oversight

The Results Act: Observations on VA's June 1997 Draft Strategic Plan

Published by the Government Accountability Office on 1997-07-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                   United States General Accounting Office

GAO

September 1997




GAO/HEHS-97-174R
                         United States
GAO                      General Accounting Office
                         Washington, D.C. 20548

                         Health, Education, and
                         Human Services Division

                         B-277393

                         July 11, 1997

                         The Honorable Richard K. Armey
                         Majority Leader
                         House of Representatives

                         The Honorable John Kasich
                         Chairman, Committee on the Budget
                         House of Representatives

                         The Honorable Dan Burton
                         Chairman, Committee on Government
                           Reform and Oversight
                         House of Representatives

                         The Honorable Bob Livingston
                         Chairman, Committee on Appropriations
                         House of Representatives

                         Subject: The Results Act: Observations on VA’s June 1997 Draft Strategic
                         Plan

                         On June 12, 1997, you asked us to review the draft strategic plans
                         submitted by federal agencies to facilitate the consultations between the
                         Congress and the agencies required by the Government Performance and
                         Results Act of 1993 (the Results Act). This letter provides our observations
                         on the draft plan the Department of Veterans Affairs (VA) submitted to the
                         Congress on June 9, 1997. Under the Results Act, VA and other departments
                         and agencies are required to submit strategic plans by September 30, 1997.


                         On the basis of the guidance provided in your June 12, 1997, letter, we
Objectives, Scope,       focused our review of VA’s June 9, 1997, draft strategic plan on
and Methodology
                     •   VA’s compliance with the Results Act’s requirements and the draft plan’s
                         overall quality,
                     •   how well the draft plan addresses VA’s statutory responsibilities,
                     •   how well the draft plan identifies crosscutting functions and plans for
                         coordination with other departments and agencies,
                     •   the extent to which the plan addresses major VA management challenges
                         we have identified in our reviews of VA programs, and




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             •   VA’s capacity to provide reliable performance and cost information to
                 support its strategic plan.

                 To evaluate VA’s draft plan, we used our May 1997 guidance for
                 congressional review of strategic plans;1 Office of Management and Budget
                 (OMB) guidance on strategic planning (Circular A-11, part 2); and our
                 numerous reports and testimonies on VA programs and departmental
                 management. (See Related GAO Products at the end of this
                 correspondence.) In addition, we have participated in consultations
                 between VA officials and the staffs of the House and Senate Committees on
                 Veterans’ Affairs. Some of our preliminary comments on VA’s draft
                 strategic plan were discussed at these meetings.

                 In passing the Results Act, the Congress anticipated that several planning
                 cycles might be needed to perfect the process of developing a strategic
                 plan and that the plan would be continually refined. Thus, our comments
                 reflect a “snapshot” of the status of the plan at a particular point. We
                 recognize that developing a strategic plan is a dynamic process and that VA
                 is continuing to work to revise the draft with input from OMB,
                 congressional staff, and other stakeholders.


                 In fiscal year 1996, VA spent over $38 billion to provide a wide array of
Background       benefits and services to its customers—veterans and their families. VA’s
                 programs are administered by three major components:

             •   The Veterans Health Administration (VHA) administers VA’s health care
                 system, including its 173 hospitals.
             •   The Veterans Benefits Administration (VBA) administers nonmedical
                 benefits for veterans, such as compensation for disabled veterans;
                 Montgomery G.I. Bill educational assistance; home loan guarantees;
                 vocational rehabilitation and counseling; and life insurance for veterans.
             •   The National Cemetery System (NCS) operates VA’s system of national
                 cemeteries, provides headstones and markers for the graves of eligible
                 veterans, and provides certificates to the families of deceased veterans
                 recognizing the veterans’ service to the nation.

                 VA began its strategic planning process about 2 years ago. VA established a
                 Strategic Management Group, consisting of senior VA officials, to develop a



                 1
                  Agencies’ Strategic Plans Under GPRA: Key Questions to Facilitate Congressional Review
                 (GAO/GGD-10.1.16, Version 1, May 1997).



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                       departmentwide strategic planning process, and to coordinate planning
                       among VA’s components.

                       VA incorporated the strategic planning documents of VHA, VBA, and NCS into
                       its fiscal year 1998 budget, which was submitted to the Congress in
                       February 1997. NCS and the loan guaranty “business line” in VBA are Results
                       Act pilot programs.2


                       Overall, we found VA’s June 9 draft strategic plan to be incomplete in terms
Results in Brief       of the elements of a strategic plan as required under the Results Act. In
                       addition, the plan generally lacks a focus on the results of VA programs.
                       Also, the draft plan is somewhat confusing and difficult to follow, mainly
                       because it has several different levels of goals, objectives, and strategies.
                       VA officials and congressional staff have consulted extensively about VA’s
                       June 9 draft, and VA officials have acknowledged that their plan needs
                       improvement. VA has indicated that it intends to make significant changes
                       to its draft strategic plan by mid-July to ensure that it is more results
                       oriented and complete, and less confusing.

                       More specifically, we found that VA’s draft plan represents an inconsistent
                       and incomplete application of the six key components of a strategic plan
                       under the Results Act. One of the six—a comprehensive agency mission
                       statement—is present. Other elements are not consistently represented in
                       the plan. For example:

                   •   Most of VA’s goals are focused on the process of providing benefits and
                       services, but not on the results of VA programs for veterans and their
                       families, such as assisting veterans in their readjustment to civilian life.
                   •   Some major strategic goals are unsupported by objectives and strategies
                       for achieving them. The draft plan includes placeholders indicating that
                       these elements will be added later. The most significant gap is in the
                       discussion of goals and objectives for most of VBA’s programs.
                   •   Discussions of external factors beyond the control of VA that could affect
                       achievement of goals are limited and omit some important external
                       factors, such as trends in the demographics of the veteran population.
                   •   VA’s draft plan is not based on formal program evaluations. Although the
                       draft plan includes a schedule of program evaluations, these evaluations
                       will not be complete for several years.


                       2
                        The Results Act required OMB to select at least 10 agencies to pilot the act’s performance planning
                       and reporting requirements for one or more of each agency’s major functions, during fiscal years 1994
                       through 1996. VBA’s New York Regional Office also participated in this pilot phase.



