The Reform of the Veterans Administration Hospital System is Not the Great Example of Government-Controlled Healthcare That Liberals Think It Is

I've seen a few blogospheric comments touting the reform of the Veteran’s Administration hospital system as an example of how strong government involvement in healthcare, maybe as strong as single payer, works well. The example doesn’t work for a very simple reason, illustrated below.

An article from the July 17 issue of Business Week does provide several metrics proving pretty conclusively that (high) quality patient care is available from the VA hospital system…

According to a Rand Corp. study, the VA system provides two-thirds of the care recommended by such standards bodies as the Agency for Healthcare Research & Quality. Far from perfect, granted -- but the nation's private-sector hospitals provide only 50%. And while studies show that 3% to 8% of the nation's prescriptions are filled erroneously, the VA's prescription accuracy rate is greater than 99.997%, a level most hospitals only dream about. That's largely because the VA has by far the most advanced computerized medical-records system in the U.S. And for the past six years the VA has outranked private-sector hospitals on patient satisfaction in an annual consumer survey conducted by the National Quality Research Center at the University of Michigan. This keeps happening despite the fact that the VA spends an average of $5,000 per patient, vs. the national average of $6,300.

Of course it wasn’t always this way. As Business Week reminds us…

To much of the public… the VA's image is hobbled by its inglorious past. For decades the VA was the health-care system of last resort. The movies Coming Home (1978), Born on the Fourth of July (1989), and Article 99 (1992) immortalized VA hospitals as festering sinkholes of substandard care. The filmmakers didn't exaggerate. In an infamous incident in 1992, the bodies of two patients were found on the grounds of a VA hospital in Virginia months after they had gone missing. The huge system had deteriorated so badly by the early '90s that Congress considered disbanding it.

So how was the system turned around? In the mid-1990s, a VA administrator by the name of Kenneth Kizer (a Clinton appointee, for those keeping score) implemented a broad-based series of reforms...

The VA was reinvented in every way possible. In the mid-1990s, Dr. Kenneth W. Kizer, then the VA's Health Under Secretary, installed the most extensive electronic medical-records system in the U.S. Kizer also decentralized decision-making, closed underused hospitals, reallocated resources, and most critically, instituted a culture of accountability and quality measurements. "Our whole motivation was to make the system work for the patient," says Kizer, now director of the National Quality Forum, a nonprofit dedicated to improving health care. "We did a top-to-bottom makeover with that goal always in mind."

And what is Dr. Kizer doing now, to continue make the system even better and build on his successes? The answer is nothing. After fixing the VA system, Dr. Kenneth Kizer was fired by Congress for not doling out enough pork projects to key legislators…

Kizer, the turnaround's architect, was forced out in 1999 when Congress refused to reconfirm him after he closed hospitals in key districts.

Government Executive Online has more detail on Dr. Kizer's firing (technically, the Senate's decision not to renew his appointment; those who want to blame Republican Senators for opposing a Clinton nominee, get ready for a big disappointment)…

VHA also reflected another change in veteran demographics: the shift in population from North and East to South and West. Kizer's response was a resource redistribution plan called the Veteran's Equitable Resource Allocation (VERA) system. The system distributes operating funds among the agency's networks based on the number of veterans served. In its first year, VERA caused nine VISNs to lose some 1998 funding, while 13 gained. For example, VISN 3, in New York, lost $124 million, while VISN 18, in Phoenix, gained nearly $60 million.

VHA's shifts in focus and resources brought results. Staffing fell 11 percent between December 1994 and September 1998, while the number of patients treated per year rose 18 percent. Surgeries performed on an outpatient basis - increasing productivity and reducing deaths - rose from 35 percent of all surgeries to 75 percent from September 1995 to March 1998....

So Kizer is a hero, and VHA has been rewarded, right? Not in Washington.

In fact, after failing to win renomination in September 1998, at the end of his four-year term, and again in June 1999, at the end of a nine-month extension granted by Congress, Kizer withdrew from contention. By June, Kizer's VHA reforms had so angered legislators that they were lining up to threaten to place holds on his nomination if it ever escaped from committee.

Many legislators apparently couldn't stomach the process Kizer used to transform VHA into a patient-centered, effective and efficient health care system. Sen. Ben Nighthorse Campbell, R-Colo., repeatedly took Kizer to task for considering closure of the nursing home and outpatient clinic at Fort Lyon, Colo., a location so remote that the VA facilities there must run their own sewer system and fire department....

Meanwhile, Sen. John Kerry, D-Mass., threatened to hold up Kizer's nomination because of hospital cutbacks in his state, which has seen reductions in veterans, and consequently in VA hospital beds and funding.

There wasn’t anything magical about “single-payer” that made the VA system work. Dr Kizer's reforms could be implemented in the existing hospital/insurance system (with an important exception or two, one of which is noted below), if there was a will to do so. The magic was that, for a little while, the top-priority -- the only priority -- in allocating resources in the VA system was quality of care. Unfortunately, as the VA is a government system, a systemic focus on regular people couldn't last. In fact, a focus on reform of patient care, instead of on the politically motivated redistribution of resources, could cost a successful administrator his job.

To be successful, hospitals need to be run by people who want to build successful hospitals, not by politicians who view the world as a giant jobs program and whose concern for the quality of care is secondary to their concern that some fat budget numbers exist that can be pointed to on election day, whether or not the money is being spent on quality healthcare. Healthcare in America will only become economical, rational, and just when people are free to choose the best doctors and hospitals available to them, free from undue interference from either the government, or from private insurance industry bureaucrats who have figured out how to manipulate the government.

One other note. The Business Week article also notes that one factor in the VA turnaround an immunity from some lawsuits tied to the VA's status as a government agency…

[VA] doctors don't have to worry as much about malpractice lawsuits, since government agencies are somewhat protected. That made it easier for the VA to go out on a limb in 2005 and institute a systemwide policy of apologizing to patients for medical errors -- an act of contrition rarely done in the private sector.

Are those who look towards the VA as model of healthcare reform willing to explore extending the tort immunity enjoyed by the VA to non-government hospitals?