STATEMENT OF
THE HONORABLE ANTHONY J. PRINCIPI
SECRETARY OF VETERANS AFFAIRS
BEFORE THE
SUBCOMMITTEE ON HEALTH
COMMITTEE ON VETERANS' AFFAIRS
UNITED STATES HOUSE OF REPRESENTATIVES

July 24, 2004

Mr. Chairman and Members of the Committee:

Thank you for providing the Department of Veterans Affairs (VA) this opportunity to discuss my recent decisions surrounding the Capital Asset Realignment for Enhanced Services (CARES). 

As you know, last month I announced my decision on the future of VHA’s capital infrastructure and publicly released my CARES Decision Document, copies of which have been provided to the Committee.   It is not my intention today to discuss the details of the entire decision document.  Instead, I will focus my discussion on the following issues of particular interest to the Committee:

1. The CARES Implementation Board;
2. Capital Initiatives for the Veterans Health Administration;
3. Community Based Outpatient Clinics;
4. Mental Health Strategic Plan;
5. Long-term Care Strategic Plan;
6. Veterans Rural Access Hospital;
7. Special Disability Program for Spinal Cord Injury and Disorders; and
8. VA/DoD Sharing Opportunities

Background

            Before I address those topics, however, I would like to provide a brief background on the CARES process.  CARES is a data-driven planning process designed to project future demand for health care services, compare projected demand against current supply, and identify capital requirements and asset realignments VA needs to meet future demand for services, improve the access to and quality of services, and improve the cost effectiveness of VA’s health care system.  The CARES process is a comprehensive, system-wide approach to projecting into the future the appropriate function, size and location for VA facilities.  CARES was initiated to provide a plan for management of VA’s capital infrastructure into the future that can be improved over time.  For that reason, the tools and a process used to develop CARES will be integrated into annual capital and strategic planning cycles, ensuring continued and systematic planning for the capital resources VA needs to provide quality health care to veterans.

On February 12 of this year, the CARES Commission presented its final report to me.  Following an intensive review of this report, I issued my “CARES Decision” on May 7, 2004.  In that decision, I formally accepted the CARES Commission’s recommendations using the flexibility the Commission provided to minimize the effect of any campus or service realignment on continuity of care to veterans currently receiving services.  My Decision and the CARES Commission Report form the blueprint that will effectively guide the Department as it moves forward to enhance and improve health care delivery to veterans by modernizing and more effectively managing its capital infrastructure.

CARES Implementation Board

             To oversee the many and varied actions needed to carry out my CARES Decision, I established the CARES Implementation Board, which I will personally chair.  The Board will provide Departmental oversight of CARES implementation and advise me on CARES-related decisions.  The Board is an inter-Departmental, senior-level group and will ensure that implementation actions are consistent with my CARES Decision, meet the Decision’s aggressive timeframes, and honor the personal and public commitments made during the CARES process.

             The Board will actively participate in developing the methodologies and structure of CARES reviews and studies as called for in my Decision.  All CARES decisions will be presented to the Board for my approval, unless approved by me for delegation.  Recently the Board held its first meeting and reviewed options regarding the composition and membership of committees, task forces and other groups that will be established to conduct the various studies outlined in my CARES Decision.  I expect that guidance will be finalized for my approval in the near future so that these groups may begin their studies and reviews.

Capital Initiatives

            I am pleased to announce that VA has developed a long-term Capital Plan, which will be delivered to members of Congress shortly.  With more than 5,500 buildings and approximately 32,000 acres of land nation-wide, it is critical that VA has a systematic and comprehensive framework for managing its portfolio of capital assets.  This plan provides that framework and is a sound blueprint for effective management of the Department’s capital investments that will lead to improved resource use and more effective health care and benefits delivery for our Nation’s veterans. 

As we strive to meet the many challenges that lay ahead, this plan will act as our guide.  I recently announced my decisions on the Capital Asset Realignment for Enhanced Services (CARES) process.  CARES is the most comprehensive analysis of VA’s health care infrastructure that has ever been conducted and my decision provides a 20-year blueprint for the critical modernization and realignment of VA’s health care system.  Consistent with my decision, the capital plan outlines CARES implementation and identifies priority projects that will improve the environment of care at VA medical facilities and ensure more effective operations by redirecting resources from maintenance of vacant and underused buildings and reinvesting them in veterans’ health care.  Implementation of CARES will require substantial investment.  While I will assess what amounts should be funded in future budgets, this plan reflects a need for additional investments of approximately $1 billion per year for the next 5 years to modernize VA’s medical infrastructure and enhance veterans’ access to care.

