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3
Implementation
The Department of Veterans Affairs/Department of Defense (VA/DoD)
Health Executive Council (HEC) executive decision memorandum (EDM)
of October 2002 was only the beginning of a long and complicated process
of consolidating federal health care delivery activities in North Chicago
into a single federal health care facility (FHCC).1 Some of the key deci-
sions were made in the 2002 EDM, namely, that the Navy would close its
hospital (Building 200H) and move inpatient services to the nearby North
Chicago VA Medical Center (NCVAMC) building and outpatient services
to a new, Navy-constructed ambulatory care center (ACC) connected to
the NCVAMC hospital building. Other key decisions were made later, such
as adopting a single chain of command, transferring civilians employed by
the Navy to the VA, creating a unified financial system and jointly funded
Department of the Treasury (Treasury) account for the combined facility,
and creating a single interface with both the VA and the DoD electronic
health record (EHR) systems. There were statements that VA and Navy
providers would be working side by side, there would be a single standard
of care regardless of beneficiary status, and the needs of both VA and Navy
beneficiaries would be met seamlessly, but the steps it would take to achieve
these goals were not clear at first.
1 Initially,
the proposed joint health care delivery initiative was called the federal health care
facility, or FHCF. It began to be called a federal health care center in late 2007, in conjunction
with plans to name the joint medical center after Captain James A. Lovell. “Federal health
care center,” or “FHCC,” will be used in the rest of this report regardless of the time period.
It should also be noted that while the Lovell FHCC name is singular, it comprises a number
of buildings on the east and west campuses and three outlying outpatient centers.
47
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48 LOVELL FEDERAL HEALTH CARE CENTER MERGER
THE IMPLEMENTATION PHASES
By 2006, the concept of a three-phase implementation process was
adopted. Phase 1 was the shifting of inpatient mental health services from
the Naval Hospital Great Lakes (NHGL) to the NCVAMC that had taken
place in 2003. Phase 2 was the shifting of emergency services and inpa-
tient medical, surgical, and pediatric services from the Navy hospital to the
NCVAMC in 2006, after the NCVAMC’s emergency department (ED) and
surgical facilities were upgraded by the VA. Phase 3 was the shift of all Navy
outpatient services to the new ACC building and other renovated spaces on
the west campus of the Lovell FHCC, as well as the implementation of the
FHCC as a single organization under a single chain of command in 2010.
Phase 1
In accordance with the October 2002 EDM, the Navy and the VA
entered into a resource sharing agreement in which the Navy would dis-
continue acute inpatient psychiatric services at 200H and the NCVAMC
would assume responsibility for the treatment of Navy patients in its acute
mental health inpatient unit and lodge discharged mental patients in its
psychiatric medical holding unit. According to the agreement, the Navy
would compensate the NCVAMC for the services as a TRICARE network
provider (i.e., at 90 percent of the CHAMPUS2 maximum allowable charge
for the specific diagnosis related group) and provide several psychiatric
support staff (Harnly, 2005). The agreement was implemented in October
2003, when six patients were transferred to the NCVAMC (Kuczka, 2003).
In August 2004, the Navy and the VA signed another resource sharing
agreement in which the Navy operates a blood donor processing center in
the NCVAMC in return for providing the NCVAMC with blood products.
The NCVAMC agreed to provide 3,242 square feet of unused laboratory
space and utilities, in addition to staff to monitor the cooling equipment af-
ter hours. The Navy agreed to pay $40,000 for renovations and $46,600 in
rent. In exchange, the NCVAMC agreed to buy 415 units of blood products
annually at a cost that was approximately equal to the rent (Harnly, 2005).
The arrangement has benefited the Navy because the space in which it was
located at Building 81H on the Navy base was no longer adequate and
would have cost more than $3 million to renovate; in return, the NCVAMC
has benefited by paying less for blood products (Hassan et al., 2008).
Neither of the sharing agreements was free of problems at first. The
Navy and the NCVAMC disagreed on the amount of air-conditioning
that would be needed for the blood processing laboratory, and experience
2 CHAMPUS stands for the Civilian Health and Medical Program of the Uniformed Services.
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IMPLEMENTATION 49
soon showed that more air-conditioning capacity was needed (Harnly,
2005). Although the Navy offered to operate the acute psychiatric unit,
the NCVAMC preferred to provide the service and be reimbursed. The
volume and acuity of patients and therefore the amounts of reimbursement
were less than forecast, and, finding itself overstaffed and losing money, the
NCVAMC sought more reimbursement, which the Navy was unwilling to
pay (Harnly, 2005).
The NCVAMC held a press conference in November 2003 to an-
nounce that the transfer of mental health patients from the NHGL to the
NCVAMC had begun. Representative Mark Kirk announced that con-
struction on a $170 million joint VA/Navy health care facility next to the
NCVAMC would begin in about 5 years. He told veterans at a Veterans
Day ceremony the same day that “if the Navy moves into this facility, it can
never close.” NCVAMC director Patrick Sullivan said that the expanded
volume of Navy patients would lead to the addition of inpatient surgical
services in 2005 (Susnjara, 2003).
