to your short-term solutions in addressing the issues at hand and over the long-term, too, address the systemic problems and challenges facing v.a. i, like so many of my colleagues, have been visiting with the veterans in my state, frankly long before the particular crisis arose. they have shared with me their concerns about the lack of doctors, of a changeover of doctors. those are some of the practical considerations that they have raised with me. and so most of us, i think all of us, have had the opportunity to talk with veterans in our communities one-on-one. and we have a commitment to make sure that we continue to stay the course. that, to me, is the most important thick this committee can do. i thank the chairman for not allowing us to move on to other matters that may be pressing,

but what could be more pressing than to make sure our veterans receive the care that they need and deserve? thank you, mr. chairman. >> other members will be filtering back. but i would like to hear from the acting secretary now. and customarily, we give five minutes, but you'll have more time. this is a serious discussion, and we want you to have the time you need to make your case, and we want the members here to have the time they need to ask you the questions. all right, senator burr suggested maybe we should wait a few minutes to make sure all the members come back. let's take a very quick recess here. okay.

let's reconvene, and senator, i think we're up to you and your opening statement. >> thank you, senator -- chairman sanders and ranking member burr for convening another very important hearing to address the issues at the v.a. it's critical that we continue to have these oversight hearings to do everything we can to hold v.a.'s feet to the fire and make sure that accountability is there. we know some things now that we did not know at the last hearing. we know for a fact that v.a.'s

wait list manipulation and access to care issues is in fact systemic. report after report has confirmed this. in fact, 77 facilities are currently under investigation by the v.a. inspector general. it's an astounding number. and i believe the scheduling problems are the tip of the iceberg. now we have allegations of whistleblower retaliation and improper payment of claims. the cancer doesn't seem to stop. but it must be stopped. while i appreciate your efforts, secretary gibson, i think you have done some things, and they are recognized and acknowledged. but i think we would all acknowledge there's so much more to be done. there has to be accountability for wrongdoing or these issues

will continue and this senate will have more hearings, not only next week or the week after but in five, ten, 20 years from now. there's a serious lack of leadership from the top. the white house needs to have a more visceral role in addressing the crisis. we collectively have the ability to fix this agency. we just have to find the will and the common ground to do it, all of us have to be a part of the solution. it may during our last committee hearing, i encouraged the expanded use of non-v.a. care to get urgent treatment to those veterans that were languishing on both secret and official waiting lists. the bill recently passed by the senate gives greater flexibility in treatment options for veterans faced with long wait times or lengthy travel. the choice card injects much

needed competition, in my opinion, into the process, and it demands of the v.a. that they get their act together. and the accountability and transparency pieces of the legislation are not only important, they're critical. the notion that employment should be tied to performance might seem elementary to most people, but this has not been happening at the v.a. there have been several instances in which senior v.a. executives who were involved in mismanagement or negligence were not reprimanded but instead received bonuses and positive performance reviews. shameful. and while senior executive service employees can be disciplined and fired under current law, it's a very long and a very drawn out process. again, that doesn't work. the secretary needs the authority this bill provides to

cut through bureaucratic red tape and most importantly, to hold individuals responsible. we have to root out the culture of corruption that is contributing to nearly all of v.a.'s most pressing issues. it's a huge challenge, but we can and must get the v.a. back on track and focused on their core mission of providing quality health care to our veterans. they deserve nothing less. thank you, mr. chairman. i yield back. >> thank you, senator. now we -- i want to take this opportunity to welcome mr. sloan gibson, acting secretary of the v.a. thank you very much for joining us. to give us an update on the state of health care at the department of veterans affairs, and we look forward to hearing your testimony. secretary gibson is accompanied by mr. philip mruczkowski, the

assistant deputy under secretary for health for administrative operations, and your prepared remarks will be submitted for the record. secretary gibson, senator tester, you have already made your statement. okay. secretary gibson, please begin. >> mr. chairman, forgive me if i dispense with the traditional niceties and get straight to business. as has been recounted this morning, we have serious problems. here's how i see the issues. first and foremost, veterans are waiting too long for care. second, scheduling improprieties were wide spread, including deliberate acts to falsify scheduling data. third, an environment exists where many staff members are afraid to raise concerns or offer suggestions for fear of retaliation. fourth, in an attempt to manage performance, a vast number of metrics have become the focal point for staff instead of focusing on the veterans we are here to serve.

