Department of Veterans Affairs

Recommendations and Actions

DVA15: Restructure the Veterans Affairs' Health Care System


The Department of Veterans Affairs (VA), through its Veterans Health Administration, currently maintains approximately 80,000 beds for both hospital and nursing home care. VA also provides outpatient services at more than 350 sites, including clinics at every medical center, satellite clinics, independent clinics, community-based and rural outreach clinics, as well as about 200 veterans centers. On- site nursing home care is provided at 126 of VA's 171 medical centers, and in thousands of community nursing homes under contract with VA. The department also supports care by other non-VA providers through sharing agreements, contracts, and various fee-for-service arrangements.

VA's health care facilities are loosely grouped into networks organized by reference to geographic location and patient use patterns. The hospital, however, remains the fundamental structural unit. Health care facilities are organized into four regions which coordinate the networks; VA's Central Office, in turn, coordinates regional activities.

With the aging of World War II veterans and migration to the so- called sunbelt region of the country, the capacity in some areas exceeds demand, while the reverse applies in other areas. These shifts, together with advancements in the technology and the practice of health care, have led to calls in recent years for VA to reevaluate its options in relation to structure of the VA health care system. Interest has also grown in revised eligibility rules for VA services to allow increased flexibility (e.g., by providing ambulatory services instead of institution-based care).

In 1989, then-Secretary Edward Derwinski established the Commission on the Future Structure of Veterans Health Care in response to the issues raised by demographics, geographic distribution patterns, system capacity, and eligibility. Over 25 years had passed since the last examination of VA health care delivery programs.

The commission, a 15-member panel of health care experts, was an independent body appointed by the secretary with the approval of Congress. Its tasks were to conduct a thorough, objective examination of the VA health care system and to recommend actions that would keep the system viable through the year 2010 and beyond. The panel examined veterans' access to care, quality of care, and restructuring to improve efficiency and effectiveness.

The commission presented its recommendations in November 1991.(1) Although many changes could be made immediately, three major recommendations could not. They were:

--- Change the law, removing differences in eligibility for inpatient, outpatient, and long-term care.

--- Reorganize the health care system to let VA Central Office set national policy and delegate operational authority to geographic service area managers.

--- Redistribute health care resources to match veterans' needs.

Implementation of the commission's recommendations posed daunting challenges. The problems of access, quality of care, and cost (issues also affecting systems beyond VA as well), and the recommendations themselves, were not amenable to simple or expedient measures such as closing facilities or opening clinics. Because of the complexity of the problems and eventual solutions, and the limits of annual budget cycles, little organized support could be mobilized for action on the bulk of the recommendations.

Nevertheless, VA did begin planning for changes in its field structure to eliminate overlapping capacity and to fill gaps in access to care. Other planning efforts included measures to simplify eligibility and increase access to care, provide a continuum of care to all eligible veterans, and expand sharing agreements with other health care providers. It also took steps to implement a more rigorous quality assurance program.

VA contributed its experience to the deliberations of the National Health Care Reform Task Force on options for achieving guaranteed access by all U.S. citizens to a defined package of services, with quality care at an affordable price. Fundamental decisions on the nature and fiscal implications of VA's future role in the reformed national health care system must await the outcome of health care reform.


The Department of Veterans Affairs should reexamine its role and delivery structure in the wake of health care reform.


Given the direction and goals of the President, it appears that VA may be in a position to be a provider in competition with other providers. A change in the VA structure will be necessary to prepare for this role.

Fiscal Impact

At this time, it would be premature to speculate on the impact of this recommendation pending the outcome of deliberations on health care reform.


1. See U.S. Department of Veterans Affairs, Report of the Commission on the Future Structure of Veterans Health Care (Washington, D.C., November 1991).

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