Evaluation of the Lovell Federal
Health Care Center Merger
__________________________
Findings, Conclusions, and Recommendations
Committee on Evaluation of the Lovell
Federal Health Care Center Merger
Board on the Health of Select Populations
INSTITUTE OF MEDICINE
OF THE NATIONAL ACADEMIES
THE NATIONAL ACADEMIES PRESS
Washington, D.C.
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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.
This study was supported by Contract/Grant No. HT0011-10-C-0002 between the National Academy of Sciences and the Department of Defense. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project.
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Suggested citation: IOM (Institute of Medicine). 2012. Evaluation of the Lovell Federal Health Care Center merger: Findings, conclusions, and recommendations. Washington, DC: The National Academies Press.
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OF THE NATIONAL ACADEMIES
Advising the Nation. Improving Health.
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COMMITTEE ON EVALUATION OF THE LOVELL FEDERAL HEALTH CARE CENTER MERGER
MICHAEL M. E. JOHNS (Co-Chair), Chancellor, Emory University, Atlanta, GA
STEPHEN M. SHORTELL (Co-Chair), Dean of the School of Public Health, Blue Cross of California Distinguished Professor of Health Policy & Management, and Professor of Organization Behavior, School of Public Health and Haas School of Business, University of California, Berkeley
NANCY R. ADAMS, Senior Partner, Martin, Blanck & Associates, Falls Church, VA
GEORGE K. ANDERSON, Executive Director, Association of Military Surgeons of the United States, Bethesda, MD
PETER B. ANGOOD, Chief Executive Officer, American College of Physician Executives, Tampa, FL
LAWTON R. (ROBERT) BURNS, Chair of the Health Care Management Department, James Joo-Jin Kim Professor, and Professor of Health Care Management, Wharton School, University of Pennsylvania, Philadelphia
EMMANUEL G. CASSIMATIS, President and Chief Executive Officer, Educational Commission for Foreign Medical Graduates, Philadelphia, PA
TIMOTHY C. FLYNN, Senior Associate Dean for Clinical Affairs, College of Medicine, and Chief Medical Officer, Shands Hospital, University of Florida, Gainesville
LARRY M. MANHEIM, Research Professor in the Institute for Healthcare Studies and the Department of Physical Medicine and Rehabilitation, Northwestern University Feinberg School of Medicine, Chicago, IL
JOHN E. MAUPIN, JR., President and Chief Executive Officer, Morehouse School of Medicine, Atlanta, GA
KAREN L. MILLER, Senior Vice Chancellor for Academic and Student Affairs, University of Kansas Medical Center, Kansas City
FRANCES M. MURPHY, President, Sigma Health Consulting, LLC, Silver Spring, MD
J. MARC OVERHAGE, Chief Medical Informatics Officer, Siemens Health Services, Malvern, PA
SUSANNE TROPEZ-SIMS, Associate Dean of Clinical Affiliations and Professor of Pediatrics, Meharry Medical College, Nashville, TN
CAROLYN (CINDY) WATTS, Professor and Chair of the Department of Health Administration, Virginia Commonwealth University, Richmond
Consultants
DAVID K. BARNES, Advanced Policy Solutions, Bethesda, MD
THOMAS A. D’AUNNO, Executive Vice Dean, Mailman School of Public Health, Columbia University, New York, NY
IOM Study Staff
MICHAEL McGEARY, Study Director
SUSAN R. MccUTcHEN, Senior Program Associate
LAVITA SULLIVAN, Senior Program Assistant
FREDERICK (RICK) ERDTMANN, Director, Board on the Health of Select Populations
Reviewers
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research Council’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report:
Elizabeth H. Bradley, Yale School of Public Health
Timothy G. Buchman, Emory University School of Medicine
Jon B. Christianson, University of Minnesota School of Public Health
Audrey C. Drake, Department of Veterans Affairs (Deputy Chief Nursing Officer Emeritus)
Nancy E. Dunlap, University of Alabama at Birmingham
Richard G. Frank, Harvard Medical School
Kyle L. Grazier, University of Michigan School of Public Health
James E. Hastings, Department of Veterans Affairs Pacific Islands Health Care System
Richard E. Oliver, University of Missouri School of Health Professions
Jonathan B. Perlin, Hospital Corporation of America
Lawrence M. Riddles, American College of Physician Executives
Paul H. Rockey, Accreditation Council for Graduate Medical Education
Hector P. Rodriguez, University of California, Los Angeles, School of Public Health
James M. Walker, Geisinger Health System
Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Charles E. Phelps, University of Rochester, and David R. Challoner, University of Florida. Appointed by the National Research Council and the Institute of Medicine, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.