fifth, v.a. has failed to hold people accountable for wrongdoing and negligence. and last, we lack sufficient clinicians, direct patient support staff, space, information technology resources, and purchase care funding to meet the current demand for timely, high-quality health care. further more, we don't have the refined capacity to accurately quantify our staffing requirements because historically, we have not built our resource requirements from the bottom up. we have instead managed to a budget number. as a consequence of all these failures, the trust that is the foundation of all we do, the trust of the veterans we serve, and the trust of the american people and their elected representatives has eroded. we will have to earn that trust back. through deliberate and decisive action, and by creating an open, transparent approach for dealing

with our stakeholders to better serve veterans. to begin restoring trust, we focused on six key priorities. get veterans off wait lists and into clinics. fix systemic scheduling problems. address cultural issues. hold people accountable where willful misconduct is documented. establish regular and ongoing disclosures of information. and finally, quantify the resources needed to consistently deliver timely, high-quality health care. here's what we're doing now. vha has reached out to over 160,000 veterans to get them off wait lists and into clinics and made over 543,000 referrals for veterans to receive care in the private sector. 91,000 more than in the comparable period a year ago. this is in the last two-month period. i would point out here that for each of those referrals on

average, they result in seven visits to a clinician. vha facilities are adding more clinic hours, aggressively recuting to fill vacancies, deploying mobile medical units using temporary staffing resources and expanding the use of private sector care. we're moving rapidly to augment and improve our existing skilging system while simultaneously pursuing the purchase of a commercial off the shelf state of the art scheduling system. i have directed medical center and visiting directors to conduct monthly inspections in person of their clinics to assess the state of scheduling practices and to identify any related obstacles to timely care for veterans. to date, over 1100 of these visits have been conducted. we're putting in place a comprehensive external audit of scheduling practices across the entire vha system. we're building a more robust

continuous system for measuring patient satisfaction, which i believe will be central to our measurement processes in the future. i have personally visited ten v.a. medical centers in the last six weeks to hear directly from the field on the actions being taken to get veterans off wait list and into clinics. i leave later today for albuquerque and el paso. the inappropriate 14-day access measure has been removed from all individual employee performance plans to eliminate any motive for inappropriate scheduling practices. in the course of completing this task, over 13,000 performance plans were amended. where willful misconduct or mismanagement is documented, appropriate actions will be taken. this also applies to whistleblower retaliation. i'm sure we'll talk about this further. i have frozen the central office headquarters hiring as a first step to insure that we're all

working to support those delivering care directly to veterans. vha has dispatched teams to provide direct assistance to facilities requiring the most improvement, including a large team on the ground right now in phoenix. all vha senior executive performances wards for fiscal year 2014 have been suspended. vha is expanding our use of private sector health care to improve access. i sent a message to all 341,000 v.a. employees and have reiterated in every visit to v.a. facilities that whistleblowers will be protected. we will not tolerate retaliation against whistleblowers. i have conducted over a dozen meetings and calls with senior representatives of vsos and other stakeholder groups to solicit their ideas for improving access and restoring trust. i have named dr. clancy interim under secretary for health. she will spearhead the immediate efforts to accelerate veterans'

access to care and restore the trust of veterans. dr. jonathan purlin, a former undersecretary for health at v.a. currently on leave of absense from his duties as chief medical officer and president of clinical services for hospital corporation of america has begun his two month assignment at v.a. as adviser to the secretary. he will help bridge the gap until v.a. has a confirmed under secretary for health. dr. jerry cox has agreed to serve as interim director of the office of medical inspector, an officer for 30 years and the former assistant inspector general for the navy for medical matters. he'll provide new leadership and a fresh perspective to help restructure omi and insure a strong internal audit function. as we complete reviews, fact finding and other investigations, we're beginning to initiate personnel actions to hold those accountable who committed wrongdoing or were

negligence in discharging their management abilities. to support this work, ms. lee bradley has begun a four month assignment as special counsel to the secretary. she's a former general counsel at v.a., and most recently, a senior member of the general counsel team at the department of defense where she had direct responsibility for the ethics portfolio for dod. before i conclude, let me briefly address the need for additional resources. i believe that the greatest risk to veterans over the immediate -- the intermediate to long term is that additional resources are provided only to support increased purchase care in the community and not to materially remedy the historic shortfall in internal v.a. capacity. such an outcome would leave v.a. even more poorly positioned to meet future demand. we have been working closely with the office of management and budget for several weeks to develop the request for funding.

