STATEMENT OF
LINDA BELTON, DIRECTOR
VETERANS INTEGRATED SERVICE NETWORK (VISN) 11
VETERANS HEALTH ADMINISTRATION
DEPARTMENT OF VETERANS AFFAIRS
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES

June 1, 2000

Mr. Chairman and Members of the Committee, I have been invited to discuss Veterans Integrated Service Network (VISN) 11 and the VA Northern Indiana Healthcare System (NIHCS).

VISN 11 is one of 22 Veterans Integrated Service Networks in the Veterans Health Administration (VHA). This Network provides services throughout a large and geographically diverse region, across the lower peninsula of Michigan, northwest Ohio, most of the state of Indiana and central Illinois. In 1999 we served nearly 147,000 veterans, representing approximately 11 percent of the total veteran population. More than 83 percent of these veterans had service-connected medical conditions or earned low incomes.

The mission of this network is to be an integrated veterans healthcare system providing high quality, coordinated, comprehensive and cost-effective services to veterans and other customers in Michigan, Indiana, central Illinois and northwest Ohio.

Reflective of the healthcare industry, VISN 11 responds to forces driving the changing healthcare market, including:

• Exponential growth in healthcare expenditures

• Transition from hospital-centered care to ambulatory care

• Reduction of hospital beds

• Increased consolidation and integration of providers

• Technological advances

At the Department level, the VA responds to the Government Performance and Results Act and National Performance Review, which challenge federal departments to conduct effective strategic planning, measure performance and demonstrate increased efficiencies. To these ends, the network is a key player in meeting VA goals of:

• Becoming more customer-focused

• Adopting innovative approaches to improving access to care

• Increasing emphasis on primary care services

• Maximizing value of financial resources

• Integrating delivery assets to provide a seamless continuum of care

For several years, the VHA medical care budget has remained essentially flat in inflation-adjusted dollars. As a result, networks have absorbed increased cost associated with inflation, pay raises, new initiatives, and new technologies. At the same time, decisions surrounding eligibility reform and definition of the VA basic benefits package have introduced the potential for large numbers of veterans to enroll with VA and obtain access to a broad range of services. Budgetary considerations and other performance goals are driving all networks to find ways to provide care more efficiently, including continuation of the shift of workload from inpatient to outpatient settings. In addition, networks must find new sources of revenue to supplement the appropriation, including maximizing medical care cost recovery, sharing agreements, enhanced use leasing, TRICARE participation and other partnerships.

Plans and actions throughout the Veterans’ Health Administration are organized along six Domains of Value: Quality, Cost, Access, Satisfaction, Functional Outcomes and Community Health. These domains serve as the cornerstones for this network’s management of care within available resources, ensuring the viability of the system into the future. Critical activities in the areas of Quality, Cost, Access and Communication and Collaboration are as follows:

Quality

All network facilities participate in nationally recognized external accreditation processes, including Joint Commission on Accreditation of Healthcare Organizations (JCAHO), Commission on Accreditation of Rehabilitation Facilities (CARF) and College of American Pathologists (CAP). The most recent JCAHO survey process was conducted in this network in 1997, with hospital accreditation scores of 90-95 and no type 1 recommendations remaining outstanding. The next JCAHO surveys are scheduled for the Fall 2000. Network medical centers with rehabilitation programs are proceeding with CARF accreditation; to date Indianapolis and NIHCS have each received 3-year accreditations.

We have collaborated with the Institute for Healthcare Improvements (IHI) to decrease waiting times in clinics and delays for veterans scheduling appointments. The clinics involved in the projects include primary care, rheumatology, general surgery, ophthalmology and 10-10M clinics. Our early successes include achieving open access for many primary care clinics appointments, improving customer satisfaction scores and reducing individual patient waiting time from check-in to check-out for a given appointment.

In 1997, the network began the development of service line management in the areas of mental health and geriatrics and long term care. Planning for these service lines was an effort to improve the quality and value of care for veterans across the network. Objectives of a service line approach include improving the consistency of care, access to care and distribution of resources across the network. In addition, service lines enable greater integration and communication across management structures, leading to planned improvements in service delivery, patient-centered management approach and cost effectiveness.

