This is the accessible text file for GAO report number GAO-08-399 
entitled 'VA Health Care: Additional Efforts to Better Assess Joint 
Ventures Needed' which was released on March 28, 2008.

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

Report to the Ranking Member, Committee on Veterans' Affairs, U.S. 
Senate: 

United States Government Accountability Office: 
GAO: 

March 2008: 

VA Health Care: 

Additional Efforts to Better Assess Joint Ventures Needed: 

GAO-08-399: 

GAO Highlights: 

Highlights of GAO-08-399, a report to the Ranking Member, Committee on 
Veterans’ Affairs, U.S. Senate. 

Why GAO Did This Study: 

The Department of Veterans Affairs (VA) and the Department of Defense 
(DOD) have a long history of partnering to achieve more cost-effective 
use of health care resources. Their partnerships have evolved to 
include joint ventures—joint efforts to construct or share medical 
facilities. VA has maintained eight joint ventures with DOD across the 
country. VA has also developed partnerships, or affiliations, with 
university medical schools to obtain health care services for veterans 
and provide training to medical residents. VA has not entered into a 
joint venture with an academic affiliate to date. However, several 
proposals for such joint ventures have surfaced in the last decade. 

This congressionally requested report discusses the (1) potential 
benefits and concerns associated with joint ventures and the extent to 
which they are documented and measured, (2) lessons learned from 
existing and proposed VA joint ventures, and (3) steps VA has taken to 
evaluate proposed joint ventures. To address these issues, GAO 
conducted site visits to and interviews with officials from all 
existing and proposed joint venture sites. 

What GAO Found: 

VA and DOD officials identified a number of potential benefits and 
concerns associated with joint ventures, but they have not routinely or 
comprehensively documented and measured them. Among the potential 
benefits, VA and DOD officials and academic affiliate representatives 
cited improved access to care, lower or avoided costs, and improved 
training opportunities. While the identified benefits are many, these 
officials and representatives also cited a number of concerns 
associated with joint ventures, such as potential conflicts of missions 
and cultures, a loss of organizational identity and control, staffing 
uncertainties, and financial risks. Although able to provide anecdotal 
information of the benefits and concerns associated with joint 
ventures, officials at the joint ventures do not use performance 
measures to routinely or comprehensively document and assess the 
outcomes of the joint ventures. Without such efforts, it is difficult 
to know to what extent these benefits and concerns have materialized. 
VA also does not use performance measures at the department level to 
determine what is being achieved through the joint ventures—thereby 
making it difficult to determine the overall outcomes of the joint 
ventures and to hold joint venture partners accountable for results. 

Officials from VA and DOD and representatives from academic affiliates 
identified several lessons they have learned from their experiences 
with the existing and proposed joint ventures. These lessons include 
the importance of establishing joint committees to work through issues, 
communicating frequently with their partners, securing leadership buy-
in and support at all levels, developing contingency plans, allowing 
adequate time to implement change, and establishing clear roles and 
responsibilities. For example, at most VA-DOD joint venture sites, 
officials have created jointly staffed committees to tackle specific 
issues, such as clinical, financial, and information management. Also, 
in New Orleans, Louisiana, VA and its academic affiliate signed a 
memorandum of understanding that, among other things, identifies the 
roles and responsibilities of the parties involved in the proposed 
joint venture negotiations. 

VA has taken steps to enhance its process for evaluating proposed joint 
ventures, but additional efforts are warranted. In response to our 
previous recommendations, VA developed and issued criteria for 
evaluating joint venture proposals in November 2007. In addition, VA 
established working groups in Charleston, South Carolina, and New 
Orleans to examine joint venture proposals with academic affiliates. 
However, VA’s criteria for evaluating joint venture proposals are not 
sufficiently specific, in terms of both the definition and the 
application of the criteria. As a result, VA’s evaluations of joint 
venture proposals could be inconsistent and, therefore, may not serve 
as a reliable guide for federal investments in joint ventures. In 
addition, the criteria are not tailored to take into account 
differences in prospective joint venture partners to ensure that VA 
applies the appropriate level of review and scrutiny to proposals. 

What GAO Recommends: 

GAO is recommending that the VA Secretary develop departmental 
performance measures for assessing joint venture outcomes and more 
specific criteria for evaluating joint venture proposals. VA generally 
agreed with GAO’s findings and recommendations. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-399]. For more 
information, contact Randall Williamson at (202) 512-2834 or 
williamsonr@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Officials Identified Potential Benefits and Concerns, but Have Not Used 
Performance Measures to Document and Assess the Outcomes of Joint 
Ventures: 

Officials Identified Lessons Learned from Their Experiences with 
Existing and Proposed Joint Ventures: 

VA Has Taken Steps to Evaluate Proposed Joint Ventures, but Additional 
Efforts Are Needed: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Department of Veterans Affairs: 

Appendix III: Comments from the Department of Defense: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Table: 

Table 1: Selected Laws and Initiatives Related to VA Collaboration with 
DOD and Academic Affiliates: 

Figures: 

Figure 1: Locations of the Eight Current VA-DOD Joint Ventures: 

Figure 2: VA's and LSU's Preferred Facility Sites for the Potential 
Joint Venture Medical Facility: 

Figure 3: The MRI Machine at North Chicago Purchased by VA and DOD: 

Figure 4: The North Chicago VA-DOD Joint Venture Local Working Groups: 

Figure 5: The VA-LSU Memorandum of Understanding for the Joint Venture: 

Abbreviations: 

DOD: Department of Defense: 

JIF: Joint Incentive Fund: 

LSU: Louisiana State University: 

MRI: magnetic resonance imaging: 

MUSC: Medical University of South Carolina: 

NDAA: Bob Stump National Defense Authorization Act for Fiscal Year 
2003: 

UCH: University of Colorado Hospital: 

VA: Department of Veterans Affairs: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

March 28, 2008: 

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

Dear Senator Burr: 

For decades, Congress has encouraged the Department of Veterans Affairs 
(VA) and the Department of Defense (DOD) to increase their resource- 
sharing activities to achieve more cost-effective use of health care 
resources and to deliver health care services more efficiently. In 
1982, Congress passed the Veterans' Administration and Department of 
Defense Health Resources Sharing and Emergency Operations Act (Sharing 
Act).[Footnote 1] The Sharing Act authorizes VA and DOD to enter into 
sharing agreements or contracts with each other for the mutual use or 
exchange of health care resources, with the goal of improving access 
to, and the quality and cost-effectiveness of, the health care provided 
by the two departments. Since that time, VA has entered into a number 
of sharing arrangements with DOD to, for example, purchase emergency 
room services, specialty care, and inpatient care and to sell 
outpatient care and ambulatory services.[Footnote 2] Starting in the 
1990s, VA and DOD expanded their sharing agreements to include joint 
ventures--that is, joint efforts to construct or share medical 
facilities. VA has maintained eight joint ventures with DOD throughout 
the country. Congress and the administration have encouraged VA and DOD 
to look for more opportunities for joint ventures as a means of 
avoiding costs by maximizing available resources to build a new 
facility or to jointly use a facility. For example, in 2003, a 
presidential task force[Footnote 3] recommended that VA and DOD declare 
that joint ventures are integral to the standard operations of both 
departments and use the existing joint ventures as laboratories for 
developing future interdepartmental policy frameworks. 

VA also has a long history of developing partnerships, or affiliations, 
with university medical schools to help VA fulfill its mission of 
providing health care to the nation's veterans. As of January 2008, VA 
had affiliations with 107 medical schools. VA is further authorized to 
enter into sharing contracts or agreements for the mutual use or 
exchange of health care resources with its academic affiliates to 
secure health care resources that otherwise might not be feasibly 
available or to effectively use other health care resources.[Footnote 
4] Although VA routinely obtains medical services for veterans from its 
academic affiliates and provides training and education to the medical 
residents of its academic affiliates, VA has not entered into a joint 
venture with an academic affiliate. However, opportunities for VA to 
enter into joint ventures with several academic affiliates, including 
affiliates in Charleston, South Carolina, and New Orleans, Louisiana, 
have surfaced over the last decade. Congress has shown an interest in 
VA's exploring possible joint ventures with academic affiliates. For 
example, in 2003, Congress required the Secretary of Veterans Affairs 
to study the feasibility of coordinating health care services with 
representatives of VA's academic affiliate, the Medical University of 
South Carolina (MUSC) in Charleston,[Footnote 5] and, in 2006, Congress 
authorized VA to collaborate with its academic affiliate, Louisiana 
State University (LSU), on rebuilding the two New Orleans medical 
centers destroyed during Hurricane Katrina.[Footnote 6] 

This report discusses the (1) potential benefits and concerns 
associated with joint ventures and the extent to which they are 
documented and measured, (2) lessons learned from existing and proposed 
VA joint ventures with DOD and academic affiliates, and (3) steps VA 
has taken to evaluate proposed joint ventures. To address these issues, 
we used a combination of site visits and semistructured interviews to 
obtain information from all eight existing VA-DOD joint ventures and 
the three proposed joint ventures between VA and academic affiliates. 
Specifically, we visited three existing VA-DOD joint venture locations 
in El Paso, Texas; Las Vegas, Nevada; and North Chicago, Illinois. We 
also visited New Orleans, which is the site of a proposed joint venture 
between VA and the Louisiana State University Health Care Services 
Division[Footnote 7]. We conducted semistructured telephone interviews 
with officials from the remaining existing and proposed joint ventures 
[Footnote 8]. During the site visits and telephone interviews, we 
interviewed the parties involved in the existing or proposed joint 
ventures, including VA and DOD officials at the local and network 
level[Footnote 9] and representatives from the academic affiliates. In 
addition to the site visits and semistructured interviews, we reviewed 
agency documentation, reports, studies, and analyses on existing and 
proposed VA joint ventures, as well as legal authorities governing 
joint ventures between VA and DOD and between VA and its academic 
affiliates. We also interviewed department-level officials from VA and 
DOD and representatives from several veteran service organizations. 
Finally, we reviewed published research and studies, including GAO 
reports, on public-private partnerships; best practices in 
collaboration, partnering, and organizational transformation; and 
evaluation criteria. We conducted this performance audit from May 2007 
through March 2008 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. 
Appendix I provides additional details on our objectives, scope, and 
methodology. 

