VA Health Care:

Improvements Needed in Capital Asset Planning and Budgeting

HEHS-99-145: Published: Aug 13, 1999. Publicly Released: Aug 13, 1999.

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Cynthia A. Bascetta
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GAO reviewed the Department of Veterans Affairs' (VA) management of health care assets.

GAO noted that: (1) VA's large, aged infrastructure could be the biggest obstacle confronting its efforts to transform itself from a hospital-based operator to a health care provider that relies on integrated networks of VA and non-VA providers to meet veterans' health care needs; (2) over the next few years, VA could spend one of every four of its health care dollars operating, maintaining, and improving capital assets at its 181 major delivery locations that encompass over 4,700 buildings on 18,000 acres of land nationwide; (3) VA has delegated basic health care planning responsibilities to its 22 regional offices, each of which oversees from 5 to 11 major health care delivery locations; (4) each regional office has developed a 5-year business plan that includes management of the health care assets under its control; (5) these plans indicate that billions of dollars may be used to operate hundreds of unneeded buildings over the next 5 years or more; (6) this is because VA plans to continue to operate and therefore necessarily maintain its 181 major delivery locations, even though most locations operate in markets that include two or more VA locations; (7) if VA followed the Office of Management and Budget's (OMB) guidelines on managing capital resources, in GAO's view, its planning would focus on assets needed to meet veterans' needs in 106 markets; (8) these markets include: (a) 66 with a single VA location; and (b) 40 with multiple locations; (9) VA's budgeting processes have weaknesses that could result in unwise capital asset investment decisions totalling hundreds of millions of dollars; (10) VA has significantly improved its centralized budget process by requiring more rigorous, systematic assessments of proposed major investments than VA has done previously; (11) GAO also expressed concerns about VA's decentralized assessment process for less expensive capital investments; (12) VA's 22 regional offices use varying approaches, which are considerably less rigorous than that used in VA's centralized process; (13) over the last 3 years, VA has significantly reduced the number of high-cost investment proposals, involving alterations or improvements, submitted for VA's centralized review and prioritization; and (14) VA could enhance veterans' health care benefits if it reduced the level of resources spent on underused or inefficient buildings and used these resources instead to provide health care more efficiently in existing locations or closer to where veterans live.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On August 4, 2003, the Secretary of Veterans Affairs publicly released a plan to restructure the capital assets used in VA's healthcare delivery system. Consistent with OMB's guidelines, the Secretary's plan covers every VA service delivery market and recommends a wide range of asset realignment alternatives, including closing delivery locations, opening new ones, consolidating healthcare services among existing delivery locations, and modernizing existing locations.

    Recommendation: The Secretary of Veterans Affairs should develop asset-restructuring plans for all markets to guide future investment decision-making. These plans should comply with OMB's guidelines and incorporate best practices of industry as well as those of VA's 181 delivery locations.

    Agency Affected: Department of Veterans Affairs

  2. Status: Closed - Not Implemented

    Comments: VA does not concur with this recommendation and does not plan to take any further action.

    Recommendation: Until more effective capital asset planning is in place, the Secretary of Veterans Affairs should require that a larger share of health care investment decisions be made using VA's centralized budget process.

    Agency Affected: Department of Veterans Affairs

  3. Status: Closed - Implemented

    Comments: In fiscal year 2001, VA established a Capital Asset Management Board at headquarters to review and approve minor construction proposals. The new process helps ensure that all capital asset investment decisions reflect the most efficient and effective use of resources to meet the Department's mission, vision, and goals.

    Recommendation: Until more effective capital asset planning is in place, the Secretary of Veterans Affairs should ensure that the fundamental principles underlying that process are rigorously implemented when making decentralized health care investment decisions.

    Agency Affected: Department of Veterans Affairs

  4. Status: Closed - Implemented

    Comments: VA's Capital Investment Board continually evaluates its capital investment process to ensure objectivity. VA has retained professional consultants to review and recommend modifications that reflect the best practices in industry as well as within VA.

    Recommendation: To reduce subjectivity and thereby enhance the credibility of VA's centralized budget process, the Secretary of Veterans Affairs should modify written guidelines to describe, in greater detail, minimum quantitative data required for each decision criterion.

    Agency Affected: Department of Veterans Affairs

  5. Status: Closed - Implemented

    Comments: VA has incorporated in its planning guidance capital investment process requirements. VA plans to enhance training opportunities for field staff involved in preparing applications for proposed capital investments.

    Recommendation: To reduce subjectivity and thereby enhance the credibility of VA's centralized budget process, the Secretary of Veterans Affairs should exclude from the prioritization process all capital investment proposals that fail to meet the information requirements.

    Agency Affected: Department of Veterans Affairs


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