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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

June 2012: 


VA/DOD Federal Health Care Center: 

Costly Information Technology Delays Continue and Evaluation Plan 
Lacking: 

GAO-12-669: 

GAO Highlights: 

Highlights of GAO-12-669, a report to congressional committees. 

Why GAO Did This Study: 

The NDAA for Fiscal Year 2010 authorized VA and DOD to establish a 5-
year demonstration to integrate VA and DOD medical care into a first-
of-its-kind FHCC in North Chicago, Illinois. Expectations for the FHCC 
are outlined in the Executive Agreement signed by VA and DOD in April 
2010. 

The NDAA for Fiscal Year 2010, as amended by the NDAA for Fiscal Year 
2012, directed GAO to report on the FHCC demonstration in 2011, 2012, 
and 2015. This is the second of the three reports and examines (1) to 
what extent VA and DOD have continued to implement the Executive 
Agreement to establish and operate the FHCC and (2) what plan, if any, 
VA and DOD have to assess the provision of care and operations of the 
FHCC. 

To conduct its work, GAO reviewed FHCC documents; interviewed VA, DOD, 
and FHCC officials; and reviewed related GAO work. 

What GAO Found: 

Officials at the Department of Veterans Affairs (VA) and Department of 
Defense (DOD) Captain James A. Lovell Federal Health Care Center 
(FHCC) have continued to make progress implementing provisions of the 
Executive Agreement’s 12 integration areas, but delays in the 
information technology (IT) area have proven costly. Specifically, for 
6 integration areas, all provisions have been implemented. Some of 
these areas were implemented at the time of GAO’s 2011 report, 
including establishing the facility’s governance structure and patient 
priority system, while 2 areas-—quality assurance and contingency 
planning-—were more recently implemented. In addition, 5 integration 
areas, such as property and fiscal authority, remain in progress. 
However, as previously reported by GAO, there have been delays 
implementing 1 of the integration areas—-IT-—which have resulted in 
additional costs for the FHCC, although the FHCC has been unable to 
quantify the total costs resulting from these delays. Despite an 
investment of more than $122 million for IT capabilities at the FHCC, 
VA and DOD have not completed work on all components required by the 
Executive Agreement, which were to have been in place in time for the 
FHCC’s opening in October 2010. These delays have resulted in 
additional costs and administrative burden for the FHCC because of the 
need for workarounds to address them. There also are other IT 
capabilities required by the Executive Agreement that are ill-defined 
and for which plans have not been established. 

Although they are required by the National Defense Authorization Act 
(NDAA) for Fiscal Year 2010 to assess the FHCC at the end of the 5-
year demonstration, VA and DOD officials said the departments have not 
yet established an evaluation plan. Officials told GAO that in 
addition to the performance data already being collected from 15 
integration benchmarks established by the Executive Agreement, the 
departments also expect to consider other factors; however, these 
factors, which may include performance measures, have not yet been 
established. VA and DOD officials also have not yet established the 
standards, such as target scores for the benchmarks, the departments 
will use to evaluate FHCC performance. GAO has previously found that 
well-defined measures and standards are essential to a sound 
evaluation plan. Furthermore, without VA and DOD agreement on the 
measures and standards, FHCC leadership is unable to track progress 
and make any midcourse adjustments to improve performance in areas VA 
and DOD have determined are necessary for the FHCC’s success. Although 
including measures of FHCC costs in the evaluation would be consistent 
with the FHCC’s purpose, VA and DOD departmental priorities, and 
federal financial accounting standards, no such cost measures have 
been established for evaluating the FHCC. 

What GAO Recommends: 

GAO recommends that VA and DOD (1) determine the costs associated with 
the workarounds required because of delays in implementing IT 
capabilities laid out in the FHCC Executive Agreement; (2) develop 
plans with clear definitions, specifications, deliverables, and time 
frames for IT capabilities required by the Executive Agreement but not 
yet defined; (3) develop and agree to an evaluation plan, to include 
all performance measures and standards to be used in evaluating the 
FHCC demonstration; and (4) establish measures related to the cost-
effectiveness of the FHCC as part of their evaluation. VA and DOD 
generally concurred and noted steps to address GAO’s recommendations. 

View [hyperlink, http://www.gao.gov/products/GAO-12-669]. For more 
information, contact Debra A. Draper at (202) 512-7114 or 
draperd@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Further Progress Has Been Made Implementing the Executive Agreement, 
but Costly IT Delays and Lack of MTF Designation Continue to Pose 
Challenges: 

VA and DOD Have Not Yet Established a Plan for Evaluating the FHCC 
Demonstration: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Federal Health Care Center Integration Benchmarks, by 
Number of Reported Measures: 

Appendix II: Comments from the Department of Defense: 

Appendix III: Comments from the Department of Veterans Affairs: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Key Provisions of Federal Health Care Center (FHCC) Executive 
Agreement Integration Areas: 

Table 2: Federal Health Care Center (FHCC) Executive Agreement--Status 
of Key Provisions of Currently Implemented Integration Areas: 

Table 3: Federal Health Care Center (FHCC) Executive Agreement--Status 
of Key Provisions of Currently In Progress Integration Areas: 

Figures: 

Figure 1: Federal Health Care Center (FHCC) Oversight Structure: 

Figure 2: Status of Federal Health Care Center (FHCC) Implementation 
of Provisions for the 12 Executive Agreement Integration Areas, as of 
May 2012: 

Abbreviations: 

DOD: Department of Defense: 

FHCC: Federal Health Care Center: 

HEC: Health Executive Council: 

IT: information technology: 

JEC: Joint Executive Council: 

MTF: military treatment facility: 

NCVAMC: North Chicago Veterans Affairs Medical Center: 

NDAA: National Defense Authorization Act: 

NHCGL: Naval Health Clinic Great Lakes: 

VA: Department of Veterans Affairs: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

June 26, 2012: 

Congressional Committees: 

The Departments of Veterans Affairs (VA) and Defense (DOD) expanded 
their efforts to share health care resources in 2010 following 
congressional authorization of a 5-year demonstration to more fully 
integrate VA and DOD facilities located in proximity to one another in 
the North Chicago, Illinois, area. As authorized by the National 
Defense Authorization Act (NDAA) for Fiscal Year 2010 (NDAA 2010), VA 
and DOD facilities in and around North Chicago were integrated into a 
first-of-its-kind system known as the Captain James A. Lovell Federal 
Health Care Center (FHCC). Although DOD and VA have shared resources 
at some level since the 1980s,[Footnote 1] the FHCC is unique in that 
it is the first fully integrated federal health care center for use by 
both VA and DOD beneficiaries,[Footnote 2] with an integrated 
workforce, a joint funding source, and a single line of governance. In 
addition to delivering integrated health care services to both VA and 
DOD beneficiaries, this unprecedented partnership is expected to offer 
lessons for decision makers about whether this is a model of care that 
might be effective if replicated at other VA and DOD locations. Among 
other things, the NDAA 2010 requires the Secretaries of VA and Defense 
to submit a report to the House and Senate Committees on Armed 
Services and Veterans' Affairs by October 2015, the year in which the 
demonstration ends, to include an assessment of the demonstration and 
a recommendation as to whether the FHCC should continue.[Footnote 3] 

VA and DOD signed an Executive Agreement in April 2010 that outlined 
the FHCC's structure. Beginning October 1, 2010, the new structure 
integrated services previously provided by the former North Chicago VA 
Medical Center (NCVAMC) and its community-based outpatient clinics and 
the Naval Health Clinic Great Lakes (NHCGL) and its associated 
clinics, as well as services provided by a new ambulatory care center 
constructed by DOD.[Footnote 4] The FHCC reported providing care to 
more than 86,000 patients in its first year of operation (October 2010 
through September 2011), including about 25,000 veterans and 59,000 
DOD beneficiaries, including Navy recruits.[Footnote 5] 

NDAA 2010, as amended by the NDAA for Fiscal Year 2012 (NDAA 2012), 
requires that we review and assess the progress made in implementing 
the Executive Agreement and the effects of the agreement on the 
provision of care and operation of the facility, and issue reports 
based on those assessments in 2011, 2012, and 2015.[Footnote 6] We 
first reported in July 2011[Footnote 7] on the status of the FHCC's 
integration efforts and found that for the 12 integration areas 
defined in the Executive Agreement,[Footnote 8] 4 had been 
implemented, 7 were in progress, and 1--information technology (IT) 
integration--was delayed. We also found weaknesses in the tool created 
to collect and report performance results and recommended that the 
FHCC reexamine its process for assessing and reporting performance to 
ensure accurate and meaningful information. In addition, we 
recommended that DOD seek a legislative change to designate the FHCC 
as a military treatment facility (MTF) to eliminate the need for 
burdensome workarounds to address several administrative challenges 
that arose because the FHCC lacked such a designation.[Footnote 9] 
Specifically, we reported that the FHCC encountered challenges in the 
areas of managing beneficiary co-payments, contracting to meet 
temporary staffing needs, using drug pricing arrangements, and 
clarifying providers' authority to sign medical readiness forms for 
active duty Navy servicemembers. 

In this second required report, we address the following questions: 

1. To what extent have VA and DOD continued to implement the Executive 
Agreement to establish and operate the FHCC? 

2. What plan, if any, do VA and DOD have to assess the provision of 
care and operations of the FHCC? 

To determine the extent to which VA and DOD have continued to make 
progress in establishing and operating the FHCC, we examined the 12 
integration areas (and the provisions within each area) outlined in 
the Executive Agreement and assessed the FHCC's progress in meeting 
them. Specifically, we reviewed VA and DOD policies pertaining to FHCC 
operations; meeting minutes documenting discussions of FHCC, VA, and 
DOD officials about patient care and operations; and financial 
planning documents, such as the operating plan and budget.[Footnote 
10] For the areas we noted in our prior report as having been 
implemented, we reexamined these for any changes that might affect 
their current status. We also reviewed our earlier work, including our 
first report on implementation progress, and a separate 2011 report 
specifically examining IT capabilities and planning for the FHCC 
integration.[Footnote 11] In addition, we interviewed officials at VA, 
DOD, and the FHCC about continued progress in establishing and 
operating the FHCC. 

