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Before the Committee on Veterans' Affairs, House of Representatives:

United States General Accounting Office:


For Release on Delivery Expected at 10:00 a.m.

Thursday, May 8, 2003:


Key Management Challenges in Health and Disability Programs:

Statement of Cynthia A. Bascetta:

Director, Health Care--Veterans':

Health and Benefits Issues:


GAO Highlights:

Highlights of GAO-03-756T, a testimony before the Committee on 
Veterans’ Affairs, House of Representatives 

Why GAO Did This Study:

In previous GAO reports and testimonies on the Department of Veterans 
Affairs (VA), and in its ongoing reviews, GAO identified major 
management challenges related to enhancing access to health care, 
improving the efficiency of health care delivery, and improving the 
effectiveness of disability programs.  This testimony underscores the 
importance of continuing to make progress in addressing these 
challenges and ultimately overcoming them.

what GAO Found:

VA has taken actions to address key challenges in its health care and disability programs.  However, growing demand for health care and a potentially larger and more complex disability workload may make VA’s challenges in these areas more complex.

* Enhancing access to health care. VA is challenged to deliver timely, 
convenient health care to its enrolled veteran population.  Too many 
veterans continue to travel too far and wait too long for care.  
However, shifting care closer to where veterans live is complicated by 
stakeholder interests.  In addition, VA’s efforts to reduce waiting 
times may be complicated by an anticipated short-term surge in demand 
for specialty outpatient care. VA also faces difficult challenges in 
providing equitable access to nursing home care services to a growing 
elderly veteran population.

* Improving the efficiency of health care delivery. VA is challenged 
to find more efficient ways to meet veterans’ demand for health care. 
VA operates a large portfolio of aged buildings that is not well 
aligned to efficiently meet veterans’ needs.  As a result, VA faces 
difficult realignment decisions involving capital investments, 
consolidations, closures, and contracting with local providers.  VA 
also faces challenges in implementing management changes to improve 
the efficiency of patient support services, such as food and laundry 

* Improving the effectiveness of disability programs. VA is challenged 
to find more effective ways to compensate veterans with disabilities.  
VA’s outdated disability determination process does not reflect a 
current view of the relationship between impairments and work 
capacity.  Advances in medicine and technology have allowed some 
individuals with disabilities to live more independently and work more 
effectively. VA also faces continuing challenges to improve the 
timeliness, quality and consistency of claims processing. Major 
improvements may require fundamental program changes. 

GAO designated federal real property, including VA health care 
infrastructure, and federal disability programs, including VA 
disability benefits, as high-risk areas in January 2003.  GAO did this 
to draw attention to the need for broad-based transformation in these 
areas, which is critical to improving the government’s performance and 
ensuring accountability within expected resource limits.

What Remains to Be Done:

VA remains challenged to:
* ensure timely, convenient, and equitable access to health 
care, including hospital, specialty outpatient, and nursing home 

* realign its health care delivery infrastructure and implement other 
management initiatives to increase the efficiency of the delivery of 
patient support services; and 

* seek solutions to modernize its disability programs as well as 
improve the timeliness and quality of disability claims decisions.

To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Cynthia A. Bascetta at (202) 512-7101.

[End of section]

Mr. Chairman and Members of the Committee:

Thank you for inviting me to discuss our past and current work on 
veterans' health care and disability benefits--two major program areas 
at the Department of Veterans Affairs (VA). As you know, VA's budget 
submission for fiscal year 2004 includes about $64 billion and 214,000 
staff. In fiscal year 2002, VA spent about $23 billion to provide 
health care to over 4 million veterans and about $26 billion to provide 
cash disability benefits to over 3 million veterans, family members, 
and survivors.

It is especially fitting, with the recent deployment of our military 
forces to armed conflict, that we reaffirm our commitment to provide 
high quality services in a convenient and timely manner to those who 
serve our nation in its times of need. Meeting this commitment as 
efficiently and effectively as possible is also of paramount 
importance. In this regard, my statement focuses on challenges that VA 
faces to ensure reasonable access to health care, use its health care 
resources efficiently, and manage its disability programs effectively.

My comments today are based on numerous reports and testimonies issued 
over the last 7 years, including significant recommendations we have 
made and VA's progress in implementing them. (See Related GAO 
Products.) We did our work in over 100 VA health care delivery 
locations and conducted surveys of all 21 health care networks and 
reviews of disability management issues covering all 57 disability 
claims processing regional offices. We are also reporting preliminary 
results of ongoing health care work that started in November 2002. This 
involves visits to delivery locations, document reviews, and interviews 
with VA officials in headquarters and the networks. We did our work in 
accordance with generally accepted government auditing standards.

In summary, VA is challenged to meet the acute and nursing home care 
needs of veterans in a timely, convenient, and equitable manner. 
Despite VA's significant access enhancements over the past several 
years, too many veterans continue to travel too far and wait too long 
for appointments, especially when they require hospital admissions or 
consultations with specialists on an outpatient basis. When trying to 
reduce travel times, VA faces difficult decisions because shifting care 
closer to where veterans live can have significant ramifications for 
stakeholders, such as medical schools, as well as for the use of VA's 
existing resources. In addition, VA's efforts to reduce waiting times 
may be complicated by an anticipated surge in demand for VA specialty 
outpatient care over the next 10 years. Also, the population most in 
need of nursing home care--veterans who are 85 years old or older--is 
growing. As a result, VA faces difficult decisions concerning the 
delivery and sizing of nursing home care services to equitably meet 
these needs.

VA is also challenged to find ways to use available health care 
resources more efficiently to meet veterans' demand for health care. 
For example, VA operates and maintains a large portfolio of aged health 
care assets, primarily buildings. This infrastructure is no longer 
effectively aligned with VA's new delivery model that emphasizes 
outpatient care. As a result, VA faces difficult realignment decisions 
involving capital investments, consolidations, closures, and 
contracting with local providers. These may have significant 
ramifications for stakeholders, such as medical schools and unions, 
primarily because realignments involve a shifting of workload among 
delivery locations or workforce reductions. VA also faces challenges in 
implementing management changes to improve the efficiency of patient 
support services, such as food and laundry services.

In addition, VA is challenged to find ways to compensate disabled 
veterans in a more meaningful and timely manner. For example, VA uses a 
disability determination process that is based on economic conditions 
in 1945 and, as such, does not accurately reflect current relationships 
between impairments and the skills and abilities needed to work in 
today's business environment. Moreover, the consequences of some 
medical conditions for many individuals have been reduced through 
advances in medicine and technology, which allow individuals to live 
with greater independence and function more effectively in work 
settings. Besides modernizing the economic and medical underpinnings of 
the program, VA remains in the midst of significant challenges to 
improve the quality, timeliness, and consistency of disability claims 
processing. Despite its recent efforts, too many disabled veterans wait 
too long for disability decisions. Significant and sustainable 
improvements may not be possible without fundamental program design 
changes, including those that require legislative actions to implement. 
VA and the Congress could face significant stakeholder resistance to 
such changes.

