VA Health Care: Travis Hospital Construction Project Is Not Justified
(Letter Report, 09/03/96, GAO/HEHS-96-198).
Pursuant to a congressional request, GAO provided information on the
Department of Veterans Affairs' (VA) planned construction of an
outpatient clinic and additional bed space at the David Grant Medical
Center, focusing on whether: (1) the project could be adequately
justified; and (2) there are cost-effective alternatives to planned
hospital construction.
GAO found that: (1) VA planned construction of additional bed space and
an outpatient clinic at Travis Air Base appears to be unjustified; (2)
VA has not revised its construction plans to reflect the changes that
have occurred in the health care marketplace and advances in medical
practices and technology that have reduced the demand for hospital beds
in Northern California; (3) VA has not considered whether its
construction plans will negatively affect surrounding community
hospitals; (4) the veteran population in Northern California is expected
to decline by 25 percent between 1995 and 2010 and may not be large
enough to support a new outpatient clinic; (5) VA is adequately meeting
the health care needs of Northern California Health Care System (NCHCS)
veterans; (6) although VA clinics have experienced some space
constraints, they have had no problem in placing veterans needing
hospital care and using community hospitals for medical emergencies; (7)
alternatives to VA construction plans include modifying VA hospital
referral patterns, expanding use of other military and VA hospitals,
granting VA more authority to contract for lower cost community hospital
services, or allowing it to purchase a local Air Force hospital for use
as a hospital or outpatient clinic; (8) VA Sierra Pacific Network
officials are evaluating the best way to meet veterans' future health
care needs, make better use of VA facilities, and increase the use of
private and other public facilities; and (9) Congress' decision on
whether to fund the construction plan will significantly affect the
alternatives and options that can be implemented.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: HEHS-96-198
TITLE: VA Health Care: Travis Hospital Construction Project Is Not
Justified
DATE: 09/03/96
SUBJECT: Veterans hospitals
Facility construction
Veterans benefits
Health resources utilization
Hospital planning
Hospital care services
Hospital bed count
Medical services rates
Cost effectiveness analysis
Community health services
IDENTIFIER: Martinez (CA)
Solano County (CA)
VA Northern California Health Care System
VA Sierra Pacific Network
Palo Alto (CA)
San Francisco (CA)
VA Integrated Planning Model
Sacramento (CA)
Fairfield (CA)
Alameda County (CA)
VA Veterans Integrated Service Network
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Cover
================================================================ COVER
Report to the Chairman, Subcommittee on VA, HUD, and Independent
Agencies, Committee on Appropriations, U.S. Senate
September 1996
VA HEALTH CARE - TRAVIS HOSPITAL
CONSTRUCTION PROJECT
IS NOT JUSTIFIED
GAO/HEHS-96-198
VA Sierra Pacific Network Planning
(406130)
Abbreviations
=============================================================== ABBREV
DGMC - David Grant Medical Center
VA - Department of Veterans Affairs
VISN - Veterans Integrated Service Network
NCHCS - Northern California Health Care System
DOD - Department of Defense
HUD - Department of Housing and Urban Development
Letter
=============================================================== LETTER
B-274096
September 3, 1996
The Honorable Christopher S. (Kit) Bond
Chairman, Subcommittee on VA, HUD,
and Independent Agencies
Committee on Appropriations
United States Senate
Dear Mr. Chairman:
The Department of Veterans Affairs (VA) has requested that the
Congress fund a $211 million hospital construction project at the
David Grant Medical Center (DGMC) at Travis Air Force Base in
Fairfield, California.\1 The proposed project would provide
additional VA hospital beds to serve veterans who were previously
served by the 235-bed VA hospital in Martinez, California, which
closed in 1991 due to earthquake safety concerns.
In 1993, the Air Force and VA initiated a joint venture allowing VA
to use space at DGMC to serve veterans on an interim basis pending
completion of the proposed project. Currently, VA has access to 55
beds; the Air Force has committed to making a total of 73 beds
available for VA use at the completion of the project. Thus, given
the planned 170 new beds in two separate bed towers and 73 existing
beds to be made available by the Air Force, the completed project
would provide VA a total of 243 acute care hospital beds. The
project would also include construction of a VA outpatient clinic
expected to provide services for about 85,000 visits a year, as well
as significant renovation of space in the existing hospital to
provide ancillary services, such as radiation therapy and dietetics,
to handle the increased workload expected to be generated by the
additional hospital beds and outpatient clinic.
Given budgetary constraints and VA's ongoing efforts to realign its
facilities into new Veterans Integrated Service Networks (VISN), you
questioned whether the proposed Travis project represents the best
way to meet the health care needs of the veterans expected to be
served by the new facility. In responding to your request, we
focused on
-- the justification for the proposed construction project,
including its potential effects on other medical facilities in
northern California, and
-- potential alternatives to the proposed Travis project.
To address these issues, we reviewed VA's hospital and clinic
planning methodologies, assumptions, and data pertaining to VA's
Sierra Pacific Network. We visited the network's hospitals in San
Francisco and Palo Alto and its Northern California Health Care
System (NCHCS), including the VA/Air Force joint venture at Travis
Air Force Base and clinics in Oakland, Sacramento, and Martinez. In
addition, we visited the McClellan Hospital at the former Mather Air
Force Base (hereafter referred to as the Mather hospital), which the
Air Force is planning to close by 2001.
We interviewed federal officials, including VA's under secretary for
health, the director of VA's Sierra Pacific Network, the Air Force's
commander of the 60th Medical Group at Travis Air Force Base, and the
administrator of the 77th Medical Group at the Mather hospital; the
dean of the Medical School at the University of California at Davis;
and the supervisor of the Hospital Financial Data Unit in the
California Office of Statewide Health Planning and Development.
These officials also provided us with studies, documents, and data,
which we reviewed. In addition, we interviewed representatives of
local veterans' service organizations to obtain their views on the
accessibility of VA care in California as well as on the proposed
Travis project and potential alternatives.
We presented our preliminary observations to your staff on August 16,
1996. This report presents the final results of our work. We did
our work in July and August 1996 in accordance with generally
accepted government auditing standards.
--------------------
\1 DGMC was constructed as a 298-bed general medical and surgical
facility. The hospital includes an additional 75 beds in an
aeromedical staging facility.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
Construction of additional hospital beds and an outpatient clinic as
large as VA proposes at Travis Air Force Base is unnecessary. We
found that significant changes have occurred in the health care
marketplace and in the way VA delivers health care in the 4 years
since the project was planned, but VA plans have not been revised
accordingly. These changes alone have resulted in over 3,300 unused
hospital beds in northern California hospitals, including beds in VA,
Air Force, and community hospitals. In addition, the veteran
population in the service area is expected to drop by about 25
percent between 1995 and 2010. We also found that VA has not
considered the likely negative effects the additional beds could have
on other hospitals in northern California, particularly those
community hospitals in the Solano County area surrounding Travis Air
Force Base that have occupancy rates of around 40 percent.