Phase 2
The second phase of the VA/DoD partnership was the moving of inpa-
tient surgical and medical services and emergency services from the NHGL
to the NCVAMC. The Navy could have sent its inpatient and emergency
cases to community hospitals, but using the NCVAMC promised to be less
expensive and would allow Navy clinicians to maintain their surgical skills.
The move would enable the NCVAMC to have a large enough workload
to offer inpatient surgery for the first time since 1992 and to upgrade and
enlarge its ED, which would benefit its veteran enrollees (VA, 2002). Before
2006, veterans needing surgery had to be sent 45 miles or more to another
VAMC (located either west of Chicago at Hines, in Chicago at the Jesse
Brown VAMC, or in Milwaukee, Wisconsin) or referred to a community
hospital.
The Navy providers were understandably concerned about moving sur-
gical services to a VAMC where inpatient surgeries had not been performed
for 20 years. When they toured the VAMC, they were concerned about the
poor condition of the operating suites (Interviews3). The Navy was unwill-
ing to expand the partnership unless appropriate renovations were done at
the NCVAMC.
The VA worked with Congress to allocate $13 million in fiscal year
(FY) 2004 construction funds to renovate the ED and construct a new
surgical center because VA renovation projects were limited to $4 million
(Chu, 2003). The number of ED examination rooms was increased from 6
3 This indicates information provided by anonymous interviews with Lovell FHCC staff.
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50 LOVELL FEDERAL HEALTH CARE CENTER MERGER
to 14; 4 new operating rooms and related facilities (e.g., recovery rooms)
were built; and 4 existing operating rooms were renovated. The construc-
tion award was made in September 2004 and the project was completed in
2006 (U.S. Senate, 2005).
Meanwhile, the physician leaders of the NHGL and the NCVAMC
began to work closely together to plan and implement the move of sur-
gical services in 2006. Both leaders were able to remain throughout the
implementation process, providing stable leadership to plan and launch the
Lovell FHCC in 2010. In 2010, the NCVAMC chief of staff became the
associate director for patient care/chief medical executive and the NHGL
director became the assistant director for patient care/assistant chief medi-
cal executive. This continuity of clinical leadership is considered by the
FHCC leadership to have been an important factor in achieving the degree
of clinical integration that has been attained (the degree of clinical integra-
tion is discussed in Chapter 4).
In June 2006, after the ED, operating rooms, and intensive/critical care
unit were upgraded, inpatient medical and surgical services for DoD benefi-
ciaries were moved to the NCVAMC. Navy physicians provided inpatient
surgery and pediatric services (the first time pediatrics had been offered at
any VA health care facility). With the removal of all inpatient services in
2006, the NHGL was redesignated as the Naval Health Clinic Great Lakes
(NHCGL).
Even before the inpatient services at the NHGL were transferred in
2006, there was a fair amount of clinical sharing. In July 2004, the Govern-
ment Accountability Office (GAO) reported that
VA provides inpatient psychiatry and intensive care, and outpatient clinic
visits, for example, pulmonary care, neurology, gastrointestinal care, dia-
betic care, occupational and physical therapy, speech therapy, rehabilita-
tion, and diagnostic tests to Navy beneficiaries. VA also provides medical
training to Naval corpsmen, nursing staff, and dental residents. The Navy
provides selected surgical services for VA beneficiaries such as joint re-
placement surgeries and cataract surgeries. In addition, as available, the
Navy provides selected outpatient services, mammograms, magnetic reso-
nance imaging (MRI) examinations, and laboratory tests. (GAO, 2004,
pp. 16–17)
After the inpatient medical-surgical transfer, the reimbursement meth-
odology for inpatient services was facility charges at the TRICARE net-
work negotiated rate (Lovell FHCC, 2006). The VA paid the Navy about
$295,000 and the Navy paid the VA $502,000 during FYs 2002 and 2003,
which was estimated to be approximately $88,000 less than the VA and
the Navy would have paid for the same services in the private sector, and
having the VA provide acute mental health services in the 10-bed ward
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IMPLEMENTATION 51
and the 10-bed medical hold unit saved the Navy about $323,000 per year
(GAO, 2004, p. 17).
Governance of these collaborative activities was through an executive
steering committee co-chaired by the NCVAMC director and the NHGL
commanding officer. The executive steering committee worked through
administrative, clinical, and mental health subcommittees (Lovell FHCC,
2006).
