VA Health Care: Opportunities to Enhance Montgomery and Tuskegee Service
Integration (Testimony, 07/28/97, GAO/T-HEHS-97-191).

GAO discussed its ongoing work on the integration of medical facilities
operated by the Department of Veterans Affairs (VA) in Tuskegee and
Montgomery, Alabama.

GAO noted that: (1) on the basis of GAO's work to date, it appears that
both Atlanta network and Montgomery and Tuskegee facility officials have
made a lot of progress in planning for this integration, and benefits
have already been realized; (2) planning activities, however, are yet to
be completed, including: (a) making key decisions on whether and how to
restructure certain services, such as nutrition and food services; (b)
fully assessing the probable impact of clinical, administrative, and
patient support service changes on veterans and employees; and (c)
determining how savings will be reinvested to benefit veterans; (3)
moreover, some stakeholders have found it difficult, if not impossible,
to assess the reasonableness of VA's decisions and to ultimately buy in
to them without the benefit of information from completed planning
activities facilitywide; and (4) because integrating facilities involves
inherently difficult issues and requires careful planning, it seems
important for VA to complete its planning in sufficient detail to ensure
that benefits are maximized and adverse impacts minimized.

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

 REPORTNUM:  T-HEHS-97-191
     TITLE:  VA Health Care: Opportunities to Enhance Montgomery and 
             Tuskegee Service Integration
      DATE:  07/28/97
   SUBJECT:  Hospital planning
             Federal agency reorganization
             Veterans hospitals
             Health care cost control
             Health services administration
             Health resources utilization
IDENTIFIER:  Montgomery (AL)
             VA Central Alabama Veterans Health Care System
             Tuskegee (AL)
             
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Cover
================================================================ COVER


Before the Subcommittee on Oversight and Investigations, Committee on
Veterans' Affairs, House of Representatives

For Release on Delivery
Expected at 9:00 a.m.  CDT
Monday, July 28, 1997

VA HEALTH CARE - OPPORTUNITIES TO
ENHANCE MONTGOMERY AND TUSKEGEE
SERVICE INTEGRATION

Statement of Stephen P.  Backhus, Director
Veterans' Affairs and Military Health Care Issues
Health, Education, and Human Services Division

GAO/T-HEHS-97-191

GAO/HEHS-97-191T


(406144)


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

  VA - Department of Veterans Affairs
  ABC - Test

VA HEALTH CARE:  OPPORTUNITIES TO
ENHANCE MONTGOMERY AND TUSKEGEE
SERVICE INTEGRATION
============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

We are pleased to be here today to discuss our ongoing work on the
integration of medical facilities operated by the Department of
Veterans Affairs (VA) in Tuskegee and Montgomery.  The two
facilities' managerial, clinical, and patient support services are to
be restructured into a single health care delivery system called the
Central Alabama Veterans Health Care System.  The system is to
provide the same or higher quality services at lower costs; savings
are to be reinvested to further enhance veterans' health care. 

The Montgomery and Tuskegee integration is a major initiative under
way in VA's Atlanta network--one of 22 networks that VA created 2
years ago to help improve the delivery of health care services to our
nation's veterans.  The Atlanta network operates 10 hospitals and 9
freestanding outpatient clinics, which served over 160,000 veterans
at a cost of $782 million in fiscal year 1997.  This integration is
the only one currently under way in the Atlanta network; other
networks have initiated facility integrations in 18 geographic
locations nationwide. 

We have been monitoring different aspects of the 22 networks'
operating policies, procedures, and practices since their inception. 
Because of your concerns about the impact of possible service changes
that the Montgomery and Tuskegee integration may have on veterans,
employees, and others, we began to collect information on the
integration of these facilities about 3 months ago.  Specifically,
you asked us to assess the progress of VA's integration planning for
these two facilities. 

On May 5, we accompanied Chairman Everett on a visit to the two
facilities.  During that visit, officials from VA's Atlanta network
as well as from the Montgomery and Tuskegee facilities told us that
they were beginning to implement changes.  In general, the officials
described several ways that service delivery at the two facilities is
to be restructured, including

  -- unifying management by creating a single team instead of using
     separate management teams at each facility;

  -- consolidating clinical services, such as inpatient medicine and
     surgery, by moving all acute-care patients to the Montgomery
     facility rather than continuing to provide the service at both
     facilities;

  -- centralizing administrative services, such as engineering, by
     moving most employees to the Tuskegee facility; and

  -- reengineering some services, such as social work and nursing, by
     designing more efficient and effective ways to meet veterans'
     needs. 