Preface
An important experiment in federal health care delivery is taking place in North Chicago, Illinois. In 2010, the Navy and the Department of Veterans Affairs (VA) consolidated their medical centers, which had operated 1.5 miles apart from each other for many years, into a joint health care center named the Captain James A. Lovell Federal Health Care Center (FHCC) after the well-known astronaut who lives near the facility. In a time of severe fiscal constraints and heightened concern about smoothing the transition of injured military servicemembers from active duty to veteran status, the possibility of providing better care at less cost by combining military and VA medical centers in the same health care market has great appeal. The outcomes of the Lovell FHCC experiment, therefore, are of significant interest to federal policy makers.
The 1995 Defense Base Consolidation and Realignment Commission decided to consolidate Navy recruit training, then in three locations, at the Naval Station Great Lakes, located near the city of North Chicago. This decision gave more urgency to the need to replace the old and obsolete Navy hospital with a new hospital, an action the Navy had planned for 2007. In 1999, a VA task force proposed converting the North Chicago VA medical center from a hospital to an outpatient facility, which was strongly opposed by veterans, community leaders, and their representatives in Congress. The solution reached by the VA/Department of Defense (DoD) Health Executive Council (HEC) was to have the Navy use the VA hospital for inpatient and emergency services rather than to build a new Navy hospital. The new arrangement was expected to reduce costs for the Navy and the VA while
increasing the patient workload enough to justify keeping the VA hospital open. The Navy began to use the North Chicago VA medical center for acute inpatient mental health services in 2003 and for all inpatient medical, surgical, and pediatric services in 2006.
In 2002, the HEC directed the Navy to build an outpatient facility next to the North Chicago VA medical center, so that all care for veterans and Navy servicemembers and other DoD beneficiaries could be provided in one location. This model had been pioneered in Albuquerque, New Mexico, where the VA medical center provides inpatient services to DoD beneficiaries, who receive their outpatient care at the Air Force ambulatory care center next to it. Similarly, veterans in Hawaii and south-central Alaska receive outpatient services from VA ambulatory care facilities built beside the Army and Air Force hospitals in Honolulu and Anchorage, respectively, where they go to receive inpatient services. These cooperative arrangements, in addition to several other similar, extensive VA/DoD health care sharing arrangements in various locations around the United States, are called “joint ventures.” In joint ventures, the VA medical center and the military medical center agree to reimburse each other for services received.
In 2005, the HEC made the momentous decision to go beyond the joint venture model and create the first “integrated” FHCC in North Chicago, which was characterized by a combined medical staff organized in a single set of clinical departments under one chief medical executive, a single set of administrative units, and a single chain of command under one FHCC chief executive. The date set for full integration was October 1, 2010, barely 5 years in the future.
The decision was based on the idea that a single organization should be able to provide better care for patients at lower cost for taxpayers than would a joint venture. The care should be better because it would be more comprehensive and coordinated, and the financial costs should be reduced because of economies of scale, reduced duplication, and other efficiencies. Local Navy and VA leaders fully embraced the concept of the Lovell FHCC, especially the idea of having one staff and one system wherever possible rather than having two side by side. The systems in question included quality assurance, patient medical records, provider accreditation, budgeting and accounting, personnel management, purchasing, and physical plant management.
A long and complicated process ensued, which included accommodating the separate but overlapping missions of the DoD and the VA health systems; reconciling the different policies and procedures, performance measures, and organizational cultures of the Navy and the VA; and overcoming several statutory limitations on interdepartmental integration, such as strictures on transferring property and personnel. Chapter 3 in this report reviews this implementation process, identifies the main issues that had
to be resolved between the Navy and the VA, and documents how they were resolved—sometimes fully, sometimes partially, and sometimes not at all.
