President George W. Bush: Resources for the President's Team The White House
President George W. Bush meets with Dan Bartlett, center, and Josh Bolten in the Oval Office Jan. 9, 2003.  White House photo by Eric Draper.
The Deputy Director for Mgmt
PMA updates, best practices, and general information.
Grading Implementation of the PMA.
Human Capital
Initiative updates, best practices, and general information.
Commercial Services Management
Initiative updates, best practices, and general information.
Improving Financial Performance
Initiative updates, best practices, and general information.
Initiative updates, best practices, and general information.
Performance Improvement
Initiative updates, best practices, and general information.
Sharing Best Practices
Stories of achieving breaktrough results in government.
Department Updates


Implementing Reform at VA: The First Year

VA Seal We have improved effectiveness at the federal government's second largest department with a "governance" system adapted from business. The focus is on performance management, conducted by accountable managers and executives against concrete objectives using relevant data. Effort only counts if it produces the desired result.

Challenge: Assess changing veteran demographics and advances in health care, and re-allocate resources to ensure that veterans get access to world-class medical care.

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Leo Mackay, Deputy Secretary of Veterans Affairs, discusses the PMA.
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Mark Catlett, Principal Deputy Assistant Secretary for Management and Acting Chief Financial Officer, discusses the PMA.
VA's health care delivery model was designed and built decades ago, when inpatient care was the norm. Reflecting a shift to outpatient care nationwide, today's VA emphasizes a continuum of care provided within an integrated regional or network-based system. Modern health care is now characterized by competence, compassion, high technology, prevention and convenience. Veteran demographics are also changing: since WWII, the veteran population has shifted west and south along with the general population. These changes in health care delivery and demographics have created expensive inefficiencies that are also opportunities: In 1999, the General Accounting Office testified that VA could recoup up to $1 million dollars a day by identifying and making better use of underused or vacant space.

VA created Capital Asset Realignment for Enhanced Services (CARES), a national planning process designed to meet the health care needs of veterans over the next 20 years. Based on the CARES pilot study, conducted in the Chicago/Wisconsin region, VA is allocating $300 million in the area, which includes building four additional community-based outpatient clinics. Additionally, inpatient services will shift from one downtown Chicago hospital to another only six miles away. A large, multi-specialty clinic will remain in the immediate vicinity. The money saved will be reinvested in upgrades and improvements at other Chicago VA hospitals.

You can't manage what you can't measure. Therefore, the first step in the process was to define the veteran population base. VA used updated enrollment figures, which included the number of veterans enrolled and now receiving VA health care, those enrolled but not currently getting VA care, and those not enrolled at all. Health care "market areas" were then defined based on geographic areas (counties or zip codes) served by the network's facilities. Some market areas included sub-markets - areas with clusters of veterans, such as in large cities. We used the latest U.S. Census data, broken down by state and county to get a firm grasp of the size and demographics of the veterans' population. With this data, VA could determine its demand for health care services and infrastructure through the next 20 years in these market areas, including the space needed to provide those services.

Learn what VA did to address its greatest management challenges.
Challenge:    Changing veteran demographics, new technology, and the trend toward preventive medicine and outpatient services have rendered many VA facilities underused or vacant, while other locations have insufficient facilities and reduced health care services.
Solution:    Realign the nation's largest integrated health care system to more efficiently serve a radically changing market.
Challenge:    VA was losing money on under-performing properties while missing opportunities to save or even generate revenues by facility sharing.
Solution:    Create revenue by leasing underused property.
To determine what America's veterans need, VA had to assess the current supply of health care services by market area, accounting for infrastructure condition, cost, employment data, current services offered, medical school affiliations, research programs, environmental issues and identification of vacant or underused space. Also considered was homeland security, interagency and intergovernmental sharing and partnership opportunities, and opportunities for enhanced-use leases.

VA will use this information to identify gaps or redundancies between current supply and future demand. Networks are now developing "draft market plans" to resolve these supply-demand mismatches.

An independent VA commission will review the draft National Market Plan. This independent, federally-chartered panel of experts will visit VA locations, conduct public hearings and confer with veterans groups, government officials and health care experts before submitting recommendations to Secretary Principi for approval in October 2003.

The result will be improved financial performance that in turn enhances access to high-quality, modern health care for veterans nationwide now and into the future.

Challenge: Find ways to convert VA's under-performing properties into productive assets yielding the highest and best return to the government.

Make under-performing properties available for long-term lease through cooperative arrangements with both public and private sector interests. The leased property then supports VA and non-VA uses that are compatible with VA missions and private-market needs.

In 1991, VA obtained legislative authority (38 U.S.C. Sections 8161 through 8169) for its enhanced-use leasing program, the first federal agency to get this authority. VA will be able to convert under-performing properties into productive assets yielding the highest and best return to the taxpayer.

Enhanced-use leasing is a cooperative arrangement under which VA property is made available to public or private entities, compatible with VA missions and private-market needs. The entity can manage the property, receiving revenue either from VA's use of the property, lease of excess space, or both. VA gets facilities, space, services, monetary payments or other "in-kind" considerations free or at reduced cost. This results in significant cost savings when compared to new construction or traditional leasing. In addition, it brings substantial private investment in VA's capital facilities and infrastructure, new long-term sources of revenues, and the creation of local jobs and tax revenues. VA has used enhanced-use leasing to obtain energy centers, regional offices, housing for homeless veterans, senior housing, childcare centers and medical/clinical facilities.

One example of enhanced-use leasing is in Chicago, where VA's Capital Asset Realignment for Enhanced Services (CARES) program is resulting in the shift away from a large downtown building that had gone largely unused. A long-term lease of this building will be taken in an upfront payment to get the funds we need to construct a new facility at the other downtown Chicago site.

Dr. Leo S. Mackay, Jr.
Deputy Secretary

Department Updates:

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