The VA/Navy merger process also benefited from a series of early Joint
Incentive Fund (JIF) awards. In FY 2004, for example, the NHGL and the
NCVAMC received JIF funds for two joint projects—mammography and
a women’s health clinic—to enhance access and quality of care for women
veterans. The new women’s health clinic, which offers mammography, ul-
trasound, gynecology, and case managers in one location, would not have
been possible to sustain without the volume added by Navy beneficiaries. In
FY 2005, the FHCC received JIF awards to purchase a magnetic resonance
imaging (MRI) machine, start an oncology/hematology clinic, and build a
high-capacity fiber optic cable to connect the facilities on the VA campus
with the Navy clinics that would remain on the base. In FY 2006, there
were awards to add a hospitalist and the capacity to perform digital radiog-
raphy (picture archiving and communication system, or PACS), capitalizing
on the new fiber optic connection between the campuses. (Additional JIF
awards during Phase 3 are reviewed in Box 3-1.)
Phase 3
On May 26, 2005, William Winkenwerder, the assistant secretary
of defense for health affairs, and Jonathan Perlin, the under secretary
of veterans affairs for health, the co-chairs of the HEC, signed an EDM
that approved construction of a Navy-funded ACC adjoining the North
Chicago VA medical center hospital building (Building 133) and creation of
a single-chain-of-command governance structure for a joint federal health
care facility.
The approved costs included construction of the ACC, renovation of
space in the VA hospital building for some of the outpatient clinics, and
construction of a 562-car, 4-story parking garage and a 540-car surface
parking lot. The total amount of $139.1 million was less than the $160.6
million originally proposed. It was achieved by reducing the size of the ACC
through renovating additional space in Building 133 and by cutting ad-
ditional administrative positions. The original cost also presumed that the
ACC would be built on the south side of Building 133, which would have
required demolition of a nursing home care unit (NHCU) and construction
of a new $25 million NHCU elsewhere on the VA campus. The south site
was preferred by the Navy because it was the largest, but scaling back the
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52 LOVELL FEDERAL HEALTH CARE CENTER MERGER
BOX 3-1
Joint Incentive Fund Awards to North Chicago,
Fiscal Years 2004–2007
Women’s Health Clinic (FY 2004)
$852,000
Mammography Services (FY 2004)
$470,000
These JIF [Joint Incentive Fund] awards established a comprehensive
women’s health center to serve both female veterans and DoD [Department of
Defense] beneficiaries. VA [Department of Veterans Affairs] hired gynecology staff
(replacing a lost Navy physician billet), purchased digital mammography equip-
ment and a stereotactic unit, and hired two wellness/case management nurses. A
partial cost savings of $70,000 resulted during the fiscal year, for example, by pay-
ing less for stereotactic mammograms in the private sector (VA/DoD, 2008a, p. 29).
The center was a significant expansion of services for veteran and DoD women.
Hematology-Oncology Program (FY 2005)
$685,000
A hematology-oncology program was added to include consultations, inpa-
tient support, outpatient care, and a chemotherapy infusion center for VA and DoD
beneficiaries. Neither the VA nor [the] DoD previously provided these services,
and all patients had been referred to the local community for care. By combin-
ing services, access was improved and patients no longer needed to travel long
distances to receive their care (VA/DoD, 2006a, p. 18).
Joint Magnetic Resonance Imaging (FY 2005)
$3,426,000
The award was to purchase a 3-Tesla state-of-the-art open-field MRI [mag-
netic resonance imaging unit] that was permanently housed in a modern MRI
suite. The full-time fixed-site MRI, which became functional in March 2007, has
reduced patient wait time and expensive referrals for contract care. It reduced
delays in treatment and thus reduced the length of stay for acutely ill inpatients.
This project included funding for a radiologist to perform interpretation of MRIs
and [to] consult with providers (VA/DoD, 2006a, p. 18).
Clinical Fiber Optics (FY 2005)
$248,000
The project provided high-speed clinical connectivity between both facilities
to transmit clinical images for the VA’s PACS [picture archiving and communication
system], VistA [Veterans Health Information Systems and Technology Architecture]
imaging, and computerized patient record system (CPRS) (VA/DoD, 2006a, p. 18).
Hospitalist (FY 2006)
$403,000
The presence of the two hospitalists has enabled VA and Navy internal medi-
cine, primary care, and specialty providers to increase capacity in the outpatient
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IMPLEMENTATION 53
setting and to recapture and empanel more patients to the clinics. The program
has shown a decrease in the average length of stay of patients while maintain-
ing good clinical outcomes. It provides for the continuity of inpatient care, post-
discharge planning and follow-up, and eliminates the uncertainty of who will be
caring for patients on a day-to-day basis (VA/DoD, 2008a, pp. 28–29).
Digital Radiography (FY 2006)
$638,000
This project involves installing a PACS at NHGL [Naval Hospital Great Lakes]
that will provide unlimited web-based access from NCVAMC [North Chicago Vet-
erans Affairs Medical Center] as well as from within NHGL and its branch health
clinics, and allow providers at both facilities greater access to patients’ imaging
studies. Additionally, this project will improve the NCVAMC PACS to include an
upgraded memory for image archive, an updated software platform for PACS, and
upgraded viewing stations. This will provide comparable imaging services at each
facility with the availability for easy exchange of radiology information and images
(VA/DoD, 2006b, p. 6).