Data we obtained show that VA is currently meeting the health care
needs of veterans served by NCHCS. With VA hospitals at Palo Alto,
San Francisco, and Travis operating below capacity, VA clinics have
no trouble placing patients needing hospital care. Also, while VA's
four clinics in the area intended to be served by the Travis hospital
are operating at close to full capacity, three have turned away no
veterans needing hospital or outpatient care. In addition, the
clinics have effectively used community hospitals for medical
emergencies. VA officials pointed out, and our visits confirmed,
that space constraints, such as the lack of sufficient numbers of
examining rooms, prevent them from operating as efficiently as they
could otherwise.
We identified several more efficient alternatives that are available
to VA if increased demand for hospital care should materialize. For
example, existing clinics' hospital referral patterns could be
modified to manage excess capacity in existing VA and Department of
Defense (DOD) hospitals. Similarly, VA clinics should be able to
purchase care from community hospitals more conveniently and at a
lower cost than would be incurred through the construction of
additional beds. VA, however, currently has limited authority to
purchase health care services from community hospitals other than in
emergencies or in cases when scarce medical specialty services are
required. Legislation to expand VA's contracting authority is
pending in the Congress. Finally, with the planned closure of the
Mather hospital, VA has an opportunity to obtain a fully functional
facility for use as either a hospital or an outpatient clinic.
VA officials in the Sierra Pacific Network are currently studying the
best way to meet veterans' future health care needs. Network
officials are considering options to make better use of VA facilities
and increase the use of private and other public facilities. The
Congress' decision on whether to fund the construction of additional
beds at Travis will significantly affect the current and future
options to be addressed through the study.
BACKGROUND
------------------------------------------------------------ Letter :2
VA provides health care through a direct delivery system of 173
hospitals and over 200 free-standing clinics nationwide. VA
facilities also purchase health care from other public and private
providers under certain conditions, such as medical emergencies. VA
served over 2.6 million veterans at a cost of about $16.2 billion in
fiscal year 1995.
In 1995, VA restructured its system into 22 VISNs. Each contains
from 5 to 11 hospitals, as well as several clinics, covering a
specified geographic area that reflects patient referral patterns and
the availability of medical services. The networks are responsible
for consolidating and realigning services within their areas to
provide an interlocking, interdependent system of care. VA expects
to improve efficiency by trimming management layers, consolidating
redundant medical services, and better using available private and
public resources.
Another important change in the VA health care system is an enhanced
focus on the provision of primary care and an increased emphasis on
shifting care from inpatient to outpatient settings. VA is in the
process of implementing a primary care approach in all of its
clinics. Under primary care, veterans are expected to enroll in an
outpatient clinic, where they are assigned to a primary care
physician or physician group. When needed, VA primary care
physicians refer veterans to VA or community hospitals. Because
non-VA physicians do not have admitting rights to VA hospitals, the
workload of VA hospitals is driven almost entirely through referrals
from its outpatient clinics.
VA'S SERVICE DELIVERY IN THE
SIERRA PACIFIC NETWORK
---------------------------------------------------------- Letter :2.1
Northern California and parts of Nevada are served by the Sierra
Pacific Network.\2 The network operates the hospital beds in the
Travis joint venture project as well as hospitals in Reno, Nevada,
and in Fresno, San Francisco, and Palo Alto (with divisions in
Livermore, Palo Alto, and Menlo Park). It also operates outpatient
clinics at each of these locations as well as satellite outpatient
clinics in Martinez, Redding, Oakland, Sacramento, and San Jose.
Although the Air Force operates an outpatient clinic at DGMC, VA does
not currently have an outpatient clinic at Travis. Figure 1 shows
the location of the major VA facilities in the Sierra Pacific
Network.
Figure 1: VA Facilities in the
Sierra Pacific Network
(See figure in printed
edition.)
Note: Does not include small community-based and outreach clinics;
does not include Nevada counties in the Sierra Pacific Network.
The proposed Travis project is located in the Sierra Pacific
Network's Northern California Health Care System. NCHCS includes the
clinics in Martinez, Oakland, Redding, and Sacramento and the
hospital beds at Travis Air Force Base. NCHCS primarily serves
veterans east of the San Francisco Bay and in the northern part of
the state. Currently, the only VA hospital beds operated in this
area are the 55 beds in the joint venture at Travis. Travis Air
Force Base is located about 50 miles northeast of San Francisco and
about 77 miles northeast of Palo Alto. It is about 44 miles
southwest of Sacramento, 34 miles northeast of Martinez, 41 miles
northeast of Oakland, and 179 miles south of Redding. The proposed
Travis project service area is shown in figure 2.
Figure 2: Proposed Travis
Project Service Area
(See figure in printed
edition.)
Note: Map shows the 33 counties included in the service area when
the project was initially planned in 1992. NCHCS' service area now
focuses primarily on 14 counties, but NCHCS facilities serve veterans
from the other 19 counties as well as from other parts of the
country.\3
The NCHCS service area continues to include the large veteran
population in the East Bay (Oakland/Martinez) and Sacramento areas.
Table 1 shows the number of veterans living in the four counties in
the NCHCS service area with the largest veteran populations.
Table 1
NCHCS Counties With the Largest Number
of Veterans, FY 1995
Number
of
vetera
County ns
-------------------------------------------------------------- ------
Sacramento 123,49
8
Alameda (Oakland) 117,08
1
Contra Costa (Martinez) 91,422
Solano (Travis Air Force Base) 42,645
----------------------------------------------------------------------
Source: Geographic Distribution of VA Expenditures; Fiscal Year
1995; State, County and Congressional District (National Center for
Veteran Analysis and Statistics, VA)
--------------------
\2 The Sierra Pacific Network is also responsible for veterans'
health care in Honolulu, Hawaii, and Manila, Republic of the
Philippines.
\3 The 14 counties are Alameda, Butte, Colusa, Contra Costa, Glenn,
Sacramento, Shasta, Siskiyou, Solano, Sutter, Tehama, Trinity, Yolo,
and Yuba.
VA'S CONSTRUCTION PLANNING
FOR NCHCS
---------------------------------------------------------- Letter :2.2
Through its construction planning, VA expects to improve the
geographic accessibility of VA hospital and outpatient care for
veterans currently served by NCHCS, as well as for those who have not
previously sought care from VA. When VA closed its hospital in
Martinez, much of the area was left with limited access to VA
hospital and outpatient care. In fiscal year 1991, the Martinez
hospital had an average daily census of 235 patients. Although the
Martinez hospital served veterans from much of northern California,
most users came from the East Bay and Sacramento areas.\4
In 1991, the Congress appropriated emergency funds to construct a
replacement outpatient clinic and a nursing home on the grounds of
the closed hospital. The replacement clinic--a prototype for the VA
system--became operational in November 1992. It included modern
ambulatory surgery capabilities, sophisticated imaging technology,
and attractive surroundings. Construction of the nursing home was
delayed pending demolition of the hospital building, but the nursing
home is scheduled to open in the fall of 1996.