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While we found that VA’s draft strategic plan is generally based on VA’s
statutory responsibilities, we noted that VA states part of its mission as
serving as “principal advocate” for veterans. This mission is not stated in
VA’s statutory authority and may not be an accurate characterization of VA’s
role under the law. VA does not necessarily speak for all veterans at all
times and may on occasion take positions that veterans may regard as not
in their best interests.

The plan acknowledges that VA needs to systematically identify areas
where coordination is required. The plan includes a strategic goal to
improve the coordination of veterans’ services among multiple agencies,
because some veterans receive services from agencies other than VA. For
example, some veterans receive employment training services from the
Department of Labor. Also, VA sometimes relies on other agencies for the
information it needs to administer programs—for example, military
service records from the Department of Defense (DOD). On the other hand,
VA’s draft strategic plan either does not address major management
challenges for VA that we have previously identified or addresses them in
little detail. Examples of such challenges are major delays in resolving
compensation and pension claims, challenges created by the “year-2000”
computer problem, and recent legislation expanding eligibility for VA
medical care and expanding VA’s authority to contract with non-VA
providers for medical services.

Finally, while VA has made progress in developing the financial and
information systems needed to provide accurate and timely cost and
performance data to support its strategic planning, much work remains to
be done. VA’s draft plan reflects VA’s need to develop both cost accounting
systems and an information technology infrastructure that will provide the
data VA needs to develop results-oriented goals and objectives, measure
progress, and manage its programs. However, the plan does not address
such issues as correcting internal control weaknesses in VA’s financial
systems and developing an information technology framework based on
“best practices” of leading public and private organizations.

Strategic planning under the Results Act is a long-term challenge for
federal agencies. We recently reported that, while agencies are likely to
meet the September 30, 1997, deadline for producing initial strategic plans,
these plans will not be as useful for congressional and agency




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                             decision-making as they could have been.3 This conclusion applies to VA.
                             The draft strategic plan acknowledges many of its own deficiencies and
                             recognizes that much work remains to be done before VA can produce a
                             strategic plan meeting the Results Act’s requirements. VA also recognizes
                             that it will not overcome all of the deficiencies in its draft strategic plan by
                             the Results Act’s deadline.


                             The Results Act requires that agency strategic plans contain the following
VA’s Draft Strategic         key elements: (1) a comprehensive mission statement; (2) general goals
Plan Does Not Fully          and objectives, including outcome-related goals and objectives; (3) a
Address Key Results          description of how the goals and objectives are to be achieved; (4) a
                             description of how performance goals in annual agency performance plans
Act Elements                 will be related to the general goals and objectives; (5) identification of key
                             external factors that could affect achievement of the general goals and
                             objectives; and (6) a description of program evaluations used in
                             establishing or revising the general goals and objectives, as well as a
                             schedule for future program evaluations. VA’s draft strategic plan contains
                             a comprehensive mission statement but is deficient in addressing the other
                             five key elements. For two of the key elements (development of
                             results-oriented goals and use of program evaluations), the draft plan
                             contains plans to help correct the deficiencies.


VA’s Mission Statement       VA’s draft strategic plan contains a basic mission statement, followed by a
                             more detailed discussion of the purposes of its major program areas. A
                             mission statement should focus on an agency’s purpose and how it will
                             achieve that purpose. VA’s mission statement does this by stating that part
                             of its mission is to help promote the health, welfare, and dignity of
                             veterans, in recognition of their service to the nation. The more detailed
                             discussions of VA’s major program areas support the basic mission
                             statement by describing how each major program assists veterans and
                             their families. For example, the plan states that

                         •   through NCS, VA ensures that veterans’ service is honored by providing
                             dignified burials and lasting memorials, as well as by maintaining veterans’
                             cemeteries as national shrines, and
                         •   VBA’s educational assistance program has several purposes, such as

                             assisting service members in readjusting to civilian life; extending
                             opportunities for higher education to people who might not otherwise be


                             3
                             The Government Performance and Results Act: 1997 Governmentwide Implementation Will Be
                             Uneven (GAO/GGD-97-109, June 2, 1997).



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                              able to afford it; and aiding in the recruitment and retention of members of
                              the Armed Forces, Selected Reserve, and National Guard.


Corporate and Strategic       VA’s draft strategic plan contains multiple layers of goals, along with
Goals, Objectives, and        objectives, strategies, and performance goals to support them. This is a
Strategies and                major source of confusion in attempting to evaluate the plan. Most of the
                              plan’s strategic goals are accompanied by objectives, strategies, and
Performance Goals             measurable performance goals. However, some corporate and strategic
                              goals are not explained at all; instead, the plan states that explanations
                              will be provided at a later date. Also, most of the plan’s goals are oriented
                              toward VA’s operations and processes, rather than toward the results of
                              VA’s programs for veterans and their families. VA officials agree that their
                              goals need to be more results oriented and focused and told us they intend
                              to make such changes in their mid-July revision of the draft strategic plan.

                              VA’s draft strategic plan is organized around two levels of goals: four
                              corporate goals, which are subdivided into 34 strategic goals. A complete
                              list of these goals appears in enclosure I. The four corporate goals are to

                          •   honor, compensate, and care for veterans in recognition of their sacrifices
                              for America;
                          •   provide “One-VA” world class customer service;
                          •   create and maintain a high performing workforce to serve veterans; and
                          •   provide the taxpayer maximum return on investment.

                              Under the first corporate goal, which reflects program purposes set forth
                              in various VA statutes, VA lists strategic goals for all of its major programs.
                              The other three corporate goals are not based on specific requirements in
                              VA’s statutes but reflect the need to provide quality, efficient service to
                              veterans. In addition, the last three corporate goals lack a focus on the
                              results of VA programs for veterans and their families; instead, they focus
                              on VA’s processes for providing benefits and services.

                              Each corporate goal has up to 10 strategic goals. This additional layer of
                              goals is one of the factors that makes the plan confusing and difficult to
                              evaluate. Also, almost all of the strategic goals are process oriented, rather
                              than results oriented. For example, two strategic goals are geared toward
                              the implementation of the Results Act:

                          •   A strategic goal stating that “VA programs are effective in meeting the
                              needs of veterans and their beneficiaries” is very broad. However, the



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    explanation of this goal describes a process for meeting some of the key
    requirements of the Results Act. Under this strategic goal, VA plans to
    identify the purpose of each program, establish results-oriented
    performance measures, identify the data needed for strategic planning
    purposes, and initiate formal program evaluations.
•   The strategic goal to “improve the continuity and coordination of delivery
    of veteran services and benefits from multiple federal agencies” describes
    VA’s intention to establish a process for identifying overlaps and linkages
    between VA and other agencies, enhancing and improving communications
    links with other agencies, and improving communications with state
    veterans’ offices and other state officials.