Results in Brief: 

VA and DOD officials and representatives of academic affiliates 
identified a number of potential benefits and concerns associated with 
joint ventures, but little effort has been taken to routinely or 
comprehensively document and measure them. Among the potential 
benefits, the officials and representatives with whom we spoke cited 
improved access to care, lower or avoided costs, and improved training 
opportunities. For example, officials from several VA-DOD joint venture 
sites said their joint ventures have enabled them to decrease their 
patient referrals to VA medical centers in other regions or to local 
community providers for care, thereby improving access to care and 
decreasing costs. In addition, in New Orleans, VA officials and LSU 
representatives said that the proposed joint venture could help in 
recruiting and retaining highly skilled medical staff by providing such 
staff with a new facility that offers a range of training 
opportunities. While the benefits that officials identified are many, 
these officials and representatives also identified a number of 
concerns associated with joint ventures, such as potential conflicts of 
missions and cultures, staffing uncertainties, a loss of organizational 
identity and control, and financial risks. For example, staffing 
uncertainties resulting from changes in leadership or the deployment of 
DOD personnel could affect the continuity and quality of care and 
access to care for veterans at joint venture sites. Although able to 
provide anecdotal information of the benefits and concerns associated 
with joint ventures, officials at the joint venture sites do not use 
performance measures to routinely or comprehensively document and 
assess the outcomes of the joint ventures. Without such efforts, it is 
difficult to know to what extent these benefits and concerns have 
materialized. VA also does not use performance measures at the 
department level to determine what is being achieved through the joint 
ventures, thereby making it difficult to determine the overall outcomes 
of the joint ventures and to hold joint venture partners accountable 
for results. 

Officials from VA and DOD and representatives from academic affiliates 
identified several lessons they have learned from their experiences 
with the existing and proposed joint ventures. These lessons include 
the importance of establishing joint committees to work through issues, 
communicating frequently with their partners, securing leadership buy- 
in and support at all levels, developing contingency plans, allowing 
adequate time to implement change, and establishing clear roles and 
responsibilities. For example, at most VA-DOD joint venture sites, 
officials have created jointly staffed committees to tackle specific 
issues, such as clinical, financial, and information management. Also, 
in New Orleans, VA and its academic affiliate signed a memorandum of 
understanding that provides a framework for collaboration and 
discussion between the two organizations on a proposed joint venture 
and identifies the roles and responsibilities of the parties in this 
process. 

VA has taken steps to enhance its process for evaluating proposed joint 
ventures, but further efforts are warranted. For example, VA 
established working groups in Charleston and New Orleans to examine 
proposals for joint ventures with academic affiliates. In addition, in 
response to our previous recommendations, VA developed and issued 
criteria for evaluating joint venture proposals in November 2007. 
However, VA's criteria for evaluating joint venture proposals are not 
sufficiently specific, in terms of both the definition and the 
application of the criteria. As a result, VA's evaluations of joint 
venture proposals could be inconsistent and, therefore, may not serve 
as a reliable guide for federal investments in joint ventures. In 
addition, the criteria are not tailored to take into account 
differences in prospective joint venture partners to help ensure that 
VA applies the appropriate level of review and scrutiny to proposals. 

For VA to develop a more robust framework for evaluating existing and 
future joint ventures, we are recommending that the Secretary of 
Veterans Affairs develop departmental performance measures to assess 
the outcomes of joint ventures and to determine the extent to which 
strategic goals are being achieved; develop more specific criteria for 
evaluating joint venture proposals; and analyze the differences among 
types of joint venture partners to determine whether the criteria 
should be tailored to the type of partner, and, if so, tailor the 
criteria. VA and DOD provided written comments on a draft of this 
report, which are reprinted in appendixes II and III, respectively. VA 
generally agreed with our findings, conclusions, and recommendations. 
Also, DOD generally agreed with the report's overall findings. The 
departments provided technical comments, which we incorporated in the 
report as appropriate. 

Background: 

VA's Partnerships with DOD: 

VA has a long history of partnering with DOD to enhance health care 
delivery to veterans, beginning in 1982 with the enactment of the 
Sharing Act, which aimed to promote more cost-effective use of health 
care resources through greater interagency sharing and coordination. 
Since that time, VA and DOD have participated in a wide array of 
sharing agreements for the mutual use or exchange of health care 
resources. Starting in the 1990s, VA and DOD expanded their sharing 
agreements to include joint ventures sharing agreements.[Footnote 10] 
Joint ventures are intended to avoid costs by maximizing available 
resources by jointly using a medical facility. According to VA, joint 
ventures involve a multi-entity, collaborative and strategic 
arrangement of at least 5 years in duration and a level of magnitude 
and scale comparable to VA's current major capital threshold ($10 
million). Joint ventures are complex in that they require an integrated 
approach because two separate health care systems must develop multiple 
sharing agreements that allow them to operate as one system at one 
location. VA currently has eight joint ventures with DOD (see fig. 1) 

Figure 1: Locations of the Eight Current VA-DOD Joint Ventures: 

[See PDF for image] 

This figure is a map of the United States depicting the locations of 
the eight current VA-DOD Joint Ventures. The eight locations are: 

Albuquerque, New Mexico; 
Anchorage, Alaska; 
Chicago, Illinois; 
El Paso, Texas; 
Fairfield, California; 
Honolulu, Hawaii; 
Key West, Florida; 
Las Vegas, Nevada. 

Source: Map Resources (map) and GAO. 

[End of figure] 

VA's Partnerships with Academic Affiliates: 

For decades, VA has also developed and maintained partnerships, or 
affiliations, with university medical schools to provide health care to 
veterans. Through these affiliations, VA has been able to obtain 
medical services for veterans and provide training and education to 
medical residents. Although VA maintains numerous sharing agreements 
with its academic affiliates, it has not yet entered into a joint 
venture with any of them. However, in recent years, VA has had the 
opportunity to consider proposed joint ventures with several academic 
affiliates. In particular: 

* University of Colorado Hospital (UCH): In the late 1990s, UCH 
proposed to integrate the VA Denver medical center and UCH into a new 
joint facility on the Fitzsimons campus, which is located in Aurora, 
Colorado.[Footnote 11] UCH and VA officials could not reach agreement 
on certain aspects of the proposal, and, therefore, discussions about a 
proposed joint venture between VA and UCH concluded in 2002. As 
required by law, in June 2007, VA issued a report that examined options 
for replacing its Denver facility, including the feasibility of 
entering into a partnership for constructing and operating a new 
facility with a federal, state, or local governmental agency or a 
suitable nonprofit organization.[Footnote 12] The report outlined three 
different options available to VA for replacing the facility and 
summarized their key advantages and disadvantages. 

* Medical University of South Carolina: In 2002, MUSC proposed to 
partner with VA in the construction and operation of a new medical 
center in Charleston. Since that time, VA and MUSC have conducted 
several feasibility studies examining the potential collaboration. In 
2006, Congress authorized the VA Secretary to enter into an agreement 
with MUSC to design and plan for the operation of a colocated joint-use 
medical facility.[Footnote 13] In November 2007, VA officials from the 
medical center in Charleston told us that VA and MUSC are still 
exploring a range of collaborative arrangements.[Footnote 14] 

* Louisiana State University Health Care Services Division: In 2005, 
Hurricanes Katrina and Rita damaged VA's New Orleans medical center and 
LSU medical facilities. In February 2006, VA and LSU signed a 
memorandum of understanding that established the framework for 
exploring whether any mutually beneficial sharing and contracting could 
occur between VA and LSU. In 2006, the VA Secretary was authorized to 
carry out the project as a collaborative effort with LSU.[Footnote 15] 
According to a VA official, no final decision on the proposed joint 
venture between VA and LSU has been made. However, VA has announced a 
preferred site for the joint facility in the downtown New Orleans area, 
adjacent to the site LSU has identified for its new facility (see fig. 
2). Although no final decision has been made, the proximity of the 
preferred sites keeps the possibility of some type of joint facility as 
an option. 

Figure 2: VA's and LSU's Preferred Facility Sites for the Potential 
Joint Venture Medical Facility: 

[See PDF for image] 

This figure is a map of VA's and LSU's preferred facility sites for the 
potential Joint Venture Medical Facility in New Orleans. Depicted are 
the existing VA campus, the future site for the new LSU facility, and 
the preferred site for the new VA facility. 

Source: New Orleans VA officials and GAO. 

[End of figure] 

Congressional and Administration Initiatives Related to VA's 
Collaboration with DOD and Academic Affiliates: 

Congress has had a long-standing interest in expanding VA's and DOD's 
sharing of health care resources. For example, the National Defense 
Authorization Act for Fiscal Year 2003 required VA and DOD to implement 
two programs--the joint incentive program and the demonstration 
program--to increase the sharing of health care resources between VA 
and DOD.[Footnote 16] The administration has also encouraged such 
collaboration between VA and DOD as a means to achieve more cost- 
effective use of health care resources. For example, in 2003, a 
presidential task force recommended that VA and DOD declare that joint 
ventures are integral to the standard operations of both departments 
and use the existing joint ventures as laboratories for developing 
future interdepartmental policy frameworks. Congress has also recently 
encouraged VA to explore opportunities for expanding its collaboration 
with academic affiliates as a potential cost-effective means of 
rebuilding and revitalizing VA's aging infrastructure. Table 1 briefly 
describes selected laws and initiatives that have authorized and 
encouraged collaboration between VA and DOD as well as between VA and 
academic affiliates. 

Table 1: Selected Laws and Initiatives Related to VA Collaboration with 
DOD and Academic Affiliates: 

Source: VA and DOD sharing - 38 U.S.C. § 8111: Veterans' Administration 
and Department of Defense Health Resources Sharing and Emergency 
Operations Act (Pub. L. No. 97-174); 
Description: Established a VA-DOD Health Care Resources Sharing 
Committee to promote the sharing of health care resources with 
responsibilities to (1) review existing policies, procedures, and 
practices relating to the sharing of health care resources between VA 
and DOD; (2) identify changes to promote sharing; and (3) monitor the 
implementation of activities designed to promote sharing; Authorized 
the VA and DOD Secretaries to jointly establish guidelines to promote 
the sharing of health care resources; Authorized the heads of 
individual VA and DOD facilities to enter into sharing agreements under 
the sharing guidelines if sharing did not adversely affect the range of 
services, the quality of care, or the established priorities for care 
provided by either department. Each agreement was to identify the 
health care resources to be shared and to provide reimbursement to the 
department providing the services. 

Source: VA and DOD sharing - 38 U.S.C. § 8111: Executive Order 13214 - 
President's Task Force to Improve Heath Care Delivery for Our Nation's 
Veterans (2001); 
Description: Established a 15-member presidential task force to, among 
other things, (1) identify ways to improve benefits and services for VA 
beneficiaries, and DOD military retirees who are also eligible for 
benefits from VA, through better coordination of the activities of the 
two departments; (2) review barriers and challenges that impede VA and 
DOD coordination, including budgeting processes, timely billing, cost 
accounting, information technology, and reimbursement; and (3) identify 
opportunities for improved resource use through partnership between VA 
and DOD to maximize the use of resources and infrastructure. 

Source: VA and DOD sharing - 38 U.S.C. § 8111: Department of Veterans 
Affairs and Department of Defense Health Resources Sharing: Staff 
Report to the Committee on Veterans' Affairs (2002); 
Description: Recommended legislation to achieve more resource sharing 
between VA and DOD[A]. 

Source: VA and DOD sharing - 38 U.S.C. § 8111: Final Report of the 
President's Task Force to Improve Health Care Delivery for Our Nation's 
Veterans (2003); 
Description: Recommended, among other things, that VA and DOD declare 
that joint ventures are integral to the standard operations of both 
departments and use existing joint ventures as laboratories for 
developing future interdepartmental policy frameworks. 

