REORGANIZATION OF THE VETERANS HEALTH ADMINISTRATION

THURSDAY, APRIL 6, 1995

House of Representatives,

Subcommittee on Hospitals and Health Care,

Committee on Veterans' Affairs,

Washington, DC.

The committee met, pursuant to call, at 9:01 a.m., in room 334, Cannon House Office Building, Hon. Tim Hutchinson (chairman of the subcommittee) presiding.

Present: Representatives Hutchinson, Smith, Bilirakis, Quinn, Edwards, Tejeda, Gutierrez, Bishop, and Doyle.

OPENING STATEMENT OF CHAIRMAN HUTCHINSON

STATEMENT OF KENNETH W. KIZER, M.D., M.P.H., UNDER SECRETARY FOR HEALTH, DEPARTMENT OF VETERANS AFFAIRS

STATEMENT OF WILLIAM J. SCHULER, PRESIDENT, CEO, PORTSMOUTH REGIONAL HOSPITAL, COLUMBIA HCA

STATEMENT OF DANIEL H. WINSHIP, M.D., DEAN, STRITCH SCHOOL OF MEDICINE, LOYOLA UNIVERSITY OF CHICAGO

STATEMENT OF DANIEL SPAGNOLO, M.D., PRESIDENT, NATIONAL ASSOCIATION OF VA PHYSICIANS AND DENTISTS

STATEMENT OF LYNNA SMITH, PRESIDENT, NURSES ORGANIZATION OF THE VA

STATEMENT OF LOUIS JASMINE, NATIONAL PRESIDENT, NATIONAL FEDERATION OF FEDERAL EMPLOYEES

STATEMENT OF DAVID GORMAN, DEPUTY DIRECTOR, DISABLED AMERICAN VETERANS

STATEMENT OF TERRY GRANDISON, ASSOCIATE LEGISLATIVE DIRECTOR, PARALYZED VETERANS OF AMERICA

OPENING STATEMENT OF CHAIRMAN HUTCHINSON

Mr. Hutchinson. This meeting will come to order--wherever the gavel is--I will take an opportunity to bang that gavel when I get one. I would like to take this opportunity to welcome our distinguished panels of witnesses who are taking time to testify before our subcommittee this morning. I would also like to thank the leadership of the American Legion and Vietnam Veterans of America who have submitted written testimony for this hearing. I look forward to hearing each of your testimony on the Veterans Health Administration proposed reorganization entitled Vision for Change , a plan to restructure and decentralize current VA field operations. The proposal seeks to reorganize the current 4-region structure into 22 Veterans Integrated Service networks or VISNs. The primary focus of the reorganization is to decentralize decision making authority to the field and to organizationally flatten and remove management layers from central office. The VISN structure was developed through a rather comprehensive process that included academics, employees, hands-on managers, and most importantly, those who will be directly affected by this process, the veterans themselves. I applaud Dr. Kizer for his leadership and his willingness to consider divergent viewpoints on a very complex and very needed undertaking.

In today's competitive health care market, our veterans deserve a health care delivery system that is responsive to their needs, understanding that health care is driven by local market conditions, I am very supportive of a structure that will afford maximum management flexibility to those closest to the delivery of health care. In my own district in northwest Arkansas, it will be very important to my veterans that planning and budgetary issues be resolved at a level where they can feel that their input is most meaningful and best understood. Understanding the enormity of this reorganization and the inherent reluctance of bureaucracies to accept change, I want to extend my cooperation to you, Dr. Kizer, and to your staff in this effort to focus VA's health care efforts on the goal of placing patients first.

Over the years this committee has worked on a very bipartisan basis to ensure that veterans' health care remains a priority. And as Chairman, I want to certainly recognize the efforts of the Chairman of the full committee, Bob Stump, and all of the contributions that he has made, as well as the long-time Chairman and now Ranking Minority Leader on the full committee, Sonny Montgomery, in fostering this climate of bipartisanship. Unavoidably, I will briefly leave the hearing at 9:45 to testify before the Joint Economic Committee; and during my absence Mike Bilirakis--and Mr. Bilirakis will be here a little later--will be chairing the hearing at that time. Now I want to thank Mike for his willingness to do that. Once again, I welcome each of our witnesses, and I look forward to each of their testimony.

Mr. Edwards, the ranking member of Texas, is unavoidably detained at the White House this morning so we will forgive him, recognizing that priority. And so when Chet gets here, we will give him an opportunity to give an opening statement.

I want to welcome Dr. Kizer, who will be our witness on the first panel. And, Dr. Kizer, all of your written statement will be included in the record. And we would ask you to keep your comments to 10 minutes or less so that each member of the subcommittee will have an opportunity to ask questions.

STATEMENT OF KENNETH W. KIZER, M.D., M.P.H., UNDER SECRETARY FOR HEALTH, DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY NORA EGAN, COORDINATOR OF THE TRANSITION WORK GROUP; JULE MORAVEC, Ph.D., DIRECTOR OF WESTERN REGION, VETERANS HEALTH ADMINISTRATION

STATEMENT OF DR. KENNETH W. KIZER

Dr. Kizer. Thank you and good morning, Mr. Chairman and members of the subcommittee. I am quite pleased to be here this morning to have an opportunity to discuss my plan to restructure the Veterans Health Administration (VHA). I know how hard you are working these days, and I appreciate your scheduling this hearing at this time. With me today at the table are Dr. Jule Moravec, the Associate Chief Medical Director for Operations, and Nora Egan, Coordinator of the team that has helped prepare the Vision for Change document that specifies our plan for reorganizing the Veterans Health Administration.

As you know, copies of the plan, Vision for Change , were sent to the committee on March 17 of this year.

In brief, this reorganization is designed to improve the delivery of health care to veterans, to improve the quality of that care, to increase the efficiency with which we provide it, and to establish accountability for outcomes and bottom-line results. I should also add that the reorganization plan is designed to retain or continue those things in the system that are functioning well, as well as to complement our several other statutory missions, in addition to providing medical care.

Perhaps the first issue that I would comment on this morning is: Why change the Veterans Health Administration? There are a number of reasons that warrant pointing out at this time.

First, technological advances, economic factors; the rise of managed health care; and a variety of other forces all profoundly changing how health care is delivered in this country. There has been a marked shift away from inpatient care and a dramatic rise in ambulatory, or outpatient, care. Many complex medical conditions that previously required hospitalization are now routinely treated at home or in outpatient settings. This trend toward moving care into ambulatory settings, or at home, is going to continue for some years to come. Indeed, I believe that it will not be all that long before the traditional, general, acute-care hospital becomes a large intensive care unit, taking care of only the sickest or most complicated of patients. Essentially all other medical care will be provided in ambulatory settings, at home, in hospices, or in various types of extended-care facilities.

The second reason why we should change the Veterans Health Administration is that there have been a number of reports in recent years that have concluded that structural changes--indeed, very fundamental structural changes--are needed in the system. In the aggregate these reports have consistently found that VA needs to become more flexible, more customer-focused, more decentralized, and more cost effective.

And finally, for a variety of reasons, there has been a fundamental reanalysis of how government should function in recent years. The National Performance Review and other activities are being undertaken to re-invent Government, to minimize bureaucracy, to reward efficiency and innovation in government, and to empower employees to make government work better for citizens.

Mr. Chairman, our plan for restructuring the Veterans Health Administration will position our veterans' health care program to adapt to the rapidly-changing, larger health care environment that we must function within. It will improve customer service, and it should certainly improve the efficiency of our operation.

Moving to a few details, the foundation for accomplishing these changes in the veterans' health care system involves the dissolution of the current hierarchical central office, regional office and network structure that is currently in effect. In its place we would create a federation of Veterans Integrated Service Networks supported by a national headquarters. At this time, the plan calls for 22 of these integrated service networks with each network including from 5 to 11 medical centers and various other VA assets. The chart gives you a schematic depiction of what some of these other assets are, including long-term care facility or medical centers, various clinics, vet centers, et cetera.

The network boundaries have been established to preserve existing patient-referral patterns; to include aggregations of patients and facilities that would be needed to support a continuum of primary, secondary, and tertiary care; and to a lesser extent, to be consistent with political jurisdictional boundaries such as state lines.

It is envisioned that these networks, or VISNs, will become the basic budgetary and planning unit for delivery of veterans' health care.

As an integrated system of care, the new VISN structure will emphasize the pooling of resources, the delivery of outpatient and primary care, partnerships, and customer service. A premium will be placed on improved patient services, rigorous cost management, process improvement and outcomes. Emphasis will be placed on the integration of ambulatory care, with acute and extended inpatient services to provide a coordinated continuum of care. Redundant administrative structures and processes will be eliminated. And each layer or process in the new organization will be expected to add value to the delivery of services in the field.

Each VISN Director will be assisted by a small staff of professional, technical, and support personnel, the number varying with the size and complexity of the individual network. Again, on the chart here you can see a schematic of basically how the VISN will relate to the Office of the Under Secretary and to other components that I will get to in a moment.

During the transition from where we are--or how we are organized at this point to the new organization--we will continue to utilize personnel in the existing 4 Regional Offices as Support Service Centers, as you can see on the chart there. Expertise in areas such as construction management, finance, planning and quality assurance will be preserved to ensure continuity of operations while the regions dissolve and the VISNs become operational.

Another structure you see on the chart there is the Management Assistance Council. This is a formal structure that I feel is important to the functioning of the organization. We intend to establish the Management Assistance Councils at each VISN, these will be composed of both internal and external stakeholders, to ensure that the needs of the patients, the communities, and others, are incorporated into our decision-making process and that there will be a formal structure by which that input will be attained.

Let me conclude my comments on field reorganization with some brief comments on how we will achieve accountability in the more decentralized Veterans Health Administration system that this reorganization plan would create. Concern about accountability led us to devote an entire chapter of the plan to performance measurement and assistance monitoring--although I would add that there was a lot more that could be said, and that we could have written on that.

The cornerstone of the accountability system will be a performance contract between each VISN Director and the Under Secretary's Office. Each contract will cover three general areas: first, the systemwide tasks and needs that all VISNs will be expected to complete; second, the VISN-specific service delivery and efficiency objectives directed by Headquarters; and third, VISN-specific objectives developed by VISN management. Performance contracts will include support of education and research, as well as our fourth mission, emergency preparedness.