To determine what plan, if any, VA and DOD have to assess the 
provision of care and operations of the FHCC, we interviewed officials 
at the FHCC, VA, and DOD regarding the provision of care and 
operations, standards used to measure and assess performance, and 
plans to evaluate and report results. We also reviewed relevant 
documents that describe the plans for measuring the FHCC's performance 
in delivering care to patients and for assessing the operations in 
support of care delivery. In addition, we examined best practices for 
program evaluation, mainly within federal agencies, including some 
specific to demonstrations.[Footnote 12] 

We conducted this performance audit from November 2011 to June 2012 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

VA and DOD have a long-standing history of sharing health care 
resources to provide services to their beneficiaries. However, the 
FHCC is unique among VA and DOD collaborations to deliver health care 
services in several ways, notably its level of integration, the way it 
is funded, and its governance structure. The Executive Agreement, 
signed by the Secretaries of both departments, contains provisions to 
be met in 12 integration areas regarding specific aspects of FHCC 
operations, including establishing a governance structure and 
combining VA and DOD staff into a single, joint workforce. The FHCC's 
leadership remains directly accountable to VA and DOD individually, 
through formal reporting relationships, and jointly, through oversight 
and advisory entities comprising VA and DOD officials. 

FHCC Established a New Level of Sharing for VA and DOD: 

VA and DOD have been authorized since the 1980s to enter into sharing 
agreements with each other to improve access to, and the quality and 
cost-effectiveness of, health care provided by the two departments. 
Since that time, VA and DOD have entered into a number of sharing 
agreements to provide services--such as emergency, specialty, 
inpatient, and outpatient care--to VA and DOD beneficiaries and to 
reimburse one another for the cost of such services. Starting in the 
1990s, VA and DOD expanded their sharing efforts to include "joint 
ventures"--locations where sharing agreements are in place that 
encompass multiple health care services for VA and DOD beneficiaries. 
The FHCC is one of 10 joint venture locations across the country. 
[Footnote 13] 

The October 2010 launch of the FHCC demonstration established a new 
level of sharing and integration for VA and DOD. Specifically, the 
FHCC is unique among other VA and DOD joint ventures in three key ways: 

1. The FHCC's integration of the provision of care and operations 
represents the highest level of collaboration among the 10 VA and DOD 
joint ventures. For example, the FHCC has a more integrated staffing 
structure than any other joint venture site. 

2. The FHCC has a joint funding source, to which VA and DOD 
contribute, unlike the other joint venture sites, which each have 
separate VA and DOD funding sources. NDAA 2010 established the Joint 
DOD-VA Medical Facility Demonstration Fund (Joint Fund) as the funding 
mechanism for the FHCC, with VA and DOD both making transfers to the 
Joint Fund from their respective appropriations.[Footnote 14] 

3. The FHCC operates under a single line of governance to manage 
medical and dental care, and has an integrated workforce of 
approximately 3,100 civilian and active duty military employees from 
both VA and DOD.[Footnote 15] None of the other joint venture sites 
have integrated governance structures; rather, they maintain separate 
VA and DOD lines of authority. 

Executive Agreement: 

In April 2010, the Secretaries of VA and Defense signed the Executive 
Agreement that established the FHCC and defined the relationship 
between VA and DOD for operating the new, integrated facility, in 
accordance with NDAA 2010. The Executive Agreement contained 
provisions in 12 integration areas regarding specific aspects of FHCC 
operations (see table 1). 

Table 1: Key Provisions of Federal Health Care Center (FHCC) Executive 
Agreement Integration Areas: 

Integration area: Governance structure; Key provisions: FHCC 
leadership structure and advisory bodies. 

Integration area: Access to health care at the FHCC; 
Key provisions: Patient priority system and eligibility of members of 
the uniformed services for care. 

Integration area: Research; 
Key provisions: Institutional Review Board approval and policy for the 
protection of human subjects. 

Integration area: Contracting; 
Key provisions: Departments of Veterans Affairs (VA) and Defense (DOD) 
responsibility for contracting support. 

Integration area: Quality assurance; 
Key provisions: Accreditation and oversight from external entities and 
credentialing and privileging of health care providers. 

Integration area: Contingency planning; 
Key provisions: Emergency and disaster management and security. 

Integration area: Integration benchmarks; 
Key provisions: Completion of 15 integration benchmarks may occur 
before 2015. 

Integration area: Property; 
Key provisions: Construction, transfer of property, and physical plant 
management. 

Integration area: Reporting requirements; 
Key provisions: VA and DOD reports to congressional committees and 
Comptroller General reviews. 

Integration area: Workforce management and personnel; 
Key provisions: Staffing, training, and the transfer of DOD civilian 
personnel to VA. 

Integration area: Fiscal authority; 
Key provisions: Budgeting, joint funding authority, and reconciliation. 

Integration area: Information technology (IT); 
Key provisions: Administrative and clinical IT, including efforts to 
achieve interoperability between VA and DOD systems. 

Source: GAO. 

[End of table] 

Each of the 12 integration areas contains a number of specific 
provisions describing how the FHCC should be jointly operated by VA 
and DOD. Some provisions have designated deadlines, while others do 
not. For example, within the IT integration area, the Executive 
Agreement included provisions identifying three specific IT 
capabilities that VA and DOD were to have in place by opening day of 
the FHCC, October 1, 2010 (for example, medical single sign-on, which 
would allow staff to use one screen to access both the VA and DOD 
electronic health record systems) while other provisions (such as 
those for financial management and outpatient appointment enhancement 
solutions) had no scheduled due dates. 

FHCC Oversight: 

As established in the Executive Agreement, the FHCC's leadership and 
workforce remain directly accountable to both VA and DOD (see figure 
1). The FHCC Director, a VA executive, is accountable to VA for the 
fulfillment of the FHCC mission, while the Deputy Director and 
Commanding Officer, a Navy Captain, is accountable to DOD. In 
addition, the Joint Executive Council (JEC) and the Health Executive 
Council (HEC) provide oversight for all of the joint ventures, 
including the FHCC. The JEC is made up of senior VA and DOD officials 
and provides broad strategic direction for collaboration and resource 
sharing between the two departments. The HEC, a sub-council of the 
JEC, provides oversight for the specific cooperative efforts of each 
department's health care organizations--VA's Veterans Health 
Administration and DOD's Military Health System. The HEC has organized 
itself into a number of work groups to carry out its work and focus on 
specific high-priority areas of national interest. 

Figure 1: Federal Health Care Center (FHCC) Oversight Structure: 

[Refer to PDF for image: illustration] 

FHCC Director (VA executive); FHCC Deputy Director (Navy Captain and 
Commanding Officer): 
Formal reporting relationship with: 
Department of Veterans Affairs (VA); and, 
Department of Defense (DOD). 
Advisory relationship with: 
FHCC Stakeholders Advisory Council; and, 
FHCC Advisory Board. 

FHCC Advisory Board: 
Formal reporting relationship with: 
Health Executive Council. 

Health Executive Council: 
Formal reporting relationship with: 
Joint Executive Council. 

Joint Executive Council: 
Formal reporting relationship with: 
Department of Veterans Affairs (VA); and, 
Department of Defense (DOD). 

Source: GAO. 

Notes: Since our 2011 report, the FHCC Advisory Board has become a 
working group of the Health Executive Council, formalizing its 
reporting relationship. Some oversight of the FHCC within VA is 
conducted by Veterans Integrated Service Network 12 and within DOD by 
the U.S. Navy Bureau of Medicine and Surgery. 

[End of figure] 

The FHCC Advisory Board, a HEC workgroup co-chaired by and comprising 
senior officials from VA and DOD, was created specifically to provide 
guidance and support to FHCC leaders and to resolve issues that arise 
at the FHCC. The Advisory Board provides guidance for the integration 
and operations of the facility, including monitoring the FHCC's 
performance and advising on issues related to strategic direction, 
mission, vision, and policy. It also serves as a communication link 
between the FHCC and VA and DOD executive leadership by reporting on 
FHCC activities to the HEC. FHCC issues that are not able to be 
resolved by the Advisory Board are elevated to the HEC for final 
resolution. The Stakeholders Advisory Council also provides feedback 
on how well the FHCC is meeting customers' needs and VA and DOD 
missions. The Stakeholders Advisory Council is made up of members from 
various regional and local organizations representing FHCC interests, 
including representation from local government, TRICARE, and two 
nearby VA medical facilities. 

Further Progress Has Been Made Implementing the Executive Agreement, 
but Costly IT Delays and Lack of MTF Designation Continue to Pose 
Challenges: 

Eleven of 12 integration areas are now either "implemented" or "in 
progress." The remaining integration area, IT, remains "delayed," as 
it was at our last review, resulting in costly and time-consuming 
workarounds. DOD's decision not to seek an MTF designation for the 
FHCC, as we had recommended in our July 2011 report, has resulted in 
continued implementation challenges.[Footnote 16] 

All but 1 of the 12 Executive Agreement Integration Areas Are 
Implemented or In Progress: 

FHCC officials have implemented or made progress implementing 11 of 
the 12 Executive Agreement integration areas. Specifically, FHCC 
officials have implemented 6 integration areas, meaning all associated 
provisions in the Executive Agreement have been met. Five of the 
integration areas are in progress, meaning some, but not all, 
associated provisions have been met, with FHCC officials maintaining 
or making additional progress meeting the provisions in each 
integration area. The 1 integration area not implemented or in 
progress is IT, which is delayed, meaning at least one provision had a 
deadline provided in the Executive Agreement that was not met. This 
integration area is discussed in more detail later in this report. 
(See figure 2.) 

Figure 2: Status of Federal Health Care Center (FHCC) Implementation 
of Provisions for the 12 Executive Agreement Integration Areas, as of 
May 2012: 

[Refer to PDF for image: table] 

Integration area: Governance structure: Implemented. 

Integration area: Access to health care at the FHCC: Implemented. 

Integration area: Research: Implemented. 

Integration area: Contracting: Implemented. 

Integration area: Quality assurance: Implemented[A]. 

Integration area: Contingency planning: Implemented[A]. 

Integration area: Integration benchmarks: In progress. 

Integration area: Property: In progress. 

Integration area: Reporting requirements: In progress. 

Integration area: Workforce management and personnel: In progress. 

Integration area: Fiscal authority: In progress. 

Integration area: Information technology: Delayed. 


Source: GAO analysis. 

Note: Integration areas that are categorized as "implemented" are 
areas in which all the identified provisions in the Executive 
Agreement have been completed, those categorized as "in progress" are 
areas in which at least one provision has not been completed, and 
those categorized as "delayed" are areas in which at least one 
provision had not met a deadline provided in the Executive Agreement. 

[A] In our prior review conducted in 2011, the status of this 
integration area was "in progress." 