Source: VA and DOD sharing - 38 U.S.C. § 8111: Bob Stump National 
Defense Authorization Act for Fiscal Year 2003 (Pub. L. No. 107-314); 
Description: Amended the Sharing Act to establish a program called the 
Joint Incentive Fund (JIF) to identify and provide incentives to 
implement, fund, and evaluate creative coordination and sharing 
initiatives. Required the VA and DOD Secretaries to contribute at least 
$15 million annually to a DOD-VA Health Care Sharing Incentive Fund. 
Initially, JIF was to expire on September 30, 2007, but it was 
extended, by law, until September 30, 2010; Amended the Sharing Act to 
(1) establish a VA-DOD Health Executive Committee whose 
responsibilities were, among other things, to recommend to the two 
Secretaries strategic direction for joint coordination and sharing 
efforts and to oversee the implementation of such efforts and (2) 
conduct a health care resource-sharing project to serve as a test for 
evaluating the feasibility, advantages, and disadvantages of programs 
designed to improve the sharing and coordination of health care and 
health care resources between VA and DOD. 

Source: VA and DOD sharing - 38 U.S.C. § 8111: National Defense 
Authorization Act for Fiscal Year 2004 (Pub. L. No. 108-136); 
Description: Established the VA-DOD Joint Executive Committee, whose 
responsibilities were, among other things, to recommend to the two 
Secretaries a strategic direction for joint coordination, share efforts 
between the two departments, and oversee the implementation of such 
efforts. 

Source: VA and DOD sharing - 38 U.S.C. § 8111: Veterans Benefits, 
Health Care, and Information Technology Act of 2006 (Pub. L. No. 109-
461); 
Description: Authorized the VA Secretary, in conjunction with the 
Secretaries of DOD and the Air Force, to report on the placement of a 
VA Medical Center in Okaloosa County, Florida, including the 
feasibility of entering into a partnership with Eglin Air Force Base 
for the construction and operation of a new, joint VA-DOD facility. 

Source: VA and DOD sharing - 38 U.S.C. § 8111: John Warner National 
Defense Authorization Act for Fiscal Year 2007 (Pub. L. No. 109-364); 
Description: Extended JIF for 3 years, or until September 30, 2010. 

Source: VA and academic affiliate sharing - 38 U.S.C. §§ 8151-8153: 
Veterans Hospitalization and Medical Services Modernization Amendments 
of 1966 (Pub. L. No. 89-785); 
Description: Authorized the VA Secretary to enter into agreements for 
specialized medical resources with hospitals, medical schools, and 
other medical installations for reimbursement when the exchange of 
specialized medical resources is determined to be in VA's best 
interests. Agreements for the exchange of specialized medical resources 
would be entered into where (1) an affiliate would provide specialized 
medical resources to VA if it would obviate VA's provision of a similar 
resource or (2) VA would provide the specialized medical resources to 
an affiliate at a VA facility that was not being used to its maximum 
capacity. 

Source: VA and academic affiliate sharing - 38 U.S.C. §§ 8151-8153: 
Veterans Health Care Eligibility Reform Act of 1996 (Pub. L. No. 104-
262); 
Description: Expanded the scope of VA's sharing authority to health 
care resources, which includes the use of space. Authorized the VA 
Secretary to enter into sharing agreements to acquire or provide the 
use of space to affiliates in exchange for payment and/or services. 

Source: VA and academic affiliate sharing - 38 U.S.C. §§ 8151-8153: 
Veterans Health Care, Capital Asset, and Business Improvement Act of 
2003 (Pub. L. No. 108-170); 
Description: Required the VA Secretary to study the feasibility of 
coordinating VA's health care services with the pending construction of 
a new university medical center at the Medical University of South 
Carolina, Charleston. 

Source: VA and academic affiliate sharing - 38 U.S.C. §§ 8151-8153: 
Veterans Benefits, Health Care, and Information Technology Act of 2006 
(Pub. L. No. 109-461); 
Description: Authorized the VA Secretary to carry out the project to 
rebuild the New Orleans VA Medical Center in collaboration with LSU 
consistent with the New Orleans Collaborative Opportunities Study Group 
Report dated June 2006; Required the VA Secretary to report on the 
feasibility of replacing facilities in Denver, Colorado, and San Juan, 
Puerto Rico, through a partnership with a federal, commonwealth, state, 
or local governmental agency, or a suitable nonprofit organization, for 
the construction and operation of a new facility; Authorized the VA 
Secretary to enter into an agreement with the Medical University of 
South Carolina to design and plan for the operation of a colocated 
joint-use medical facility in Charleston, South Carolina. 

Source: GAO summary of selected laws and initiatives related to VA 
collaboration. 

[A] Department of Veterans Affairs and Department of Defense Health 
Resources Sharing: Staff Report to the Committee on Veterans' Affairs, 
U.S. House of Representatives 107th Congress (Washington, D.C.: Feb. 
25, 2002). 

[End of table] 

VA and DOD have also taken steps to improve and expand their health 
care sharing activities. For example, since 2005, VA and DOD have 
convened annual conferences to highlight the progress and 
accomplishments of joint ventures as well as provided a forum for 
discussing common barriers to success, lessons learned, and best 
practices. In 2007, VA and DOD established the VA-DOD Joint Market 
Opportunities Working Group to examine the existing VA-DOD joint 
ventures and the potential for additional joint ventures. In the first 
phase of its review, the working group studied all eight existing VA- 
DOD joint ventures sites to identify best practices, lessons learned, 
and challenges. In the second phase of its review, the working group 
plans to assess potential opportunities for the colocation and 
comanagement of VA-DOD facilities. 

In addition, VA is exploring options to improve its partnerships with 
academic affiliates. For example, in 2006, VA established a blue ribbon 
panel to advise the VA Secretary on issues related to a comprehensive 
philosophical framework to enhance VA's partnerships with medical 
schools and affiliated institutions. Among other things, the panel will 
explore the different types of health care partnerships between VA and 
academic affiliates, including joint ventures, in light of changes of 
medical education, research priorities, and the health care needs of 
veterans. 

Guidance Related to Strategic Planning and Performance Measures: 

The National Defense Authorization Act for Fiscal Year 2003 also 
required VA and DOD to develop and publish a joint strategic plan to 
shape, focus, and prioritize coordination and sharing efforts within 
the departments and to incorporate the goals and requirements of the 
joint strategic plan into each department's strategic plan.[Footnote 
17] In response, VA and DOD approved their initial Joint Strategic Plan 
in April 2003 to guide the departments' health care resource-sharing 
activities. The plan is updated annually and included in the Joint 
Executive Council Annual Report to Congress. 

We have reported that there is no more important element in results- 
oriented management than an agency's strategic planning effort. 
[Footnote 18] This effort is the starting point and foundation for 
defining what the department seeks to accomplish, identifying the 
strategies it will use to achieve the desired results, and then 
determining how well it succeeds in reaching goals and achieving 
objectives. We also previously reported that traditional management 
practices involve the creation of long-term strategic plans and regular 
assessments of progress toward achieving the plans' stated 
goals.[Footnote 19] Moreover, the Government Performance and Results 
Act of 1993 requires agencies to set goals, measure performance, and 
report on their accomplishments.[Footnote 20] The use of performance 
measures is a key tool to help managers assess progress toward 
achieving the goals or objectives stated in their plans. This is also 
an important accountability tool to communicate a department's progress 
to Congress and the public. 

Officials Identified Potential Benefits and Concerns, but Have Not Used 
Performance Measures to Document and Assess the Outcomes of Joint 
Ventures: 

Officials from VA and DOD and representatives from academic affiliates 
identified a number of potential benefits and concerns associated with 
joint ventures, but have not used performance measures to routinely or 
comprehensively document and assess the outcomes of the joint ventures. 
The most commonly cited potential benefits of joint ventures include 
improved access to care, cost savings and avoidances, and improved 
training opportunities. According to the officials we interviewed, 
joint ventures also raise a number of potential concerns, including 
potential conflicts between organizations' missions and cultures, a 
potential loss of organizational identity and control, and 
uncertainties associated with staffing. While able to discuss these 
potential benefits and concerns, none of the officials involved in VA- 
DOD joint ventures use performance measures to routinely document or 
assess the outcomes of these endeavors at their facilities. Without 
this information, the extent to which identified benefits have been 
achieved and concerns mitigated at joint ventures is unknown. VA also 
does not use performance measures at the department level to determine 
what is being achieved through the joint ventures. As a result, VA has 
only limited and anecdotal information on the results of joint 
ventures. 

Officials Cite a Number of Benefits Associated with Joint Ventures: 

According to our interviews with officials from VA and DOD and 
representatives from academic affiliates, the potential benefits of 
joint ventures range from improved access to care to greater 
flexibility in the use of staff and other resources.[Footnote 21] 

* Joint ventures provide improved access to care: VA and DOD officials 
said that the existing and proposed joint ventures provide their 
patients with improved access to specialty care and services that may 
not otherwise be available. For example, VA officials said that 
veterans in Honolulu have access to orthopedic care at the DOD medical 
center that would not otherwise be readily available. Similarly, 
according to LSU representatives, the proposed joint venture between VA 
and LSU would provide veterans with access to the only Level I Trauma 
Center in the region. Also, according to DOD officials in Fairfield, 
the joint venture with VA provides their beneficiaries with access to 
specialty care, such as neurosurgery, dialysis, and radiation oncology 
services. VA officials also said that joint ventures have resulted in 
fewer referrals of veterans to VA medical centers in other geographic 
areas, and, as a result, veterans do not have to travel great distances 
to receive care. For example, VA officials in El Paso said that local 
veterans, who previously had to travel over 250 miles to the 
Albuquerque VA medical center, can now be treated at the local DOD 
hospital. VA officials in Anchorage said that before a joint venture 
with DOD was established there, they referred most of their joint 
replacement cases to the Seattle VA medical center. With the joint 
venture, many veterans requiring joint replacement can now be treated 
at the facility in Anchorage and do not have to travel to Seattle. 

* Joint ventures could reduce or avoid costs: Many of the officials 
from VA and DOD and representatives from the academic affiliates told 
us that joint ventures have resulted in or have the potential to result 
in lower or avoided costs by creating economies of scale, eliminating 
redundant or duplicative services, and reducing infrastructure and 
construction costs. In general, officials at many of the VA-DOD joint 
venture sites said that purchasing care from their joint venture 
partner was less expensive than purchasing the same services in the 
local community from private providers. In addition, officials said 
they lowered their costs through economies of scale or volume discounts 
that each agency--working alone--would not otherwise receive. Officials 
at some joint venture sites said they lower their costs by reducing 
redundancies and duplication of staffing, equipment, services, and 
space. For example, in North Chicago, DOD officials estimated that they 
will save about $352,000 annually by sharing a magnetic resonance 
imaging (MRI) machine purchased using joint incentive funds (see fig. 
3). In New Orleans, VA officials estimated that a joint facility with 
LSU would be more cost-effective than a stand-alone facility because a 
joint operation would enable the partners to share space and 
facilities, such as laboratories, kitchens, and the energy plant. 
Several of the officials at VA-DOD joint venture sites said they 
avoided several million dollars in construction costs by entering into 
a joint venture rather than building a stand-alone medical facility. 
Each partner thus expanded the services available to all patients, 
while avoiding the costs of separate, duplicative medical facilities. 

