The Veterans Health Administration: Quality, Value, Accountability, and Information as Transforming Strategies for Patient-Centered Care

Published Online: November 01, 2004
Jonathan B. Perlin, MD, PhD, MSHA; Robert M. Kolodner, MD; and Robert H. Roswell, MD

The Veterans Health Administration is the United States' largest integrated health system. Once disparaged as a bureaucracy providing mediocre care, the Department of Veterans Affairs (VA) reinvented itself during the past decade through a policy shift mandating structural and organizational change, rationalization of resource allocation, explicit measurement and accountability for quality and value, and development of an information infrastructure supporting the needs of patients, clinicians, and administrators. Today, the VA is recognized for leadership in clinical informatics and performance improvement, cares for more patients with proportionally fewer resources, and sets national benchmarks in patient satisfaction and for 18 indicators of quality in disease prevention and treatment.

(Am J Manag Care. 2004;10(part 2):828-836)

The Veterans Health Administration (VHA), one of three administrations within the Department of Veterans Affairs (VA), is the largest integrated health system in the United States. Suffering deservedly or not during the 1980s and early 1990s from a tarnished reputation of bureaucracy, inefficiency, and mediocre care, the VA sought to reinvent itself beginning in 1995 as a model system characterized by patient-centered, high-quality, high-value healthcare. This reinvention mandated structural and organizational changes, rationalization of resource allocation, measurement and active management of quality and value (and clear accountability for quality and value), and an information infrastructure that would increasingly support the needs of patients, clinicians, and administrators.

Although predating the US Institute of Medicine's recent recommendations for a more ideal health system,1 the VA's improvement using strategies remarkably similar to those enunciated in the report provides increasing evidence for the utility of the recommendations in closing the "quality chasm." Through adoption of evidence-based practices, proactive approaches to patient safety, and use of advanced technologies (eg, a fully deployed electronic health record, bar-coded medication administration), the VA's success in improving quality, safety, and value have allowed it to emerge as an increasingly recognized leader in healthcare.2,3


Origins of the Veterans Health Administration

Although health and social support for aged or disabled soldiers has existed in the United States since Colonial times, the spectrum of national programs for American veterans was consolidated with the establishment of the Veterans Administration in 1930. Resources for social services expanded rapidly following World War II with the Servicemen's Readjustment Act of 1944 (better known as the GI Bill of Rights), and a hospital system that specialized in meeting the rehabilitative needs of more than 1 million returning troops who had experienced physical and emotional trauma expanded and evolved. The Veterans Administration was elevated to Cabinet status and became the Department of Veterans Affairs in 1989, with financial support programs such as pensions administered under the aegis of the Veterans Benefits Administration and health services consolidated in the Veterans Health Administration (VHA). The Secretary of Veterans Affairs directs the activities of the department, and the Under Secretary for Health serves as the chief executive officer of VHA.

Structural and Organizational Transformation Since 1995

Until the mid-1990s, the VA operated largely as a hospital system providing general medical and surgical services, specialized care in mental health and spinal cord injury, and long-term care through directly operated or indirectly supported facilities. Medical centers and other facilities operated relatively independently of each other, even competitively duplicating services. Anachronistic laws required virtually all healthcare services to be provided in hospitals, counter to the movement of care into the ambulatory environment. In 1996, the Veterans Health Care Eligibility Reform Act enabled the system to be restructured "from a hospital system to a health care system," as directed by then Under Secretary for Health, Kenneth W. Kizer, MD. The structural changes were predicated on the assumption that providing the most effective, efficient care required coordination among facilities and synergy of resources, including that care be provided in the most appropriate environments.

The structural transformation was characterized by creation of 22 geographically defined Veterans Integrated Service Networks (VISNs) in 1995. In addition to redirecting resources allocations to follow the geographically shifting veteran population, resources were allocated to each network rather than to each facility. Within VISNs, this created financial incentives for coordination of care and resources among previously competing facilities. Although the portfolio of medical centers still exists today, medical centers now belong to 1 of 21 VISNs (2 VISNs were recently merged), as do community-based outpatient clinics, which increased from fewer than 200 in 1996 to more than 850 today, and more than 300 other long-term care facilities, domiciliaries, veterans' counseling centers, and home-care programs. This structural transformation facilitated shifting care from the hospital to ambulatory-care facilities and the home environment, allowing a reduction of authorized hospital and long-term care beds from approximately 92 000 to 53 000, with a concomitant decrease in hospitalizations and an increase in ambulatory-care visits and home care services (Figure 1).


It should be noted that from 1996 to 2003, the number of veterans treated annually increased by 75% from approximately 2.8 to 4.9 million. The appropriated budget to care for those increasing numbers of patients remained flat at $19 billion from 1995 to 1999, and has increased to approximately $25 billion for fiscal year 2003, or about 32% cumulatively over 6 years.


Quality and Value as Organizing Strategies

Because of its public nature, the VA is perhaps the most scrutinized health system in the United States. In the late 1980s and early 1990s, the VA was beset by increasing public anxiety about the quality of care. A 1992 movie titled Article 99, made in Hollywood by Orion Pictures, parodied the VA as a hapless and dangerous bureaucracy, and the challenging US economy at the close of the 1980s and opening of the next decade raised concern about the economic viability of the system. The broader American healthcare context saw the increasing emergence of managed care, offering the hope of improved quality and the promise of a mechanism for controlling healthcare cost inflation. At the extremes, a tension emerged between the desire to maintain a system dedicated to veterans' health needs and vouchering out (contracting for) care for presumably greater quality and efficiency. It was increasingly apparent that if the VA were to survive, it would need to prove its value to Congress and its quality to veterans themselves.

Two documents entitled Vision for Change and Prescription for Change, published in 1995 and 1996, respectively, outlined the challenges facing the VA and served as the strategic outline for organizational restructuring and a new strategy for systematizing quality and value.4,5

The VA sought to operationalize value in terms of the relationship of outputs to inputs, in contrast to the more simplistic, prevalent, and less meaningful concept of unit cost. Expanding on the definition of "value" as the relationship of quality to cost,6 the VA objectified quality as a constellation of outcomes of interest to veterans and stakeholders that were known as the value domains. The value domains now include 6 dimensions of effectiveness that the VA holds itself accountable for through performance measurement. The first 5 can be construed as the outputs of the system, and include technical quality of care, access to services, patient functional status, patient satisfaction, and community health. The inputs are the resources, ultimately financial, that the VA works with. The sixth value domain, cost-effectiveness, emerges as the ratio of outputs to inputs, a relationship sometimes referred to as the "value equation."

The objectification of quality and value serves as the basis for internal performance improvement efforts, and both internal and external accountability. Measures are determined in each of the value domains. In the arena of quality, performance measures largely are derived from rates of providing evidence-based healthcare services (processes and intermediate outcomes) in the areas of preventive health, disease treatment, and palliation. Novel composite measures, known as the prevention index (see Figure 2), chronic disease index, and palliative care index, serve to focus provider attention on these areas and summarize performance. Examples of measure topics in each domain are described in Table 1.



Accountability Through a National Performance Contract

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