In 1992, VA planners conducted a study to determine where to build a
replacement hospital. The options considered included partially
renovating and seismically retrofitting the closed Martinez hospital,
constructing a new hospital in Sacramento, constructing dual
hospitals in Martinez and Sacramento, and constructing a joint
venture hospital at Travis Air Force Base. Although the dual
hospital option was judged to offer the greatest improvement in
accessibility, the cost was considered prohibitive. After further
negotiations with the affected parties, which resulted in the Air
Force's offer to allow VA to establish some hospital beds at DGMC on
an interim basis and reduce the number of beds to be included in the
final construction project, VA decided on the 243-bed joint venture,
including 170 new beds and 73 existing beds.
Although VA sought funding for the hospital project in its fiscal
year 1996 budget submission, the Congress did not fund the hospital
aspect of the project.\5 Instead, the Congress provided $25 million
to construct only an outpatient clinic at Travis.\6 Rather than going
forward with construction of the clinic, however, VA, in its fiscal
year 1997 budget submission, requested $32 million toward
construction of the entire original $211 million project. Moreover,
VA estimates that it will need about $67 million more in one-time
activation costs for the completed facility and about $72 million a
year to operate it.
--------------------
\4 VA Health Care: Closure and Replacement of the Medical Center in
Martinez, California (GAO/HRD-93-15, Dec. 1, 1992).
\5 In our report, VA Health Care: Effects of Facility Realignment on
Construction Needs Are Unknown (GAO/HEHS-96-19, Nov. 17, 1995), we
suggested that the Congress consider delaying all major construction
projects until VA developed and applied criteria for assessing
alternatives.
\6 Proposed VA Hospital at Travis Air Base (GAO/HEHS-95-268R, Sept.
19, 1995).
PROPOSED TRAVIS PROJECT NOT
ADEQUATELY JUSTIFIED
------------------------------------------------------------ Letter :3
The proposed Travis project would probably add to existing excess
hospital beds both in the VA system and in the community. Moreover,
not enough low-income and service-connected veterans live near Travis
Air Force Base to support a clinic of the size VA proposes. To
support the clinic, VA would need to focus on attracting large
numbers of higher-income veterans with no service-connected
disabilities or attracting veterans from other NCHCS clinics.
EXISTING HOSPITAL BEDS
APPEAR ADEQUATE TO MEET
FUTURE DEMAND
---------------------------------------------------------- Letter :3.1
The 1992 decision to add 170 new hospital beds at Travis has
essentially been overcome by events. Both VA and the private sector
are increasingly shifting care to outpatient settings, decreasing
demand for hospital care. Not only has VA been able to meet the
demands for hospital care through use of existing VA and community
beds, but there is also significant excess hospital capacity in VA,
DOD, and community facilities.
To support the proposed number of beds planned for the Travis
project, VA would need to more than triple the number of people it
serves. Such an increase in market share appears unlikely because
the veteran population in the service area is projected to decrease
by about 25 percent between 1995 and 2010. To the extent that VA is
successful in increasing its market share by attracting veterans
currently using community hospitals, the financial viability of
community hospitals, particularly those in the vicinity of Travis Air
Force Base, might be adversely affected.
ADVANCES IN MEDICAL
PRACTICE AND TECHNOLOGY
REDUCE DEMAND FOR
HOSPITAL CARE
-------------------------------------------------------- Letter :3.1.1
VA's position that it needs to build 170 more hospital beds at Travis
is based on the assumption that veterans will demand hospital care in
2005 at the same rate they did between 1989 and 1991. This
assumption appears flawed given the changing health care delivery
market.
Because the data used in VA's integrated planning model are several
years old, the model does not fully reflect the decrease in hospital
utilization occurring because of changes in medical practice and
medical technology. For example, a few years ago, it was common
practice for patients to remain in the hospital for 1 to 2 weeks
following surgery. Now, however, it is common medical practice to
get patients out of bed the day of or day after major surgery and to
discharge them within a few days. In addition, new techniques, such
as less invasive laparoscopic surgery, help shorten lengths of stay
for those patients requiring hospital admission. Similarly, advances
in medical technology and techniques, such as laser surgery, permit
many procedures to be safely performed on an outpatient basis.
Moreover, in the past few years, VA has made major strides toward
shifting care to outpatient settings. For example, the performance
expectations that the under secretary for health set for VISN
directors establish goals for increasing both the percentage of
surgeries performed on an outpatient basis and the percentage of
hospital admissions shifted to outpatient settings. The NCHCS
clinics served more veterans in fiscal 1995 than they did in 1992,
and fewer veterans were admitted to hospitals in 1995 than in 1990,
the last full year that the Martinez hospital was open. This reduced
usage seems consistent with VA's shifting of care from inpatient to
outpatient settings.
With the establishment of the recently constructed Martinez
outpatient clinic, NCHCS became a model for the rest of the VA
system. The Martinez clinic offers modern ambulatory surgery and
sophisticated imaging technology, permitting much care to be
delivered on an outpatient basis. The bed days of care provided to
veterans served by the Martinez clinic are among the lowest in the VA
system, according to the VISN director. The ambulatory surgery and
imaging capabilities at Martinez also help reduce hospital admissions
from other VA clinics. For example, the Sacramento and Oakland
clinics refer some patients to Martinez for ambulatory surgery rather
than admitting them to a hospital. As the Oakland, Sacramento, and
Redding clinics' ability to perform outpatient surgery is expanded,
further reductions in hospital admissions might well result.
VA is also moving towards nonhospital settings for patients who need
subacute care. In 1991, VA provided a considerable amount of such
care in its hospitals, and the 1992 plans for the proposed Travis
project, for example, included 56 nonacute beds.
EXISTING FACILITIES MEET
CURRENT USERS' NEEDS
-------------------------------------------------------- Letter :3.1.2
The NCHCS clinics at Oakland, Martinez, and Sacramento--the primary
clinics likely to generate admissions to the VA hospital at
Travis--currently serve all veterans seeking outpatient care and
place all veterans requiring hospital care in a VA or community bed.
However, network and NCHCS officials told us, and we observed during
our visits, that these clinics operate inefficiently, in part,
because of space constraints, such as the lack of sufficient numbers
of examining rooms. The fourth NCHCS clinic, in Redding, does not
currently meet the needs of all veterans seeking care. The Redding
clinic, which provides only primary care, evaluates all veterans
seeking care but, according to the chief medical officer, does not
serve higher-income veterans in the discretionary care category for
hospital care or veterans who have no service-connected disabilities
and do not receive a VA pension. According to the chief medical
officer, the clinic was built to support 15,000 visits a year but
provided 33,000 visits last year. A new, larger clinic is scheduled
to open in November.
