------ Appendix II:7.1

Veteran's health care:  The Perry Point medical center would not
serve any new types of patients or provide any new services.  Perry
Point officials said that the project would improve the patient
environment and increase efficiency.  JCAHO had identified
deficiencies but had not cited Perry Point for violations because the
deficiencies were to be corrected with the project.  Relocating
nursing stations and adding therapy space would improve patient
observation and supervision.  Replacing rooms with up to six beds and
congregate bath and toilet facilities with single and double rooms
with handicapped-accessible private bathrooms would correct privacy
deficiencies and improve patient accessibility.  Upgrading elevators
and locating treatment space and cafeterias in the buildings would
save staff time transporting patients.  Locating supply rooms more
conveniently should save nurse time.  In addition, the director and
chief of staff believe that the project would make Perry Point more
competitive with community providers. 

VA costs:  VA estimates that activation costs would be $2.0 million
and recurring costs, $0.5 million.  Medical center officials estimate
that upgrading HVAC would save about $2,000 a year in operations
costs. 


      POTENTIAL IMPACT OF VA'S
      PLANNED REORGANIZATION
------------------------------------------------------ Appendix II:7.2

Perry Point's director believes that the planned reorganization would
have no significant impact on the medical center.  Perry Point's
mission would not change because it is the only VA medical center in
the proposed VISN that would provide long-term psychiatric care. 
Under the realignment, however, three of the medical centers in the
network--Perry Point, Baltimore, and Fort Howard--will be managed by
one director. 

Perry Point officials believe that they have no feasible options. 
Using other VA medical centers would be infeasible because they are
too far away.  The closest facility, Coatesville, does not have the
capacity to handle the number of patients cared for by Perry Point. 
Using community facilities would not be feasible because the
affiliated facilities do not provide the tertiary care that Perry
Point provides and others are prohibitively expensive.  Renovation
was selected over new construction because the existing buildings are
structurally sound and management thought that this option would
provide a better chance to get other needed construction at the
center.  Finally, segmenting the buildings is not feasible because
all the buildings need renovation. 


      POTENTIAL EFFECTS OF DELAYED
      FUNDING
------------------------------------------------------ Appendix II:7.3

Veterans' health care:  The Perry Point medical center would continue
to provide veterans with inefficient care in facilities that do not
meet industry standards.  In addition, officials said that the
medical center would continue to be less attractive than community
facilities in competing for patients. 

VA costs:  Project design was completed in September 1995,
construction contract award is scheduled for completion in August
1996, and construction completion in February 1999.  If delayed,
Perry Point's chief engineer said that inflation would increase
costs; no estimates had been made.  Moreover, increased competition
in the local construction industry could further raise costs. 


   NURSING UNIT RENOVATION,
   MARION, ILLINOIS
-------------------------------------------------------- Appendix II:8

The Marion medical center is a 14-building campus on 76 acres that
serves southern Illinois, southwest Indiana, and western Kentucky. 
It is affiliated with Southern Illinois University School of Medicine
and colleges in Missouri, Kentucky, Indiana, and Illinois and has
sharing agreements with Naval Reserve Fleet Hospital 500 and the Army
Reserve 21st General Hospital.  It provides primary and secondary
medical and surgical care and nursing home care.  During fiscal year
1994, the average number of operating beds was 123 medical, 26
surgical, and 60 nursing home beds; and the average daily census was
81, 17, and 60, respectively.  The center admitted 4,784 inpatients
and provided 58,007 outpatient visits and about 94.4 percent of its
patients were category A veterans, including 21.2 percent
service-connected, 62.6 percent nonservice-connected low-income, and
10.6 percent nonservice-connected with special needs (5.0 percent
were other veterans and 0.6 percent were nonveterans). 

This $11.5 million, 49,157 gross-square foot patient environment
project would renovate medical and surgical nursing units on two
floors and part of a third in a four-story hospital building.  It
would convert rooms with up to nine beds and congregate bath and
toilet facilities to single and double rooms with private,
handicapped-accessible bathrooms; convert a first-floor hospital wing
to patient rooms; move the existing outpatient clinic; modernize the
intensive care unit; replace the electrical, heating, air
conditioning, and plumbing systems; and modify the interior structure
for seismic protection.  Medical center officials said that the
number of beds would not change. 

The project would not correct all the medical center's deficiencies. 
Marion's 5-year facility plan includes no additional major
construction projects but includes $4.2 million for two minor
projects.  In addition, a new $15.6 million outpatient clinic is
under construction. 