I would also like to point out that we designated federal real property 
and federal disability programs as high-risk areas in January 
2003.[Footnote 1] We did this to draw attention to the need for broad-
based transformation in these areas, which is critical to improving the 
government's performance and ensuring accountability within expected 
resource limits. If this transformation is well implemented, agencies 
will be better positioned to achieve mission effectiveness, reduce 
operating costs, improve facility conditions, and enhance security and 


During World War I, Public Health Service hospitals treated returning 
veterans and, at the end of the war, several military hospitals were 
transferred to the Public Health Service to enable it to continue 
treating injured soldiers. In 1921, those hospitals were transferred to 
the newly established Veterans' Bureau. By the early 1990s, the 
veterans' health care system had grown into one of our nation's largest 
direct providers of health care, comprising more than 172 hospitals.

In October 1995, VA began to transform its health care system from a 
hospital-dominated model to one that provides a full range of health 
care services. A key feature of this transformation involves the 
development of community-based, integrated networks of VA and non-VA 
providers that could deliver health care closer to where veterans live. 
At that time, about half of all veterans lived more than 25 miles from 
a VA hospital; about 44 percent of those admitted to VA hospitals lived 
more than 25 miles away.[Footnote 2] In making care more proximate to 
veterans' homes, VA also began shifting the delivery of health care 
from high-cost hospital settings to lower-cost outpatient settings.

To facilitate VA's transformation, the Congress passed the Veterans' 
Health Care Eligibility Reform Act of 1996, which furnishes tools that 
VA said were key to a successful transformation, including:

* new eligibility rules that allow VA to treat veterans in the most 
appropriate setting;

* a uniform benefits package to provide a continuum of services; and:

* an expanded ability to purchase services from private providers.

Today, VA operates over 800 delivery locations nationwide, including 
over 600 community-based outpatient clinics and 162 hospitals. VA's 
delivery locations are organized into 21 geographic areas, commonly 
referred to as networks. Each network includes a management office 
responsible for making basic budgetary, planning, and operating 
decisions concerning the delivery of health care to its veterans. Each 
office oversees between 5 and 11 hospitals, as well as many community-
based outpatient clinics.

To promote more cost-effective use of resources, VA is authorized to 
share resources with other federal agencies to avoid unnecessary 
duplication and overlap of activities. VA and the Department of Defense 
(DOD) have entered into agreements to exchange inpatient, outpatient, 
and specialty care services as well as support services. Local 
facilities also have arranged to jointly purchase pharmaceuticals, 
laboratory services, medical supplies, and equipment.

Also, VA has been authorized to enter into agreements with medical 
schools and their teaching hospitals. Under these agreements, VA 
hospitals provide training for medical residents, and appoint medical 
school faculty as VA staff physicians to supervise resident education 
and patient care. Currently, about 120 medical schools and teaching 
hospitals have affiliation agreements with VA. About 28,000 medical 
residents receive some of their training in VA facilities every year.

Veterans' eligibility for health care also has evolved over time. 
Before 1924, VA health care was available only to veterans who had 
wounds or diseases incurred during military service. Eligibility for 
hospital care was gradually extended to war-time veterans with lower 
incomes and, in 1973, to peace time veterans with lower incomes. By 
1986, all veterans were eligible for hospital and outpatient care for 
service-connected conditions as well as for conditions unrelated to 
military service.[Footnote 3]

VA implemented an enrollment process in 1998 that was established 
primarily as a means of prioritizing care if sufficient resources were 
not available to serve all veterans seeking care. About 6.2 million 
veterans had enrolled by the end of fiscal year 2002. In contrast, the 
overall veteran population is estimated to be about 25 million. VA 
projects a decline in the total veteran population over the next 20 
years while the enrolled population is expected to decline more slowly 
as shown in table 1.

Table 1: Veteran Population and Enrollment Projections between Fiscal 
Years 2007 and 2022 (in millions):

Veteran population; 2007: 22.8; 2012: 20.6; 2017: 18.6; 2022: 16.9.

Enrollment; 2007: 6.3; 2012: 6.3; 2017: 6.1; 2022: 5.7.

Source: VA:

[End of table]

In addition to health care, VA provides disability benefits to those 
veterans with service-connected conditions. Also, VA provides pension 
benefits to low-income wartime veterans with permanent and total 
disabilities unrelated to military service. Further, VA provides 
compensation to survivors of service members who died while on active 

Disabled veterans are entitled to cash benefits whether or not employed 
and regardless of the amount of income earned. The cash benefit level 
is based on the percentage evaluation, commonly called the "disability 
rating," that represents the average loss in earning capacity 
associated with the severity of physical and mental conditions. VA uses 
its Schedule for Rating Disabilities to determine which disability 
rating to assign to a veteran's particular condition. VA's ratings are 
in 10 percent increments, from 0 to 100 percent.

Although VA generally does not pay disability compensation for 
disabilities rated at 0 percent, such a rating would make veterans 
eligible for other benefits, including health care. About 65 percent of 
veterans receiving disability compensation have disabilities rated at 
30 percent or lower; about 8 percent are 100 percent disabled. Basic 
monthly payments range from $104 for a 10 percent disability to $2,193 
for a 100 percent disability.

To process claims for these benefits, VA operates 57 regional offices. 
These offices made almost 800,000 rating-related decisions[Footnote 4] 
in fiscal year 2002. Regional office personnel develop claims, obtain 
the necessary information to evaluate claims, and determine whether to 
grant benefits. In doing so, they consider veterans' military service 
records, medical examination and treatment records from VA health care 
facilities, and treatment records from private providers. Once claims 
are developed, the claimed disabilities are evaluated, and ratings are 
assigned based on degree of disability. Veterans with multiple 
disabilities receive a single, composite rating. For veterans claiming 
pension eligibility, the regional office also determines if the veteran 
served in a period of war, is permanently and totally disabled for 
reasons unrelated to military service, and meets the income thresholds 
for eligibility.

Access to Health Care Could Be Enhanced:

Over the past several years, VA has done much to ensure that veterans 
have greater access to health care. Despite this, travel times and 
waiting times are still problems. Another problem faced by aging 
veterans is potentially inequitable access to nursing home care.

Many Veterans Travel Too Far for Hospital Admissions and Specialty 

The substantial increase in VA health care delivery locations has 
enhanced access for enrolled veterans in need of primary care, although 
many still travel long distances for primary care.[Footnote 5] In 
addition, many who need to consult with specialists or require 
hospitalization often travel long distances to receive care. 
Nationwide, for example, more than 25 percent of veterans enrolled in 
VA health care--over 1.7 million--live over 60 minutes driving time 
from a VA hospital. These veterans would have to travel a long distance 
if they require admissions or consultations with specialists, such as 
urologists or cardiologists, located at the closest VA hospitals.

In October 2000, VA established the Capital Asset Realignment for 
Enhanced Services (CARES) program, which has a goal of improving 
veterans' access to acute inpatient care, primary care, and specialty 
care. CARES is intended to identify how well the geographic 
distribution of VA health care resources matches projected needs and 
the shifts necessary to better align resources and needs. Toward that 
end, VA has divided, for analytical purposes, its 21 networks into 76 
geographic areas--groups of counties--in order to determine the extent 
to which enrollees' travel times exceed VA's access standards.