The capital plan also identifies our highest priority needs for new construction and expansion of cemeteries in areas where burial sites will soon be depleted, new benefits administration office facilities, and information technology projects designed to improve customer service and enhance delivery of VA benefits. 

As we move forward, VA will continue to improve stewardship of the funds entrusted to us by more effectively managing our capital assets and planning to meet the future needs of America’s veterans and their families.  By employing best business practices and maximizing the functional and financial value of our capital assets through well thought-out acquisitions, allocations, operations, and dispositions, VA will continue to ensure that all capital investments are based on sound business principles and -- most importantly -- meet our veterans’ health care, benefits, and burial needs.   I am confident that effective implementation of this plan will help us to achieve these important results.

             VA’s capital investment planning process and methodology ensures a Department-wide approach for the use of capital funds and ensures all major investments are based upon sound economic principles and are fully linked to strategic planning, budget, and performance measures and targets.  On May 20, 2004, I transmitted an interim report to VA’s 5-Year Capital Plan entitled “CARES Major Construction Projects Fiscal Year (FY) 2004 – 2010” to Congress.  This interim report includes VA’s highest priority major medical facility construction requirements over the next five years.  VA’s comprehensive 5-year capital plan will include other specific capital requirements such as leasing, minor construction, and community based outpatient clinics. 

             The projects listed in the interim report were identified through the CARES planning process as well as the VA’s capital investment process, and support decisions identified in my CARES Decision.  The CARES process focused on capital requirements at a macro-level by using projections of beds and inpatient and outpatient services.  Once performance gaps were identified in the market plans, business case applications were developed for specific major construction projects in order to fill these gaps.  Business case applications were scored and prioritized based on how well they addressed each of the criteria in the capital decision model.  Over 100 CARES concept papers and business case applications were submitted and reviewed through VA’s capital investment process utilizing criteria I approved in May 2004.

Once Congress approves the FY 2005 appropriations, VA will have more than $1 billion available to begin renovating and modernizing VA’s health care system.  In the next six months, VA intends to make 28 design awards, one land purchase, and a construction award for a bed tower at the West Side VA Medical Center in Chicago, Illinois.  VA will use available funds from FY 2004 and prior year appropriations and funds appropriated for FY 2005 to carry out these awards.  VA will proceed with planning and construction once the requirements of section 221 of Pubic Law 108-170 are fulfilled, which allows me to carry out major construction projections specified in the final CARES report 45 days after my submission of the interim report that was delivered to Congress on May 20^th of this year.

Community-based Outpatient Clinics (CBOCs)

             VA is committed to continuing its efforts to meet national standards for access to care for our Nation’s veterans by establishing new sites of care through CBOCs.  VA will also continue to explore opportunities to improve management of existing CBOCs through more effective staffing, expanding hours of operation, and examining opportunities to augment services where appropriate.

             To ensure that VA fulfills its commitment, I established priority criteria for the development of new CBOCs through the CARES process.  The priority criteria include the development of CBOCs that:

1. are in markets with large numbers of enrollees, are outside of access guidelines, and are below VA national standards for primary care access;
2. are in markets that are classified as rural or highly rural and are below VA national standards for primary care access;
3. take advantage of VA/DoD sharing opportunities;
4. are associated with the realignment of a major facility; and
5. are required to address the workload in existing overcrowded facilities.

These criteria reflect my determination to produce more equitable access to VA services across the country, particularly in rural and highly rural areas where there are often limited health care options.  They also reflect VA’s ongoing commitment to strengthening sharing opportunities with the Department of Defense.

My Decision identifies 156 priority CBOCs.  These priority CBOCs are targeted for implementation by 2012 pending availability of resources, validation with the most current data available, and approval through the National CBOC Approval Process and the CARES Implementation Board.   As VA proceeds in implementing CARES and engages in future planning, the locations of these CBOCs may change, but the priorities will remain constant.

Planning the implementation of new CBOCs has begun.  On May 13, 2004, a revised VA Handbook on Planning and Activation of CBOCs was issued to all VISNs.  At the same time, VISNs were provided guidance on submission of new CBOC business plans.  VISNs are now in the process of preparing business plans for priority CBOCs identified in my Decision that are planned for activation in FY 2004.  Additionally, VISNs are preparing business plans for priority CBOCs planned for FY 2005 that require immediate review in order to proceed with VA/DoD agreements and leasing or contracting obligations.  These business plans are to be completed and submitted to the Acting Under Secretary for Health by the end of this month.  A review panel will evaluate the business plans, score the applications and develop a recommendation that the Acting Under Secretary for Health will submit to me for approval.