Some areas of incomplete or nonintegration, such as having to operate the provider accreditation systems of both departments, have resulted in continued duplication and thus are reducing potential efficiencies. Others affect patient care. Most critically, the VA and the DoD electronic health record (EHR) systems are not compatible, and few of the software programs created to make them interoperable—that is, to make it possible to enter one EHR system (or an interface) and view and enter information in both EHR systems simultaneously so that care can be optimized—were operational when the Lovell FHCC opened. To ensure, at a minimum, that patient safety is not compromised by harmful drug interactions or allergies, the Lovell FHCC had to develop costly manual pharmacy workarounds. When DoD patients are seen by VA specialty, inpatient, and emergency medicine providers, manual workarounds are necessary to enter the clinical information recorded in the VA EHR system into the DoD EHR system. We should note that this problem has been recognized and was part of the reason that in early 2011 the DoD and VA secretaries committed their departments to developing a joint EHR system, beginning with the single pharmacy system that is greatly needed at the Lovell FHCC.
In Chapter 4, our committee assesses the results of the integration experiment, to the extent they can be ascertained after less than 2 years of operation. Clearly, the leaders of the North Chicago FHCC initiative have succeeded, through tremendous effort, in creating a single organization serving both beneficiary populations. However, the degree of integration of clinical and administrative services varies across the organization, mostly because of external constraints. Nonetheless, the more important questions are whether the creation of the FHCC in North Chicago has been worthwhile and if it is a good model for merging the VA and the DoD health care delivery systems in other locations where they have facilities in close proximity.
The Lovell FHCC has not been in operation long enough to determine the benefits accrued and to assess whether it has been cost effective. Appendix B contains an evaluation framework that would be useful for the DoD and the VA to adopt so that at the end of the 5-year demonstration period for the Lovell FHCC these organizations will be able to decide whether the merger is worthwhile and whether it can be replicated elsewhere. In the meantime, our report recommends some ways that the departments could facilitate integration by resolving differences in department policies, procedures, and systems at the national level.
We would like to thank many people who helped with this study. Most are listed in the Acknowledgments section of the report; others contributed by agreeing to give confidential interviews, which were extremely helpful.
We are particularly grateful to Janice Halkovich of the Lovell FHCC for arranging interviews and access to data and for helping to schedule presentations at the committee’s two meetings in North Chicago. We would also like to thank the hardworking members of the committee who attended the meetings, read extensive materials between meetings, and helped draft the report and review its several iterations. Their experience and expertise were critical to this evaluation and in formulating the committee’s consensus conclusions and recommendations. Finally, we would like to thank the Institute of Medicine staff—Michael McGeary, Susan R. McCutchen, and LaVita Sullivan—who diligently collected the enormous amount of information that forms the basis of this report and organized our meetings to facilitate productive discussions.
Michael M. E. Johns, and
Stephen M. Shortell, Co-Chairs
Committee on Evaluation of the
Lovell Federal Health Care Center Merger
Acknowledgments
Many individuals and organizations contributed to the study. In particular, the committee and staff would like to thank the individuals listed below who took the time to provide information about, and their views of, the implementation, operation, and impacts of the Captain James A. Lovell Federal Health Care Center (Lovell FHCC). The committee would also like to thank the approximately 50 individuals who agreed to be interviewed on a confidential basis, who cannot be listed here but who provided important input into the study.
Mark Albrecht, Lovell FHCC
Mary Ann Allred, Lovell FHCC
CDR Martin Anerino, Lovell FHCC
Norman Arnswald, Veteran/Lovell FHCC Customer