Key areas of focus for the performance measures will be patient satisfaction, ease of access to care, the quality of care, and efficiency. Performance measures will focus primarily on outcomes, rather than on processes, and will be selected to allow for comparison to national and private-sector measures.

In summary, field units and senior managers will be held accountable for measurable improvements to the veterans' health care system. The resulting efficiencies should allow the Veterans Health Administration to invest in new ways of providing high quality, efficient ambulatory, as well as inpatient, care to better meet the needs of our veterans as well as to better meet their expectations.

Mr. Chairman, I would note that in an effort to move as expeditiously as possible, we have begun to make preliminary plans for implementing the field reorganization. These, of course, are subject to compliance with current law and input that we receive as part of this hearing process. We are establishing a steering committee to oversee the many activities that will be involved; and we are creating a number of technically-oriented work groups that will handle detailed actions such as activation of the VISNs, development of performance measurements, executive performance contracts, employee education, resource allocation, and a number of other areas. We understand that the 90 days in session provided to the Congress for review of the plan under the current law--unless earlier legislative approval is provided--will be completed in late July or early August of this year, depending upon the recess schedule of the Senate.

Let me conclude my comments with just a brief note on restructuring of VHA's Central Office.

In order for the field reorganization to be successful, and for the VISNs to be empowered to make appropriate operational decisions, headquarters must change its focus from micro-managing operations to the critical role of governing and leading the system overall. Offices in the future will be organized by function or product line, whenever possible, rather than in the discipline-specific stovepipe nature that they currently are organized. Headquarters must focus much greater attention, in the future, on achieving systemwide quality improvement, information management, cost management, and strategic planning.

Mr. Chairman, that concludes my general, introductory comments on our plan to restructure the veterans' health care system. I certainly would be pleased to answer any questions that you or any other members of the subcommittee have at this time.

[The prepared statement of Dr. Kizer appears on p. 60.]

Mr. Hutchinson. Thank you, Dr. Kizer. And, again, I appreciate your efforts to address, I think, what all of us recognize as a need for reorganization and better services at a more local decision-making level.

I have met, as I know you have, with many of the veterans' service organizations, the veterans groups, and you have included their input in designing this reorganization. Many of them express concerns about the relative autonomy of the VISN Directors and were concerned as to what guarantees there might be to ensure that hospital and VISN Directors would not arbitrarily eliminate specialized services because of the high cost involved. Could you comment on the need to address that, whether any statutory language might be needed to ensure and to guarantee the continuation of those specialized services.

Dr. Kizer. Certainly, sir.

Of course, what really characterizes the veterans' health care system, indeed the hallmarks of the system, are our specialized services. However, you cannot have specialized services such as spinal cord injury and blind rehabilitation without having a full-service complement of health care services to support those. It would really make no sense for this system, though, to eliminate, to denigrate or to de-emphasize what are our hallmark programs, and what characterizes us as a system. So, sir, I think that within the organization there is widespread recognition that these programs deserve special recognition and that they will continue to require that focus in the future. Yes, while they are costly and often labor-intensive, and they would not be, quote-unquote, competitive in the private sector, they are the essence of what the veterans' health care system is all about.

So, one, I think that denigrating these programs would not be wise for the system, and I think that our managers recognize how foolish it would be to do something that would work to the detriment of the system such as undermining these programs. Second, I would note that while we intend to decentralize, we certainly are not abandoning our oversight responsibility. We have had this discussion with many of the veterans' service organizations, as well as others. We recognize the need to develop performance criteria and other measures that we can use to track these programs in a way that will not only guarantee their ongoing survival and functioning, but which will really improve the quality of service that is provided through these programs in the future. And, third, I guess I would point out that there continue to be considerable provisions already in the law for Congressional oversight of these programs that require notification of not only the headquarters, but also Congress, if any such substantive changes are to be undertaken at the local level. I recognize the concern, and perhaps nervousness, if you will, that some entities may feel about this change anyway, I think it is very understandable that they would have some anxieties. I think, if anything, what we hope will come out of this is a strengthening, not only of the specialized programs, but the system overall.

Mr. Hutchinson. Thank you, Dr. Kizer.

Mr. Quinn, you are recognized. We will be under the 5-minute rule, and we will give an opportunity for a second round of questions if so desired. You are recognized.

Mr. Quinn. Thank you, Mr. Chairman. And thank you, Dr. Kizer, for your comments. I might mention also that I am a member of the Joint Economic Committee where Mr. Hutchinson is going to testify so I will leave to hear his testimony. Maybe we would save some time if we just stay here and traded, Tim, and we could all stay with all of you this morning.

I read your testimony, Doctor, and appreciate your comments this morning; and we have a meeting scheduled, I think, over here in the first part of May with my veterans staff to talk about this and other matters. Just a couple of general questions: I like the concept, first of all. I think it is a step in the right direction. Just a question on the MACs, the big MACs as I called them when I read through here, the Management Assistance Councils: Did I read it correctly that for each VISN there will be a council to sort of advise? And you know the chart that you listed for the councils did a pretty good job of including everybody, local officials, state officials, hospital officials, and so on, and so forth. Do we envision a council for each of the 22 VISNs that you are talking about?

Dr. Kizer. That is correct, sir.

Mr. Quinn. So some of Tim's concern, which is a concern I shared and the organizations mentioned to you and to us, about making certain that whether it is Congressional oversight--which is a little bit removed in Washington, DC from the actual operations--some of the concerns that the organizations may have could be discussed and could be reviewed in the council.

Dr. Kizer. Absolutely. Indeed, that is one of the reasons why I am including this formal structure, which would include representation from the veterans' service organizations. These MACS would provide a forum where these issues could be discussed at a very early stage. And if there are problems, they would be brought to the attention of management and hashed out at that level. But the idea is to provide a formal forum for stakeholder input to occur at the local level.

Mr. Quinn. And I think as important as the concerns early on would be that ongoing that you mentioned. I mean, we need to walk before we run with this thing; I think we would all agree. As the process evolves, there may be additional concerns that the veterans' organizations--and they are going to need a place to air that. They are going to need a place to have some feedback and some response, not only by calling their local Congressmember or whoever it happens to be, but I think that local level of input is key to all of it. So I will be looking with you at that as it evolves.

Thank you for your answer. There is no question that this is a change, dramatic change. How much discussion--we are talking about late July, early August as a possibility to be operating here; you think?

Dr. Kizer. As we have looked at all of the steps that need to be taken internally, our goal is to have this system fully operational by October 1, 1995--concomitant with the new fiscal year, with the hope that we would be phasing it in starting in the early fall--i.e, August or September.

Mr. Quinn. Okay. And how much discussion has gone on in the field, I mean, at local VA Hospitals and some of the other assets that you talk about when you try to get to these 22 VISNs? Is there communication back and forth with hospital directors and staff out there already, and how much?

Dr. Kizer. Yes, sir, there has been considerable field involvement. Just to give you some idea--when we floated some of these concepts out to the field last November, we got about 1,500 pages of response back from our field facilities. With the draft versions of the plan that were sent out, we got additional response. The plan has been discussed in numerous different forums both in the field and in VACO. I do anticipate also that we will, over the next several months, be making considerable efforts to actually visit a wide array of these facilities, particularly ones where there may be some potential problems, to see what we can do to facilitate the process from a headquarters point of view.

Mr. Quinn. That is a good idea. I was at the Buffalo, NY center this weekend and talked with our director on Saturday. And I think we are going to be pleasantly surprised at those out in the field who want to help. And the reaction has been somewhat positive so far. So thanks for your answers and your comments. I look forward to working with you.

Dr. Kizer. Thank you. And I would just add also that the response that we have gotten from the field overall has been very, very positive; they are chomping at the bit to get going.

Mr. Quinn. Thank you, Dr. Kizer.

Mr. Chairman.

Mr. Hutchinson. Thank you, Jack.

Mr. Tejeda, the gentleman from Texas is recognized.

Mr. Tejeda. Thank you, Mr. Chairman.

Dr. Kizer, I want to commend you for stressing in your testimony the plan's emphasis on outpatient care and primary care. You know, many Texans, many veterans living in South Texas, have very little access to ambulatory care; and they have to drive hundreds of miles to reach some crowded centers. Let me just ask you: What are your thoughts on the prepared testimony of William Schuler of Columbia HCA, recommending the VA to develop contractual relationships with private sector health care providers? Would such a contract be cost effective for the VA?

Dr. Kizer. We would want to look at that and see what the specifics are within the specific community that was involved. Under the scenario that we have outlined here, what I would hope our managers would do would be to review the opportunities that might exist, whether it be contracting with a private provider or using VA assets, or using an academic affiliate, or contracting with a DoD partner, or whatever; look at the cost; look at the access; look at the quality of care; look at the needs of the veterans identified with the system, and a number of other things; and then come up with plans that would work best to serve the needs in that specific community; and also involving entities like the management assistance councils.

Mr. Tejeda. Just one other question: How will the new VISN Networks affect VA medical research carried out at several facilities within one network? Will the plan have a negative impact on individual VA medical facilities associated with some of the universities within their--particularly on the medical research aspect of it?

Dr. Kizer. It is hard for me to envision how it would have a negative impact. I do see the potentialk for some very--potentially--some very positive impacts and some opportunities, particularly opportunities for our academic partners to look at service-delivery issues and primary-care issues and some other things which historically have often been hard for academic institutions to focus on because of the lack of a partner that has a service-delivery network that would provide those opportunities to do that type of research. So I see really no negative effects, and a number of potential positive benefits to this.

Mr. Tejeda. Thank you very much.

Thank you very much, Mr. Chairman.

Mr. Hutchinson. Thank you.

Our good friend from Florida, Mr. Bilirakis, is recognized.

Mr. Bilirakis. Thank you, Mr. Chairman. I, too, want to welcome Dr. Kizer and his colleagues with him to our hearing.

I have an opening statement and I ask unanimous consent that it be made part of the record.

Mr. Hutchinson. Without objection.

[The prepared statement of Congressman Bilirakis appears on p. 51.]

Mr. Bilirakis. Thank you, Mr. Chairman.