Figure 3: The MRI Machine at North Chicago Purchased by VA and DOD: 

[See PDF for image] 

This figure is a photograph of the MRI machine at North Chicago 
purchased by VA and DOD. 

Source: GAO. 

[End of figure] 

* Joint ventures offer additional training opportunities: VA and DOD 
officials at the existing VA-DOD joint venture sites said that the 
joint ventures provide educational and training opportunities to meet 
DOD's readiness mission. Several DOD officials said that the joint 
ventures give their medical staff opportunities to work on veteran 
patient cases that are more severe, complex, and varied than cases 
involving active duty personnel. Such opportunities help the military 
medical staff sustain their skill levels and provide greater assurance 
of medical readiness. According to VA and DOD officials we interviewed, 
joint ventures also offer knowledge-sharing opportunities. For example, 
in Key West, VA personnel train Navy staff to handle disruptive 
behavior, while Navy staff train VA personnel in a variety of areas, 
including basic life support and advanced cardiac life support. 
Finally, VA officials and academic affiliate representatives said that 
the educational and training opportunities at joint ventures can serve 
as a recruitment and retention tool. For example, in New Orleans, VA 
officials and LSU representatives said that the proposed joint venture-
-specifically, a new, modern facility and the range of training 
opportunities that may be offered in the new facility--could help in 
recruiting and retaining highly skilled medical staff. 

* Joint ventures increase flexibility in the use of resources: 
According to many of the VA and DOD officials and academic affiliate 
representatives we interviewed, joint ventures offer flexibility in 
handling fluctuations in staffing and allow more efficient use of space 
and equipment. Since DOD staff is subject to deployments, VA staff can 
often help stabilize staffing at VA-DOD joint venture facilities. For 
example, because VA and DOD staff are extensively integrated among all 
commonly shared or used work units, DOD officials in Las Vegas said 
that VA and DOD staff are often seen as interchangeable and can, 
therefore, fill in for each other as needed, allowing continuity in 
service and care. LSU officials expected the proposed joint venture 
with VA in New Orleans to provide a similar opportunity, especially for 
hard-to-fill and specialty positions. Furthermore, joint ventures can 
provide additional flexibility with and access to space and equipment, 
according to officials from DOD and VA. In North Chicago, VA officials 
described how the joint venture helped them better use their 
underutilized capacity by integrating VA and DOD medical facilities and 
expanding the emergency room at the VA medical center. In Albuquerque, 
VA officials said they were able to use DOD's outpatient facility as 
backup space when VA's operating room was flooded due to a water leak. 

In addition to the benefits previously cited, some VA and DOD officials 
identified a benefit that is specific to VA-DOD joint ventures--that 
is, joint ventures support efforts to achieve a seamless transition 
between VA and DOD. Some VA and DOD officials noted that joint ventures 
support the Presidential Task Force objective for VA and DOD to 
collaborate at all levels to ensure a seamless transition for eligible 
military personnel from active duty to veteran status.[Footnote 22] DOD 
officials in Honolulu told us that the joint venture agreement with VA 
and the resulting close working relationship help them to seamlessly 
transfer beneficiaries from the DOD health system to the VA health 
system. VA officials at two joint venture sites said that the 
colocation of the VA and DOD facilities enables them to conduct medical 
evaluations of active duty personnel before they are transferred to 
veteran status, which helps to provide a smoother transition. 

Officials Acknowledge Potential Concerns Associated with Joint 
Ventures, but Offer Mitigation Strategies: 

VA and DOD officials and representatives from academic affiliates also 
identified a number of potential concerns associated with joint 
ventures, including maintaining timely access to care, potential 
conflicts between organizational missions and cultures, staffing 
uncertainties that can affect hospital operations, a loss of 
organizational identity or control, the potential to create 
dependencies, and financial risks. In identifying the potential 
concerns, they offered examples of the mitigation strategies they have 
used or could use to manage these concerns. Furthermore, federal 
statutes serve to safeguard the quality of care and access to care for 
veterans in a joint venture arrangement, and VA officials noted that 
veteran service organizations play an important oversight role in 
ensuring that these provisions are met.[Footnote 23] 

* Joint ventures may not maintain timely access to care: Limited access 
to joint venture facilities, resulting from either reduced capacity or 
increased security procedures, could hinder a patient from obtaining 
timely care. At a few VA-DOD sites, officials said that their patients 
may not always be able to access timely care from their joint venture 
partner because of capacity constraints. For example, in El Paso, VA 
and DOD officials said that an expected realignment of military 
personnel in the region may result in an increased demand for medical 
services. This increase, coupled with limits on available space and 
personnel, may reduce DOD's ability to meet the demands of both 
veterans and active duty personnel for timely care. To mitigate this 
concern, VA officials told us that the El Paso VA office has developed 
contingency plans, which are reviewed each day, to ensure that care is 
not delayed or denied to any veteran. Officials at the El Paso VA 
medical center also maintain a network of health care providers in the 
community and at other VA facilities. In addition, the high level of 
security at the military bases that host some of the VA-DOD joint 
ventures sometimes makes it difficult for the veterans to gain timely 
access to the medical facility. For example, in Fairfield, DOD 
officials said that it can be difficult to get VA staff and patients on 
and off the military base in a reasonable amount of time while adhering 
to security procedures. Furthermore, VA officials in Las Vegas noted 
that during national emergencies, such as the terrorist attacks of 
September 11, 2001, the military base can be "locked down" for hours or 
days, and, therefore, veterans would not then be able to access the 
base for care. VA and DOD have taken steps to mitigate these access 
issues. For example, VA and DOD have developed informal "work arounds" 
at the military base in Fairfield, and, in Las Vegas, VA officials 
worked with DOD to ensure that veterans can access the base by 
presenting their veteran identification card. 

* Joint ventures could lead to conflicts between organizational 
missions and cultures: Differences in organizational missions and 
cultures could affect the success of a joint venture. VA officials 
stated that DOD's readiness mission may be incompatible in certain 
situations with VA's mission to provide quality and timely care to 
veterans. Similarly, VA officials noted that VA and its academic 
affiliates have different missions and, at times, competing priorities, 
which has raised concerns among veterans that they may not always 
receive appropriate access to equipment and services. A director of a 
VA medical center said these types of access-to-care issues can be 
addressed by establishing a protocol during the formation of the joint 
venture and monitoring to ensure that the protocol is followed once the 
joint venture is fully operational. Different organizations also have 
different cultures, which can lead to conflicts. In Honolulu, for 
example, VA officials discussed differences in VA's and DOD's 
interpretations of certain guidelines, which resulted in friction 
between the two organizations. However, the officials said these types 
of conflicts are worked out within the joint venture's governance 
process. Although differences in missions cannot be completely 
eliminated, DOD officials in North Chicago said that using a phased 
approach to integrate staff, facilities, and services gave both VA and 
DOD the time to adjust to each other's staff, culture, and operations. 

* Staffing uncertainties could affect joint venture operations: 
Staffing uncertainties, such as those resulting from changes in 
leadership or the deployment of DOD personnel, can affect the 
continuity and quality of care and access to care for veterans. At the 
VA-DOD joint ventures, DOD's top-level administration rotates command 
about every 2 years, requiring VA to continually "sell" the concept of 
a joint venture to the new leadership, according to a VA official. LSU 
officials also noted that academic affiliates can experience frequent 
leadership turnovers. To facilitate a smooth transition, officials at 
one of the VA-DOD sites said that they hold transition briefings, while 
officials at other sites recommended maintaining documentation of joint 
policies and decisions to help the new leadership understand the 
ongoing operational agreements. Officials at most of the VA-DOD sites 
also discussed the concerns raised by the deployment of key DOD medical 
personnel and its potential negative effect on services--that is, when 
DOD personnel are deployed, the joint venture may not be able to 
maintain the same level of services or patient load. Although officials 
at some of the VA-DOD sites said that the integrated operations of the 
joint venture helped mitigate concerns about the potential impact of 
deployment, VA officials in Albuquerque said that they decided to 
mitigate these concerns by eliminating the joint staffing model and 
moving to an arrangement under which DOD purchases care from VA. 

* Joint ventures may result in a loss of identity or control: A joint 
venture could diminish VA's identity by changing a VA medical center 
from a facility that treats only veterans to a facility with a mixed 
patient population that is served by providers from different health 
care systems. The same would be true for the DOD and academic affiliate 
partners. Since the identity of a VA medical center as a veteran's 
hospital is important to veterans, initial construction proposals for 
joint ventures between VA and its academic affiliates in Charleston, 
Denver, and New Orleans included options to construct separate bed 
towers for VA and the academic affiliate. Another potential concern is 
the loss of some level of control. Because a joint venture binds the 
participating organizations together, one joint venture partner can be 
affected by the other partner's actions or circumstances--from 
deployments to changes in leadership or priorities. To mitigate this 
concern, joint venture partners recommended having governance and 
contingency plans that delineate roles and responsibilities, establish 
lines of authority, and identify work-arounds, among other things. 

* Joint ventures may create dependencies: When partners enter into a 
joint venture, a concern exists that they may become dependent on each 
other for equipment and services and not have immediate access to 
necessary equipment or services if the joint venture arrangement is 
disrupted or dissolved. For example, VA officials in El Paso said one 
of their primary concerns is that VA patients will become dependent on 
services provided by DOD, which could be interrupted or discontinued in 
the event of a military realignment or deployment. To handle this 
uncertainty, VA officials said that it is important to have back-up 
plans for the provision of health care and to maintain relationships 
with other health care providers in the community. Also, as we have 
previously noted, VA officials said the El Paso VA office has developed 
contingency plans, which are reviewed daily, to ensure that care is not 
delayed or denied to any veteran. LSU representatives also stated that 
in addition to considering what services and equipment can be shared in 
a proposed joint venture with VA, it is important to consider how the 
partners would separate or discontinue such sharing, if necessary, in 
the future. 

* Joint ventures may pose financial risks: Although joint ventures are 
often viewed as a way to avoid costs by pooling resources, joint 
ventures also raise some financial concerns, such as the possibility of 
incurring additional costs. For example, VA officials from two of the 
eight VA-DOD sites said that certain aspects of the joint venture have 
resulted in additional costs for their organizations. In addition, a 
feasibility study conducted by VA and MUSC on the proposed joint 
venture in Charleston showed that VA would not earn a positive return 
on investment on any of the joint venture options. Furthermore, joint 
ventures may have additional costs associated with the projects that 
would not occur otherwise. For example, a representative from MUSC said 
that the federal homeland security requirements that apply to a 
facility's construction and operations and other security 
considerations, which would apply to MUSC in a VA-MUSC joint venture, 
would add to the overall cost of the project for MUSC. In addition, 
joint ventures between federal and nonfederal organizations face more 
public scrutiny, because of concerns that the federal government may be 
viewed simply as a source of capital funding or may be financially 
taken advantage of by the nonfederal partner. To mitigate some of these 
financial concerns, the VA medical center director in New Orleans 
stated that joint venture partners should agree that neither partner 
should make a profit from the joint venture arrangement. 