[End of figure] 

Six Integration Areas Are Implemented: 

FHCC officials have implemented all provisions in 6 of the 12 
Executive Agreement integration areas. Of these 6, 4 were integration 
areas we previously reported as implemented: (1) governance structure, 
(2) access to health care at the FHCC, (3) research, and (4) 
contracting. The two other implemented integration areas, quality 
assurance and contingency planning, moved from in progress at the time 
of our last review to implemented in this review. Integration areas we 
previously reported as implemented have remained in that status by 
maintaining activities or policies that meet the associated provisions 
in the Executive Agreement. For example, in the area of governance 
structure, the Stakeholders Advisory Council meets quarterly as 
required by the Executive Agreement and in another integration area, 
research, existing policies remain in place. Since our 2011 report, 
the FHCC met two additional required provisions for the quality 
assurance integration area: (1) officials obtained accreditation for 
the integrated facility by relevant external accrediting bodies--the 
Commission on Accreditation of Rehabilitation Facilities, and The 
Joint Commission[Footnote 17]--and (2) FHCC officials reviewed the 
FHCC's policy on professional practices.[Footnote 18] In addition, 
FHCC officials have established a formal agreement to outline the 
jurisdiction of VA and DOD related to the security program for the 
FHCC campus, as the Executive Agreement requires. (See table 2.) 

Table 2: Federal Health Care Center (FHCC) Executive Agreement--Status 
of Key Provisions of Currently Implemented Integration Areas: 

Integration area: Governance structure[B]; 
Status of key provisions as of July 2011[A]: FHCC leadership structure 
and advisory bodies were in place; 
Status of key provisions as of May 2012: Maintained establishment of 
leadership structure; continued to meet provision for the Stakeholders 
Advisory Council to meet at least quarterly. 

Integration area: Access to health care at the FHCC[B]; 
Status of key provisions as of July 2011[A]: Patient priority system 
to ensure access was in place and FHCC maintained its "pipeline to the 
fleet" readiness goal by monitoring the medical readiness of enlisted 
Navy recruits; 
Status of key provisions as of May 2012: Continued to meet provisions 
related to patient priority system and the "pipeline to the fleet" 
readiness goal. 

Integration area: Research[B]; 
Status of key provisions as of July 2011[A]: Institutional Review 
Board approval and policy for the protection of human subjects were in 
place; 
Status of key provisions as of May 2012: Continued the existing 
policies related to the Institutional Review Board. 

Integration area: Contracting[B]; 
Status of key provisions as of July 2011[A]: Department of Veterans 
Affairs (VA) responsibility for contracting support established; 
Status of key provisions as of May 2012: Maintained implementation of 
contracting provisions, with VA continuing to oversee contracting 
support. The Department of Defense (DOD) is responsible for personal 
services contracts. 

Integration area: Quality assurance[C]; 
Status of key provisions as of July 2011[A]: Accreditation and 
oversight from external entities were ongoing and policies on 
credentialing and privileging of health care providers were in place; 
Status of key provisions as of May 2012: Met final two provisions: 
(1) accreditation as a joint facility by relevant external accrediting 
bodies--the Commission on Accreditation of Rehabilitation Facilities 
and The Joint Commission--and (2) review of the FHCC's policy on 
professional practices[D]. 

Integration area: Contingency planning[C]; 
Status of key provisions as of July 2011[A]: Emergency management 
personnel, training standards, and programs were in place. Officials 
were working on a formal agreement outlining the jurisdiction of VA 
and DOD related to FHCC campus security; 
Status of key provisions as of May 2012: Met final provision: formal 
agreement outlining the jurisdiction of VA and DOD related to FHCC 
campus security established. 

Source: GAO. 

[A] See GAO, VA and DOD Health Care: First Federal Health Care Center 
Established, but Implementation Concerns Need to Be Addressed, GAO-11-
570 (Washington, D.C.: July 19, 2011). 

[B] We reported this integration area as implemented in July 2011 (see 
GAO-11-570). 

[C] We reported this integration area as in progress in July 2011 (see 
GAO-11-570). 

[D] The Commission on Accreditation of Rehabilitation Facilities and 
The Joint Commission are independent organizations that accredit 
health care organizations and programs. 

[End of table] 

Five Integration Areas Remain In Progress: 

Five other integration areas in the Executive Agreement remain in 
progress: (1) integration benchmarks, (2) property, (3) reporting 
requirements, (4) workforce management and personnel, and (5) fiscal 
authority. Each of these integration areas was also in progress at the 
time of our first report in July of 2011. FHCC officials have actively 
maintained past progress while continuing to work toward 
implementation of the provisions in the Executive Agreement associated 
with these integration areas. 

Some integration areas cannot be met until a certain point in the 
integration or depend on other conditions being met. For example, for 
the integration benchmarks area and the property area, the Executive 
Agreement specifies that in accordance with NDAA 2010, property 
transfer may occur upon the earlier of (1) completion of the 15 
integration benchmarks or (2) 5 years from the date the Executive 
Agreement was executed. Thus, the FHCC may address the property 
integration area prior to the end of the demonstration, in 2015, but 
it is not required to do so. 

FHCC officials also are in the process of addressing other integration 
areas with provisions that do not have specific deadlines associated 
with them. For example, for the fiscal authority integration area, 
FHCC officials continue to make progress implementing the provisions, 
although they have experienced some challenges. Since our last review, 
the Joint Fund, into which both VA and DOD contribute, has become 
operational.[Footnote 19] However, the provision of the Executive 
Agreement in the fiscal authority integration area that requires the 
FHCC to develop an operating plan by month that includes workload data 
has not yet been met. Specifically, the FHCC's operating plan does not 
include workload data, which officials reported is because the current 
VA and DOD IT systems calculate workload data differently. (See table 
3.) 

Table 3: Federal Health Care Center (FHCC) Executive Agreement--Status 
of Key Provisions of Currently In Progress Integration Areas: 

Integration area[A]: Integration benchmarks; 
Status of key provisions as of July 2011[B]: Collection of data and 
assessment of performance on the 15 benchmarks had begun. Benchmarks 
may be addressed prior to the conclusion of demonstration in 2015; 
Status of key provisions as of May 2012: Past progress maintained by 
continued collection and assessment of data on the 15 benchmarks to be 
addressed prior to 2015. 

Integration area[A]: Property; 
Status of key provisions as of July 2011[B]: Construction of the 
facility was completed. Transfer of property to the Department of 
Veterans Affairs (VA) may occur by completion of demonstration in 2015; 
Status of key provisions as of May 2012: Property transfer provision 
may be met by completion of demonstration by 2015. 

Integration area[A]: Reporting requirements; 
Status of key provisions as of July 2011[B]: VA and the Department of 
Defense (DOD) required to report to congressional committees following 
completion of demonstration. This final report is due October 2015; 
Status of key provisions as of May 2012: Provision to report to 
congressional committees to be met following completion of 
demonstration in October 2015. 

Integration area[A]: Workforce management and personnel; 
Status of key provisions as of July 2011[B]: Provisions related to 
staffing, training, and the transfer of DOD civilian personnel were 
met. VA is required to evaluate the extension of collective bargaining 
rights for the transferred employees by October 2012; 
Status of key provisions as of May 2012: Past progress in staffing, 
training, and transfer of employees maintained. Provision to evaluate 
the extension of the collective bargaining rights to be met by October 
2012. 

Integration area[A]: Fiscal authority; 
Status of key provisions as of July 2011[B]: Developed an integrated 
budgeting and financial reconciliation process. Developed the Joint 
DOD-VA Medical Facility Demonstration Fund (Joint Fund) process, but 
had not implemented it. An automated reconciliation report is to be 
generated by December 31, 2013, and additional provisions are to be 
met at a future date; 
Status of key provisions as of May 2012: Joint Fund has been 
implemented, and past progress of implemented provisions maintained. 
An automated reconciliation report to be generated by December 31, 
2013. An operating plan by month including workload data to be 
developed. 

Source: GAO. 

[A] We reported these integration areas as in progress in July 2011; 
see GAO, VA and DOD Health Care: First Federal Health Care Center 
Established, but Implementation Concerns Need to Be Addressed, GAO-11-
570 (Washington, D.C.: July 19, 2011). Two additional integration 
areas--quality assurance and contingency planning--were in progress at 
the time of the last report and are now implemented (see table 2). 

[B] See GAO-11-570. 

[End of table] 

Continued Delays in the Remaining Executive Agreement Integration 
Area--IT Implementation--Have Resulted in Additional Costs for the 
FHCC: 

Despite some progress, the FHCC continues to face costly delays in the 
IT integration area. The Executive Agreement specified three key IT 
capabilities that VA and DOD were required to have in place on opening 
day, in October 2010, to facilitate interoperability of VA and DOD 
electronic health record systems.[Footnote 20] In our 2011 report, we 
found that all three of these IT components were delayed; some of them 
continue to remain so. As a result of these delays, the FHCC has had 
to implement costly workarounds to address the needs these 
capabilities were intended to serve. In addition to delays in 
developing these specific IT capabilities, other IT capabilities 
required by the Executive Agreement have not been well defined and 
implementation plans for them have not been established. 

Specifically, in our 2011 report, we noted that none of the following 
three IT capabilities required by the Executive Agreement to be in 
operation by October 2010 were implemented by that time: (1) medical 
single sign-on, which would allow staff to use one screen to access 
both the VA and DOD electronic health record systems; (2) single 
patient registration, which would allow staff to register patients in 
both systems simultaneously; and (3) orders portability, which would 
allow VA and DOD clinicians to place, manage, and update clinical 
orders from either VA or DOD electronic health records systems for 
radiology, laboratory, consults (specialty referrals), and pharmacy 
services. 

Although none of these capabilities were in place at the time of the 
FHCC's opening, FHCC officials reported that subsequently, in December 
2010, medical single sign-on and single patient registration became 
operational, as we noted in our 2011 report. Two orders portability 
components--pharmacy and consults--remain delayed as of May 2012. 
While orders portability for pharmacy remains delayed, VA and DOD 
officials have estimated completion of the consults component by March 
2013. Since our last review, orders portability for radiology became 
operational in June 2011 and for laboratory in March 2012. Officials 
report that as of March 2012, VA and DOD have spent more than $122 
million on IT capabilities at the FHCC. 

Figure: Status of IT Capabilities Required for FHCC: 

[REfer to PDF for image: list] 

1. Medical single sign-on, which would allow staff to use one screen 
to access both the Departments of Veterans Affairs (VA) and Defense 
(DOD) electronic health record systems--required by October 2010, 
delivered December 2010. 

2. Single patient registration, which would allow staff to register 
patients in both systems simultaneously-—required by October 2010, 
delivered December 2010. 

3. Orders portability, which would allow VA and DOD clinicians to 
manage clinical orders from either VA or DOD electronic health records 
systems-—four components required by October 2010: 
* Pharmacy component delayed; 
* Consults component not delivered—-estimated delivery date March 2013; 
* Radiology component delivered June 2011; 
* Laboratory component delivered March 2012. 

Source: GAO. 

[End of figure] 

VA and DOD officials reported several reasons for the delays in each 
of the orders portability components and described the workarounds 
implemented as a result of these delays. 