Dr. Kizer, Mr. Tejeda brought up, of course, the point of research; and I had not planned to get into that. But his point is well taken. And research, medical research, is something that has always concerned me that there may not be adequate coordination, if you will--that may be a lot of duplication of effort in all that. I am sure that there is in all research. And that concerns me as far as the private sector is concerned, NIH, our universities, et cetera, et cetera. So I guess the same thing applies to VA research. And I know VA research is a good research. It is something we should all be very proud of and should retain. So I am not really going to raise a question in that regard, but I would hope that that is not going to be interrupted, maybe even enhanced, as a result of your plan. But, you know, you do worry that when you have a splitting up like this--which makes sense in general, as far as I am concerned--but when you have a split up like this, does that mean that you have a chance of less coordination, if you will, between the research groups.

Specialized services were brought up. And that is a subject close to my heart. And I guess you answered it pretty well. But in terms of the medical center directors, you know, the authority that they may have to reduce these services in order to save money--I mean, part of the bottom line is obviously going to be important in our lives for ever and ever. Will they have the authority to reduce those services to save money? And they are very expensive, as you already indicated.

Dr. Kizer. Under this concept, the VISN Director, or the VISN, becomes the basic budgetary unit, as opposed to the individual medical center. With this we see some potential, real positive attributes for our specialized services. As we change our focus from that individual institution to a population of veterans over a geographic area, how we can pool the resources within that area to better serve the needs of the veterans that are within that VISN catchment area and we actually can enhance, or potentially enhance, those specialized services by changing the focus from what one institution can do, to what five or six or seven institutions or medical centers combined with various other facilities, long-term care facilities, and clinics, working in coordination can do to actually enhance those services. So again, while I recognize the concern, I would go back to the fact that these specialized services are the hallmarks and really characterize the veterans' health care service. They are at the core of the system.

And I see some very good potentials for strengthening specialized services and for making them better than what has existed in the past. And while I am cognizant of those concerns, I do not think they are realistic concerns.

Mr. Bilirakis. Well, I appreciate it. I trust that it will work out the way you intended in that regard. And as you have just said, they are the hallmark of our VA system health care and health care system.

And really I use them; I have been contacted--maybe we all have--by the press and by others regarding this idea of the VA health care system being eliminated and veterans given vouchers to buy care in the private sector. And, or course, I find a lot of fault with that. But certainly a part of that fault is the fact that the hallmark of our system is these specialized services. And there is not any way they could get those same specialized services in the private sector.

So, but let me ask you then your opinion--if I may put you on the spot--regarding the voucher idea.

Dr. Kizer. Well, sir, I believe that we have the potential; and within 2 or 3 years, we will have the proof that the system that we are proposing will not only be better than the voucher system but, I think it will be much better than any sort of system that would be proposed or conceived of, such as a voucher system. I, frankly, do not think that vendors are the way to go for veterans' health care. I think that we have tremendous potential, to make the VA health care system the flagship health care system of the 21st century. With some polishing, this somewhat raw diamond can indeed be such.

Mr. Bilirakis. So your thinking is that in spite of the budgetary constraints that we not only have now but will continue to have, and the fact that we are--certainly this committee is--going to be in the forefront of the eligibility reform process which conceivably--and maybe hopefully--will bring in a larger number of veterans, if you will, that you do not think that that might be part of our future, vouchers?

Dr. Kizer. I do not see that at this point sir. I do not rule out the possibility that we may work in new ways with private sector entities. But as far as turning the system over, vouchering it or whatnot, I really do not see that as a viable alternative. I think that we can show quite well, and even more so in the future, that we are not only more cost effective, but that we will provide better service than would be achieved in such a scenario.

Mr. Bilirakis. Well, thank you, sir. Good luck.

Mr. Hutchinson. Thank you, Mike.

The gentleman from Illinois, Mr. Gutierrez, is recognized.

Mr. Gutierrez. Mr. Chairman, I ask unanimous consent to have my opening statement put into the record.

Mr. Hutchinson. Without objection.

[The prepared statement of Congressman Gutierrez appears on p. 54.]

Mr. Gutierrez. Thank you, Chairman.

And thank you very much, Mr. Kizer, for being here. I just have one question for you. It is apparent from your testimony that you plan to put a renewed emphasis on outcomes and results. You are going to establish performance contracts, for example. What are some of the criteria you are going to use to judge the performance of a facility or a group of facilities, or even individuals? And is there any chance that we would put a commodity on things like timeliness or efficiency? And when we do that, do we end up creating a system that rewards quantity over quality? For instance, what happens if we ask: How many patients did you see today? rather than: What did you do for each patient to make them better?

Dr. Kizer. Thank you, sir. As noted in Chapter 4 of the document, we have given various examples of those different areas and exactly the areas that you are talking about. We would see timeliness as one of the areas that we would be looking at. We also see quality of care, customer satisfaction, and a number of other things that would be specifically looked at. I think that your concern is an appropriate one if you only looked at a very narrow slice. But if you look at a comprehensive performance assessment where, yes, timeliness is an issue; but quality is also measured; patient satisfaction is also measured; efficiency is measured; complications are measured; and you put those together, then you have a balance system where you are not just achieving quantity over quality or the scenario that you had expressed.

I think that our approach is a very balanced approach. We have a number of different menus that we can choose from as far as looking at performance measures. One of the things that we would anticipate starting work on in the near future would be developing those specific contract measures for the VISNs, looking at their performance historically in these different areas, looking at the evidentiary base that we have in these things that has accumulated in recent years, and then coming up with measurements by which the management of the various VISNs would be held accountable.

Mr. Gutierrez. Thank you, Dr. Kizer. And the concern is simply that as I have watched health care reform during the last--I do not know--maybe 10 to 12 years in my own personal life, it seems like every time I get a health care provider, a new one, whether I am working in the Chicago City Council or moving to Congress and have to change health care providers, or they change, it seems like there is more of an emphasis on efficiency but not really quality in terms of the doctors that you see and the relationships that you develop with those doctors. And those medical institutions seems to be simply saying: We are going to be more efficient. And more efficient has not exactly meant better health care or more personalized health care--at least not in my own personal life. And it has not seemed to work that way. So I want to make sure that as we look at the health care system in the VA, that we maintain that kind of personalized health care where people feel that they have a doctor, they have a relationship with the medical institution.

Chairman Hutchinson, Thank you very much.

Dr. Kizer. Let me just add one brief remark, for your point is very well taken. I think with the increased emphasis on primary care and ambulatory care that is envisioned under this scenario that you will see the personal nature of care increase in the future in the VA.

Mr. Hutchinson. Thank you.

And, Dr. Kizer, in reading the summary of the reorganization plan, I know that one of the goals is to provide the best quality care as possible and to meet the patients' needs. But there was one statement on Page 17, that troubled me, but I would like you to expand on it. It says to be successful, the integrated health care system requires management of total costs, a focus on populations rather than individuals, and a data-driven, process-focus customer orientation. Well, it seems paradoxical to me that we talk about total costs and populations rather than individuals, and then talk about customer orientation.

I am wondering if each of the VISNs has, in effect, a kind of global budget under which they operate? And if the goal then is going to be the management of total costs, where does the the focus on the individual come? And how can we be assured that the individual veteran will not be lost in the greater scheme of the budget?

Dr. Kizer. Indeed, I think that if you were to look at it purely as a budgetary exercise, that might be a concern. But again, the business that we are in is taking care of individuals. We can do that, I think, in a better way when we look at populations and how we can serve the needs of the populations. But at the cornerstone of that are the individuals. So the two really are not exclusive, or they are not contradictory, because health care is basically a one-on-one business between a doctor and a patient, a nurse and a patient, etc. And that is what will continue in the future. But from a planning point of view, we are looking at managing it, so that how we can serve more patients, and provide better care to those individual patients within the system. If we focus on a population, a geographic area, then we can start to achieve some economies, some efficiencies. We can start out-stationing facilities that make it more convenient for the patient to get care in a way that has not been the case in the past in this system.

Mr. Hutchinson. Do you see that there would be more rationing of medicine under the reorganization or less? And when you use the term protocol in the reorganization plan, exactly how do you define the word protocol. And how does that fit into the overall scheme of the reorganization?

Dr. Kizer. In the protocol, are you referring to political protocols?

Mr. Hutchinson. Yes. If you had a recipe that would be used.

Dr. Kizer. One of the things that many health entities have found useful is defining clinical benchmarks, best practices, or clinical protocols--they go by a variety of different names. And while that is not a specific recipe that everybody falls into, if you can define those best practices or protocols for patients and, as a system, you strive to use them, then experience outside the VA has shown them to have been beneficial for individual patient care, the quality of that care and also the efficiency with which that care is provided. Protocols help clinicians answer such questions as--Do you have to get x-rays for this condition? How many times do you need to get a laboratory test? And a number of other things. Depending on the condition that is under consideration, what many health entities have found is that using best practices, or the protocols, has improved the quality of care, as well as in many cases reduced the cost by avoiding unnecessary testing that really does not have any value in making the patient better.

Mr. Hutchinson. Thank you, Dr. Kizer.

The gentleman from Georgia, Mr. Bishop, do you have any questions you would like to pose?

Mr. Bishop. Not at this time, Mr. Chairman.

Mr. Hutchinson. Okay, thank you.

Do any--okay, Mr. Doyle.

Mr. Doyle. Good morning.

Mr. Hutchinson. We will let you warm up and then come back to you. Do any of the members have another round of questions?

Mr. Bilirakis. I have just a quick one, Mr. Chairman. I guess maybe it is not all that quickly answered.

Construction: How would the new plan affect the construction plan in terms of planning and that sort of thing?

Dr. Kizer. One of the tasks that I would expect our VISN management to complete within the first year, would be to develop a 5-year, strategic plan for the facility needs they might have in their service area. And then we would be looking at that from headquarters. So that, without speaking specifically about any facility, would be a planning process.

However, perhaps more to your point, where I see the system going in the future is toward becoming an outpatient-based system, looking at lease arrangements, looking at joint venturing, looking at a number of other ways that we might get more return on our dollars as opposed to necessarily building facilities ourselves. And what I would hope is that our field managers would have the flexibility to look at what the needs are, what those needs might be in the future, and how they could best serve those in the most efficient way possible. And it may be that this can be best accomplished by situating a small clinic or a larger clinic or a number of clinics, but I would see much less emphasis in the future on traditional hospital construction.