VA Does Not Use Performance Measures to Routinely or Comprehensively 
Document and Assess Outcomes of Joint Ventures at the Local or 
Department Level: 

Although VA and DOD officials at existing joint venture sites 
identified a number of benefits and concerns associated with joint 
ventures, they stated that they do not use performance measures to 
routinely or comprehensively document and assess the outcomes of the 
joint ventures. For example, VA and DOD officials told us that they do 
not use performance measures to assess the extent to which the joint 
ventures produce the identified benefits, such as improved care or 
lower costs. VA and DOD officials at several joint venture sites said 
that they have information, such as patient referral rates, wait times 
and satisfaction survey data, as well as workload and financial 
statistics that could be used to indicate how the joint ventures are 
performing. However, officials do not use the information to routinely 
or comprehensively document and measure the results of the joint 
ventures for a number of reasons, including the following: 

* The VA-DOD sites have competing priorities for the limited resources 
that would be required to conduct such assessments, according to 
officials from several sites. 

* Officials at the VA-DOD sites said that differences in their computer 
systems and business processes can limit their ability to conduct such 
assessments. 

* VA officials said that since all of the existing joint ventures with 
DOD have been congressionally directed, there is little incentive to 
document or measure the results of the joint ventures. 

* VA officials noted that they are not required to conduct assessments. 

Officials at some VA-DOD joint venture sites have done one-time studies 
assessing certain aspects of the joint venture. For example, DOD 
officials in Albuquerque said they commissioned a study of the cost of 
services provided in their network compared with the cost of services 
provided through the joint venture with VA.[Footnote 24] Officials at 
several sites also provided examples of projected cost savings 
associated with JIF projects, which require business case analyses. 
However, VA and DOD officials at all of the VA-DOD joint venture sites 
said that they do not routinely or comprehensively assess the outcomes 
of the joint ventures. Rather, several VA and DOD officials said they 
intuitively knew they were saving money as a result of the joint 
venture, but they were unable to provide data to support this belief. 
Without comprehensive, supporting evidence, the extent to which the 
cited outcomes have been achieved at joint venture sites is largely 
unknown. 

From a department-level strategic planning perspective, VA has broadly 
defined what the joint ventures are to accomplish and identified some 
strategies it will use to achieve the desired results. However, VA does 
not use performance measures at the department level to determine what 
is being achieved through its joint ventures and how well VA succeeds 
in reaching the goals and achieving the desired outcomes. We have 
previously reported that performance measures are a valuable tool for 
holding agencies accountable for results, tracking progress toward 
agency goals, and giving managers crucial information on which to base 
their organizational and management decisions.[Footnote 25] Although VA 
has over a hundred performance measures that it uses to centrally 
monitor agency programs and activities, it does not have specific 
measures for its joint venture activities. The 2003 Presidential Task 
Force to Improve Health Care Delivery for Our Nation's Veterans also 
found that none of VA's and DOD's performance metrics measured the 
depth and breadth of VA-DOD collaboration and sharing, or the impact of 
successful collaboration on various health care indicators, such as 
improved access or reductions in the overall cost of furnishing 
services. Similarly, in March 2006, we found that VA and DOD had not 
established specific quantitative performance measures to track the 
progress of their health care resource-sharing activities.[Footnote 26] 
We concluded that such measures would be a useful tool for VA to help 
ensure that health care sharing is optimized, and that the departments 
are cost-efficiently achieving their resource-sharing goals. 
Furthermore, we recommended that VA develop performance measures that 
would be useful for determining the progress of their health care 
resource-sharing goals. Performance measures could also help VA use the 
existing joint ventures as laboratories for developing future 
interdepartmental policy frameworks, as recommended by the 2003 
presidential task force, by allowing VA to assess what is being 
achieved through the joint venture, including what is and what is not 
working. 

Officials Identified Lessons Learned from Their Experiences with 
Existing and Proposed Joint Ventures: 

Officials from VA and DOD and representatives from academic affiliates 
identified several lessons they have learned from their experiences 
with the existing and proposed joint ventures. These lessons included 
establishing joint committees to work through issues, communicating 
frequently with their partner, securing leadership buy-in and support 
at all levels, developing contingency plans, allowing adequate time to 
implement change, and establishing clear roles and responsibilities. 

* Establish joint committees to work through issues: Officials at many 
of the joint venture locations said that establishing joint committees 
to work through the various issues that arise in developing and 
implementing joint ventures is helpful. Almost all of the sites had 
established such committees, which typically consist of an equal number 
of representatives from VA and DOD. The joint committee structure 
allows the officials to work collaboratively in tackling joint venture 
issues. For example, in North Chicago, the joint committee structure 
consists of an Executive Steering Group that is co-chaired by VA and 
DOD and six joint working groups that are responsible for specific 
issues, such as finance, information management, and clinical issues 
associated with forming their joint venture (see fig. 4). Similarly, in 
Las Vegas, all joint venture activities are addressed and monitored 
through a series of jointly staffed committees, ensuring that both VA 
and DOD have equal input into joint venture activities and decisions. 
These committees report to the leadership of the joint venture. In New 
Orleans, VA and LSU formed a joint venture coordinating committee whose 
responsibilities include identifying opportunities for sharing 
information technologies and ensuring the availability of appropriate 
staffing for all aspects of the joint venture. Our previous work on 
organizational transformation cites such benefits of establishing 
jointly staffed teams as creating opportunities for employees from the 
merging organizations to interact with each other, helping accelerate 
the merger or transformation process by allowing the parties to learn 
more about each other, and breaking down organizational silos. Teams 
composed of a cross-section of individual members can also assist in 
integrating different perspectives, flattening organizational 
structure, streamlining operations, and making it easier to work 
together on future projects.[Footnote 27] 

Figure 4: The North Chicago VA-DOD Joint Venture Local Working Groups: 

[See PDF for image] 

This figure is an organizational chart of the North Chicago VA-DOD 
Joint Venture Local Working Groups. The structure is depicted as 
follows: 

Top level: 
Executive Steering Committee: 
* VA Director and Navy Commander (co-chairs). 

Second level, reporting to the Executive Steering Committee: 
* Communications (VA and DOD co-chairs); 
* Finance/Budget (VA and DOD co-chairs); 
* Human Resources (VA and DOD co-chairs); 
* Clinical (VA and DOD co-chairs); 
* Administration (VA and DOD co-chairs); 
* Information Management/Information Technology (VA and DOD co-chairs). 

Source: GAO. 

[End of figure] 

* Frequent communication between partners is important: Officials at 
most VA and DOD sites with whom we spoke said that frequent 
communication between partners helps reduce confusion, fosters a better 
work environment, helps ensure that vital information is shared with 
affected staff, and provides opportunities for each partner to learn 
from the other. For example, at one site, officials said that frequent 
meetings between VA and DOD leadership provide a convenient platform 
for the leaders to discuss joint venture issues, resolve problems, and 
evaluate a joint strategy or vision for going forward. At another site, 
the staff meets almost daily to plan and execute decisions related to 
the joint venture. At the site of a proposed joint venture between VA 
and an academic affiliate, VA officials adopted a communications 
strategy to use in communicating with VA's potential partner, 
employees, and stakeholders. In our previous work on organizational 
transformations, we have noted that creating an effective, ongoing 
communications strategy is essential to implementing significant 
organizational changes, such as the joint ventures.[Footnote 28] Such a 
strategy helps to build an understanding of the purpose of the planned 
change and establish trust among VA and its academic affiliates and 
stakeholders, such as employees and veterans. A communications strategy 
can also help ensure that these groups receive a message that is 
consistent in tone and content. Sharing a consistent message with 
stakeholders helps reduce the perception that some are more likely than 
others to get the "real" story when, in fact, all are receiving the 
same information. 

* Leadership buy-in and support at all levels are vital: Most VA and 
DOD officials and academic affiliate representatives with whom we spoke 
said that leadership buy-in and support play a key role in the success 
of a joint venture. This lesson is consistent with our previous work on 
organizational transformation, which indicates that support from top 
leadership is indispensable for fundamental change, such as a joint 
venture entails.[Footnote 29] Top leadership's clear and personal 
involvement in the transformation represents stability for both the 
organization's employees and its external partners. Top leadership must 
set the direction, pace, and tone for the transformation. Likewise, 
when a transformation requires extensive collaboration with another 
organization, as would be the case with a joint venture, committed 
leadership at all levels is needed to overcome the many barriers to 
working across organizational boundaries. Officials noted that forming 
a joint venture is very challenging and leadership buy-in and support 
are needed to encourage the partners to work through the challenges. 
Without such commitment from the top, the officials at one VA-DOD joint 
venture site said that they would have given up on the joint venture a 
long time ago because of the number of seemingly insurmountable 
challenges. Conversely, the proposed joint venture between VA and UCH 
in Denver did not come to fruition largely because of a lack of 
leadership buy-in.[Footnote 30] 

* Contingency plans are critical: Officials from an academic affiliate 
noted that it is important that joint venture partners develop 
appropriate contingency plans to ensure continuity of service, and 
officials from many of the joint venture sites had developed such plans 
to ensure continued care for their clients. For example, VA officials 
at several sites said they have contingency plans in place--such as 
plans to send patients to other health care providers in the community-
-in case a military deployment threatens to disrupt services or care, 
or an increased demand for care by DOD beneficiaries reduces DOD's 
ability to meet VA's demand for care to veterans. As we have previously 
reported, contingency planning is important because it identifies 
alternative activities that can be employed to ensure the continuity of 
an agency's core business operations and will greatly improve response 
efforts. Not having such a plan in place increases the risk of 
unnecessary problems in an uncertain situation.[Footnote 31] 

* Allow adequate time to introduce and implement change: Joint ventures 
represent a significant change in how VA normally conducts business. As 
a result, VA and DOD officials told us that the implementation of joint 
ventures must be managed with care. Officials at one of the VA-DOD 
joint ventures noted that forming a joint venture often takes years-- 
which helps ensure that the changes are carefully considered. This 
lesson is consistent with the finding in our prior work on 
organizational transformations that successful major change management 
in large private and public-sector organizations can often take at 
least 5 to 7 years. As a result, we have previously reported that it is 
essential to establish and track implementation goals and establish a 
timeline to pinpoint performance shortfalls and gaps and suggest 
midcourse corrections.[Footnote 32] By demonstrating progress toward 
these transformation goals, the organization builds momentum and 
demonstrates that real progress is being made. Similarly, some VA and 
DOD officials recommended using a phased implementation schedule to 
help employees and stakeholders get accustomed to the changes. 