In 1995, the four NCHCS clinics served over 33,000 veterans,
providing a total of 338,000 outpatient visits. Veterans served by
the four clinics were admitted to hospitals about 2,800 times,
primarily for general medicine services, but also for surgical,
neurological, and psychiatric services. This admission rate, about
85 admissions per 1,000 veterans served, supported an average daily
census of about 75 hospital beds, or about 2 beds per 1,000 veterans
served.
VA WOULD NEED TO TRIPLE
MARKET SHARE TO SUPPORT
ADDITIONAL BEDS
-------------------------------------------------------- Letter :3.1.3
VA's proposal to build 170 new beds at Travis and obtain 18
additional beds in the existing Air Force hospital would more than
quadruple VA's current capacity of 55 beds. Because the hospital
care needs of all current VA users are being met through use of
existing VA and community beds, VA would need to attract significant
numbers of new users to its health care system, or shift current
hospital users to the Travis hospital, to justify the cost of the
proposed additional beds. Given the limited potential to shift
current hospital users from other VA hospitals and community
hospitals to an expanded Travis project, VA would need to more than
triple its market share of veterans living in the NCHCS service area.
NCHCS clinics refer patients to any VA hospital in the Sierra Pacific
Network but emphasize referrals to the Travis hospital. Clinic
directors told us that referral decisions are based on where veterans
live, the type of care they need, the urgency of their condition, the
availability of beds, and where veterans would prefer to obtain care.
NCHCS' summary admission statistics show that, in fiscal year 1995,
52 percent of the admissions were to VA's Travis hospital. Another
25 percent were sent to community hospitals. The remaining 23
percent went to other VA hospitals, primarily Palo Alto and San
Francisco.
The potential to fill additional beds at Travis by reducing the use
of community hospitals appears limited because admissions to
community hospitals are generally for treatment of emergent
conditions--conditions requiring emergency care. Because patients
with emergent conditions are not stable and require immediate
hospitalization, they are transported by ambulance to the nearest
hospital capable of providing the needed services.\7 Because of the
distance from Sacramento, Oakland, Redding, and Martinez to Travis
Air Force Base, patients needing emergency care generally would not
be transported to Travis even if more beds were available there.
Such patients would continue to obtain care in community hospitals.
If VA had additional beds at Travis Air Force Base, some of the
veterans currently using the Palo Alto and San Francisco hospitals
might be shifted to the Travis hospital. However, according to NCHCS
clinic officials, many of the veterans referred to the Palo Alto and
San Francisco hospitals were referred there because the veterans
either lived closer to one of those facilities or needed specialized
care not available at Travis.
To effectively use the additional beds it is seeking to construct and
obtain through transfer from the Air Force, VA would need to more
than triple--from 33,000 to over 112,000--the number of veterans in
the service area who use VA health care services. In fiscal year
1995, the four existing clinics treated about 33,000 veterans,
supporting about two hospital beds for every 1,000 veterans using VA
services. Assuming an 85-percent occupancy rate in the proposed
hospital, VA would need to attract about 72,250 new users to maintain
an average daily census of 145 in the 170 additional beds it is
seeking to construct and about 7,650 new users to maintain an average
daily census of 15 in the additional 18 beds the Air Force plans to
transfer to VA.
Utilization data from other VA medical centers support our estimate
that VA would need to more than triple its market share of veterans
living in the service area to support the proposed beds at Travis.
The approximately 33,000 users in the service area were hospitalized
a total of about 2,800 times during fiscal year 1995, maintaining an
average daily census of 75 hospital patients. To maintain an average
daily census of 145 (85-percent occupancy) in the new beds, VA would
need to provide hospital care to about 6,500 additional patients each
year, experience from existing medical centers suggests. For
example, the Charleston, South Carolina, VA medical center, which had
an average daily census of 145 in fiscal year 1995, treated about
5,923 patients. Similarly, the Iowa City, Iowa, VA medical center,
with an average daily census of 142, treated 6,526 patients.
--------------------
\7 Patients not needing emergency care are considered either "urgent"
or "nonurgent" depending on their medical condition. An urgent
condition is one that requires immediate treatment but is not
immediately life threatening. Urgent patients' admissions can be
deferred for short periods of time. If their conditions can be
stabilized, urgent care patients can be transported by ambulance to
Travis or any other VA hospital. Care for patients with nonurgent
conditions may be deferred for longer periods of time, and patients
can be required to provide their own transportation to a VA hospital.
EXISTING HOSPITALS HAVE
HUNDREDS OF UNUSED BEDS
-------------------------------------------------------- Letter :3.1.4
Over 3,300 excess hospital beds exist in and near the areas that
would be served by the proposed Travis project. First, veterans' use
of VA acute care beds in Palo Alto and San Francisco has declined by
about 180 beds over the past 3 years, adding to excess acute care
capacity. The medical center director from San Francisco indicated
that the facility could accommodate at least 80 additional acute care
patients per day. Similarly, the Palo Alto medical center director
estimated that the new acute care hospital nearing completion there
will have about 100 unused beds when it opens. Although these
hospitals are not convenient for veterans in Sacramento and other
areas north of Travis, for veterans living in Oakland and some other
parts of the East Bay, the hospitals are closer than Travis.
Second, the Air Force has unused beds at Travis that could
potentially be used for VA inpatient care. For example, over 40 beds
have been converted to office space.
Third, significant excess hospital capacity exists in community
hospitals in northern California, including the Sacramento, Martinez,
Oakland, Redding, and Fairfield areas. For example, community
hospitals in the counties where the VA facilities are located had
average occupancy rates in 1995 ranging from about 40 percent (Solano
County) to about 68 percent (Sacramento County). Overall, an average
of 3,158 unused community hospital beds existed in the five counties
on any given day (see table 2).
Table 2
Availability of Community Hospital Beds
in Selected Northern California
Counties, 1995
Averag
e Averag
Availa occupa e
ble ncy unused
County beds rate beds
---------------------------------------------- ------ ------ ------
Alameda (Oakland) 2,938 61.6 1,122
Sacramento 2,572 67.6 833
Contra Costa (Martinez) 1,637 54.9 738
Shasta (Redding) 627 59.3 255
Solano (Travis) 352 40.4 210
Total 8,126 61.1 3,158
----------------------------------------------------------------------
DEMAND FOR HOSPITAL CARE
LIKELY TO CONTINUE
DECLINING
-------------------------------------------------------- Letter :3.1.5
Declining numbers of veterans are likely to lead to continuing
declines in demand for VA hospital care. In fiscal year 1995, an
estimated 412,000 veterans lived in the area that would be served by
the proposed Travis project. By 2010, VA estimates that the veteran
population will have decreased by 25 percent. Figure 3 shows the
expected decrease in veterans' population in the Travis service area.
Figure 3: Estimated Decrease
in Veteran Population in
Northern California Counties
That Would Be Served by the
Travis Project, 1995-2010
(See figure in printed
edition.)
