VA Health Care: Lessons Learned From Medical Facility Integrations
(Testimony, 07/24/97, GAO/T-HEHS-97-184).
GAO discussed the preliminary results of its ongoing work on the
integration of medical facilities operated by the Department of Veterans
Affairs (VA).
GAO noted that: (1) facility integrations are a critical piece of VA's
overall strategy to enhance the efficiency and effectiveness of health
service delivery to veterans; (2) VA's strategy is similar to how the
private sector health care industry is evolving; (3) in essence,
integrations can allow VA to provide the same or higher quality services
to veterans at a significantly reduced cost; (4) in just 2 years, by
unifying management and consolidation services, VA's integrations have
produced millions of dollars in savings that can be reinvested in the
system to further enhance veterans' care; (5) but VA also faces
difficulties in planning and implementing integrations, primarily
stemming from the potential adverse impacts on stakeholders such as
veterans, facility and medical school personnel, and members of Congress
who represent these groups; (6) for example, while integrations will
generally enhance VA's ability to serve veterans, they will likely
result in, among other things, fewer, less convenient, or less desirable
employment opportunities for VA and medical school employees or training
opportunities for medical school residents and students; (7) with so
much at risk, it is imperative that VA plan and implement integrations
to maximize their benefits and minimize the adverse impacts; (8) VA's
integration planning approach has many positive features; (9) GAO's work
to date, however, indicates areas where improvements could be made; (10)
for example, integration decisions are generally made incrementally,
that is, on a service-by-service basis, at varying times throughout the
process instead of being made on the basis of decisions about all
activities across the integrated facilities; (11) also, planning and
implementation activities frequently occur simultaneously, which does
not allow for consideration of the collective effect of such changes on
the integration; (12) in addition, stakeholders are involved at varying
times in different ways but are not always provided sufficient
information at key decision points; (13) currently, VA is considering
ways to improve its facility integration process; and (14) with that in
mind, GAO's work suggests that VA could achieve better results by: (a)
adopting a more comprehensive planning approach; (b) completing planning
before implementing changes; (c) improving the timeliness and
effectiveness of communications with stakeholders; and (d) using a more
independent planning approach.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-HEHS-97-184
TITLE: VA Health Care: Lessons Learned From Medical Facility
Integrations
DATE: 07/24/97
SUBJECT: Hospital planning
Health care facilities
Veterans hospitals
Health care cost control
Health care personnel
Veterans
Medical schools
Health services administration
Health resources utilization
IDENTIFIER: Chicago (IL)
Alabama
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Cover
================================================================ COVER
Before the Subcommittee on Health and the Subcommittee on Oversight
and Investigations, Committee on Veterans' Affairs, House of
Representatives
For Release on Delivery
Expected at 9:30 a.m.
Thursday, July 24, 1997
VA HEALTH CARE - LESSONS LEARNED
FROM MEDICAL FACILITY INTEGRATIONS
Statement of Stephen P. Backhus, Director
Veterans' Affairs and Military Health Care Issues
Health, Education, and Human Services Division
GAO/T-HEHS-97-184
GAO/HEHS-97-184T
(406142)
Abbreviations
=============================================================== ABBREV
HUD - Department of Housing and Urban Development
VA - Department of Veterans Affairs
VISN - veterans integrated service network
VA HEALTH CARE: LESSONS LEARNED
FROM MEDICAL FACILITY INTEGRATIONS
============================================================ Chapter 0
Messrs. Chairmen and Members of the Subcommittees:
We are pleased to be here today to discuss preliminary results of our
ongoing work on the integration of medical facilities operated by the
Department of Veterans Affairs (VA). In general, a VA integration
involves a restructuring of the services within two or more medical
facilities into a seamless health care delivery system.
VA operates 173 hospitals and over 200 freestanding outpatient
clinics nationwide at a cost of about $17 billion a year. Two years
ago, VA created 22 networks to help improve service delivery to the 3
million veterans who use its medical facilities each year. Each
network is responsible for overseeing between 4 and 11 hospitals. To
date, networks have initiated integrations in 18 geographic areas,
involving a total of 36 hospitals.\1
Our work to date has focused primarily on VA's ongoing integrations
in Chicago, Illinois, and in Alabama. Our review of the Chicago
integration is being done in response to requests by part of the
Illinois congressional delegation, including Congressmen Evans and
Gutierrez, who serve on the House Veterans' Affairs Committee, and
Chairman Bond of the Senate Appropriations Committee's Subcommittee
on VA, HUD, and Independent Agencies. Chairman Everett has asked us
to review the Alabama integration.