CAPT Dale Barrette, Lovell FHCC
CAPT David J. Beardsley, Lovell FHCC
CAPT Steven G. Bethke, Recruit Training Command, Naval Station Great Lakes
Thomas Bresciano, Lovell FHCC
Jill K. Center, Government Accountability Office (GAO)
Kenneth L. Cox, Office of the Assistant Secretary of Defense for Health Affairs, Department of Defense (DoD)
Joseph X. DiMario, Rosalind Franklin University of Medicine and Science
CDR Bridgette Faber, Lovell FHCC
Imran Faizi, Lovell FHCC
Debra M. Filippi, DoD/Department of Veterans Affairs (VA) Interagency Program Office
Lenny Floom, Veteran/Lovell FHCC Customer
LCDR Aaron Frank, Lovell FHCC
Leanne Fredrickson, Lovell FHCC
Sarah Fouse, Lovell FHCC
CMC Ross Gilliatt, Lovell FHCC
Janice Halkovich, Lovell FHCC
Tariq Hassan, Lovell FHCC
CAPT Rich Hayden, Lovell FHCC
COL Claude Hines, Jr., Military Health System, DoD
Patrick Hull, Lovell FHCC
Andre Greedan, Lovell FHCC
Ronald Kaplan, Rosalind Franklin University of Medicine and Science
Laura Kelly, VA Northern California Health Care System
CMDR Ruth Kline, Lovell FHCC
CDR Eileen Knoble, Lovell FHCC
CAPT Norman Lee, Lovell FHCC
Frank Maldonado, Lovell FHCC
Karen T. Malebranche, Office of Interagency Health Affairs, VA
John G. Manczko, Lovell FHCC
Tiffany McFadden, Lovell FHCC
Barbara Meadows, Lovell FHCC
Gloria E. Meredith, Rosalind Franklin University of Medicine and Science
James Miller, Lovell FHCC
Paul Morgan, Lovell FHCC
CAPT Maryalice Morro, Navy Medicine East, Bureau of Medicine and Surgery, U.S. Navy
Clifford Moudy, Lovell FHCC
Jeffrey A. Murawsky, Veterans Integrated Service Network 12, VA
Robert Opsut, Office of the Assistant Secretary of Defense for Health Affairs, DoD
CAPT Kevin Otte, Lovell FHCC
CAPT James Oxford, Lovell FHCC
Kelvin Parks, Lovell FHCC
Nancy L. Parsley, Rosalind Franklin University of Medicine and Science
Michael Peck, Lake County Veterans Assistance Commission
LCDR Donna Poulin, Lovell FHCC
Robert Charles Powell, Constituent, Illinois 10th Congressional District
Wendy Rheault, Rosalind Franklin University of Medicine and Science
Russell Robertson, Rosalind Franklin University of Medicine and Science
Mary Schindler, Lovell FHCC
Marianne Semrad, Lovell FHCC
Robert Sorensen, Lovell FHCC
Patrick L. Sullivan, Lovell FHCC
Gregory X. Swanson, TRICARE North Region
Keith Tietmeyer, Office of Information and Technology, VA
Estan Villarreal, Veteran/Lovell FHCC Customer
Piyush Vyas, Lovell FHCC
K. Michael Welch, Rosalind Franklin University of Medicine and Science
E. Jane Whipple, GAO
Lt. Col. Doreen Wilder, David Grant U.S. Air Force Medical Center
Malissa G. Winograd, GAO
Edwin Zarling, Lovell FHCC
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Department of Veterans Affairs/Department of Defense Resource Sharing and Other Joint Initiatives
Lessons Learned from Department of Defense/Department of Veterans Affairs Collaborations
Outcomes and Best Practices of Private-Sector Collaborative Ventures
Lessons Learned from Other Federal and Private-Sector Collaborative Approaches
6 FINDINGS, CONCLUSIONS, AND RECOMMENDATIONS
Tables, Figures, and Boxes
TABLES
3-1 Workload Categories and Measures
4-2 Clinical Integration Status of the Lovell Federal Health Care Center
4-3 Department of Defense Patient Satisfaction Scale for the Lovell Federal Health Care Center
4-4 Veterans Administration Patient Satisfaction Scale for the Lovell Federal Health Care Center
D-1 Key Variables in Collaboration Among Health Care Organizations
D-3 Summary of Empirical Studies of Outcomes of Collaboration Among Health Care Organizations
FIGURES
3-1 Lovell Federal Health Care Center leadership organization chart
4-8 TRICARE patient ratings of the Lovell Federal Health Care Center, 2011 (100-point scale)
4-11 Department of Veterans Affairs outpatient satisfaction scores, fiscal years 2009–2011
4-12 Department of Veterans Affairs inpatient satisfaction scores, fiscal years 2009–2011
4-13 Lovell Federal Health Care Center patient satisfaction scores, October 2010–June 2012
D-1 Conceptual framework of collaboration among health care organizations
D-2 Three key activities for effective organizational change
BOXES
2-1 TRICARE Prime and Other TRICARE Programs
3-1 Joint Incentive Fund Awards to North Chicago, Fiscal Years 2004–2007
5-1 Currently Active Department of Veterans Affairs/Department of Defense Joint Ventures
5-2 Checklist for Effective Implementation of Collaborative Ventures Among Health Care Organizations
D-1 Checklist for Effective Implementation of Collaborative Ventures Among Health Care Organizations