During this visit, however, VA officials were not prepared to provide
detailed information about their proposed service changes.  Since
then, we have discussed the integration of the facilities with
officials in VA's headquarters, Atlanta network, and Montgomery and
Tuskegee facilities, and reviewed planning documents.  We also
discussed integration issues with several private health care
providers and consulting firms. 

On the basis of our work to date, it appears that both Atlanta
network and Montgomery and Tuskegee facility officials have made a
lot of progress in planning for this integration, and benefits have
already been realized.  Planning activities, however, are yet to be
completed, including (1) making key decisions on whether and how to
restructure certain services, such as nutrition and food services;
(2) fully assessing the probable impact of clinical, administrative,
and patient support service changes on veterans and employees; and
(3) determining how savings will be reinvested to benefit veterans. 
Moreover, some stakeholders have found it difficult, if not
impossible, to assess the reasonableness of VA's decisions and to
ultimately "buy in" to them without the benefit of information from
completed planning activities facilitywide.  Because integrating
facilities involves inherently difficult issues and requires careful
planning, it seems important for VA to complete its planning in
sufficient detail to ensure that benefits are maximized and adverse
impacts minimized. 


   FACILITY INTEGRATIONS PLAY A
   KEY ROLE IN RESHAPING VA'S
   HEALTH CARE DELIVERY
---------------------------------------------------------- Chapter 0:1

Facility integrations are part of VA's nationwide strategy to
restructure its health care delivery system to improve access to and
quality and efficiency of care provided to our nation's veterans. 
This is being done in a way that reflects, in large part, changes
that have been under way in the private sector for some time. 
Profound changes in health care brought about by technological
advances and the rise of managed health care, among other things,
have caused a dramatic shift away from inpatient care and a
corresponding increase to outpatient care.  Toward this end, VA has
been increasing the number of ambulatory care access points,
emphasizing primary care, decentralizing decision-making, and
integrating facilities to provide an interdependent, interlocking
system of care. 

Integrations can provide significant benefits to veterans primarily
because VA can reinvest the money it saves to further enhance
veterans' access and improve service availability and quality.  VA
estimates that integration of facilities nationwide has generated
over $83 million in annual 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, and (3) make existing services more accessible through
longer operating hours or shorter waiting times.  VA expects the
Montgomery and Tuskegee integration to save several million dollars
annually, and expects to reinvest part of these savings to establish
and operate an outpatient clinic in Dothan. 

While integrating health care facilities can be beneficial, it
requires careful planning because it affects veterans as well as
other stakeholders, including VA employees and residents of local
communities.  For example, facility integrations may alter the way
veterans receive VA health care.  Historically, many VA facilities
afforded veterans one-stop service delivery; that is, they provided
as many services as possible at a single location.  When inpatient
medicine and surgery services are consolidated at the Montgomery
facility, veterans will receive primary care at Tuskegee and will
have to use Montgomery when they need a hospital admission.  These
changes will generally bring VA service delivery practices more in
line with private sector practices. 

Integration of VA medical facilities also has significant impacts 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 service area.  Nationwide, 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.  Also, in some situations, employees have been moved from
one medical facility to another or transferred to different positions
within their current medical facility, which in some cases required
retraining.  Like other integrations, VA has used buyouts and
attrition to reduce the Montgomery and Tuskegee workforce by over 100
employees since beginning integration planning.  VA officials expect
that additional integration planning decisions will be made that will
further reduce the workforce and affect other employees by requiring
them to be retrained for other positions. 


   COMPLETING PLANNING PHASE
   BEFORE IMPLEMENTING CHANGES
---------------------------------------------------------- Chapter 0:2

VA's integration planning approach has many positive features.  For
example, the Montgomery and Tuskegee facilities currently plan and
implement their integrations using work groups composed of both
facilities' employees.  Involvement of local facility employees in
planning activities appears beneficial in that it expedites the
process, includes those most familiar with the operations of each
facility, and permits stakeholder involvement in the outcome. 

But our work to date also raises concerns about VA's integration
planning process.  Integration decisions are generally made
incrementally, that is, on a service-by-service basis, at varying
times throughout the process.  Also, planning and implementation
activities frequently occur simultaneously, without a detailed,
comprehensive plan. 

By contrast, private health care providers and consulting firms with
whom we spoke appear to approach integrations with a more structured
process that places greater emphasis on reaching implementation
decisions after comprehensive integration planning is completed. 
Providers generally told us that they prepare written plans that
include detailed analyses of services at each facility, how services
can best be restructured, and how the changes will affect patients,
employees, and others. 

