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Witness Testimony of Madhulika Agarwal M.D., M.P.H., Deputy Under Secretary for Health for Policy and Services, Veterans Health Administration, U.S. Department of Veterans Affairs

Good morning, Mr. Chairman, Madam Ranking Member, and Members of the Subcommittee.  Thank you for the opportunity to discuss the Department of Veterans Affairs’ (VA) productivity levels for physicians.  I am accompanied today by Dr. Carter Mecher of the Veterans Health Administration (VHA)’s Office of Public Health, and Dr. Jeffrey A. Murawsky, Director of VHA’s Great Lakes Health Care System.
    VHA believes it is essential to ensure that all employees within our Administration, including our physicians, are able to work as effectively as possible to provide appropriate, high-quality care and services and meet the needs of Veterans.
VHA currently uses both population-based (primary care physicians) and work value-based (specialist physicians) models to assess physician productivity, that will soon be used in over half of our physician workforce.  VHA is committed to establishing appropriate productivity models for five additional specialties by the close of this fiscal year.  Over the next three years, we will refine and develop additional models that are individualized for specialty care.
Measuring productivity in a health care setting is a complex issue.  First, I would like to discuss some of those complexities as they pertain to VHA.  I then will describe actions VA has already taken, and is in the process of taking, to measure effectiveness and productivity in achieving all of our statutory missions.
VHA has four principal missions for which it is responsible.  These include patient care, medical education, research, and support to the Nation’s emergency preparedness.  In Fiscal Year 2012, eighty-four percent of our physician full-time-equivalent (FTE) workforce was providing direct patient care to Veterans, our primary responsibility.   
VHA fully recognizes it is incumbent on us to effectively manage this very important resource.  However, we also know that VHA—and the entire medical profession—has had a long history of challenges in this area.  These issues include changing needs of patients; changing practice patterns, new delivery models, impact of technology innovations on patterns of care, challenges with physician recruitment and retention; and accurately measuring productivity in an integrated health system.  
Just last month, the Bipartisan Policy Center issued a report entitled “The Complexities of National Health Care Workforce Planning,” which described the issues facing the entire health care industry.  The complexities addressed are no different from those that VHA faces.  It is my privilege to inform this subcommittee, America’s Veterans and their families, and other interested parties of the actions we are taking to ensure our physician workforce is optimally deployed to provide America’s Veterans with the quality of care they have earned through their service and sacrifices.
Quality, accessibility, and efficient delivery of health care are basic principles VHA uses to develop physician productivity and staffing standards.  To ensure this, VHA has established an Office of Productivity, Efficiency, and Staffing (OPES) to build tools to help program offices develop effective management strategies, systems, and studies to optimize clinical productivity and efficiency, and to support the establishment of staffing guidance that promotes the goals of clinical excellence; access; and the provision of safe, efficient, effective, and compassionate care.  OPES produces a number of tools, such as the Physician Productivity Cube, which VHA uses to monitor productivity, staffing and efficiency.
VA has moved from a hospital-based system to a health care system with a focus on ambulatory care.  The foundation of our integrated health care delivery system is primary care, and primary care physicians were our first priority for developing a staffing model.  Primary care providers constitute the single largest component of our physician workforce, 34 percent.  VHA now has a fully operational Primary Care Panel Size Staffing Model, which defines the number of active patients that may be assigned to each primary care provider.  In developing this staffing model, our goal was to establish a primary care system that balances productivity with quality, access, and patient service.  In addition, the staffing model permits VHA to measure the overall productivity of primary care providers and the capacity of our system, in order to understand and inform our primary care staffing needs.  Currently we are completing the process of updating that model to reflect changes associated with VHA’s deployment of patient-aligned care teams (PACT) at all our sites of care.  
The second largest component of our physician workforce is our Mental Health providers.  Psychiatrists now account for 14 percent of VA’s physician workforce.  Mental Health has experienced unprecedented growth in the past two years— driven by sharply increasing demand for Mental Health services.  VHA has comprehensively studied our mental health provider resources to ensure that they are optimally deployed and used.  We will be distributing a directive providing guidance for facilities to support this objective, entitled “Productivity Guidance for Mental Health Providers,” by the end of spring, 2013.
Relative Value Units (RVUs) are used by Medicare, Medicaid, and many private practices and institutions, to track physician productivity.  RVUs consider the time and intensity of physician services and have three components:  (1) the Work RVU (wRVU) encompassing time spent before, during  and after the service and considers the technical skill, physical effort, mental judgment, and potential risk of performing a medical service; (2) the Practice Expense (peRVU) which considers the support staff,  medical supplies and equipment needed to perform a procedure and; (3) the Malpractice (mpRVU) which measures the liability costs associated with each medical procedure.  Each of these RVU components is determined by applying the Centers for Medicare & Medicaid Services’ weights to CPT codes (Current Procedure Terminology) of patient encounters.  Only the wRVU component is used for physician productivity measurement.
