Alongside the battered copies of Field & Stream in the waiting room of the Department of Veterans Affairs outpatient clinic in Monterey, Calif., is a surprising sight: building blocks and other children's toys.
The Monterey facility, on the grounds of what once was Fort Ord, is one of a handful of VA facilities nationwide at which children of active-duty military personnel are receiving healthcare services along with the sick, aging men who have been veterans clinics' traditional patients.
"The nurses always tell the vets they can play with the toys if they want, but we don't get too many takers on that," says Eric Allen, M.D., a family physician who on average has treated three to five children a day at the clinic since it opened its doors to nonveteran patients in 1996.
The startling change in the Monterey clinic's patient mix reflects a movement toward greater integration among federal healthcare providers-in particular, the VA, the Defense Department and the Indian Health Service.
Indeed, VA and military healthcare facilities over the years have inked hundreds of agreements to share facilities and equipment. But federal belt-tightening, plus an expected decline in the populations of veterans and military beneficiaries, is driving the systems to pursue collaboration like never before.
Closure. Trying to reduce the defense budget, Congress has closed bases and other military facilities, including hospitals and clinics. Those closures have reduced access to the Defense Department's $10.4 billion healthcare program for active-duty family members and retirees.
What's more, the Defense Department has transformed its health insurance program for 6.6 million dependents of active-duty personnel, retirees and their families into a managed-care plan called Tricare, which is administered by private-sector health plans.
Fee-for-service health insurance for military dependents and retirees had been known as CHAMPUS, for the Civilian Health and Medical Program of the Uniformed Services. CHAMPUS still covers military beneficiaries in areas where no Tricare network exists.
The VA healthcare system, meanwhile, is facing stagnant government appropriations. Its current $17 billion annual appropriation isn't likely to grow from now until at least 2002. With such prospects, VA officials have set a goal of deriving 10% of the 900-facility system's budget from nontraditional sources by 2002, including third-party insurers, Tricare and perhaps Medicare.
Thus, the latest trend in intergovernmental sharing is the VA's movement to treat military dependents and retirees at its hospitals. After starting with CHAMPUS treatment at a single hospital in Asheville, N.C., in 1994, the VA now has 69 sites in Tricare networks.
Ten of those VA facilities provide treatment to military dependents under age 18. Of those clinics, three are caring for children in their first years of life: the Monterey clinic; a clinic in Rome, N.Y., run by the VA hospital in Syracuse, N.Y.; and a clinic at the Indianapolis VA hospital. In those areas, access to military providers is nonexistent because nearby bases have been shuttered.
"I guess that suggests an increasing reliance on the VA to provide care in areas where bases have closed," says Kenneth Cox, program manager for external healthcare programs at the Defense Department.
Sharing. VA programs have shared resources with the Pentagon and private providers since 1967. But the extent and type of sharing have changed.
According to the department's annual report to Congress on resource sharing, the VA and other providers exchanged $98 million worth of services in federal fiscal 1997.
The VA, however, bought more services than it sold, spending $81 million against sales of about $17 million.
The growing number of nonveterans in VA facilities represents a dramatic departure from tradition. It's also a turnabout for veterans groups, which closely scrutinize quality and access and historically have opposed expansion of VA services to nonveterans.
"We had one secretary who lost his job over that," notes Richard Wannemacher, associate national legislative director for Disabled American Veterans, a Cincinnati-based group representing 1.2 million veterans.
In 1991 then-VA Secretary Edward Derwinski proposed a pilot project to open two underutilized rural facilities to nonveterans, specifically people eligible for Medicare, Medicaid or Indian Health Service coverage. The VA would have been reimbursed for services by those programs.
Veterans groups objected, contending the facilities weren't underutilized so much as underfunded. After the Senate voted to oppose such an expansion, the VA withdrew its proposal. Pressure from veterans groups in the wake of the bungled proposal led to Derwinski's departure from the cabinet of President Bush.
New directions. In subsequent years, the VA has proved the powerful veterans lobby wrong in some ways. Demonstrating that its inpatient beds in fact were underutilized, the VA has closed nearly half the beds in operation in 1994, when Health Undersecretary Kenneth Kizer, M.D., took his post as head of the VA healthcare system.
The reduction in inpatient capacity also has been justified by various eligibility reforms put in place in 1996. The reforms lessened some financial incentives to treat veterans in inpatient beds rather than ambulatory settings. For example, veterans previously had to be hospitalized if they wanted to receive crutches during recovery from a broken leg. That was because crutches were viewed as prosthetics, which could be doled out only during hospitalization. In many cases, eligibility requirements made it easier for a doctor to admit a patient to the hospital than to give him an outpatient appointment.
And the VA has overcome some of the furious objections to opening facilities to nonveterans. For example, veterans groups now acknowledge that the VA's budget outlook means it must look for new sources of income.
"I think the veterans have come a long way from there," says Richard Fuller, national legislative director for the Paralyzed Veterans of America, a Washington-based group representing 18,000 veterans. "As long as eligible veterans are being cared for first and nobody's being turned away . . . all these new moneymaking schemes are fine."
Wannemacher is in agreement that the VA must look for moneymaking alternatives, although the idea of expanding services to nonveterans is frightening to him and other advocates.
Without the additional money that Tricare and other third-party payers could bring into the system, the flat VA budget means the department's healthcare buying power would decline, potentially reducing the number of veterans it treats and services it offers. The VA has been gradually expanding its services to Tricare beneficiaries since 1994. The VA's fiscal 1997 Tricare revenues were $2.8 million.
Still, veterans groups worry that veterans will be squeezed out of facilities as overzealous hospital managers chase Tricare dollars.
