Precise comparisons of year-to-year costs per patient are difficult, since the mix of patients changes over time with changes in eligibility rules and with the amount of combat American forces face. In addition, many people enrolled with the VA also receive health care elsewhere, so only estimated comparisons are possible between the VA’s cost efficiency and that of other providers. But here’s a suggestive statistic: After adjusting for the changing mix of patients, the Congressional Budget Office estimates that the VA’s spending per enrollee grew by 1.7 percent in real terms from 1999 to 2005. Compare that 1.7 percent with Medicare’s real rate of growth of 29.4 percent in cost per capita over that same period.18
Or consider this measure of the VA’s medical efficiency: Veterans enrolled in its health-care system are, as a group, far older, sicker, poorer, and more prone to mental illness, homelessness, and substance abuse than the population as a whole. Half of all VA enrollees are over age sixty-five. More than a third smoke. One in five veterans has diabetes, compared with one in fourteen U.S. residents in general. Name any chronic disease—Alzheimer’s, cancer, congestive heart failure, sclerosis of the liver—and a much higher percentage of veterans have it than do Americans in general. In recent years, the VA has also had to invest massively to meet the needs of recent combat vets suffering from traumatic brain injury, post-traumatic stress syndrome, and an extraordinary level of other mental health needs. It has had to do so even while caring for Vietnam-era veterans who are more and more beset not only with the normal chronic conditions of age, but with delayed complications now linked to exposure to Agent Orange, such as type II diabetes. Yet from 2002 to 2007, a period of intense combat for U.S. forces, during which the VA generally excluded new enrollments by vets lacking service-related disabilities, the VA’s spending per patient rose no faster than Medicare’s.19 One study done before the wars started asked: “What would it cost to provide the same healthcare benefits as the VA using Medicare as the surrogate payor?” The answer that came back was that Medicare would cost 21 percent more.20
You might well think that the untold story here is that the VA engages in rationing. And indeed, according to a RAND study published in the New England Journal of Medicine in 2006, VA patients received only about 67 percent of the care that experts believe they should get. But before you say, “I knew there was a catch,” consider this: the same study found that the U.S. health-care system as a whole delivers only 54.9 percent of the treatments recommended by evidence-based medicine.21
Because the VA lacks any financial incentive to engage in overtreatment, it saves money by avoiding unnecessary surgery and redundant testing. But “rationing” is hardly the right word to explain the VA’s cost-effectiveness. Instead, Americans who don’t use the VA stand the greatest risk of receiving inappropriate care, ranging from doctors who fail to prescribe routine preventive measures such as flu vaccines or medicine to control hypertension to vast amounts of over-treatment. According to the same study, even Americans with $50,000 or more in family income receive lower-quality health care than do VA patients in general.22
What a concept! Cost containment and quality improvement go hand in hand in many industries, but in health care this combination is virtually unheard of. If the VA were a car company, it would be Honda. Today’s VA produces the equivalent of well-engineered, efficient, reliable, reasonably priced cars with few defects and great safety records, using proven scientific techniques and a culture of continuously improving quality control. By contrast, if America’s most prestigious hospitals were auto companies, most would build cars like Alfa Romeos or Renaults—classy to look at, and often very innovative, but unsafe, inefficient, temperamental, ridiculously expensive, and an unwise choice of transportation in situations where your life actually depends on their not breaking down.