We have visited the four medical facilities being integrated in
Alabama and Chicago and their respective network offices. Also, to
gain a broader perspective, we discussed VA's other 16 integrations
with network officials and others. In addition, we discussed
integration issues with several private health care providers and
consulting firms.
As you requested, my testimony focuses on (1) the role of facility
integrations in reshaping VA's health care delivery system and (2)
lessons learned that could help enhance VA's process for planning and
implementing ongoing and future facility integrations.
In summary, facility integrations are a critical piece of VA's
overall strategy to enhance the efficiency and effectiveness of
health service delivery to veterans. VA's strategy is similar to how
the private sector health care industry is evolving. In essence,
integrations can allow VA to provide the same or higher quality
services to veterans at a significantly reduced cost. In just 2
years, by unifying management and consolidating services, VA's
integrations have produced millions of dollars in savings that can be
reinvested in the system to further enhance veterans' care.
But VA also faces inherent difficulties in planning and implementing
integrations, primarily stemming from the potential adverse impacts
on stakeholders such as veterans, facility and medical school
personnel, and members of Congress who represent these groups. For
example, while integrations will generally enhance VA's ability to
serve veterans, they will likely result in, among other things,
fewer, less convenient, or less desirable (1) employment
opportunities for VA and medical school employees or (2) training
opportunities for medical school residents and students.
With so much at risk, it is imperative that VA plan and implement
integrations to maximize their benefits and minimize the adverse
impacts. VA's integration planning approach has many positive
features. For example, local facilities currently plan and implement
their integrations using work groups comprising VA medical facility
employees and others, such as affiliated medical school employees.
The involvement of local facility employees in planning activities
appears to expedite the process, primarily because no two integration
situations are alike.
Our work to date, however, indicates areas where improvements could
be made. For example, integration decisions are generally made
incrementally, that is, on a service-by-service basis, at varying
times throughout the process instead of being made on the basis of
decisions about all activities across the integrated facilities.
Also, planning and implementation activities frequently occur
simultaneously, which does not allow for consideration of the
collective effect of such changes on the integration. In addition,
stakeholders are involved at varying times in different ways but are
not always provided sufficient information at key decision points.
Currently, VA is considering ways to improve its facility integration
process. With that in mind, our work suggests that VA could achieve
better results by
-- adopting a more comprehensive planning approach,
-- completing planning before implementing changes,
-- improving the timeliness and effectiveness of communications
with stakeholders, and
-- using a more independent planning approach.
--------------------
\1 See app. for a list of the 18 integrations.
BACKGROUND
---------------------------------------------------------- Chapter 0:1
Generally, the 18 integrations, with one exception, share some common
characteristics. For example, most of VA's integrations to date
involve (1) facilities that have complementary missions, such as
acute and mental health care; (2) one facility that is significantly
larger than the other(s); and (3) only one or no facility(ies) with a
strong medical school affiliation. By contrast, Chicago's Lakeside
and West Side facilities have almost identical missions, are about
the same size, and have strong affiliations with major medical
schools.
VA's facility integrations use different ways to improve management,
clinical, and patient support services. These include
-- unifying management by creating a single team to manage all
facilities instead of using separate management teams at each
facility;
-- consolidating a service by moving all employees and patients to
one facility rather than continuing to provide the service at
multiple locations;
-- centralizing a service by moving some but not all of the
employees associated with it to one of the facilities;
-- contracting out some services that VA employees have
historically provided; and
-- reengineering service delivery by designing more efficient and
effective ways to do business.
Of the 18 integrations, 5 have reported that all activities have been
completed, and they anticipate no additional changes to their
management or delivery structure at this time. The remaining
integrations are in various stages of planning and implementation,
and several anticipate completion within the next few months.
