The Department of Veterans Affairs is considering consolidating dozens of medical facilities in order to make nearly 5,000 personnel cuts in fiscal year 1995.
Also among the options spelled out in a VA draft document obtained by MODERN HEALTHCARE is contracting out a variety of services.
The staff reductions are required by Vice President Al Gore's National Performance Review, which, if fully implemented, would require the VA to cut as many as 25,000 full-time-equivalent positions over the next five years, said VA Secretary Jesse Brown. The cuts also are needed to reduce a shortfall in the proposed fiscal 1995 VA healthcare budget of $16.5 billion, which the committee preparing the options estimated at between $300 million and $700 million.
According to the draft, "some of the changes are dramatic, but they are necessary given budget constraints and the need to position ourselves for national healthcare reform."
Veterans groups have been told that the committee meeting to pare down the list of options will release a final list within the next several weeks.
The proposal that would result in the most significant reductions is contracting out services ranging from dental care to laundry. If all the half-dozen services cited in the draft were moved outside the VA, nearly 4,000 jobs would be cut in 1995, and more than 15,000 jobs would be eliminated by the end of fiscal year 1997. The VA now has more than 200,000 employees.
The plan to contract out services has been considered for many years and has the support of veterans groups.
"It has been proven that the private sector can do most of these services more efficiently. The question is, how much money do you really save?" said Frank Buxton, deputy director of national veterans services at the American Legion.
According to the draft report, contracting of services would save more than $57 million by the end of 1997. Veterans groups question whether those savings would actually be realized.
The VA draft also considers the consolidation of more than 50 medical centers, a move that would result in nearly 1,500 staff reductions by the end of fiscal year 1997. Consolidations of administration services at more than 70 medical centers would cut more than 1,000 additional staff during the same period. The VA operates 171 hospitals and more than 300 clinics.
Eliminating a level of middle management throughout the system also would result in nearly 1,500 cuts by the end of 1997.
According to the draft, the existence of an early retirement program for federal government employees passed by Congress as part of the National Performance Review means "there may not be a more perfect opportunity to reorganize our management structure than the present time. With an (early retirement) incentive, the prospect of consolidating medical centers and administrative services to streamline our system is substantially improved."
Veterans groups said the consolidations may be overdue.
"It is not only a reasonable way to go, it makes sound business sense," said David Gorman, assistant national legislative director for medical affairs at the Disabled American Veterans.