      EXPECTED BENEFITS AND COSTS
------------------------------------------------------ Appendix II:8.1

Veterans' health care:  The Marion, Illinois, medical center would
not serve any new types of patients or provide any new services. 
Medical center officials said that the project would correct fire and
safety deficiencies, improve patient environment, and increase
efficiency.  They said that JCAHO had not cited the medical center
for fire and life and safety violations because the project would
correct the violations but noted that failure to complete the project
in a timely manner would result in citations.  Upgrading air
conditioning would not only reduce the risk of airborne infection and
improve patient comfort but also correct National Fire Protection
Association code violations by reducing the threat of smoke
inhalation from a fire.  Upgrading electrical and medical gas systems
would also correct code violations.  Converting patient rooms to
single and double rooms with private handicapped-accessible baths
would meet VA space and handicapped accessibility criteria, Uniform
Federal Accessibility Standards, and VA privacy goals.  Removing
asbestos from the building and making seismic improvements also would
increase patients' safety.  Expanding the nursing station space would
reduce instances of transcription and medication errors and eliminate
the crowding of administration and medical professionals.  Increasing
room space would eliminate the need to move beds when doors are
opened or closed, patients are moved in or out of the room, or
bedside treatment is given to patients.  Adding waiting rooms for
relatives and other visitors would increase customer satisfaction. 

VA costs:  VA estimates that activation costs would be $3.1 million
and recurring costs would be $.3 million; no staff changes are
planned.  The senior engineer estimates that the project would save
$146,000 in annual utility and maintenance and repair costs. 


      POTENTIAL IMPACT OF VA'S
      PLANNED REORGANIZATION
------------------------------------------------------ Appendix II:8.2

The Marion, Illinois, medical center director believes that the
proposed project complements VA's planned reorganization and that the
reorganization would have no significant affect on the medical
center.  This is because the medical center would continue to provide
basic health care in the new target area; support the Secretary's
mandate to "put patients first;" and meet the VISN objective of
ensuring patient satisfaction, access, quality, and efficiency. 

The director also believes that no feasible alternative exists. 
Using other VA medical centers would not be feasible because the
nearest VA hospital is 120 miles away and continuity of care would be
disrupted.  Renovating the hospital rather than constructing a new
one is cost effective; but no studies have been done.  Segmenting is
not feasible because the utility systems need total replacement and
the project would involve the entire hospital.  When developing the
project proposal, medical center officials determined that several
options were infeasible.  Using community facilities would be
infeasible because renting bed space would increase costs by about
$5.8 million per year and contracting for inpatient care would
destroy the continuity of patient care and increase costs by about
$6.6 million per year.  Also, reducing the number of beds in existing
rooms would fail to meet the Secretary's priority of comparable
facilities, perpetuate deficiencies, and increase maintenance and
repair costs. 


      POTENTIAL EFFECTS OF DELAYED
      FUNDING
------------------------------------------------------ Appendix II:8.3

Veterans' health care:  The Marion, Illinois, medical center would
continue to provide veterans with inefficient care in facilities that
do not meet industry standards. 

VA costs:  Project design is scheduled for completion in January
1996; construction contract award in December 1996; and construction
completion by August 1999.  If delayed for 3 years, the senior
engineer estimates that inflation would increase construction costs
by $1.8 million.  In addition, a likely utility system failure would
require increased repairs and interim upgrades costing $3.3 million. 


   NURSING UNIT RENOVATION,
   LEBANON, PENNSYLVANIA
-------------------------------------------------------- Appendix II:9

The Lebanon medical center is a 31-building campus on 213 acres that
serves south central Pennsylvania.  It is affiliated with the
Pennsylvania State University College of Medicine and 45 other
colleges and universities and has several sharing agreements with the
Department of Defense.  It provides primary and secondary medical and
surgical care and nursing home care.  In fiscal year 1994, the
average number of operating beds was 256 medical, 20 surgical, 193
psychiatric, and 177 nursing home beds; and the average daily census
was 187, 10, 169, and 166, respectively.  The center admitted 3,421
patients and provided 78,040 outpatient visits, and about 89 percent
of its patients were category A veterans, including 41.1 percent
service-connected, 38.7 percent nonservice-connected low-income, and
9.5 percent nonservice-connected with special needs (9.8 percent were
other veterans and 0.9 percent were nonveterans). 

This $9 million, 50,425 gross-square-foot patient environment project
would renovate medical and surgical nursing units on three floors of
one building.  The project would replace rooms with up to four beds
and congregate bath and toilet facilities with single and double
rooms with private and semiprivate bathrooms; relocate and expand
nursing stations and other support space; upgrade HVAC, electrical,
medical gas, and other building systems; improve patient amenities;
and establish a combined psychiatric and acute medical care unit. 
The number of beds in the renovated area would decrease from 128 to
110.  The project would not affect the rest of the renovated building
or any other buildings on the campus. 

