The Veterans Affairs Scandal

Published May 30, 2014

National Review Online

The interim report of the inspector general of the Department of Veterans Affairs regarding the waiting list scandal that has exploded into public view in recent weeks is devastating. In its wake, there is no question that VA Secretary Eric Shinseki should resign or should be dismissed. Shinseki is, of course, an honorable and deeply impressive man, but he is the executive in charge of an agency that has badly failed in its core mission here.

Even given the lax standards of cabinet-level accountability that have characterized the last few administrations, there is no excuse for keeping Shinseki in office at this point. What appears to have happened here is far worse than a management failure. It is a pattern of exceptionally widespread, systematic, and even criminal deception throughout an agency Shinseki oversees.

Reading the report, and reflecting on my own exposure to the structure and management of the VA, which intersected with my responsibilities as a health-policy staffer in the Bush White House on several occasions, I’m left with a few thoughts on the scandal.

First, it is important to understand just how serious the misdeeds of the Phoenix VA hospital (and apparently quite a few others) really are. The core of the scandal is what appears to have been a highly organized effort to cook the books in order to be able to report far shorter wait times for care than were actually achieved. Veterans awaiting care were kept off the formal waiting list (so that the wait-time clock did not start ticking) and handled through a series of ad hoc informal queues, which were themselves carelessly kept and badly mishandled. To work, this system appears to have required the active collusion of a large number of people at each VA facility in question, involving everything from telephone operators keeping some appointment requests out of the system to senior managers turning off audit controls on the hospital’s scheduling software to make it impossible to know who manipulated the system and how. The IG notes that some of these actions were almost certainly outright crimes. It’s not clear if what has happened at the many other VA facilities that have now been drawn into this scandal was as deep and broad, but it does look that way in at least some cases.

Second, the lengths to which VA employees were willing to go to report shorter wait times is a function of a longstanding emphasis (by Congress, successive administrations, and the veterans’ groups) on wait times as a primary performance measure, but this emphasis has not been tied (by any of them) to structural reforms that might actually enable the VA to function more efficiently. Centrally run, highly bureaucratic, public health-care systems that do not permit meaningful pricing and do not allow for competition among providers of care can really only respond to supply and demand pressures through waiting lines. It happens everywhere, but when it has happened at the VA the response has been to criticize waiting times rather than to reconsider how the system is organized.

There is no question that the quality of the VA system has improved significantly over the last three decades, thanks to a series of modernization efforts launched (and very well executed, I should note) by the Clinton administration and continued by both the Bush and Obama administrations. But these efforts began from an extremely low baseline and they have achieved improvements by essentially modernizing the infrastructure that supports a very inefficient bureaucracy. The potential of these kinds of changes to dramatically reduce waiting times was always going to be limited, and the increasingly unrealistic targets set for waiting times put pressure on the system without giving administrators any way to release it. These targets reached the point of near-absurdity in 2011 when the Obama administration set a goal of 14 days between the time a patient asks for an appointment and the time that patient sees a doctor or nurse.

These targets did not account well for the huge differences between different kinds of patients seen by the VA, and they were tied directly to bonuses and salary increases for hospital administrators, creating a huge incentive to distort the prioritization system used by the VA and, as happened here, to just lie about waiting times. The Phoenix hospital in question, for instance, reported that it had managed by last year to get average waiting times down to 24 days. In fact, the IG report found, the average waiting time was 115 days. There’s no way to bridge that gap with “targets.” And there’s probably no way to really bridge that gap at all in a public hospital system like the VA.

Defenders of the VA system note that, despite waiting times, the system generally gets high marks from its patients, and performs relatively well compared to the larger health-care system on measures of quality. This is true and important. But it also has to be understood in the context of some key differences between the VA and the larger health-care system. Some of these differences (like the increased patient load as a result of the Iraq and Afghanistan wars) create added burdens on the VA. Others (like the system’s unusually homogeneous patient population and its not seeing the degree of aging of its patient pool that the larger health care system is seeing because of the relatively smaller number of baby-boomer vets compared to the prior generation) work to its advantage.

But the most important difference is that the VA is not a full-service health system. It only provides a limited range of services in a limited range of specialties, and even the system’s highest priority patients get barely 50 percent of their health care from the VA system. Much of the most complex and expensive care provided to veterans is handled by the larger health-care system. What it does do, the VA often does reasonably well, to its credit. And its patients of course also like the fact that the care they receive costs them very little (or nothing), and that they receive it in an environment designed for veterans and in which they have a lot in common with fellow patients. That’s all to the good, but it doesn’t make for very meaningful comparisons with the larger health-care system.

The fact is that the VA has not been able to translate its relative advantages, or its growing budgets (the agency’s budget has grown far more quickly than its patient load over the past decade), into the sort of superior performance that Congress and successive administrations have hoped for.

A major reason for that is the department’s (and not just each hospital’s or sub-agency’s) administrative dysfunction, which really has to be seen to be believed. The Department of Veterans Affairs is almost certainly the most poorly managed cabinet department, and it has to rank among the most poorly managed federal agencies at any level. It is characterized by deep dysfunction at pretty much every level (and not just in its health-care system; the veterans’ disability system has enormous problems too). This has not only been the case under the Obama Administration, of course. It has been the case for decades, and a primary reason for it is a challenge that no one in Congress (well,almost no one) or in any administration particularly wants to talk about: the power of the veterans’ groups.

It is impossible to overstate the political power of the veterans’ interest groups over the VA. The simplest way to describe it is that they get everything they want, period. There are many powerful interest groups in Washington, but because their domain is carefully limited and politically and culturally sensitive, the vets’ groups have a kind of command of their arena that I don’t think any other sort of interest group approaches. And this is a big part of the reason why the VA is so dysfunctional, because it is not subject to congressional or administrative oversight in the usual sense. It answers fundamentally to the vets’ groups. They often informally review its annual budget request before it goes to OMB. They are uniquely involved in drafting budgets on the congressional side. They are considered a necessary signoff on every major decision. Their firm opposition to something is the end of the story. Their priorities are the VA’s priorities. And yet they are very well positioned to treat failures that result from their own distorting power over the system as reasons to increase that power.

These groups do have the interests and needs of veterans in mind, of course. They are not cynics by any means. But neither are most other interest groups. The problem is that it can easily become very difficult to distinguish the interests of the people you speak for and your own institutional interests as their advocate.

The current design of the VA health system allows the vets’ groups to have a great deal of say over a great many decisions, and they are genuinely persuaded that changing that would undermine the interests of veterans. That means they are likely to consider this scandal a threat to the status quo at the VA, rather than emblematic of that status quo, and that even in the wake of this scandal they are likely to be resistant to fundamental structural reforms (like a greater integration of veterans’ specialty care into the private health-care system). Of course, the administration is likely to be opposed to that too, as many liberals still take the public VA system as a model for the larger system, rather than the other way around. So significant change is not likely. More numerical targets unconnected to structural improvements are more likely, and therefore more problems are too.

These problems did not start with the Obama administration, and won’t end with it. But the particulars of what happened in Phoenix and elsewhere are qualitatively far different from the sort of administrative dysfunction the VA has long endured. They constitute a massive conspiracy to benefit VA employees at the expense of their patients. Firing the Secretary of Veterans’ Affairs won’t fix the department, but it is nonetheless unavoidable now.

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