oversight

VA Health Care: Improvements Needed in Nursing Home Planning

Published by the Government Accountability Office on 1990-06-12.

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

GAO ’            Report to the Chairmm, Conunittee on -
                 Veterans’ Affairs, US. Senate



June   1990
                 VA HEALTH CARE
                 Improvements Needed
                 in Nursing Home
                 Planning




                         --
GAO,‘HRD-90-98
United States
General Accounting    Office
Washington,   D.C. 20548

Official   Business
Penalty    for Private   Use $300
Human Resources    Division

B-239723

June 12,199O

The Honorable Alan Cranston
Chairman, Committee on Veterans’ Affairs
United States Senate

Dear Mr. Chairman:

In response to your request, this report addresses the Department of Veterans Affairs’
nursing home planning process.

We found that the Department may not need to add as many nursing home beds as planned.
The Department also may be able to reduce the number of new nursing home beds that it
needs to construct.

We are sending copies of this report to cognizant congressional committees, the Secretary of
Veterans Affairs, the Director of the Office of Management and Budget, and other interested
parties. This report was prepared under the direction of David P. Baine, Director, Federal
Health Care Delivery Issues, who may be reached on (202) 275-6207 if you have any
questions concerning this report. Other major contributors to this report are listed in
appendix IV.

Sincerely yours,




Lawrence H. Thompson
Assistant Comptroller General
Executive Swnmary


                   The Department of Veterans Affairs (VA) faces a major challenge: plan-
Purpose            ning how to meet the long-term care needs of a rapidly aging veteran
                   population. The number of veterans 65 years old and over is projected
                   to grow to 9 million by 2000-a 50percent increase over the 1988 level.
                   The Chairman of the Senate Committee on Veterans’ Affairs asked GAO
                   to assess how well VA is planning to meet this challenge.


                      is authorized to provide nursing home care to veterans to the extent
Background         VA
                   that space and resources are available. In fiscal year 1988, VA spent
                   about $951 million to provide about 33,000 nursing home beds for veter-
                   ans’ use. About 12,000 beds were available in 119 nursing homes that VA
                   operates. The other 21,000 beds were available through community and
                   state veterans’ nursing homes.

                   VA'S approach to nursing home planning is decentralized. Since 1984,
                   each of VA'S 27 medical districts has prepared plans biennially using
                   2000 as the target year. VA instructs the districts (1) to establish a goal
                   for the number of beds to supply, (2) to maximize the use of community
                   and state nursing homes to meet the goal, and (3) if sufficient beds are
                   not expected to be available in community and state homes, to plan to
                   convert the maximum number of VA hospital beds to nursing home beds
                   before proposing new construction.

                   GAO assessed the nursing home planning process used by four medical
                   districts in 1988, the most recently completed VA-wide planning cycle.
                   During visits to these districts, which cover 13 states, GAO examined
                   how they established bed-supply goals and surveyed the existing bed
                   supply.


                   VA'S bed-supply goal is based on the assumption that the proportion of
Results in Brief   veterans in all nursing homes that VA will support in 2000 approximates
                   its historical share. VA uses the most current data available on the num-
                   ber of veterans expected to use nursing homes in 2000.

                   VA'S current planning goal is to provide 47,000 nursing home beds by
                   fiscal year 2000, an increase of 14,009 beds over the fiscal year 1988
                   operating level. VA plans to provide about half of the 14,000 beds in com-
                   munity and state veterans’ homes. It plans to obtain the remaining beds
                   by constructing about 5,000 new beds at an approximate cost of
                   $405 million and converting about 2,000 VA hospital beds to nursing



                   P8ge 2                  GAO/ElUM&S8   IN Nursing   Home Phming   Needs Improvements
                             Executive   Summary




                             home use at an approximate cost of $105 million. To date, VA has
                             obtained funding for about 2,000 of the 7,000 beds.

                             VA may not need to add all of the planned 7,000 new nursing home beds.
                             The districts GAO visited did not accurately determine the number of
                             available beds in community and state homes. VA'S planning process
                             lacks the necessary guidance to ensure that VA accurately identifies
                             available beds. Without an accurate estimate, VA may add nursing homes
                             where they are not needed or fail to add them where they are needed.

                             VA also may be able to reduce the number of new nursing home beds that
                             it needs to construct. The potential for converting VA hospital beds to
                             nursing home use is increasing because of a decrease in the number of VA
                             hospital beds used. VA can convert hospital beds to nursing home care in
                             less time and at less than one-half the cost of new construction. In April
                              1990, the Secretary of Veterans Affairs established the Commission on
                             the Future Structure of Veterans’ Health Care. VA expects the Commis-
                             sion to identify additional VA hospital beds that could be candidates for
                             conversion.


Principal Findings

VA Considers Key Factors     By supplying 47,000 beds in 2000, VA will provide about 16 percent of
in Setting Bed-Supply Goal   nursing home beds projected to be used by veterans. VA'S goal is slightly
                             less than the 19 percent it has provided, on average, since 1985. In set-
                             ting this goal, VA considered several key factors, primarily nursing home
                             use rates for males in seven age groups. VA used data from the most
                             current source available, the 1986 National Nursing Home Survey con-
                             ducted by the National Center for Health Statistics. (See ch. 2.)


Estimates of Available       Two districts GAO visited excluded a total of more than 1,100 community
Community and State          nursing home beds by assuming limits on the percentage of beds VA could
                             use in a single nursing home. Planners made this assumption in order to
Veterans’ Nursing Home       minimize problems should a home suddenly become unavailable for use;
Beds Are Flawed              however, such problems are rare. (See p. 21.) The limitations are not
                             needed. Their use can result in VA'S planning to operate new VA nursing
                             home beds in areas where they are not needed.




                             Page 3                  GAO/HRDB@Bg   VA Nudng   Home Phmlng   Needa Improvements
                              Execotlve   Summary




                              Planners in three districts GAO visited did not collect sufficient informa-
                              tion to determine the availability of beds in community nursing homes.
                              These districts eliminated more than 2,000 vacant community nursing
                              home beds from their planning considerations in addition to those elimi-
                              nated through application of occupancy ceilings. VA guidance does not
                              specify the procedures district planners should follow to determine the
                              availability of community nursing home beds. (See p. 22.)