The project would not correct all the medical center's deficiencies. 
Lebanon's 5-year facility plan also includes $24.3 million for four
major construction projects to develop a rehabilitation center for
the blind, consolidate rehabilitation outpatient clinic and
administrative services, renovate a nursing home facility, and expand
ambulatory care facilities and $21.2 million for 13 minor projects. 


      EXPECTED BENEFITS AND COSTS
------------------------------------------------------ Appendix II:9.1

Veterans' health care:  The Lebanon medical center would not serve
any new types of patients or provide any new services.  Medical
center officials said that the project would correct fire and safety
deficiencies, improve patient environment, and increase efficiency. 
When doorways are widened, the medical center would comply with all
fire code requirements; doorways are too narrow for gurneys. 
Increasing the number of handicapped-accessible patient rooms and
bathrooms by installing hand and wheelchair rails and other
modifications would meet JCAHO and Americans with Disabilities Act
(ADA) space standards.\23 Installing sinks in patient rooms would
eliminate the need for nurses, doctors, and patients to use remote
congregate bathrooms to wash hands and dispose of patient waste and
would address JCAHO's requirements for adequate infection control. 
Converting most rooms to single and double rooms with private and
semiprivate bathrooms would move toward VA's privacy goals (the goals
would not be totally met because Lebanon obtained a waiver for
several double rooms to share bathrooms because exterior wall
construction would preclude building private bathrooms in some
areas).  Upgraded ventilation would improve indoor air quality. 
Upgrading heating and air conditioning should make patients more
comfortable.  Telephones and televisions would be installed in every
room, improving patient comfort and satisfaction.  In addition,
efficiency would increase because nurses would spend less time on
such routine tasks as disposing of human waste, bathrooms would not
be closed to patients of the opposite sex, and intensive care units
would not be used for routine patient monitoring because rooms are
not equipped with monitoring devices.  Finally, Lebanon should be
able to better compete with private providers. 

VA costs:  VA estimates that activation costs would be $1.8 million
and recurring costs would be $.4 million; no staff changes are
planned.  The executive assistant to Lebanon's director anticipates
savings from reduced operating and maintenance costs for the
renovated area; no estimates were made. 


--------------------
\23 ADA standards require 48 inches between beds, 4 inches from head
of bed to the wall, 36 inches from side of bed to wall, and 48 to 60
inches from foot of bed to wall. 


      POTENTIAL IMPACT OF VA'S
      PLANNED REORGANIZATION
------------------------------------------------------ Appendix II:9.2

The Lebanon medical center director said that it is too early to know
how the reorganization would affect the project and medical center
but believes that it would have little effect because the medical
center would continue to serve veterans and continue to need
renovation. 

The medical center director also believes no feasible alternative
exists, but no studies have been conducted.  Using other VA medical
centers would not be feasible because they do not provide acute care
or are too far from Lebanon; the closest is about 75 miles away. 
Using community facilities would be infeasible because private
hospitals do not want to serve veterans who do not have insurance or
the income to pay for care because such veterans are viewed as
high-cost risks--being generally older, sicker, and poorer and often
having alcohol abuse and other social problems.  Further,
transferring medical and surgical functions to the Pennsylvania State
University College of Medicine would be too expensive because a new
building would have to be constructed at the University and too
inconvenient because Lebanon nursing home patients would have to be
transported 17 miles to the University if they would need medical or
surgical services.  Constructing a new building would be infeasible
because new construction would be more expensive; no cost analysis
has been done.  Finally, segmenting the project would be infeasible
because plumbing and some other renovations are interrelated and
require refurbishing all three floors. 


      POTENTIAL EFFECTS OF DELAYED
      FUNDING
------------------------------------------------------ Appendix II:9.3

Veterans' health care:  Lebanon medical center officials said that
the center would continue to provide veterans with inefficient care
in facilities that do not meet industry standards. 

VA costs:  Project design was completed in August 1995, construction
award is scheduled for completion in August 1996, and construction
completion in February 1999.  If delayed, inflation would increase
the cost of construction about 5 percent a year, according to the
executive assistant.  Moreover, the executive assistant believes that
using minor construction funds to renovate the nursing units would
lengthen the completion time and increase cost. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

Paul R.  Reynolds, Assistant Director, (202) 512-7109
Byron S.  Galloway, Assignment Manager
John A.  Borrelli, Evaluator-in-Charge
Linda S.  Bade
Ralph J.  Dagostino
Sylvia Diaz Jones
Vincent J.  Forte
John R.  Kirstein
Thomas P.  Monahan
Nancy T.  Toolan


*** End of document. ***