             VISNs also received guidance regarding establishing outreach clinics to an existing primary care site, changing the location of an existing CBOC, leasing additional space for an existing CBOC, expanding services at an existing CBOC and changing management models at CBOCs, such as VA-staffed or contract.  To obtain approval for any of these changes to CBOCs, the VISNs must submit a justification for the change and a summary of stakeholder comments.  In the case of establishing an outreach clinic subordinate to an existing primary care site, approval will be granted only for areas that meet the distance criteria for highly rural areas specified in the national planning criteria.

             I should point out that although I established priority criteria and identified 156 priority CBOCs that meet these criteria, these priorities do not prohibit the VISNs from pursuing other CBOC opportunities.  VISNs have been asked to submit a business plan for establishing a CBOC earlier than originally indicated in my Decision or for establishing a CBOC not referenced in my Decision.  In either scenario, however, the VISN must demonstrate that it will, at the same time, be able to open any priority CBOC on schedule.

Mr. Chairman, I recognize that resources are not available to open all of the priority clinics immediately.  I work closely with Congress for approval of appropriations to enhance access to VA health care services as well as expand the types of services offered in outpatient sites, particularly specialty care such as mental health services.  Moreover, VA will manage implementation of CBOCs by applying the revised CBOC criteria within the existing National CBOC Approval Process and through the authority of the CARES Implementation Board.  This will ensure a careful and considered implementation that mandates VISNs develop sound business plans and ensures that national criteria are met and that resources are available to provide the high quality of care veterans expect from VA.

Mental Health Strategic Plan

             VA is committed to meeting the mental health needs of our Nation’s veterans, and it is critical that VA’s health care system consistently provides comprehensive mental health care services at a high level of quality across the country.  Effective mental health treatment requires that veterans have appropriate access to a full continuum of mental health care services.

             In my Decision I called for a comprehensive VA Mental Health Strategic Plan.  This strategic plan, which is nearing completion, incorporates the recommendations of the report of the President’s New Freedom Commission on Transforming Mental Health Care in America through VA’s Action Agenda for Transforming Mental Health Care in VA.  The recommendations resulting from the VA Mental Health Strategic Plan will require every VISN to develop mental health market plans that incorporate revised projections, which must include projected demand for outpatient mental health services and acute psychiatric inpatient care.   Additionally, policies developed in the Mental Health Strategic Plan, such as special emphasis on integrating strategies to meet the future geropsych needs of the enrolled veteran population and incorporating the findings VHA’s Work Group reviewing the President’s New Freedom Commission on Mental Health Report, will be incorporated in the VISN’s plans to ensure mental health services are included in CBOCs; that veterans have access to a full continuum of mental health care services, which are consistent across all VISNs; and ensure that acute inpatient mental health services are collated with other inpatient services.  I expect to receive the Mental Health Strategic Plan to later this summer.

Long-term Care Strategic Plan

Mr. Chairman, many stakeholders have expressed concerns about how VA intends to address the provision of long-term care within the context of CARES.  In order to respond to these concerns, I directed in my Decision that VHA develop a Long-term Care Strategic Plan addressing

• consistent access for nursing home care;
• geropsych needs;
• domiciliary care;
• long-term psychiatric care for the seriously mentally ill;
• expanding care coordination in the home;
• residential care, assisted living facilities; and
• other less restrictive care settings.

I am currently considering various policy options that have been designed to adhere to certain core principles, which include a policy that is clinically sound, is fair for veterans, can be modeled for VISN planning, and is acceptable to Congress.  Some of the key elements that I will strongly consider are the extent to which the Long-term Care Strategic Plan:

• focuses on veterans who need care for a short duration, for services to restore function following a period of hospitalization, for example, patients who have had a heart attack, stroke or hip replacement; veterans in need of respite care, and geriatric evaluation and management to stabilize medically complex patients; or end-of-life, hospice and palliative care for those who are terminally ill; and
• focuses on veterans who can no longer be maintained safely in home and community-based settings such as elderly patients needing help with activities of daily living, or who require long-term maintenance care and specialized services not generally available in the community, such as chronically mentally ill patients, spinal cord injury or traumatic brain injury patients, and ventilator dependent patients.

The Long-term Care Strategic Plan will be designed to improve the veteran’s quality of life by seeking to preserve personal dignity, enhance emotional well being, and provide care in the least restrictive setting possible.

            In addition to long-term nursing home care, VA is reviewing its long term-care policy in other key program areas, such as domiciliary and residential rehabilitation programs.  VA’s long-term care policies relating to these programs will assure that programs in domiciliary structures are focused on residential rehabilitation and that each patient has a clinical treatment plan.  As each program (e.g., mental health, substance abuse, and long-term care) defines its discrete capacity for residential rehabilitation, VA will have a more complete picture of the total capacity requirement for domiciliaries.