* Pharmacy component: Officials have said that they no longer plan to 
develop a FHCC-specific capability that will allow VA's and DOD's 
electronic health record systems to exchange information for pharmacy 
orders, as required by the Executive Agreement, until a more long-term 
effort to merge the departments' electronic health record systems into 
a single system is complete. In March 2011, the Secretaries of VA and 
Defense announced that the two departments had committed to this 
broader effort, but the departments have not determined when this 
single electronic health record system will be completed. Officials 
reported that they have assigned a project team to address this 
requirement and estimate that they will award a contract for the 
pharmacy solution by November 2012. Meanwhile, the FHCC continues to 
maintain the interim orders portability workaround that we previously 
reported on, which includes five dedicated, full-time pharmacists to 
conduct manual checks of patient records to reconcile allergy 
information and identify possible interactions between drugs 
prescribed in VA and DOD systems. Additionally, FHCC officials 
reported that they have also hired a full-time pharmacy technician to 
assist in this process. FHCC officials reported that as of March 2012, 
they have spent close to $1 million to institute this workaround and 
that they anticipate spending an additional $750,000 to fund this 
process from April 2012 through April 2013. 

* Consults component: VA and DOD officials reported that this 
component, which will allow VA's and DOD's electronic health record 
systems to exchange information for consult orders, remains delayed 
because of changes to the requirements for this component in response 
to lessons learned since the FHCC opened. Officials reported that they 
completed the process of documenting changes to the requirements in 
February 2012 and will use that information to develop the consults 
component. Until this IT component is implemented, the FHCC staff in 
the specialty care clinics manage the consult orders manually by 
reviewing daily all consult requests to determine if care could be 
provided at the FHCC, in which case the order is manually entered into 
the appropriate system. 

* Radiology component: Officials told us that this area was delayed in 
part because they underestimated the amount of work required to allow 
VA's and DOD's electronic health record systems to exchange 
information for radiology orders, and they needed additional time to 
resolve software defects related to the work. 

* Laboratory component: Officials reported that there were delays in 
delivering a capability that would allow the VA and DOD systems to 
exchange information for laboratory orders because they needed to 
address software differences between the VA and DOD systems, such as 
how the systems detect and combine duplicate orders. In addition, they 
acknowledged that they underestimated the time and effort required to 
address such differences. Before the laboratory component was 
implemented, the FHCC instituted a workaround that required health 
care providers to review both VA and DOD systems for notifications of 
laboratory results. 

Although they were unable to quantify the total cost for all the 
workarounds resulting from delayed IT capabilities, FHCC officials 
reported that staff time equivalent to 23 full-time employees is being 
used to manage the workarounds as a result of delays in IT 
capabilities to support pharmacy, consults, radiology, and laboratory 
as well as delays to the other IT components not delivered on time. 

In addition to the three delayed IT capabilities that were to be in 
operation by opening day, implementation of three other IT 
capabilities required, but not defined, by the Executive Agreement--
documentation of patient care to support medical and dental 
operational readiness, financial management solutions, and outpatient 
appointment enhancements--also have not been implemented, and in some 
cases work on them has not begun. The Executive Agreement does not 
provide clear and specific definitions of these three capabilities, 
nor does it outline deadlines or specific deliverables. Officials 
reported that as of May 2012, they had not begun to address the 
requirements for two of the three capabilities--documentation of 
patient care to support medical and dental operational readiness and 
outpatient appointment enhancements--nor had they developed plans or 
time frames for doing so. VA and DOD officials reported that they have 
determined the requirements for and have begun the technical 
development of the financial management solutions, such as automated 
financial reconciliation and billing processes, and they estimate that 
testing of the initial capability for the financial reconciliation 
requirement will occur in July 2012. 

Lack of an MTF Designation for the FHCC Continues to Pose 
Implementation Challenges: 

FHCC officials continue to experience implementation challenges 
related to the FHCC's lack of an MTF designation. In our July 2011 
report, we noted several challenges associated with the lack of an MTF 
designation at the FHCC, including limits on its ability to access 
DOD's drug pricing arrangements for DOD beneficiaries and to use 
personal services contracts to meet staffing needs, as had been done 
by DOD prior to the integration.[Footnote 21] As a result, we 
recommended that DOD seek a legislative change to designate the FHCC 
as an MTF to facilitate sharing of all DOD authorities and privileges 
for the facility. Although DOD concurred with our assessment of 
challenges based on the lack of an MTF designation, the department has 
opted not to pursue our recommendation. DOD stated that it anticipates 
that as the FHCC stabilizes and matures, the confusion caused by the 
lack of an MTF designation will dissipate and that the challenges we 
noted in the last report have been addressed by workarounds. However, 
we have found that some of the integration implementation challenges 
that could be solved with such a designation remain. In particular, 
officials told us the FHCC has been denied access to DOD's drug 
pricing arrangements for its DOD beneficiaries, which has resulted in 
the FHCC paying higher prices for certain drugs for DOD beneficiaries 
than would be the case if it were an MTF, although FHCC officials were 
unable to quantify the added expense. DOD officials told us that the 
department continues to explore ways to access DOD's drug pricing 
arrangements, despite the lack of an MTF designation, but that so far 
these efforts have not been successful. In addition, FHCC officials 
have instituted a workaround to enable them to fulfill staffing needs 
using personal services contracts--a preferred method for 
accommodating fluctuations in medical and dental workloads resulting 
from increases in the number of Navy recruits on-site at any given 
time.[Footnote 22] If the FHCC was designated as an MTF, it would have 
the authority to use personal services contracts, making such a 
workaround unnecessary. We continue to believe that an MTF designation 
is important to address the challenges the FHCC faces based on the 
lack of such a designation, and because it would set a precedent for 
future VA and DOD integrations to help make the integration process 
smoother. 

VA and DOD Have Not Yet Established a Plan for Evaluating the FHCC 
Demonstration: 

Although they are required by NDAA 2010 to conduct a comprehensive 
evaluation of the FHCC at the end of the 5-year demonstration and 
submit a report on this evaluation to the House and Senate Committees 
on Armed Services and Veterans' Affairs, VA and DOD officials said the 
departments have not yet established an evaluation plan. We have 
previously found that developing a sound evaluation plan before a 
demonstration program is implemented can increase confidence in 
results and facilitate decision making about broader applications of 
the demonstration.[Footnote 23] Without such a plan in place during 
the demonstration--including well-defined measures and standards, such 
as target scores, for determining performance on each measure--FHCC 
leadership cannot track progress and make adjustments to improve 
performance in areas that VA and DOD determine are necessary for the 
FHCC's success.[Footnote 24] In addition, we have previously found 
that joint agreement on commonly desired outcomes, such as those 
established as performance measures and standards in an evaluation 
plan, is important for collaborating agencies, such as VA and DOD, to 
successfully overcome differences in their agency missions, cultures, 
and established ways of doing business.[Footnote 25] 

VA and DOD officials told us that at the end of the demonstration, 
they expect the FHCC Advisory Board, along with the HEC and JEC--the 
governing bodies that provide executive oversight for VA and DOD 
collaborations--to assess the demonstration and provide 
recommendations to the departments about whether the FHCC should 
continue. These assessments will inform the Secretaries of VA and 
Defense, who will ultimately issue a report and recommendation to 
congressional committees regarding the FHCC. Officials confirmed that 
they will use the 15 integration benchmarks established in the 
Executive Agreement as part of the assessment (see app. I),[Footnote 
26] which as we previously reported, are monitored and reported by 
FHCC officials using a FHCC-developed tool.[Footnote 27] In addition 
to these benchmarks, VA and DOD officials also have said they expect 
to consider additional factors, which may include performance 
measures, in evaluating the FHCC's performance at the end of the 
demonstration. Officials explained that the 15 integration benchmarks 
do not address all factors relevant to determining the FHCC's utility 
as an integrated model for delivering health care. Among the 
additional factors DOD and VA officials say they are considering are 
the following: 

* an Institute of Medicine study commissioned by DOD to determine 
whether the quality of, and access to, services provided by the 
integrated FHCC meet or exceed those of NCVAMC and NHCGL as separate 
facilities prior to the integration;[Footnote 28] 

* an evaluation of whether the services available at the FHCC are 
appropriate for the needs of its beneficiary population (for example, 
whether the pediatrics workload is sufficient to maintain a pediatrics 
department at the FHCC or whether it would be more cost-effective to 
contract for pediatrics care in the local community); 

* personnel-related factors, such as whether corpsmen are able to be 
used at their full capacity at the FHCC and develop the medical skills 
needed for deployment;[Footnote 29] and: 

* FHCC costs. 

Furthermore, VA and DOD have not set specific target scores for 
determining successful performance for the existing 15 integration 
benchmarks. Officials told us they do not expect to establish these 
scores until the end of the 5-year FHCC demonstration. 

Although federal financial accounting standards, VA and DOD 
departmental priorities, and the Executive Agreement--which lays out 
the purpose of the FHCC--indicate that reliable cost information is 
important for evaluating the FHCC, VA and DOD officials have not 
determined what cost measures, if any, will be used in the FHCC's 
evaluation. In particular, federal financial accounting standards 
state that Congress and federal executives need reliable cost 
information to compare alternative courses of action and evaluate 
program performance.[Footnote 30] In addition, both the Veterans 
Health Administration's vision statement and the Military Health 
System's core values statement highlight the importance of cost or 
value of health care to VA and DOD. Furthermore, VA and DOD jointly 
agreed through the Executive Agreement that the FHCC itself was 
designed to improve cost-effectiveness of health care delivery, along 
with access and quality, for the beneficiaries of NHCGL and NCVAMC. 
Prior to the integration, FHCC officials reported that cost savings, 
mainly one-time construction savings, were one of the original 
considerations in deciding to integrate the two facilities, but FHCC 
officials told us that they are unable to determine whether these 
savings were actually realized.[Footnote 31] We have previously 
reported that cost-effectiveness information is important for ensuring 
that a program produces sufficient benefits in relation to its 
costs.[Footnote 32] Although the existing FHCC integration benchmarks 
include measures related to access and quality, they do not include 
any measures related to cost-effectiveness, and while VA and DOD 
officials said they are considering incorporating cost into the 
evaluation, they still have not determined whether to do so or what 
cost measures will be used. 

Conclusions: 

The FHCC is a 5-year demonstration that has the potential to be a 
model for future VA and DOD collaborations to deliver high-quality and 
cost-effective integrated health care services. However, the 
demonstration has notable problems. The lack of an MTF designation; 
costly delays in IT implementation and the lack of clear definitions, 
deliverables, and time frames for certain IT capabilities; and the 
lack of an overall evaluation plan for the demonstration pose 
challenges to VA, DOD, and FHCC officials. 

Because the FHCC does not have an MTF designation, FHCC officials 
continue to experience additional costs and administrative burden. The 
FHCC is unable to use DOD drug pricing arrangements for DOD 
beneficiaries, which has resulted in additional costs for the FHCC, 
and also cannot use personal services contracts without the need for a 
workaround. Because of these ongoing problems, we continue to believe 
that the Secretary of Defense should seek a legislative change to 
designate the FHCC as an MTF, even if only for the period of the 5-
year demonstration. 

