Financial Management: An Assessment of the Veterans Administration's Major Processes

Highlights

In response to a congressional request, GAO reported on the Veterans Administration (VA) financial management processes to: (1) identify and describe the major VA financial management processes and the primary information on which they rely; (2) identify and assess the major financial management implications of any weaknesses in this information; (3) determine if and how VA ranks veterans' needs with service-connected health care problems in its medical care and construction planning; and (4) identify and assess the processes VA uses to rank major construction projects.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Veterans Administration	The Administrator of Veterans Affairs should take action to improve VA budget execution for medical care by using a cost accounting system which captures costs and work-load data on a more specific and managerially useful basis, such as diagnostic-related groups (DRG) or individual patients. The capture of data by DRG would permit hospitals to better control excessive costs related to DRG. Since VA allocates hospital budgets on the basis of work load and costs as measured by DRG, its accounting system should be able to capture work load and costs on the same basis.	Closed – Not Implemented Although the recommendation is still valid after 3 years, it does not appear that VA will implement it.
Veterans Administration	The Administrator of Veterans Affairs should take action to improve VA budget execution for medical care by setting standards for many of the inputs to medical care to provide managers with reports showing variances between planned versus actual work load and costs. The Brockton/West Roxbury project is reviewing a well-developed variance reporting system that might be applicable.	Closed – Not Implemented Although the recommendation is still valid after 3 years, it does not appear that VA will implement it.
Veterans Administration	The Administrator of Veterans Affairs should take action to improve VA budget execution for medical care by incorporating a modeling function within its management information system to permit managers to analyze projections of the probable consequences of alternative changes in budget work loads and costs.	Closed – Not Implemented Although the recommendation is still valid after 3 years, it does not appear that VA will implement it.
Veterans Administration	The Administrator of Veterans Affairs should take actions to improve the VA budget formulation process for medical care, including: (1) the use of a case-mix approach to develop its budget, which would involve using costs which are more clearly related to VA estimates of veterans' medical needs; (2) the development of an approach to budget formulation which would emphasize the role of field management, not only Central Office management, and would foster better communication and understanding between the participants and improve the delivery of medical care; and (3) the use of cost and work-load data by DRG to improve the linkage between budget formulation and execution and to develop more accurate budget estimates.	Closed – Not Implemented Although the recommendation is still valid after 3 years, it does not appear that VA plans to implement it.
Veterans Administration	To make its Medical-District-Initiated Program Planning (MEDIPP) system more useful to both medical care planners, decisionmakers, budget officers, and Congress, the Administrator of Veterans Affairs should: (1) develop a clearly ranked set of national medical care goals and objectives to guide both MEDIPP planners and those who prioritize medical care construction projects; (2) establish a planning framework based on a projection of the types of illnesses, for which future veterans are expected to request care, and an analysis of the resources necessary to provide that care; (3) systematically collect and use veteran eligibility data in planning to meet the needs of the greatest number of veterans authorized to receive VA medical care in the order of their priority for receiving care; and (4) develop a systematic mechanism to link the results of MEDIPP with the budget process.	Closed – Implemented Although the recommendation is still valid after 3 years, it does not appear that VA plans to implement it.
Veterans Administration	The Administrator of Veterans Affairs should continue efforts to: (1) improve the reliability and usefulness of the databases with planning applications, giving priority to current efforts to develop a system of capturing clinical work-load and cost data on a per-patient, per-illness, and clinic-stop basis; and (2) use one or more dollar ceilings to guide MEDIPP planners in their assessment of alternative medical care strategies.	Closed – Not Implemented Although the recommendation is still valid after 3 years, it does not appear that VA will implement it.
Veterans Administration	To correct the weaknesses in the VA construction process, the Administrator of Veterans Affairs should develop a phased strategy to include actions that would: (1) require that MEDIPP produce a national medical care strategy, with clearly defined medical care priorities, and the construction projects to support those priorities; (2) establish a comprehensive set of design standards for each major type of VA medical care facility for use in the construction process; (3) establish a comprehensive set of work-load, staffing, and space design standards for each major function in a VA medical care facility; (4) establish clear milestones for the planning, design, and construction of each major type of facility; and (5) clearly define the roles and responsibilities of major participants and assign primary responsibility and accountability to one office for both the timeliness and results of each major step of the process.	Closed – Not Implemented Although the recommendation is still valid after 3 years, it does not appear that VA will implement it.
Veterans Administration	The Administrator of Veterans Affairs should take action to improve financial management information by calculating and recording an accrual, which includes an estimate of benefit payments to be paid to those individuals currently in military service. The liabilities of the compensation and pension programs would then be more fairly stated and this information could be used for planning purposes.	Closed – Not Implemented Although the recommendation is still valid after 3 years, it does not appear that VA will implement it.

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Auditing and Financial Management

Financial management systemsGovernment facility constructionHealth care cost controlHealth care planningHealth resources utilizationManagement information systemsMedical information systemsVeterans benefitsVeterans hospitalsMedicareElectronic data processing