For example, as part of CARES, VA has mandated that the 21 network 
directors identify ways to ensure that at least 65 percent of the 
veterans in their areas are within VA's access standards for hospital 
care--60 minutes for veterans residing in urban counties, 90 minutes 
for those in rural counties, and 120 minutes for those in highly rural 
counties. VA has identified 25 areas that do not meet this 65 percent 
target. In these areas, over 900,000 enrolled veterans have travel 
times that exceed VA's access standards. In addition, as part of CARES, 
VA identified 51 other areas where access enhancements may be addressed 
at the discretion of network directors, given that at least 65 percent 
of all enrolled veterans in those areas have travel times that meet 
VA's standard. In these areas, about 875,000 enrolled veterans have 
travel times that exceed VA's standards.

By contrast, VA has not mandated that network directors enhance access 
for veterans who travel long distances to consult with specialists. 
Unlike hospital care, VA has not established standards for acceptable 
travel times for specialty care. Currently, nearly 2 million enrolled 
veterans live more than 60 minutes driving time from specialists 
located at the closest VA hospital.

When considering ways to enhance access for veterans, VA network 
directors may consider three basic options: construct a new VA-owned 
and operated delivery location; negotiate a sharing agreement with 
another federal entity, such as a DOD facility; or contract with 
nonfederal health care providers. Shifting the delivery of health care 
closer to where veterans live may have significant ramifications for 
other stakeholders, such as medical schools. For example, within the 76 
areas, there are smaller geographic areas that contain large 
concentrations of enrollees outside VA's access standards--10,000 or 
more--who live closer to non-VA hospitals than they do to the nearest 
VA hospitals. Such enrolled veterans could account for significant 
portions of the hospital workload at the nearest VA delivery locations. 
Therefore, a shifting of this workload closer to veterans' residences 
could reduce the size of residency training opportunities at existing 
VA delivery locations.

Enhancing veterans' access can also have significant ramifications 
regarding the use of VA's existing resources. Currently, VA has most of 
its resources dedicated to costs associated with its existing hospitals 
and other infrastructure, including clinical and support staff, at its 
major health care delivery locations. Reducing veterans' travel times 
through contracting with providers in local communities or other 
options could reduce demand for services at VA's existing, more distant 
delivery locations. Efficient operation of those locations could become 
more difficult given the smaller workloads in relation to the operating 
costs of existing hospitals.

Many Veterans Wait Too Long for Appointments:

We also have found that excessive waiting times for VA outpatient care 
persist--a situation that we have reported on for the last decade. For 
example, in August 2001, we reported that veterans frequently wait 
longer than 30 days--VA's access standard--for appointments with 
specialists at VA delivery locations in Florida and other areas of the 
country.[Footnote 6] More recently, a Presidential task force reported 
in its July 2002 interim report that veterans are finding it 
increasingly difficult to gain access to VA care in selected geographic 
regions.[Footnote 7] For example, the task force found that the average 
waiting time for a first outpatient appointment in Florida, which has a 
large and growing veteran population, is over a year.

Although there is general consensus that waiting times are excessive, 
we reported, and VA agreed, that its data did not reliably measure the 
scope of the problem.[Footnote 8] To improve its data, VA is in the 
process of developing an automated system to more systematically 
measure waiting times. VA has also taken several actions to mitigate 
the impact of long waiting times, including limiting enrollment of 
lower priority veterans and granting priority for appointments to 
certain veterans with service-connected disabilities.[Footnote 9]

VA faces an impending challenge, however, reducing the length of times 
veterans wait for appointments. Specifically, VA's current projections 
of acute health care workload indicate a surge in demand for acute 
health care services over the next 10 years. For example, specialty 
outpatient demand nationwide is expected to almost double by fiscal 
year 2012.

Veterans' Access to Nursing Home Care May Be Inequitable:

VA's long-term care infrastructure, including nursing homes it 
operates, was developed when the concentration of veteran population 
was distributed differently by region. Consequently, the location of 
VA's current infrastructure may not provide equitable access across the 
country. In addition, when VA developed its long-term care 
infrastructure, it relied more on nursing home care and less on home 
and community-based services than current practice. To help update VA's 
long-term care policy, the Federal Advisory Committee on the Future of 
VA Long-Term Care recommended in 1998 that VA maintain its nursing home 
capacity at the level of that time but meet the growing veteran demand 
for long term care by greatly expanding home and community-based 
service capacity.[Footnote 10] The House Committee on Veterans' Affairs 
has expressed concern that VA needs to maintain its nursing home 
capacity workload at 1998 levels.

VA currently operates its own nursing home care units in 131 locations, 
according to VA headquarters officials. In addition, it pays for 
nursing home care under contract in community nursing homes. VA also 
pays part of the cost of care for veterans at state veterans' nursing 
homes and in addition pays a portion of the construction costs for some 
state veterans' nursing homes. In all these settings combined, VA's 
nursing home workload--average daily census--has declined by more than 
1,800 since 1998. See table 2. The biggest decline has been in 
community nursing home care where the average daily census was 31 
percent less in 2002 than in 1998. Average daily census in VA-operated 
nursing homes also declined by 11 percent during this period. A 9 
percent increase in state veterans' nursing homes' average daily census 
offsets some of the decline in average daily census in community and 
VA-operated nursing homes.

Table 2: Nursing Home Average Daily Census Provided or Paid for by VA 
in Fiscal Years 1998-2002:

Type of nursing home: VA nursing homes; 1998: 13,426; 1999: 12,653; 
2000: 11,828; 2001: 11,674; 2002: 11,974.

Type of nursing home: Community nursing homes; 1998: 5,575; 1999: 
4,547; 2000: 3,682; 2001: 4,010; 2002: 3,831.

Type of nursing home: State veterans' nursing homes; 1998: 14,602; 
1999: 15,051; 2000: 15,286; 2001: 15,593; 2002: 15,941.

Type of nursing home: Total; 1998: 33,603; 1999: 32,251; 2000: 30,796; 
2001: 31,277; 2002: 31,746.

Source: VA.

Note: The average daily census represents the total number of days of 
nursing home care divided by the number of days in the year.

[End of table]

VA headquarters officials told us that the decline in nursing home 
average daily census could be the result of a number of factors. These 
factors include providing more emphasis on shorter-term care for post-
acute care rehabilitation, providing more home and community-based 
services to obviate the need for nursing home care, assisting veterans 
to obtain placement in community nursing homes where care is financed 
by other payers, such as Medicaid, when appropriate, and difficulty 
recruiting enough nursing staff to operate all beds in some VA-operated 
nursing homes.

VA policy provides networks broad discretion in deciding what nursing 
home care to offer those patients that VA is not required to provide 
nursing home care to under the provisions of the Veterans Millennium 
Health Care and Benefits Act of 1999.[Footnote 11] Networks' use of 
this discretion appears to result in inequitable access to nursing home 
care. For example, some networks have policies to provide long-term 
nursing home care to these veterans who need such care if resources 
allow, while other networks do not have such policies. As a result, 
these veterans who need long-term nursing home care may have access to 
that care in some networks but not others. This is significant because 
about two-thirds of VA's current nursing home users are recipients of 
discretionary nursing home care.