Mr. Bilirakis. And they would be--their responsibility would be really a recommendation responsibility, suggestions, recommendations to headquarters; and headquarters would make the final decisions as far as any construction goes, and that sort of thing.

Dr. Kizer. VISN Directors would have to come to VACO for projects that are above limits that are specified. Projects below the threshholds could be done locally subsequent to process of notification.

Mr. Bilirakis. I see.

Dr. Kizer. It might be possible to situate some small clinics or access points.

Mr. Bilirakis. Sure.

Dr. Kizer. That made sense without----

Mr. Bilirakis. So they would have the authority----

Dr. Kizer. They would still have to notify us and----

Mr. Bilirakis. Sure.

Dr. Kizer (continuing). As well as Congress. But in many cases, when it is being done within existing resources, they could do that, certainly.

Mr. Bilirakis. Thank you.

Thank you, Mr. Chairman.

Mr. Hutchinson. Thank you, Mike.

Do other Members have questions of Dr. Kizer?

I would recognize Minority Counsel, Mr. Ibson, for questions.

Mr. Ibson. Yes, sir. I would like to expand on the questions that the Chairman asked you earlier, and related questions from Mr. Bilirakis. In responding to their questions, you have expressed confidence that the integrity of specialized medical programs would be preserved. I think, veterans' service organizations have very real concerns regarding integrity of those programs. And I think those service organizations may have raised those concerns because historically during periods of budget constraints those programs sustained cuts. Given the confidence you expressed that those programs would be protected, would you have any objection to legislation to ensure such protection?

Dr. Kizer. Recognizing that we are not talking about any specific legislation, I can only comment in the abstract. I would hope that we would exhaust all other means first before it were necessary to enact statutory changes. For example, one of the things that has struck me about this is that some of the groups who have complained or who have voiced, I think, some legitimate concerns about where some of these services have gone, have never met with the directors, or met with them collectively, to try to work out what the problems and solutions might be. It occurs to me that in the absence of having that sort of dialogue, it would be premature to effect legislation. And certainly the direction, the tack that I am taking, or would like to take, is that we explore all these other common sense approaches, that we talk about this, that we work together to achieve our common purposes, and that we reserve statutory mandates to when that is absolutely needed.

Mr. Bilirakis. Would the Chairman yield just for a quick moment?

Mr. Hutchinson. Sure, Mike, you are recognized.

Mr. Bilirakis. Dr. Kizer, did you--have you read--the next witness is Mr. William Schuler. He is President, CEO of Portsmouth Regional Hospital, Columbia HCA system. Have you read his written testimony?

Dr. Kizer. I do not believe I was provided his testimony, sir. But I have not read it, to answer your question.

Mr. Bilirakis. I would like to recommend, Mr. Chairman, that a copy of that might be given to Dr. Kizer; and if he has any rebuttal or any comments regarding it, he may possibly furnish to the committee in writing.

Mr. Hutchinson. The staff will provide Dr. Kizer a copy of the testimony; and if you would give us a written response then.

Dr. Kizer. Sure. I would note that I have met with representatives of Columbia HCA and have discussed where we are going and getting some of their thoughts in the past. I do not know whether Mr. Schuler is aware of that or not.

(Subsequently, the Department of Veterans Affairs provide the following information:)

Mr. William Schuler, President and Chief Executive Officer of the Portsmouth Regional Hospital and Portsmouth Pavilion, Columbia HCA Healthcare Corporation relayed the positive impact on his medical system after a corporate decision was made to decentralize operational decision making. It was instructive to us as we restructure the VHA healthcare delivery system. By decentralizing operational decision making we will increase the autonomy of field management in making operational decisions.

First, Mr. Schuler's company is pursuing an organizational strategy similar to what we have proposed for the veterans' health-care system. We believe this reflects the understanding that health-care is fundamentally a local enterprise and larger health-care organizations function best when operational aspects are decentralized.

Regarding the reference made in Mr. Schuler's remarks to a proposal that would have VA contract with the Clinch Valley Medical Center (a Columbia/HCA hospital located in Clinch valley, Virginia) to obtain certain services for veterans living in the local area, I understand that the proposal is still being reviewed by the regional staff, and a contract has not yet been approved. Further, I understand that the intent of the proposal is to establish a VA clinic that would operate half days, Monday through Friday, staffed with personnel contracted from the community. The clinic would provide an access point for primary medical and psychiatric care only. All additional modes of care, other than acute emergency, would be referred to the Salem VA Medical Center.

This arrangement is the kind of innovative arrangement with the private sector that will be facilitated as a result of VHA's planned restructuring. This is an example of the ``virtual organization'' referenced in Vision for Change . I applaud Columbia/HCA's interest in contracting with the VA to improve veterans' access to care, and I envision many other opportunities for sharing with the private sector in the future.

Mr. Bilirakis. Thank you.

Mr. Hutchinson. Thank you, Mike.

Do any other Members have questions?

Dr. Kizer, I want to thank you for your time. I thank you for your effort in this reorganization plan. We appreciate it very much. We will excuse you at this time.

Dr. Kizer. Thank you, sir.

Mr. Bilirakis (presiding). We will ask the second panel, Mr. Schuler, President, CEO of Portsmouth Regional Hospital in Portsmouth, NH, representing Columbia HCA.

Mr. Schuler, I welcome you to this hearing, very important hearing, and would ask you if you would try to keep your oral remarks to 5 minutes, or as close thereto as possible. But obviously your entire written statement is a part of the record. So if you do not mind the gentleman being in front of you, if that will not bother you, I would appreciate if you would start. Take your time, sir. Please start, Mr. Schuler.

STATEMENT OF WILLIAM J. SCHULER, PRESIDENT, CEO, PORTSMOUTH REGIONAL HOSPITAL, COLUMBIA HCA

Mr. Schuler. Fine. My name is Bill Schuler. I am a----

Mr. Bilirakis. I have been corrected. It is 10 minutes, rather than 5 minutes. We do 5 minutes in Commerce. Sorry. So you have 10 minutes, apparently.

Mr. Schuler. Okay. Thank you.

My name is Bill Schuler. I am a former U.S. Marine Corps Infantry Platoon Leader, a Vietnam veteran. I did receive a Purple Heart and a Bronze Star as a Marine Officer in Vietnam. And I am pleased and honored to appear before this subcommittee today.

I am presently--currently president and Chief Executive Officer of Portsmouth Regional Hospital and Portsmouth Pavilion. As President and CEO, I am responsible for all internal and external services at the 144-bed medical surgical facility and the 65-bed psychiatric hospital in Portsmouth, NH, where both facilities are located. We have approximately 900 employees, 125 members of our medical staff, and a $75-million-plus budget.

Portsmouth Regional Hospital and Portsmouth Pavilion are both owned and operated by Columbia/HCA Corporation, based in Nashville, TN. Pending a planned merger with another health care company, Columbia will own and operate more than 315 acute care and psychiatric hospitals, more than 100 ambulatory surgery centers, and dozens of home health agencies in 35 States and 2 foreign countries.

In 1944--1994, Columbia employees and facilities provided more than $1 billion in uncompensated and charity care; and the company paid more than $1.2 billion in local, state, and Federal income taxes.

I am pleased--taxes--I am pleased that this subcommittee is seeking information from the private sector as the veterans' health system reorganizes. And I appreciate being part of that process.

Columbia has been an agent of change sweeping in health care. The company's strategy is to have local management make nearly every key decision regarding the operation of that hospital. Local managers are responsible for all personnel decisions, for local marketing programs, for negotiating and signing local contracts, and for establishing and requesting our own levels of capital funding. The corporation is now a service entity to these hospitals, helping my hospital become a stronger local competitor. The corporate offices negotiate national purchasing contracts, suppliers with suppliers, to reduce significantly the cost of supplies to my hospital. The corporate office is also responsible for operations and installation of computer information services which help track financial data and ease the paper flow burden at the hospital on the hospital employees and are instrumental in tracking medical outcomes that enable us to measure and improve the quality of our care. Finally, the corporate office is responsible for capital formation, which it does by issuing shares of stock or borrowing in public debt markets.

The decision to decentralize has provided my hospital and community with many benefits. But make no mistake, the decision was based on how to best compete and survive in today's rapidly changing health care environment. As many of you know, hundreds of hospitals have closed over the past 5 years. More than 10,000 hospital beds were taken out of service in 1994.

In my view, this type of local autonomy is suited to the veterans' health system. Having just listened to Dr. Kizer's proposals, I was encouraged by the fact that the VA is beginning to take a look at decentralization; and I think it is a good move on their part. As this subcommittee examines the restructuring of the veterans' health system, I would like to make some other suggestions as well.

I believe this is an ideal time for the veterans' health system to expand contractual relationships with private-sector health care providers. This will enable the VA to use the excess capacity in the private sector to provide improved ambulatory access to veterans, especially to elderly and chronic patients with limited ability to travel. I am pleased to learn of a public/private initiative in Virginia that may offer future alternatives to the VA veterans who seek to restructure and reform itself to better serve both veterans and taxpayers.

Veterans living in a rural area around Richlands, VA now must travel 2\1/2\ hours to the nearest veterans hospital, which is in Salem, VA. Clinch Valley Medical Center, the local hospital, which is owned and operated by Columbia/HCA, has excess capacity of 42 percent. The management of the Salem VA Hospital has agreed to contract with Clinch Valley Medical Center to provide certain services to veterans living in the area. This experiment will likely demonstrate the cost-effectiveness of public and private partnerships in the provision of health care to rural areas of declining population.

In this agreement, the VA will contract with a local internist, nurse, and secretary. The hospital will lease an on-campus site to the VA. And the hospital will provide necessary ancillary services, such as diagnostic procedures and pharmacy, to the clinic for service-disabled veterans. Once the success of this phase has been established, the local hospital hopes to expand the program to include elective procedures and emergency care for service-connected and nonservice-connected veterans.

