Summary: GAO recommends that the Department of Veterans Affairs (VA) implement more effective health care capital asset planning and strengthen its budgeting processes to avoid spending billions of dollars operating hundreds of unneeded buildings over the next five or more years. VA should focus on Office of Management and Budget guidelines that suggest that agencies use market-based assessments to determine target population needs, evaluate the capacity of existing assets, identify excesses and deficiencies, estimate assets' life-cycle costs, and compare these with alternatives for meeting the population's needs. VA has 40 markets with two to nine VA locations that have utilization significantly below inpatient capacity and that compete with other VA locations to serve rapidly declining veteran populations. VA could restructure these assets and enhance veterans' benefits. VA has 66 other markets with a single VA location, also in areas with rapidly declining inpatient workloads and veteran populations, where assets could be restructured and benefits enhanced. VA's centralized budget development process to review and approve capital investments of $4 million or more under its major construction appropriation relies on inconsistent or incomplete information for decision-making. The 22 regional offices that make less expensive investment decisions in VA's decentralized assessment process generally do so without systematically assessing ways to redesign or simplify work processes or explore lower-cost alternatives. Such decisions account for more than 85 percent of VA's total health care investment dollars requested for fiscal year 2000. Over the past 3 years, VA has significantly reduced the number of high-cost investment proposals involving alterations or improvements by dividing them into less expensive ones, which require less information about benefits, risks, and alternatives. This has resulted in VA's decentralized process having approved investments that VA's centralized process considered to be a low priority or unsound.