Project Management Support (FY 2007)
$1,770,000
This award provided a dedicated contract staff for project management sup-
port of the steering group, the six national work groups, and a number of local
joint committees engaged in planning the FHCC [federal health care center] (VA/
DoD, 2006b, p. 6).
Enterprise Information Management/Information Technology
Requirements at the Lovell Federal Health Care Center (FY 2008)
$11,000,000
This enterprise-level JIF project supported the development of the technical
requirements for the basic interoperability capabilities that the Lovell FHCC staff
would need to enter, edit, and retrieve patient information in both the VA and [the]
DoD EHRs [electronic health record systems] simultaneously (VA/DoD, 2008b,
pp. 17–18).
Enterprise Information Management/Information Technology Development
at the Lovell Federal Health Care Center (FYs 2009/2010)
$100,020,000
This enterprise-level JIF project supported the work of VA and DoD IT staff
and private contractors to develop new interoperability software to enable the
Lovell FHCC staff to enter, edit, and retrieve patient information in both the VA
and DoD EHRs simultaneously (VA, 2010a, pp. 1G–4G).
Interim Pharmacy Solution at the Lovell Federal Health Care Center (FY 2010)
$1,000,000
This enterprise-level JIF award supported the interim solution to the lack of
interoperability between VA and DoD EHRs that would have created unacceptable
patient safety risks. The interim solution was to hire five licensed pharmacists to
manually check for potential drug-drug and drug-allergy interactions in both EHRs
for every prescription (VA/DoD, 2011, p. 57).
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54 LOVELL FEDERAL HEALTH CARE CENTER MERGER
footprint of the ACC meant it could be built on the east site, obviating the
need to replace the NHCU.
The decision to downsize the ACC by half, to 201,000 square feet, had
another impact. It affected decisions on which and how many clinics to
combine instead of to maintain as separate Navy and VA clinics (discussed
below). It drove a decision to adopt the VA’s Consolidated Mail Order
Pharmacy (CMOP) program so that the pharmacy dispensing space in the
ACC could be downsized, which became a problem when the DoD decided
against letting the FHCC use the CMOP. The reduced size of the pharmacy
space also made it more difficult to implement a manual workaround when
the IT solution to enable orders portability between the DoD and the VA
EHR systems was not ready in time (discussed below).
In addition to a lower-cost construction project, the proposal contained
a substantially revised governance structure. At the March 2005 meeting of
the HEC, the VA and Navy planning group had proposed a dual command
and reporting structure in which the NCVAMC director and the NHGL
commanding officer would be coequals, each reporting to his or her respec-
tive department. Under them would be consolidated directorates for clini-
cal services, patient services, and administration, each headed by coequal
associate directors. There would be a single medical staff working within a
matrix system under a single set of bylaws. This partnership was considered
to be a step toward the ultimate goal of full integration. The HEC, at the
urging of Vice Admiral Donald Arthur, the Navy surgeon general, directed
the planning group to plan a fully integrated organization under a single-
line-of-authority governance structure.
The revised governance EDM listed the pros and cons for what it called
the federal health care model, in which all services currently provided by
the Navy and the VA in North Chicago would be located within a single
organizational structure under a single chain of command. The single chain
of command would be a VA senior executive service director and chief ex-
ecutive officer and a Navy captain deputy director and chief of operations,
who would report to a board of directors under the HEC. The EDM identi-
fied the pros of establishing a single organization, as it would
• increase the range of specialty care services available to VA and
DoD beneficiaries,
• meld the medical staff into one body for clinical oversight,
• create a single standard of care for all beneficiaries and thus pro-
vide a seamless patient care environment, and
• reduce redundancies and thus reduce operating costs.
The cons were a prescient listing of the challenges that were subse-
quently encountered during the implementation. The creation of a com-
bined health care center would require
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IMPLEMENTATION 55
• significant communication efforts among all senior members of
the DoD, the Navy, and the VA to support the development and
implementation of the combined federal health care organization;
• each parent organization to accept a significant reorganization
resulting in a loss of autonomy over its respective personnel and
assets;
• the crossing of cultural borders when personnel from one organiza-
tion were supervised by the other organization’s personnel for daily
functions;
• the establishment of an interdepartmental process for resolution of
disputes; and
• the development of support systems (e.g., acquisition, information,
budgeting, human resources) that would meet the standards and
reporting requirements of the VA, the Navy, and the DoD.