    Wide differences also exist in the scopes of strategic goals. For example,
    compare the strategic goal to “improve the overall health care of veterans”
    with the strategic goal to “establish an ongoing process of collecting
    employee information about the workforce and integrate priority concerns
    into the strategic management process.” The former goal is very broad,
    covering VHA’s statutory responsibility to provide health care to veterans;
    the latter appears to be an objective or strategy for achieving a larger
    strategic goal.

    In general, VA’s strategic goals are supported by statements of objectives,
    strategies to implement the objectives, and performance goals against
    which VA’s progress in meeting strategic goals can be measured. However,
    not all of the strategic goals are supported by objectives, strategies, and
    performance goals. The most significant gap is in the strategic goal to
    “improve benefit programs.” This goal covers all five of VBA’s business
    lines, but supporting details are provided for only one business line: loan
    guaranty. Thus, the plan lacks any discussion of objectives, strategies, or
    performance goals for several major VBA program areas, including
    compensation and pension—one of VA’s two largest program areas (the
    other being medical care). VBA has done strategic planning for these
    programs, as reflected in its fiscal year 1998 budget submission. However,
    VA is still working to incorporate VBA’s strategic planning into the
    Department’s strategic plan, including the development of results-oriented
    goals and objectives. Other gaps in VA’s draft strategic plan are in the
    strategic goals related to VHA’s medical education and emergency medical
    back-up functions.

    One of the necessary features of a strategic plan is a discussion of how an
    agency plans to ensure accountability for achieving strategic goals. VA’s
    draft plan contains such a discussion, in the form of a strategic goal to



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                             ensure that VA employees are accountable for their performance in
                             achieving VA’s goals. VA’s strategy is to establish a performance
                             management system to emphasize achievement by individual employees,
                             or groups of employees, of specific organizational goals; emphasize
                             accountability for outcomes; and promote innovation. Executive rewards
                             are to be made consistent with this new performance management system.

                             Some of the statements of strategies do not address how they will
                             contribute to achieving strategic goals, or how the strategies will be
                             implemented. For example, under the strategic goal to “improve the
                             overall health care of veterans,” one of the strategies is to increase the
                             proportion of VA residents trained in primary care to 50 percent. The
                             strategy does not explain how increasing the proportion of residents
                             trained in primary care will help improve veterans’ health care, nor does it
                             describe how VA will increase the proportion of medical residents trained
                             in primary care.

                             Most of the plan’s strategic goals are accompanied by measurable
                             performance goals. Many of VA’s performance goals meet the definition of
                             an annual performance goal because they have (1) a performance measure
                             used to track progress in achieving the performance goal (for example, the
                             average number of days required to process a claim for educational
                             assistance) and (2) a target level to be achieved during a given fiscal year
                             (for example, reducing the average number of days to process an
                             educational assistance claim to 23 days by fiscal year 2002).

                             The strategic goal to provide “prompt delivery of services and benefits” is
                             accompanied by 15 measurable performance goals covering promptness of
                             service for most of VA’s major program areas, such as to

                         •   provide veterans with decisions on vocational rehabilitation claims within
                             60 days, by fiscal year 2002;
                         •   set headstones and grave markers in national cemeteries within 60 days of
                             interment, by fiscal year 2002; and
                         •   schedule primary care appointments for VA patients within 7 days of their
                             contacting VA, by fiscal year 2003.


Reflection of External       Most of the strategic goals in VA’s draft plan are accompanied by
Factors                      discussions of external factors affecting achievement of the strategic goal.
                             External factors can be economic, demographic, social, technological, or
                             environmental. Assessments of such external factors can be valuable to



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agencies in setting goals and can assist the Congress and agencies in
determining the likelihood of achieving strategic goals. Further, such
assessments can explain why agencies did not meet their strategic goals.

In many cases, the draft plan’s discussion of external factors supporting
strategic goals is limited to whether the Congress will appropriate
sufficient funds, or make substantive legislative changes, to allow VA to
meet its goals. This is particularly true for VA’s discretionary programs,
such as health care and NCS. Also, discussions omit external factors that
are beyond the control of both VA and the Congress. For example, while
the plan includes some data on demographic trends in the veteran
population, it does not explain how these were used in setting strategic
goals, or how they will be used to measure progress in achieving these
goals. Also, larger trends, such as in the overall workforce and health care
system, are not tied to strategic goals.

One of the major strategic goals of NCS is to ensure that a burial option is
available to all eligible veterans. The plan defines a burial option as burial
in a VA national cemetery or a state veterans’ cemetery within 75 miles of
the veteran’s place of residence. NCS’ performance goals, in turn, are
geared toward constructing new VA national cemeteries; expanding
existing VA cemeteries; and assisting, through the State Cemetery Grants
Program, the construction of new state veterans’ cemeteries. The plan lists
specific VA cemeteries to be constructed or expanded, with specific target
fiscal years for each. The plan’s discussion of external factors consists of a
statement that resource constraints could delay achievement of the plan’s
performance goals. However, the plan does not tie the strategic and
performance goals to external factors, such as the mortality rate for
veterans and veterans’ relative preferences for VA, state, and private
cemeteries, which will affect the need for additional VA and state cemetery
capacity.

The first strategic goal specific to VHA—to improve the overall health care
of veterans—is defined, in part, in terms of increasing the number of users
of VA’s health care system. The plan’s discussion of external factors
indicates that its objective to increase VA health care system users is
dependent on enactment of legislation to allow VA to keep reimbursements
from third-party insurers, and to obtain Medicare reimbursements, for
some of the medical care VA provides.4 However, the plan does not address
the effects of major external factors on future use of VA’s health care

4
 In general, VA can collect the costs of providing care not related to veterans’ service-connected
disabilities from private insurers but cannot collect from Medicare. Third-party collections not needed
to cover VA’s collection costs are deposited in the Treasury.