* Clearly define roles and responsibilities: Many VA and DOD officials 
and representatives from academic affiliates we interviewed said that 
clearly defining the roles and responsibilities of each joint venture 
partner helped to avoid problems such as misunderstandings, 
duplication, and confusion. Similarly, our previous work on 
collaboration between organizations suggests that agreeing on roles and 
responsibilities is important.[Footnote 33] In particular, 
collaborating organizations should work together to define and agree on 
their respective roles and responsibilities, including how the 
collaborative effort will be led. In doing so, organizations can 
clarify who will do what, organize their joint and individual efforts, 
and facilitate decision making. VA, DOD, and academic affiliates have 
used several techniques to define their roles and responsibilities. For 
example, at one VA-DOD joint venture site, officials use joint policy 
letters to document roles, responsibilities, policies, and decisions. 
These joint policy letters also help to maintain continuity during 
transitions, such as changes in the top leadership at one of the joint 
venture partners. In New Orleans, VA and LSU signed a memorandum of 
understanding that identifies the roles and responsibilities of the 
parties and provides a framework for collaboration and discussion 
between the two organizations on a proposed joint venture. Figure 5 
shows the VA-LSU memorandum of understanding and highlights the 
specific roles and responsibilities of the parties. 

Figure 5: The VA-LSU Memorandum of Understanding for the Joint Venture: 

[See PDF for image] 

This figure depicts an illustration of the VA-LSU Memorandum of 
Understanding for the Joint Venture, with the following sections 
highlighted: 

3.0 Authority: 

3.1 Under 38 USC § 513, the Secretary of Veterans Affairs may “enter 
into contracts or agreements with private or public agencies or 
persons…for such necessary services…as the Secretary may consider 
practicable.” 

3.2 Pursuant to 38 USC § 8153, when the Secretary determines it to be 
in the best interest of the prevailing standards of the Department [of 
Veterans Affairs] medical care program, he may make arrangements, by 
contract or other form of agreement for the mutual use or exchange of 
use, of health-care resources between Department health-care facilities 
and any health-care provider, or other entity or individual. 

3.3 Pursuant to Article 8, Section 7 of the Louisiana Constitution, the 
Board of Supervisors of Louisiana State University and Agricultural and 
Mechanical College (Board) is granted authority to supervise and manage 
the institutions statewide and other programs administered through its 
system. The LSU Health Care Service Division is a part of the LSU 
System. 

4.0 Roles And Responsibilities Of The Parties: 

4.1 The Parties shall draft a Charter for a study group to be known as 
VA/LSU Collaborative Opportunities Study Group (COSG) for New Orleans 
(the “Group”). 

4.2 Subject to federal law, regulation and VA policy, the VA shall 
commit the appropriate resources (time, assets, personnel, etc.) to the 
formation and support the ongoing functioning of the Group. 

4.3 Subject to law, regulation and LSU policy, LSU shall commit the 
appropriate resources(time, assets, personnel, etc.) to the formation 
and the ongoing functioning of the Group. 

4.4 The Parties understand that other entities or organizations may 
have an interest in the goals and activities described in this MOU. In 
recognition of this, the Parties will invite the participation of other 
entities, organizations or associations as determined by the group. 

4.5 The Parties agree that the Group shall be tasked to study the 
following areas of mutual interest: 

4.5.1 The present and future demographics of the City of New Orleans 
(”City”) and metropolitan New Orleans area [”Region]; 

4.5.2 The present and future need for LSU and VA health care services, 
medical research and medical education in the City and Region; 

4.5.3 An analysis of the present and future need for LSU and VA 
primary, tertiary, specialty and emergency health care services in the 
City and Region; 

4.5.4 Evaluation of state-of-the-art joint and collaborative health 
care delivery models, including the model known as the Texas Medical 
Center; 

4.5.5 An analysis of proposed sites and locations for future LSU and VA 
health care facilities, research and educational facilities in the City 
and Region, including analysis of sites for joint and collaborative 
facilities; 

4.5.6 An analysis of how the VA/LSU collaboration can contribute to the 
National and Louisiana advancement of health care services, in 
cooperation with medical education. 

Source: New Orleans VA officials and GAO. 

[End of figure] 

VA Has Taken Steps to Evaluate Proposed Joint Ventures, but Additional 
Efforts Are Needed: 

VA has taken steps to evaluate proposed joint ventures. For example, VA 
established working groups in Charleston and New Orleans to examine 
joint venture proposals with academic affiliates. In addition, in 
response to our previous recommendations,[Footnote 34] VA developed and 
issued criteria for evaluating joint venture proposals in November 
2007. However, VA's evaluation criteria are not sufficiently specific 
to ensure consistent evaluations of proposals, and are not sufficiently 
tailored to ensure the appropriate level of review. 

VA Has Taken Steps to Better Evaluate Proposed Joint Ventures: 

VA has undertaken steps to better assess proposed joint ventures. 
Specifically, in response to our recommendations, VA developed criteria 
for evaluating joint venture proposals at the department 
level.[Footnote 35] The criteria are contained in a handbook that VA 
issued in November 2007. The handbook represents an important step 
toward better assessing proposed joint ventures and managing existing 
joint ventures in that, among other things, it details departmental 
policy on joint ventures, defines joint ventures, identifies the 
process for reviewing and approving joint venture proposals, and 
outlines criteria for use in evaluating joint venture proposals--none 
of which had previously been developed, documented, or shared with 
joint venture partners. Developing evaluation criteria is a notable 
step because, as we have previously noted, the absence of criteria at 
the department level to evaluate joint venture proposals can result in 
inconsistent evaluations, misunderstandings, and delays.[Footnote 36] 
According to VA, the handbook was developed by a working group of over 
50 officials from various offices and levels within VA. The working 
group used a variety of methods to identify the evaluation criteria, 
including soliciting ideas from VA officials, identifying and analyzing 
relevant statutes and regulations, and reviewing related published 
research. 

As outlined in the November 2007 handbook, VA's evaluation criteria 
will be applied in a two-phase review process and will be applicable to 
all joint venture proposals, including those involving DOD, academic 
affiliates, and other health care providers. 

* Phase I: The first review phase is the initial evaluation of a joint 
venture proposal. In this phase, VA officials apply a set of criteria, 
referred to as the screening criteria, to determine if the proposal 
will be submitted to the department level for consideration. Depending 
on how well the proposal meets the criteria, VA officials assign it a 
pass or fail rating. If the proposal receives a pass rating, it moves 
to the second review phase. 

* Phase II: In the second phase, VA officials apply a more robust set 
of criteria, referred to as comprehensive criteria, to determine if the 
proposal will be submitted to the VA Secretary for consideration. If 
the proposal passes the second phase of review, it will be folded into 
VA's capital investment and budget processes and will compete with 
other projects for funding. The Secretary will make the final decision 
regarding whether VA will pursue the joint venture. 

In addition to developing the evaluation criteria, VA has taken other 
steps to better evaluate proposed joint ventures. For example, VA 
established Collaborative Opportunities Steering Groups and 
Collaborative Opportunities Planning Groups to study the proposed joint 
ventures with its academic affiliates in Charleston and New Orleans. 
The study groups were tasked with analyzing what, if any, mutually 
beneficial sharing and contracting could be done with each academic 
affiliate. Composed of VA officials and representatives from the 
respective academic affiliate, the study groups assessed a range of 
issues, including sharing options and the clinical, legal, and 
financial considerations associated with the different sharing options. 
The study groups were charged with issuing their findings to VA and the 
respective academic affiliate, which they did in a series of 
reports.[Footnote 37] The study groups did not make recommendations, 
but rather they laid out the advantages and disadvantages of the 
different options examined. 

VA's Evaluation Criteria Are Less Useful Than They Could Be: 

VA's development of criteria for evaluating joint venture proposals 
represents a step forward in VA's process for assessing joint venture 
proposals. However, the evaluation criteria are less useful than they 
could be. 

* The evaluation criteria are not sufficiently specific--in terms of 
both the definition and the application of the criteria: VA defined 
most of the screening and comprehensive criteria by outlining the 
different elements that make up each criterion. While this information 
is instructive, key elements of some of the criteria are sometimes not 
defined. For example, one of the screening criteria is "serendipitous 
win-wins." Other than instructing VA officials to determine if the 
proposal offers "unique promise and advantages for enhancing quality," 
this term is not defined, and there are no examples of what might be 
considered a "serendipitous win-win" arrangement. Furthermore, although 
the handbook identifies a host of criteria that VA officials should 
consider in evaluating joint venture proposals, it generally does not 
provide guidance on whether certain criteria are more important than 
others or how each criterion will be used to make an overall 
assessment. For example, it is unclear whether all 4 screening 
criteria, plus their 18 sub-elements, must be met to receive a passing 
rating. The lack of specificity in the definition and application of 
the evaluation criteria could lead to inconsistent evaluations of joint 
venture proposals--thereby reducing the value of having such criteria 
in place. 

VA officials noted that the lack of specificity in the evaluation 
criteria reflects, in part, their view of a primary purpose of the 
criteria. Specifically, they noted that for the working group, a 
primary purpose of the criteria was to inform potential partners about 
VA's requirements for joint venture proposals. VA officials further 
noted that their familiarity with the processes involved in preparing 
proposals for community outpatient clinics and joint incentive 
projects, among other things, will help them to apply the criteria. We 
recognize the usefulness of the criteria as a communication tool and 
considered their usefulness for this purpose when we previously 
recommended that VA develop evaluation criteria and share them with 
proposed joint venture partners.[Footnote 38] In addition, we recognize 
that VA officials' experience with related processes will be useful in 
applying the criteria. However, our purpose in previously recommending 
that VA develop evaluation criteria was to ensure that proposals are 
evaluated consistently across the country. Given that multiple VA 
officials will be using the criteria to evaluate joint venture 
proposals, increasing the specificity of the criteria--by fully 
defining their key elements and the process for applying them--will 
help ensure that the criteria are applied consistently. Furthermore, 
given the magnitude of joint ventures compared with other projects, 
such as joint incentive projects, additional specificity in how to 
apply the criteria seems warranted. 

* The criteria are not tailored for the different types of joint 
ventures: VA plans to apply the same criteria and review process for 
all joint venture proposals, including those with DOD, academic 
affiliates, and other health care providers. However, according to some 
VA and DOD officials we interviewed, there are fundamental differences, 
risks, and experiences between joint ventures with DOD and joint 
ventures with other partners that should be taken into account. For 
example, since VA and DOD are federal departments, both are accustomed 
to working within the federal framework and following federal laws, 
regulations, guidance, and procedures--which may not be the case for 
academic affiliates or other health care providers. Furthermore, both 
VA and DOD follow the same federal appropriation cycle--which can help 
to synchronize joint investments. In contrast, academic affiliates or 
other health care providers may use a different fiscal year. In 
addition, federal law governs the availability of federal funds--and 
provides safeguards in the use of those funds, which helps mitigate 
some of the potential financial risks involved with a joint venture. 
For example, appropriation law provides that appropriated funds are 
available only for the objects for which the appropriations were made, 
except as otherwise provided by law.[Footnote 39] Thus, VA and DOD can 
spend their appropriated funds only to meet the health care needs of 
their beneficiaries, and neither department is permitted to pay for the 
health care needs of the other department's beneficiaries. In addition, 
the Sharing Act provides for the department providing the health care 
services to be reimbursed for the cost of the services under a rate of 
reimbursement determined by the two departments. Finally, VA and DOD 
have experience developing and implementing joint ventures, whereas VA 
has not developed a joint venture with any other health care provider. 
While some of the criteria that VA has found most useful in working 
through the challenges of forming joint ventures with DOD may be 
applicable to forming joint ventures with academic affiliates or other 
health care providers, other criteria may be less applicable or some 
potentially useful criteria may be lacking. 