                              Planners in the four districts GAO visited did not follow VA guidance in
                              estimating the availability of state veterans’ nursing home beds. In these
                              four districts, planners did not count a total of 436 existing state home
                              beds. In contrast, in one district 100 beds identified as available had not
                              yet been approved for construction and should not have been counted.
                              (See pp. 22-23.)


Potential Is Increasing for   VA now expects a greater decrease in the number of hospital beds to be
Converting VA Hospital        used by 2000 and beyond than anticipated during the development of
                              the 1988 nursing home plan. VA expects that this will increase the num-
Beds to Nursing Home Use      ber of hospital beds available for conversion to nursing home use. Con-
                              versions take much less time to complete than new construction and are
                              significantly less costly. VA estimates that the average cost of converting
                              a bed is $37,900, while the average cost of constructing a new VA nursing
                              home bed is $81,400. (See p. 23.)

                              VA expects that by October 1991 its Commission on the Future Structure
                              of Veterans’ Health Care will make recommendations to the Secretary of
                              Veterans Affairs concerning mission changes at individual medical cen-
                              ters. As a result of these changes, VA expects that additional VA hospital
                              beds will be available for conversion to nursing home care. GAO believes
                              the Commission could play a significant role in assessing the need for
                              new construction of VA nursing homes beginning in fiscal year 1993. (See
                              p. 24.)


                              GAO makes several recommendations to help ensure that VA adds nursing
Recommendations               home beds where they are needed and does not add them where they
                              are not needed. Specifically, the Secretary of Veterans Affairs should
                              require the Chief Medical Director to review planned nursing home con-
                              struction projects to be sure that planners accurately counted available
                              beds in community and state veterans’ nursing homes and identified
                              opportunities for converting VA hospital beds to nursing home use. GAO
                              recommends that this review and subsequent planning efforts use


                              P8ge 4                  GAO/HRBWB8   VA Nnming   Home Plmning   Needa Improvements
                  Executive   Summary




                  revised planning guidelines that remove limitations on the percentage of
                  beds VA can use in a single community nursing home. GAO also recom-
                  mends that the Secretary require the Chief Medical Director to provide
                  clear guidance to planners regarding specific steps to take to assess the
                  availability of community nursing home beds and that planners follow
                  guidelines in developing their counts of available state veterans’ nursing
                  home beds. (See p. 25.)


                     concurred with GAO'S recommendations. VA stated that it is taking
Agency Comments   VA
                  steps to modify its nursing home planning to incorporate GAO'S recom-
                  mendations. (See app. III.)




                  Page 6                 GAO/HIUMO-@I3   VA Nudng   Home Plannhg   Needa Improvementa
Contents


Executive Summary
Chapter 1                                                                                                 8
Introduction             Veteran Population Is Aging Rapidly
                         VA’s Nursing Home Care System
                                                                                                          8
                                                                                                          9
                         VA’s Nursing Home Planning Process                                              12
                         Objectives, Scope, and Methodology                                              12

Chapter 2                                                                                                16
Establishing a Nursing   Estimating Veterans’ Nursing Home Use
                         Estimating Veterans’ Use of VA-Supported Nursing
                                                                                                         16
                                                                                                         19
Home Bed-Supply Goal          Homes
                         Conclusions                                                                     19

Chapter 3                                                                                                21
VA’s Plan for Adding     MEDIPP Procedures Inadequate for Identifying Available
                             Community and State Veterans’ Nursing Home Reds
                                                                                                         21
Nursing Home Beds Is     Potential Is Increasing for Converting Hospital Reds to                         23
Flawed                       Nursing Home Use
                         Conclusions                                                                     24
                         Recommendations                                                                 25
                         Agency Comments                                                                 25

Appendixes               Appendix I: Site Selection                                                      26
                         Appendix II: State and Local Agencies GAO Contacted                             28
                         Appendix III: Comments Prom the Department of                                   30
                             Veterans Affairs
                         Appendix IV: Major Contributors to This Report                                  33

Bibliography                                                                                             34

Related GAO Products                                                                                     36

Tables                   Table 2.1: Nursing Home Use Rates for Veterans (1986)                           17
                         Table 2.2: Change in Veterans’ Nursing Home Use (1988-                          19
                             2000)
                         Table I. 1: Profile of Medical Districts Visited                                27




                         Page 6                GAO/NItD96-66   X4 Nndng   Home Phming   Needs Improvements
          Contents




Figures   Figure 1.1: Veteran Population (Mar. 1988)                                             8
          Figure 1.2: VA Projections of the Veteran Population                                   9
          Figure 1.3: Percentage of Beds Supported in VA Nursing                                10
               Home Programs (Fiscal Year 1988)
          Figure 1.4: Size of VA Nursing Homes (Fiscal Year 1988)                               11
          Figure 1.5: VA Districts GAO Visited                                                  13
          Figure 2.1: Estimated Daily Use of Nursing Homes by                                   16
               Veterans
          Figure 2.2: Veteran Population (1988 and 2000)                                    18
          Figure 3.1: VA’s Plans for Constructing and Converting                            23
               Nursing Home Beds (June 1989)




          Abbreviations

          GAO        General Accounting Office
          MEDIPP     Medical District Initiated Program Planning
          OMB        Office of Management and Budget           .
          VA         Department of Veterans Affairs


          Page 7                  GAO/liRDW66   VA Nursing   Home Phming   Needa Improvementa
Chapter 1

Introduction


                                                 Veterans’ use of nursing homes is expected to increase through 2010 and
                                                 then decline through 2030. This poses a major challenge to the Depart-
                                                 ment of Veterans Affairs (VA): determining whether the number of VA
                                                 nursing home beds should be increased. The Chairman of the Senate
                                                 Committee on Veterans’ Affairs asked us to assess VA’S nursing home
                                                 planning.


                                                    estimated that the veteran population numbered about 27 million in
Veteran Population Is                            VA
                                                 1988. About 6.2 million, or just under one-fourth, were elderly (65 years
Aging Rapidly                                    or older). (See fig. 1.1.)


Figure 1 .l : Veteran Population   (Mar. 1988)
                                                 7    V~al8lmfnmn2am




                                                 Source: VA, Veteran Population Projections by Age and Period of Service, May 1989.


                                                 VA estimates that the elderly veteran population will grow significantly,
                                                 representing an increasingly larger share of the overall veteran popula-
                                                 tion. By 2000, about 9 million veterans will be 65 years or older, a
                                                 SO-percent increase; about 1 of 3 veterans will be in this age group. By
                                                 2030, the approximately 5.8 million elderly veterans will account for
                                                 about 40 percent of the veteran population. (See fig. 1.2.)




