Converting Veterans Administration Health Care to Private Sector Won't Work

Now that the furor over the scheduling fiasco at some of the Veterans Administration Health Centers has become tepid this article reviews problems in the V.A. which would not be ameliorated by the private sector, as suggested by some legislators.

Fact-There were inordinate delays in patient care at some Veteran’s Health Centers

Myth-Treating Veterans in the private sector would improve their care

The V.A. has an unusual patient mix, which includes severe combat injuries as well as an aging population of older veterans with chronic disease and often, low incomes. First of all, with the exception of major urban trauma centers, most U.S. hospitals are not ready to treat combat injuries, especially in the mental health and social support areas. Secondarily, the private sector health system in the United States is driven by finance and reimbursement decisions which do not target serving the chronically ill and low income patients. Though the nation now provides health insurance to most of its population, if you availed yourself of the tax-credit-insurance-exchange-option, this does not mean that the low income population who are covered solely on Medicare/Medicaid actually are able to obtain care management in any coordinated manor. The Veteran’s Administration does provide care management, both in terms of the nation’s first and well integrated electronic medical record program and because the V.A. is a single health system. The electronic medical record and patient management system of the V.A. is so good that other countries have adopted it, including Switzerland, and it was a free open source system until former President Bush allowed Cerner to put a black box around it. Fobbing the veterans off into the mélange of U.S. health systems would not create better record keeping or care coordination, except possibly under the best integrated health systems, such as the Mayo Clinic or Kaiser, which function as true group practices. Even if the best integrated health systems could contract to serve veterans, there would be capacity issues.

Fact-The incentive plan for Veteran’s Health Center managers was based on reducing patient wait times

Myth-Perverse incentives in the private sector do not cause delays and inappropriate treatment for patients

In reality, the private health sector in the United States is composed of many for-profit and non-profit health care organizations, and financial interests all too often cause adverse patient care and waste. Primary areas of waste in the private sector health system are; predominance of unnecessary procedures which do not necessarily improve patient outcomes and fraud. The Federal Bureau of Investigation estimates that Medicare fraud costs the government up to ten percent of all annual Medicare billings, which meant the fraud tally was 57 billion dollars in 2011.[1] That works out to two hundred dollars for every man, woman, and child in the country.

 Fraud is not a problem in the V.A., since there are no private sector incentives to overcharge or provide unnecessary services, as the entire system runs on a budget. One of the concerns in the private health care system now is the shortage of primary care clinicians, especially since we have added so many more patients to the lowest economic tier of medical care, via the Medicaid expansion. This program does not provide adequate reimbursement for health care providers. The current Medicaid program is probably the closest model the nation has to the V.A. patient management issues, because it has a low income patient population, who also have difficulty finding a doctor, which results in wait times and gaps in the care continuum. As T.R. Reid pointed out in The Healing of America, we have citizens going blind because they can’t afford their glaucoma medicine.[2]

Fact-The Veteran’s Administration is the most cost effective health care system in the nation for the complex patients it serves

Myth-Private sector health systems could treat the veterans more efficaciously

Even if we just compared the Veterans Administration to Medicare, the V.A. is far less expensive than the per capita cost of Medicare. A recent study by the Health Economic Resource Center comparing prescription drug costs between Medicare and the Veterans Administration shows the V.A. costs 48.2% less for the same RX.[3] This is because, unlike Medicare (no thanks to President Bush) the V.A. actually has group purchasing of prescription medications and a lower administrative cost for distribution. And this economic principle applies throughout its network.

Private health care systems must balance their budgets based on a complex system of financial reimbursements for services, because they are not government agencies. This means they can make organizational changes with greater ease, but they also assume the financial responsibility. Because of this reality, the private sector has an over-abundance of imaging, specialty surgical facilities and the like, as they are very lucrative. The U.S. health care model has a “build it and they shall come” approach, hence we are awash in ambulatory surgical centers for joint replacements. Let’s face it, doctors spend twelve years in medical training and have huge government funded loans and they need to make money. As individuals they are merely responding to the health system of incentives, which is driven largely by medical device companies and the pharmaceutical industry.

To improve care for our veterans, many whom have serious injuries from the Afghanistan and Iraq wars, we need to give the Veterans Administration enough money to hire enough clinicians. All of the political rhetoric and head rolling won’t change the patient wait times if there aren’t enough clinicians. I don’t want to hear about congressmen taking the agency to task, but rather, how much money has been allocated to help alleviate this problem. Don’t take a short cut with our service men and women. It isn’t always about making money, but about providing care.

This article was written by Roberta E. Winter, aka healthpolicymaven and author of Unraveling U.S. Health Care-A Personal Guide.

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[1] http://www.medicarenewsgroup.com/news/medicare-faqs/individual-faq?faqId=6a130489-e387-476d-a358-c77cfba68367

[2] T.R. Reid, The Healing of America, New York, Penguin Press, 2009

[3] http://www.herc.research.va.gov/resources/faq_b06.asp