Veterans' Health Care:

Fiscal Year 2000 Budget

HEHS-99-189R: Published: Sep 14, 1999. Publicly Released: Sep 14, 1999.

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Stephen P. Backhus
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Pursuant to a congressional request, GAO provided information on the Veterans Health Administration's (VHA) plans to spend an additional $900 million requested for veterans' medical care and the likelihood of VHA's achieving its proposed management efficiency savings.

GAO noted that: (1) VHA intends to spend an additional $900 million appropriation for expenditures that were originally to be financed through management efficiency savings; (2) more specifically, about $800 million is to fund payroll increases, inflation, and other mandatory rate changes, such as for property rentals; (3) VHA would use the remaining $100 million to enhance its extended care services; (4) this, in effect, leaves $800 million of VHA's spending plan--primarily for service enhancements--to be offset by efficiency savings; (5) although VHA can achieve significant management efficiency savings in fiscal year (FY) 2000, an $800 million savings target seems unlikely;assessment indicates that VHA has identified a wide array of efficiency initiatives that, if implemented in a timely manner, could yield about $600 million of savings in FY 2000; (7) these initiatives include, for example, shifting veterans' care to more appropriate settings or reengineering clinical and administrative processes--actions that in the past afforded VHA the opportunity to provide the same or higher-quality services at lower costs; (8) as GAO has previously reported, beyond the savings that VHA can achieve by implementing initiatives it has already identified, GAO believes a realignment of VHA's capital assets is critical to its continued ability to realize significant savings that could be reinvested to enhance medical care for veterans; and (9) therefore, it seems essential that VHA carry out its commitment to systematically assess its major health care delivery markets as quickly as possible.

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