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                      system, notably, changes in the overall health care market (such as the
                      trend toward managed care in the private sector) and veterans’
                      demographics (such as the decline in numbers and aging of the veteran
                      population). These factors could potentially limit the increase in health
                      care that VA is attempting to achieve.


Program Evaluations   The goals in VA’s draft strategic plan are not supported by formal program
                      evaluations. Program evaluations are objective, formal assessments of the
                      results, impact, or effects of a program or policy. Program evaluations can
                      be an important source of information in helping the Congress and others
                      ensure that agency goals and strategies are valid and reasonable, providing
                      baselines for agencies to use in developing performance measures and
                      developing performance goals, and identifying factors likely to affect
                      agency performance.

                      VA’splan acknowledges that VA has not performed such evaluations. To
                      prepare for evaluations, VA programs are conducting “strategic program
                      scans.” These are general reviews of VA’s current programs, including
                      identification of each program’s purpose, outcomes, existing performance
                      measures, and data needed to measure program outcomes and impact.

                      VA’sdraft strategic plan includes a plan for beginning a formal evaluation
                      process for its programs. VA’s strategy is to identify and prioritize, in
                      consultation with congressional oversight committees and stakeholders,
                      programs to be evaluated. VA plans to establish its prioritization in fiscal
                      year 1998 and begin conducting evaluations in fiscal year 1999. VA also
                      plans to begin performing more focused reevaluations of the first
                      programs evaluated, starting in fiscal year 2001.

                      OMB  guidance suggests that agencies include a schedule for program
                      evaluations in their strategic plans. These schedules should communicate
                      the general scope and methodology of evaluations, key issues to be
                      addressed, and when evaluations will occur. VA’s strategic plan does not
                      contain this information; its schedule is general, stating that two
                      evaluations will be initiated in fiscal year 1999, and four will be initiated
                      every fiscal year thereafter until all VA programs have been evaluated.




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                           VA’s draft plan addresses its major statutory responsibilities and is
Key Statutory              generally consistent with them. The mission statement includes a
Responsibilities Are       reference to VA’s general authority to administer laws providing benefits to
Addressed in VA’s          veterans and their beneficiaries. The basic mission statement is supported
                           by more specific references to the statutory authorities for VA’s major
Strategic Plan             programs. VA’s major statutory responsibilities are to provide

                       •   health care (38 U.S.C. 1701);
                       •   burial services (38 U.S.C. 2400);
                       •   vocational rehabilitation (38 U.S.C. 3100);
                       •   educational assistance (38 U.S.C. 3001, 3201, and 3451);
                       •   compensation for disabilities (38 U.S.C. 1101 and 1301);
                       •   pensions (38 U.S.C. 1501);
                       •   insurance (38 U.S.C. 1901); and
                       •   home loan guarantees (38 U.S.C. 3701).

                           The mission statement also includes an element that is not dictated by law.
                           In particular, VA describes part of its basic mission as serving as the
                           “principal advocate” for veterans and their families in “ensuring that they
                           receive medical care, benefits, social support, and lasting memorials
                           promoting the health, welfare, and dignity of all veterans.” This role is not
                           directly linked to anything in the laws governing VA and may not be an
                           accurate characterization of its role under the law. A senior VA official
                           stated that VA has a responsibility to determine whether its programs are
                           adequate to meet the needs of veterans and, from time to time, to
                           recommend changes in statutory authority to the Congress. While it is
                           reasonable for VA to review its programs and recommend changes, serving
                           as a principal advocate for veterans and their families is not an accurate
                           description of that role. VA does not necessarily speak for all veterans at all
                           times and—because of factors such as its statutory duties, the policies of
                           the executive branch, and the availability of funds—may on occasion take
                           positions that veterans may regard as not in their best interests.


                           VA has not clearly identified the areas where its programs overlap with
VA Has Not Fully           those of other federal agencies, nor has it coordinated its strategic
Identified and             planning efforts with those agencies. Instead, one of VA’s strategic goals is
Coordinated                to identify areas of overlap and coordinate with other federal agencies.
                           According to the draft plan, this will involve (1) identifying programmatic
Crosscutting               overlaps and linkages with other federal agencies, (2) enhancing and
Functions                  improving communication links with other federal agencies, and
                           (3) keeping state directors of veterans affairs and other state officials



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                          apprised of VA benefits and programs and of opportunities for
                          collaboration and coordination.

                          In some areas, VA provides benefits and services to veterans that are
                          similar to those provided by other federal agencies to nonveterans or
                          exclusively to veterans. Examples of areas where VA needs to coordinate
                          with other departments and agencies follow.


Employment Training       We have identified 163 separate employment training programs in the
                          federal government.5 VA administers 11 of these programs, including its
                          largest education program—the Montgomery G.I. Bill—and VA’s vocational
                          rehabilitation program.


Substance Abuse           In October 1996, we reported that VA was one of 16 federal agencies
                          providing substance abuse treatment and prevention programs.6 VA’s focus
                          is on treatment programs for veterans, provided through VHA’s medical
                          centers, outpatient clinics, and domiciliaries. Treatment services can
                          include diagnostic assessment; detoxification; and medical, psychiatric,
                          and psychological counseling. VA’s draft strategic plan does not indicate
                          whether VA plans to coordinate with other agencies providing substance
                          abuse treatment and prevention services, notably the Departments of
                          Health and Human Services, Education, and Housing and Urban
                          Development.


Telemedicine              VA is one of nine federal agencies developing telemedicine systems.
                          Telemedicine, in its broadest sense, refers to the use of communications
                          technology to help deliver medical care without regard to the distance
                          separating the participants. VA examples include the following:

                      •   The Baltimore VA Medical Center stores X rays and magnetic resonance
                          images electronically, rather than on film. This provides better images and
                          allows several users at distant sites to view them at the same time.
                      •   The Washington and San Francisco Medical Centers routinely review, via
                          telephone lines, the status of cardiac pacemakers worn by VA patients. This
                          reduces the number of unnecessary operations to replace pacemakers.

                          5
                           Multiple Employment Training Programs: Information Crosswalk on 163 Employment Training
                          Programs (GAO/HEHS-95-85FS, Feb. 14, 1995).
                          6
                           Drug and Alcohol Abuse: Billions Spent Annually for Treatment and Prevention Activities
                          (GAO/HEHS-97-12, Oct. 8, 1996).