Delays in the implementation of key IT components required by the 
Executive Agreement to be in place by October 2010 have resulted in 
the FHCC establishing workarounds in an effort to maintain patient 
care and safety. In some cases, these workarounds have been costly and 
inefficient, necessitating the hiring of additional staff or using 
additional staff time to do manually what the IT systems are intended 
to automate. After spending more than $122 million on IT capabilities 
needed for the FHCC, key deliverables remain delayed, resulting in 
additional costs to the FHCC. For example, officials have spent more 
than $1 million as of May 2012 on workarounds for the pharmacy 
component alone, with an additional $750,000 of spending expected 
through April 2013. Having a clear understanding of the costs 
associated with workarounds needed when IT systems are not in place is 
essential in planning any future VA and DOD integration efforts. In 
addition, the lack of clarity for time frames and deliverables for two 
other IT requirements included in the Executive Agreement may pose 
challenges for implementing them during the demonstration. 

Despite the fact that the demonstration is in its second of 5 years, 
DOD and VA have yet to develop and implement an overall evaluation 
plan. Without such a plan, decision makers at all levels lack the 
information needed to evaluate the FHCC in a transparent way that 
ensures confidence in the results. Establishing an evaluation plan, 
including relevant measures and standards, such as target scores for 
the benchmarks, as early as possible during the demonstration also 
provides FHCC officials the opportunity to make informed midcourse 
changes to better ensure the delivery of high-quality and cost-
effective care. It also will better facilitate decision making about 
whether replicating the model in other locations is prudent. Finally, 
without assessing the cost-effectiveness of the FHCC, VA and DOD 
decision makers, as well as Congress, will be unable to adequately 
assess whether the integrated health care delivery model of the FHCC 
produces sufficient benefits in relation to its costs. 

Recommendations for Executive Action: 

To clarify IT requirements within the Executive Agreement, to enable 
VA and DOD to make an informed recommendation about whether the FHCC 
should continue after the end of the demonstration, and to provide 
useful information for other integrations that may be considered in 
the future, we recommend that the Secretaries of Veterans Affairs and 
Defense take the following four actions: 

* determine the costs associated with the workarounds required because 
of delayed IT capabilities at the FHCC for each year of the 
demonstration, including the costs of hiring additional staff and of 
managing the administrative burden caused by the workarounds; 

* develop plans with clear definitions and specific deliverables, 
including time frames for two IT capabilities--documentation of 
patient care to support medical and dental operational readiness and 
outpatient appointment enhancements--and formalize these plans, for 
example, by incorporating them into the Executive Agreement; 

* expeditiously develop and agree to an evaluation plan, including the 
performance measures and standards, such as target scores, to be used 
to evaluate the FHCC demonstration, and formalize the plan, for 
example, by incorporating it into the Executive Agreement; and: 

* establish measures related to the cost-effectiveness of the FHCC's 
care and operations to be included as a part of the evaluation plan. 

Agency Comments and Our Evaluation: 

DOD and VA each provided comments on a draft of this report. In their 
comments, both agencies generally concurred with each of the four 
recommendations to the Secretaries of Defense and Veterans Affairs. 
(DOD's comments are reprinted in app. II; VA's comments are reprinted 
in appendix III.) In addition, both VA and DOD provided technical 
comments which we have incorporated as appropriate. The agencies' 
specific responses to each of our recommendations are as follows: 

* To determine the costs associated with the workarounds required 
because of delayed IT capabilities at the FHCC, DOD indicated that it 
will collaborate with VA to determine these costs. VA stated the FHCC 
will convene a workgroup to review these costs and to identify any 
additional needs associated with IT development delays. VA suggested 
changing "workaround" to "impacts and changes to business practices." 
We maintain that "workaround" is used appropriately in the context of 
this report because we use it to describe processes that are 
temporarily in place for the purpose of mitigating IT delays rather 
than permanent changes to business practices. 

* To develop plans with clear definitions and specific deliverables, 
including time frames for two IT capabilities, both VA and DOD stated 
that they are working together through their joint Interagency Program 
Office to develop and formalize these plans. DOD added that the 
Interagency Program Office will also consider how these plans relate 
to the larger effort to implement an integrated electronic health 
record. Both agencies noted that formalization of these plans does not 
require incorporation into the Executive Agreement. We offered 
amending the Executive Agreement as an example of how plans could be 
formalized and leave it to the agencies' discretion how best to do so. 

* To expeditiously develop and agree to an evaluation plan, VA and DOD 
mentioned that although a methodology and framework for a final 
evaluation have not been determined, they are tracking some measures 
of performance through the 15 integration benchmarks. In addition, VA 
stated that the JEC has directed the HEC to outline an evaluation plan 
to include analysis of personnel, logistics, resources, and regulatory 
issues. Again, both agencies noted that formalizing of the evaluation 
plan does not require incorporation into the Executive Agreement. As 
we noted above, amending the Executive Agreement is one option for how 
the plan could be formalized and the agencies may determine the most 
effective way to do so. 

* To establish measures related to the cost-effectiveness of the 
FHCC's care and operations to be included as a part of the evaluation 
plan, VA stated that it will develop a process to expedite creation of 
an evaluation plan. Both agencies concurred with the recommendation to 
include cost-related measures. 

VA provided an additional comment regarding the issue of MTF 
designation at the FHCC. They suggest that VA and DOD agree on the 
matter of seeking an MTF designation before any action is taken 
regarding establishing the FHCC as an MTF. 

We are sending copies of this report to the Secretary of Defense, 
Secretary of Veterans Affairs, and appropriate congressional 
committees. In addition, the report is available at no charge on the 
GAO website at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-7114 or draperd@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix IV. 

Signed by: 

Debra A. Draper Director, Health Care: 

List of Committees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John S. McCain: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Patty Murray: 
Chairman: 
The Honorable Richard Burr: 
Ranking Member: 
Committee on Veterans' Affairs: 
United States Senate: 

The Honorable Howard P. "Buck" McKeon: 
Chairman: 
The Honorable Adam Smith: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Jeff Mille: 
Chairman: 
The Honorable Bob Filner: 
Ranking Member: 
Committee on Veterans' Affairs: 
House of Representatives: 

[End of section] 

Appendix I: Federal Health Care Center Integration Benchmarks, by 
Number of Reported Measures: 

Integration benchmarks: 1. Patient satisfaction measures meet Federal 
Health Care Center (FHCC) targets; 
Number of individual performance measures to be reported: 2. 

Integration benchmarks: 2. Staff surveys meet FHCC targets; 
Number of individual performance measures to be reported: 2. 

Integration benchmarks: 3. Health profession trainee satisfaction 
measures meet FHCC targets; 
Number of individual performance measures to be reported: 1. 

Integration benchmarks: 4. Stakeholders Advisory Council determination 
that the FHCC meets both Department of Veterans Affairs (VA) and 
Department of Defense (DOD) missions.A]; 
Number of individual performance measures to be reported: 1. 

Integration benchmarks: 5. Clinical and administrative performance 
measures meet FHCC targets; 
Number of individual performance measures to be reported: 4. 

Integration benchmarks: 6. Patient access to care meets FHCC targets; 
Number of individual performance measures to be reported: 3. 

Integration benchmarks: 7. Evidence-based health care measures meet 
FHCC targets; 
Number of individual performance measures to be reported: 2. 

Integration benchmarks: 8. Clinical/dental productivity meets FHCC 
targets; 
Number of individual performance measures to be reported: 3. 

Integration benchmarks: 9. Information technology solution timeline is 
met and has no negative impact on patient safety; 
Number of individual performance measures to be reported: 1. 

Integration benchmarks: 10. Pre-FHCC academic and clinical research 
missions are maintained; 
Number of individual performance measures to be reported: 2. 

Integration benchmarks: 11. Navy servicemember medical readiness for 
duty meets Navy targets; 
Number of individual performance measures to be reported: 3. 

Integration benchmarks: 12. Navy advancement/retention meets Navy 
targets; 
Number of individual performance measures to be reported: 3. 

Integration benchmarks: 13. Successful annual GAO review; 
Number of individual performance measures to be reported: 1. 

Integration benchmarks: 14. Validation of FHCC fiscal reconciliation 
model by an annual independent audit; 
Number of individual performance measures to be reported: 1. 

Integration benchmarks: 15. Satisfactory facility and clinical 
inspection, accreditation, and compliance outcomes from several 
external oversight/groups, such as VA and DOD Offices of the Inspector 
General and The Joint Commission[B]; 
Number of individual performance measures to be reported: 9. 

Integration benchmarks: Total; 
Number of individual performance measures to be reported: 38. 

Source: GAO. 

[A] The Stakeholders Advisory Council is composed of members from 
various organizations representing FHCC interests, including a local 
government representative, as well as officials from TRICARE and 
nearby VA medical facilities located in Hines, Illinois, and 
Milwaukee, Wisconsin. It provides feedback on how well the FHCC is 
meeting customers' needs and whether the FHCC is meeting VA and DOD 
missions. 

[B] The Joint Commission is an independent organization that accredits 
and certifies health care organizations and programs in the United 
States. 

[End of table] 

[End of section] 

Appendix II: Comments from the Department of Defense: 

Note: GAO received DOD's letter commenting on a draft of this report 
on June 11, 2012. 

The Assistant Secretary of Defense: 
Health Affairs: 
1200 Defense Pentagon: 
Washington, DC 20301-1200: 

Ms. Debra Draper: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Draper: 

This is the Department of Defense's (DoD) response to the Government 
Accountability Office's (GAO) draft report GAO-12-669, "VA/DOD Federal 
Health Care Center: Costly Information Technology Delays Continue and 
Evaluation Plan Lacking," dated May 11, 2012 (GAO Code - 290987). The 
Department appreciates the opportunity to comment on the draft report. 

The Department generally concurs with each of the four 
recommendations. Also enclosed arc specific. technical comments 
regarding details contained in the body of the report that the
Department believes will add clarity and some instances of improved 
accuracy. 

Please direct any questions to the points of contact on this matter, 
Mr. Kenneth E. Cox (Functional) and Mr. Gunther J. Zimmerman (Audit 
Liaison). Mr. Cox may be reached at (703) 681-4258, or 
Kenneth.Cox@tma.osd.mil. Mr. Zimmerman may be reached at (703) 681-
3492, ext. 4065, or Gunther.Zimmerman@tma.osd.mil. 

Sincerely, 

Signed by: 

Jonathan Woodson, M.D. 

Enclosures: 

1. Overall Comments. 
2. Technical Comments. 
3. Interagency Program Office Comments. 
4. Department of the Navy Comments. 

