VA Health Care:

Capital Asset Planning and Budgeting Need Improvement

T-HEHS-99-83: Published: Mar 10, 1999. Publicly Released: Mar 10, 1999.

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Stephen P. Backhus
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Pursuant to a congressional request, GAO discussed the management of health care assets within the Department of Veterans Affairs (VA).

GAO noted that: (1) VA's asset plans indicate that billions of dollars might be used operating hundreds of unneeded buildings over the next 5 years or more; (2) this is because VA does not systematically: (a) evaluate veterans' or asset needs on a market (or geographic) basis; or (b) compare assets' life-cycle costs and alternatives to identify how veterans' needs can be met at lower costs; (3) in GAO's view, 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; (4) over the last 2 years, VA has significantly improved its budgeting process for major capital investments; (5) this process, however, still relies too heavily on: (a) inconsistent or incomplete information; (b) imprecise decision criteria; and (c) qualitative (rather than quantitative) measurement standards; (6) this results in subjective asset-management judgments, based on individual viewpoints, rather than objective decisions, based on systematic assessments of proposed investments' benefits, costs, and risks; (7) VA's capital asset decision-making also appears to be driven more by the availability of resources within VA's different appropriations rather than the overall soundness of investments; and (8) VA's reliance on construction appropriations could be reduced if VA is given legislative authority to use: (a) proceeds from the disposal of unneeded assets to invest in more appropriate ones; or (b) some or all of operational savings or third-party collections attributable to capital investments.

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