FACILITY INTEGRATIONS PLAY A
KEY ROLE IN RESHAPING VA'S
HEALTH CARE DELIVERY
---------------------------------------------------------- Chapter 0:2
Facility integrations are a critical part of VA's nationwide strategy
to restructure its health care delivery system to improve access,
quality, and efficiency of care to veterans. VA's restructuring plan
reflects, in large part, the changes that have been under way in the
private sector health care system for some time. Profound changes in
the health care environment brought about, in part, by technological
advances, economic factors, demographic changes, and the rise of
managed care are causing a dramatic shift away from inpatient care
and a corresponding increase in outpatient care. Toward that end, VA
has been establishing new community-based clinics, emphasizing
primary care, decentralizing decision-making, and integrating
facilities to provide an interdependent, interlocking system of care.
VA's progress to date indicates that integrations are having positive
results, but it remains to be seen whether integrations will reach
their maximum potential and accomplish what VA intends and veterans
need.
Integrating health care facilities is a complex process that requires
careful planning because it can have an adverse affect on many
stakeholders, such as veterans, facility employees, and medical
school personnel. For example, facility integrations will
undoubtedly alter the way veterans receive health care.
Historically, each VA facility has generally tried to provide
veterans with one-stop service delivery, that is, to provide as many
services as possible at a single location. After consolidating
services as part of integration, more veterans may have to go to more
than one location for care. For example, when acute inpatient care
is moved from the Tuskegee hospital to the Montgomery hospital,
veterans receiving primary care at Tuskegee will have to use the
Montgomery facility when they need a hospital admission. These
changes will generally bring VA service delivery practices more in
line with those of the private sector.
Integrations nevertheless provide significant benefits to veterans,
primarily because VA can reinvest the money it saves in access and
service improvements. VA estimates that integration of facilities
has generated over $83 million in savings, which has been used, in
part, to (1) provide new community-based clinics that expand
veterans' access to primary care, (2) offer new services at existing
medical facilities, or (3) make existing services more accessible
through longer operating hours or shorter waiting times.
Facility integration has also had a significant impact on VA
employees. Most savings are achieved by reducing the number of
employees providing the same services at multiple medical facilities
within the same geographic area. To date, VA has been able, for the
most part, to accomplish this reduction through buyouts and routine
attrition, although some reductions-in-force were or will be used.
In some situations, employees will move from one medical facility to
another or transfer to different positions within their current
facility, which may require retraining.
In addition, medical school personnel are affected by the
integrations. As VA reduces unnecessary duplication of services,
medical schools may have to share management of integrated services,
which would result in a reduction in the number of physicians
employed and residents trained. In addition, some would have to
travel to different facilities rather than continue to provide
services at their present locations. For example, medical school
employees and others may have to travel between the Lakeside and West
Side facilities, a distance of about 6 miles.
LESSONS LEARNED THAT COULD
ENHANCE VA'S FACILITY
INTEGRATIONS
---------------------------------------------------------- Chapter 0:3
Because of the large reinvestment opportunities potentially
available, facility integrations are one of the best ways VA has to
improve quality and access to care for veterans while also increasing
the efficiency of health care delivery. Currently, VA is considering
ways to improve its facility integration process. On the basis of
our visits to the Chicago and Alabama facilities and discussions with
officials involved with the other 16 integrations, we also believe
that improvements can be made to VA's integration process. Our
discussions with several private sector health care providers who are
involved with major facility integrations have indicated to us that
adopting the following changes could bring VA's process more in line
with private sector integration practices.
USING A COMPREHENSIVE
PLANNING APPROACH
-------------------------------------------------------- Chapter 0:3.1
Integration of VA medical facilities may be more successful if done
on a comprehensive planning basis. Such an approach could involve,
among other things, a thorough assessment of all potential resources
needed to meet the expected workload over the next 5 to 10 years in a
geographic service area. At present, VA does not always include
these elements in its planning process. Consequently, integration
planners do not always consider all viable options, changing
conditions, and future investments. This could cause VA to miss
better options, which could greatly lower the dollar savings and thus
reduce reinvestment opportunities to improve veterans' care.
Comprehensive planning for integration of services that includes all
VA facilities within the same geographic service area expands the
options available for consideration. For example, in the Chicago
area, four VA facilities within 35 miles of each other serve
essentially the same veteran population. If veterans' current
inpatient needs could be met in three rather than four locations, VA
could save about $20 million annually in operating costs, although
some of the savings may need to be reinvested to increase outpatient
capacity at the three locations or in community clinics. Operating
in fewer locations also could generate additional savings by avoiding
future renovations and equipment replacement, and possibly through
the sale or lease of excess capacity.