[End of letter] 


Government Accountability Office Draft Report — Dated May 11, 2011
(GAO Code - 290987): 

"VA/DOD Federal Health Care Center: Costly Information Technology Delays
Continue and Evaluation Plan Lacking" 

Department of Defense Comments: 

Recommendation 1: The GAO recommends that the Secretaries of Veterans 
Affairs (VA) and Defense determine the costs associated with the 
workarounds required due to delayed Information Technology (IT) 
capabilities at the Federal Health Care Center (MCC) for each year of 
the demonstration, including the costs of hiring additional staff and 
of managing the administrative burden due to workarounds. 

DoD RESPONSE: The Department of Defense (DoD) concurs with the 
recommendation to determine the costs associated with workarounds 
required as a result of delays in the implementation of specific IT 
capabilities at the James A. Lovell FHCC. The costs associated with 
the Orders Portability Pharmacy workaround are documented in the GAO's 
report, but DoD will collaborate with VA to determine the cost of 
other IT workarounds, if any. 

Recommendation 2: The GAO recommends that the Secretaries of VA and 
DoD develop plans with clear definitions and specific deliverables 
including timeframes for two IT capabilities—documentation of patient 
care to support medical and dental operational readiness and 
outpatient appointment enhancements—and formalize these plans such as 
by incorporating them into the Executive Agreement for the DoD-VA 
Medical Facility Demonstration Project at the FHCC. 

DoD Response: DoD concurs with the recommendation to develop plans 
with clear definition and specific deliverables for the two IT 
capabilities and formalize these plans. Consistent with its charter, 
the VA/DoD Interagency Program Office (IPO) is working with DoD and VA 
to develop and formalize plans with clear definitions and specific 
deliverables including timeframes for two IT capabilities 
(documentation of patient care to support medical and dental 
operational readiness and outpatient appointment enhancements). 
Formalization of these plans does not require incorporation into the 
Executive Agreement. 

Additionally, IPO will work with VA (Office of Information and 
Technology and the Veterans Health Administration), DoD, and FHCC 
Officials to develop plans with clear definitions, specifications, 
deliverables, and timeframes for IT capabilities and how those plans 
relate to the integrated electronic health record (iEFIR) effort. The 
anticipated completion date is December 2012. 

Finally, as it was previously reported, it is anticipated that FHCC 
products will support documentation of patient care with regard to 
medical and dental operational readiness, and functional 
representatives will assess this capability as the work environment 
evolves at FHCC. 

See responses to GAO's Question #2 received January 25, 2012, and 
Question 116 received February 24, 2012. 

Recommendation 3: The GAO recommends that the Secretaries of VA and 
DoD expeditiously develop and agree to an evaluation plan, including 
the performance measures and standards, such as target scores, to be 
used to evaluate the FHCC's demonstration, and formalize the plan, 
such as by incorporating them into the Executive Agreement. 

DoD Response: DoD concurs with the recommendation to develop an 
evaluation plan and to formalize that plan. Formalization of this plan 
does not require incorporation into the Executive Agreement. 

The Executive Agreement states: The Navy Bureau of Medicine and 
Surgery (BUMED), Navy Medicine East, and VA have agreed on Benchmarks 
to define the degree of integration success (Section VI, J). 
Attachment A Section 7 (below) lists the Benchmarks. 

The FHCC established the baseline for these measures prior to 
integration and established control limits for each measure. FHCC 
staff evaluate each month whether the measures are better, worse, or 
unchanged since enacting the Executive Agreement. 

Additionally, DoD has contracted with the Institute of Medicine (IOM) 
to study the collaboration efforts at the FHCC. The IOM will evaluate 
whether the integrated DoD and Veterans Administration health care 
facility in North Chicago is more beneficial to DoD and VA in serving 
the needs of their eligible populations than their independent 
facilities. DoD and VA are engaged in efforts to determine lessons 
learned and cultural integration with the assistance of the
VA National Center for Organizational Development. 

Finally, while a framework and methodology for the final evaluation 
and report have not been determined, there are currently evaluation 
criteria in place and on-going in the following areas: 

1. Patient satisfaction measures meet VA and DoD benchmarks. 

2. Maintenance of Medical Individual Accounts for Recruits at less 
than five percent; maintain Training Center Support Students Not Under 
Instruction for medical reasons at less than two percent; Individual 
Medical Readiness — indeterminate status for active duty less than 
five percent. 

3. Stakeholders Advisory Council determination that the FHCC meets 
both DoD and VA missions. 

4. Successful annual Comptroller General review. 

5. Validation of fiscal reconciliation report by annual independent 
audit. 

6. VA clinical and administrative performance measures exceed mean for 
all VA Medical Centers. 

7. Meet all access to care standards. 

8. Evidence-Based Health Care measures meet or exceed VA and DoD mean. 

9. Satisfactory clinical and facility inspection outcomes from 
external oversight/accreditation groups, including but not limited to: 
a. Joint Commission; 
b. VA Office of Inspector General (OIG); 
c. DoD OIG; 
d. VA Office of the Medical Inspector; 
e. BU MED Medical Inspector General; 
f. American Association of Blood Banks; 
g. Food and Drug Administration; 
h. College of American Pathologists; 
i. Occupational Safety and Health Administration. 

10. Officer promotion/retention and enlisted advancement/retention 
meet or exceed Department of Navy means. 

11. Information Management (IM)/IT implementation timeline met and no 
negative impact on patient safety. 

12. Staff satisfaction and other appropriate measures identified as VA 
and DoD benchmarks. 

13. Relative Value Unit/Relative Weighted Product/Dental Weighted 
Value production meets Business Plan targets. 

14. Maintain pre-FHCC academic and clinical research missions. 

15. Trainee Satisfaction as measured by the Learner Perception Survey. 

Recommendation 4: The GAO recommends that the Secretaries of VA and 
DoD establish measures related to the cost-effectiveness of the FHCC's 
care and operations to be included as a part of the evaluation plan. 

DoD Response: DoD concurs with the recommendation to include cost-
effectiveness measures in the evaluation plan. 

[End of enclosure] 

Department of The Navy
Bureau of Medicine and Surgery: 
Washington, DC: 

June 11, 2012: 

Memorandum for Assistant Secretary of Defense (Health Affairs): 

Subject: Draft Report on VA/DoD Federal Health Care Center: Costly 
Information Technology Delays Continue and Evaluation Plan Lacking 
dated May 2012 (GAO Code 290987). 

Thank you for the opportunity to review and comment on the GAO Draft 
Report on VA/DoD Federal Health Care Center: Costly Information 
Technology Delays Continue and Evaluation Plan Lacking dated May 2012. 
Navy Medicine generally concurs with each of the four recommendations; 
however we do not agree that the detailed information Technology and
Evaluation Plans require incorporation into the Executive Agreement to 
ensure their execution. Enclosed are comments as requested regarding 
details contained in the draft report. 

My point of contact for this matter is Ms. Tamara Rollins at (202) 762-
3520 or Tamara.Rollins@med.navy.mil. 

Signed by: 

D. L. Styles: 
Deputy Chief, Medical Operations, Acting: 

Attachments: As stated: 

[End of letter] 

Government Accountability Office: 

Draft Report (GAO Code - 290987) – Dated May 18, 2011: 

"VA/DOD Federal Health Care Center: Costly Information Technology Delays
Continue and Evaluation Plan Lacking" 

Navy Medicine Comments: 

Recommendation 1: The Government Accountability Office (GAO) 
recommends the Secretaries of Defense and Veterans Affairs determine 
the costs associated with the workarounds required due to delayed IT 
capabilities at the FHCC for each year of the demonstration, including 
the costs of hiring additional staff and of managing the 
administrative burden due to workarounds. 

Navy Response: Navy Medicine concurs with the recommendation to 
determine the costs associated with workarounds required as a result 
of delays in the implementation of specific IT capabilities at the 
FHCC. The costs associated with the Orders Portability Pharmacy 
workaround are documented in the GAO's report. 

Recommendation 2: GAO recommends that the Secretaries of Defense and 
Veteran Affairs develop plans with clear definitions and specific 
deliverables including timeframes for two IT capabilities—
documentation of patient care to support medical and dental 
operational readiness and outpatient appointment enhancements—and 
formalize these plans such as by incorporating them into the Executive 
Agreement. 

Navy Response: Navy Medicine concurs with the recommendation to 
develop plans with clear definition and specific deliverables for the 
two IT capabilities; however we do not concur that this plan needs to 
be incorporated into the Executive Agreement. 

Recommendation 3: GAO recommends that the Secretaries of Defense and 
Veteran Affairs expeditiously develop and agree to an evaluation plan, 
including the performance measures and standards, such as target 
scores, to be used to evaluate the FHCC demonstration, and formalize 
the plan, such as by incorporating them into the Executive Agreement. 

Navy Response: Navy Medicine concurs with the recommendation to 
develop an evaluation plan, however does not concur that the detailed 
evaluation warrant being added into the Executive Agreement. 

The Executive Agreement states: BUMED, Navy Medicine East, and VA have 
agreed on Benchmarks to define the degree of integration success 
(Section VI, J). 

The FHCC established the baseline for these measures prior to 
integration and established control limits for each measure. FHCC 
staff review the measures monthly and evaluate each to determine 
whether the measures are better, worse or unchanged since enacting the 
Executive Agreement. 

The Institute of Medicine (TOM) has also been contracted by OASD/HA to 
study the collaboration efforts at the FHCC. The IOM will evaluate 
whether the integrated Department of Defense and Veterans 
Administration (DoD/VA) health care facility in North Chicago is more 
beneficial to DoD and VA in serving the needs of their eligible 
populations than their independent facilities. 

Recommendation 4: GAO recommends that the Secretaries of Defense and 
Veteran Affairs establish measures related to the cost-effectiveness 
of the FHCC's care and operations to be included as part of the 
evaluation plan. 

Navy Response: Navy Medicine concurs with the recommendation to 
include cost-effectiveness measures in the evaluation plan. 

[End of section] 

Appendix III: Comments from the Department of Veterans Affairs: 

Department of Veterans Affairs: 
Washington DC, 20420: 

June 11, 2012: 

Ms. Debra Draper: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Draper: 

The Department of Veterans Affairs (VA) has reviewed the Government 
Accountability Office's (GAO) draft report, "VA/DOD Federal Health 
Care Center: Costly Information Technology Delays Continue and 
Evaluation Plan Lacking" (GAO-12-669) and generally concurs with GAO's 
four recommendations to the Department. 

The enclosure specifically addresses GAO's four recommendations and 
provides an action plan for each and provides general and technical 
comments. VA appreciates the opportunity to comment on your draft 
report. 