In brief, I believe this arrangement will ensure that area veterans receive consistently high quality care delivered locally and efficiently on a timely basis. In my opinion, it does not make sense for the Veterans Administration to compete with organizations such as Clinch VAlley Medical Center. Clinch Valley pays taxes, provides jobs, and delivers quality care to patients regardless of their ability to pay. It makes sense for them to work together. I know this proposal will come before the appropriate Appropriations Subcommittee, and I encourage its passage.

By decentralizing the authority of VA centers, local administrators can make decisions like these to contract with regional private hospitals to provide veterans with care they need in their own communities. It makes sense for the VA; it makes sense for private sector hospitals with excess capacity; and most importantly, it makes sense for veterans.

And speaking as a veteran, and not as a health care professional, I would like to receive my care in my community when I become ill, just as Medicare and Medicaid patients can. I recognize that this change is dramatic and cannot come quickly, but I encourage you to lay the groundwork for that change now. I believe these hearings can lead to that process and other veterans--and I and other veterans seek. So I thank you, Mr. Chairman, for the opportunity to address this subcommittee.

[The prepared statement of Mr. Schuler appears on p. 63.]

Mr. Bilirakis. Thank you, Mr. Schuler. Well, Mr. Schuler, you are a veteran; and I commend you for your service to this country. You may know that the veterans have been very zealously guarding separate veterans' health care over the years. The mainstreaming--I think that is the right term; is it not--that is something that they really have not really been willing to accept over the years. I realize that over the years some things may be changing. Ideas and thoughts may be changing because of budgetary constraints and maybe some common sense and that sort of thing. But in your experience, whether you have had personal experience, or whether you were talking about other Columbia/HCA Hospitals or other private facilities, has this idea been welcomed by the veterans, the privatizing; if you will?

Mr. Schuler. I--I believe so. There was a discussion here of vouchers. My personal opinion, not as a hospital CEO now but as a veteran, is that a voucher system basically puts the power into the hands of that individual veteran. If, in fact, the veterans' services and hospitals provide the finest quality of care and accessible and easy for them, then I believe veterans will use that. And by the way, I do not think--I am not one that thinks that the voucher system should close the VA system at all. I think it simply puts the power into the hands of that individual veteran to let him make a choice. If, in fact, the veterans hospital or health care service in that area is, as Dr. Kizer mentioned, one of the finest there is, the veterans will clearly use it. And if, in fact, it is not, you have a choice for the veteran to get that care elsewhere. And to me that is the benefit I see of the vouchering and decentralization. I think the decentralization concept which Dr. Kizer had mentioned--and as I was listening to it--was really a very good start. It really puts decision making closer to where the tire hits the road. As a former Infantry Platoon Leader, one of the early examples I got was that the decisions made closest to where the action was was usually the best decision making. And it seems to me that the VA is moving in that direction, and I would encourage that type of----

Mr. Bilirakis. Well, all right. Let me sort of play Devil's Advocate, because that is really what I am trying to do. All right if the situation determines that most of the veterans in a particular area do not find the services at the VA as adequate as maybe they would maybe a private facility and switched over, you were basically probably leading up to closing down that facility. I mean, you are not going to keep it open if there is hardly anybody to serve, which maybe based on what you say is maybe what should take place. But then we get to the specialized care. And they are the only ones who could offer that particular specialized care. So do you envision maybe sort of a two-tiered type of a voucher system where there would be veterans facilities for specialized care would somehow be preserved in spite of the fact that maybe the others--and I should not maybe even be going into this because I do not mean to put anybody in fear of closing down health facilities. But I guess that is the real world, and it is being talked about, and we better explore it.

Mr. Schuler. I--again, as a veteran, along those lines, I would think once decentralization occurs and it becomes more market driven, I would have the confidence that some of these veterans hospitals in areas can begin to dramatically improve their services. It becomes competitive. They have a vested interest in developing a highly competitive, high quality product. And I think that would result somewhat from a voucher system.

I think what you may see is a consolidation of some of these specialized services that may allow veterans to maybe more cost efficiently consolidate these services and make it more accessible to other veterans and improve the quality of it. I would not dismantle the veterans system, by any means. But I would think potentially a voucher system and public/private partnerships would make the veterans systems presently more competitive and more motivated encouragement to become more attractive to those veterans who now have that voucher ability to get their service anywhere. And I view that as a system that could become more competitive and better for the veterans and better for the VA.

Mr. Bilirakis. I would hate to be a party to something like that that did not work out. We may as well never run for re-election.

Well, it is something--that is something that is part of our real world. It is being talked about. And I do not see any large amount of interest among the members of the Veterans' Committee thinking towards that end. But at the same time, we should be open minded. And people like your opinions, and people like you.

Mr. Schuler. I think you need to be open minded in terms of where you could go. Would I recommend that tomorrow? Probably not. But I think the decentralization and reorganization of the veterans is a good step in a direction that makes it more competitive and the ability to develop those kinds of quality services that Dr. Kizer was talking about. And if, in fact, they are successful in developing a more decentralized, quality-driven service that is, as he said, one of the diamonds in the rough in health care delivery, then I think, frankly, a voucher system would fit into their needs because people would love to go there. I might even want to get my care there. And if they are not, you have provided an avenue for veterans to seek care elsewhere.

Mr. Bilirakis. Well, thank you, sir.

I will turn now to the ranking member of the subcommittee, Mr. Edwards of Texas.

Mr. Edwards. Mr. Chairman, thank you very much. And I will be brief. I have no questions at this point. I would like to submit my opening statement if I could in writing for the record.

Mr. Bilirakis. No objection.

[The prepared statement of Congressman Edwards appears on p. 56.]

Mr. Bilirakis. The opening statement of Mr. Edwards will be part of the record of this subcommittee.

Mr. Edwards. I just want to say I apologize for being late. I would like to say I just forgot to move my watch ahead an hour this weekend, but we had a meeting of Southwest House Members, Democratic Members, at the White House this morning. So we were keeping Presidential time this morning, Mr. Chairman.

Mr. Bilirakis. And that explains your tardiness.

Mr. Edwards. That is correct. So thank you very much. And I know we have a lot of other witnesses, and I will wait to listen to those.

Mr. Bilirakis. Thank you, sir.

Mr. Tejeda . No questions.

Mr. Bishop. Thank you, Mr. Chairman.

Just a couple of brief questions, very brief. I am intrigued with the idea of the voucher system and decentralization from your point of view, particularly in areas that are underserved for veterans. Access is a problem in a number of areas in the country for veteran services. And I could see the decentralization to the extent that vouchers would be allowed so that veterans could utilize local facilities such as yours rather than have to travel 3 or 4 miles to a veterans hospital.

On the other hand, if there is a veterans facility available, it has been my experience in talking with veterans, that they enjoy the esprit de corps and the camaraderie of meeting with veterans who have similar backgrounds and experiences while waiting for their services. And to some extent that has a therapeutic effect. And they would choose if they had a choice to get that care at a veterans facility as opposed to a private facility because they know that they will be able to talk with other people who have similar backgrounds and concerns and who may have even similar problems.

I want to commend you for the innovative idea but also express the concern that the Chairman expressed that we do not want to put veterans hospitals out of business. But I think that it is a very, very innovative idea for utilization of vouchers, for example, in contracting with local hospitals for the provision of services when veterans are not located where there is access. Because I have a lot of complaints in my district that we do not have a convenient veterans hospital for veterans medical services. And many times they have to go from Georgia to Tuskegee, Florida or from South Georgia to Atlanta, which is a great, great deal of inconvenience. The veterans' service organizations do a fine job in trying to assist in providing transportation, but it can really be a lot of wear and tear on a veteran to make that long trip. So I just want to thank you for that. And I just note those comments in the caveat.

Mr. Bilirakis. Thank you, Mr. Bishop. Mr. Doyle.

Mr. Doyle. Thank you, Mr. Chairman.

Mr. Schuler, thanks for your testimony this morning. I represent a district in western Pennsylvania with one of the highest veterans populations in the country, and we have 3 VA hospitals in my district. I have met with all of the directors in those hospitals and toured them. And they have been asking for this decentralization. They want the flexibility to be able to make some decisions locally. So I think many of us are welcoming Dr. Kizer's Vision for Change plan. And it is good to hear someone in the private sector to opine that it is a step in the right direction. Thank you for your testimony.

Mr. Bilirakis. I am going to do something a little unusual, if I may.

Mr. Bishop, your veterans who now have to travel such long distances to get health care and in spite of the fact that transportation is being provided for them or efforts are being made towards that end, how would they feel if the VA contracted with private facilities in the area as is being done in some areas of the country as Mr. Schuler shared with us? How would they feel about something like that?

Mr. Bishop. That is a very interesting question, and I certainly will want to explore that. But what I have gathered from the conversations with the veterans' service organizations has been that they would prefer a separate veterans' health care system, specifically designed and specifically targeted for veterans, probably because of the esprit de corps and the common background and experiences and the camaraderie that they have when they pursue those services. And then they get to exchange those ideas and information during the course of their visits and their travel to and from. So I do not know. And I think that it certainly would be a worthwhile survey for the VA to determine what the attitudes of veterans would be toward that.

Mr. Bilirakis. That is very important. I know I would ask Mr. Schuler at this point how much of this contracting out is being done; do you know? I mean, you know, to what extent?

Mr. Schuler. I am really not aware of it. I am just aware of that one incident in Richlands. I believe there are others. And I think, again, the distance, the access issue is probably a good start to see if that works and get feedback from those veterans involved.

I agree there are veterans who would prefer to get--who have the camaraderie--although frankly, there are a lot of veterans who do not have to use the system who are using our hospitals. We are in an area where there is a military base, a concentration of veterans, and I have to admit we share stories now at the local level as well and services. And I, again, I think the voucher system--if, in fact, the veterans feel strongly about that--you have simply empowered them to do that.

And I have no--I do not think the veterans system would go away. I think there is a use for it and a need for it in these particular areas where a 2\1/2\ to 3 hour drive could wear somebody down, especially depending on the amount of care that they need, that that sometimes can be a significant benefit to them that they are not wasting 4 to 6 hours in an automobile. But they are, in fact, able to use that more productively in their lives. And so that may be an excellent example where a decentralized VA can negotiate these things, get immediate feedback from their veterans in that area. And it is a good starting point for people to begin to gauge whether----

Mr. Bilirakis. In these outlying areas.