VA may realize greater results over the long run if it uses a longer
planning horizon. This could enable VA to determine how its current
workload will compare with its future resource needs. For example,
as in the private sector, VA's inpatient workload has been decreasing
and is expected to continue decreasing over the next 5 to 10 years.
If inpatient workload continues to decrease, excess hospital space
will increase. Thus, if it uses current workload as a basis, VA may
decide that it is not viable to consolidate services, but if it uses
future workload estimates, VA may conclude that it is viable to
consolidate.
VA may also realize better results if its planning considers all
potential resources needed over the next 5 to 10 years. If VA plans
for veterans' current needs, it risks using funds for construction,
renovation, and equipment that may yield short-term benefits only.
For example, in Chicago, VA approved renovations of Lakeside's
surgical intensive care unit and emergency room, and the replacement
of its cardiac catheterization equipment. For West Side, VA approved
the replacement of the angiography suite. If, within 5 to 10 years,
the inpatient workload is consolidated at one facility, VA would have
realized limited benefits from some of these investments.
COMPLETING PLANNING PHASE
BEFORE IMPLEMENTING CHANGES
-------------------------------------------------------- Chapter 0:3.2
VA's decision-making may be enhanced if it completes all planning for
the integrated facilities before beginning to implement the
integrations. Each of its 18 facility integrations involved between
2 and 35 work groups to develop proposals to integrate management,
clinical, and patient services. VA currently begins implementing
proposals as they become available from the various work groups,
without first examining all proposals together for an overall
perspective.
VA's integration process contains one common decision
point--headquarters' approval of the initial proposal to integrate.
With this approval, VA essentially decides to operate two or more
facilities as a health care system using a single management team.
Once an integration is approved, the director for the new system sets
up governing boards to direct and oversee the integration process and
decision-making. The boards establish work groups to analyze data
and explore integration options. Typically, as each work group
completes its planning, it submits an integration proposal to the
board with recommendations to the director. Once the board approves
the recommendations, the director generally begins implementing them.
This incremental approach runs the risk that later work group
proposals could affect previously implemented actions. In addition,
it is especially difficult, if not impossible, to assess the
reasonableness of VA's decisions when they are made incrementally.
For example, VA decided to relocate some administrative staff from
the Montgomery to the Tuskegee facility, primarily because VA
concluded that sufficient space was not available at Montgomery. But
VA had not yet determined how much staffing was needed for a number
of other services at Montgomery before implementing these changes.
This occurred primarily because, at the time, planning for those
services was not completed. VA was still considering, for instance,
several options for restructuring Montgomery's and Tuskegee's
nutrition and fiscal services, which could greatly affect the
availability of space in the Montgomery facility.
VA recognizes the need for a more structured process. Two months
ago, it established a team to revise its integration guidance. VA is
considering adopting a five-phase process that includes
conceptualization, quantitative and qualitative analyses,
implementation planning, implementation, and evaluation. These are
logical phases in that the end of each phase seems to provide a
decision point at which stakeholders may efficiently and effectively
participate in VA's process. Moreover, this process suggests that
decisions on the proposed integration of services on a facilitywide
basis will be made only after planning is completed, because the next
phase focuses on the implementation of the plan. As such, this
approach should help VA make better integration decisions.
PROVIDING A DETAILED
INTEGRATION PLAN TO
STAKEHOLDERS BEFORE
IMPLEMENTATION BEGINS
-------------------------------------------------------- Chapter 0:3.3
Stakeholder participation in the process could be enhanced if VA
provides a detailed integration plan before implementation begins.
VA encourages local facilities to have early and continued
stakeholder involvement. The local facilities have worked hard to
involve stakeholders by using such techniques as meetings, letters,
briefings, newsletters, and videos.
Stakeholders, however, have sometimes found it difficult to
understand and support VA's actions because they were not provided
sufficient information about the integrations, such as
-- how services will be integrated,
-- how potential changes will affect veterans and employees,
-- why selected alternatives are the best ones available,
-- how much the potential changes will cost to implement,
-- how much the potential changes will save, and
-- how VA will reinvest savings to benefit veterans.