In 1998, VA launched its National Center for Patient Safety, designed to apply "systems approaches" to patient safety. VA also partners with other organizations to share lessons and help develop strategies; maintains a national registry of adverse events; developed a handbook for employees on patient safety improvement and is instituting a large educational effort to make patient safety a priority. Some specific actions taken to-date include implementing bar coding for medication administration, using bar-coding technology for blood administration in the operating room, and computerized order entry. Network staff training by the National Patient Safety Program was conducted in Chicago just last week. The objective of the current patient safety program is to identify system problems and solutions, not to assign fault to individuals. VA also maintains current review processes to investigate incidents and take appropriate corrective actions, as needed. Corrective actions may include disciplinary actions, staff education and training to improve competencies, or changes in processes and procedures.

VHA has also undertaken an aggressive performance measurement system, including establishing baseline performance and outcome goals in the areas of prevention, clinical guidelines and chronic disease management. As we all know, preventing illness and successfully managing chronic disease processes improve not only the quality of care provided, but improve patients’ quality of life.

Cost

The 22 Networks receive appropriated funds from VA Headquarters through the Veterans Equitable Resource Allocation (VERA) model, as well as specific allocations for special purpose funding, e.g. prosthetics, and for research and medical education support. The VERA model is based on inpatient and outpatient workload in program areas of medicine, surgery, psychiatry, as well as workload in long-term care programs. Adjustments are made for geographic pay differences as well as variable costs in education and research.

Once this appropriated budget – approximately $650 million for VISN 11 in FY00 - is distributed to the network, leadership determines necessary funding for critical network initiatives, e.g. CBOCs, leases, special projects, employee education, fire and safety program and national program support. These initiatives were funded at a level of $10.2 million in fiscal year 2000.Prosthetics special purpose funding as distributed from VA headquarters totaled $15 million in fiscal year 2000, with the network funding an additional $3.9 million in order that prosthetics funding in 2000 would be at the level of actual spending in 1999. Research and Education support funding are passed-through to facilities as allocated to the network from VA headquarters.

Budget distribution from the network to facilities (Ann Arbor, Detroit, Battle Creek, Saginaw, Northern Indiana, Indianapolis and Danville) uses a single price capitation rate based on veteran users at each facility and includes a transfer pricing methodology for veteran users at more than one network facility. The facility providing the majority of primary care gets the credit for the individual veteran user. This methodology reflects the important and necessary shift of care from the inpatient to the outpatient setting. The capitation rate in FY00 was approximately $5,500 ($650 million appropriation, minus network initiatives noted above, divided by the number of unique users in the network). Hospital patients treated at multiple facilities within the network are funded using a transfer pricing methodology based on 80% of applicable HCFA rate. Long term care patients treated at multiple facilities within the network are funded at the VA national average per diem cost. In addition, the network budget methodology provides for financial supplementals for the care of patients with lengths of stay more than 100 days, at the level of $20,000 per patient. The higher expenses of operating the dual campus facility of Northern Indiana are also funded at the level of $1.5 million in FY00.

VISN 11 maintains a reserve of 2% of the operating budget, $13.2 million. This is made up of $10 million in no-year funding and $3.2 million in capital two-year funding. These reserves help to ensure funding for unexpected shortfalls due to increased workload, catastrophic patient care needs and acts of nature such as weather-related emergencies.

Another source of funding are non-appropriated funds which are distributed to facilities based on their individual collections. For the most part, non-appropriated funds in this network are made up of third party collections under the Medical Care Cost Fund (MCCF) program. Collections in 1998 totaled $26.4 million, in 1999 totaled $28.9 million, and through April 2000 total $13.8 million.

Access

In an attempt to better manage care within allocated resources, the network has undergone a significant shift during the past five years along several dimensions, most notably moving from a healthcare delivery system traditionally rooted in inpatient care to a more outpatient based system. Examples of change from FY95 through FY99 include Bed Days of Care reduced 38%; Outpatient Visits increased 30%; Ambulatory Procedures increased 78%; and, Number of Users increased 16%.

An integral part of the expansion of outpatient access is the establishment of new Community-Based Outpatient Clinics (CBOCs). VISN 11 expects to have a total of 22 CBOCs established and serving veterans by this summer. This will bring 85% of veteran users in our Network within 30 miles of a VA primary care site.

Another investment in improving access for veterans is our 24-hour clinical phone care program. Our network leadership views the clinical phone care program as a basic underpinning of self-care, demand management, disease management and health promotion programs. This initiative has been designed with a capital investment of $500,000 and an annual operation budget of $450,000 which we expect to result in improved access, better customer service, a reduction in unnecessary clinic visits and decreased waiting times.