Conclusions: 

A number of potential benefits are associated with joint ventures, 
including improved access to care and reduced costs. As a result, 
Congress and the administration have encouraged joint ventures between 
VA and DOD and, more recently, between VA and academic affiliates as a 
cost-effective means to stretch limited resources and replace aging 
infrastructure. However, comprehensive information is not readily 
available on whether joint ventures actually produce all of the 
identified benefits. Specifically, VA does not use performance measures 
at the local or department level to routinely or comprehensively assess 
the outcomes of its existing joint ventures, leaving VA with only 
limited and anecdotal information on the outcomes of joint ventures. 
While some of the benefits of joint ventures, such as gaining economies 
of scale, may be intuitive, and the anecdotal examples provided by 
officials at different joint venture sites suggest that some benefits 
are being achieved, the magnitude and extent of such benefits are 
unknown. Routine and comprehensive information on what is being 
achieved through the joint ventures could help VA leadership and 
policymakers make more informed decisions about how to improve the 
performance of existing joint ventures as well as whether to pursue 
different joint venture opportunities in the future. 

VA's effort to develop criteria for evaluating joint venture proposals 
is a positive step in improving VA's process for assessing joint 
venture proposals. However, without more specific criteria for 
evaluating future joint venture proposals, VA may not improve the 
consistency of its evaluations as we intended when we recommended that 
VA develop evaluation criteria. Given the long-term and resource- 
intensive nature of joint ventures, it is critical that VA have robust 
criteria that can be consistently applied to distinguish proposals that 
are in the best interest of our nation's veterans and the federal 
government from those proposals that are not. Furthermore, although the 
intent of our previous recommendations was to ensure consistency in the 
evaluation of joint venture proposals, we also recognize that each 
proposal could have unique aspects and should be evaluated on its 
merits and circumstances. To the extent that the application of a 
single set of criteria to all joint venture proposals excludes 
consideration of unique but important aspects of individual proposals, 
VA may overlook differences among different types of prospective joint 
venture partners that should be taken into account. 

Recommendations for Executive Action: 

To develop a more comprehensive framework for evaluating existing and 
future joint ventures, we recommend that the Secretary of Veterans 
Affairs take the following three actions: 

* Develop departmental performance measures to assess the outcomes of 
joint ventures and to determine the extent to which strategic goals are 
being achieved. 

* Revise the evaluation criteria for joint venture proposals to ensure 
they are measurable and specific--both in terms of definition and 
application. 

* Analyze the differences among types of joint venture partners to 
determine whether the evaluation criteria should be tailored to the 
type of partner (e.g., DOD or academic affiliate) and, if so, tailor 
the criteria accordingly. 

Agency Comments: 

We provided a draft of this report to VA and DOD for review and 
comment. VA and DOD provided written comments on a draft of this 
report, which are reprinted in appendixes II and III, respectively. VA 
generally agreed with our findings, conclusions, and recommendations. 
VA stated that the report is consistent with VA's direction and ongoing 
work toward enhancing existing and future joint ventures. As part of 
this ongoing work, VA's Joint Ventures Working Group is reviewing 
existing performance measures to develop specific measures for joint 
venture activities and will facilitate incorporation of the measures 
into VA's established processes. In addition, the working group will 
review and refine the proposed evaluation guide on a continual basis. 
Also, DOD generally agreed with the report's overall findings. The 
departments provided technical comments, which we have incorporated as 
appropriate. 

We are sending copies of this report to congressional committees with 
responsibilities for veterans' issues; the Secretary of Veterans 
Affairs; the Secretary of the Department of Defense; and the Director, 
Office of Management and Budget. We also will make copies available to 
others upon request. In addition, this report will be available at no 
charge on GAO's Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions on matters discussed in this 
report, please contact me on (202) 512-2834 or at williamsonr@gao.gov. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this report. Key contributors 
to this report are listed in appendix IV. 

Sincerely yours, 

Signed by: 

Randall Williamson: 
Acting Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

This report discusses the (1) potential benefits and concerns 
associated with joint ventures and the extent to which they are 
documented and measured, (2) lessons learned from existing and proposed 
Department of Veterans Affairs (VA) joint ventures with academic 
affiliates and the Department of Defense (DOD), and (3) steps VA has 
taken to better evaluate proposed joint ventures. 

To address these objectives, we used a combination of site visits and 
semistructured interviews to obtain information for all eight existing 
VA-DOD joint ventures and for the three proposed joint ventures between 
VA and academic affiliates. Specifically, we visited three existing VA- 
DOD joint ventures in El Paso, Texas; Las Vegas, Nevada; and North 
Chicago, Illinois. We also visited New Orleans, Louisiana, the site of 
a proposed joint venture between VA and the Louisiana State University 
(LSU) Health Care Services Division.[Footnote 40] We used several 
criteria to select these sites, including geographic dispersion, the 
maturity of the partnership, the nature of the shared services, the 
organizations involved in the partnership (e.g., the branch of the 
military), the structure or framework of the partnership, and the 
perceived effectiveness of the partnership. We conducted semistructured 
telephone interviews with officials from the remaining existing and 
proposed joint ventures.[Footnote 41] During the site visits and 
telephone interviews, we interviewed the parties involved in the 
existing or proposed joint ventures, including VA and DOD officials and 
representatives from the academic affiliates. We also performed a 
content analysis of the information we collected through the site 
visits and semistructured interviews to determine the benefits and 
concerns associated with joint ventures, as well as the lessons learned 
in developing joint ventures that were commonly cited by the officials 
involved in the VA joint ventures. We also interviewed department-level 
officials from VA and DOD and representatives from several veterans 
service organizations, including Disabled American Veterans, the 
Paralyzed Veterans of America, and the American Legion. 

In addition to conducting the site visits and semistructured 
interviews, we reviewed agency documentation, reports, studies, and 
analyses on existing and proposed VA joint ventures so that we could 
report on any issues or concerns associated with jointly planning, 
constructing, and sharing a medical center. For example, we reviewed 
the VA Strategic Plan Fiscal Year 2006-2011, the VA 5-Year Capital Plan 
Fiscal Year 2005-2010, the VA-DOD Joint Executive Council Strategic 
Plan Fiscal Year 2007-2009, VA-DOD Joint Executive Council annual 
reports, the VA-MUSC Collaborative Opportunities Steering Group final 
report, and the VA-LSU Collaborative Opportunities Study Group report. 
We reviewed legal authorities governing the sharing of health resources 
between VA and DOD, and VA and its academic affiliates, including 
appropriation and fiscal law authorities. 

To identify criteria for possible use in evaluating joint ventures and 
to help us assess the comprehensiveness of VA's criteria, we reviewed 
published research and studies, including GAO reports, on public- 
private partnerships; best practices in collaboration, partnering, and 
organizational transformation; and evaluation criteria. To identify 
applicable studies focusing on public-private partnerships for 
constructing joint public facilities or hospitals similar to VA's joint 
venture partnerships, we searched literature databases using the 
following criteria: (1) studies that identified any benefits and risks 
associated with forming public-private partnerships for hospitals or 
federal buildings, with a focus on cost savings or risk management; (2) 
studies that provided lessons learned from previous health-care- 
related, public-private partnerships, including any factors 
contributing to challenges or successes; and (3) studies that provided 
guidelines or evaluative criteria that could be used to evaluate a 
health-care-related, public-private partnership. After identifying the 
studies, we reviewed each study to determine its relevance and 
applicability to our objectives and to ensure the methodological 
soundness of the non-GAO studies. 

We conducted this performance audit from May 2007 through March 2008 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. 

[End of section] 

Appendix II: Comments from the Department of Veterans Affairs: 

The Secretary Of Veterans Affairs: 
Washington: 

February 29, 2008: 

Mr. Randall Williamson: 
Acting Director, Physical Infrastructure Issues: 
U. S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Williamson: 

The Department of Veterans Affairs (VA) has reviewed the Government 
Accountability Office's (GAO) draft report, VA Health Care: Additional 
Efforts to Better Assess Joint Ventures Needed (GAO-08-399) agree with 
GAO's conclusions and concur with GAO's recommendations. GAO has 
generally provided a helpful document, which is consistent with VA's 
direction and ongoing work toward enhancing existing and future joint 
ventures. 

The enclosure specifically addresses each of GAO's recommendations and 
provides comments to the draft report. VA appreciates the opportunity 
to comment on your draft report. 

Sincerely yours, 

Signed by: 

James B. Peake, M.D. 

Enclosure: 

Department of Veterans Affairs (VA) Comments to Government 
Accountability Office (GAO) Draft Report: 
VA Health Care: Additional Efforts to Better Assess Joint Ventures 
Needed (GAO-08-399): 

To develop a more comprehensive framework for evaluating existing and 
future joint ventures, GAO recommends that the Secretary of Veterans 
Affairs take the following three actions: 

* Develop departmental performance measures to assess the outcomes of 
joint ventures and to determine the extent to which strategic goals are 
being achieved. 

Concur -- VA established the Joint Ventures Working Group under the VA 
Strategic Management Council in 2007. The Working Group has become a 
successful collaboration involving more than 60 subject matter experts 
from the Veterans Health Administration (VHA), Veterans Benefits 
Administration, National Cemetery Administration, staff offices and VHA 
field officials working with joint ventures. The Working Group is 
reviewing existing performance measures and working closely with VA 
field officials to develop specific measures for joint venture 
activities. 

Proper development of performance measures requires a detailed 
understanding of operational requirements as well as strategic 
management processes. This is especially true across departmental 
structures, processes, and authorities for VA and DoD joint ventures 
and potentially across public and private structures, processes, and 
authorities for VA and academic affiliate joint ventures. 

In addition, the Working Group is facilitating ongoing VA systems' 
enhancements that are integral to improving resource-sharing and joint 
venture operations between VA and DoD or academic affiliates, as well 
as improved performance measures. As part of this ongoing analysis, the 
Working Group will develop additional departmental performance measures 
to assess the outcomes of joint ventures and to determine the extent to 
which strategic goals are being achieved. The Working Group will 
facilitate incorporation of measures into established processes 
including review for potential enhancement of measures on a continual 
basis. The Working Group will provide the VA Strategic Management 
Council (SMC) with the proposed departmental measures for its review by 
the end of FY 2008. 