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                      •   The Atlanta Medical Center uses its telemedicine system to provide
                          continuing medical education and training to residents, including classes
                          conducted by the Centers for Disease Control and Prevention.

                          VA participates in the Joint Working Group on Telemedicine (JWGT), which
                          was established in 1995 to coordinate federal agencies’ telemedicine
                          efforts. We reported in February 1997 that JWGT is having difficulty
                          developing an inventory of telemedicine programs and that agencies do
                          not have strategic plans to guide their telemedicine investments.7 VA’s draft
                          strategic plan addresses VA’s efforts to implement telemedicine systems
                          under the strategic goal of reducing medical care costs and improving VHA’s
                          revenue stream. VA’s main performance goals include developing a
                          telemedicine strategic plan in fiscal year 1998 and developing and
                          implementing standards for such projects. The plan does not, however,
                          mention JWGT or any efforts to coordinate telemedicine development with
                          other agencies—for example, with the DOD health care system.

                          Also, VA relies on other agencies for information and must coordinate with
                          these agencies. VA relies heavily on DOD to provide records of veterans’
                          military service. For example, VA needs military records

                      •   as part of the evidence required to determine whether veterans have
                          service-connected disabilities, which affects veterans’ eligibility and
                          entitlement for many VA programs, including disability compensation and
                          medical care, and
                      •   to determine whether veterans and Selected Reserve and National Guard
                          members meet the military service requirements for eligibility for
                          Montgomery G.I. Bill educational assistance.


                          Our work at VA has identified a number of major management challenges
VA’s Strategic Plan       that VA faces, some of which are not addressed in VA’s draft strategic plan.
Does Not Address
Some Major                We have reported that VA’s vocational rehabilitation program should be
                          more focused on whether it helps disabled veterans find jobs than on
Management                whether veterans complete the program.8 As we have noted above, VA’s
Challenges                draft strategic plan is silent on the goals and objectives of most of its
                          programs, including the vocational rehabilitation program. A

                          7
                           Telemedicine: Federal Strategy Is Needed to Guide Investments (GAO/NSIAD/HEHS-97-67, Feb. 14,
                          1997).
                          8
                           Vocational Rehabilitation: VA Continues to Place Few Disabled Veterans in Jobs (GAO/HEHS-96-155,
                          Sept. 3, 1996).



                          Page 13                                           GAO/HEHS-97-174R VA’s Draft Strategic Plan
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results-oriented goal for this program would focus on issues such as how
well it assisted disabled veterans in overcoming their employment
handicaps to obtain and maintain employment consistent with their
abilities, aptitudes, and interests.

Veterans face major delays in the resolution of their compensation and
pension claims by the time the appeals process has been completed. VA’s
draft plan includes a strategic goal to “do it right the first time.” This
strategic goal includes performance goals related to reducing delays in
claims processing, including (1) providing correct entitlement decisions on
claims 97 percent of the time by fiscal year 2002 and (2) reducing the
proportion of veterans’ appeals that are remanded by the Board of
Veterans Appeals back to VBA benefits offices from 43.7 percent to
20 percent by fiscal year 2002. Also, under the strategic goal of “prompt
delivery of services and benefits,” VA has set a performance goal to reduce
appeal processing time by 64 percent (from 1,000 days to 365 days) or
more by fiscal year 2003.

VBAmay not be able to make accurate and timely benefit payments to
veterans at the beginning of the year 2000 unless it is able to reprogram its
computers to recognize the next century. Most computer software in use
today is limited to a two-digit date field, such as “97” for 1997. Thus, this
software will not be able to distinguish between the years 1900 and 2000
because both will be designated “00.” We recently reported and testified
that VBA could do more to address its year-2000 problems and
recommended a number of actions VBA should take to address the serious
risks associated with its year-2000 activities.9 The discussion in VA’s draft
strategic plan on developing a departmentwide information technology
infrastructure addresses the year-2000 issue. The plan states that VA’s
objective is to ensure that its information systems will provide
uninterrupted service to support VA benefits delivery and medical care in
the year 2000. The plan also includes a performance goal that full
implementation and testing of compliant software (that is, software
capable of processing dates beyond 1999) will be completed by
December 1999.

VBAalso needs to strengthen its ability to prevent overpayments of
compensation and pension benefits. At the end of 1996, VA’s outstanding
overpayments exceeded $500 million. VA has the capability to prevent
millions of dollars in overpayments but has not done so because it has not

9
 Veterans Benefits Computer Systems: Risks of VBA’s Year-2000 Efforts (GAO/AIMD-97-79, May 30,
1997) and Veterans Benefits Computer Systems: Uninterrupted Delivery of Benefits Depends on
Timely Correction of Year-2000 Problems (GAO/T-AIMD-97-114, June 26, 1997).



Page 14                                          GAO/HEHS-97-174R VA’s Draft Strategic Plan
                               B-277393




                               focused on this area. VA’s draft strategic plan states that, through efforts
                               within VA and with other agencies, VA will work to ensure that data used in
                               making decisions are correct and up to date. Among the decisions that
                               should be improved with better data are VBA’s determinations of
                               compensation and pension payment amounts. However, the plan does not
                               establish a strategy or performance goal for reducing overpayments.

                               VHA  faces challenges in implementing the Veterans’ Health Care Eligibility
                               Reform Act of 1996 (P.L. 104-262). This law expanded eligibility for VA
                               health care services and required VHA to establish an enrollment system for
                               veterans using VA’s health care system. VHA’s challenge is to develop an
                               enrollment system that accurately reflects the law’s priorities. The
                               Eligibility Reform Act also expanded VHA’s authority to procure health care
                               services from other providers and sell its services to other providers. VHA’s
                               challenge is to determine when it should provide services in its own
                               facilities and when it should contract for services. VA’s draft strategic plan
                               sets out a performance goal to increase the number of enrolled veterans
                               that is based on VA’s objective to preserve its existing health care system
                               for all veterans by increasing the number of veterans using the system. The
                               plan does not address how the enrollment system will be developed to
                               support its strategic goal of improving veterans’ health care, nor does it
                               address contracting out care as an option for meeting the health care
                               needs of veterans.


                               In addition to the Results Act, the Congress in recent years has enacted
VA’s Capacity to               other legislation designed to help federal agencies meet their needs for
Provide Reliable               accurate and reliable information to support executive branch and
Information on                 congressional decision-making.

