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June 08, 2014 12:00 PM How VA Outsourcing Hurts Veterans

By Phillip Longman

On Thursday, Sen. Bernie Sanders, chairman of the Senate Veterans Affairs Committee, announced that he had reached a compromise with John McCain and other Senate Republicans on how to fix whatever it is that needs fixing at the VA. The legislation contains some good ideas, like providing for the hiring of more doctors and nurses where they are needed. But the bill also contains one provision that is a significant concession to Republican enemies of government. If enacted, it would lower the quality of health care received by veterans while setting back the movement for health care delivery system reform generally.

This is the provision in the draft legislation that would, according to a Senate Veterans Committee press release, “allow veterans living more than 40 miles from a VA hospital or clinic to access more convenient private care.” Given all the headlines about excessive wait times and backlogs at the VA, that might sound smart at first hearing, but in practice it could well lead to a disaster.

To begin with, as most people in this debate don’t seem to know or care to remember, the VA already engages in extensive outsourcing of medical services. For example, under the Bush Administration, the VA began contracting with Humana to provide care to veterans in rural areas, a program that continues under the Access Received Closer to Home project. In 2009, the Senate Veterans Affairs committee determined that the VA was already outsourcing some $3 billion year to private providers.

By 2012, the Obama administration had continued the trend to the point that the public employee unions that represent VA employees were screaming. “Contract physicians and nurses lack the specialized skills and best practices of clinicians who dedicate their lives to serving the veteran population as VA employees,” complained Alma Lee, National VA Council President for the American Federation of Government Employees. “Excessive contracting out has put many medical centers in the red, without benefitting the patient.”

Now to be sure, some of this outsourcing makes sense. It’s not cost-effective to maintain VA hospitals or even clinics in many remote areas. Due to the declining population of veterans, the VA lacks a sufficient volume of patients even in some developed areas to be able to justify using its own specialists.

But even at its current scale, the outsourcing of VA care has already been fraught with problems. One comes from just the generic hazards of government contracting. In 2009, the VA Inspector General (pdf) found that 37 percent of the $3.2 billion the VA had paid out the year before to private health care providers was improperly paid. Not only does outsourcing create new administrative costs and burdens for procuring and managing contracts. It also opens up opportunities for crony deals and all the kinds fraudulent billing by private doctors that bedevils Medicare and Medicaid.

Far more potentially tragic, however, is what further privatization of the VA would do to the quality of care received by veterans. It’s not just that it would threaten the closure of more VA hospitals, thereby making the highly specialized prosthetic and trauma care they offer to disabled veterans more difficult to obtain. Even routine care would suffer in quality as well

To understand why, consider that health care quality experts are virtually unanimous in identifying fragmentation of care as the one of the largest, if not the largest failures of U.S. health care outside of the VA. Here, for example, is the diagnosis of the of the National Quality Forum, a non-profit organization dedicated to improving healthcare quality:

CARE COORDINATION IS A VITAL aspect of health and healthcare services. Many patients often see multiple physicians and care providers a year, which can lead to more harm, disease burden, and overuse of services than if care were coordinated. This is particularly evident for people with chronic conditions and those at high risk for co-morbidities, who often are expected to navigate a complex healthcare system. Despite efforts to reduce problems through various initiatives and programs—such as care/case management—poor communication, medication errors, and preventable hospital readmissions are still substantial.

Indeed, they are. And superior coordination of care is one main reason why the VA, despite it flaws, continues to outperform most other health care providers in most measures of health care quality.

Because the VA truly is a system, it can coordinate among all the different specialists and other health care providers who are necessarily involved in patient care these days. And because it operates as a system, the VA can also make sure that all these medical professionals are working from a common electronic medical record and adhering to established, evidence-based protocols of care—not inadvertently ordering up dangerous combinations of drugs, or performing unnecessary surgeries and tests just to make a buck.

In short, as I explain further in my book Best Care Anywhere, the VA can treat the whole patient as opposed to one body part at a time. And due to its near lifelong relationship with its patients, which often extends to long-term nursing home care at the end of life, the VA also has incentives for investing in prevention and patient wellness that are largely absent elsewhere in U.S. medicine.

The VA pioneered this model of an integrated, evidence-based, health care delivery system platform that is aligned with the interests of its patients. The last thing we should want to see is more veterans getting treatment in the comparatively more chaotic, fragmented, dangerous, profit-maximizing world of U.S. medicine outside the VA. Instead, the challenge before us is to stop excluding so many vets from VA care with absurd eligibility standards, while giving the VA the capacity it needs to bring its superior model of care to a larger population. Eventually, we need a VA that is open to not only all vets and their family members, but more public health care systems like it that anyone can join.

Phillip Longman is a senior editor at the Washington Monthly and a lecturer at Johns Hopkins University, where he teaches health care policy. He is also a senior fellow at the New America Foundation, where Atul Gawande is a board member.

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