VA intended to address veterans' access to nursing home care as part of 
its larger CARES initiative to project future health care needs and 
determine how to ensure equitable access. However, initial projections 
of nursing home need exceeded VA's current nursing home capacity. VA 
said that the projections did not reflect its long-term care policy and 
decided not to include nursing home care in its CARES initiative. 
Instead, VA officials told us that they have developed a separate 
process to provide projections for nursing home, and home and 
community-based services needs. These officials expect that new 
projections will be developed for consideration by the Under Secretary 
for Health by July 2003. VA officials also told us that VA will use 
this information in its strategic planning initiatives to address 
nursing home and other long-term care issues at the same time that VA 
implements its CARES initiatives.

Because VA has not systematically examined its nursing home policies 
and access to care, veterans have no assurance that VA's $2 billion 
nursing home program is providing equitable access to care to those who 
need it. This is particularly important given the aging of the veteran 
population. The veteran population most in need of nursing home care--
veterans 85 years old or older--is expected to increase from almost 
640,000 to over 1 million by 2012 and remain at about that level 
through 2023. Until VA develops a long-term care projection model 
consistent with its policy, VA will not be able to determine if its 
nursing home care units in 131 locations and other nursing home care 
services it pays for provide equitable access to veterans now or in the 

Efficiency Could Be Improved through Health Care Asset Realignment and 
Other Management Actions:

In recent years, VA has made an effort to realign its capital assets, 
primarily buildings, to better serve veterans' needs as well as 
institute other needed efficiencies. Despite this, many of VA's 
buildings remain underutilized and patient support services are not 
always provided efficiently. VA could make better use of its resources 
by taking steps to partner with other public and private providers, 
purchase care from such providers, replace obsolete assets with modern 
ones, consolidate duplicative care provided by multiple locations 
serving the same geographic areas where it would be cost effective to 
do so, and assess various management options to improve the efficiency 
of patient support services.

Capital Assets Not Well-Aligned to Meet Veterans' Needs:

VA has a large and aged infrastructure, which is not well aligned to 
efficiently meet veterans' needs. In recent years, as a result of new 
technology and treatment methods, VA has shifted delivery from 
inpatient to outpatient settings in many instances and shortened 
lengths of stay when hospitalization was required. Consequently, VA has 
excess inpatient capacity at many locations.

For example, in August 1999, we reported that VA owned about 4,700 
buildings, over 40 percent of which had operated for more than 50 
years, and almost 200 of which were built before 1900. Many 
organizations in the facilities management environment consider 40 to 
50 years to be the useful life of a building.[Footnote 12] Moreover, VA 
used fewer than 1,200 of these buildings (about one-fourth of the 
total) to deliver health care services to veterans. The rest were used 
primarily to support health care activities, although many had tenants 
or were vacant.[Footnote 13] In addition, most delivery locations had 
mission-critical buildings that VA considered functionally obsolete. 
These included, for example, inpatient rooms not up to industry 
standards concerning patient privacy; outpatient clinics with 
undersized examination rooms; and buildings with safety concerns, such 
as vulnerability to earthquakes.

As part of VA's transformation, begun in 1995, its networks implemented 
hundreds of management initiatives that significantly enhanced their 
overall efficiency and effectiveness.[Footnote 14] The success of these 
strategies--shifting inpatient care to more appropriate settings, 
establishing primary care in community clinics, and consolidating 
services in order to achieve economies of scale--significantly reduced 
utilization at most of VA's inpatient delivery locations. For example, 
VA operated about 73,000 hospital beds in fiscal year 1995. In 1998, 
veterans used on average fewer than 40,000 hospital beds per day, and 
by 2001 usage had further declined to about 16,000 hospital beds per 

In 1999, we concluded that VA's existing infrastructure could be the 
biggest obstacle confronting VA's ongoing transformation 
efforts.[Footnote 15] During a hearing in 1999 before this Committee's 
Subcommittee on Health, we pointed out that, although VA was addressing 
some realignment issues, it did not have a plan in place to identify 
buildings that are no longer needed to meet veterans' health care 
needs. We recommended that VA develop a market-based plan for 
restructuring its delivery of health care in order to reduce funds 
spent on underutilized or inefficient buildings. In turn those funds 
could be reinvested to better serve veterans' needs by placing health 
care resources closer to where they live.

To do so, we recommended that VA comply with guidance from the Office 
of Management and Budget. The guidance suggested that market-based 
assessments include (1) assessing a target population's needs, 
(2) evaluating the capacity of existing assets, (3) identifying any 
performance gaps (excesses or deficiencies), (4) estimating assets' 
life cycle costs, and (5) comparing such costs to other alternatives 
for meeting the target population's needs. Alternatives include (1) 
partnering with other public or private providers, (2) purchasing care 
from such providers, (3) replacing obsolete assets with modern ones, or 
(4) consolidating services duplicated at multiple locations serving the 
same market.

During the 1999 hearing, the subcommittee chairman urged VA to 
implement our recommendations and VA agreed to do so. In August 2002, 
VA announced the results of a pilot study in its Great Lakes network, 
which includes Chicago and other locations. VA selected three 
realignment strategies in this network - consolidation of services at 
existing locations, opening of new outpatient clinics, and closure of 
one inpatient location. Currently, VA is analyzing ways to realign 
health care delivery in its 20 remaining networks. VA expects to issue 
its plans by the end of 2003. To date, VA has projected veterans' 
demand for acute health care services through fiscal year 2022, 
evaluated available capacity at its existing delivery locations, and 
targeted geographic areas where alternative delivery strategies could 
allow VA to operate more efficiently and effectively while ensuring 
access consistent with its standards for travel time.

For example, VA has the opportunity to achieve efficiencies through 
economies of scale in 30 geographic areas where two or more major 
health care delivery locations that are in close proximity provide 
duplicative inpatient and outpatient health care services. VA may also 
achieve similar efficiencies in 38 geographic areas where two or more 
tertiary care delivery locations are in close proximity. VA considers 
delivery locations to be in close proximity if they are within 60 miles 
of one another for acute care and within 120 miles for tertiary care. 
In addition, VA may achieve additional efficiencies in 28 geographic 
areas where existing delivery locations have low acute medicine 
workloads, which VA has defined as serving less than 40 hospital 
patients per day. VA also identified more than 60 opportunities for 
partnering with the DOD to better align the infrastructure of both 
agencies.[Footnote 16]

VA faces difficult challenges when attempting to improve service 
delivery efficiencies. For example, service consolidations can have 
significant ramifications for stakeholders, such as medical schools and 
unions, primarily due to shifting of workload among locations and 
workforce reductions. Understandably, medical schools are reluctant to 
change long-standing business relationships involving, among other 
things, training of medical residents. For example, VA tried for 5 
years to reach agreement on how to consolidate clinical services at two 
of Chicago's four major health care delivery locations before 
succeeding in August 2002. This is because such restructuring required 
two medical schools to use the same location to train residents, a 
situation that neither supported.