For example, for the Montgomery/Tuskegee integration, VA decided to
consolidate administrative services by moving most employees from
Montgomery to Tuskegee. However, it made this decision before
determining how many or which employees would be moved or what it
would cost to renovate the space needed to accommodate the increased
number of administrative staff at Tuskegee. Therefore, VA officials
could not answer some key questions raised by congressional
stakeholders.
VA's incremental planning approach contributes to these communication
problems because it limits the amount of information available about
the integration before implementation begins. Providing this
information would enable VA to communicate more effectively with
stakeholders. Moreover, presenting such planning results in a
written document that could be shared with stakeholders would further
enhance the opportunity for effective communication by allowing VA to
obtain stakeholders' views and gain support or "buy-in" for its
proposed integration activities.
USING AN INDEPENDENT
PLANNING APPROACH
-------------------------------------------------------- Chapter 0:3.4
Objective facility integration planning based on independent judgment
is critical to successful integrations. Making decisions to
restructure medical facility services when the decisions could
adversely affect the planners' own interests presents an inherently
difficult situation. Many competing interests are at stake in VA's
integrations, including those of VA employees, medical school
personnel, and residents of affected communities. As planners, these
groups may not aggressively consider all viable options and may avoid
difficult choices by focusing only on marginal changes to the status
quo. In such situations, VA integrations might yield less than their
full potential benefit to veterans, needlessly limiting savings
available for reinvestment.
For example, in the West Side/Lakeside integration, VA uses work
groups to study integration of individual clinical services. Medical
school faculty chair the work groups that will make proposals for how
VA will integrate two of the more important services--surgery and
medicine. The work groups are expected to address integration of
management and consolidation of services. A potentially divisive
issue is whether to consolidate clinical services and, if
consolidated, where the services should be located. Because the
planners will be greatly affected by the outcomes, it has proven
extremely difficult for the competing medical schools to address this
issue.
To overcome this problem, a more independent planning approach using
planners (full-time VA planners or consultants) with no vested
interests in the geographic area could be used to develop data,
explore options, and recommend actions to the network director.
-------------------------------------------------------- Chapter 0:3.5
In conclusion, VA has only scratched the surface in reaping the
benefits of medical facility integrations; the greatest benefits are
yet to be realized. Effective integrations involve difficult choices
and, as we discussed today, the decisions should be objective and in
the best interests of veterans. Toward this end, we encourage VA to
continue improving its integration process, because every dollar
saved by integrating in a more efficient way can be reinvested to
better meet veterans' medical needs or serve veterans who might
otherwise not be served.
This concludes my prepared statement. We will be glad to answer any
questions you or Members of the Subcommittees may have.
VA'S APPROVED INTEGRATIONS
==================================================== Appendix Appendix
VISN\a VA health care system Integrated facilities
---------------------- ---------------------- ----------------------
1 Connecticut Newington, CT; West
Haven, CT
2 Western New York Batavia, NY; Buffalo,
NY
3 New Jersey East Orange, NJ;
Lyons, NJ
3 Hudson Valley Castle Point, NY;
Montrose, NY
4 Pittsburgh Pittsburgh (Highland
Drive), PA; Pittsburgh
(University Drive), PA
5 Maryland Baltimore, MD; Fort
Howard, MD; Perry
Point, MD
7 Central Alabama Montgomery, AL;
Tuskegee, AL
11 Northern Indiana Fort Wayne, IN;
Marion, IN
12 Chicago Lakeside, IL; West
Side, IL
13 Black Hills Fort Meade, SD; Hot
Springs, SD
14 Greater Nebraska Grand Island, NE;
Lincoln, NE
14 Central Iowa Des Moines, IA;
Knoxville, IA
17 North Texas Bonham, TX; Dallas, TX
17 Central Texas Marlin, TX; Temple,
TX; Waco, TX
17 South Texas Kerrville, TX; San
Antonio, TX
20 Puget Sound American Lake, WA;
Seattle, WA
21 Palo Alto Livermore, CA; Palo
Alto, CA
22 Southern California Sepulveda, CA; Los
System of Clinics Angeles, CA
----------------------------------------------------------------------
\a Veterans integrated service network.
*** End of document. ***