                                                 P8ge 8                          GAo/BBDgoa#I      t4 Nndng    Home Pluming     Needs Improvements
                                              chapter      1
                                              I.ntroducdon




Figure 1.2: VA Projections   of the Veteran
Population                                    30   Vdrumfn     mlfflam




                                                   -All-


                                              Source: VA, Veteran Population Projections by Age and Period of Serwce, May 1989


                                              The aging of the veteran population should result in a significant
                                              increase in veterans’ demand for nursing home care because individuals
                                              over 65 have historically been the primary users.


                                                 is authorized to provide nursing home care to veterans to the extent
VA’s Nursing Home                             VA
                                              that space and resources are available. VA provided or financially sup-
Care System                                   ported nursing home care for over 83,000 veterans in fiscal year 1988,
                                              at a cost of about $95 1 million. This care was provided in (1) VA nursing
                                              homes, (2) contract community nursing homes, and (3) state veterans’
                                              nursing homes. (See fig. 1.3.)




                                              Page 9                         GAO/TiRMW9        VA Nursing Home Plum&        Needs Improvementi
Supported in VA Nursing Home Programs          I                                           State veterans’   nursing    homes
(Fiscal Year 1988)




                                                                                           VA nursing   homes




                                                       I                                   Community     nursing   homes
                                        Source: VA, Summary of Medical Programs, September 1988.

                                        These homes provided about 33,000 beds daily for veterans. VA’S Veter-
                                        ans Health Services and Research Administration, which is led by the
                                        Chief Medical Director, is responsible for administering the nursing
                                        home care system.


VA Nursing Homes                        The Congress initially authorized VA to provide nursing home care in
                                        1964. By fiscal year 1988, VA had over 12,000 nursing home beds,
                                        located in 119 homes nationwide; a total of 27,220 veterans received
                                        care at a cost of about $636 million. These homes varied in size from 10
                                        to 300 beds; one-half had fewer than 100 beds. (See fig. 1.4.)




                                        Page 10                       GA0ililttb90.08   VA Nursing   Home F+hmlng      Needs Improvements
                                       chapter 1
                                       Introduction




Figure 1.4: Size of VA Nursing Homes
(Fiscal Year 1988)
                                       SO      Number of VA nursing homa
                                                                I
                                       45

                                       40

                                       3s



                                       2s

                                       20

                                       15



                                        5
                                       30 rl
                                        0
                                       10                L            2
                                               h*r           601099       loot0     2oobadm
                                               thm60         m            199mormofu
                                               m
                                               NUlObUOfbOdSpUhOlllB




                                       The Veterans’ Health-Care Amendments of 1986 (P.L. 99-272) estab-
                                       lished eligibility criteria that VA must use if sufficient resources are not
                                       available to serve all veterans needing care. Veterans with service-
                                       connected disabilities have the highest priority; those with special cir-
                                       cumstances, such as former prisoners of war, have the next highest.
                                       Other veterans’ priorities are based on income levels; those who have
                                       income above a prescribed level must make a copayment in order to
                                       receive care. There is no limitation on a veteran’s length of stay in a VA
                                       nursing home.


Community Nursing                      In fiscal year 1988, VA contracted with about 3,000 community nursing
Homes                                  homes for an average of 12,400 beds per day. Over 42,000 veterans
                                       received care in these homes at a cost to VA of about $360 million. VA’S
                                       policies and procedures for placing veterans in these homes are similar
                                       to those used for its homes. Veterans’ stays in community nursing
                                       homes, however, are limited by law to 6 months or less unless the need
                                       for nursing home care is related to a service-connected disability.




                                       Page 11                                    GAO/HRD9CW3   VA Nursing   Home Pluming   Needs Improvements
State Veterans’ Nursing   VA does not place veterans into state veterans’ homes. Rather, each state
Homes                     designates an agency that places veterans according to the state’s poli-
                          cies and procedures. VA paid a daily fee, $20.36 in fiscal year 1988, for
                          each veteran served. VA also provides grants to states to help finance the
                          construction or renovation of state homes; by law, VA can pay up to 66
                          percent of the cost.

                          During fiscal year 1988, VA paid over $66 million in fees to 49 state vet-
                          erans’ nursing homes, located in 30 states. VA supported a daily average
                          of about 8,700 beds in these homes; over 14,200 veterans received care.
                          In that year, VA also provided $48.2 million in construction grants.


                               119 nursing homes are located in seven geographic regions. At the
VA’s Nursing Home         VA’S
                          time of our review, the regions included 27 medical districts1 Since
Planning Process          1981, each district has developed a nursing home plan as part of VA’S
                          Medical District Initiated Program Planning (MEDIPP)process. Districts
                          submitted plans annually in fiscal years 1982-84. Since 1984, districts
                          have prepared plans biennially.

                          Each medical district’s plan includes a goal for the total number of nurs-
                          ing home beds that it will supply in a target year. Since 1984, VA has
                          used 2000 as its planning target year. The plans also include estimates
                          of the number of community and state veterans’ home beds that are
                          expected to be available to VA. District planners may propose building
                          new homes or converting existing hospital beds or space to nursing.
                          home use only when they do not expect sufficient VA, community, and
                          state home beds to be available to meet the bed-supply goal.


                          We assessed the nursing home planning process for four medical dis-
Objectives, Scope,and     tricts for the 1988 MEDIPP cycle. We examined how the districts estab-
Methodology               lished their bed-supply goals. We reviewed surveys of the existing bed
                          supply and districts’ strategies for meeting the goals. The 1988 cycle is
                          the most recent for which both the data VA used and the resulting VA-
                          wide MEDIPP plan are available. VA published the results of the 1988 plan
                          in June 1989. In our analyses, we included VA estimates of the veteran
                          population published in May 1989 and other more current data that
                          were not available to VA during the 1988 planning cycle.


                          ‘In March 1990, the Secretary of Veterans Affairs abolished VA’s medical districts. He has also prc+
                          poeed to reduce the number of regions from seven to four.