Unions, too, have been reluctant to support planning decisions that 
result in a restructuring of services. This is because operating 
efficiencies that result from the consolidation of clinical services 
into a single location could also result in staffing reductions for 
such support services as grounds maintenance, food preparation, and 
housekeeping. For example, as part of its ongoing transformation, VA 
proposed to consolidate food preparation services of 9 delivery 
locations into a single location in New York City in order to operate 
more efficiently. Two unions' objections, however, slowed VA's 
restructuring, although VA and the unions subsequently agreed on a way 
to complete the restructuring.

VA also faces difficult decisions concerning the need for and sizing of 
capital investments, especially in locations where future workload may 
increase over the short term before steadily declining. In large part, 
such declines are attributable to the expected nationwide decrease in 
the overall veteran population by more than one-third by 2030; in some 
areas, veteran population declines are expected to be steeper. It may 
be in VA's best interests to partner with other public or private 
providers for services to meet veterans' demands rather than risk 
making a major capital investment that would be underutilized in the 
latter stages of its useful life.

In cases when VA's realignment results in buildings that are no longer 
needed to meet veterans' health care needs, VA faces other difficult 
decisions regarding whether to retain or dispose of these buildings. VA 
has several options, including leasing, demolition, or transferring 
buildings to the General Services Administration (GSA), which has the 
authority to dispose of excess or surplus federal property. When there 
is no leasing potential, VA faces potentially high demolition costs as 
well as uncertain site preparation costs associated with the transfer 
of buildings to GSA. Given that such costs involve the use of health 
care resources, ensuring that disposal decisions are based on 
systematic analyses of costs and benefits to veterans poses another 
realignment challenge.[Footnote 17]

The challenge of dealing with a misaligned infrastructure is not unique 
to VA. In fact, we identified federal real property management as a 
high-risk area in January 2003. For the federal government overall and 
VA in particular, technological advancements, changing public needs, 
opportunities for resource sharing, and security concerns will call for 
a new way of thinking about real property needs. In VA's case, it has 
recognized the critical need to better manage its buildings and land 
and is in the process of implementing CARES to do so. VA has the 
opportunity to lead other federal agencies with similar real property 
challenges. However, VA and other agencies have in common persistent 
problems, including competing stakeholder interests in real property 
decisions. Resolving these problems will require high-level attention 
and effective leadership.

Patient Support Services Could Be Provided More Efficiently:

As VA continues to transform itself from an inpatient-to an outpatient-
based health care system, it must find more efficient, systemwide ways 
of providing patient care support services, such as consolidation of 
services and the use of competitive sourcing. For example, VA's shift 
in emphasis from inpatient to outpatient health care delivery has 
significantly reduced the need for inpatient care support services, 
such as food and laundry services. To make better use of resources, 
some VA inpatient facilities have consolidated food production 
locations, used lower-cost Veterans Canteen Service (VCS) workers 
instead of higher-paid Nutrition and Food Service workers[Footnote 18] 
to provide inpatient food services, or contracted out for the provision 
of these services. Some VA facilities have also consolidated two or 
more laundries into a single location, contracted for labor to operate 
VA laundries, or contracted out laundry services to commercial 

VA needs to systematically explore the further use of such options 
across its health care system. In November 2000, we recommended that VA 
conduct studies at all of its food and laundry service locations to 
identify and implement the most cost-effective way to provide these 
services at each location.[Footnote 19] At that time, we identified 63 
food production locations that could be consolidated into 29, saving 
millions of dollars annually. We estimated that VA could potentially 
save millions of dollars by consolidating both food and laundry 
production locations.

VA may also be able to reduce its food and laundry service costs at 
some facilities through competitive sourcing--through which VA would 
determine whether it would be more cost-effective to contract out these 
services or provide them in-house. VA must ensure, however, that, if a 
decision to contract for services is made, contract terms on payments 
and service quality standards will continue to be met. For example, we 
found that weaknesses in the monitoring of VA's Albany, New York 
laundry contract appear to have resulted in overpayments, reducing 
potential savings.[Footnote 20]

In August 2002, VA issued a directive establishing policy and 
responsibilities for its networks to follow in implementing a 
competitive sourcing analysis to compare the cost of contracting and 
the cost of in-house performance to determine who can do the work most 
cost effectively. VA has announced that, as part of the President's 
Management Agenda, it will complete studies of competitive sourcing of 
55,000 positions by 2008. VA plans to complete studies of competitive 
sourcing for all its laundry positions by the end of calendar year 
2003. Similar initiatives for food services and other support services 
are in the planning stages at VA. Overall, VA's plan for competitive 
sourcing shows promise. However, VA has not yet established a timeline 
for implementing an assessment of competitive sourcing and the other 
options we recommended for all its inpatient food service locations. 
Until VA completes these assessments and takes action to reduce costs, 
it may be paying more for inpatient food services than required and as 
a result have fewer resources available for the provision of health 
care to veterans.

We recognize that one of the options we recommended that VA assess, the 
competitive sourcing process set forth in the Office of Management and 
Budget (OMB) Circular A-76, historically has been difficult to 
implement. Specifically, there are concerns in both the public and 
private sectors regarding the fairness of the competitive sourcing 
process and the extent to which there is a "level playing field" for 
conducting public-private competitions. It was against this backdrop 
that the Congress in 2001, mandated that the Comptroller General 
establish a panel of experts to study the process used by the 
government to make sourcing decisions. The Commercial Activities Panel 
that the Comptroller convened conducted a yearlong study, and heard 
repeatedly about the importance of competition and its central role in 
fostering economy, efficiency, and continuous performance improvement. 
The panel made a number of recommendations for improving sourcing 
policies and processes.

As part of the administration's efforts to implement the 
recommendations of the Commercial Activities Panel, OMB published 
proposed changes to Circular A-76 for public comment in November 2002. 
In our comments on the proposal to the Director of OMB this past 
January, we noted the absence of a link between sourcing policy and 
agency missions, unnecessarily complicated source selection 
procedures, certain unrealistic time frames, and insufficient guidance 
on calculating savings. The administration is now considering those and 
other comments as it finalizes the revisions to the Circular.

Fundamental Changes Could Improve Effectiveness of VA's Disability 

Significant program design and management challenges hinder VA's 
ability to provide meaningful and timely support to disabled veterans 
and their families. VA relies on outmoded medical and economic 
disability criteria. VA also has difficulty providing veterans with 
accurate, consistent, and timely benefit decisions, although recent 
actions have improved timeliness.

VA's Disability Criteria Are Outmoded:

In assessing veterans' disabilities, VA remains mired in concepts from 
the past. VA's disability programs base eligibility assessments on the 
presence of medically determinable physical and mental impairments. 
However, these assessments do not always reflect recent medical and 
technological advances, and their impact on medical conditions that 
affect the ability to work. VA's disability programs remain grounded in 
an approach that equates certain medical impairments with the 
incapacity to work. Moreover, advances in medicine and technology have 
reduced the severity of some medical conditions and allowed individuals 
to live with greater independence and function more effectively in work 
settings. Also, VA's rating schedule updates have not incorporated 
advances in assistive technologies--such as advanced wheelchair design, 
a new generation of prosthetic devices, and voice recognition systems-
-that afford some disabled veterans greater capabilities to work.