Achievement of             •   The Chief Financial Officers’ (CFO) Act of 1990, as expanded by the
Strategic Goals Is Still       Government Management Reform Act of 1994 and the Federal Financial
                               Management Improvement Act of 1996, was designed to improve the
Limited                        timeliness, reliability, usefulness, and consistency of agencies’ financial
                               information and requires, among other things, cost accounting.
                           •   The Paperwork Reduction Act of 1995 and the Clinger-Cohen Act of 1996
                               are intended to improve agencies’ ability to use information technology to
                               support their mission and improve performance.

                               VA has begun to implement these acts and has made progress in financial
                               management and information technology. But VA still has financial
                               management and information technology issues that it needs to address



                               Page 15                                GAO/HEHS-97-174R VA’s Draft Strategic Plan
    B-277393




    before it can be assured that it has the performance and cost information
    needed to measure its progress in achieving results-oriented goals.

    VA has established a sound financial management structure, a goal of the
    CFO  Act of 1990. The Assistant Secretary for Management serves as VA’s
    Chief Financial Officer, and CFO positions have been established in VHA,
    VBA, and NCS. Also, VHA plans to establish a CFO position in each of its 22

    veterans integrated service networks. Further, VA participated in a pilot for
    annual accountability reports beginning with fiscal year 1995.
    Accountability reports are designed to consolidate reporting of
    performance and financial data under various laws and provide a
    comprehensive picture of an agency’s program performance and financial
    condition.

    A good financial management system is important to help VA ensure that it
    has reliable and timely information on the costs of its programs. For
    example, VHA needs accurate and timely information on its costs for
    providing medical care in order to determine whether providing health
    care in a VA facility is more or less costly than contracting it out. The
    installation of its Financial Management System gives VA, for the first time,
    an integrated financial management system. This system has led to
    improvements in reporting of receivables and property management,
    which resulted in the first issuance by VA’s Inspector General of an
    unqualified opinion on VA’s Statement of Financial Position for the fiscal
    year ending September 30, 1996.10

    However, the Inspector General identified six areas where VA still needs to
    correct internal control weaknesses:

•   continuing efforts are needed to refine property, plant, and equipment
    records;
•   continuing action is needed to improve estimates used in valuing accounts
    receivable;
•   aggressive efforts are needed to cancel unneeded obligations;
•   continuing progress is needed in correcting problems of the antiquated VA
    Life Insurance system;
•   information system security controls need improvement; and
•   the Housing Credit Assistance program financial accounting process needs
    strengthening.



    10
      VA has been preparing audited annual financial statements since fiscal year 1986.



    Page 16                                              GAO/HEHS-97-174R VA’s Draft Strategic Plan
B-277393




In addition, VA’s fiscal year 1996 Accountability Report mentioned 12
material weaknesses, reported under the Federal Managers’ Financial
Integrity Act (FMFIA), dealing with such issues as compliance with credit
reform requirements, loan sale program management, controls over
prescription drugs, and antiquated computer hardware and software. The
strategic plan does not discuss any planned corrective actions with regard
to the six reportable conditions or the 12 FMFIA material weaknesses.

VA’s draft strategic plan includes a strategic goal to establish an effective
departmentwide cost accounting system. According to the plan, this
system would include two cost accounting systems already in
development: VHA’s Decision Support System (DSS) and VBA’s Activity
Based Costing (ABC) system.

Using DSS to combine clinical and financial information, VA can compare
the costs of surgery performed by different physicians at different medical
facilities; evaluate patient outcomes; and analyze ways to increase service
quality, reduce costs, and appropriately price excess services for sale to
the private sector or other federal agencies. We previously reported,
however, that some of the clinical and cost data DSS requires are
incomplete, inaccurate, or inconsistent.11 VHA plans to achieve universal
usage of DSS for its management and budgeting by fiscal year 2000.

In general, the ABC model involves (1) developing cost information,
(2) identifying specific program activities to be costed, and (3) allocating
costs to the specific activities. The ABC model has been pilot tested at VBA’s
St. Louis and Philadelphia Regional Offices to capture these offices’ costs
that were attributable to VBA’s educational assistance and insurance
business lines, respectively. Three other pilots were completed in
May 1997—at VBA’s St. Paul Debt Management Center; its Benefits Delivery
Center and Finance Office in Hines, Illinois; and VBA’s Central Office
operations.

The Paperwork Reduction Act of 1995 provides basic guidance to federal
agencies on acquiring and managing information resources. Based on the
concept that information resources should support agency missions and
performance, the act requires that information resources management
plans (1) delineate the resources that are needed and (2) explain how the
agency plans to minimize the paperwork burden on the public and the cost



11
 VA Health Care Delivery: Top Management Leadership Critical to Success of Decision Support
System (GAO/AIMD-95-182, Sept. 29, 1995).



Page 17                                           GAO/HEHS-97-174R VA’s Draft Strategic Plan
B-277393




to the government of collecting information. The Clinger-Cohen Act of
1996 reinforces this guidance and adds requirements designed to promote
the use of information technology to better support agencies’ missions and
performance. This act is primarily concerned with ensuring that agencies
have systems to prioritize information technology investments.

VBA’s information technology efforts have yielded some improvements in
its hardware and software capabilities. Our work on VA’s information
technology development, focusing on VBA, identified areas where
improvements are needed before VBA can provide accurate performance
data to support its strategic planning and program management.

One such problem is the need for VBA to develop credible strategic
business and information resources management plans. VBA has
undertaken several initiatives to improve claims processing efficiency and
reduce its large backlog of unprocessed claims. But it has done so without
an overall business strategy clearly setting forth how it would achieve its
goals. Instead, VBA has used stopgap measures to deal with its claims
processing problems. While these measures have improved processing
times and reduced the claims backlog, VA needs to find other solutions. VBA
plans to use business process reengineering (BPR) methods to develop new
strategic goals and resource requirements for each of its business lines.
Three of these business lines, including compensation and pension, have
begun BPR projects, but only the compensation and pension BPR project has
progressed sufficiently to produce formal goals and detailed plans.