Mr. Schuler (continuing). In these outlying areas. It is, again, Clinch Valley in Richlands, VA is probably a good point that ought to be measured and surveyed after a while and find out how these veterans feel about that.

Mr. Bilirakis. Great.

Mr. Bishop, I know you are chomping at the bit. There is something you wanted to add.

Mr. Bishop. No. I just think that that is a very interesting subject that ought to be explored through surveying veterans' attitudes toward it. I have heard lots of complaints at hearings with this very subcommittee across my district and Atlanta. The veterans complain about having to travel long distances and how inconvenient it is when they have to do that, particularly when they are ill to start with. And it is a burden on families. It is a burden on them in terms of time, and it physically has wear and tear on them. So it certainly should be an option.

Mr. Bilirakis. I agree with you. I think we better be open minded to it, maybe try to find out more about it. I do not know, maybe with the demonstration projects in areas such as Richmond and maybe your area and whatnot might be a good idea.

Mr. Tejeda, Mr. Edwards, any further questions of Mr. Schuler?

Thank you very much, sir. We appreciate your coming here today and sharing your expertise with us.

Mr. Bilirakis. The next panel, we would like to invite them up at this point. Dr. Daniel Winship, who is the Dean of the Stritch School of Medicine, Loyola University of Chicago; Dr. Samuel Spagnolo, President of the National Association of VA Physicians and Dentists; Lynna Smith, President of the Nurses Organization of the VA; and Louis Jasmine, National President, National Federation of Federal Employees, welcome.

We have 10 minutes. Your oral testimony, your prepared statement, obviously is made a part of the record. We will start out with Mr. Winship. Doctor?

STATEMENT OF DANIEL H. WINSHIP, M.D., DEAN, STRITCH SCHOOL OF MEDICINE, LOYOLA UNIVERSITY OF CHICAGO; ACCOMPANIED BY DANIEL SPAGNOLO, M.D., PRESIDENT, NATIONAL ASSOCIATION OF VA PHYSICIANS AND DENTISTS; LYNNA SMITH, PRESIDENT, NURSES ORGANIZATION OF THE VA; LOUIS JASMINE, NATIONAL PRESIDENT, NATIONAL FEDERATION OF FEDERAL EMPLOYEES

STATEMENT OF DR. DANIEL H. WINSHIP

Dr. Winship. Good morning, Mr. Chairman and members of the subommittee. I am Dr. Daniel Winship, Dean of the Stritch School of Medicine, Loyola University of Chicago. I am pleased to present the testimony of the Association of American Medical Colleges, as you consider the proposed reorganization of the Veterans Health Administration.

AAMC represents the 125 accredited United States medical schools; nearly 400 major teaching hospitals, including 74 VA medical centers; over 90 professional and academic societies; and the Nation's medical students and residents. Together, the members of the AAMC work together to improve the Nation's health through the advancement of academic medicine.

I personally have devoted my professional life to research and academic medicine, having held appointments at several medical schools and hospitals within the AAMC's membership. In addition, I have cared for veteran patients in 4 medical VA medical centers, directed a VA medical center, and served in VA central office.

Currently, I am an attending physician at the Edward Hines, Jr. VA Medical Center, with which Loyola University is affiliated. The Hines VA, you may know, was the first VA medical center to affiliate with a school of medicine. Back in the 1940s, VA medicine suffered from bureaucratic constraints, a shortage of physicians, and a less than sterling reputation.

As thousands of veterans began returning home from the second World War, President Truman signed a 1946 law that allowed VA hospitals to enter into affiliation agreements with accredited medical schools. Affiliations helped staff VA hospitals with top-notch medical school faculty physicians, residents, and interns, and provided medical schools with new venues in which to educate young physicians, including military doctors returning home to seek specialized training.

These affiliations have allowed VA to achieve its goal of affording the veteran a much higher standard of medical care than could be given him with a wholly full-time medical service. Today, nearly 10,000 VA clinicians have academic appointments with one or more academic institutions; and a similar number of faculty from these academic affiliates care for veteran patients and teach residents and students at VA medical facilities.

Contrary to popular belief, the VA medical system offers veterans excellent health care and a range of specialized services that many veterans desperately need but might not find elsewhere.

VA medical centers consistently score well on the reports of the Joint Commission for the Accreditation of Hospital Organizations, comparing favorably with their private sector counterparts. A 1992 U.S. News and World Report article on AIDS cited four VA medical centers among the facilities that offer the finest AIDS care in the United States. The vibrant VA health care research program, based on the health care needs of veterans, attracts top physicians and scientists to VA careers and contributes positively to the quality of medical care received by patients in affiliated VA medical centers.

Since 1982, VA has also been required by law to serve as a backup to the military medical system during war and other national emergencies. During the Persian Gulf War, many VA medical centers developed contingency plans to treat casualties in concert with their academic partners. The Hines VA and Loyola University, for example, crafted a plan that would have used my institution's entire specialty structure to provide medical care for wounded soldiers. These cooperative efforts in support of military medicine are particularly vital since the number of beds operated by the military has declined from 80,000 to 16,000 over the past 25 years.

VA also plays a major part in educating today's physicians. In 1994, VA supported more than 9,100 medical resident positions, or close to 10 percent of all the residency slots in the country, and over 33,000 medical residents from affiliated institutions rotated through VA facilities. More than one-half of the Nation's physicians have received some part of their training in VA facilities.

After nearly 50 years of close partnership, academic medicine cannot envision an educational environment that does not somehow include VA. Severing or even diminishing the symbiosis that has benefitted both parties is particularly unimaginable when one considers that many VA medical centers are situated on the same grounds or located in the same building complexes as their affiliated medical schools.

Academic medicine looks forward to working with VA and the Congress in reinventing VA to face the challenge of caring for the Nation's veterans while adapting to changes in the health care environment and marketplace. The proposal before you is an important first step toward transforming VHA into a more comprehensive, responsive, and efficient medical system. Secretary Brown, Under Secretary Kizer, and their colleagues in Washington and in the field should be commended for tackling the awesome task of reorganizing the largest integrated medical system in the United States.

The AAMC and its member institutions will continue to support VA's efforts to provide the best possible care for our Nation's veterans. We are concerned, however, that the reorganization proposal mentions only in passing VA's missions to educate health professionals and conduct health research. We would like to think that the reorganization can strengthen, rather than imperil, the arrangements between VA medical centers and schools of medicine that are essential to the high quality of care provided to veterans by VA.

Under the proposed reorganization, basic budgetary and planning responsibilities would shift from individual medical centers to the VISNs, which would coordinate health care for eligible veteran beneficiaries in defined geographic areas.

This move carries potential ramifications for the long-standing relationships between individual VA medical centers and their academic partners. For instance, the proposed shift in planning responsibility from the VA medical center to the VISN signals the potential for dramatic changes in the role of Deans Committees.

Every medical school that conducts medical education programs in cooperation with a VA medical center must organize and nominate a Deans Committee, subject to the approval of the VA medical center director. These Deans Committees are composed of medical school deans and senior faculty members from appropriate medical school departments and divisions. The Deans Committee has a primary advisory responsibility regarding all aspects of a VA medical center's education and research programs. These committees also nominate faculty and trainees from the medical school for appointments to meet VA's staffing needs.

Under the reorganization plan, each VISN would establish a management assistance council to assure input from VHA's internal and external stakeholders. The plan foresees a role for VHA's academic affiliates as consultants to these councils, providing recommendations regarding the operating of and planning for the VISNs. Although we believe the close interaction between VA medical centers and affiliated medical schools warrants involving academic medicine and other important stakeholders as more than simply consultants, we also realize that adding representation from every conceivable external interest would make these councils rather unwieldy.

Notwithstanding this concern, the AAMC appreciates VA's interest in the views of its partners, and we believe these councils would provide an avenue for the dialogue and constructive collaboration that is essential to the success of the reorganization.

The interplay between the VISNs and the Deans Committees within each network will almost certainly create tensions that will buffet the affiliations. Since each proposed VISN would also incorporate more than one VA medical center with a strong academic partnership, the reorganization plan harbors the potential for additional conflicts within the VISNs themselves. I believe VA and academic medicine should work together to create a structure through which the VISNs can work with the Deans Committees, either individually or through consortia, to devise systems for staffing VA facilities, educating students and residents, and conducting health research in the best interests of veterans and each partner. As the subcommittee considers the reorganization plan, the AAMC would welcome the opportunity to discuss this issue further.

We understand the need for VA to restructure its health care system to provide health care to its patients more effectively and rationally. Medical schools and nonfederal teaching hospitals with educational and research missions are also beginning to form integrated networks and to incorporate ambulatory and community-based service points into expanded continuums of care. However, as VA reinvents itself, the directors of the 22 VISNs must take care not to sunder unnecessarily the ties between individual VA medical centers and medical schools. I believe that VHA headquarters should provide the field with national policy, direction, and oversight to ensure that the benefits of these affiliations are preserved and enhanced.

In my view, the transformations in health care delivery that are spreading across the country present VA and academic medicine with new possibilities for cooperation that would benefit both partners and, ultimately, the veterans we serve. For instance, VHA, medical schools, and teaching hospitals can join together in finding ways to enhance primary care education and to provide students and residents with more experience in outpatient settings. These types of collaborations between VA medical centers and academic medicine would make sense for both partners, providing academic medicine with new educational opportunities and helping VA improve veterans' access to health care by promoting appropriate delivery systems. Together, medical schools and VA can implement necessary changes, yet protect what is good in the current system.

Based on my experience as a physician and an administrator, I believe that the proposed reorganization, although an important first step, should not be considered a panacea by this subcommittee. As the subcommittee discusses the future of VA health care, it should also consider reforming the convoluted and dysfunctional eligibility criteria to allow VHA to provide a comprehensive range of care to all eligible veterans; allowing VA to retain third-party collections; urging appropriators to provide adequate funding for VA medical care and research; and allowing VA medical centers to treat non-veteran patients, as long as the high quality of care for eligible veterans is not compromised and VA is reimbursed properly for all care provided to non-veterans.

Thank you for allowing me to present the views of the Association of American Medical Colleges today. I would be pleased to answer your questions.