Take-Home Lessons
If this contrast gives you cognitive dissonance, it should. The VA, after all, is a massive bureaucracy headquartered in Washington. Its medical division alone, known as the Veterans Health Administration (VHA), employs more than 247,000 workers represented by five different unions. Even many of its doctors are organized into bargaining units. It’s micromanaged by Congress and political appointees. The VA is the last place most people, including myself, would expect to find true innovation in technology or human organization, let alone a world-class exemplar of best practices in health care. As one British health-care researcher puts it with typical English understatement: “It may be somewhat ironic, to both Americans and non-Americans, that through the VHA the United States has implemented a model of integrated public-sector health care that appears, on balance, to work quite well. And therein lies perhaps the most potent message of the VHA story.”23
The VA’s performance is particularly difficult for conservatives to process. Back in 2004, when the Bush administration pushed for greater use of information technology in health care as a means of improving quality and holding down costs, it wound up choosing not some well-endowed, prestigious private hospital as the place to showcase the potential, but the Baltimore VA Medical Center. That’s because, despite the administration’s overall faith in market forces, it could find no private-sector hospital that could begin to match the VA’s use of electronic medical records. Astonishingly, twenty years after the digital revolution, only 1.5 percent of hospitals today have integrated IT systems like the VA uses, and those that do often find their commercial software programs to be buggy and inadequate.24 “I know the veterans who are here are going to be proud to hear that the Veterans Administration is on the leading edge of change,” Bush found himself exclaiming in his remarks at the Baltimore VA Medical Center.25 If Bush found it strange or disorienting to be saying this about the largest actual example of socialized medicine in the United States, he didn’t express any curiosity about how and why it might be true.
Which is regrettable. Because the story of how and why the VA became the benchmark for quality medicine in the United States suggests that vast swaths of what we think we know about health, health care, and medical economics are just wrong.
It’s natural to believe, for example, as I long did, that more competition and consumer choice in health care will lead to greater quality and lower costs, because in almost every other realm it does. That’s why conservatives in general have pushed for individual “health savings accounts” and high-deductible insurance plans. Together, these measures are supposed to encourage patients to do more comparison shopping, therefore creating more market discipline in the system.
But when it comes to health care, it’s a government bureaucracy that’s setting the standard for best practices while controlling costs, and it’s the private sector that’s lagging in quality and cost-effectiveness. That unexpected reality needs examining if we’re to have any hope of understanding what’s wrong with America’s health-care system and how to fix it.
It turns out that precisely because the VA is a big, government-run system that has nearly a lifetime relationship with its patients, it has incentives for investing in prevention and effective treatment that are lacking in private-sector medicine, including that which is underwritten by Medicare and Medicaid. As we’ll see, these incentives became particularly sharp beginning at the VA’s lowest moment in the late 1970s. Even as the VA faced severe budget cuts and loss of political support, the large numbers of World War II and Korean War veterans it served were then beginning to experience the infirmities of old age. VA doctors in that era found themselves dealing more and more with aging patients beset by chronic conditions such as hypertension, diabetes, and cancer, and they had to find a way to manage these diseases with dwindling resources. The happy, if unexpected, result was an explosion of organizational and technological innovation, most of it started by individual VA doctors acting on their own, that the private sector still cannot match.
During the period of the VA’s transformation, chronic illnesses still affected a comparatively small share of the population as a whole but are now becoming w
idespread as the baby boom generation ages and as increasing numbers of younger Americans experience the consequences of obesity and sedentary lifestyle. The increase in chronic illnesses gives the story of the VA’s turnaround a growing relevancy. Some 20 years ahead of their time, VA doctors felt compelled to begin developing a new, highly effective model of care stressing prevention as well as safe and effective management of chronic disease. Today, the continuing improvement of this model, which is based largely on the skillful use of information technology in both treatment and medical research, has propelled the VA into the vanguard of twenty-first-century medicine. The purpose of this book is to explain the VA’s unexpected triumph and to show how to make its benefits available to all Americans.
TWO
Hitting Bottom
No other health-care provider in the United States has had such a scandal-filled and controversial past as the VA, and so it is no wonder that many Americans have long pointed to its example as proof that government-provided health care is a very bad idea. Yet a closer look at the checkered history of the VA reveals subtler lessons, both about how government-run institutions can and do fail and about how ordinary men and women can reinvent them—even over the objection of their bosses.