Another challenge for VBA is to do a better job of managing its information
technology development projects as investments. Our reviews of VBA’s
information technology initiatives show that VBA lacks the critical cost,
benefit, and risk information it needs to determine whether it has made
worthwhile investments—a first step in determining what it needs to meet
its information resource management priorities.12 For example, VBA’s
January 1997 information resource management support plan identified
the year-2000 problem discussed earlier as VBA’s top priority, but neither
these plans nor VBA’s year-2000 plan adequately discusses the resources
required to deal with the problem. VBA needs to develop the tools needed
to follow a three-phased management approach for selecting, controlling,
and evaluating information technology-related projects. It also needs to
develop a process to rank and prioritize information technology
investments as a consolidated portfolio.


12
  VBA Information Technology Investment (GAO/AIMD-97-10R, Oct. 18, 1996).



Page 18                                          GAO/HEHS-97-174R VA’s Draft Strategic Plan
    B-277393




    A third challenge for VBA is to improve its software development
    capability. Once agencies have identified their top priority information
    technology projects, they must be able to determine whether the projects
    should be developed in house or contracted out. Our review of VBA’s
    software development capabilities found that, on a scale of software
    development maturity, VBA was in the “least mature” category.13 Thus, VBA
    cannot reliably develop and maintain high-quality software within existing
    cost and schedule constraints. This, in turn, places VBA’s information
    technology modernization efforts at significant risk. We made several
    recommendations to the Secretary of Veterans Affairs. These
    recommendations and VBA’s responses follow:

•   Obtain expert advice on developing high-quality software. VBA is working
    with the Air Force, under an interagency agreement, to implement this
    recommendation.
•   Develop a plan to achieve a higher level of software development maturity.
    VBA has developed such a plan and has taken other actions to improve

    software development maturity.
•   Require that future software development contracts specify that services
    be obtained from contractors with at least a level 2 (on a scale of 1 to 5,
    with 5 being the highest level) rating. According to VBA, it has awarded a
    general software contract that requires contractors to have knowledge of
    the software capability evaluation methodology and use it where
    applicable.

    VA’s   draft strategic plan identifies several actions it will take to address
    VA-wide    information technology planning, including the following:

•   Development of a VA-wide Capital Asset Plan and establishment of a VA
    Capital Investment Board to generate policies for capital investments,
    including investments in information technology, and review proposed
    capital investments.
•   Development of a VA-wide information technology strategic plan and a
    portfolio of information technology capital investments.

    The draft plan’s discussion of information technology does not address
    VA’s need to address its information security weaknesses—an issue we
    have identified as high-risk throughout the federal government.14 Also, the
    Paperwork Reduction Act of 1995 and the Clinger-Cohen Act of 1996 call

    13
     Software Capability Evaluation: VA’s Software Development Process Is Immature (GAO/AIMD-96-90,
    June 19, 1996).
    14
      Information Management and Technology (GAO/HR-97-9, Feb. 1997).



    Page 19                                         GAO/HEHS-97-174R VA’s Draft Strategic Plan
                  B-277393




                  for agencies to implement a framework of modern technology
                  management based on the “best practices” followed by leading private-
                  and public-sector organizations that have successfully used technology to
                  dramatically improve performance and meet strategic goals. VA’s draft plan
                  does not include these “best practices.”


                  We met with VA officials on July 9, 1997, to discuss their comments on a
Agency Comments   draft of this letter. At that time, the Assistant Secretary for Policy and
                  Planning provided a letter stating VA’s general comments (see enc. II).

                  VA officials agreed that VA’s strategic plan needs to focus more on results
                  but noted that congressional oversight of VA has focused on program
                  delivery (such as expanding benefits to more veterans and increasing
                  benefit amounts) and not, for the most part, on program outcomes or
                  results.

                  In addition, VA officials said that VA will continue to place “appropriate
                  emphasis” on customer service, workforce development, and management
                  issues. They noted that VA is in the business of providing services and
                  benefits; thus, they believe that VA’s processes are important to serving its
                  customers. Also, these officials believe that the Results Act does not
                  preclude focusing on VA’s processes. We agree that process-oriented goals
                  and measures are important and can support results-oriented goals and
                  measures.

                  VA officials also believe that our letter should reflect the “extensive and
                  constructive” consultations that have already taken place on VA’s draft
                  strategic plan. As we have noted, we participated in the consultations
                  between VA officials and staffs of the House and Senate Committees on
                  Veterans’ Affairs and discussed many of the observations in this letter at
                  these meetings.


                  As arranged with your offices, unless you publicly announce its contents
                  earlier, we plan no further distribution of this correspondence until 30
                  days after its issue date. At that time, we will send copies to the Minority
                  Leader of the House of Representatives; the Ranking Minority Members of
                  the House Committees on Budget, Government Reform and Oversight, and
                  Appropriations; the Chairmen and Ranking Minority Members of the
                  Senate Committees on Budget, Government Reform and Oversight, and
                  Appropriations; the Chairmen and Ranking Minority Members of the



                  Page 20                                GAO/HEHS-97-174R VA’s Draft Strategic Plan
B-277393




House and Senate Committees on Veterans’ Affairs; the Secretary of
Veterans Affairs; and the Director, Office of Management and Budget. We
will also send copies to others on request.

Please contact me on (202) 512-7202 if you have any questions. Greg
Whitney also contributed to this correspondence.




Cynthia M. Fagnoni
Acting Associate Director
Veterans’ Affairs and
  Military Health Care Issues

Enclosures - 2




Page 21                              GAO/HEHS-97-174R VA’s Draft Strategic Plan
Enclosure I

Corporate and Strategic Goals in the
Department of Veterans Affairs’ Draft
Strategic Plan

Corporate goal                                    Strategic goals
1. Honor, compensate, and care for                1.1: VA programs are effective in meeting the needs of veterans and their beneficiaries
veterans in recognition of their sacrifices for   and contribute to improving the quality of their lives.
America.
                                                  1.2: Improve the overall health care of veterans.

                                                  1.3: 100 percent of the VA medical research projects are demonstrably related to the
                                                  health care of veterans or to other departmental missions.

                                                  1.4: VA will collaborate with the Department of Health and Human Services and affiliated
                                                  medical schools to regulate the number of physicians trained to ensure there are a
                                                  sufficient number in each subspecialty and avoid creating a surplus in particular
                                                  subspecialties.

                                                  1.5: Provide back-up medical care for the Department of Defense in times of emergency.

                                                  1.6: Improve benefit programs.