Source: VA's 1995 Integrated Planning Model
Veterans' use of other VA hospitals in northern California is also
expected to continue declining, due in large part to the decreasing
veteran population. VA's 1994 Integrated Planning Model\8 estimates
that veterans will use a total of 294 fewer beds at the Palo Alto and
San Francisco hospitals between 1995 and 2010.
--------------------
\8 VA's Integrated Planning Model takes into consideration the
expected increase in inpatient use of its aging veteran population.
VA'S TRAVIS PROJECT WOULD
AFFECT OTHER HOSPITALS
-------------------------------------------------------- Letter :3.1.6
The proposed Travis project would likely have a significant economic
effect on other hospitals, particularly those in the Travis and
Sacramento areas. As previously discussed, VA would need to generate
about 6,500 additional hospital admissions in order to fill the new
beds planned at Travis. The additional admissions would most likely
come primarily from the Fairfield and Sacramento areas, because
Oakland and Martinez are closer to VA hospitals in Palo Alto and San
Francisco. As discussed above, community hospitals in the Fairfield
area have occupancy rates of around 40 percent and those in the
Sacramento area, about 68 percent.
Similarly, to the extent referral patterns for the Oakland and
Martinez clinics would be changed to encourage shifting patients from
Palo Alto and San Francisco to newly expanded beds at Travis Air
Force Base, excess capacity would be increased at Palo Alto and San
Francisco.
VETERAN POPULATION NEAR
TRAVIS MAY NOT BE LARGE
ENOUGH TO SUPPORT PROPOSED
CLINIC
---------------------------------------------------------- Letter :3.2
The number of veterans traditionally targeted by VA--primarily
veterans with low incomes or service-connected disabilities--living
near the Travis Air Force Base does not appear to be large enough to
support an outpatient clinic as large as the one planned. The Travis
area is less densely populated than areas where other VA clinics are
located. Thus, to meet workload projections, the clinic would have
to serve large numbers of higher-income veterans with no
service-connected disabilities or attract veterans away from existing
VA clinics.
NEW MARKET WOULD BE
NEEDED TO SUPPORT TRAVIS
CLINIC
-------------------------------------------------------- Letter :3.2.1
Existing VA clinics in Sacramento, Martinez, and Oakland generally
draw veterans from one of two distinct markets: the Sacramento and
East Bay areas. The proposed Travis outpatient clinic, which would
be as large as VA's Sacramento clinic and larger than the Oakland
clinic, would serve primarily the area around Solano County. Solano
County has fewer veterans than the counties where the existing
clinics are located (see
table 3).
Table 3
Comparison of Estimated Workload of
Travis Clinic With Fiscal Year 1995
Workload of Existing NCHCS Clinics
County
vetera
n Vetera
popula ns
Clinic/County tion served Visits
-------------------------- ------ ------ --------------------------
Martinez (Contra Costa) 91,422 16,781 101,425
Sacramento (Sacramento) 123,49 11,672 83,151
8
Oakland (Alameda) 117,08 6,457 67,830
1
Travis (Solano) 42,645 (GAO (Planned) 84,955
estima
te)
12,000
----------------------------------------------------------------------
Although the Sacramento, Martinez, and Oakland clinics are crowded,
they turn away no veterans seeking care, including higher-income
veterans with no service-connected disabilities. The clinics
reported that most of the veterans they serve are in the mandatory
care category and have service-connected disabilities or low incomes.
Moreover, with more clinic space, it would be possible to serve even
more veterans.
In effect, VA is planning to develop a new outpatient market in the
area surrounding the Travis clinic. This market would comprise
veterans residing in the northeastern part of the East Bay area and
the southwestern part of the Sacramento area.
CONVENIENCE WOULD BE
IMPORTANT IN ATTRACTING
VETERANS TO TRAVIS CLINIC
-------------------------------------------------------- Letter :3.2.2
VA's facilities operate in a competitive market in northern
California. According to public and private health care experts,
convenience is an important factor in California residents' choices
of health care providers. Several NCHCS officials said that veterans
could not reasonably be expected to travel more than 25 to 35 miles
for care.
Similarly, our review of VA patients using outpatient services in
fiscal year 1993 showed that most VA clinic users live close to the
clinic. Living within 5 miles of a VA clinic significantly increases
the likelihood that a veteran will use VA health care services;
nationwide, about 26 percent of veterans using VA outpatient services
lived within 5 miles of a VA clinic, although only about 17 percent
of veterans lived within 5 miles of a VA clinic. Moreover, about 68
percent of VA outpatient users lived within 25 miles of a VA clinic,
and almost all lived within 100 miles.\9
Accordingly, the proposed Travis outpatient clinic should draw users
primarily from veterans living close to Fairfield. Because Travis is
within 44 miles of the existing clinics at Martinez, Oakland, and
Sacramento, however, the primary service area for the Travis clinic
would actually be smaller. Veterans who live within 44 miles of both
Travis and either Martinez, Oakland, or Sacramento would likely use
the closest facility. Figure 4 shows the service area from which the
proposed Travis clinic and existing Martinez, Oakland, and Sacramento
clinics could expect to attract most of their users.
Figure 4: Projected Primary
Service Area for Travis
Outpatient Clinic
(See figure in printed
edition.)
The primary Travis service area does not appear to have enough
veterans to support about 85,000 outpatient visits a year. The
clinic would have to attract about 19 percent of all veterans living
in the primary service area, compared with an average market share of
13 percent for other clinics.
During fiscal year 1995, about 1,900 veterans living in the Travis
primary service area used VA outpatient clinics. Many such veterans
would probably begin using the Travis clinic because of added
convenience. But even if all VA users who reside in the Travis
primary service area shifted to the Travis clinic, the number would
be too small to efficiently support the Travis project.
--------------------
\9 VA Health Care: How Distance From VA Facilities Affects Veterans'
Use of VA Services (GAO/HEHS-96-31, Dec. 20, 1995).
TRAVIS CLINIC WOULD NEED
TO ATTRACT LARGE NUMBERS
OF VETERANS WITH HIGH
INCOME AND WITHOUT
SERVICE-CONNECTED
DISABILITIES
-------------------------------------------------------- Letter :3.2.3
Establishing a clinic at Travis could attract a number of veterans
who had not previously used VA health care services. To support
85,000 visits, however, the clinic would need to attract about 12,000
users (based on 11,672 users who generated 83,151 visits at the
Sacramento clinic). The veterans most likely to use VA health care
services are those with low incomes or service-connected
disabilities. Although the Travis clinic is being designed to
provide roughly the same number of visits as the Sacramento clinic
and more than the Oakland clinic, the number of veterans with low
incomes in the proposed Travis service area is smaller. Over 37,800
veterans with incomes of less than $25,000 live in Sacramento County,
11,672 of whom used the Sacramento clinic in fiscal year 1995.
Similarly, almost 31,800 veterans with incomes of less than $25,000
live in Alameda County, 6,457 of whom used the Oakland clinic that
same year. The Travis clinic area has only about 10,300 veterans
with incomes under $25,000 from whom to attract the estimated 12,000
users.
