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Veterans Crisis Line Badge

Office of Public and Intergovernmental Affairs

Remarks by Deputy Secretary Sloan Gibson

Professional Services Council (PSC) Board of Directors Meeting
Washington, DC
July 9, 2015

In the private sector, overhauling the largest healthcare system in America, transforming business processes, and implementing organization-wide cultural change would be quite a challenge.

Now, think about getting all that done in the Federal Government. We have 535 board members—Congress—and about 65 percent of our workforce is unionized. Hiring is hard; firing is harder. We have onerous budget and acquisition processes and operate in an entrenched bureaucracy. Everything we do is highly visible, an open book, subject to scrutiny and critique by powerful and vocal competing interests. If there’s an organization in America facing greater challenges than VA, I’d like to know who it is.

Today I’d like to do two things: First, tell you some things about VA you probably didn’t know. Second, tell you what we’ve accomplished and where we’re headed.

Last summer I met Dr. Harvey Fineberg. He had just stepped down after 12 years as the president of the Institute of Medicine. I told him that because of the health care crisis, VA could accomplish more in two-to-three years than we could otherwise have done in two-to-three decades.

Dr. Fineberg immediately corrected me. “No!” he said, “VA can accomplish things now it never could have accomplished!”

Harvey was right. VA has an extraordinary opportunity and we must seize it!

Part of seizing that opportunity has to do with leadership. Both Bob McDonald and I have come to VA after long careers in business. I’ve sworn in David Shulkin as Under Secretary for Health, LaVerne Council as Assistant Secretary for Information and Technology, and Tom Allin as MyVA Program Management Officer. We bring with us a business perspective on transforming VA, and I’ll say more about that later.

First, let me describe for you the business known as VA.

VA’s the second largest agency in the Federal government with 340,000 employees—a third of them Veterans—and a $169 billion budget. 11 million of the 22 million Veterans living today are registered, enrolled, or use at least one VA benefit or service.

Among our nine lines of business . . .

  • Last year, we provided $58 billion in compensation benefits to four million Veterans and their survivors.
  • We supported 100,000 disabled Veterans with $1.1 billion in vocational rehabilitation and employment benefits.
  • Since 2009, we’ve paid $50 billion in Post 9/11 GI Bill education benefits to 1.4 million Veterans and family members.
  • In 2014 alone, we guaranteed 440,000 home loans with a balance of $100 billion, and for the nearly 2.2 million home loans on our books, we’ve have the lowest foreclosure rate in the industry.
  • Not many realize VA is the Nation’s 10th largest insurance enterprise with nearly $1.3 trillion in coverage under 6.5 million policies for Veterans, Servicemembers, and families.
  • We operate 131 National Cemeteries, maintain 3.4 million gravesites, perform over 125,000 interments each year,
  • And for the past decade, the American Customer Satisfaction Index has ranked our cemetery system the top customer-service organization in the Nation, public or private.

If VA were in the private sector, we’d be a Fortune 10 company—and I’m just getting to healthcare.

Nine million of the Nation’s 22 million Veterans are enrolled for healthcare—our 9th line of business. We’re the largest healthcare system in America. We provide services from primary care to polytrauma care to complex specialized procedures like organ transplants and neurosurgery.

We have 150 hospitals and nearly a thousand outpatient clinics, some as large as 250,000 square feet. We have 300 Vet Centers where we provide counseling and support for combat Veterans and their families.

We have 135 nursing homes, 104 residential rehabilitation treatment facilities, and scores of outreach and mobile medical clinics to serve our most rural Veterans.

We complete 80 million appointments a year. That’s about 250,000 each weekday.

We have 23,000 doctors, and our 91,000 nurses make VA the largest employer of nurses in the country.

We’re engaged with the public and private sectors and academia like never before—1,800 academic affiliations alone. Our affiliations are close and highly productive.

Clinicians from many of the most prestigious medical schools in the country deliver care, teach, and conduct research at VA. The Chief of Staff of our Boston VA Medical Center is one of the deans at Harvard Medical School. At the UC San Francisco medical school, the entire faculty is credentialed to practice in VA, and all our medical center physicians there are members of the University’s staff. Today, we spend over $650 million annually on medical and nursing school alliances—from Mount Sinai to Loma Linda. 70 percent of all U.S. physicians receive at least some of their training at VA hospitals. In fact, we train 62,000 medical students and residents, 23,000 nurses, and 33,000 in other health fields, annually.

We invest $1.8 billion in research annually. Among other things, VA researchers have . . .

  • Pioneered electronic medical records and bar-code software to safely administer medicines;
  • Developed the implantable cardiac pacemaker;
  • Proved an aspirin a day reduces risk in patients with unstable angina;
  • Conducted the first successful liver transplants;
  • Created the nicotine patch;
  • Developed some of the first medications for hypertension;
  • Helped license the shingles vaccine through a VA Cooperative Study;
  • And demonstrated that patients with total paralysis can use their minds to control robotic arms.