                                                  1.7: Ensure that a burial option is available to all eligible veterans.

                                                  1.8: Improve minority veterans’ awareness and utilization of VA programs, services, and
                                                  benefits.

                                                  1.9: Improve women veterans’ utilization of VA programs, services, and benefits.

                                                  1.10: Improve the continuity and coordination of delivery of veteran services and benefits
                                                  from multiple federal agencies.

2. Provide “One-VA” world class customer          2.1: Ease of access: A veteran, beneficiary, or representative will be able and
service.                                          encouraged to access VA in the fastest possible time; by the easiest possible means;
                                                  and, where possible, receive one-stop assistance.

                                                  2.2: Customer satisfaction: Service will meet or exceed customer expectations.

                                                  2.3: Courtesy: Service will be delivered with respect, dignity, and compassion.

                                                  2.4: Do it right the first time: Accurate and complete benefits and services will be
                                                  delivered with zero defects. If it is not done right the first time, there will be candid
                                                  acknowledgment of mistakes and priority assignment to correction of mistakes.

                                                  2.5: Prompt delivery of services and benefits: Timeliness of service delivery will meet or
                                                  exceed customer expectations and will be analyzed against the best-in-business.

                                                  2.6: Effective outreach: Veterans, dependents, and beneficiaries will know and
                                                  understand the available benefits and services.
                                                                                                                                       (continued)




                                                  Page 22                                          GAO/HEHS-97-174R VA’s Draft Strategic Plan
                                            Enclosure I
                                            Corporate and Strategic Goals in the
                                            Department of Veterans Affairs’ Draft
                                            Strategic Plan




Corporate goal                              Strategic goals
3. Create and maintain a high-performing    3.1: Establish an ongoing process of collecting employee information about the
workforce to serve veterans.                workplace and integrate priority concerns into the strategic management process.

                                            3.2: Support VA’s ability to create and maintain a high- performing workforce to serve
                                            veterans today and tomorrow.

                                            3.3: Promote VA’s mission to train future health care providers in service to veterans and
                                            all Americans.

                                            3.4: Ensure that VA’s future workforce is well prepared to carry out its responsibilities.

                                            3.5: Ensure that VA employees are accountable for their performance.

                                            3.6: Promote efforts to ensure that VA’s workforce reflects the diversity of the customers
                                            we serve: the nation’s veterans and their dependents.

                                            3.7: VA’s work environment is recognized by employees as conducive to productivity,
                                            achievement, and fostering respect among all.

                                            3.8: Advance innovative work and employment practices.
4. Provide the taxpayer maximum return on   4.1: Establish an effective departmental cost accounting system.
investment.
                                            4.2: Reduce costs and improve the revenue stream for the health care system.

                                            4.3: Reduce benefit delivery costs and improve productivity.

                                            4.4: Manage the national cemeteries in the most efficient and effective manner.

                                            4.5: Develop and implement a departmental Capital Asset Plan that addresses the
                                            construction and information technology needs of medical facilities, cemeteries, and
                                            veterans’ benefits offices.

                                            4.6: Implement an overarching departmental information technology infrastructure to
                                            integrate information resources management within the Department.

                                            4.7: Enhance the departmental Procurement System.

                                            4.8: Ensure that corporate data and information are timely maintained; accurate; used
                                            consistently throughout VA; and readily available within the Department, to external
                                            stakeholders, and to the general public, as appropriate.

                                            4.9: Provide fast, efficient, and cost-competitive delivery of human resource and payroll
                                            services.

                                            4.10: Increase the use of alternate dispute resolution to conserve time, money, and
                                            resources.

                                            Note: Not all of the strategic goals are numbered in VA’s draft plan; we added numbering for ease
                                            of identification.

                                            Source: VA draft strategic plan dated June 9, 1997.




                                            Page 23                                               GAO/HEHS-97-174R VA’s Draft Strategic Plan
Enclosure II

Comments From the Department of
Veterans Affairs




               Page 24     GAO/HEHS-97-174R VA’s Draft Strategic Plan
Enclosure II
Comments From the Department of
Veterans Affairs




Page 25                           GAO/HEHS-97-174R VA’s Draft Strategic Plan
Page 26   GAO/HEHS-97-174R VA’s Draft Strategic Plan
Page 27   GAO/HEHS-97-174R VA’s Draft Strategic Plan
Related GAO Products


              Veterans Benefits Administration: Focusing on Results in Vocational
              Rehabilitation and Education Programs (GAO/T-HEHS-97-148, June 5, 1997).

              The Government Performance and Results Act: 1997 Governmentwide
              Implementation Will Be Uneven (GAO/GGD-97-109, June 2, 1997).

              Veterans Benefits Computer Systems: Risks of VBA’s Year-2000 Efforts
              (GAO/AIMD-97-79, May 30, 1997).

              Veterans’ Affairs: Veterans Benefits Administration’s Progress and
              Challenges in Implementing GPRA (GAO/T-HEHS-97-131, May 14, 1997).

              Veterans’ Employment and Training Service: Focusing on Program Results
              to Improve Agency Performance (GAO/T-HEHS-97-129, May 7, 1997).

              Agencies’ Strategic Plans Under GPRA: Key Questions to Facilitate
              Congressional Review (GAO/GGD-10.1.16, Version 1, May 1997).

              Department of Veterans Affairs: Programmatic and Management
              Challenges Facing the Department (GAO/T-HEHS-97-97, Mar. 18, 1997).

              Managing for Results: Using GPRA to Assist Congressional and Executive
              Branch Decisionmaking (GAO/T-GGD-97-43, Feb. 12, 1997).

              VADisability Compensation: Disability Ratings May Not Reflect Veterans’
              Economic Losses (GAO/HEHS-97-9, Jan. 7, 1997).

              VAHealth Care: Improving Veterans’ Access Poses Financial and
              Mission-Related Challenges (GAO/HEHS-97-7, Oct. 25, 1996).

              Vocational Rehabilitation: VA Continues to Place Few Disabled Veterans in
              Jobs (GAO/HEHS-96-155, Sept. 3, 1996).

              VAHealth Care: Opportunities for Service Delivery Efficiencies Within
              Existing Resources (GAO/HEHS-96-121, July 25, 1996).




(105754)      Page 28                               GAO/HEHS-97-174R VA’s Draft Strategic Plan
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