VA has made some progress in updating its rating schedule to reflect 
medical advances. Revisions generally consist of (1) adding, deleting, 
and reorganizing medical conditions in the Schedule for Rating 
(2) revising the criteria for certain qualifying conditions, and (3) 
wording changes for clarification or reflection of current medical 
terminology. However, VA's effort to update its disability criteria 
within the context of current program design has been slow and is 
insufficient to provide the up-to-date criteria VA needs to ensure 
meaningful and equitable benefit decisions. Completing an update of the 
schedule for one body system has generally taken 5 years or more; the 
schedule for the ear and other sense organs took 8 years. In August 
2002,[Footnote 21] we recommended that VA use its annual performance 
plan to delineate strategies for and progress in updating its 
disability rating schedule. VA did not concur with our recommendation 
because it believes that developing timetables for future updates to 
the rating schedule is inappropriate while the initial review is 

In addition, VA's disability criteria have not kept pace with changes 
in the labor market. The nature of work has changed in recent decades 
as the national economy has moved away from manufacturing-based jobs to 
service-and knowledge-based employment. These changes have affected the 
skills needed to perform work and the settings in which work occurs. 
For example, advancements in computers and automated equipment have 
reduced the need for physical labor. However, the percentage ratings 
used in VA's Schedule for Rating Disabilities are primarily based on 
physicians' and lawyers' estimates made in 1945 about the effects that 
service-connected impairments have on the average individual's ability 
to perform jobs requiring manual or physical labor. VA's use of a 
disability schedule that has not been modernized to account for labor 
market changes raises questions about the equity of VA's benefit 
entitlement decisions; VA could be overcompensating some veterans, 
while under-compensating or denying compensation entirely to others.

In January 1997, we suggested that the Congress consider directing VA 
to determine whether the ratings for conditions in the schedule 
correspond to veterans' average loss in earnings due to these 
conditions and adjust disability ratings accordingly. Our work 
demonstrated that there were generally accepted and widely used 
approaches to statistically estimate the effect of specific service-
connected conditions on potential earnings. These estimates could be 
used to set disability ratings in the schedule that are appropriate in 
today's socio-economic environment.[Footnote 22]

In August 2002, we recommended that VA use its annual performance plan 
to delineate strategies for and progress in periodically updating labor 
market data used in its disability determination process. VA did not 
concur with our recommendation because it does not plan to perform an 
economic validation of its disability rating schedule, or to revise the 
schedule based on economic factors. According to VA, the schedule is 
medically based; represents a consensus among stakeholders in the 
Congress, VA, and the veteran community; and has been a valid basis for 
equitably compensating disabled veterans for many years.

Even if VA's schedule updates were completed more quickly, they would 
not be enough to overcome program design limitations in evaluating 
disabilities. Because of the limited role of treatment in VA disability 
programs' statutory and regulatory design, its efforts to update the 
rating schedule would not fully capture the benefits afforded by 
treatment advances and assistive technologies. Current program design 
limits VA's ability to assess veterans' disabilities under corrected 
conditions, such as the impact of medications on a veteran's ability to 
work despite a severe mental illness. In August 2002, we recommended 
that VA study and report to the Congress on the effects that a 
comprehensive consideration of medical treatment and assistive 
technologies would have on its disability programs' eligibility 
criteria and benefit package. This study would include estimates of the 
effects on the size, cost, and management of VA's disability programs 
and other relevant VA programs; and would identify any legislative 
actions needed to initiate and fund such changes. VA did not concur 
with our recommendation because it believes this would represent a 
radical change from the current programs, and it questioned whether 
stakeholders in the Congress and the veterans' community would accept 
such a change.

VA's disability program challenges are not unique. For example, the 
Social Security Administration's (SSA) disability programs[Footnote 
23] remain grounded in outmoded concepts of disability. Like VA, SSA 
has not updated its disability criteria to reflect the current state of 
science, medicine, technology and labor market conditions. Thus, SSA 
also needs to reexamine the medical and vocational criteria it uses to 
determine whether individuals are eligible for benefits.

VA Is Trying to Improve the Quality and Timeliness of Claims 

Even if VA brought its disability criteria up to date, it would 
continue to face challenges in ensuring quality and timely decisions, 
including ensuring that veterans get consistent decisions--that is, 
comparable decisions on benefit entitlement and rating percentage--
regardless of the regional office making the decisions. VA has made 
some progress in improving disability program administration, but much 
remains to be done before VA has a system that can sustain production 
of accurate, consistent, and timely decisions.

VA is making changes that will allow it to better identify accuracy 
problems at the national, regional office, and individual employee 
levels. In turn, this will allow VA to identify underlying causes of 
inaccuracies and target corrective actions, such as additional 
training. In response to our March 1999 recommendation,[Footnote 24] VA 
has centralized accuracy reviews under its Systematic Technical 
Accuracy Review (STAR) program to meet generally applicable government 
standards on segregation of duties and organizational independence. 
Also, the STAR program began reviewing more decisions in fiscal year 
2002, with the intent of obtaining statistically valid accuracy data at 
the regional office level; regional office-level accuracy goals have 
been incorporated into regional directors' performance standards. 
Further, VA is developing a system to measure the accuracy of 
individual employees' work; this measurement is tied to employee 
performance evaluations.

While VA has made changes to improve accuracy, it continues to face 
challenges in ensuring consistent claims decisions. In August 2002, we 
recommended that VA establish a system to regularly assess and measure 
the degree of consistency across all levels of VA claims 
adjudication.[Footnote 25] While VA agreed that consistency is an 
important goal, it did not fully respond to our recommendation 
regarding consistency because it did not describe how it would measure 
consistency and evaluate progress in reducing any inconsistencies it 
may find. Instead, VA said that consistency is best achieved through 
comprehensive training and communication among VA components involved 
in the adjudication process. We continue to believe that VA will be 
unable to determine the extent to which such efforts actually improve 
consistency of decision-making across all levels of VA adjudication now 
and over time.

VA's major focus over the past 2 years has been on producing more 
timely decisions for veterans, and it has made significant progress in 
improving timeliness and reducing the backlog of claims. The Secretary 
established the VA Claims Processing Task Force, which in October 2001 
made specific recommendations to relieve the veterans' claims backlog 
and make claims processing more timely. The task force observed that 
the work management system in many regional offices contributed to 
inefficiency and an increased number of errors. The task force 
attributed these problems primarily to the broad scope of duties 
performed by regional office staff--in particular, veterans service 
representatives (VSR). For example, VSRs were responsible for both 
collecting evidence to support claims and answering claimants' 
inquiries. Based on the task force's recommendations, VA implemented 
its claims process improvement (CPI) initiative in fiscal year 2002. 
Under this initiative, regional office claims processing operations 
were reorganized around specialized teams to handle specific stages of 
the claims process. For example, regional offices have teams devoted 
specifically to claims development, that is, obtaining evidence needed 
to evaluate claims.

Also, VA focused on increasing production of rating-related decisions 
to help reduce inventory and, in turn, improve timeliness. In fiscal 
years 2001 and 2002, VA hired and trained hundreds of new claims 
processing staff. VA also set monthly production goals for fiscal year 
2002 for each of its regional offices, incorporating these goals into 
regional office directors' performance standards. VA completed almost 
as many decisions in the first half of 2003 (404,000) than in all of 
fiscal year 2001 (481,000). This increase in production has contributed 
to a significant inventory reduction; on March 31, 2003, the rating-
related inventory was about 301,000 claims, down from about 421,000 at 
the end of fiscal year 2001. Meanwhile, rating-related decisions 
timeliness has been improving recently; an average of 199 days for the 
first half of fiscal year 2003, down from an average of 223 days in 
fiscal year 2002.