The story begins with one of the biggest political scandals in American history. One afternoon in 1923, a visitor to the White House was mistakenly sent to “The Red Room” on the second floor. Approaching the door, the visitor encountered the commander in chief with his hands around a man’s neck shouting, “You yellow rat! You double-crossing bastard. If you ever …”1
The object of Warren G. Harding’s wrath, so goes the story, was Colonel Charles R. Forbes. Forbes was a dashing and charismatic man, fond of playing poker and living the high life. Both Harding and, especially, his wife, it was said, found him to be great company when they first met him while on vacation in Hawaii. “Colonel Forbes was the type of man around whom women always have buzzed,” explained one Harding loyalist in his memoirs.2
But Forbes was also the type of man who, despite being a deserter in World War I, somehow became a colonel, winning the Congressional Medal and enjoying a strong leadership role in the American Legion. And he was also the type of man who could win enough confidence from the president of the United States to be appointed to the politically sensitive and morally crucial role of heading up the newly formed Veterans Bureau, where he was tasked with organizing the health care of millions of wounded veterans of the Great War.
He was a poor choice, for he also turned out to be one of the greatest crooks ever to hold high office in the United States. By the time all the investigations were over, and Forbes had been sent off to serve hard time at Leavenworth, the total tally for his graft and flagrant waste of taxpayer dollars stood at $200 million, or about $2.1 billion in today’s money. Forbes took lavish kickbacks on the various veterans hospitals he built around the country. For example, he used taxpayer dollars to pay more than five times the market value for the land on which the VA hospital in Livermore, California, still stands. For his troubles, he and a fellow partner in crime each pocketed $12,500 in kickbacks. When he wasn’t touring the nation picking out other lucrative sites on which to build hospitals, he was entertaining extravagantly and living a life of luxury in Washington, ostensibly on his government salary of $10,000 a year.
To maintain his lifestyle, Forbes plied the Veterans Bureau with trainloads of unneeded provisions, such as a 100-year supply of floor wax, which he then sold off by the trainload for pennies on the dollar in exchange for kickbacks. Boxcars filled with bed sheets, drugs, alcohol, and other hospital supplies—many desperately needed by overcrowded veterans hospitals—would arrive at the railroad siding outside the Veterans Bureau’s warehouse in Perryville, Maryland, only to be reloaded out the back door almost immediately for resale as “government surplus.”
Not only was Forbes’s graft extraordinary, but he let down millions of Great War veterans, many of them poisoned by mustard gas and otherwise grievously wounded, thereby making a “lost generation” feel even more abandoned. Reflecting on his experience with Forbes and his cronies, Harding would later famously say, “I have no trouble with my enemies. I can take care of them. It is my friends. My friends that are giving me trouble.”3
Routineers and Mediocrities
Yet it wasn’t just scandal—but attempts to avoid scandal—that marred the veterans health system for much of its history. One of the reasons the VA would later emerge as such a rule-bound and ossified bureaucracy was that, after the example of Charles Forbes, subsequent administrators were terrified by the prospect of unauthorized spending and insider graft. The first of these was Brig. Gen. Frank T. Hines. One chronicler of the VA describes him as a “bald-pated, slightly built shipbuilding businessman who spent the next twenty-two years trying to keep the Veterans Bureau (and beginning in 1930, the Veterans Administration) from the pit of financial corruption.”4
In 1945, muckraking journalist Albert Deutsch testified before Congress about the type of bureaucracy Hines had created:
He placed excessive stress on paper work. Bureaucratic procedures were developed, which tied up the organization in needless red tape. Avoidance of scandal became the main guide of official action. Anything new was discouraged: “It might get us in trouble.” Routineers and mediocrities rose to high office by simple process of not disturbing the status quo. Good men were frozen out or quit.… The agency increasingly was controlled by old men with old ideas.5
After World War II, Omar Bradley, the storied “soldier’s general,” took over the Veterans Administration for two years and did much to bring its health services into the modern age. At the time, the nation’s newspapers were full of headlines such as “Veterans Hospitals Called Backwaters of Medicine” and “Third-Rate Medicine for First-Rate Men.” In an attempt to turn the situation around and prepare for the huge wave of returning World War II veterans, Bradley had a memorandum sent to the deans of the nation’s medical schools, offering them an attractive deal. They could partner with local veterans hospitals and use their facilities to help train medical internists and residents, while also having their faculties control hiring and firing decisions.6
This was a fateful decision that changed the course of the VA, and of American health care as a whole. Today, an estimated 65 percent of all doctors practicing in the United States have received all or part of their training in VA facilities. The deep collaboration with the nation’s medical schools also helped the VA to raise the caliber of its doctors and led to veterans hospitals enjoying much better reputations, at least among the World War II generation of veterans.