VA's process contains one common decision point--headquarters
approval of an initial integration proposal before detailed planning
begins.  With the September 10, 1996, approval of the Montgomery and
Tuskegee integration proposal, VA decided to operate the two
facilities as an integrated health care system using a single
management team.  Following this decision, a governing board was
established to direct and oversee the integration planning process. 
The board established 13 work groups to analyze data and explore
integration options.  These groups then submitted their integration
proposals to the board, and subsequently, the network office
authorized the implementation phase of the integration.  Soon after,
the director of the newly integrated facilities established four task
forces to analyze in more detail certain aspects of the proposals,
including space and relocation requirements.  The director has the
authority to implement changes on a service-by-service basis as he
determines appropriate. 

This incremental approach runs the risk that later work group
proposals could affect previously implemented actions or, conversely,
may be limited by proposals that have already been implemented.  In
addition, it is almost impossible to determine the reasonableness of
VA's decisions when they are made incrementally. 

For example, the cornerstone of the Montgomery and Tuskegee
integration is the consolidation of acute care at Montgomery and
long-term, rehabilitative, and psychiatric care at Tuskegee.  In
addition, administrative services are to be centralized at Tuskegee. 
This decision to relocate administrative staff now employed at the
Montgomery facility was based on (1) a determination that there would
not be sufficient space available for the administrative staff at
Montgomery once acute care was moved there and (2) a perception that
this would be fair to Tuskegee because acute care was being moved to
Montgomery.  However, the decision was made without adequately (1)
exploring other options that could alleviate the space concern, such
as relocating the staff in other buildings on the Montgomery campus,
or (2) taking into account how future changes in workload might
affect the availability of space in Montgomery, in which case it
might be more prudent for VA to lease space nearby until space
becomes available at the Montgomery facility. 

Also, because VA had not yet made decisions on how to integrate a
number of other services before implementation, some key questions
about the availability of space at Montgomery remained unanswered. 
VA is still considering, for instance, several options for
restructuring the nutrition and food service, which could make more
space available at Montgomery.  For example, one option is to
consolidate food preparation at one facility and transport meals to
the other.  Another option is to contract for services.  Selecting
one of these options could help avoid the costs of moving
administrative employees to Tuskegee.  Consequently, without a
decision on these options, VA has a limited basis for knowing whether
its overall integration decisions will produce optimal results. 


   PROVIDING A DETAILED
   INTEGRATION PLAN TO
   STAKEHOLDERS BEFORE
   IMPLEMENTATION BEGINS
---------------------------------------------------------- Chapter 0:3

Stakeholders' participation in the process, and ultimately their
buy-in, could be enhanced if VA provided them detailed information on
all aspects of the integration before beginning implementation. 
Several private providers told us that before implementing
integration changes, they provide stakeholders information such as
services to be integrated and resources required.  VA does encourage
local facilities to have early and continued stakeholder involvement
in the integration process. 

While the Montgomery and Tuskegee facilities have worked hard to
involve stakeholders by using such techniques as meetings, letters,
briefings, and newsletters, some of VA's integration actions are
difficult to understand because insufficient information about the
integration is currently available, 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, VA's inability to provide sufficient information raised
concerns about VA's decision to centralize administrative services at
Tuskegee.  VA made this decision before determining how many or which
employees would be moved and, as discussed earlier, without weighing
other options that could affect the need to move administrative
staff.  Therefore, VA officials could not answer some important
questions about the potential impact of this proposed action. 

In addition, VA officials' failure to consider all potential
construction and renovation costs needed for the two facilities over
the next several years raises questions.  Estimates presented by the
work groups to the board showed that integration renovation costs
would be about $300,000, including over $100,000 to renovate the
Tuskegee buildings that would house the administrative staff.  But a
master construction plan discussed at the same board meeting showed
that estimated construction costs for the two facilities over the
next few years could approach $8 million, including other possible
renovation costs to house administrative staff.  VA officials said
they do not consider this plan to be part of the integration because
they believe that many of the projects in it would be done regardless
of whether the facilities were integrated.  We believe that VA should
consider all potential expenditures for the two facilities over the
next several years as integration-related decisions so that it can
better demonstrate to stakeholders the reasonableness of the
renovation costs as they relate to the overall plan for the
integration. 

VA's incremental planning approach contributes to 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. 

VA is currently considering ways to improve its integration planning
and implementation process.  Toward this end, VA is developing a more
structured process that should increase the availability of
information at important decision points.  However, our work to date
suggests that stakeholders' interests may be better served if VA
completed a comprehensive planning phase and achieved buy-in from
those stakeholders before implementation. 


-------------------------------------------------------- Chapter 0:3.1

This concludes my prepared statement.  I will be glad to answer any
questions you or Members of the Subcommittee may have. 


*** End of document. ***