Veterans with service-connected disabilities are the other main
category of VA users. Because the overall veteran population in
Solano County is roughly one-third of the veteran population in
either Oakland or Sacramento, the Travis clinic will likely have
fewer service-connected veterans from whom to attract its users. We
could not readily obtain data on the number of veterans in each
county who have service-connected disabilities. Nationwide, however,
about 2.2 million of the 26.2 million veterans (8.4 percent) have
compensable service-connected disabilities. If Solano County is
representative of the distribution of veterans with service-connected
disabilities nationwide, then about 3,600 of the approximately 43,000
veterans living in Solano County have service-connected disabilities.
In contrast, an estimated 10,400 veterans with service-connected
disabilities live in Sacramento County.
ALTERNATIVES TO TRAVIS SHOULD
BE MORE FULLY EXPLORED
------------------------------------------------------------ Letter :4
If demand for VA hospital care increases, several alternatives are
available that do not entail constructing additional beds at Travis.
These options include
-- converting the Air Force's Mather hospital to VA use,
-- expanding VA use of space at Travis Air Force Base,
-- making greater use of excess capacity in existing VA hospitals,
and
-- expanding use of community hospitals.
The Sierra Pacific Network is currently assessing the best way to
deliver health care to veterans. The Congress' decision on whether
to fund the Travis hospital has significant implications for this
planning effort.
MATHER HOSPITAL AVAILABLE TO
VA AT LOWER COST
---------------------------------------------------------- Letter :4.1
Between 1988 and 1995, the Defense Base Closure and Realignment
Commission recommended closing several DOD hospitals in northern
California, including Letterman Army Medical Center in San Francisco,
the Naval Hospital in Oakland, and the Air Force's Mather hospital
near Sacramento. The Air Force currently operates a 105-bed hospital
on the grounds of the former Mather Air Force Base, which is about 11
miles southeast of Sacramento. While physically located at Mather,
the hospital is currently part of McClellan Air Force Base. DOD
plans to close the Mather hospital by 2001.
The planned closure provides VA the opportunity to acquire a fully
functional hospital and outpatient clinic at a fraction of the cost
of new construction at Travis. In addition, the facility is closer
to the larger Sacramento-area veteran population and would alleviate
the crowding at the existing Sacramento outpatient clinic. Because
Mather is a small hospital, however, operating costs per patient
treated may be high.
VA has developed two primary options for potential use of the Mather
hospital building:
-- convert the building into an outpatient clinic and 91-bed
hospital and
-- convert the building into an outpatient clinic and use the
second floor as an ambulatory surgery center.
VA's existing Sacramento outpatient clinic is overcrowded, and plans
have been developed to build a larger facility. Building a
replacement outpatient clinic in Sacramento that would provide 87,000
outpatient visits per year is estimated to cost about $32 million
(excluding the cost of land). VA officials believe that using the
existing Mather clinic may be a cost-effective alternative to new
construction.
NCHCS studied the Mather hospital to determine how to renovate the
facility for use as a 91-bed VA hospital, outpatient clinic, and
outpatient surgery center. Renovation would be required primarily to
improve patient privacy, improve accessibility for the handicapped,
and make safety and seismic improvements. VA officials said that the
inpatient wards at the Mather hospital could be reconfigured into a
91-bed hospital that meets the handicapped-access needs of the
veteran population. VA officials, working with an architectural
design firm, estimate that the total cost of converting the Mather
hospital into a fully functional hospital and outpatient clinic would
be about $28 million. In addition, there would be start-up costs of
about $11 million and increased annual operating costs of about $14
million.
In addition to the hospital building, VA has developed plans for
using several of the adjacent buildings. For example, one building
would be used to house a mental health clinic--the current clinic is
located in a strip mall across the street from the existing
Sacramento clinic. In addition, VA officials indicated that they
might be able to use a new warehouse at the Mather site to serve all
VA hospitals and clinics in the Sierra Pacific Network.
A potential drawback to using the Mather hospital as an inpatient
facility is the cost of operating a small hospital. With small
hospitals, the number of staff frequently exceeds the number of
patients. A 91-bed hospital could be expected to have an average
daily census of no more than 78 patients. The VISN director told us
that, in the private sector, 150 beds is generally considered the
break-even point for operating a hospital. Another VA official said
that it is difficult to attract physicians to a small hospital
because of the limited range of patients and services provided. The
dean of the University of California at Davis medical school,
however, did not see the size of the facility as a problem. Because
of its proximity to UC-Davis, a hospital at Mather would, he said, be
able to draw physicians and residents from the medical school. He
said that Mather could be used for more routine hospitalizations and
that specialized care could be provided at the University of
California at Davis Hospital.
NCHCS' facility planner said that converting the Mather facility to
only an outpatient clinic and ambulatory surgery center would cost
about the same as converting the facility into a VA hospital, but
annual operating costs would be less. Using the Mather hospital as a
clinic would relieve crowding at the existing Sacramento clinic.
In November 1995, VA sent a letter to the Air Force Base Conversion
Agency expressing an interest in acquiring, at no cost, the Mather
facility and a separate dental clinic located at McClellan Air Force
Base. The proposal was endorsed by the Sacramento County Board of
Supervisors and, on May 30, 1996, VA notified the Secretary of the
Air Force of its intention to acquire the hospital. VA had concluded
that acquiring the hospital, including required modifications, would
be the most cost-effective alternative to building a new VA
outpatient clinic in Sacramento.
The Air Force has already received an appropriation of $10 million
for fire, safety, and seismic improvements to the building. The Air
Force informed VA that it will proceed with the improvements if it
gets assurance from VA that the facility will be used as a hospital.
As of August 1996, VA had not provided the Air Force assurance that
the facility would be used as a hospital.
OPPORTUNITIES EXIST TO
EXPAND VA USE OF EXISTING
BEDS AT DGMC
---------------------------------------------------------- Letter :4.2
The Air Force appears to have additional beds that could potentially
be made available for VA use if the need arises. About 40 beds have
been converted to office and other space. Moreover, further
integration of Air Force and VA patient care services could provide
VA access to additional beds.
According to VA officials, one significant drawback to VA's use of
DGMC is the lack of office space for VA physicians. Typically,
physicians spend only a portion of their day with hospitalized
patients, using the rest of their day to see patients on an
outpatient basis, complete paperwork, or conduct research. Because
VA does not have an outpatient clinic at Travis and no physicians'
offices are available to VA, physicians' options are limited.
Both VA and Air Force officials agreed that it is less costly to
build office space than hospital space. While VA has no immediate
need for additional beds, if either VA or DOD demand for inpatient
care increases in the future, additional office space could be built,
and some or all of the space currently used for administrative
purposes could be returned to patient care. Similarly, additional
inpatient beds might be made available if some of the 75 beds in the
aeromedical staging facility could be used to support the ambulatory
surgery program.