The working group identified areas in which issues would have to be
addressed, some of which might require legislative relief or changes in one
or both departments’ policies, regulations, or business rules. These included
personnel management, information management/information technology
(IM/IT), budgeting, eligibility, and pharmacy. To identify these and explore
the options for resolving any differences, the HEC chartered six national
task groups:
1. Leadership
2. Finance and budgeting
3. Human resources
4. IM/IT
5. Clinical
6. Administration
In 2007, another task group, for communications, was established to in-
form stakeholders about and involve them in the integration process.
The task group members were national and local subject matter experts
and were co-chaired by a VA official and a Navy or a DoD official. In all,
more than 100 individuals served as members of task groups.
Each task group was charged with
• identifying all policies, directives, regulations, and laws (e.g., Titles
5, 10, and 38 of the U.S. Code) specific to each department’s opera-
tions in the task group’s subject area that would have to be changed
or dropped to allow integration of NCVAMC and NHGL health
care operations in the FHCC;
• developing a timeline for the full implementation of the operational
plan, including milestones and activities; and
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56 LOVELL FEDERAL HEALTH CARE CENTER MERGER
• developing recommendations of ways to overcome any barriers to
full implementation of the FHCC.
On October 17, 2005, Winkenwerder and Gordon Mansfield, the VA
deputy secretary, announced the joint agreement during a press conference
in North Chicago. A local newspaper headline was “Navy, VA do hospital
deal; Sailors, vets to get care under 1 roof” (Gibbard, 2005). In a press re-
lease, Winkenwerder said that the process of combining the two health cen-
ters would be “difficult,” but the benefit would be “the continued provision
of accessible, high quality health care for active duty and veteran patients
that benefits taxpayers through the reduction of costs by reducing duplica-
tion between these two health care delivery systems.” He also said that the
collaboration would “improve the seamless delivery of care to patients,
from entry into the armed forces through veteran status” (Ellis, 2005).
THE TASK GROUP PROCESS
The national task groups began to meet periodically, usually quar-
terly, either in North Chicago or in the Washington, DC, area. They were
mirrored by local task groups that met more often, usually biweekly but
sometimes weekly. The national leadership task group (LTG) met biweekly
by telephone to address governance and other organizational and manage-
ment issues and to oversee the progress of the other task groups. The LTG
and some of the other task groups held periodic 2-day retreats and, once or
twice per year, all the national task groups met in retreat for several days.
There was also a series of cross–task group meetings to address issues that
affected two or more task groups.
The procedure was for each task group to develop an EDM for HEC
approval for each of the issues in its jurisdiction that could not be decided
under local authority. The EDMs were to present options, usually three but
sometimes two or four, with pros and cons for each option, and to recom-
mend one option for HEC consideration and decision. The plan was to use
the approved EDMs to develop a concept of operations as the basis for a
business plan and then for detailed standard operating procedures.
Developing the EDMs was generally a lengthy process involving nu-
merous revisions as they were circulated locally, then at the regional level
(Veterans Integrated Service Network [VISN] 12 and Navy Medicine East
[NME]), then at the national level (typically involving multiple offices
within the VA, the Navy, and the DoD, and on matters involving legislation,
the Office of Management and Budget [OMB]), and the Executive Office
of the President. Most of the EDMs were not signed until July 2008, more
than 3 years after the start of the process.
The EDM process was intended to identify operational differences in
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IMPLEMENTATION 57
the departments’ policies and procedures and resolve them at the lowest
level possible. As it turned out, many aspects of the FHCC required higher-
level approval, usually changes in the standard procedures or program
policies of one department or the other, or of both. The task groups spent
a great deal of time trying to identify who needed to be consulted at the
regional or national level, or both, and getting them to the table to make
decisions. In some cases, the LTG had to appeal to the HEC to intervene
to obtain needed decisions when there was agreement to disagree between
the departments. When funding was involved, the department comptrollers
and the OMB had to approve. Ultimately, legislative authority was required
to resolve some matters, which had to be worked out with the Armed
Services committees or the Veterans’ Affairs committees of the House and
Senate, or all four of them, and sometimes also with the House and Senate
Appropriations Subcommittees for Defense and Veterans Affairs. Despite
strong support for VA/DoD health care collaborations by Congress, full
legislative authority required to create, staff, and fund the FHCC was not
received until the National Defense Authorization Act for FY 2010 (NDAA
20104) was signed on October 28, 2009, less than a year before the FHCC
was officially established on October 1, 2010. This created a great deal of
uncertainty during most of the planning process, which began in earnest in
2005, about whether the FHCC would be considered to be a military treat-
ment facility (MTF) so that cost sharing would not have to be required from
DoD beneficiaries; whether the ownership of the ACC and equipment in
the Navy hospital could be transferred to the VA to operate and maintain;
what the status of Navy civilian employees would be; and what the funding
mechanism would be.
