VA Health Care:

Closing a Chicago Hospital Would Save Millions and Enhance Access to Services

HEHS-98-64: Published: Apr 16, 1998. Publicly Released: Apr 16, 1998.

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Cynthia A. Bascetta
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Pursuant to a congressional request, GAO reviewed whether the Veterans Health Administration (VHA) could serve veterans in Chicago, Illinois, with three hospitals, focusing on: (1) the extent of the resources that could be redirected to improve patient care; and (2) the potential impact of one hospital closure on VHA's other missions.

GAO noted that: (1) VHA can meet the health care needs of Chicago-area veterans by operating three hospitals instead of four; (2) VHA began fiscal year (FY) 1997 operating 1,665 inpatient medicine, surgery, and psychiatry beds at the four Chicago hospitals, and veterans used 850 beds a day, on average; (3) the large supply of unused beds provides sufficient capacity to meet the needs of veterans now using Lakeside or West Side Hospitals; (4) for example, during FY 1997, veterans used an average of 145 and 198 beds a day at Lakeside and West Side, respectively, while during the same period Hines Hospital closed 262 beds and North Chicago Hospital closed 244 beds; (5) moreover, veterans' demand for VHA hospital care is expected to continue declining as: (a) treatments shift from inpatient to outpatient settings; and (b) the Chicago-area veteran population continues to decrease; (6) in addition, other Chicago public and private hospitals have about 5,700 excess beds, which VHA could use on a contract basis to meet veterans' inpatient needs closer to their homes, as VHA does elsewhere; (7) regardless, veterans would continue to have good access to health care if either Lakeside or West Side hospital is closed because most of the veterans using these facilities live in essentially the same residential areas; (8) GAO's analysis showed that consolidating services into three locations could reduce VHA expenditures an estimated $200 million over the next 10 years by lowering facility operating and maintenance costs as well as avoiding $6 million to $27 million in renovation costs; (9) in addition, VHA could potentially generate millions of dollars in revenues through the lease or sale of property from the closed location; (10) VHA would, however, incur one-time costs for relocating some clinical services, but the savings could be used to enhance services to veterans, including adding needed new community-based outpatient clinics and buying new equipment; (11) VHA would also be able to meet its education, research, and Department of Defense contingency missions by operating three hospitals; (12) this is because the three remaining locations would likely carry the same workload that four locations would have, thereby providing a sufficient number of patients for VHA to maintain a comparable level of education and research opportunities; and (13) VHA will also be able to provide a flexible portion of its operating beds for military casualties, if needed, which was set at about 40 percent in 1997.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In August 2002 VA announced a plan to close the Chicago Health Care System's lakeside hospital. Lakeside's patients will be transferred to other Chicago area VA hospitals by December 2003. VA anticipates it will be able to generate revenue from Lakeside through an enhanced-use lease with a private sector organization that will finance and develop the property. VA will receive substantial discounts, facilities, services, or revenues.

    Recommendation: The Secretary of Veterans Affairs should direct the Great Lakes network director to develop and implement a detailed plan for meeting veterans' needs in three hospitals. This plan should explore all options available and select those that maximize veterans' access to services while minimizing to the extent practical, the impact on employees, medical schools, and others. The plan should also identify which of the four VHA hospitals in the Chicago area to close.

    Agency Affected: Department of Veterans Affairs


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