While VA has made progress in getting its workload under control and 
improving timeliness, it will be challenged to sustain this 
performance. Moreover, it will be difficult to cope with future 
workload increases due to factors beyond its control, such as future 
military conflicts, court decisions, legislative mandates, and changes 
in the filing behavior of veterans. VA is not alone in facing these 
challenges; SSA is also challenged to improve its ability to provide 
accurate, consistent, and timely disability decisions to program 
applicants. For example, after failing in its attempts since 1994 to 
redesign a more comprehensive quality assurance system, SSA has 
recently begun a new quality management initiative. Also, SSA has taken 
steps to provide training and enhance communication to improve the 
consistency of decisions, but variations in allowances rates continue 
and a significant number of denied claims are still awarded on appeal. 
SSA has recently implemented several short-term initiatives not 
requiring statutory or regulatory changes to reduce processing times 
but is still evaluating strategies for longer-term solutions.

More dramatic gains in timeliness and inventory reduction might require 
program design changes. For example, in 1996, the Veterans' Claims 
Adjudication Commission noted that most disability compensation claims 
are repeat claims--such as claims for increased disability percentage-
-and most repeat claims were from veterans with less severe 
disabilities. The Commission questioned whether concentrating 
processing resources on these claims, rather than on claims by more 
severely disabled veterans, was consistent with program intent. Another 
possible program design change might involve assigning priorities to 
the processing of claims. For example, claims from veterans with the 
most severe disabilities and combat-disabled veterans could receive the 
highest priority attention. Program design changes, including those to 
address the Commission's concerns, might require legislative actions.

In addition to program design changes, outside studies of VA's 
disability claims process identified potential advantages to 
restructuring VA's system of 57 regional offices. In its January 1999 
report, the Congressional Commission on Servicemembers and Veterans 
Transition Assistance stated that some regional offices might be so 
small that their disproportionately large supervisory overhead 
unnecessarily consumes personnel resources. Similarly, in its 1997 
report, the National Academy of Public Administration stated VA should 
be able to close a large number of regional offices and achieve 
significant savings in administrative overhead costs.

Apart from the issue of closing regional offices, the Commission 
highlighted a need to consolidate disability claims processing into 
fewer locations. VA has consolidated its education assistance and 
housing loan guaranty programs into fewer than 10 locations, and the 
Commission encouraged VA to take similar action in the disability 
programs. VA proposed such a consolidation in 1995 and in that proposal 
enumerated several potential benefits, such as allowing VA to assign 
the most experienced and productive adjudication officers and directors 
to the consolidated offices; facilitating increased specialization and 
as-needed expert consultation in deciding complex cases; improving the 
completeness of claims development, the accuracy and consistency of 
rating decisions, and the clarity of decision explanations; improving 
overall adjudication quality by increasing the pool of experience and 
expertise in critical technical areas; and facilitating consistency in 
decisionmaking through fewer consolidated claims-processing centers. 
VA has already consolidated some of its pension workload (specifically, 
income and eligibility verifications) at three regional 
offices.[Footnote 26] Also, VA has consolidated at its Philadelphia 
regional office dependency and indemnity compensation claims by 
survivors of servicemembers who died on active duty, including those 
who died during Operation Enduring Freedom and Operation Iraqi Freedom.

Mr. Chairman, this concludes my prepared statement. I will be happy to 
answer any questions that you or Members of the Committee may have.

Contact and Acknowledgments:

For further information, please contact me at (202) 512-7101. 
Individuals making key contributions to this testimony include Paul R. 
Reynolds, James C. Musselwhite, Jr., Irene P. Chu, Pamela A. Dooley, 
Cherie' M. Starck, William R. Simerl, Richard J. Wade, Thomas A. Walke, 
Cheryl A. Brand, Kristin M. Wilson, Greg Whitney, and Daniel Montinez.

[End of section]

Related GAO Products:

VA Health Care: Improved Planning Needed for Management of Excess Real 
Property. GAO-03-326. Washington, D.C.: January 29, 2003.

High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January 1, 

High-Risk Series: Federal Real Property. GAO-03-122. Washington, D.C.: 
January 1, 2003.

Major Management Challenges and Program Risks: Department of Veterans 
Affairs. GAO-03-110. Washington, D.C.: January 1, 2003.

Veterans' Benefits: Quality Assurance for Disability Claims and Appeals 
Processing Can Be Further Improved. GAO-02-806. Washington, D.C.: 
August 16, 2002.

SSA and VA Disability Programs: Re-Examination of Disability Criteria 
Needed to Help Ensure Program Integrity. GAO-02-597. Washington, D.C.: 
August 9, 2002.

VA Long-Term Care: The Availability of Noninstitutional Services Is 
Uneven. GAO-02-652T. Washington, D.C.: April 25, 2002.

VA Long-Term Care: Implementation of Certain Millennium Act Provisions 
Is Incomplete, and Availability of Noninstitutional Services Is Uneven. 
GAO-02-510R. Washington, D.C.: March 29, 2002.

VA Health Care: More National Action Needed to Reduce Waiting Times, 
but Some Clinics Have Made Progress. GAO-01-953. Washington, D.C.: 
August 31, 2001.

VA Health Care: Community-Based Clinics Improve Primary Care Access. 
GAO-01-678T. Washington, D.C.: May 2, 2001.

Inadequate Oversight of Laundry Facility at the Department of Veterans 
Affairs Albany, New York, Medical Center. GAO-01-207R. Washington, 
D.C.: November 30, 2000.

VA Health Care: Expanding Food Service Initiatives Could Save Millions. 
GAO-01-64. Washington, D.C.: November 30, 2000.

VA Laundry Service: Consolidations and Competitive Sourcing Could Save 
Millions. GAO-01-61. Washington, D.C.: November 30, 2000.

Veterans' Health Care: VA Needs Better Data on Extent and Causes of 
Waiting Times. GAO/HEHS-00-90. Washington, D.C.: May 31, 2000.

VA and Defense Health Care: Evolving Health Care Systems Require 
Rethinking of Resource Sharing Strategies. GAO/HEHS-00-52. Washington, 
D.C.: May 17, 2000.

VA Health Care: VA Is Struggling to Address Asset Realignment 
Challenges. GAO/T-HEHS-00-88. Washington, D.C.: April 5, 2000.

VA Health Care: Improvements Needed in Capital Asset Planning and 
Budgeting. GAO/HEHS-99-145. Washington, D.C.: August 13, 1999.

VA Health Care: Challenges Facing VA in Developing an Asset Realignment 
Process. GAO/T-HEHS-99-173. Washington, D.C.: July 22, 1999.

Veterans' Affairs: Observations on Selected Features of the Proposed 
Veterans' Millennium Health Care Act. GAO/T-HEHS-99-125. Washington, 
D.C.: May 19, 1999.