ISSUES AFFECTING THE INTEGRATION PROCESS5
The task groups were oriented by a video teleconference in September
2005 and began work. All the task groups met in Washington, DC, for
several days in December 2005 to report on issues, recommend solutions
and plans of action, and set milestones for Phase 3 leading to the launch-
ing of the FHCC in 2010. Early on, the task groups classified issues they
identified as “big rock” EDMs, “critical” EDMs, or issues that could be
settled without an EDM. Big rocks were issues that were deemed to be key
4 National Defense Authorization Act (NDAA), Public Law 111-84. http://www.intelligence.
senate.gov/pdfs/military_act_2009.pdf (accessed August 6, 2012).
5 This section of Chapter 3 provides a detailed account of implementation issues encoun-
tered at the Lovell FHCC. Table 3-2 summarizes the implementation issues likely to be
encountered in creating other integrated VA/DoD health care centers, based on the Lovell
FHCC experience.
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92 LOVELL FEDERAL HEALTH CARE CENTER MERGER
200925), but the process of passing the bill was too far along to include
the FHCC provisions. Instead, when the NDAA 2009 was passed by Con-
gress, it included a section on “Guidelines for Combined Medical Facilities
of the Department of Defense and the Department of Veterans Affairs”
that required the DoD and VA secretaries to execute a binding operational
agreement on nine areas:
1. Governance
2. Patient priority categories
3. Budgeting
4. Staffing and training
5. Construction
6. Physical plant management
7. Contingency planning
8. Quality assurance
9. Information technology
Although the NDAA 2009 allowed the DoD and the VA to negotiate
an operational agreement for a combined facility, it did not explicitly confer
additional legal authority regarding beneficiary benefits, ACC ownership,
employee transfers, or a joint funding mechanism. In June 2009, Senators
Durbin and Daniel Akaka reintroduced legislation in the new Congress
with the four specific authorities needed for the Lovell FHCC to function
with hopes that it would pass as part of a DoD supplemental appropria-
tions bill. The fast-track initiative failed and the bill became part of the
regular NDAA process. One area that required considerable negotiation
was the transfer of personnel. The draft language was designed to “pro-
tect” the Navy civilians moving into the VA personnel system by specifying
that they would not lose pay or seniority or be subject to a probationary
period if they had already completed this as a DoD employee. Although the
departments agreed on the language, the union representing Navy civilians
at Great Lakes—the American Federation of Government Employees—
opposed the language because the Navy personnel would lose the right
under the VA’s Title 38 personnel system to appeal to the Merit Systems
Appeal Board (Robinson, 2009, p. 98). The Durbin-Akaka bill extended
collective bargaining rights under Title 5 to transferred employees for 2
years, at which time the VA secretary, in consultation with the DoD and
Navy secretaries, would determine whether the appeal rights should be
terminated, revised, or retained.
25 NDAA, S. 3001, January 3, 2008. http://www.gpo.gov/fdsys/pkg/BILLS-110s3001enr/pdf/
BILLS-110s3001enr.pdf (accessed August 6, 2012).
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IMPLEMENTATION 93
The DoD was also concerned about using the JIF program as the
funding mechanism, because it wanted to control how much and when the
funding would be spent (the JIF legislation says each department has to
contribute “at least $15 million a year” which becomes “no year” money—
that is, there is no limit on what a department can contribute and it does
not have to be spent the same year) (Robinson, 2009). The departments
had already stretched the intent of the JIF program in using it to provide
the $100 million for interoperable IT solutions for the Lovell FHCC. The
Durbin-Akaka bill provided for a Treasury fund under the VA to which the
DoD and the VA could transfer funds for the FHCC, and it stipulated that
the funds would be available for 1 FY, except for 2 percent, which could
be carried over into a second year.
After a fair amount of behind-the-scenes negotiating in the executive
branch, and then between the House and the Senate, which had passed dif-
ferent versions of the NDAA 2010, the Department of Defense-Department
of Veterans Affairs Medical Facility Demonstration Project was passed as
part of the NDAA 2010 and signed into law on October 28, 2009. The
House had not included a Lovell FHCC section in its bill but acceded to
the Senate language with certain modifications and additions. The final
bill did not refer to the Captain James A. Lovell FHCC because the name
had not been approved through customary procedures. The final version
directed the DoD and VA secretaries to submit a copy of the EA required
by the NDAA 2009 to Congress at least 7 days before finalizing it. It also
directed the GAO to review and assess progress annually. The legislation
renamed the Treasury fund the “Joint Department of Defense-Department
of Veterans Affairs Medical Facility Demonstration Fund,” and said that
DoD and VA funds for the joint fund had to be specifically authorized and
appropriated for that purpose. It specified that the first priority for care
would be given to active duty servicemembers. The department secretaries
were required to submit a final report to Congress after 5 years, describ-
ing and assessing the demonstration and recommending whether or not to
continue it.
