House Committee on Veterans' Affairs

TESTIMONY OF KIM WINCUP

VICE CHAIRMAN

CONGRESSIONAL COMMISSION ON

SERVICEMEMBERS AND VETERANS

TRANSITION ASSISTANCE

MAY 25, 2000

Mr. Chairman and Members of the Committee, it is a privilege to appear before you this morning to testify on a specific aspect of the healthcare findings and recommendations of the Commission on Servicemembers and Veterans Transition Assistance.

You have likely heard the saying that there is nothing constant in this world except for change. And many things have changed over the years gone by and many more will change in the years to come. Change is one reason the Congress created our Commission. Many of the benefits and services provided to the men and women now leaving the Armed Forces and the organizational structures designed to meet them are rooted in the closing days of World War II, more than a half century ago. Our Commission looked at how the country has changed: in the military, in the civilian world and in the Americans who make the transition from one to the other.

We found in some cases benefits and services have become so outdated and program management so ineffective they break faith with those who served and currently serve in uniform. Consistent with these findings, we proposed fundamental and far-reaching reforms to both programs and the governmental organizations delivering them. Our report was without dissent.

The Commission found that access to high quality healthcare is of critical importance to active duty servicemembers and veterans. They consider healthcare to be one of the most important benefits they receive from their military service. We were very impressed with the quality of care provided to servicemembers and veterans and consider both systems to be unique and irreplaceable national resources, critical to the nation and its citizens.

At the same time, however, the Commissioners found that changing healthcare practices, an evolving patient population, infrastructure built for another era and increasing healthcare costs in a time of budgetary pressure will challenge the ability of the two systems, as currently structured, to meet the healthcare needs of their beneficiaries in this new century. We found a true partnership between the VA and DoD healthcare systems offers the best hope for continued access to a continuum of high quality care for the millions of beneficiaries of both Departments. A partnership would allow them to better serve their beneficiaries by making their combined resources accessible to all beneficiaries and allowing the Departments to realize efficiencies from more efficient utilization of their limited resources.

The Commission recognizes the efforts that have been made to establish sharing agreements drawing on the strengths of each Department, but considered in the context of the total beneficiary population and the combined budgets of both Departments, sharing has been incremental and marginal at best. There are several reasons for this:

Differing administrative, budgetary and personnel systems.
Each uniformed service’s desire to have its own specific providers.
National traditions and corporate culture.
Differing catchment areas for DoD and VA facilities.
Differing eligibility rules and priorities for beneficiaries.

These institutional and cultural barriers to increased cooperation and sharing are part of the reason the Departments project only $62 million of their $33 billion combined budgets will be transferred between Departments as a result of sharing agreements in FY 2002. With specific regard to pharmaceuticals and medical products, the Commission found that VA and DoD procured nearly $3.7 billion in FY 1997. Currently however, I understand that through a recent Memorandum of Agreement, VA and DoD jointly procure some drugs, but this effort amounts to less than 3% of their joint budgets allocated to pharmaceuticals.

The Commissioners believed that the Departments can do better, indeed must do better, if the systems are to remain strong and viable well into this century. Difficult decisions will have to be made within the Departments and the Congress to lower the barriers that impede the creation of a true partnership between DoD and VA. Failure to act will be paid by increasing numbers of beneficiaries who will be forced to turn elsewhere for their healthcare. The Commission has drafted a blueprint that, if adopted, will create the framework for that partnership. A partnership that would maximize the return on the human and physical resources of DoD and VA and increase the number of beneficiaries they treat.

In the short time allotted, it is impossible to cover in any detail the many Commission findings and recommendations to create a partnership in healthcare between DoD and the VA. I will just highlight a few related to joint procurement.

Segmented purchasing by the federal healthcare sector is wasteful and makes no sense when it results in the loss of the quantity discounts that the private sector has demonstrated are possible.
DoD and VA could apply the savings realized from combining their purchasing power for pharmaceuticals, as well as medical/surgical supplies and equipment, to increase the amount of healthcare provided to their beneficiaries. Joint purchasing should not affect military readiness because readiness seems tied much more closely to distribution than to purchasing capability.
Joint purchasing of pharmaceuticals, as well as medical/surgical supplies and equipment, would allow the departments to develop additional procurement leverage for wartime and military readiness contractual requirements (e.g. surge and distribution requirements).
A clinically based joint DoD/VA formulary would improve cost-effectiveness of pharmacy operations without compromising healthcare for beneficiaries.
The use of combined purchasing power of both Departments for the procurement of VA-DoD pharmaceuticals, medical surgical supplies and equipment, and require the establishment of a joint formulary and universal product numbers. Projected savings of $374 million annually. A DoD Inspector General report recommended that DoD use VA contracts and administration for such purchasing.

Servicemembers and veterans will be the beneficiaries of these recommendations if the Departments and the Congress accept the challenges offered by the changing times and the healthcare recommendations formulated by the Commission in response to them.

Thank you.

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