[The prepared statement of Dr. Winship is on p. 69.]

Mr. Bilirakis. Thank you very much, Dr. Winship. Dr. Spagnolo.

STATEMENT OF DR. SAMUEL SPAGNOLO

Dr. Spagnolo. Thank you. Good morning, Mr. Chairman and members of the subcommittee. My name is Samuel Spagnolo, and I am here today as President of the National Association of VA Physicians and Dentists, better known as NAVAPD. For the past 20 years, I have served as the Chief of Pulmonary Diseases at the Washington, DC VA Medical Center, having come here after finishing my training at Harvard and the Mass General Hospital.

I have also been for the past 20 years, serving as the Director of the Pulmonary Division at George Washington University; and I am currently Professor of Medicine at George Washington University.

With me today are two of my colleagues. They are sitting behind me, Dr. Rhonda Lee Travaglino-Parda, who is Chief of Plastic Surgery at the Washington VA and Dr. John Burton, Chief of Dental Service at Columbia, SC; and we hope they will have an opportunity to answer your questions.

I thank you for the opportunity to comment today on the recent proposal to restructure the Veterans Health Administration. We come before the Committee today to address what we believe is the single most important issue facing VHA. That is maintaining and improving the quality of patient care for our Nation's veterans.

At the outset, let me emphasize that NAVAPD does not oppose change in the VA system. On the contrary, continuous change is necessary to meet the needs of any dynamic business or organization. The VHA must now contend with ongoing changes affecting the demands for its services, such as an aging veteran population, a marked decline in inpatient and acute care, and major shifts in the geographic locations of veterans, to mention a few. The VHA must address these issues in a timely and effective way without compromising quality health care. Therefore, it is not whether the VHA changes, it is how it changes that concerns us.

We applaud the VA for proposing to eliminate unnecessary bureaucratic layers in the management system and shifting operational decisions to the local level. The concept of decentralization is not inherently bad, provided the new structure significantly involves doctors in the management process.

Before I address our concerns, I want to stress that NAVAPD seeks to continue a constructive dialogue with the VA and Congress as we debate this reorganization plan. As always, we stand ready to answer any questions and to work with the VA and Congress.

We would also like to briefly point out that the reorganization plan fails to address the difficult issue of simplifying veterans' health care eligibility criteria. Without knowing who our patients are and what they need, how can we effectively plan for their care? We know there is a Bill recently put forth before the House, and we urge Congress to address this important issue before any attempt is made to reorganize the system.

NAVAPD has four areas of concern, and let me briefly tell you what they are. We are concerned that quality health care is not the focus of reorganization. Although the plan endeavors to address the quality of health care, its primary goal is managed care, now commonly known as best value care, as the plan states. Let me quote from the plan: The new VISN structure places a premium on improved patient services, rigorous cost management, process improvement, outcomes and best value care.

Congressman Hutchinson, I think, has already addressed this. The plan goes on to say that an integrated health care system requires management of total costs; a focus on populations rather than individuals; and a data-driven process-focused orientation, which is a long sentence.

I am personally aware of managed care organizations where patients are scheduled in 8-minute intervals. I do not consider that quality care. When you restructure a system as unique as the VA administration health care system, the question really should be: What is best for the Nation's veterans, not: What is the best value for the VA system? We are concerned that managed care will effectively--adversely affect the quality of care delivered, especially in specialized services.

For example, NAVAPD has consistently taken the position that the VA should improve patient care by creating centers of excellence. These centers would provide treatment, research, postgraduate education in special areas, such as organ transplant perhaps, early diagnosis of cancer, cardiac surgery, spinal cord injury and rehabilitation.

To accomplish this goal, there must be a strong commitment at the management level. There must also be significant input from doctors.

Let me just digress for a minute. As a physician, I am acutely aware that the ultimate responsibility for my patients' care rests with me. I am trained to make decisions on the quality of care that my patients receive. All of you know, the practice of medicine is centered around the doctor/patient relationship, and decisions about treatment must be based upon the professional judgment of the doctor. This relationship must not be compromised by managed care. I ask you: Under managed care, who is the patient's advocate? Who will protect clinical outcomes? Furthermore, courts have consistently upheld my accountability in the doctor/patient relationship. Who is accountable in a system that inserts a non-medical administrator into that relationship?

Now, this leads me to my second point. NAVAPD is concerned that under this plan, doctors will not have substantial decision-making authority regarding the development and implementation of administrative policies within each VISN. The plan proposes that each VISN be headed by a director, who would be expected to have expertise in medical management, finance, budgeting, planning. There is no mention of expertise in patient care. If a doctor cannot advise the VISN director as to the clinical outcome of decision, and if that advice does not carry real authority, then the doctor has no real input into the management process.

Policy decisions made without clinical justification will fail and will have serious adverse impacts on the quality of patient care.

Our third concern is that the plan's main emphasis on decentralization of authority will adversely impact the quality of patient care. By the year 2010, our information is that one third of all veterans will reside in six States: California, Pennsylvania, Texas, Florida, Arizona, and New York. What does that mean for facility management, staffing, expansion and the allocation of technology resources? It is not clear to NAVAPD how the new VISN management structure will address the allocation of these resources among the VISNs and what criteria will be used in the allocation of these resources.

Finally, one of NAVAPD's primary goals has always been to improve patient care by maintaining special medical expertise within the system. The VHA must adopt policies that are aimed at retaining senior, experienced personnel and recruiting new quality doctors.

This reorganization plan fails to address how the VA would modify academic affiliations and resource opportunities for doctors. The opportunity to be actively involved in medical education and research has long been one of the most attractive features in employment. I personally have trained nearly 100 lung specialists.

In this important opportunity for growth and professional development, if that is closed off to VA doctors, you can rest assured that senior physicians and dentists will leave and the recruitment of new, high quality doctors will suffer.

Let me summarize our position. First, the focus of any reorganization of the VHA must be the quality of health care for veterans and not managed or best value care. Second, physicians and dentists should be directly and effectively involved in management decisions affecting patient care. Third, decentralizing management functions in the VHA should not negatively impact resource allocation. And finally, the reorganization should maintain specialized medical expertise in this system.

Mr. Chairman, that concludes my remarks. Thank you for the opportunity; and I, along with my colleagues, would be more than welcome to answer any of your questions.

[The prepared statement of Dr. Spagnolo is on p. 76.]

Mr. Bilirakis. Thank you so much, Doctor. Ms. Smith.

STATEMENT OF LYNNA SMITH

Ms. Smith. Thank you, Mr. Chairman. I would like to introduce myself. I am Lynna Smith, a nurse practitioner at the American Lake Veterans Affairs Medical Center in Tacoma, Washington. As president of the Nurses Organization of Veterans Affairs, I am testifying on behalf of Nova, and I speak for the more than 40,000 professional nurses.

It is an honor and a privilege for me to represent NOVA here today and to testify on the Veterans Administration's Reorganization proposal. This testimony will focus on the effect of this on veterans' health care and on nurses. NOVA strongly supports the Veterans Health Administration and an independent health care system providing a full range of services enhanced by education and research programs benefitting both veterans and the Nation. The VHA functions in concert with major trends in the health care profession and reflects those changes in its care of veterans. NOVA also supports the recognition--reorganization goal to transform the VA into a responsive, decentralized, customer-driven organization providing high quality, cost-effective, accessible service for all veterans. NOVA applauds Secretary Brown for his leadership in this undertaking.

NOVA is also committed to providing quality health care for the veteran. We believe that the health care must shift from the illness/cure model of care to a focus on the wellness/health promotion model. NOVA asserts that an increased utilization of nurses as primary providers will promote accessibility and quality care, that the increased use of nurses as case managers will decrease fragmentation of health care, that research-based clinical practice will promote increased standardization of health care and promote quality of care. That education and training will assist nurses in moving toward ambulatory care, hospice or home care and long term care settings.

The following comments are on components or reorganization. In September, 1994, the Nursing Program's Board of Directors initiated an organizational structure to support decentralization by providing opportunities for grass roots input in policy development and decision making. The Board includes chairs of five constituency centers: Clinical, Administrative, Research, Education, and Informatics. Task forces with representatives from nationwide VA have been developed to work on elements of the strategic plan.

This innovative program has generated interest and enthusiasm from all levels of nursing service. As with all programs, outcome measures need to be tracked. For example, an Advanced Practice Advisory Group was appointed in 1994 and subsequently aligned with the Clinical Constituency Group. The Advanced Practice Advisory Group guided the development of a new directive related to establishing prescriptive authority for Advanced Practice Nurses, Clinical Pharmacy Specialists and Physician Assistants. This Group has also begun the development of Scope of Practice guidelines for Advance Practice Nurses and has initiated identification of issues and information necessary to create a national database for Advance Practice Nurses in the VA. NOVA strongly commends these innovative programs as essential for nursing in the VA.

In late 1994, the VA announced each medical center can now realign Chief Nurses to the position of Associate Director for Nursing Services Patient Care Services. This realignment positions our nursing services to assume a greater scope of responsibility and accountability for the governance and operation of each VHA medical center.

NOVA applauds Nancy Valentine, the Assistant Chief Medical Director for Nursing Programs and the Task Force on Reorganization of the Chief Nurse with the support of Secretary Jesse Brown and Deputy Secretary Hershel Gober in achieving this NOVA goal.

The Veteran Integrated Service Network restructuring proposal would abolish the VHA's current 4-region system and replace them with 22 VISNs. These VISNs will allocate resources among the medical centers and use contract services with the private sector as well as sharing agreements with the Department of Defense. NOVA believes this reorganization will lead to an increased quality of care as well as cost managements. NOVA recommends that nursing representation be at the VISN level.

NOVA also supports the goals of the recent organizational integration in which 16 VA medical centers were realigned into seven facilities. This allows for expansion of services to veterans and the improves the management of the VA's network of health facilities. This integration is commendable and, in our opinion, exactly what the VA needs to accomplish.

However, at one or more facilities, this process appeared very abruptly, with both staff and veterans voicing feelings of uncertainty about their programs and health care. The process of integration, which should have begun prior to merger, must now begin. Issues of concern include communication with the veteran consumer and the hospital staffs about this integration process; continuity of health care programs; consolidation and integration of information systems; and integration of clinical services. NOVA recommends that these integrated facilities be monitored to ensure the achievement of the stated goals, and that the veteran consumer and the staff of the various clinical programs within these facilities have representation in this process.