In the meantime, the Lovell FHCC planners began to draft an EA
covering the nine areas specified in the NDAA 2009. The EA draft went
through nearly 70 iterations while it was reviewed up the two department
chains before being signed by the three secretaries (VA, DoD, and Navy)
on April 23, 2010. At the same time, the Lovell FHCC began drafting an
executive sharing agreement (ESA) to prepare for the possibility that the
joint Treasury fund might not be ready, or the appropriations for it passed,
by October 1, 2010. In fact, the FHCC was operated under the ESA for
the first 9 months because the defense appropriations bill for FY 2011 was
not passed and the DoD had to operate under a CR. This meant that the
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94 LOVELL FEDERAL HEALTH CARE CENTER MERGER
requirement in the NDAA 2010 that funds be specifically appropriated for
the FHCC could not be fulfilled.
SUMMARY OF IMPLEMENTATION CHALLENGES
The experience of the planning and implementation of the Lovell
FHCC provides many examples of the issues that arise—and how they
can resolved—when the VA and the DoD decide to serve their respective
beneficiary populations by combining their medical centers. Some of the
significant issues that had to be addressed to implement the Lovell FHCC
are listed in Table 3-2. This history is ripe for the evaluation of lessons
learned that should be considered in designing any future FHCCs. Some of
the solutions developed by the Lovell FHCC might be adopted by future
FHCCs. Many of them are compromises or time-consuming workarounds
necessitated by differing policies and procedures of the VA, the DoD, and
TABLE 3-2 Issues Likely to Be Encountered in Creating an Integrated
Department of Veterans Affairs/Department of Defense Joint Health Care
Center
Implementation
Issue Discussion
Joint governance The desire to have a joint governance structure must be reconciled
with the requirement that a federal health care center (FHCC) be
assigned to, and the director/chief executive officer to come from, one
department or the other. The requirement that the ranking active duty
military officer, if he or she is not the director, exercise the Uniform
Code of Military Justice and other command responsibilities is another
irreducible complication in achieving a single chain of command.
Beneficiary Although the intent at the Lovell FHCC was to treat everyone equally,
benefits and this was not totally achieved. Because the Navy’s boot camp for enlisted
copayments recruits is at Naval Station Great Lakes, there was an agreement,
which was specified in the 2010 National Defense Authorization Act
(NDAA), that active duty servicemembers are to receive first priority
in scheduling appointments and receiving services. This is most evident
at the west campus pharmacy, where active duty beneficiaries go to
the head of the line, making some veterans unhappy (see Chapter
4). The FHCC planners also wanted Department of Defense (DoD)
beneficiaries to be exempt from cost sharing, as they are at military
treatment facilities (MTFs). Congress allowed the FHCC to be an MTF
for eligibility purposes, but only during the 5-year demonstration, and
the DoD secretary had to issue a ruling that cost sharing would not
be required as part of the 5-year demonstration. A more permanent
arrangement will have to be worked out if FHCCs become standard
programs rather than demonstration projects.
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IMPLEMENTATION 95
TABLE 3-2 Continued
Implementation
Issue Discussion
Joint funding The solution in North Chicago was to create a Department of the
mechanism and Treasury (Treasury) fund under the Department of Veterans Affairs
reconciliation (VA) where the departments could pool their funds and to develop
model a reconciliation process based on workload measures to apportion
responsibility between the Navy and the VA for funding after the fact.
The reconciliation methodology could be a model for future FHCCs,
but the VA decision support system does not routinely track industry
standard workload measures (e.g., relative value units and relative
weighted products) that, therefore, have to be determined manually
as a workaround. Also, the Treasury fund is only authorized for the
5-year demonstration in North Chicago and would have to be extended
by Congress to additional FHCC sites. In addition, the reconciliation
methodology has not yet been put to the test; the FHCC funding is
based on historical levels during the first 3 years.
Employee status It is desirable for several reasons to have all employees in the same
personnel system. In a VA/DoD FHCC, active duty personnel will
always be in a separate personnel system. However, civilians can
be put under one department or the other, if Congress approves.
Nonetheless, differences regarding job descriptions, compensation, and
collective bargaining rights must be resolved. At this time, the authority
to transfer Navy civilians to the VA is only granted for the 5-year
demonstration in North Chicago and would have to be extended to any
additional sites by Congress.
Joint workforce The VA and the military department (the Navy in the case of the Lovell
planning FHCC) must agree on staffing levels and a mechanism for revising
them during the year in response to shifts in workload. The situation
is complicated at the Lovell FHCC because the Navy personnel rotate
out after 2 or 3 years and are often deployed once or twice during their
rotation at Great Lakes.
