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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. REFERENCES Arthur, D. 2006. Written statement of Vice Admiral Donald C. Arthur, Surgeon General of the Navy, before the Subcommittee on Military Quality of Life and Veterans Affairs of the House Appropriations Committee (also before Senate Appropriations Subcommittee on Defense on May 3, 2006). http://www.med.navy.mil/bumed/comms/Pages/Congressional Testimony.aspx (accessed August 7, 2012).

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