EXCESS CAPACITY AT EXISTING
VA HOSPITALS COULD BE USED
TO MEET HOSPITAL CARE NEEDS
OF EAST BAY VETERANS
---------------------------------------------------------- Letter :4.3
Both the Palo Alto and San Francisco VA medical centers have
significant excess capacity that could be used to serve veterans,
especially those from the East Bay. Some of these veterans live
closer to Palo Alto or San Francisco than they do to Travis Air Force
Base. The chief medical officer from the Oakland clinic said that
the Palo Alto and San Francisco hospitals had approached him about
referring more patients.
The main hospital at Palo Alto was severely damaged in an earthquake,
and a replacement acute care facility is under construction\10 The
replacement hospital, scheduled to open in 1997, will be virtually a
bed-for-bed replacement for the bed tower damaged in the earthquake.
It will include 228 medical/surgical beds, including 24 intensive
care unit beds. Because of changes in medical practice, the medical
center director estimates that the hospital will have about 100
excess medical and surgical beds when it opens.\11
Moreover, the Menlo Park division of Palo Alto also has a number of
empty beds. The division, which includes 118 psychiatric beds and a
100-bed drug and alcohol abuse unit, plans to reduce its operating
beds by 50 percent. As a result, Palo Alto and its Menlo Park
division will have sufficient excess capacity to accommodate the
additional 60 psychiatric beds planned at Travis.
The VA medical center at San Francisco also has excess capacity. The
San Francisco medical center is authorized 240 beds and is currently
staffed to operate 190 beds, with an average daily census of about
160 patients, including many who may require only subacute hospital
or extended care. The medical center director said that the hospital
has about 80 excess beds now and will likely have more in the future
because the hospital's workload has been steadily declining; the base
closures in the Bay area have slowed the rate of decline, however, as
military retirees with dual eligibility have sought care from VA
after closure of DOD hospitals. Further, the San Francisco hospital
is more convenient for some East Bay veterans because it is closer
that the Travis Air Force Base, served by public transportation, or
both.
--------------------
\10 In addition to the main hospital at Palo Alto, the medical center
includes facilities at Menlo Park and Livermore. Facilities at Menlo
Park include inpatient units for long-term psychiatric care,
posttraumatic stress disorder, and drug and alcohol treatment and
outpatient care. Facilities at Livermore provide long-term care and
outpatient care; acute care beds have been closed.
\11 The hospital director plans to use a portion of the excess
capacity to accommodate a 34-bed extended care unit currently housed
in space that is less than satisfactory.
OPPORTUNITIES EXIST TO
EXPAND USE OF COMMUNITY
HOSPITALS CLOSE TO VETERANS'
HOMES
---------------------------------------------------------- Letter :4.4
Thousands of unused beds are available in community hospitals in
northern California. In the approximately 4 years since VA's
decision to build a replacement hospital at Travis Air Force Base was
made, significant changes in the availability of beds in community
hospitals have occurred. For example, a major hospital in the
Martinez area--Merrithew--expressed interest in selling its excess
capacity to VA. Another hospital in Martinez--Kaiser
Permanente--plans to close.\12 Similarly, four hospital systems based
in Sacramento--Catholic, UC-Davis, Kaiser Permanente, and
Sutter--have alliances with hospitals covering a wide geographic area
in northern California. An alliance with one of these hospital
systems might bring hospital care closer to veterans' homes than
would construction of a VA hospital at Travis. The potential for
such an alliance is one of the alternatives being explored by the
network.
Although VA currently makes extensive use of contract hospitals to
provide emergency services, it lacks authority to contract for
routine hospital care for most veterans. VA has specific statutory
authority (38 U.S.C. 1703) to contract for medical care when its
facilities cannot provide necessary services because they are
geographically inaccessible. VA also has authority (38 U.S.C. 8153)
to enter into agreements "for the mutual use, or exchange of use, of
specialized medical resources when such an agreement will obviate the
need for a similar resource to be provided" in a VA facility.
Specialized medical resources are equipment, space, or personnel
that--because of their cost, limited availability, or unusual
nature--are unique in the medical community. Neither statute
authorizes VA to routinely provide hospital care through contracts
with community facilities. As a result, VA cannot currently rely
exclusively on contracting to meet any unexpected growth in the needs
of veterans in the service area.
VA is seeking to expand its legislative authority to contract for
hospital and other health care services. Language that would expand
its contracting authority was included in veterans' health care
eligibility reform legislation (H.R. 3118) passed by the House of
Representatives on July 30, 1996. If enacted, contracting reforms
would give VA considerable flexibility to contract with community
hospitals.
A number of basic contracting approaches could be used to obtain beds
from community hospitals. First, VA could lease excess space in a
community hospital and staff and operate its own beds, sharing
certain services with the hospital. Second, VA could contract with a
hospital to operate a set number of beds for veterans. Such
contracts, however, involve certain risks because of the unknown
demand for care. In other words, if VA overestimates demand, then
its costs of providing care through contracting would increase. The
third method of providing care though contracting would be to
purchase care "on the margin," paying for each hospital episode
separately, as VA does now for emergency services.
In May 1993, we testified before the Senate Committee on Veterans'
Affairs on the effects of changes in the health care system on VA's
major construction program. At that time, we suggested that VA
consider seeking authority to use demonstration projects to test the
feasibility of and best methods for contracting with community
hospitals as an alternative to building VA hospitals that might never
be used. One of the areas proposed for consideration as a
demonstration site was the northern California area served by the
former Martinez hospital.\13
--------------------
\12 The director of the Sierra Pacific VISN, formerly the director of
the Kaiser Permanente hospital, said that the hospital has major
structural deficiencies and would not be suitable for VA use.
\13 Veterans' Health Care: Potential Effects of Health Care Reforms
on VA's Major Construction Program (GAO/T-HRD-93-19, May 6, 1993).
VA STUDY OF OPTIONS FOR
SERVING VETERANS IN SIERRA
PACIFIC NETWORK WILL BE
AFFECTED BY TRAVIS DECISION
---------------------------------------------------------- Letter :4.5
VA is developing plans for restructuring the way health care services
are provided in the Sierra Pacific Network. The Congress' decision
on whether to fund the proposed Travis project has significant
implications for the study.
In 1995, VA provided its network directors proposed criteria to help
identify opportunities for efficiencies. For example, the criteria
suggest that directors use community providers (subject to current
restrictions under the VA law) if the same kind of services of equal
or higher quality are available at either lower cost or equal cost
but in more convenient locations for patients. The criteria also
encourage directors to use nearby VA facilities and to integrate or
consolidate services if doing so would yield significant
administrative or staff efficiencies.
In addition, the Sierra Pacific Network director has established a
task team consisting of facility directors to study the best way to
deliver care in the network. The goal is to develop a short-term
strategic plan (1 to 2 years) and a longer term strategic plan (3 to
5 years). These plans are to be completed in the fall of 1996,
although the Sierra Pacific Network director said that final plans on
how to best deliver care will not be complete until spring of 1997.