While many private sector healthcare organizations use the industry-accepted metric of wRVUs to determine productivity, wRVUs also are used in academic and private practices to determine physician compensation.
VHA intends to expand the use of wRVUs as only one of several measures to assess the productivity and efficiency of each specialty practice area throughout the organization.  
Radiology, the third largest component of our physician workforce (nearly 6 percent of the total workforce) offers a good example of how wRVUs can be used to set productivity levels.  A comprehensive study of the productivity of VA radiologists was performed in Fiscal Year 2005.  The study found that the observed mean productivity of radiological specialists was 5,453 wRVUs per physician, and the median was 4,904 wRVUs.  VHA determined that radiologists assigned to full-time clinical effort should produce 5,000 wRVUs of work in the course of a year.  In Fiscal Year 2012, the observed mean productivity per clinical full-time equivalent radiology physician increased to 5,652 wRVUs.  This productivity standard is assessed on an annual basis.
To assist local leadership in managing their specialty practices, information is available on the VA Intranet that provides data on productivity and includes factors that affect productivity, such as the presence and number of support staff.  Utilizing the metric of a wRVU permits measurement of cost efficiency and the ability to study the relationship of productivity, efficiency and outcomes.
When the Mental Health directive is published, more than 54 percent of VHA’s physician workforce will have standards to measure their productivity and efficiency.  OPES has created a tool called the Physician Productivity Cube, a tool that captures physician productivity workload for physician specialties by measuring workload by wRVUs, number of encounters, and number of individual patients.  It also gives our hospitals and health care systems the capability to assess their productivity and to compare themselves to national medians, medical centers of similar size and complexity, and private sector benchmarks.  It is a quarterly reporting system of our physician workforce.  However, given the inherent complexity of this effort, OPES is doing extensive validation of the local primary data contained in the cube’s database.    

The Office of Inspector General (OIG) was given access to the Physician Productivity Cube, and noted significant variation in observed productivity within VHA and recommended that VHA establish productivity standards.  VHA has accepted this recommendation.  Our work in specifically addressing the problems identified by OIG began six months before the OIG’s report was released.  
In June 2012, VHA established a Specialty Care Physician Productivity and Staffing Plan Task Force to further refine our methodology for specialty care physician productivity and staffing.  VHA’s task force focused on seven specialties excluding Primary Care, Mental Health, and Radiology, specialties for which models have already been developed or are near release.  The seven specialties were Cardiology, Gastroenterology, Dermatology, Neurology, Orthopedics, Urology, and Ophthalmology, which account for a major portion of our remaining physician workforce, and are representative of all remaining specialties.  The task force’s recommendation was for an RVU-based approach that builds upon the extensive work OPES has already done in this area.
These specialty areas comprise smaller numbers of clinicians than Primary Care, Mental Health, or Radiology.  The specialty services, however, are typically more heavily dependent upon the availability of capital infrastructure such as access to operating rooms and cardiac catheterization labs; and are more heavily involved in our research mission.  The task force has initiated a pilot study in four Veterans Integrated Service Networks (VISN) to gain insight into unique facility characteristics that may affect physician productivity and thereby explain some of the observed variation.  For example, surgeons with ready access to Operating Rooms (OR) will likely have higher productivity than those clinicians in an office-based or clinic practice.  Moreover, working in operating rooms with efficient scheduling of surgical procedures, expedient room turnover, and adequate OR staff (nursing, anesthesiology) would be expected to impact surgical productivity. Understanding the influence of these local factors, such as adequate support staff ratios for our providers, is an important component of this VISN pilot project.
In addition, OPES is testing and refining new, enterprise-wide solutions for capturing workload that does not impose additional burden on clinicians who are treating Veterans.  We believe the results of these pilot programs will provide the essential data needed to establish productivity standards in these specialty areas.  VHA will make every effort to account for the unique characteristics of the local facilities in which our specialists practice.
VA is integrating physician productivity data and measures of access to care into a model to guide staffing decisions in specialty care.  This approach coupled with measures of quality and the amount of specialty contract care, or non-VA community care, will help VA medical center leaders make informed decisions on the appropriate numbers of specialty physicians to meet patient care needs.  
VHA’s primary goal is improving the health and well-being of our Veterans.  We are reorienting to deliver more proactive, personalized and patient-driven care.  In addition to our commitment to establish productivity standards for five specialties by the end of this fiscal year, excluding, Primary Care, Radiology and mental health, we will ensure a plan is in place to establish productivity standards for all specialty care services within three years.  We will provide specific training to the leadership of all our health care facilities on how to utilize the data from the Physician Productivity Cube.  We will provide medical facility directors more specific guidance on how to develop staffing plans and ensure medical facility management reviews them annually to ensure optimal efficiency.  
In the process of introducing these changes, VHA will ensure that Veterans continue to have access to the highest quality primary and specialty care.  
Mr. Chairman, this concludes my testimony.  We appreciate the opportunity to appear before you today to discuss this important issue.  My colleagues and I are prepared to answer your questions.