VA Health Care:

Building Hospital in Florida More Cost-Effective Than Buying One in Mobile

HRD-87-56: Published: May 8, 1987. Publicly Released: May 8, 1987.

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In response to a congressional request, GAO evaluated whether it would be more cost-effective for the Veterans Administration (VA) to build a new hospital in the Florida Panhandle, buy and renovate a hospital in Mobile, Alabama, or do both. GAO considered such factors as: (1) veterans' access to the facilities; (2) the amount of projected inpatient work load that would shift from existing VA hospitals to the new facility; and (3) cost.

GAO found that: (1) more veterans in the Gulf Coast area would have better access to a hospital in Florida than one in Alabama; (2) 21 percent of the inpatient work load at the two nearest existing VA hospitals would shift to a new hospital in Alabama, while 16 percent of the inpatient work load at the two hospitals would shift to a new hospital in Florida; and (3) building a hospital in Florida would cost $47 million, buying and renovating a hospital in Alabama would cost $67 million, and doing both would cost $109 million. GAO noted that the high cost for the hospital in Alabama resulted from VA expectations that: (1) it would have to replace the mechanical and electrical systems to bring the facility into compliance with various electrical and safety codes; and (2) accessibility standards and VA requirements would require changes. GAO concluded that building a new hospital in Florida would be the most advantageous alternative.

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