Veterans' Health Care: Facilities' Resource Allocations Could Be More Equitable

VA has linked its new resource allocation method, the Veterans Equitable Resource Allocation (VERA) system to the VISN strategic planning process and more clearly associated allocations with VA long-range goals, performance standards, and workload priorities. On July 1, 1997, VA issued Network Strategic Guidance to the VISNs to be used in the budget process for FY 1998 through 2002. VA provided VISNs with a range of their estimated allocations from VERA and other revenues for this period, based on certain assumptions. VA has instructed VISNS that it intends to use some of the information for justification and development of FY 1999 and 2000 budget requests to Congress. VA planning guidance lays out VA national goals, standards, and priorities for VISNs to address in their planning process. VA provides a suggested plan format for VISNs to link their health planning, performance standards, and workload priorities to VISN resource allocations and national objectives.

VA linked its new resource allocation method, the VERA system, to the VISNs' strategic planning process and has given VISN managers short- and long-range financial objectives. On July 1, 1997, VA issued Network Strategic Guidance to the VISNs to be used in the budget process for FY 1998 through 2002. VA provided VISNs with a range of their estimated allocations from VERA and other revenues for this period, based on certain assumptions. VA planning guidance lays out VA national goals, standards, and priorities for VISNs to address in their planning process. VA requires that VISNS provide information for each fiscal year from 1998 through 2002 on operating and capital costs for various functions as well as workload numbers for certain types of services. VA's suggested plan format for VISNs links VISN health planning, performance standards, and workload priorities to VISN resource allocations and national objectives for the next FY through 2002.

VA considers this recommendation completed because it conducted an evaluation of cost variations among VISNs for factors such as staffing and bed ratios per patient, labor costs, and energy in its design of the Veterans Equitable Resource Allocation (VERA) method. VA's actions are not fully responsive, however, because it has not instituted a formal review and process in its VERA method to examine the reasons for cost variations among facilities. This analysis remains germane because VISNs now allocate resources they obtain under VERA to their facilities. VA headquarters and VISNs need to know the reasons for cost differences among facilities to ensure that allocations to the facilities adequately address existing inequities and inefficiencies.

In the process to design and implement VERA, which replaced RPM and a related resource allocation method, VA examined available data to increase the amount of its medical care budget allocated to VISNs through VERA. VA includes in VERA 88 percent of its medical care budget, an increase of the proportion allocated under RPM. Headquarters allocates the remainder of the medical care budget on other criteria. These criteria include buying power leverage gained through central purchasing, legal requirements, or because the activities are VA-wide responsibilities. VA continues to explore potential improvements in VERA including the possibility of expanding the proportion of the medical care budget it allocates.

VA considers this recommendation closed because the VERA system allocates funds to VISNs according to the number of high-priority (service-connected and low income) or Category A veterans served. However, this action does not complete the recommendation. As GAO's work and a Price Waterhouse report have found, such an approach does not address equitable access issues for those veterans who have health care needs but do not use the VA system. VA has acknowledged this limitation in VERA and tried to address this issue, in part, through a contract study of why veterans do or do not use VA services. The contract was terminated without definitive results, and no mechanism has been incorporated in VERA to address equitable access for veterans who are not users of VA services. Moreover, GAO found in a recent review (HEHS-98-226) that VA does not know if access is more equitable under VERA because it does not have indicators of equitable access to monitor improvements among or within VISNs.