VA researchers have received three Nobel Prizes in Medicine or Physiology, six Lasker Awards, and, last fall, two VA researchers received the Samuel J. Heyman Service to America Medals for groundbreaking work on spinal cord injuries.

So by any measure, VA innovation has contributed significantly to American healthcare—indeed, healthcare around the world—and shaped how doctors and other professionals think about and deliver care.

While we still have much room to improve access and the quality of care, most Veterans are satisfied with the VA care they receive.

That’s not just me—since 2004 the American Customer Satisfaction Index has shown that Veterans receiving VA healthcare give us higher satisfaction ratings than patients receiving care in private hospitals—both inpatient and outpatient care.

J.D. Power scored VA’s Mail Order Pharmacy the highest in overall satisfaction—every year for the last five years—and last year, 24 VA medical facilities were recognized as “top performers” by The Joint Commission.

You may have seen Tina Rosenberg’s January piece in The New York Times. Let me share a few lines:

  • “Hospital-acquired infection is one of the country’s leading causes of death, killing 75,000 people per year—more than car accidents and breast cancer combined.”
  • “Yet hospitals have only started to take prevention seriously in the last decade, most in the last five years.”
  • “One hospital group, however, has done more than all others. It’s not the Mayo Clinic’s hospitals, nor the Cleveland Clinic’s, nor Kaiser Permanente, nor Sutter, nor Geisinger. These are all hospital chains known for their quality, but another big name leaves them in the dust: the V.A.”

She goes on to say —

  • “V.A.’s achievement is even more remarkable because its patients are older and sicker than patients in other hospitals.”

I could add that Veterans have a lower risk of dying of heart failure in a VA hospital than in a private sector hospital, and that VA exceeded private hospitals in prescribing Beta-Blockers after a heart attack, controlling high blood pressure, and conducting colorectal cancer screening.

But if even one Veteran waits too long for care or benefits, it’s unacceptable.

One year ago, 290,000 Veterans were waiting more than 30 days for care. Since then, improving access to care has been our top priority, and we’ve made real progress.

  • We completed 7 million more appointments for care inside VA and in the community than in the previous twelve months—double the additional capacity required to meet those Veterans’ needs last year.
  • Average wait-time for completed appointments?
    • Four days for primary care,
    • Five days for specialty care,
    • Three days for mental health.
  • Scheduled appointments inside VA are up 12 percent, and authorizations for VA Community Care are up 44 percent.
  • 97 percent of appointments inside VA are completed within 30 days of the clinically indicated or Veteran’s preferred date; 93 percent within 14 days; 88 percent within 7 days; And 22 percent of appointments are completed on the same day.
  • After-hours and weekend appointments are up 12 percent.
  • We’ve expanded our use of virtual care:
    • Secure messaging is up 36 percent,
    • Tele-health up 19 percent,
    • e-Consults up 36 percent.
  • The New Enrollee Appointment Request (NEAR) list is down 93 percent.
  • The Electronic Wait List (EWL) is down 47 percent.

To achieve this improvement in access to care, VA has been executing a strategy focused on building capacity through staffing, space, productivity, and VA Community Care. Highlights . . .

  • Growing VHA staffing by 12,000 since April last year, including 1,000 physicians and 2,700 nurses.
  • Activating 80 new VHA leases that add 1.3 million square feet to our healthcare footprint, plus another 420,000 square feet in VA-owned properties.
  • Our Relative Value Units—a standard measure of clinical output—have increased 10 percent, while our healthcare budget has increased only 2.8 percent.
  • And 1.5 million Veterans have been authorized for care in the community, up 36 percent.

Clearly, we are providing more Veterans more access to care.

Our challenge? As we improve access, even more Veterans are coming to VA for their care. As a result, appointments pending over 30 days are up 50 percent from a year ago.

Consider Phoenix. After adding 337 staff, completing 109,000 more appointments, and a 91 percent increase in care in the community, wait times are up. Why? In the same months—the number of Veterans in Phoenix receiving primary care increased 11 percent, specialty care—17 percent, and mental health care—16 percent.

We also saw it in Las Vegas. In the two years since opening the new medical center, the number of Veterans receiving care jumped 18 percent. Let’s not lose sight of the broader context:

  • We are dealing with an aging Veteran population—over half receiving care are 65 or older.
  • More Veterans are filing disability claims for more conditions.
  • The average degree of disability today is near 50 percent, meaning that many more Veterans are eligible for healthcare from VA.

We also know many Veterans prefer VA healthcare. VFW’s March survey of Veterans reports that 47 percent of Veterans offered Choice elected to wait to get their care inside VA, 78 percent were satisfied with their VA care experience, and 82 percent would recommend VA care to fellow Veterans.