while the amounts under consideration are large and the context of v.a.'s size, scope, and existing budget, they represent moderate percentage increases and annual expenditures. furthermore, a substantial portion of the funds required are noun recurring costs that would not be reflected in long term run rates. resources required to meet current demand covering the remainder of fiscal year '14 through fiscal year '17, total $17.6 billion. these funds address only the current shortfalls in clinical staff, space, information technology, and purchase care necessary to provide timely, high-quality care. in closing, we understand the seriousness of the problems we face. we own them. we're taking decisive action to begin to resolve them. the president, congress, veterans, vsos, the american people, and v.a. staff all

understand the need for change. we must all of us seize this opportunity. we can turn these challenges into the greatest opportunity for improvement in the history of this department. i believe that in as little as two years the conversation can change. that v.a. can be the trusted provider of choice for health care and for benefits. if we are successful, who wins? the growing number of veterans that turn to v.a. for health care each year. the 700,000 veterans who are currently diagnosed with post traumatic stress disorder. the million iraq and afghanistan veterans who have turned to v.a. for health care since 2002, and the average veteran who turns to v.a. for health care who is older, sicker, and poorer than average patients in the private sector. these are the veterans who will win when v.a. becomes the trusted provider of care and

benefits. that is what and where we want to be in the shortest time possible. our ability to get there depends on our will to seize the opportunity, to challenge the status quo, and to drive positive change. i appreciate the hard work and dedication of v.a. employees, the vast majority of whom i continue to believe care deeply about the mission, want to do the right thing, and work hard every day to take care of veterans. as well, i appreciate our partners from the veterans service organizations, our community stakeholders and dedicated v.a. volunteers. lastly, i deeply respect the important role that congress and the members of this committee play in serving veterans and i am grateful to you for your long-term support. i prepare to take your questions. >> well, mr. acting secretary, thank you very much. we're not dealing with niceties. we're dealing with realities.

as i understand it, we're talking in a broad sense about two very serious problem areas. number one, i trust that every member of this committee numbers that we have an immediate crisis that we have hundreds of thousands of veterans on wait lists that those folks must get the medical care they need in a timely manner and i'm pleased to see mr. acting secretary that you have moved aggressively in that area. but if i understand you correctly, the second point you made is that while it's important we put out the current fire, unless we effectively deal with the long-term capacity issues, facing the v.a., we're going to be back here year after year with similar type problems. all right. you mentioned the number. and i want you to get into some detail. what are we talking about? how many in phoenix, other areas of this country, there are long waiting periods.

the goal of this committee is to end those waiting periods to make sure that veterans get quality care in a timely manner. so let's just start off with personnel. all right. how many doctors, how many nurses? how many other types of medical personnel do you need to achieve that goal? be as specific as you possibly can, and how much is that going to cost? >> mr. chairman, of the $17.6 billion, approximately $10 billion is allocated for a combination of purchase care and hiring additional clinical staff. the blend of that will change over time as we ramp up that capacity, as we are successful in hiring people, yes, sir. >> is it fair to say that to the degree that we strengthen the v.a., we become less dependent on expensive contract care? is that a fair statement. >> >> absolutely a fair statement. >> thank you, i interrupted you.

>> and so over the three-plus year period of time, that $10 billion gets allocated, a portion to purchase care, probably more on the front end than on the back end as we're successful in hiring. as i mentioned in my opening statement, you know, our ability to develop highly-refined bottom up estimates of specific physician and clinician requirements is pretty limited. our best estimates at this time is this would -- closing this gap would require hiring approximately 10,000 additional clinical staff. those are divided among primary care, specialty care, and mental health care. and of the 10,000 roughly 1,500 of those are actually physicians. others are nurses and nurse practitioners and other direct patient support staff.

>> you talk about space. >> yes, sir. >> i trust that you're not talking about building some las vegas type expensive buildings. what is the relationship between space and the emergency that we currently have in terms of waiting periods? >> i would tell you, mr. chairman, in every medical center i visited except one, and that's in augusta, the number one constraint that they're operating under right now is space. fayetteville, north carolina, for example, is growing their patient population at a 7% annual rate. and when it takes us five or more years to get a building out of the ground, it doesn't take long to fall behind. so where we are today as a department is we're behind in terms of the space required today to serve patients. that there are $6 billion included in the $17.6 billion total that's designed for

infrastructure. >> and can you give us what are those projects? do you have them? >> there are -- i'm going to ask philip to go into some of the details. there are eight major projects there. there are 77 lease projects for outpatient clinics that would add about 2 million square feet and roughly 4 million appointment slots, and then there are both minor construction and nonrecurring maintenance that would add several million, roughly 4 million in round numbers, additional outpatient visit slots there. >> we have heard time and time again that the dysfunctionality in terms of appointments for the v.a. has something to do with a significantly outdated program. computer situation. can you say a word on that? how you intend to improve that? >> there are actually four