Sincerely, 

Signed by: 
 
John R. Gingrich: 
Chief of Staff: 

Enclosures: 

[End of letter] 

Enclosure: 

Department of Veterans Affairs (VA) Comments to Government 
Accountability Office (GAO) Draft Report: VA/DOD Federal Health Care 
Center: Costly Information Technology Delays Continue and Evaluation 
Plan Lacking (GA0-12-669): 

GAO Recommendation: To clarify IT requirements within the Executive 
Agreement, to enable VA and DOD to make an informed decision about 
whether the FHCC should continue after the end of the demonstration, 
and to provide useful information for other integrations that may be 
considered in the future, we recommend the Secretaries of
Veterans Affairs and Defense take the following four actions: 

Recommendation 1: determine the costs associated with the workarounds 
required due to delayed IT capabilities at the FHCC for each year of 
the demonstration, including the costs of hiring additional staff and 
of managing the administrative burden to workarounds. 

VA Response: Concur with comments. The Veterans Health Administration 
(VHA) suggests that the GAO not use the term "workarounds" and instead 
refer to what the Federal Health Care Center (FHCC) has implemented as 
"impacts and changes to business practices." The term workaround is an 
incomplete portrayal of the efforts VA has made. Addressing what 
business practices were changed and the impact of these changes 
ensures a more complete and accurate capture of the costs of delaying 
IT capabilities. 

VA concurs with the recommendation to determine the costs associated 
with the impacts and changes to business practices due to delayed 
information technology (IT) development and the operational impact of 
testing and deploying new IT solutions. As noted in the GAO draft 
report on pages 16 and 17, the FHCC has already allocated additional 
funding to support staff needed for the pharmacy and laboratory 
processes due to delays in IT development. The need for these staff 
was determined by a multidisciplinary group, who focused on how to 
ensure patient safety without the integrated record. Also, the FHCC 
has dedicated approximately 23 full-time equivalents (FTE) to support 
the operational impacts, as stated in the report. The FHCC will 
maintain the additional resources at the site until the IT solutions 
are in place and discussions are underway with the VHA Chief Financial 
Officer (CFO) and the Department of Navy's (DON) Bureau of Medicine 
and Surgery (BUMED) Comptroller to determine how funding for these 
resources will be addressed. 

Because the total costs of the impacts and changes to business 
practices have not been tracked previously and to ensure that all 
potential liabilities associated with IT delays are identified, the 
FHCC will convene a workgroup under the authority of the FHCC Advisory 
Board. The workgroup will consist of appropriate subject matter experts
(SME) as well as front line clinicians to identify any further gaps 
that may exist beyond the pharmacy and laboratory arenas associated 
with IT development delays and operational impacts, focusing on what 
needs to be done to ensure patient safety. The workgroup will also 
review and validate the total costs of implementing changes to
business practices as determined and tracked by the FHCC. The FHCC 
Advisory Board will report to the Health Executive Committee (HEC) no 
later than December 31, 2012, and will provide a plan on the level of 
additional staff required by the FHCC, as well as a plan for funding 
that staff. 

Recommendation 2: develop plans with clear definitions and specific 
deliverables including timeframes for two IT capabilities—-
documentation of patient care to support medical and dental 
operational readiness and outpatient appointment enhancements—-and 
formalize these plans such as by incorporating them into the Executive 
Agreement. 

VA Response: VA concurs with the recommendation to develop plans with 
clear definition and specific deliverables for the two IT 
capabilities; however, VA does not concur that this plan needs to be 
incorporated into the Executive Agreement (EA). Consistent with its 
charter, the Interagency Program Office (IPO) is working with
Department of Defense (DoD) and VA to develop and formalize plans with 
clear definitions and specific deliverables, including timeframes for 
two IT capabilities (documentation of patient care to support medical 
and dental operational readiness and outpatient appointment 
enhancements). The anticipated completion date is December 2012. 

Recommendation 3: expeditiously develop and agree to an evaluation 
plan, including the performance measures and standards, such as target 
scores, to be used to evaluate the FHCC demonstration, and formalize 
the plan, such as incorporating it into the Executive Agreement. 

VA Response: VA concurs with the recommendation to expeditiously 
develop and agree to an evaluation plan however, VA does not concur 
that this plan needs to be incorporated into the EA. It is important 
to note that the FHCC EA includes benchmarks to define the degree of 
integration success (Section VI, J, Attachment A, Section 7). 

These benchmarks are included as Attachment A of this action plan.
The FHCC established the baseline for these measures prior to 
integration and established control limits for each measure. FHCC 
staff evaluates these measures monthly to determine whether the 
results are better, worse, or unchanged since enacting the EA. 

In addition to these benchmark reviews, DoD has contracted with the 
Institute of Medicine to study the collaboration efforts at the FHCC. 
With assistance from VA's National Center for Organizational 
Development, DoD and VA are identifying lessons learned from the 
organizational and cultural integration. 

While a framework and methodology for the final evaluation and report 
have not been determined, there are currently evaluation criteria in 
place, and on-going efforts continue. It is also important to note 
that because this is a demonstration pilot, VA and DoD have been 
gathering important data and information about topics that were not 
identified or anticipated at the start of the project. This dynamic 
process has required flexibility, mindfulness, and agility in order to 
recognize issues and react effectively. The opportunity to react 
quickly has been important in order to gather valuable insights about 
how to successfully establish an integrated facility. These additional 
lessons learned may include areas such as culture, governance, and new 
business practices. 

In addition to this ongoing context for evaluation, the VA/DoD Joint 
Executive Committee (JEC) has directed the VA/DoD Health Executive 
Council (HEC) to prepare the outline for an evaluation plan that will 
be used to develop the recommendations for the report to Congress. The 
plan will identify and analyze those personnel, logistics, resourcing, 
and regulatory issues that apply to FHCC and will be used to assist the
Secretaries in making decisions concerning similar future integrated 
facilities. 

Recommendation 4: establish measures related to the cost-effectiveness 
of the FHCC's care and operations to be included as a part of the 
evaluation plan. 

VA Response: Concur with comment. VA will develop a process involving 
VHA, the FHCC, and the VA Office of Policy and Planning to expedite 
developing and establishing a more formalized evaluation plan. 

General Comments: 

Page 12, paragraph 3: Fiscal Issues/Workload Data: GAO indicates that 
the operating plan does not include workload data. The following 
outlines how the FHCC is collecting and using these data. 

* The FHCC budget call workbooks (Attachment B) reflect that workload 
data is being captured and reported in VA's Decision Support System. 
These data are then used in determining budget amounts. Unfortunately, 
the FHCC only had one year of data to work with for the fiscal year 
(FY) 2013 budget call. Because this budget submission is so early in 
the year, the FHCC cannot capture the previous year workload data. FY 
2011 was the base year. The FY 2014 budget call workbooks will reflect 
two years of workload data. In the future, more workload data will be 
available for analysis and to assist in the budgeting process. 

* GAO's report says that the FHCC's "operating plan does not include 
workload data." This is true from the perspective that the operating 
plan only requires the FHCC to report dollars needed each month to 
operate the facility. While neither the Navy nor VA's operating plan 
requires workload data be reported, the dollars reported on the 
operating plans do include an analysis of the workload data as 
described previously. 

Page 16, Consults Component: The business requirements document for 
consults was updated in February 2012 to reflect a year's worth of 
lessons learned and to incorporate local changes to the business 
process as a result of those lessons learned. The consults IT project 
is scheduled to deliver its first customer-facing capability in
August 2012, (orders) and finish in February 2013 (results). 

Page 16, Radiology and Laboratory Components: Originally the radiology 
and laboratory orders portability issues were being worked as one 
project. It soon became apparent that the laboratory orders 
portability was much more complicated than the radiology orders 
portability, and the mapping of laboratory orders and results between 
electronic health records was a massive under taking. The local 
leadership decided to focus on radiology because the daily work load 
was much lighter for radiology compared to the laboratory, e.g. 
processing counts are 500 radiology orders vice 10,000 laboratory 
orders per day. Radiology was delivered in June 2011. The technology 
used to develop the radiology solution was then leveraged to build the 
laboratory solution. 

Page 17, Military Treatment Facility: The report states that, "Lack of 
an MTF designation for the FHCC continues to pose implementation 
challenges." GAO provides examples about access to DOD's drug pricing 
and use of personal service contracts. Although GAO indicates that a 
military treatment facility (MTF) designation is important to address 
the challenges the FHCC faces and would set a precedent for future VA 
and DOD integration to help make the integration process smoother. 

VA suggests that no action regarding a military treatment facility 
designation occur without a joint agreement between the Department of 
Veterans Affairs and the Department of Defense. 

Attachment A: 

Integration Benchmarks (Executive Agreement, Attachment A, Section 7): 

1. Patient satisfaction measures meet Department of Veterans Affairs 
(VA) and Department of Defense (DoD) benchmarks. 

2. Maintenance of Medical Individual Accounts for Recruits at less 
than five percent; maintain Training Center Support Students Not Under 
Instruction for medical reasons at less than two percent; Individual 
Medical Readiness — indeterminate status for active duty less than 
five percent. 

3. Stakeholders Advisory Council (SAC) determination that the Federal 
Health Care Center (FHCC) meets both DoD and VA missions. 

4. Successful annual Comptroller General review. 

5. Validation of fiscal reconciliation report by annual independent 
audit. 

6. VA clinical and administrative performance measures exceed mean for 
all VA medical centers (VAMC). 

7. Meet all access to care standards. 

8. Evidenced Based Health Care measures meet or exceed VA and DoD mean. 

9. Satisfactory clinical and facility inspection outcomes from 
external oversight/accreditation groups, including but not limited to: 
a. Joint Commission; 
b. VA Office of Inspector General (OIG); 
c. DoD OIG; 
d. VA Office of the Medical Inspector; 
e. Navy Bureau of Medicine and Surgery (BUMED) Medical Inspector 
General (MEDIG); 
f. American Association of Blood Banks; 
g. United States Food and Drug Administration (FDA); 
h. VA GIG Combined Assessment Program (CAP) Reviews; 
i. Occupational Safety and Health Administration. 

10. 0fficer promotion/retention and enlisted advancement/retention 
meet or exceed Department of Navy (DON) means. 

11. Information Management/Information Technology (IM/IT) 
implementation timeline met and no negative impact on patient safety. 

12. Staff satisfaction and other appropriate measures identified VA 
and DoD as benchmarks. 

13. Relative Value Unit (RVU)/Relative Weighted Product RVU/RWP/Dental
Weighted Value production meets Business Plan targets. 

14. Maintain pre FHCC academic and clinical research missions. 

15. Trainee Satisfaction as measured by the Learner Perception Survey. 

Captain James A. Lovell: 
Federal Health Care Center: 
Fiscal Year 2013: 
Budget Call: 
Department Summary Worksheet: 
 
Directorate: Patient Care. 
Department: Dept of Amb Med Care. 
Division: Primary Care. 
Section: Internal Medicine. 