One more thing we must keep in mind: Most Veterans already have a choice—81 percent have either Medicare, Medicaid, Tricare, or some private insurance

Many come to VA because of the disparity in out-of-pocket costs between their insurance and VA care. For example, the average Medicare reimbursement for a knee replacement is $25,000, with a co-pay of 20 percent. Choosing VA saves Veterans $5,000.

So, as VA improves access—which we are continuing to do—more Veterans are choosing VA care, for both its high quality and its low cost.

Veteran response is placing extraordinary demands on resources. We’re running the largest healthcare organization in the country on a 20-year-old financial management system. We’ve not effectively factored into our predictive analytics market penetration, changing Veteran reliance, and improving access. Historically, we’ve managed to a budget instead of managing to requirements based on Veterans’ needs.

We also have to deal with medical breakthroughs that don’t follow the budget cycle timeline. The new wonder drugs to cure Hepatitis C are examples of new requirements impossible to forecast when our 2015 budget was first proposed. To keep Hep C Veterans from needlessly waiting, we’ve asked for some budget flexibility to use a limited amount of Veterans Choice Program funding.

The lack of budget flexibility is another condition you don’t have to deal with in the private sector.

So we face some significant challenges, but we are making real progress improving Veterans’ access to the quality healthcare they deserve.

We’ve also made outstanding progress in our efforts to eliminate our backlog of disability claims. Two years ago, the backlog peaked at 611,000. Today it’s under 130,000—an 80 percent reduction.

Last year, we completed 1.3 million claims for disability compensation—150,000 more than in 2013. We’ve already reached the one million mark this fiscal year—the earliest ever. Our claims inventory is under 400,000 for the first time in six years. Average days pending is 120 days—under our 125-day standard.

Step back and consider: Three years ago, our claims process management system was all paper-based—5,000 tons of paper files. Since then, we have designed and fielded an automated system: We designed the process, we built the technology, and we trained the people to use it.

Now claims processing is virtually all digital.

Longer term, we’re building a world-class customer-service enterprise, oriented around the needs of Veterans. We call the effort MyVA because that’s how we want Veterans to think of us.

Our five MyVA objectives are:

  1. Improving the Veteran experience: seamless, integrated, and responsive customer service experiences for every Veteran, every time.
  2. Improving employee experience: eliminate barriers to customer service, and focusing on our “people and culture” so we can better serve Veterans.
  3. Improving our internal support services, including acquisitions and logistics.
  4. Establishing a culture of continuous improvement: Identify and correcting problems faster, replicate solutions across the enterprise, train thousands of employees in Lean Six Sigma.
  5. Enhancing strategic partnerships, working closer and smarter with public and private partners to serve Veterans in ways VA alone can’t.

Speaking of partnerships, as businessmen, both Bob and I know that, in any business, you want your suppliers to become your partners. You want to help them do their job, so they can help you do yours.

All of you understand that. My natural tendency upon arriving at VA was to reach out to its business partners—its contractors and suppliers, and I’ve done that at VA—in places like Orlando, New Orleans, and Denver—where VA and its business partners have been at odds. But the initial reaction within VA to my reaching out was—you don’t want to do, you want to keep your distance.

At times, it seemed that we were treating contractors like the enemy. That’s no way to do business. We have strict laws governing contracting. We can’t change that. But we still need to be working with our contractors more like valued partners and involving them in our business processes.

Our Acquisition team is finishing a thorough review of our current system—processes, policies, workloads, and service delivery. We already know our VA supply chain is not what it should be, in terms of its ability to manage spending and ensure deliveries.

For example, if someone in VHA needs to order suction tubing and types that into the current system, the system gives them 40 pages of products—a bewildering mix of different sizes, amounts, purposes, prices, and vendors. It takes time to figure out what to buy, and the likelihood of a wrong purchase is high. Our purchases are also spread among the many different vendors, so we lose a lot of buying power.

We have a solicitation out for a next-generation system that will focus the buyer on preferred products—fewer choices, but easier selection—more ordering, less purchasing. That way, we can be better customers and negotiate terms of service like pricing and delivery based on our actual purchasing history. Ideally, we’d like it to be as easy as ordering from Amazon—simple point-and-click—with purchasing authority delegated as low as possible.

This is truly an exciting time to be at VA:

  • We’re providing more care to more Veterans;
  • We’ve shrunk the claims backlog to a fraction of what it was two years ago;
  • We’re made progress in the fight against Veterans homelessness—down by a third in the past few years; and
  • We’re forging ahead with a range of new MyVA initiatives to improve the Veteran experience, the employee experience, and our business partners’ experience.

I don’t know of any organization with a greater opportunity or a more inspiring and noble mission.

With your support—and the support of the President, Congress, VSOs across the Nation, and other stakeholders—we will succeed.

Thanks for listening. I’ll do my best to answer your questions.