Veterans groups have long argued that outside income should only supplement the VA's government funding, rather than substitute for it, as is now being done.
That concern shows up as the No. 1 priority on the fiscal 1999 "independent budget," an annual list of spending priorities put together by veterans groups. The list began in 1987 and now is endorsed by 54 groups representing veterans, military retirees, physicians and others.
In a letter to Kizer, R.P. Carbonneau, executive director of AMVETS and chairman of this year's independent budget, expressed concern about the possible expansion of inpatient sharing agreements. AMVETS is a Lanham, Md.-based group representing 180,000 veterans.
The objections are heightened by the VA's rollout of capitated budgets and a reformed system for determining veterans' eligibility for care, Carbonneau says. Capitation raises the possibility that providers will profit by shortchanging veterans on care, while the eligibility reforms could reduce access for certain veterans, he says.
"Considering that many veterans currently face delays in treatment and receive less than optimal care at the VA, we question whether the VA should expand its patient base," Carbonneau's letter read.
In response, Kizer says he will stop any program that is shown to interfere with veterans' care. "If this delays or in any way impedes care for veterans, that's contrary to what's intended," he says.
No harm. The VA says that despite the growing number of military beneficiaries being treated by VA doctors, veterans are not being squeezed out of the system. That's the finding of a 1997 study by consultants Price Waterhouse, New York, and the Lewin Group, Fairfax, Va. The study, commissioned by the VA, found that even with the influx of Tricare and CHAMPUS enrollees, the department is not denying or delaying care for veterans with service-related disabilities or low incomes. The VA was created to treat those veterans, whose numbers now reach 9 million.
If Tricare and CHAMPUS were eliminated from VA facilities, veterans' waiting times for appointments would shrink only slightly, if at all, the study says. It argues that the VA has sufficient inpatient capacity to accommodate Tricare patients because all the facilities reviewed had lower than 85% occupancy rates, in many cases significantly lower. The study reviewed the most current data available from VA facilities.
Outpatient capacity, however, varies from site to site, and the study urges the department to establish standards for determining whether a VA facility can take on additional patients.
According to the study, the added revenues from treating nonveteran populations are resulting in more services for veterans. For instance, the heavy use of the Monterey clinic by Tricare enrollees so increased the patient load of Allen, the clinic's family physician, that more doctors were brought to the facility to treat patients.
What's more, in some cases, continuity of care for veterans' families has improved, as married couples, one an eligible veteran and one covered by Tricare, can now see the same family physician. "That's kind of nice," Allen says.
Bill collecting. The study, however, did raise new concerns: namely, the VA's capacity to collect bills, something it never really has had to do before as an almost exclusively government-financed organization. Indeed, historically the system's chief concern has been serving its patients within its limited means, rather than making sure they paid up.
But billing has become important as the VA seeks payment from Tricare and third-party insurers.
According to the Price Waterhouse study, the VA had collected only 55% of the $1.5 million it billed to payers at the six sites treating Tricare beneficiaries. The study blames the lack of software support from VA headquarters.
The VA facilities, however, defend themselves. "It was a steep learning curve initially," says Eric Raffin, who heads business development at the VA's Palo Alto Health Care System, which includes the Monterey clinic. "We've really become much more of an efficient billing machine."
Gene Shields, president and chief executive officer of Humana Military Healthcare Services, which includes VA facilities in its networks, also defends the VA. Although those VA facilities initially "didn't have strong capacity for billing," 85% of the bills originating from those facilities now are paid on the first submission, Shields says. "For the VA, which had very little expertise, it's extraordinary," he says of that first-time payment rate.
Kizer acknowledges billing has been a challenge for the VA, because the agency has never had to do it before. "I think we've learned, and we're getting better," he says.
If Tricare contracts are the most visible sign of collaboration between the VA and the Pentagon, they certainly are not the oldest. Since 1967 VA hospitals have been able to sell and buy services from private providers, as well as military facilities, although such sharing was until recently limited to scarce, specialized medical services.
Congress expanded the VA's authority to share services in 1997 to include primary-care and administrative services with any organization, including health plans and insurers.
But as VA clinics continue to add military beneficiaries to their patient rolls, another type of sharing probably will languish: namely the operation of VA and military hospitals under the same roof.
Kizer says the VA and military won't co-locate very many facilities because neither system plans to build. In one case, the VA planned to build a new wing onto an Air Force hospital for its patients, but after congressional criticism in September 1997 it changed its proposal. Now the VA leases 100 beds from 220-bed David Grant Medical Center at Travis Air Force Base in California.
Virtual collaboration. But the two agencies say they are full-steam ahead on collaborative efforts of a virtual sort. They are emerging from monthly meetings of the VA/Defense Department Executive Council, a panel of top executives of both healthcare systems.
Among the joint projects have been developing clinical guidelines for such diseases as asthma, congestive heart failure and diabetes; making VA facilities the military's preferred provider for such specialty services as spinal cord injury and blindness rehabilitation, areas where the military isn't as experienced; computerizing patient records in a project that includes the Indian Health Service; and, potentially, purchasing pharmaceuticals.
Despite the collaboration, few see the two systems merging. The main reason cited is military doctors' need to treat a wide variety of patients to maintain their combat preparedness.
The Pentagon's Cox says, for example, that the Army, Air Force and Navy maintain separate healthcare systems for treating their active-duty personnel because each fighting force has specific healthcare concerns.
"If we can't rationalize (those) three systems into one, there's no way we could have a merged federal system," Cox says.
But Kizer leaves the door open. The chief question, he says, is how the military's readiness mission could mix with a system that is oriented around treating chronic diseases and conditions like the VA's.
"There are those who believe that those are two incompatible missions," Kizer says. "I feel we will have many opportunities in the future to discuss that."