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200H | Naval Hospital Great Lakes (also referred to as NHGL) |
ACC | ambulatory care center |
AHLTA | Armed Forces Health Longitudinal Technology Application |
ANACI | Access National Agency Check with Inquiries |
APC | ambulatory payment classification |
APN | advanced practice nurse |
ARC | Allocation Resource Center |
BAH | Booz-Allen & Hamilton (former name for Booz Allen Hamilton) |
BHIE | Bi-directional Health Information Exchange |
BRAC | Base Realignment and Closure |
BUMED | Bureau of Medicine and Surgery |
CAC | common access card |
CAP | community-acquired pneumonia |
CARES | Capital Asset Realignment for Enhanced Services |
CCQAS | Centralized Credentials and Quality Assurance System |
CHAMPUS | Civilian Health and Medical Program of the Uniformed Services |
CHDR | Clinical Data Repository/Health Data Repository |
CMOP | Consolidated Mail Order Pharmacy |
CMS | Centers for Medicare & Medicaid Services |
CNA | Center for Naval Analyses |
CO | commanding officer |
CPRS | Computerized Patient Record System |
CR | continuing resolution |
CTG | clinical task group |
DMHRSi | Defense Medical Human Resources Systems-internet |
DMLSS | Defense Medical Logistics Standard Support |
DoD | Department of Defense |
DOS | disk operating system |
DSS | Decision Support System |
DWV | dental weighted value |
EA | executive agreement |
eDR | enhanced document referral |
ED | emergency department |
EDM | executive decision memorandum |
EHR | electronic health record |
ESA | executive sharing agreement |
FHCC | federal health care center |
FHCF | federal health care facility |
FLITE | Financial and Logistics Integrated Technology Enterprise program |
FMS | Financial Management System |
FTE | full-time equivalent |
FY | fiscal year |
GAO | Government Accountability Office (since 2004) or General Accounting Office (prior to 2004) |
GIP | Generic Inventory Package |
GLAC | Great Lakes Acquisition Center |
HEC | Health Executive Council |
HEDIS | Healthcare Effectiveness Data and Information Set |
HR | human resources |
ICTB | Inter-facility Credentialing Transfer Brief |
ICU | intensive care unit |
IDC | independent duty corpsman |
IDES | Integrated Disability Evaluation System |
iEHR | integrated electronic health record |
IM | information management |
IM/IT | information management/information technology |
IOM | Institute of Medicine |
IPO | Interagency Program Office |
IT | information technology |
JEC | Joint Executive Council |
JFURSWG | Joint Facility Utilization Resource Sharing Working Group |
JIF | Joint Incentive Fund |
JMFDF | Joint Medical Facility Demonstration Fund |
LTG | leadership task group |
MAXIMO | Department of Veterans Affairs asset management commercial, web-based software program |
MHS | Military Health System |
MOA | memorandum of agreement |
MRI | magnetic resonance imaging |
MSPT | mission specific pass-through |
MS-RWP | Medicare severity relative weighted product |
MTF | military treatment facility |
NACI | National Agency Check with Inquiries |
NCOD | National Center for Organizational Development |
NCVAMC | North Chicago Veterans Affairs Medical Center |
NDAA | National Defense Authorization Act |
NFEC | Naval Facilities Engineering Command |
NHCGL | Naval Health Clinic Great Lakes |
NHCU | nursing home care unit |
NHGL | Naval Hospital Great Lakes (also referred to as 200H) |
NME | Navy Medicine East |
NMLC | Naval Medical Logistics Command |
NRMC | Naval Regional Medical Center |
NSGL | Naval Station Great Lakes |
OHA | Office of Health Affairs |
OMB | Office of Management and Budget |
OPM | Office of Personnel Management |
ORYX | Joint Commission’s performance measure |
PA | physician’s assistant |
PACS | picture archiving and communication system |
PIV | personal identity verification |
PSC | personal services contract |
RTC | Recruit Training Command |
RTC Recap | Recruit Training Command Recapitalization Program |
RVU | relative value unit |
RWP | relative weighted product |
SAC | Stakeholder Advisory Committee |
SCIP | Surgical Care Improvement Project |
TFL | TRICARE for Life |
TRICARE | military health care insurance system |
TSC | Training Support Center |
USS | United States ship |
VA | Department of Veterans Affairs |
VAMC | Department of Veterans Affairs medical center |
VHA | Veterans Health Administration |
VISN | Veterans Integrated Service Network |
VistA | Veterans Health Information Systems and Technology Architecture |