                          P8ge 12                         GAO/lXRD-9048     VA Nursing   Home! Plandng    Needs Improvements
                                         chapter 1
                                         Introduction




                                         We conducted our review at VA headquarters and the four medical dis-
                                         tricts. We selected the districts to represent a mix of factors affecting
                                         nursing home use, including, for example, projected changes in the num-
                                         ber of veterans aged 66 and over, state restrictions on nursing home bed
                                         construction, and ongoing and proposed VA nursing home construction.
                                         (See app. I.) The districts we visited cover all or parts of 13 states. (See
                                         fig. 1.6.) We cannot project the findings to other districts.

Figure 1.5: VA Districts   GAO Visited




                                         Page 13                 GAO/HlOBO&3   U Ntuuing   Home Pkwdng   Needs Improvementa
                               chapter 1
                               InWction




Evaluating Distri .cts’ Bed-   We reviewed VA'S policies and procedures for establishing a bed-supply
Supply Goals                   goal and discussed them with headquarters officials. At each district, we
                               analyzed the data and assumptions used to develop the goal and dis-
                               cussed them with the district director, nursing home planners, and social
                               workers, who place VA patients in VA nursing homes and community
                               nursing homes. We also reviewed records and interviewed nursing home
                               planners and other officials at VA'S Midwestern Regional Office (includes
                               medical district 18) and Western Regional Office (includes medical dis-
                               trict 26) to assess their roles in developing the districts’ bed-supply
                               goals.

                               We also compared the districts’ data and assumptions to those used in
                               public and private studies of nursing home and noninstitutional care,
                               including hospital-based home care and adult day health care. (See bibli-
                               ography.) In addition, we interviewed four non-VA nursing home experts
                               to obtain their opinions on VA'S planning process, including the appropri-
                               ateness of the data and assumptions used.


Evaluating Districts’ Bed-     We reviewed VA'S policies and procedures for surveying the existing
Supply Surveys                 nursing home bed supply and discussed them with headquarters offi-
                               cials. At the four districts visited, we interviewed planners and dis-
                               cussed the results of their nursing home surveys. We also contacted
                               officials in area agencies on aging, health departments, state veterans’
                               homes, and other public agencies in 11 states within the four districts
                               visited. (See app. II.) From these agencies, we collected information on
                               nursing homes and their patients and compared them to the data that
                               the district planners used.


Evaluating VA’s Nursing        We reviewed VA'S policies and procedures for developing proposals to
Home Strategy                  meet projected nursing home bed-supply shortfalls and discussed them
                               with VA officials. To evaluate VA'S strategy for meeting its bed-supply
                               goal, we reviewed its fiscal year 1989 and 1990 budgets and related doc-
                               uments. In addition, we interviewed Office of Management and Budget
                               (OMB) officials responsible for reviewing VA'S budget request. We
                               obtained information on OMB’Spolicies concerning VA nursing home care
                               and funding decisions as they were reflected in VA'S 1988 and 1989
                               budgets. We also reviewed nursing home funding for fiscal years 1981
                               through 1988 to obtain data on the cost and duration of VA nursing home
                               construction.




                               Page 14                GAollJltDOO-08   VA Numlng   Home Plmhg   Needs Improvementa
Chapter      1
lWXdUCtl0n




Our audit work was performed from March 1988 through February
1990 in accordance with generally accepted government auditing
standards.




Page 15              GAO/‘HRDBO-BS   VA Nundng Home Pluming   Needs Improvements
Chapter 2

Establishing a Nursing Home BedSupply Goal


                                     VA’S bed goal was based on assumptions about key factors affecting vet-
                                     erans’ nursing home use and the most current data available. VA plans to
                                     supply or support about 47,000 beds in VA, community, and state veter-
                                     ans’ nursing homes in 2000. To develop this goal, VA used two estimates.
                                     First, it estimated the total number of veterans expected to use all nurs-
                                     ing homes. Second, it estimated the proportion of those veterans whom
                                     it would support.


                                         estimated that veterans will use approximately 296,000 beds a day in
Estimating Veterans’                 VA
                                     all nursing homes in 2000-a 73-percent increase over the 1988 level.
Nursing Home Use                     (See fig. 2.1.) Veterans’ use is expected to peak in 2010, when approxi-
                                     mately 390,000 beds a day will be used, and decline gradually through
                                     2030.


Figure 2.1: Estimated Daily Use of
Nursing Homes by Veterans            400    votmmnsin-


                                     360

                                     300

                                     260

                                     200

                                     180




                                            n
                                     100


                                      so


                                       0

                                            lsm          1900
                                            -Y=

                                     Source: GAO calculation based on 1995 National Nursing Home Survey utilization rates for males and
                                     VA, Veteran Population Projections, May 1989.


                                     VA used three steps to estimate veterans’ nursing home use. First, it
                                     obtained nursing home use rates for males. Second, it projected the num-
                                     ber of veterans in seven age groups for 2000. Finally, to estimate veter-
                                     ans’ daily use of nursing homes, it multiplied the estimated number of
                                     veterans in each age group by the use rate for that group.


                                     Page 16                         GAO/llRlS9O-96    VA Nursing   Home plannine   Needs Improvements
                                        Chapter 2
                                        Establishing   a Numlng Home Bed-
                                        SuPPlY-




Estimating Nursing Home                 VA  used nursing home rates for males developed from the 1986 National
Use Rates for Veterans                  Nursing Home Survey, conducted by the National Center for Health Sta-
                                        tistics. This survey provided data on the average daily number of males
                                        in seven age groups residing in nursing homes in 1986. Using data lim-
                                        ited to males was reasonable because 96 percent of veterans are male.
                                        Based on these data, VA developed a model of nursing home use that
                                        accounted for the geographic distribution of veterans. The rate of nurs-
                                        ing home use is significantly greater for males in the three oldest age
                                        groups. (See table 2.1.)


Table 2.1: Nursing Home Ube Rates for
Veterans (1985)                                                                                              Use rates per 1 ,ooO
                                        Age group                                                                      veterans
                                        25-34                                                                                 512
                                        35-44                                                                                 717
                                        45-54                                                                               1.597
                                        55-64                                                                               4.075
                                        65-74                                                                              10 740
                                        75-84                                                                              41.731
                                        85andover                                                                         144.435
                                        Source: VA




Projecting the Number of                VA projected a rapid growth in the number of veterans in the two oldest
Veterans in 2000                        age groups, those most likely to use nursing home care. VA estimated that
                                        the number of veterans in these groups would increase from about 1.2
                                        million in 1988 to about 3.9 million in 2000. (See fig. 2.2.)