Amb Med All Other (60): 
APPN: 0169. 
FCP: 2123. 

SAG/FSF (DOD): M9/YR. 

Spending History: 

FY10 (N/A): [Empty]. 

FY11 (EOY wo/logistics): 
1st quarter: $0; 
2nd quarter: $74,443; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $74,443. 
 
FY12 Plan (w/logistics): 
1st quarter: $117,507; 
2nd quarter: $3,360; 
3rd quarter: $3,359; 
4th quarter: $3,359; 
Total: $127,585. 

FY 2012 - Funding Requested: 

Supplies: 

Logistics - FY12 (ref): 
1st quarter: $3,360; 
2nd quarter: $3,360; 
3rd quarter: $3,359; 
4th quarter: $3,359; 
Total: $13,438. 

Logistics - Office FY13: 
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

Logistics - Medical FY13: 
1st quarter: $3,360; 
2nd quarter: $3,360; 
3rd quarter: $3,359; 
4th quarter: $3,359; 
Total: $13,438. 

Approved: 
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

Non-Logistics - FY12 (ref): 
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

Non-Logistics - Office FY13: 
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

Non-Logistics - Medical FY13: 
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

Approved: 
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

Contracts: 

Contracts - FY12 (ref): 
1st quarter: $114,147; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $114,147. 

Contracts - FY13:
1st quarter: $104,208; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $104,208. 

Approved: 
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

Fee basis: 

Contracts - FY12 (ref): 
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

Contracts - FY13:
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

Approved: 
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

FY 2013 - Total Requested: 
1st quarter: $107,558; 
2nd quarter: $3,360; 
3rd quarter: $3,359; 
4th quarter: $3,359; 
Total: $117,645. 

FY 2013 - Total Approved: 
1st quarter: $0; 
2nd quarter: $0; 
3rd quarter: $0; 
4th quarter: $0; 
Total: $0. 

Point of Contact for Budget Call issues: (required field):  

Department Head: 
First Name: 
Last Name: 
Rank: 
Phone Number: 
      
Budget Preparer: 
First Name: 
Last Name: 
Rank: 
Phone Number: 

Workload (DSS): 

FY10: 
1st quarter: 0; 
2nd quarter: 0; 
3rd quarter: 0; 
4th quarter: 0; 
Total: 0. 

FY11: 
1st quarter: 6,694; 
2nd quarter: 8,245; 
3rd quarter: 9,951; 
4th quarter: 11,073; 
Total: 35,963. 

FY12: 
1st quarter: 0; 
2nd quarter: 0; 
3rd quarter: 0; 
4th quarter: 0; 
Total: 0. 

Percent variance: 0.00%. 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Debra A. Draper, (202) 512-7114 or draperd@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Marcia A. Mann, Assistant 
Director; Jill K. Center; Regina Lohr; and Rasanjali Wickrema made key 
contributions to this report. Lisa A. Motley provided legal support, 
and Jennie F. Apter assisted in message and report development. 

[End of section] 

Footnotes: 

[1] The Veterans' Administration and Department of Defense Health 
Resources Sharing and Emergency Operations Act was enacted in 1982. 
See 38 U.S.C. § 8111. The Department of Veterans Affairs was 
previously known as the Veterans Administration. 

[2] VA beneficiaries include veterans of military service and certain 
dependents and survivors; DOD beneficiaries include active duty 
servicemembers and their dependents, medically eligible National Guard 
and Reserve servicemembers and their dependents, and military retirees 
and their dependents and survivors. Active duty personnel include 
Reserve component members on active duty for at least 30 days. 

[3] See Pub. L. No. 111-84, § 1701(d), 123 Stat. 2190, 2568 (2009). 

[4] The NHCGL includes a main clinic and three branch clinics that 
provide health care services to Navy recruits, as well as active duty 
personnel and their families. 

[5] In addition to veterans and DOD beneficiaries, the FHCC reported 
providing care to approximately 2,000 other patients, including FHCC 
employees. 

[6] NDAA 2010--Pub. L. No. 111-84, § 1701(e), 123 Stat. 2190, 2568 
(2009)--required GAO to report annually beginning in 2011; NDAA 2012--
Pub. L. No. 112-81, § 1098, 125 Stat. 1298, 1609 (2011)--amended that 
reporting requirement to include reports in 2011, 2012, and 2015. 

[7] GAO, VA and DOD Health Care: First Federal Health Care Center 
Established, but Implementation Concerns Need to Be Addressed, 
[hyperlink, http://www.gao.gov/products/GAO-11-570] (Washington, D.C.: 
July 19, 2011). 

[8] The 12 integration areas are (1) governance structure, (2) access 
to health care at the FHCC, (3) research, (4) contracting, (5) quality 
assurance, (6) integration benchmarks, (7) property (i.e., 
construction and physical plant management), (8) reporting 
requirements, (9) workforce management and personnel, (10) contingency 
planning, (11) fiscal authority, and (12) information technology. 

[9] According to DOD policy, an MTF is a medical facility, owned and 
operated by DOD, established for the purpose of furnishing medical 
care, dental care, or both to eligible individuals. 

[10] In the area of financial systems, we did not perform a financial 
audit of the FHCC, but rather assessed its progress in establishing 
and operating a model for joint funding. 

[11] See [hyperlink, http://www.gao.gov/products/GAO-11-570], and GAO, 
Electronic Health Records: DOD and VA Should Remove Barriers and 
Improve Efforts to Meet Their Common System Needs, [hyperlink, 
http://www.gao.gov/products/GAO-11-265] (Washington, D.C.: Feb. 2, 
2011). 

[12] GAO, Limitations in DOD's Evaluation Plan for EEO Complaint Pilot 
Program Hinder Determination of Pilot Results, [hyperlink, 
http://www.gao.gov/products/GAO-08-387R] (Washington, D.C.: Feb. 22, 
2008), and Tax Administration: IRS Needs to Strengthen Its Approach 
for Evaluating the SRFMI Data-Sharing Pilot Program, [hyperlink, 
http://www.gao.gov/products/GAO-09-45] (Washington, D.C.: Nov. 7, 
2008). 

[13] The other nine joint venture locations are Anchorage, Alaska; 
Fairfield, California; Key West, Florida; Honolulu, Hawaii; Las Vegas, 
Nevada; Albuquerque, New Mexico; Biloxi, Mississippi; Charleston, 
South Carolina; and El Paso, Texas. Charleston became the newest joint 
venture when it was added in 2011. 

[14] The Consolidated Appropriations Act, 2012 provided funds for VA 
and DOD to transfer to the Joint Fund for fiscal year 2012. Pub. L. 
No. 112-74, div. A, § 8104, div. H, §§ 224, 225, 125 Stat. 786, 830-
31, 1158 (2011). Prior to the enactment of the Department of Defense 
and Full-Year Continuing Appropriations Act, 2011, the FHCC received 
funding from VA and DOD through an alternative funding mechanism 
outlined in the Executive Agreement. 

[15] This 3,100-employee figure is an FHCC estimate including civilian 
employees, active duty servicemembers, and contractors. 

[16] See [hyperlink, http://www.gao.gov/products/GAO-11-570]. 

[17] The Commission on Accreditation of Rehabilitation Facilities and 
The Joint Commission are independent organizations that accredit 
health care organizations and programs. 

[18] The FHCC is required by the Executive Agreement to review its 
policy on professional practices, which deals with staff certification 
and training, 1 year after the FHCC became operational to determine if 
it meets the Navy and FHCC mission requirements. 

[19] The FHCC was not able to operate the Joint Fund until funds had 
been authorized and appropriated for VA and DOD to transfer into the 
Joint Fund, which occurred in April 2011. Pub. L. No. 112-10, div. A, 
§ 8107, div. B, §§ 2017, 2018, 125 Stat. 38 (2011). 

[20] VA and DOD rely on separate electronic health record systems to 
create, maintain, and manage patient health information. 

[21] See [hyperlink, http://www.gao.gov/products/GAO-11-570]. 

[22] The FHCC processes nearly 40,000 Navy recruits each year, 
ensuring that each recruit is medically ready for service. 

[23] [hyperlink, http://www.gao.gov/products/GAO-08-387R] and 
[hyperlink, http://www.gao.gov/products/GAO-09-45]. 

[24] [hyperlink, http://www.gao.gov/products/GAO-09-45]. 

[25] GAO, Results-Oriented Government: Practices That Can Help Enhance 
and Sustain Collaboration among Federal Agencies, [hyperlink, 
http://www.gao.gov/products/GAO-06-15] (Washington, D.C.: Oct. 21, 
2005). 

[26] The 15 integration benchmarks comprise 38 individual performance 
measures. For example, the patient satisfaction benchmark is measured 
using 2 performance measures--a VA measure and a DOD measure based on 
separate surveys that assess beneficiaries' experience with care at 
the FHCC. 

[27] In response to a recommendation we made in our July 2011 report, 
FHCC officials have made changes to this tool. Specifically, we raised 
concerns regarding the accuracy and transparency of the information 
generated by this reporting tool and also about the ability of FHCC's 
use of a single monthly summary score to provide a meaningful gauge of 
success. We were particularly concerned about the use of this summary 
score given that VA and DOD had not established specific targets to 
define success. In response to our concerns, officials have (1) 
corrected a calculation error to make the summary score more accurate 
and (2) altered their methodology to ensure that the summary score 
better reflects performance rather than fluctuations caused by varied 
data collection time frames, as had occurred previously. See 
[hyperlink, http://www.gao.gov/products/GAO-11-570]. 

[28] The Institute of Medicine expects to publish the results of this 
study in the fall of 2012. 

[29] Officials explained that corpsmen--enlisted personnel who receive 
advanced training to provide treatment and administer medications--
must be able to fully develop skills at the FHCC that they will need 
to be ready for service in the field when deployed, such as medical 
skills needed in combat areas. 

[30] Federal Accounting Standards Advisory Board, Statement of Federal 
Financial Accounting Standards 4: Managerial Cost Accounting Standards 
and Concepts (Washington, D.C.: July 1995). 

[31] In a 2009 report, FHCC officials projected that the integration 
would result in one-time cost savings of $67 million by avoiding the 
need to build a new naval hospital and recurring annual cost savings 
of $22.3 million by reducing operating costs and staff size when 
compared to the projected costs for NCVAMC and NHCGL separately. They 
have contracted with the Center for Naval Analyses to conduct an 
assessment of the costs associated with the FHCC's integration, 
including past and current costs through the early stages of the 
demonstration. This assessment is also intended to document any cost 
savings associated with FHCC patient care. 

[32] [hyperlink, http://www.gao.gov/products/GAO-09-45]. 

[End of section] 

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