Investments in information technology will also have positive impacts on access, timeliness and quality. Within this network, telemedicine initiatives include telepsychiatry between care sites, a teleopthalmalogy pilot between Indianapolis and Danville, teleradiology between Indianapolis and NIHCS and Danville for off-tour coverage and tele-home care at Indianapolis to allow data and limited video transmission over standard phone lines. These, and other, technology initiatives have been possible by investment and installation of a Wide Area Network (WAN) which provides the technical capacity to transmit quality data and pictures.

Communication and Collaboration

Communication with important stakeholder groups is of high priority throughout the network. In order to assure these communications across all care sites, the network has designed an annual Veteran Service Officer (VSO) Forum. The first Forum was held in December 1997 with approximately 75 national, state and county service officers in attendance. The program grew to over 100 attendees at the 1999 Forum. These Forums cover a wide variety of topics important to veteran groups including eligibility, womens’ health, service line development, program changes and access.

VISN 11 staff work closely with colleagues in the Veteran Benefits Administration (VBA) regional offices in Detroit and Indianapolis to meet veterans needs regarding compensation and pension examinations. C&P processing times are consistently below the national standard of 35 days, and was at 25 days during the most recent reporting period in March 2000. The C&P sufficiency rate is a consistent 99% in the network. In a collaborative effort to continuously improve performance, VHA and VBA officials in this network developed joint performance standards to reduce incomplete C&P examination rates by 25% and to provide training to VBA rating specialist staff in the use of electronic medical record information to clarify information, as needed. VHA and VBA staffs in Indianapolis have developed a co-location plan to the medical center, with a construction project submitted for consideration in fiscal year 2001. Officials in Detroit are currently working on a co-location plan, as well. These collaborative efforts with VBA will improve service to veterans as they seek medical care and benefits.

In 1999, the network implemented a network award and recognition program in partnership with American Federation of Government Employees (AFGE) and Service Employees International Union (SEIU) labor officials. This program recognizes significant employee contributions in the areas of Provider of Choice, Employer of Choice, Multicultural Workplace and Performance Management. The program’s objectives are to recognize employee contributions, communicate those contributions throughout the network and to share best practice initiatives. The Northern Indiana Healthcare System has been recognized at the Exceptional level for the Multicultural Workplace Award and the Provider of Choice Award in the past 12 months.

Closing Comments

The VA Northern Indiana Healthcare System plays an integral role in VISN 11’s healthcare delivery system, providing primary, secondary and long-term care. As a system, future challenges of balancing the need for programmatic investment and current operations, maximizing value, and ensuring effective communication will be met in partnership with other VA components, community providers, educational affiliates, labor partners and veteran groups. As the only integrated site in this network, it is clearly recognized that the integration of the Ft. Wayne and Marion medical centers presents a number of unique challenges. This integration was undertaken immediately prior to the VA adopting a very aggressive plan to change significant business and healthcare practices. The necessary pace of change was not fully met with a concomitant aggressive communication plan with employees and other stakeholder groups, which has had an impact on employee morale. It is important to note that the significant changes within the network, generally, and at NIHCS, specifically, have been accomplished without implementing reductions-in-force (RIFs) resulting in employees losing jobs. Programmatic changes such as shifting from inpatient to outpatient care to the extent possible, consolidating laundry services, and discontinuing programs have been accomplished through the use of early retirement and buyout authority, and by offering displaced employees alternative positions, including necessary retraining. Some other networks have implemented RIFs affecting hundreds of employees, but this network’s firm commitment to valuing employees has allowed significant change without job loss.

We recognize the need to establish and maintain a safe environment for patients and employees as changes are implemented. The best patient care can only be delivered when patients and staff are comfortable and secure. To that end, this network has completed workplace evaluations at each medical center by the Chief, Police and Security Service, VAMC Detroit, and a consultant expert from VISN 2. These evaluations have resulted in physical plant improvements, changes in operating policies and procedures, purchase of personal safety equipment and employee education and training.

VISN 11 continues to face a number of challenges including managing and operating within appropriated funding, increasing market share, continuously improving quality of care, fully integrating administrative and clinical programs and processes, investing in capital improvements and information technology and effectively communicating with all stakeholder groups. As we meet these challenges we will continue to strive to meet employee needs through effective, ongoing communication. Employees who understand the need for change and who have input into the change effort are critical to ensuring success. The most valuable resource we have is a well-trained and well-informed workforce.