                                        Page 17                      GAO/HRD~66   VA Numlng   Home Phnning   Needs Improvements
                                             Chapter 2
                                             MabUdng      a Nursing   Home Bed-
                                             SilPPlY Goal




Figure 2.2: Veteran Population   (1988 and




                                                                                         h a
                                             Source: VA, Veteran Population Projections by Age and Period of Service, May 1989




Projecting Veterans’ Use of                  VA multiplied the estimated number of veterans in each age group by the
Nursing Homes                                1986 use rate for that group. This provided an estimate of veterans’
                                             daily use of nursing homes. The projected increase in veterans’ nursing
                                             home use reflects the expected increased number of veterans in the
                                             higher use age groups. (See table 2.2.)




                                             Page 18                         GAO/IlRDM        VA Nursing   Home F%nning     Needs Improvements
                                           Chapter 2
                                           Establishing   a Nursing   Home Bed-
                                           SUPPlYcort




Table 2.2: Change in Veterans’   Nursing
Home Use (1988-2000)                                                              Estimated average daily beds
                                                                                       occupied by veterans
                                           Age group                                   1988                   2000       Percent change
                                           25-34                                       1,594                  1,028                  -36
                                           35-44                                      4,260                   2.094                  -51
                                           45-54                                      8,212                   8,889                     8
                                           55-64                                     28,476                  19,018                  -33
                                           65-74                                     53,646                  54,871                     2
                                           75-84                                     42,816                 140,467                   228
                                           85and over                                31,776                  68,607                   116
                                           Total                                   170,780                 294,973                     73




VA’s Assumptions Are                       VA’S estimating model relied on two basic assumptions. First, it assumed
Reasonable                                 that veterans use nursing homes at the same rate as the general male
                                           population. Second, it assumed that nursing home use rates will remain
                                           relatively unchanged through 2000. VA did not have any data directly
                                           addressing the appropriateness of its first assumption. For planning
                                           purposes, however, it appears reasonable. Regarding the second
                                           assumption, although advances in the medical treatment of chronic dis-
                                           eases or housing and community-based services for the elderly could
                                           alter males’ nursing home use, we did not identify evidence indicating
                                           that these factors, or others, would significantly affect the rates by
                                           2000.


                                              plans to supply about 47,000 nursing home beds daily in 2000. This is
Estimating Veterans’                       VA
                                           about a l&percent market share of the 296,000 beds that it expects vet-
Use of VA-Supported                        erans to use. As a matter of policy, VA has used a 12- to 16-percent share
Nursing Homes                              for planning purposes since 1981. Between 1986 and 1988, VA provided
                                           beds for 19 percent of all veterans using nursing homes. For the 1988
                                           planning cycle, VA sent draft guidance to the districts allowing them to
                                           set their market share goal for 2000 within a range of 16 to 19 percent.
                                           In September 1988, VA decided instead to retain the goal at 12 to 16
                                           percent.


                                              is authorized by law to provide              nursing home care to the extent that
Conclusions                                VA
                                           space and resources are available.              Given the discretionary nature of its
                                           mandate, VA has used a reasonable                model for setting its goal for the
                                           number of nursing home beds that                 it will supply in 2000. The model



                                           Page 19                         GAO/HRDBO-M3      VA Nurdng   Home w       Needs Improvements
chapter 2
~umng         t Nunling Home Bed-
SnPPlY Gall




adequately considers important indicators of future use and uses the
most current information available.




Page 20                      GAO/lBD@MB   VA Nudng   Home Pluming   Nttda   hnprovtmtnta
Chapter 3

VA’s Plan for Adding Nursing Home Beds
Is Flawed

                            VA'S  plan calls for an additional 14,000 beds to meet its bed-supply goal
                            for 2000. VA plans to (1) obtain about half of these beds from community
                            nursing homes or in state veterans’ homes and (2) build new homes or
                            convert empty VA hospital beds for the rest. VA requires that medical dis-
                            tricts demonstrate that community and state veterans’ nursing home
                            beds will be unavailable before proposing the addition of new VA-owned
                            nursing home beds. In addition, districts must assess the potential to
                            convert VA hospital beds to nursing home use before proposing new
                            nursing home construction. Conversion is significantly less costly than
                            new construction. At the four districts we visited, planners did not accu-
                            rately identify the number of beds available in community or state
                            homes. Also, the potential for converting VA hospital beds is increasing
                            because of a faster decline in VA hospital occupancy rates than previ-
                            ously expected.


                            District surveys of community nursing home beds significantly underes-
MEDIPP Procedures           tirnated the number of available beds. Moreover, districts’ estimates of
Inadequate for              available state veterans’ home beds were inaccurate.
Identifying Available
Community and State
Veterans’ Nursing
Home Beds

Occupancy Ceiling           Planners in two districts we visited limited the percentage of beds VA
Produces Underestimate of   could use in a single nursing home. These districts excluded a total of
                            more than 1,100 beds by using such limits in the 1988 MEDFP process. VA
Potentially Available       guidance allows such limitations to minimize potential placement
Community
- -         Nursing Home    problems for veterans in a home if VA must unexpectedly terminate the
Beds                        home’s contract because serious quality-of-care problems are found.
                            However, the director of extended care services told us that VA contracts
                            are seldom terminated in this way. In the rare instances that serious
                            problems are found, VA usually elects to discontinue placing patients in
                            the home for the remainder of the contract year. Patients already resid-
                            ing in the home complete their contract stays.

                            These occupancy ceilings result in VA'S planning to operate new VA nurs-
                            ing home beds when they might not be needed. For example, medical
                            district 12 did not include 499 vacant community beds because they
                            exceeded the district’s maximum occupancy rate ceiling. About 150 of


                            Page21                 GAO~~VANPlsineHomePlannineN~Lmprovernente
                             chrpttr 3
                             VT/d%& for Adding Numing Home Btdt




                             these vacant beds are in the area surrounding the VA medical center in
                             Gainesville, Florida. In its 1988 plan, VA proposed to build a 120&d
                             nursing home addition to this medical center in 1996.1


MEDIPP Guidance              MEDIPP guidance does not specify the procedures district planners should
Insufficient to Determine    follow to determine the availability of community nursing home beds.
                             We found that districts did not collect sufficient information to deter-
Availability of Community    mine bed availability. Planners in medical districts 12,18, and 26 elimi-
Nursing Home Beds            nated more than 2,000 vacant community nursing home beds from their
                             planning considerations. These beds were in addition to those eliminated
                             through application of occupancy ceilings.