Joint electronic Although joint use of the DoD and the VA EHR systems was
health record considered to be a prerequisite for seamless health care delivery at
(EHR) system the Lovell FHCC, attempts to develop a minimum set of software
capabilities (e.g., single patient registration, single sign-on, and single
order entry and results retrieval) by the opening of the Lovell FHCC
were not successful. In fact, the lack of integration of the DoD and the
VA EHR systems has caused time-consuming workarounds to ensure
that patient information is the same and current in both of them and
integrated health care delivery has been inhibited. The Lovell FHCC
experience was a major factor in the decision of the DoD and the VA
secretaries to cancel updates of their legacy EHR systems and jointly
develop a single EHR system for use by both departments. Having a
single EHR system designed to meet the needs of both departments
would greatly facilitate integrated health care delivery.
continued
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96 LOVELL FEDERAL HEALTH CARE CENTER MERGER
TABLE 3-2 Continued
Implementation
Issue Discussion
Information Ideally, there would be network trust so that users of one computer
technology (IT) system would be automatically allowed access to the other. The VA
network trust, “dot.gov” system does not meet the DoD’s “dot.mil” security standards
security, and and it would be very costly to bring it up to DoD standards. The Navy
computer system relented on requiring a secret-level security clearance to access the DoD
access EHR system when the VA agreed to have all VA personnel undergo a
more intensive security investigation. The departments also could not
reach agreement on using a single access card and more than 1,000 VA
employees had to be issued special access cards, a process that could
not be completed by October 1, 2010.
Credentialing It was not cost effective to operate a common interface for the VA
and privileging and DoD credentialing verification systems at the Lovell FHCC, even
though both are based on the same Joint Commission standards. As
at the Lovell FHCC, future FHCCs would have to staff and operate
both systems unless the departments agreed to develop a single, joint
system similar to what the Lovell FHCC decided to do in the case of
the incompatible EHR systems. Although there was agreement that the
FHCC director, a career VA employee, would be the final privileging
authority, the deputy director, as the ranking active duty officer, must
also privilege active duty clinicians for certain military purposes.
Privileging and The DoD has more permissive privileging rules than the VA because it
supervision deploys registered nurses and hospital corpsmen with advanced training
of active duty to assignments in locations where they must perform independently of
advanced physicians. The solution at the Lovell FHCC was for the VA to agree
practice nurses to a scope of practice that included the specific functions that APNs
(APNs), hospital and IDCs are expected by the DoD to perform, which are broader
corpsmen, and than the VA’s usual scope of practice for these positions. Supervision of
independent corpsmen is also an issue. The Navy requires them to be supervised by
duty hospital an active duty nurse, which inhibits staff integration. The workaround
corpsmen (IDCs) at the FHCC was to allow corpsmen working on the west campus to be
supervised by civilian nurses in their daily work as long as there is an
active duty nurse mentor.
Procurement There was agreement that the Lovell FHCC would use the VA
procurement system, but experience has shown that it would be more
cost effective if the Navy facilities command could be used for certain
base operations. It is also more cost effective to use personal services
contracts (PSCs) for staffing the east campus branch clinics, given that
the workload there varies, but the VA does not have authority to use
them. The FHCC would like the VA to obtain authority from Congress
to use the PSCs. Meanwhile, despite the agreement to use the VA
logistics system, the Navy logistics command is administering the PSCs
on the east campus.
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IMPLEMENTATION 97
TABLE 3-2 Continued
Implementation
Issue Discussion
Pharmacy It might be more efficient to have one formulary, but the decision for
formulary the Lovell FHCC was to maintain two of them. If the two departments
could agree on a common formulary, it also might lead to lower prices
because of their combined demand.
Mail order The Lovell FHCC saved space in the ambulatory care center by
pharmacy deciding to rely on the VA’s Consolidated Mail Order Pharmacy
(CMOP) for prescription refills, but the DoD does not want to allow
DoD beneficiaries to use this program. The resulting backup at the
FHCC pharmacy has been a major consumer dissatisfaction issue. This
question—whether or not to use the CMOP for DoD beneficiaries—
should be settled before designing the pharmacy space in future
FHCCs.
Military The issue is finding a way to document the current individual medical
operational readiness of active duty servicemembers who obtain emergency,
readiness inpatient, or specialty services on the east campus. Because of the lack
of interoperability between the VA and the DoD EHR systems, entries
in the VA EHR system used at these west campus locations are not
simultaneously recorded automatically in the DoD EHR system. This
problem is being addressed by the development of the integrated EHR
system, the iEHR.
Law The Lovell FHCC expected to integrate the Navy and the VA police
enforcement and forces, but efforts have been stymied by the Posse Comitatus Act, which
security generally prohibits active duty servicemembers from arresting civilians.
In August 2012, permission was granted for the Navy masters-at-arms
to attend the 8-week VA Police Academy in Little Rock, Arkansas, after
which they will be able to carry lethal and nonlethal weapons as they
participate in patrolling the west campus of the FHCC.
the affected military service (in this case, the Navy) that could be addressed
more effectively at the enterprise level. Others may be unique to North
Chicago, for example, the priority given to active duty servicemembers
because of the demands of the recruit training mission.
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