GAO discussed the future of the Department of Veterans Affairs (VA) health care program, focusing on: (1) actions needed to improve VA hospitals' efficiency; (2) challenges that threaten the long-term viability of the VA health care system; and (3) options for restructuring the VA health care system. GAO noted that: (1) VA lags far behind the private sector in improving hospital efficiency; (2) VA management problems limit its ability to improve hospital efficiency and shift more of its inpatient care to less costly ambulatory settings; (3) hospital daily work loads are decreasing, while the demand for outpatient care is expanding; (4) options for restructuring the VA health care system include expanding eligibility for VA care and supplementing health care coverage under other programs; (5) VA needs to establish priorities for targeting its limited resources; and (6) VA missions will be jeopardized if VA does not reevaluate its health care system.