The task team is studying current use rates for each facility in the
network, the types of services available at each facility, where the
patients live, and the cost and availability of services in the
community. This study will likely address such potential service
delivery alternatives as integrating hospitals; establishing new
clinics; purchasing care through community providers; using the
soon-to-be-closed Mather hospital for inpatient care, outpatient
care, or both; and expanding the joint venture at Travis Air Force
Base.
It will be difficult for the network to recommend changes in facility
missions, contracting with community providers, and hospital referral
patterns until the Congress completes its deliberations on (1)
funding the Travis project and (2) reforming VA health care
contracting.
CONCLUSIONS
------------------------------------------------------------ Letter :5
VA's plans to establish a 243-bed medical center at Travis Air Force
Base--which include construction of 170 new hospital beds, renovation
and expansion of existing Air Force support areas, and construction
of an 85,000-visit outpatient clinic--are not justified on the basis
of the current and expected workload and the availability of
lower-cost alternatives.
First, VA is meeting veterans' needs with existing facilities. NCHCS
clinics in Sacramento, Oakland, and Martinez, while crowded and
operating at less than full efficiency, are meeting inpatient and
outpatient needs and turning away no veterans.
Second, the decision to build at Travis was driven by VA's 1992
assessment of veterans' health care needs in northern California,
which relied on assumptions concerning the future availability and
use of hospital beds that are no longer valid. To support the number
of beds VA plans to build at Travis, VA would need to more than
triple the number of veterans now served there under the joint
venture with the Air Force. VA's ability to attract such a large
supply of new users is questionable, however, given the large supply
of unused hospital beds in VA, Air Force, and private hospitals; the
decreasing veteran population; and the shifting of medical care from
inpatient to outpatient settings. Such uncertainties subject VA to
the risk of spending federal dollars to build a hospital that will
have a large supply of beds that may never be used.
Third, alternatives to the construction project could meet any
increase in demand for hospital care without incurring the risk of
spending hundreds of millions of dollars to build and operate
hospital beds that are unlikely to ever be used. VA has many more
efficient alternatives to serve northern California veterans. For
example, it might be able to obtain use of additional beds from the
Air Force at DGMC or to obtain the Mather hospital from the Air Force
when McClellan Air Force Base is closed. Similarly, it could change
hospital referral patterns for its existing clinics, especially the
Oakland and Martinez clinics, to send more hospital patients to Palo
Alto and San Francisco to take advantage of existing excess capacity.
Finally, if VA had the legislative authority, it could expand
contracting with community hospitals in order to provide veterans
access to hospital care closer to their homes and at the same time
strengthen the financial viability of community hospitals, especially
those operating at less than 50-percent occupancy.
Pursuing such alternatives before spending hundreds of millions of
dollars to build and operate a new VA hospital appears consistent
with VA's new network planning strategy in that it would help
maintain the viability of existing VA hospitals. Without such
planning, the existing VA hospitals' viability may be jeopardized by
declining workloads associated with shifting veterans to the new
Travis hospital.
Although construction of outpatient facilities at Travis Air Force
Base appears justified to support the existing VA beds, there do not
appear to be enough veterans in the primary area to be served by the
clinic to support a clinic of the size that VA plans. In addition,
if VA obtains and converts the Mather hospital into a clinic and
ambulatory surgery center, or constructs a new outpatient clinic in
Sacramento, the ability of the Travis clinic to attract veterans from
the Sacramento area would likely be diminished. The clinic needs of
veterans in the Travis area could be met with less clinic space than
VA included in the proposed Travis project, and VA could build the
smaller clinic with the flexibility to expand if necessary.
RECOMMENDATION TO THE CONGRESS
------------------------------------------------------------ Letter :6
We recommend that the Congress deny VA's request for funds to
construct additional hospital beds at Travis Air Force Base, given
the availability of cost-effective alternatives to meet the health
care needs of veterans in the NCHCS.
MATTERS FOR CONSIDERATION BY
THE CONGRESS
------------------------------------------------------------ Letter :7
The Congress may also wish to consider directing VA to spend only
part of existing appropriated funds to construct a smaller outpatient
clinic designed to provide considerably fewer than 85,000 visits a
year. Moreover, the Congress could direct VA to delay expenditure of
the remaining appropriated funds for the Travis facility until VA's
ongoing network study is completed. VA's study provides the
opportunity to identify lower-cost alternatives to meet veterans'
needs, including
-- outpatient clinic improvements for veterans living in Oakland or
Sacramento and
-- acquisition and renovation of the Mather hospital for VA use as
an inpatient or outpatient facility.
VA's study could also determine the highest-priority needs and, if
necessary, justify congressional approval to spend all or a portion
of the existing appropriations to meet any higher-priority needs
identified through the study.
Because VA does not currently have legislative authority to contract
for routine hospital care, it cannot take full advantage of the
excess hospital capacity in Northern California to meet the hospital
care needs of veterans closer to where they live. Therefore, if
proposed legislation to expand VA's contracting authority is not
enacted, the Congress may want to consider authorizing VA to conduct
a demonstration project in northern California to assess the benefits
and costs of VA's purchasing care for veterans with urgent and
nonemergent conditions from community providers.
AGENCY COMMENTS
------------------------------------------------------------ Letter :8
We requested comments on a draft of this report from the Department
of Veterans Affairs, but none were received in time to be included in
the report.
---------------------------------------------------------- Letter :8.1
We are sending copies of this report to the Speaker of the House; the
President of the Senate; the Ranking Minority Member of the
Subcommittee on VA, HUD, and Independent Agencies, Senate Committee
on Appropriations; the Chairman and Ranking Minority Member of the
Subcommittee on VA, HUD, and Independent Agencies, House Committee on
Appropriations; the Chairmen and Ranking Minority Members of the
Senate and House Committees on Appropriations; and the Chairmen and
Ranking Minority Members of the Senate and House Committees on
Veterans' Affairs. Copies of the report are also being provided to
Members of congressional delegations from the affected portions of
northern California. We are also sending copies to the Secretaries
of Veterans Affairs, Defense, and the Air Force; the Director, Office
of Management and Budget; and other interested parties. Copies will
be made available to others upon request.
This report was prepared under the direction of David P. Baine,
Director, Veterans' Affairs and Military Health Care Issues, who can
be reached at (202) 512-7101. You may also call Mr. Paul Reynolds
at (202) 512-7109 or Mr. James Linz at (202) 512-7110 if you or your
staff have questions concerning this report. Other evaluators who
made contributions to this report include Byron Galloway, Deena
El-Attar, Joan Vogel, John Borrelli, John Kirstein, Paul Wright, and
Ann McDermott.
Sincerely yours,
Janet L. Shikles
Assistant Comptroller General
Health, Education, and Human
Services Division
*** End of document. ***