NOVA continues to have significant concern regarding veteran eligibility issues and access to care. For example, in Tacoma, Washington, there are three new private health care plans actively marketing veterans.

One of my veterans that I see, after attending one of these sessions stated to me: The plan sounds too good to be true. He decided to return and hear the presentation a second time, and subsequently, signed up for the plan. He selected a family doctor, believing that he will receive total health care, including medications in exchange for his medicare deductible and a $5 visit co-pay. There was a proviso with his plan, though; and that was that he was not to receive health care from any other provider, including the VA.

NOVA believes that eligibility reform is critical to a viable VA. Unless the reorganization plan includes simplification eligibility reform, those veterans, especially those less than 50 percent service connected, may well go elsewhere for their health care.

Our country has a responsibility for the men and women who have put their lives on the line and made our country and the world a safer place. Veterans deserve quality, efficient and effective health care. This is the VA challenge. NOVA is committed to working with the VA and with Congress to achieve this goal.

In closing, Mr. Chairman, NOVA would like to thank you and this subcommittee for your work with the legislation to amend Title 38 to exempt full-time professional nurses from restrictions on remunerated outside professional activities. This regulation has long been an issue for NOVA members, and we are truly grateful for your support.

Thank you.

[The prepared statement of Ms. Smith appears on p. 83.]

Mr. Bilirakis. Thank you very much, Ms. Smith. Mr. Jasmine.

STATEMENT OF LOUIS JASMINE

Mr. Jasmine. Thank you. Good morning, Mr. Chairman and members of the subcommittee. My name is Louis Jasmine. I am the president of the National Federation of Federal Employees. On behalf of the National Federation of Federal Employees, otherwise known at NFFE, I appreciate the opportunity to appear before you today to offer our comments on the plan to reorganize the Veterans Health Administration.

NFFE represents over 150,000 fellow employees throughout the country. I would like to take a moment to reaffirm the commitment of all NFFE VA employees to constructing a VHA that is more responsive and provides high quality health care to those individuals who have given so much to this Nation, the veterans. NFFE has wholeheartedly embraced the VA's call to put veterans first and is willing to work with the VHA as it restructures its health care delivery system to put patients first.

I must say also that NFFE applauds the VHA for developing a reorganization plan that is correctly focused on systematic changes intended to improve service delivery rather than on a massive job cuts intended to provide only monetary savings. In today's cut and slash reform environment, this is certainly a refreshing change and we want to applaud you on that.

As you know, you already know the current, the proposal for reorganization which is going to transform the current field operations to 22 Veterans Integrated Service Networks, or VISN. What is more important to NFFE is the--that in the reorganization plan, that it would lead to a net reduction of 157 FTE positions. NFFE is certainly pleased to see that VHA intends to achieve these reductions through the use of reassignments, early retirement, and special placement initiatives instead of the more draconian reduction-in-force, one thing that we all really do not like to see as a means of reduction. And we certainly want to applaud you for taking these steps at reducing the number of FTEs.

While NFFE is generally supportive of the VHA's reorganization plan, we do have a few concerns. Leading the list in the potential impact is the plan on the labor-management partnerships in the VHA. As you may know, many VA facilities already have, or are in the process of completing, a partnership agreement with resident employee unions. These partnership agreements envision accountability at the facility level. The partnership may be undermined if the facility management is required to defer to the VISN director instead of being able to reach an agreement with its partner at the station. Throughout the Federal Government, partnership agreements have shown by working together Federal workers and management can dramatically improve the quality of service while reducing costs. The VHA reorganization plan should reflect the success of this philosophy.

As I travel through different parts of the country visiting VAs, those that have partnerships, and certainly those partnerships have worked toward improving quality service and reducing cost; and I think the reduction of cost and money is the bottom line throughout this whole operation and your reorganization plan.

Another concern is the potential for micro-management of the medical centers by the VISN directors. In the 1980s, the regions were too large and contained too many medical centers for Regional Director to manage human or fiscal resources effectively. The danger in the present plan is that the VISNs are small enough for the VISN Director to micro-manage the medical centers; and this is a concern that the unions have, NFFE has. To avoid this problem, the VHA should emulate some of the Nation's largest private sector multi-hospital systems, which basically allowed the medical center director the freedom to locally manage the human and fiscal resource departments, but also make them accountable for their actions. And we think the committee should look at that, as well.

Finally, in conclusion, Mr. Chairman, I would like to reaffirm that NFFE's commitment to reform the VHA so that it provides our Nation's veterans with a health care delivery system that is both effective and of high quality. NFFE believes that this proposal has the potential to realize this goal as long as it is adjusted to reflect the success of labor management partnerships and safeguards are added to ensure that local directors are allowed to manage effectively. The local directors having that autonomy and that authority is the key to successful relationships.

That concludes my testimony, and I would like to thank you for allowing me the opportunity to come before you today.

[The prepared statement of Mr. Jasmine appears on p. 89.]

Mr. Bilirakis. Thank you, sir. Thank you for your input. Mr. Hutchinson has just come in. But Ms. Smith, Mr. Hutchinson introduced the piece of legislation that you referred to. But you gave me credit. So I guess I am going to have to seriously consider co-sponsoring it.

Ms. Smith. Thank you.

[Laughter.]

Mr. Bilirakis. I am always impressed with the fact that even though during these veterans hearings--this does not really take place in too many other committees when the VA is usually asked to testify first--in other committees, when you ask basically the administration to testify first, or early on, they usually get up and leave after they are done testifying. But I am always impressed that the VA always has a representative here to hear the rest of the testimony. Ms. Egan--and there may be others--but I know Nora Egan is here, and I appreciate very much, and I know the others do, too. You got an earful, particularly from Dr. Spagnolo. I would very much appreciate it if you would--you know, your time is wasted if you do not go back with those inputs to Dr. Kizer and to the others.

Dr. Spagnolo, when this was all being worked out, was there not any coordination done with your group? Was your input not requested? Did the VA not work with your people?

Dr. Spagnolo. There were one or two phone calls made, but not on a grand scale, Mr. Chairman. We would like to have had a little more input, but we are certainly willing and able to give as much input now as we can.

Mr. Bilirakis. Well, the cow is now out of the barn.

Sir, I commend you for being so very concerned about the quality of medical care. As you say, in your opinion, you do not think enough emphasis has been placed on that insofar as this plan is concerned.

Are you sort of being cautious in your concern that the quality of medical care might be adversely affected or do you feel confident that it will be adversely affected under this system?

Dr. Spagnolo. No, I think I am more concerned that it could be, and I do think that--I am all for restructuring and simplifying the bureaucracy, which I have been in it for many years. But I think we can improve quality of patient care if we put some trust in those people who are making those quality decisions, such as the doctors and the nurses and the dentists. And I do not see enough of that happening. I have watched the VA over 20 years, longer; and I have watched the separation between the administration and the providers get wider and wider and wider.

Mr. Bilirakis. And you feel that it is getting wider yet?

Dr. Spagnolo. And I feel that, you know, a lot of people have a lot of criticisms about the VA health care system; and I feel that you have got to put the providers back--let me borrow a phrase from a, perhaps, a famous senator who said: We feel we have been pushing this train for a long time. We would like to have an opportunity to help lead this train. That is really what I am asking.

Mr. Bilirakis. That certainly does appear to be reasonable.

Dr. Spagnolo. And I think, as a partnership in this reorganization matter, with real input by physicians, nurses, dentists, and all the practitioners, I think we can deliver quality care. But I am a little concerned about this new phrase, best value and managed. I am very concerned about what that means.

Mr. Bilirakis. Ms. Smith, you have devoted your life, obviously, to taking care of people in need, and yet you have said some good things about the reorganization. But Dr. Spagnolo does not oppose it, either. Do you sort of agree with him in the fact that maybe there has not been enough emphasis on quality of medical care?

Ms. Smith. I feel--I agree with him that there needs to be professional medical nursing input in order to keep the system whole, but I also believe that there has to be a business administration. In order for the VA to survive, we have to have a business aspect to it. That is what this is all about. The VA is such a special group, all of the things that have been talked here today--talked about here today, the veterans' camaraderie, the special problems that veterans have related to so many of the events in their lives related to the military, I believe that we have to preserve that; but we have to do it in the economy. And if it takes a CEO to maintain some business aspects in order to bring more income in and to get more money into health care providers to take care of those veterans, that is what is essential.

Mr. Bilirakis. Are there not doctors out there or nurses, I mean, practitioners who also can serve? I realize the reputation of doctors. My son is one of them; and I am here to tell you, when it comes to business--but there must be people out there that could serve, basically, both functions.

Ms. Smith, I commend you for your candidness. You are quite right. I think, the real world is we have got to worry about the bottom line, unfortunately. But at the same time, we do not want to hurt the quality of medical care in the process. Can both not be done, in your opinion?

Ms. Smith. Can a medical or a nurse do both?

Mr. Bilirakis. Yes.

Ms. Smith. I believe so.

Mr. Bilirakis. You believe so, right. Dr. Spagnolo?

Dr. Spagnolo. Absolutely, and here is one.

Mr. Bilirakis. Right. And I plan to go to Dr. Winship.

Dr. Spagnolo. And Dr. Kizer, who was here earlier who is a physician. I think there are plenty of physicians who are good managers, and I think the VA should also start a management program for physicians.

Mr. Bilirakis. That is a good point. I wish they had started one when my son was still training through the VA.

Dr. Winship, do you have any comments regarding particularly Dr. Spagnolo's testimony?

Dr. Winship. Yes. I would echo Dr. Spagnolo's concerns, but I do not believe that the VA is headed, necessarily, in the direction of plummeting health care. I think a lot of what is going on now and, in fact, the heart of this program is not just to save money, but also really and truly to improve health care. I have long thought, personally, that decentralization of management of VA medicalk care would be a great benefit and would allow more bang for the buck, if you will, to get decision-making out there where it is really being done. So I think it is not only possible, I think it is likely, and I think there is a strong focus on that in the plan.