The Veterans Health Administration invested billions in startup costs for new medical facilities, but it had no way to check if its spending was on-budget, according to a U.S. Government Accountability Office report on Thursday.
Veterans' changing healthcare needs led the agency to spend more than $4 billion building and leasing new medical facilities from 2012 to 2018. But the VHA couldn't determine whether it was spending the money effectively because it had no process to compare its actual spending to its cost estimates for the projects.
"Officials have never compared activation costs against estimated costs because until recently, officials said, VHA lacked the accounting mechanisms to facilitate such comparisons," GAO said.
The federal watchdog found that the VHA also doesn't have a plan to take advantage of its new accounting mechanisms, so it's unclear how the information will be used going forward.
"Without processes and clear definitions associated with measuring activation costs, VHA does not have reasonable assurance that it will be able to effectively manage the resources associated with activation," GAO said.
Today's veterans face different challenges than in the past thanks to the changing nature of warfare, population aging and other societal changes. That has led to increased demand for new treatments and facilities, including large medical centers and community-based outpatient clinics that offer more specialty care.
The VHA supplies new medical facilities with startup funds for new staff, furniture, equipment and other needs. But the GAO found that the agency's process for determining cost estimates only covers part of the so-called "activation" process, which means that it's likely underestimating how much it will spend.
Local and regional officials told the GAO that they were frustrated because the VHA didn't provide them with clear guidance about what types of expenses would be allowed during the activation period. The government watchdog observed that local and regional officials disagreed about how long the VHA would consider costs to be activation-related, which suggested that the agency hadn't been clear-cut about the timing of expenses either.
The GAO recommended that the Veteran's Affairs Department create formal procedures for estimating total activation costs and comparing them to the VHA's actual spending. It also recommended that the agency define what types of expenses are allowed during activation and clarify when medical facilities will no longer qualify for activation-related expenses.
The VA agreed with the watchdog's recommendations. It aims to finalize plans to address each of the GAO's recommendations by December.