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Our Government Run Health Services – Part 7 – Veterans Health Administration

VHAlogoThe United States Department of Veterans Affairs (VA) is a government-run military veteran benefit system responsible for administering programs of veterans’ benefits for veterans, their families, and survivors. Although we shall focus on medical benefits here, it also administers burial benefits, disability compensation, education, home loans, life insurance, pensions, survivors’ benefits, vocational rehabilitation and survivors’ benefits.

The Veterans Health Administration (VHA) is the American government’s second largest department, after the United States Department of Defense. The total 2009 budget is approximately $87.6 billion. There are nearly 280,000 employees at 2,650 Veterans Affairs medical facilities, benefits offices and clinics. The VHA services around 25 million veterans, about 20% of them requiring some kind of hospital service in a typical year. In this article we’ll look at the background to the VHA, its strengths and weaknesses.

Background
The VHA has its origins in the first federal military veterans hospital, Hand Hospital, in Pittsburgh in 1778. The wide range of American veterans health services was consolidated with the establishment of the Veterans Administration in 1930. After World War II the “GI Bill of Rights” established benefits and formed a hospital system that specialized in meeting the needs of more than a million returning troops. Until the 1980s, it was known as VA’s Department of Medicine and Surgery. The Veterans Administration was elevated to Cabinet status and became the Department of Veterans Affairs (still known as the VA) in 1989, with health services consolidated in the Veterans Health Administration.

Until the mid-1990s, the VA primarily ran a hospital system. Its medical centers and other facilities operated relatively independently of each other, often resulting in duplicated services. In 1995, the structural transformation created 22 geographically defined Veterans Integrated Service Networks (VISNs). Resources were allocated to each network rather than to each facility. Within VISNs, this created financial incentives for coordination of care and resources among previously competing facilities. All VHS medical centers, 850 outpatient clinics, and more more than 300 other long-term care facilities, domiciliaries, veterans’ counseling centers, and home-care programs now belong to 1 of 21 VISNs.

Care provision was gradually shifted from the hospital to ambulatory-care facilities and the home environment. In 1996, the VHA was restructured from a hospital system to a health care system. In recent years, VHA has opened hundreds of outpatient clinics in towns across America, while steadily reducing inpatient bed levels at its main hospitals. From 1996 to 2003, the number of veterans treated annually increased by 75% from approximately 2.8 to 4.9 million, but the appropriated budget to care for those increasing numbers of patients remained flat at $19 billion from 1995 to 1999, bringing its own share of problems. Qualified veterans may have access to the Medicare and Medicaid programs in addition to VHA facilities.

Strengths
Until the mid-90s the VHA was often disparaged as a bureaucracy that provided mediocre care. However, since then, and particularly in the past decade, the VA has reinvented itself because of a policy shift that emphasized:

  • Structural and organizational change.
  • Rationalization of resource allocation.
  • Explicit measurement and accountability for quality and value.
  • Development of an information infrastructure to support the needs of patients, clinicians and administrators.

Today, the VA cares for more patients than in the early 90s with proportionally fewer resources, sets national benchmarks in patient satisfaction and for 18 indicators of quality in disease prevention and treatment, and is recognized for leadership in clinical informatics and performance improvement techniques. Many health care systems use the concept of unit cost of obtaining a particular outcome to help measure the value of services. The VA decided to express value in terms of the relationship of outputs to inputs.

Expanding on the definition of “value” as the relationship of quality to cost, the VA established a system of value domains of interest to veterans and stakeholders. The inputs are the resources, ultimately financial, that the VA works with. The value domains now include 6 dimensions of effectiveness that the VA holds itself accountable for through performance measurement. The first five value domains are outputs of the system. They include:

  • Technical quality of care
  • Access to services.
  • Patient functional status.
  • Patient satisfaction.
  • community health.

The sixth value domain, cost-effectiveness, emerges as the ratio of outputs to inputs, a relationship generally known as the “value equation.” These measures of quality and value serve as the basis for internal performance improvement efforts, and both internal and external accountability. There are also composite measures, known as the prevention index, chronic disease index, and palliative care index, that serve to focus provider attention on these areas and summarize performance. This may sound complex, but the VHA self assessment technique boils a complex set of situations, spending and results down into sets of numbers that can be audited, analyzed, compared with other health care systems and improved upon.

A 2004 study1 of the VHA noted that – ” Veterans are increasingly satisfied by changes in the VA health system. On the American Customer Satisfaction Index, the VA bested the private sector’s mean healthcare score of 68 on a 100-point scale, with scores of 80 for ambulatory care, 81 for inpatient care, and 83 for pharmacy services for the past 3 years. Similar improvements have been achieved in each value domain.”

The VHA is also pioneering use of telemedicine, which we wrote about in “Things To Come” and “The Future of Healthcare?“, earlier this year. Veterans with chronic conditions can manage their health and avoid hospitalization by using special VHA telehealth technology provided for use in their homes. A pilot study of a new VHA system involving 17,025 VA home telehealth patients found a 25 percent reduction in the average number of days hospitalized and a 19 percent reduction in hospitalizations for patients using it. The data also show that for some patients the cost of telehealth services in their homes averaged $1,600 a year – much lower than in-home clinician care costs. The program now covers 35,000 patients and is the largest of its kind in the world.

Weaknesses
Despite the dramatic improvements in the VHA’s performance since the early 90s, there are still some problems that need to be addressed. In the same year (2004) that the above study was conducted, the Government Accountability Office (GAO) was scathing in its assessment of some of the VHA’s financial controls. VHA personnel and contractors had access to purchase cards and convenience checks and the GAO found that they resulted in:

  • Instances of improper, wasteful, and questionable purchases.
  • Inadequate segregation of duties.
  • Lack of key supporting documents.
  • Lack of timeliness in recording, reconciling, and reviewing transactions.
  • Insufficient program monitoring activities.

Their report said – “Generally, GAO found that internal controls were not operating as intended because cardholders and approving officials were not following VA/VHA operating guidance governing the program and, in the case of documentation and vendor-offered discounts, lacked adequate guidance. The lack of adequate internal controls resulted in numerous violations of applicable laws and regulations and VA/VHA purchase card policies that GAO identified as improper purchases. GAO identified over $300,000 in wasteful or questionable purchases, including two purchases for 3,348 movie gift certificates totaling over $30,000 for employee awards for which award letters or justification for the awards could not be provided …. also, 250 questionable purchases totaling $209,496 from vendors that would more likely be selling unauthorized or personal use items lacked key purchase documentation.” VHA immediately reviewed the use of these purchasing mechanisms and the situation has since improved. The issue here isn’t the actual type of fraud found within the VHA, it’s that it was allowed to flourish until the GAO weeded out the problem, which raises suspicions that there may be other problems lurking in there. On the positive side, the VHA has managed to negotiate better prescription drug prices than any other government run healthcare system.

Ease of access to VHA services in rural areas often depends on how close a patient is to the nearest military base or large town. That was a major problem as late as the early 2000s. However, the extensive VHA telehealth system has dramatically improved the quality of service and outcomes for patients using it, particularly in rural areas. Similarly, since 2002, the tens of thousands of returning veterans that have needed treatment for symptoms of emotional disorder (such as Post Traumatic Stress Disorder) have lead to an overhaul of VHA facilities.

The VHA received a body blow when the Walter Reed Army Medical Center scandal broke in the Washington Post in February 2007. The press leapt on the reports of decaying structures and wounded heroes in shockingly badly maintained buildings. Similar stories of neglect and substandard care, particularly for patients needing treatment for mental conditions, flooded in from soldiers, their family members, veterans, doctors and nurses working inside the system. They also described depressing living conditions for outpatients at other military bases around the country. Thankfully, the corrective response from the government was swift in coming. Emergency funds were allocated and corrective work started almost immediately. Patients have been moved to other facilities while improvements are being made.

The Veterans Affairs Secretary also announced at the end of February 2007 that the department would be incorporating 23 new Readjustment Counseling Service Centers in the next two years. There were already 209 similar facilities operating around the country. The Obama administration has continued to support funding and expansion of this kind of treatment, which is almost unique to the Military Health System and VHA. However, very clearly, something was, and may still be, wrong within this flagship program.

Conclusions
The VHA can prove that it is doing an excellent job and its beneficiaries overwhelmingly agree. Note its scores on the American Customer Satisfaction Index, which were in the low 80s (out of a possible 100), as compared with the mean of 68 from the private health insurance sector. It’s often held up as America’s model health care system and all of the indicators signal that it deserves that high regard.

Yes, there are problems in the VHA, but it’s an efficient system that can be and often is corrected. The VHA defines and administers health plans and provides the services. Almost every other US government health care system employs varying proportions of those components. It’s worth noting the conclusions of a 2006 report2 on the VHA – “The success at the VHA is a clear example that healthcare can be done right. It is a cheaper system providing better patient care than the private sector.”

Sources:
 1 “The Veterans Health Administration: Quality, Value, Accountability, and Information as Transforming Strategies for Patient-Centered Care” – Jonathan B. Perlin, MD, PhD, MSHA; Robert M. Kolodner, MD; and Robert H. Roswell, MD. – The American Journal of Managed Care – October 31, 2004.
 2 Veteran’s Health Administration: The Best Value In Healthcare” – Rachel Mayo – December 15, 2006 – HS 6000.

Related Posts: Part 1 – Indian Health Service. | Part 2 – CHIP. | Part 3 – Medicaid.| Part 4 – Medicare. | Part 5 – FEHBP. | Part 6 – Military Health System. | Part 8 – Summary.

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