                             Planners eliminated nursing home beds for several reasons, including
                             nursing homes’ declining to participate, insufficiency of VA payment
                             rates, and unavailability of specific services. However, planners did not
                             always obtain sufficient information to assure these factors would pre-
                             vent VA'S use of these beds. For example, planners in two districts elimi-
                             nated community nursing home beds because VA'S payment level
                             appeared to be inadequate. However, these plannen did not ask the
                             homes’ operators whether they would accept VA'S contract rate. The
                             planner in one district did not inform the nursing home operator what
                             an acceptable rate might be or record what the home charged. The plan-
                             ner in the other district, while asking nursing home operators what the
                             home charged, did not inform the operators of VA'S contract rate or ask
                             what the home would charge VA.


Estimates of Availability    Planners did not follow MEDIPP guidance in estimating the availability of
of State Veterans’ Nursing   state veterans’ home beds. For example, planners in the four districts
                             did not count 436 state veterans’ home beds that they should have.
Home Beds Are Inaccurate     These beds were occupied by the districts’ veterans but were located in
                             homes outside the districts’ boundaries. VA'S planning procedures direct
                             the districts to count such beds in their surveys.

                             In contrast, medical district 18 counted as available about 100 state vet-
                             erans’ home beds it should not have. These beds were counted even
                             though they were not currently built or officially planned for future
                             construction. Including these beds is contrary to VA guidelines that


                             ‘In December 1989, VA decided not to construct this project because projectAutilization was insuffi-
                             cient to support it.



                             Page 22                         GAO/HRD-tBtb98 IN Nprdap Home pknnine Needs lmpro~mente
                                     Chapter   3
                                     VA’s Plan for Adding Nnrsine Home Bede
                                     lJ3Flawed




                                     instruct planners to count only existing beds or beds funded for con-
                                     struction by either the states or VA. Districts that count such beds as
                                     available may not meet their bed-supply goal if the beds are not built.


                                        officials estimate that there will be a greater reduction in hospital
Potential Is Increasing              VA
                                     operating bed levels up to 2000 and beyond than VA had anticipated dur-
for Converting                       ing the 1988 MEDIPP cycle. Unused VA hospital beds are candidates for
Hospital Beds to                     conversion to nursing home care.
Nursing Home Use                     Converting hospital beds and space to nursing home use is generally less
                                     costly and faster than constructing new beds. VA estimates that the aver-
                                     age cost of converting a bed is $37,900, while the average cost of con-
                                     structing a VA nursing home bed is $81,400. Historically, VA has needed
                                     about 8 years to plan, design, and build a new nursing home; generally,
                                     conversions take much less time to complete.

                                     VA’S current plan calls for the majority of the new nursing home beds
                                     that it expects to operate in 2000 to be in newly constructed VA nursing
                                     homes rather than in converted hospital space. (See fig. 3.1.)



and Converting   Nursing Home Beds                                                     Conversion   (n = 2.059 beds)
(June 1989)




                                                                  71%-            -    ConstNdion(n-      5,067beds)




                                     Source: VA, Nursing Home Care Plan, June 1989.


                                     VAestimates that about 6,600 of these beds will require funding from its
                                     construction budget-approximately    $405 million for new construction


                                     Page 23                       G~o/HBD~vANursing           Home PlmmingNeehImPro~~menta
              Chapter 3
              V’s Plan for Adding   Nprdng   Borne bda
              rsPIawtd




              and $106 million for conversions.2 Projects range in size from 15-bed
              conversions to new 240&d nursing home care units. As of June 1989,
              about one-third of the 6,600 beds had been funded. VAplans to activate
              about 1,500 of the 2,000 converted beds by fiscal year 1995. VAexpects
              that the MEDIPPplan developed in the 1990 cycle will show an increase in
              conversions as a result of decreased use of hospital beds,

              In April 1990, the Secretary of Veterans Affairs established the Com-
              mission on the Future Structure of Veterans’ Health Care. Among its
              goals will be identifying opportunities to change the missions, the mix of
              services offered, at individual medical centers. VAexpects the Commis-
              sion to identify VAhospital beds that should be converted to nursing
              home use as a result of mission-change recommendations. It expects the
              Commission to issue its recommendations to the Secretary in October
              1991. This timetable could allow it to make recommendations that per-
              tain to increasing the proportion of conversions as early as the delibera-
              tions for the fiscal year 1993 budget.


              VA’Sestimation of avaiiable beds in community and state veterans’ nurs-
Conclusions   ing homes was flawed in the medical districts we visited. Without an
              accurate estimate VAmay add nursing homes where they are not needed
              or fail to add them where they are needed. Further, VA’Splanning pro-
              cess lacks guidance to ensure that VAidentifies aII available nursing
              home beds. The scope of our work does not enable us to estimate the
              total number of beds available to VA.However, because districts’ plan-
              ning problems are linked to weaknesses in VAguidance, we believe simi-
              lar problems may be occurring elsewhere.

              Based on current estimates, VA’Splan may overstate the number of beds
              it needs to construct. VAmay be able to convert more hospital beds to
              nursing home use than it originally estimated. In addition, recommenda-
              tions from VA’SCommission on the Future Structure of Veterans’ Health
              Care may identify further conversion possibilities that could reduce the
              need for new nursing home construction. Converting the maximum num-
              ber of unused hospital beds is a reasonable strategy given that hospital
              beds can be converted to nursing home use in less time and at less than
              half the cost of constructing new nursing home beds.



              2VA will convert approximately 600 beds without additional   funding by redesignating acute-care kds
              as nursing home beds.



              Pyle 24                        GAO-              VA Nurdng Home Phnning Needs Improvements
                      chnpter 3
                      VA’S plrn ior   Adding   N-ine   HOme Beds
                      hlPlnwed




                      We recommend that the Secretary of Veterans Affairs require the Chief
Recommendations       Medical Director to

                  l revise planning guidelines to remove limitations on the percentage of
                    beds VA can use in a single community nursing home,
                  . provide clear guidance to planners regarding the specific steps they
                    should take to assess the availability of community nursing home beds,
                  l assure that planners follow guidelines in developing their counts of
                    available state veterans’ nursing home beds, and
                  l review planned nursing home construction projects before requesting
                    funding to be sure that available beds in community and state veterans’
                    homes were accurately counted and that opportunities for converting
                    hospital beds were identified.


