Veterans' Affairs:

Progress and Challenges in Transforming Health Care

T-HEHS-99-109: Published: Apr 15, 1999. Publicly Released: Apr 15, 1999.

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Pursuant to a congressional request, GAO discussed the challenges facing the Department of Veterans Affairs (VA) in transforming health care, focusing on: (1) VA's transformation progress to date; (2) challenges that remain to be confronted; and (3) the implications for VA's fiscal year (FY) 2000 budget.

GAO noted that: (1) VA's transformation continues to make significant progress; (2) over the last 3 years, VA has enhanced benefits and served 500,000 additional veterans, while realizing a nonappropriated revenue surplus of $496 million that remains available for future use; (3) this was accomplished primarily because VA's management initiatives reduced operating costs by over $1 billion; (4) the most notable initiatives involved shifting veterans' care to appropriate settings and reengineering administrative and clinical processes; (5) this year, however, GAO's work shows that VA's transformation appears to be losing momentum; (6) VA, for example, has prolonged decisions concerning much needed restructuring of aged capital assets, including hospital closures, which could result in unnecessary expenditures of billions of dollars over the next several years; (7) VA's transformation cannot be successfully completed until these and other critical challenges are adequately addressed; (8) in GAO's view, VA's FY 2000 budget is based on the unduly optimistic expectation that its ongoing transformation will generate needed efficiencies of $1.4 billion in savings; (9) VA assumes that employment reductions in FY 2000 will be more than 3 times greater than expected FY 1999 reductions; (10) VA has not taken the underlying management actions--such as aggressively addressing all potential facility integrations and service consolidations--that appear necessary to make a three-fold reduction possible; (11) if VA had made such difficult decisions earlier, it might not need to realize this level of savings; (12) moreover, VA may ultimately need to use less desirable management actions, including large-scale employee furloughs, to operate within its proposed budget; (13) such actions could adversely affect all veterans' quality of care, especially waiting times; and (14) VA could avoid such undesirable outcomes for higher priority veterans if, as Congress intended, VA uses its new enrollment process to manage access to VA health care services within available resources.

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