* Revise the evaluation criteria for joint venture proposals to ensure 
they are measurable and specific-both in terms of definition and 
application. 

Concur – The Working Group designed a new Departmental process for 
evaluating joint venture proposals and documented it in VA Handbook 
0311, Joint Ventures Program. The Working Group is beginning to employ 
the application process. This effort will include an analysis to 
determine whether evaluation criteria for joint venture proposals need 
to be more measurable and specific in terms of both definition and 
application. In addition, the Working Group plans to develop an 
evaluation guide to ensure optimal application of evaluation criteria. 

The Working Group will provide its analysis and the proposed evaluation 
guide to the VA SMC by the end of FY 2008. This is a new departmental 
process, which the Working Group will review and refine on a continual 
basis. 

* Analyze the differences between types of joint venture partners to 
determine whether the evaluation criteria should be tailored to the 
type of partner (e.g., DOD or academic affiliate) and, if so, tailor 
the criteria accordingly. 

Concur -- The Working Group will analyze the differences between the 
types of joint venture partners and determine how tailoring of criteria 
may be appropriate. The Working Group will provide their analysis and 
recommendations to the VA SMC by the end of FY 2008. 

[End of section] 

Appendix III: Comments from the Department of Defense: 

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

March 12, 2008: 

Mr. Randall Williamson: 
Assistant Director, Physical Infrastructure Issues: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Williamson: 

This is the Department of Defense response to the Government 
Accountability Office (GAO) draft report, "VA Health Care: Additional 
Efforts to Better Assess Joint Ventures Needed," dated February 4, 2008 
(GAO Code 541033/GAO-08-399). 

Thank you for the opportunity to review and comment on the draft 
report. The Department concurs with the report's overall findings. 
Attached are our technical comments for your review and consideration. 

My points of contact for additional information are Mr. Ken Cox 
(Functional) at (703) 681-4258, and Mr. Gunther Zimmerman (Audit 
Liaison) at (703) 681-3492. 

Sincerely, 

Signed by: 
S. Ward Casscells, MD: 

Attachment: As stated: 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Randall Williamson, (202) 512-2834 or williamsonr@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Nikki Clowers, Assistant 
Director; Vashun Cole; Elizabeth Curda; Jennifer DuBord; Elizabeth 
Eisenstadt; Cindy Gilbert; Alexander Lawrence; Susan Michal Smith; and 
James Musselwhite Jr. made key contributions to this report. 

[End of section] 

Footnotes: 

[1] The Sharing Act has been amended several times since 1982 and is 
codified at 38 U.S.C. § 8111. 

[2] Health care services shared under these agreements include 
inpatient and outpatient care; ancillary services, such as diagnostic 
and therapeutic radiology; dental care; pharmacy services; and 
specialty care services, such as treatment for spinal cord injuries. 
Shared support services include administration and management, 
research, education and training, patient transportation, and laundry. 

[3] The Presidential Task Force to Improve Health Care Delivery for Our 
Nation's Veterans was established by Executive Order 13214 in 2001 to 
promote resource sharing between VA and DOD. 

[4] 38 U.S.C. §§ 8151-8153. 

[5] Veterans Health Care, Capital Asset, and Business Improvement Act 
of 2003, Pub. L. No. 108-170 § 232, 117 Stat. 2042, 2052-2053 (2003). 

[6] Veterans Benefits, Health Care, and Information Technology Act of 
2006, Pub. L. No. 109-461, § 801, 120 Stat. 3403, 3442 (2006). 

[7] In our Louisiana site visit, we also interviewed representatives 
from Tulane University about the proposed joint venture. Although the 
Tulane University Health Sciences Center does not have an ownership 
stake in the joint venture project, the university does have 
representatives involved in the process because it has working 
relationships with VA and LSU. 

[8] The remaining VA-DOD joint ventures were located in Anchorage, 
Alaska; Albuquerque, New Mexico; Fairfield, California; Honolulu, 
Hawaii; and Key West, Florida. The remaining proposed joint ventures 
between VA and academic affiliates involve (1) the Medical University 
of South Carolina and (2) the University of Colorado at Denver and 
Health Sciences Center and the University of Colorado Hospital. 

[9] The management of VA's facilities is decentralized to 21 regional 
networks referred to as Veterans Integrated Service Networks 
(networks). 

[10] In addition to joint venture sharing agreements, VA and DOD 
participate in local sharing agreements and national sharing 
initiatives. Local sharing agreements allow VA and DOD to take 
advantage of their facilities' capacity to provide health care by being 
providers of health services, receivers of health services, or both. 
National sharing initiatives are designed to achieve greater 
efficiencies, that is, to lower cost and improve access to goods and 
services when they are acquired on a national level, rather than by 
individual facilities--for example, VA and DOD jointly purchase 
pharmaceuticals and surgical instruments for nationwide distribution. 

[11] In 1995, the University of Colorado decided to relocate its Health 
Sciences Center campus, including its affiliated UCH, from downtown 
Denver to the former Fitzsimons Army Medical Base located in nearby 
Aurora, Colorado, which was closed as part of DOD's base realignment 
and closure process. For more information on the proposed joint venture 
in Denver, see GAO, VA Health Care: Experiences in Denver and 
Charleston Offer Lessons for Future Partnerships with Medical 
Affiliates, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-472] 
(Washington, D.C.: Apr. 28, 2006). 

[12] Veterans Benefits, Health Care, and Information Technology Act of 
2006, Pub. L. No. 109-461, § 801, 120 Stat. 3403, 3442 (2006). 

[13] Veterans Benefits, Health Care, and Information Technology Act of 
2006, Pub. L. No. 109-461, § 801, 120 Stat. 3403, 3442 (2006). 

[14] For more information on the proposed joint venture in Charleston, 
see [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-472]. 

[15] Veterans Benefits, Health Care, and Information Technology Act of 
2006, Pub. L. No. 109-461, § 801, 120 Stat. 3403, 3442 (2006). 

[16] The Bob Stump National Defense Authorization Act for Fiscal Year 
2003 (NDAA), Pub. L. No. 107-314 (2002), required VA and DOD to 
establish a joint incentive program to identify and provide incentives 
to implement, fund, and evaluate creative health care coordination and 
sharing initiatives between VA and DOD. VA and DOD refer to this 
program as the Joint Incentive Fund program. NDAA also required VA and 
DOD to establish the Health Care Resources Sharing and Coordination 
Project to serve as a test for evaluating the feasibility, advantages, 
and disadvantages of programs designed to improve the sharing and 
coordination of health care resources between VA and DOD. VA and DOD 
refer to this program as the Demonstration Site Selection program. (See 
38 U.S.C. § 8111(d) and note to 38 U.S.C. § 8111.) 

[17] 38 U.S.C. § 8111(b). 

[18] GAO, Agencies' Strategic Plans Under GPRA: Key Questions to 
Facilitate Congressional Review, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-10.1.16] (Washington, D.C.: 
May 1997). 

[19] GAO, Program Performance Measures: Federal Agency Collection and 
Use of Performance Data, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAOGAO/GGD-92-65] (Washington, D.C.: 
May 4, 1992). 

[20] 31 U.S.C. §§ 1115 and 1116. 

[21] Many of the benefits of joint ventures that were identified by VA 
and DOD officials and academic affiliate representatives are similar to 
benefits associated more generally with health resource-sharing 
activities between VA and DOD. See GAO, VA and DOD Health Care: 
Resource Sharing at Selected Sites, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-04-792] (Washington, D.C.: July 
21, 2004); and VA and Defense Health Care: Evolving Health Care Systems 
Require Rethinking of Resource Sharing Strategies, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO/HEHS-00-52] (Washington, D.C.: 
May 17, 2000). 

[22] The President's Task Force to Improve Health Care Delivery for Our 
Nation's Veterans Final Report (May 2003). 

[23] The Sharing Act states that each sharing agreement shall specify 
procedures to ensure that the availability of direct health care 
resources to individuals who are not primary beneficiaries of the 
providing department is on a referral basis and does not adversely 
affect the range of services, the quality of care, or the established 
priorities for care provided to the primary beneficiaries of the 
providing department. (See 38 U.S.C. § 8111(e)(3)(D).) When VA enters 
into an agreement with a health care provider to provide services to 
nonveterans, the Secretary must determine that veterans will receive 
priority under the agreement and ensure that an acceptable level and 
quality of services is maintained for eligible veterans at that 
facility or will result in the improvement of services to veterans at 
that facility. (See 38 U.S.C. § 8153(e).) 

[24] The study concluded that the joint venture is more cost-effective 
than using the community. However, DOD officials said this study may no 
longer be valid under a new reimbursement schedule for VA and DOD. 

[25] GAO, DOD Civilian Personnel: Improved Strategic Planning Needed to 
Help Ensure Viability of DOD's Civilian Industrial Workforce, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-03-472] (Washington, D.C.: 
Apr. 30, 2003). 

[26] GAO, VA and DOD Health Care: Opportunities to Maximize Resource 
Sharing Remain, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-315] 
(Washington, D.C.: Mar. 20, 2006). 

[27] GAO, Results-Oriented Cultures: Implementation Steps to Assist 
Mergers and Organizational Transformations, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-03-669] (Washington, D.C.: 
July 2, 2003). 

[28] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-669]. 

[29] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-669]. 

[30] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-472]. 

[31] GAO, Year 2000 Computing Crisis: National Credit Union 
Administration's Efforts to Ensure Credit Union Systems Are Year 2000 
Compliant, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-AIMD-98-20] 
(Washington, D.C.: Oct. 22, 1997). 

[32] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-669]. 

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

[34] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-472]. 

[35] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-472]. 

[36] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-472]. 

[37] VA-MUSC Collaborative Opportunities Steering Group, Ralph H. 
Johnson Veterans Affairs Medical Center and Medical University of South 
Carolina: Collaborative Opportunities Steering Group Final Report (Dec. 
7, 2005); and VA-LSU Collaborative Opportunities Study Group, New 
Orleans Collaborative Opportunities Study Group Report (June 2006). 

[38] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-472]. 

[39] 31 U.S.C. § 1301(a). 

[40] In our Louisiana site visit, we also interviewed representatives 
from Tulane University about the proposed joint venture. Although the 
Tulane University Health Sciences Center does not have an ownership 
stake in the joint venture project, the university does have 
representatives involved in the process because it has working 
relationships with VA and LSU. 

[41] The remaining VA-DOD joint ventures were located in Anchorage, 
Alaska; Albuquerque, New Mexico; Fairfield, California; Honolulu, 
Hawaii; and Key West, Florida. The remaining proposed joint ventures 
between VA and academic affiliates involve (1) the Medical University 
of South Carolina and (2) the University of Colorado at Denver and 
Health Sciences Center and the University of Colorado Hospital. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office: 
441 G Street NW, Room LM: 
Washington, D.C. 20548: 

To order by Phone: 
Voice: (202) 512-6000: 
TDD: (202) 512-2537: 
Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: