Reinventing the VA

By Richard Haugh

Civilian providers find valuable lessons in a once-maligned health care system

When Kenneth Kizer, M.D., left private sector health care in 1994 to take over the reins of the Veterans Health Administration, he wondered how well he would fit in. Common wisdom held that military health care and the world of civilian hospitals were light years apart.

Common wisdom was wrong, he says now. Reducing operating costs, improving service and safety, implementing best practices--the strategic goals turned out to be exactly the same on both sides of the fence.

The difference is that the VA in recent years has made big strides dealing with those issues--improving the quality of care it offers, creating a sophisticated electronic medical record and streamlining business processes such as bed use and prescription drug procurement.

And while "you can't necessarily take things the Veterans Administration is doing and just plunk them down into Downtown General," says Kizer, now president and CEO of the National Quality Forum in Washington, D.C., "what you can do is look at their strategy, objectives and tactics, and adapt them to see which ones apply."

The VA is the largest health system in the country, spending $25.9 billion on health care this year, treating 4.5 million veterans in 163 hospitals and 859 clinics in 2002. Over the past few years, the VA has shrugged off its reputation as a bloated bureaucracy and health provider of second choice, and is now recognized as a leader in quality improvement and in reducing medical errors.

Patient stays have been cut in half at veterans' hospitals without sacrificing quality of care, according to a study published in October in the New England Journal of Medicine. The study found that from 1994 to 1998, overall hospital use dropped 50 percent, urgent care visits fell 35 percent and care delivered in outpatient settings increased by about 10 percent. During that time, survival rates of veterans held steady as a whole, and for some indications actually improved.

Moreover, the VA is spending less to deliver care. In 2002, the VA's spending per patient was $4,928, down from $5,019 in 2001. That compares with Medicare's increased spending during the same time: to $6,604 per patient in 2002 from $6,214 in 2001.

"If we were a fee-for-service provider and we dropped hospital bed utilization by 50 percent, as we have, that's not the kind of model that makes your board of directors happy," says Robert Roswell, M.D., undersecretary for health for the VA. "It makes me ecstatic, though, because it allows me to free up those resources and provide more benefits."

A Strategy That Works

Key to the reincarnated VA is information technology. The system has spent hundreds of millions of dollars on an electronic medical record system, bar-coded medication administration and computerized physician order entry. The VA has EMRs in almost all of its facilities, and projected that 95 percent of medication orders would be electronically input by this past October.

"It won't be the completion of the human genome project that will be cited as the most significant contribution to the advancement of medicine. It will be the evolution of the electronic medical record," Roswell predicts. "If there is a lesson to be learned from the VA, more than anything else it's the use of an electronic medical record system."

The VA launched initiatives designed not only to improve its quality of patient care but to streamline its business operations and reduce costs.

During Kizer's tenure, the VA restructured its service areas into 21 geographic regions, each with its own governance. Standards were established in each region and performance was measured in areas such as patient satisfaction, medication errors, adherence to clinical guidelines, and administrative costs.

The Veterans Administration also launched an Internet-based physician credentialing program and a systemwide self-assessment program.

Like its civilian counterparts, the VA regularly bumps up against fiscal constraints. Because it is funded by the federal government, the VA isn't as dependent on third-party payers, but that also makes its finances vulnerable to annual congressional budget battles.

"People may think it's an endless pot of dollars. It isn't. I'm held very closely to a budget," says Ken Mizrach, director of the New Jersey Veterans Administration Health Care System. "I can't keep going back to the well and saying 'I need more.' It doesn't work that way, even in government."

The VA health system and its active-duty counterpart, the Military Health System, adhere to a structured operating method, the so-called command-and-control system. While that's an advantage over private health care with its hodgepodge of independent contractors operating in a fragmented system, it's not pain free, says Dan Snyder, who retired in 2001 as an executive in the Navy's health care system and who is now the chief operating officer of the urban central region of Intermountain Health Care and CEO of the system's LDS Hospital, Salt Lake City.

"There is an incredible misperception that in the military all you do is snap your fingers and people jump up and down. But it's no easier leading in a military facility than leading in a private facility like we have," Snyder says.

Snyder thinks that in some ways it's actually easier to manage staff in the private sector. "You can be pretty authoritative because if people don't perform, you fire them. In the military, you can't fire people. They're with you until their enlistment expires," he says.

Almost Too Popular

There's been an ironic and unpleasant consequence of the VA's improved reputation: An explosion in demand for care has created waiting times that stretch into months for some appointments.

"In many ways they became a victim of their own success," Kizer says. "There are some things they could do to better manage their waiting lists, but the biggest fact is simply that they have a lot more people wanting to use the system than they did before."

The Veteran's Administration estimates that enrollment in its health program has increased from 2.9 million in 1996 to 6.8 million today, an increase of over 57 percent since Congress relaxed eligibility re-quirements for VA health care in 1996. A July 2002 VA survey found 318,000 veterans nationwide facing waits of six months or more to see a doctor. By July 2003, the number had dropped to fewer than 110,000.

Long waiting lists for appointments aren't a problem in New Jersey. The state's VA launched a program called Advanced Clinic Access that is being considered as a national model. Through a combination of extended clinic hours, scheduling tweaks and a new collaborative effort with physicians, it eliminated the backlog of veterans seeking a doctor's appointment. Now, patients can see a doctor virtually on demand.

"If a veteran needs a primary care appointment today, they can call up their primary care physician and access that care today," says New Jersey's Mizrach.

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This article 1st appeared in the December 2003 issue of HHN Magazine.

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