Veterans' Affairs: Progress and Challenges in Transforming Health Care. 
GAO/T-HEHS-99-109. Washington, D.C.: April 15, 1999.

VA Health Care: Capital Asset Planning and Budgeting Need Improvement. 
GAO/T-HEHS-99-83. Washington, D.C.: March 10, 1999.

Veterans' Benefits Claims: Further Improvements Needed in Claims-
Processing Accuracy. GAO/HEHS-99-35. Washington, D.C.: March 1, 1999.

VA Health Care: Closing a Chicago Hospital Would Save Millions and 
Enhance Access to Services. GAO/HEHS-98-64. Washington, D.C.: April 16, 

VA Hospitals: Issues and Challenges for the Future. GAO/HEHS-98-32. 
Washington, D.C.: April 30, 1998.

VA Health Care: Status of Efforts to Improve Efficiency and Access. 
GAO/HEHS-98-48. Washington, D.C.: February 6, 1998.

VA Disability Compensation: Disability Ratings May Not Reflect 
Veterans' Economic Losses. GAO/HEHS-97-9. Washington, D.C.: January 7, 

VA Health Care: Issues Affecting Eligibility Reform Efforts. GAO/HEHS-
96-160. Washington, D.C.: September 11, 1996.


[1] U.S. General Accounting Office, High-Risk Series: An Update, 
GAO-03-119 (Washington, D.C.: Jan. 1, 2003); U.S. General Accounting 
Office, High-Risk Series: Federal Real Property, GAO-03-122 
(Washington, D.C.: Jan. 1 2003).

[2] U.S. General Accounting Office, VA Health Care: How Distance From 
VA Facilities Affects Veterans' Use of VA Services GAO/HEHS-96-31 
(Washington, D.C.: Dec. 20, 1995).

[3] U.S. General Accounting Office, VA Health Care: Issues Affecting 
Eligibility Reform Efforts, GAO/HEHS-96-160 (Washington, D.C.: Sept. 
11, 1996).

[4] Rating-related claims are primarily original claims for 
compensation and pension benefits and "reopened" claims; for example, 
when a veteran claims that a service-connected claim has worsened.

[5] U.S. General Accounting Office, VA Health Care: Community-Based 
Clinics Improve Primary Care Access, GAO-01-678T (Washington, D.C.: 
May 2, 2001). 

[6] U.S. General Accounting Office, VA Health Care: More National 
Action Needed to Reduce Waiting Times, but Some Clinics Have Made 
Progress, GAO-01-953 (Washington, D.C.: Aug. 31, 2001). 

[7] President's Task Force to Improve Health Care Delivery for Our 
Nation's Veterans: Interim Report, (Washington, D.C.: July 31, 2002).

[8] U.S. General Accounting Office, Veterans' Health Care: VA Needs 
Better Data on Extent and Causes of Waiting Times, GAO/HEHS-00-90 
(Washington, D.C.: May 31, 2000).

[9] The Veterans' Health Care Eligibility Reform Act of 1996 required 
VA to establish priority categories for enrollment to manage access in 
relation to available resources. VA has 8 priority categories, with 
Priority 1 veterans--those with service-connected disabilities rated 50 
percent or more--having the highest priority for enrollment. By 
contrast, Priority 8 veterans are primarily veterans with no service-
connected disabilities and higher incomes. 

[10] VA Long-Term Care At The Crossroads: Report of the Federal Advisory 
Committee on the Future of VA Long-Term Care, (Washington, D.C.: June, 

[11] This act requires that VA provide nursing home care to veterans 
with service-connected disabilities of 70 percent or more and those who 
need such care because of a service-connected disability. This 
provision of the act expires on December 31, 2003.

[12] Price Waterhouse, Independent Review of the Department of Veterans 
Affairs' Office of Facilities Management (Washington, D.C.: June 17, 

[13] Health care support buildings include warehouses, engineering 
shops, laundries, fire stations, day care centers and boiler plants. 

[14] U.S. General Accounting Office, Veterans' Affairs: Progress and 
Challenges in Transforming Health Care, GAO/T-HEHS-99-109 (Washington, 
D.C.: April 15, 1999).

[15] U.S. General Accounting Office, VA Health Care: Capital Asset 
Planning and Budgeting Need Improvement, GAO/T-HEHS-99-83 (Washington, 
D.C: Mar. 10, 1999).

[16] In May 2000, we reported that most VA/DOD sharing activity 
involved a relatively small number of sharing agreements and joint 
ventures. U.S. General Accounting Office, VA and Defense Health Care: 
Evolving Health Care Systems Require Rethinking of Resource Sharing 
Strategies, GAO/HEHS-00-52 (Washington, D.C.: May 17, 2000). The 
Congressional Commission on Servicemembers and Veterans Transition 
Assistance also reported that opportunities exist for greater sharing 
and partnering between VA and DOD. See Report of the Congressional 
Commission on Servicemembers and Veterans Transition Assistance 
(Washington, D.C.: Jan. 14, 1999).

[17] U.S. General Accounting Office, VA Health Care: Improved Planning 
Needed for Management of Excess Real Property, GAO-03-326 (Washington, 
D.C.: Jan. 29, 2003).

[18] The wage differences between the two result from differences in 
how wage rates for their respective pay schedules are determined.

[19] U.S. General Accounting Office, VA Health Care: Expanding Food 
Service Initiatives Could Save Millions, GAO-01-64 (Washington, D.C.: 
Nov. 30, 2000); U.S. General Accounting Office, VA Laundry Service: 
Consolidations and Competitive Sourcing Could Save Millions, GAO-01-61 
(Washington, D.C.: Nov. 30, 2000).

[20] U.S. General Accounting Office, Inadequate Oversight of Laundry 
Facility at the Department of Veterans Affairs Albany, New York, 
Medical Center, GAO-01-207R (Washington, D.C.: Nov. 30, 2000).

[21] U.S. General Accounting Office, SSA and VA Disability Programs: 
Re-Examination of Disability Criteria Needed to Help Ensure Program 
Integrity, GAO-02-597 (Washington, D.C.: Aug. 9, 2002).

[22] U.S. General Accounting Office, VA Disability Compensation: 
Disability Ratings May Not Reflect Veterans' Economic Losses, GAO/
HEHS-97-9 (Washington, D.C.: Jan. 7, 1997).

[23] Disability Insurance (DI) provides benefits to workers with severe 
long-term disabilities who have enough work history to be insured for 
coverage under the program. Supplemental Security Income (SSI) provides 
benefits to disabled, blind, or aged individuals with low income and 
limited resources, regardless of their work histories.

[24] U.S. General Accounting Office, Veterans' Benefits Claims: Further 
Improvements Needed in Claims-Processing Accuracy, GAO/HEHS-99-35 
(Washington, D.C.: Mar. 1, 1999).

[25] U.S. General Accounting Office, Veterans' Benefits: Quality 
Assurance for Disability Claims and Appeals Processing Can Be Further 
Improved, GAO-02-806 (Washington, D.C.: Aug. 16, 2002).

[26] These are the VA regional offices in St. Paul, Minnesota; 
Philadelphia, Pennsylvania; and Milwaukee, Wisconsin.