One prime example is former senator Bob Dole, who remains grateful for the prolonged treatment he received in veterans hospitals after being strafed by Nazi machine gun fire during the final weeks of World War II. He married his nurse and spoke movingly throughout his life about the men and women who helped him for over two years to recover from his paralysis. The VA, which also did a capable job of administering the generous educational and housing benefits extended to World War II vets under the GI Bill, enjoyed a golden moment of high public esteem.
But the moment was fleeting. By the mid-1950s, Congress was already rapidly cutting the VA’s budget, causing massive layoffs. Many Korean War vets discovered they could not get into VA hospitals unless they could prove they had service-related disabilities. At the same time, a census taken in 1954 found that 65 percent of patients had been in VA hospitals for more than ninety days and that 8 percent had been in the hospital for over twenty years! Many VA hospitals remained little better than warehouses for the homeless, the infirm, and the aged.7
It was also true, however, that, thanks to its affiliation with medical schools, the VA continued to distinguish itself by developing many innovative medical techniques. During the 1950s, Rosalyn Yalow did her work in nuclear medicine at a VA hospital in the Bronx that would later earn her the Nobel Prize. In the early 1960s, endocrine oncologist Andrew V.
Schally was doing the experiments in his lab at the New Orleans VA hospital that would make him a Nobel laureate as well. In the early 1970s, the VA became the first health-care provider in the United States to install nuclear-powered heart pacemakers.
But there were also recurring instances of veterans being subjected to medical experiments and treated as guinea pigs. As early as 1950, fourteen VA hospitals, all affiliated with medical schools, were performing radiation experiments on patients under the VA’s radioisotope program. Yet, while these experiments may have advanced the cause of science, there is no record that the VA even contemplated a program for acquiring informed consent until 1958.8
Ironically, in the course of testing the effects of LSD in the early 1960s, the VA hospital in Palo Alto, California, gave it to a man named Vic Lovell, who enjoyed “the trip” so much that he “turned on” his friend and neighbor Ken Kesey to the psychedelic experience. Kesey got himself a job at the VA to secure his supply, eventually stealing LSD from the hospital when the trials were over. While tripping with schizophrenics in the hospital’s psychiatric ward, Kesey received the inspiration, he would later say, for his masterpiece, One Flew Over the Cuckoo’s Nest. He and his band of Merry Pranksters went on to make “acid” seem cool to a whole generation of Americans.9
Broken Promises
At around the same time, veterans started returning from Vietnam to an ungrateful nation. Maybe it was the lucky ones who were treated to mind-altering drugs. Not only did many returning Vietnam vets find veterans hospitals woefully underfunded and run down, many found them staffed by people they regarded as hostile. Some were house officers and doctors their own age who opposed the war and had avoided the draft by going to medical school. Others were older vets who viewed Vietnam veterans as losers and who dismissed their complaints about post-traumatic stress and exposure to chemical agents like Agent Orange as unmanly. It wasn’t until 1978 that the VA even set up a registry of veterans exposed to the 19 million gallons of Agent Orange and other dioxin-laden defoliants dropped on Vietnam. It wasn’t until 1991 that the VA stopped demanding that Vietnam veterans exposed to Agent Orange offer proof.
Best Care Anywhere Page 5