I will, of course, keep Congress informed of the Long-term Care Strategic Plan once adopted.  Once again, in all cases, the Long-term Care Strategic Plan will be designed to improve the veteran’s quality of life by seeking to preserve personal dignity, enhance emotional well being, and provide care in the least restrictive setting possible.

Veterans Rural Access Hospital:

VA is also reviewing the “critical access hospital” concept that was initially introduced to help ensure that veterans receive high quality care at VA’s small facilities.   Recognizing that some small and rural facilities will be unable to maintain the workload necessary to perform certain surgical procedures or manage some complex illnesses effectively, VA will establish parameters to ensure high quality patient care.  A new policy, Veterans Rural Access Hospital (VRAH), is under development and will specifically define the clinical and operational characteristics of small and rural facilities within VA.  I have directed that the VRAH policy be completed later this month.  In the interim, the missions of small facilities recommended for change will not be altered.  Once the new VRAH policy is approved, however, VA will study the scope of services performed at VA’s small and rural facilities using the policy’s criteria and the guidance that will be provided.  I anticipate the outcome of this study will be clarification of the type and complexity of surgical procedures that can be safely accomplished in small and rural facilities.

Special Disability Program for Spinal Cord Injury and Disorders (SCI&D):

             I recommitted VA to excellence in care for veterans with SCI&D by approving new SCI&D Centers in Syracuse, Denver, Minneapolis, and VISN 16, and a certified SCI&D outpatient clinic in Philadelphia.  I also approved expansion of existing SCI&D Centers in Memphis, Cleveland, Augusta, and Long Beach.  As part of the implementation process for the new centers and the expansion of existing centers, I requested that VHA validate the number of SCI&D beds to ensure the appropriate need for and distribution between acute and long-term SCI&D beds.  I also requested that VHA validate the expansion of the existing SCI&D Center or development of a new SCI&D Center in South Florida.

   In preparation for implementation of the new and expanded SCI&D Centers, members of VHA’s SCI&D Strategic Health Care Group have reviewed and validated SCI&D beds.  A balance has been achieved between acute and long-term care planning based on dual, actuarial, demand-forecasting models that have been peer-reviewed, scrutinized, and vetted.  The “CARES Major Construction Projections FY 2004-2010” appropriately includes plans for expansion of the existing SCI&D Center in Tampa.  The new VISN 16 SCI&D Center needs inclusion in the “CARES Major Construction Projections FY 2004-2010”.  Ongoing planning for long-term care outside the SCI&D Centers will be refined after publication of VA’s Long-Term Care Strategic Plan.

VA/DoD Sharing Opportunities:

Sharing between the Department of Veterans Affairs and the Department of Defense is a priority of the President and for both Departments.  As my CARES decisions are implemented, we will continue to take all necessary steps to identify and act on available sharing opportunities.

My CARES decision identified 35 promising sharing opportunities.   Working through the VA/DoD Joint Executive Council (JEC), co-chaired by VA’s Deputy Secretary and DoD’s Under Secretary for Personnel and Readiness, VA and DoD have already begun to work more closely toward making a reality of many of these opportunities. 

For example, my CARES Decision, as well as VA’s 5-Year Capital Plan, includes a number of significant ventures for VA – DoD collaboration including two new federal medical facilities in Denver, Colorado and Las Vegas, Nevada,  a joint outpatient clinic in Pensacola, Florida, an outpatient clinic and regional office in Anchorage, Alaska, and an outpatient clinic in Columbus, Ohio.

In addition, the JEC recently established a Capital Asset Planning and Coordination Steering Committee, which will be responsible for identifying and overseeing opportunities that maximize capital asset resource utilization for both Departments.  This body will oversee implementation of the VA/DoD recommendations that require capital planning and will seek to maximize productive collaboration between Departments in developing capital asset management sharing opportunities in the future.  Both Departments recognize the importance of capital coordination efforts at the local level and the Capital Asset Planning and Coordination Steering Committee is working to improve the stability of VA/DoD partnerships through transition of management at local facilities.

Conclusion:

Mr. Chairman, my CARES Decision and accompanying 5-year Capital Plan represent a blueprint for VA’s future.  Sophisticated forecasting models provide new and more complete information about the demand for VA health care.  A comprehensive assessment of VA’s facilities has greatly improved our understanding about the condition of VA’s facilities.  These factors, combined with the experience of conducting the CARES process, leave the Department well positioned to continue to expand the accuracy and scope of its planning efforts.  Throughout the CARES implementation process we will keep you and other members of Congress informed and involved and, just as important, we will keep our patients and their families informed and involved.

This concludes my statement.  I will now be happy to answer any questions that you or other members of the Subcommittee might have.