                         commented on a draft of this report on May 18,199O. (See app. III.)
Agency Comments       VA
                      The Department agreed with our recommendations and specified a num-
                      ber of actions being taken to improve the nursing home planning pro-
                      cess. Actions the Department said were being taken include

                      having VA'S Commission on the Future Structure of Veterans’ Health
                      Care assess existing VA health care resources in terms of projected
                      future needs,
                      removing the limitation on the percentage of beds VA can use in a single
                      community nursing home that has been in operation long enough, gener-
                      ally 1 year, to provide sound evidence of an acceptable level of sus-
                      tained quality of care,
                      supplementing existing instructions to planners to ensure that they thor-
                      oughly address VA reimbursement rates for community nursing homes
                      when assessing availability of community beds,
                      verifying regional planners’ input in assessments of state home availa-
                      bility, and
                      reviewing nursing home construction projects to ensure that use of com-
                      munity and state home beds, as well as possibilities for conversion of
                      hospital beds, are fully considered before requesting funding for con-
                      struction of new beds.




                      Pnge26
Appendix I

Site Selection


                     Because the development of nursing home planning information was
                     centered in VA’S 27 medical districts1 we visited 4 districts, each repre-
                     senting a slightly different planning environment. VA’s district planners
                     face varied nursing home use and bed-supply conditions. To illustrate,
                     planners in districts with no state veterans’ nursing home beds must
                     consider how to achieve their bed-supply goals using two types of
                     homes, compared to three in other districts. Also, in districts in areas
                     with relatively large numbers of available community nursing home
                     beds (measured by the number of beds per thousand elderly and occu-
                     pancy rates), planners can achieve more of their goal with those beds
                     than planners in areas with relatively fewer available beds.

                     To evaluate VA'S planning process, we selected districts whose nursing
                     home planning environments were representative of those faced by
                     other medical districts. As shown in table I. 1, we considered information
                     on

                 . the location of the elderly veteran population in 1988 and 2030,
                 . the availability of state home beds,
                 l state restrictions on new nursing home construction,
                 . the number of community nursing home beds per thousand elderly,
                 . the status of VA nursing home construction, and
                 . whether the district had completed a survey of community nursing
                   homes.




                     ‘In March 1990, the Secretaxy of Veterans Affairs   abolished VA’s rbdical   districts.




                     Page 26                         GAO/HRDS66          VA Nursing Home Planning Neede Improvements
                                                      Appends      I
                                                      Site Selection




Table 1.1: Profile of Medical   Districts   Visited
                                                                                                Medical   district   (headquarters)
                                                                4                                                                         25
Information considered                                          (Philadelphia)          $ain*sville)                 ~knneapols)          (Long Beach)
Projected change In veteran population aged 65 and              DE: Increase            FL: Decrease                 IA: Decrease         NV: Increase
   over, 1988 to 2030a                                          MD: Decrease            GA: Increase                 MN: Decrease         CA. Decrease
                                                                NJ: Decrease                                         ND: Increase
                                                                PA: Decrease                                         SD: Increase
                                                                                                                     WI: Increase
State home beds in district                                     Yes                     No                           Yes                  No
State home beds shared with bordering district                  Yes                     Yes                          Yes                  Yes
State restrictions on nursing home bed constructionb            Yes                     Yes                          SD: No               CA: No
                                                                                                                     Others: Yes          NV: Yes
Range in number of community nursrng home beds                  99.1-138.1              59.5-141.8                   176.7-201.6          94.7-100.9
  per 1,000 persons aged 75 and older
Ongoing VA nursing home construction                            Yes                     No                           Yes                  Yes
Proposed VA nursina home construction                           No                      Yes                          No         .         No
Community nursing home analysis completed by                    No                      Yes                          Yes                  Yes
  district for 1988 MEDIPP
                                                      aPopulation data are for entire states.
                                                      bAs of September   1989.




                                                      Page 21                           GAO/HRDfJ@66          VA Nursing   Home Flannhg   Needs Improvements
 Ppe

bc; and Local AgenciesGAO Contacted1


Medical District 4

Delaware                Bureau of Health Planning and Resources Management
                        Department of Health and Social Services


Maryland2               Charlotte Hall Veterans Home
                        Office on Aging


New Jersey              Department of Health
                        Department of Veterans Administrative                      Services, State of New Jersey


Pennsylvania2           Bureau of State Veterans Affairs, Pennsylvania Department of Military
                        Affairs
                        Department of Health
                        Pennsylvania State Data Center, The Pennsylvania State University at
                        Harrisburg



Medical District 12

Florida2                Department of Health and Rehabilitative Services:

                      . Aging and Adult Services
                      . Health Care Cost Containment Board
                      . Office of Comprehensive Health Planning

                        Department of Administration,                 Veterans’ Field Services


Georgia2                Georgia War Veterans Nursing Home, Augusta
                        Georgia War Veterans Nursing Home, Milledgeville



                        ‘We did not contact Nevada and North Dakota because these states had relatively few veterans aged
                        66 and over.

                        ‘Portion of state is included in the medical district noted.



                        Page 28                          GAO/IiRBM          VA Nursing Home Phnnlng Needa Improvements
Medical District 18

Minnesota             Department of Administration
                      Department of Health Services
                      Metropolitan Council of the Twin Cities Area



Iowa2                 Iowa Department of Elder Affairs
                      Iowa Department of Inspections and Appeals
                      Iowa Veterans Home, Marshalltown


South Dakota          Office of Adult Services and Aging
                      Department of Health, Center for Health Policy and Statistics
                      South Dakota Office of Charities and Corrections


Wisconsin2            Department of Health and Social Services, Bureau on Aging
                      Wisconsin Department of Veterans Affairs


Medical District 25

California            Department of Veterans Affairs, State and Consumer Services Agency,
                      State of California
                      Office of Statewide Health Planning and Development




                      *Portion of state is included in the medical district noted.



                      P8ge es                          GAO/HBDgoBB        VA Nursing Home plurnine Need8 Improvementa
Appendix III

CommentsFrom the Department of
Veterans Affairs


                                             THE SECRETARY OF VETERANS AFFAIRS
                                                              WASHINGTON




                                                MAY181990

               Wr. David P. Baine
               Director,    Federal Health           Care
                   Delivery  Issues
               u. S. General Accounting              Office
               Washington, D.C.20548
               Dear Mr. Baine:
                          I     am responding   to     your      draft     report,   v
                                  ts NeOdOd in ve                  Plw          (GAO/HRD-90-98),   dated
               April          5, 1990.
                      We appreciate      GAO’s      evaluation      of the Department of Veterans
               Affairs’     (VA) planning     efforts      for   meting the long-term care needs
               of our rapidly         aging veteran            population.       I am committed to
               assuring that as we approach the newt century,                    VA will   be prepared
               to meet our veteran's          long term-health           care needs.      To this end,
               I have established         the VA Commission on the Future Structure                  of
               Veterans'      Health Care.        This commission is assessing existing              VA
               health     care resources         in terms of projected             future   needs.     I
               anticipate      that the commission18 efforts              will result in a realigned
               VA health       care system --one that will               be there to care for our
               veterans when they are no longer able to care for themselves.
                     I concur in each of GAO's recommendations in this report.  The
               Department is taking steps to modify our nursing home planning to
               incorporate   GAO's recommendations.  Our detailed  comments on each
               of the recommendations is enclosed.




                                                     Secretary
               Enclosure
               EtU/ jev




                              Page30                   GAO/HHBBWf3       VANumingHomePlanningNeedsImprovements
                                                                            Enclosure
  DEPARTMENTOF VETERANSAFFAIRS COI'QKEWTS
                                       ON TRR APRIL 5, 1990,
      GAO REPORT


am   reaanen      ds that        I require   the Chief   Wadiaal Diroator    to:
      --       Red80 planning guidelima    to tomom limitations oa the
               peraent of hods VA aan us0 in a sing10 aonuaity nursing
               horn..
        We concur with the recommendation.           The Office of Geriatrics
and Extended Care is proposing a change to VA Wanual, X-9, WEDIPP
 (Wedical     Center      Initiated     Program Planning),       to   reaovo the
limitation     on the percent of beds VA can uso in a single comaunity
nursing     hone.      However, this       change will   ba lirited      to those
community nursing homes that have been in oparation                 long enough,
genorally     1 year,     to provide sound evident%     of an acceptable level
of sustained      quality      of care.

      --       Rrovido aleu          guidaaae to plmnsrs ragudiag ths spsaifia
               steps      they     should taks to as8sss ths availability      of
               aanunity          nursing home beds.
       We concur with the recoamendation.               VA Wanual, n-9, WBDIPP,
Chapter 10, provides       specific  planning       guidancs     and reguirements
for assessing     the availability      of -unity             nursing   home beds.
Howover, we will     provide further      instructions         to planners in the
guidance issued for the 1991 WRDIPP cycle to ensure that they
thoroughly    address VA reimbursement          rat.8      for capunity      nursing
horn.8 when assessing availability       of community b&a.            Us 8nticipate
issuing the guidance in October 1990.

      BB
               Assurs that plaaasrs      follow    guidslinos in developing
               their aouats of l vailabls      atats vstsmas'   nursing home
               hads.
       WI concur with the recommendation.         &ginning     with the WEDIPP
1990 Strategic       Plan Submission,       due Sopteabu        4,  1990, the
Strategic   Planning office's     Planning,    Developnnt     and Coordination
Division    will   verify  regional    planner    input    in the state     home
assoasments on an individual        basis.
          Appendix   tU
          CommentaFromthe Departmentof
          VeteMsAfi8ira




     --        Raviav     aurrontly     planned   nursing     homa oonstruction
               projoots     before   requesting    funding     to ba sue that
               l vailabl8   beds in oonunity     and state veterans     bores were
               l aaurately   aounted   rod that opportunities       for aonverting
               hospital    beds wet0 idantifiod.
       We concur with the recommendation.        VA policy     requires  that
nursing     home needs assessments     be updated prior       to requesting
construction      funds.   VA will   continue   to review nursing        home
construction     projects  to ensure that use of community and state
hose beds as well as possibilities       for conversion    of hospital   beds
are fully     considered  before construction    funding for new beds is
requested.




          Page32                      GAO/IiRDBM8VANumlng Home Pkmln~~NeeALmprovementi
Appendix IV

Major Contributors to This Report


                   Paul R. Reynolds, Assistant Director, (202) 233-5281
Human Resources    Bruce D. Layton, Assignment Manager
Division,          Micaela M. Jones, Evaluator-in-Charge
Washington, D.C.   Geraldine F. Castaldo, Evaluator




                   P8ge83                GAO/lIRDMW   W Nudng Homellmnin# NeedleImprovementa
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               Page 34                GAO/liRD3lM3   VA Nursing   Home PIarming   Needs Improvemen.
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Pyle   36                             VANursing
                           GAO/HRDfMl-B2          Home Phnning   Needa Improvements
RelatedGAO Products


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             Long Term Care for the Elderly: Issues of Need, Access, and Cost
             (GAO/HRIHX+NOV.   28,1988).

             VA Health Care: Assuring Quality Care for Veterans in Community and
             State Nursing Homes (GAO/HRD8818, Nov. 12, 1987).

             Financial Management: An Assessment of the Veterans Administration’s
             Major Processes (GAO/AFMDsG-7, June 27, 1986).

             An Aging Society: Meeting the Needs of the Elderly While Responding to
             Rising Federal Costs (~~0m~~-86-136, Sept. 30, 1986).

             VA Health Care: Issues and Concerns for VA Nursing Home Programs
             (GAOIHRDSG-IUBR, Aug.8, 1986).

             VA'S Justification
                              for the Number of Beds Planned for the Philadelphia
             Hospital and Nursing Home (GAo/~n-ss-69, June 13,1985).

             Medicaid and Nursing Home Care: Cost Increases and the Need for Ser-
             vices Are Creating Problems for the States and the Elderly (GAODPEXM-1,
             Oct. 21, 1983).

             VA Is Making Efforts to Improve Its Nursing Home Construction             Planning
             Process(~~0mm-8zm,      May20,1983).

             VA Should Consider Less Costly Alternatives Before Constructing             New
             Nursing Homes (GAo~F~~P-1 14, Sept. 30, 1982).




(401976)     Page 36               GAO/liItDW!M   VANursing   Home Planning   Needs Improvemenk
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