parallel tracks under way right now dealing with the scheduling system. there are 11 existing defects in the system that are being patched as we speak. there are four different interfaces that are in the process of being developed to make it easier for schedulers to access and to actually provide the opportunity for veterans to be able to directly access their schedule. on the 11th of july, we let a contract for major enhancements to the existing scheduling system that will remedy many of the most egregious problems we have right now that make it hard to deal with, and in parallel with all of that, as i mentioned in my statement, we're pursuing the acquisition of a commercial, off-the-shelf, state of the art system that is probably two years down the road in terms of having that functionality in place, which is why we're pursuing the other tracks. >> let me conclude. i have gone over my time. if we don't have the resources at the v.a. to address issues

like hundreds of thousands of folks coming home with ptsd and tbi space issues, what happens in years to come? >> the wait times just get longer. we don't -- we don't meet any acceptable standard of timely and consistent quality health care. it's -- you know, i have committed to the president, i have committed to veterans, i have committed to the staff at v.a., i will not hold back for asking for resources because we have not been managing to requirements as a department. this would never happen in the private sector. you would never stand for it. you would fail as a business if you did this. it makes no sense, and i will not -- i'm not holding back now, and i won't hold back in the future. but i have also told these folks that have worked on the numbers, i don't want a penny in there we can't justify. not one cent. >> i have gone over my time. senator burr. >> mr. chairman, thank you.

and secretary sloan, secretary gibson, again, i commend you. you've sort of made all of us go back and sort of ask about numbers. because it hadn't been that long ago that we wrote off $127 million for that new software program to do scheduling. i think that was the second time in the $14 billion plus we've got currently in the construction and maintenance account that means that projects are on a seven, eight, ten-year timeline. so it's good to see, one, that the v.a. has a sense of urgency, two, that omb is recognizing the realities of what the needs are. and i've got a set of questions for you. but i'm going to -- i'm going to send those to you and ask you to respond to them, and i would ask unanimous consent that all members have an opportunity to do that. mr. chairman. >> without objection. >> sloan, i want to focus for just a few moments on data integrity and specifically at

the vba. i want to give you some examples of testimony provided by the office of the inspector general and the general accounting office in a house hearing on monday night. the inspector general made the statement and i quote all of these. we have concerns that vba's performance goals are not realistic and comprised by data integrity issues. unquote. quote, we're receiving the numbers of serious allegations regarding mail mismanagement, manipulation of dates of claims and other data integrity issues in the baltimore, philadelphia, oakland, and houston v.a. regional offices and today, we received an additional allegation regarding the little rock v.a. regional office. we're concerned at how quickly the number of regional offices with allegations is growing, unquote. quote, vba removed all provisional rated claims from its pending inventory. v vba's process misrepresented the

workload of pending claims in its progress of amending the backlog of claims. quote, an office of inspector teams sent to a regional office on june 14 said there were opportunities for offices to manipulate and input correct dates of claims in the electronic record. incorrect application of date of claim compliezs data integrity related to timeliness of claims processing, unquote. then there's this exchange that took place between congressman bilirakis and the assistant ig, linda halladay. mr. bilirakis said you remarked in your opening statement the vba itself reported a decrease in the national backlog by more than 50% since march 2014. do you trust those numbers? ms. halladay, at this point, i would say no. i can't trust those numbers. i think we have a lot of work ahead of us to address the allegations we've just received. they all seem to focus on data

integrity, and they need to be looked at very carefully so i don't want to say i trust them. near the end of the hearing, congressman o'rourke asked ms. halladay, and i quote, one of the things you said in your opening comment that struck me that some of the success may be comprised by data integrity issues. anything secretary hickey said tonight that alleviates the concerns you said in your opening statement. ms. halladay simply responded no. also on the issue of whether vba's quality metrics are reliable, the general accounting office provided this testimony, and i quote. in the prior work, we have documented shortcomings in v.a.'s quality assurance activities and more recently, concerns have been raisedunts the lack of transpair aenls related to the changes in the agency's national accuracy rate for disability claims, unquote. quote, in several basic areas, there are not following -- they're not following general

statistical procedures. that looseness in their methodology translates to numbers that aren't accurate and aren't helpful in looking at trends over time in terms of performance, accuracy rates and/or comparing terms of relative performance. that's not good metrics. unquote. simply, the inspector general's office testified that they, and i quote, continue to identify a high rate of errors in regional offices processing of claims decisions. now, under secretary hickey was the one who testified for the v.a. and despite her testimony, which was refuted by the inspector general, the gao, v.a. put out a press release the very next day entitled v.a. takes action to insure data integrity of disability claims in which the v.a. touts it has reduced the backlog by 55 first, reduced the

numbers of days it takes to process claims and improved their accuracy rate to over 90%. now, listen. you've said that you've got to gain the trust of the committee, of the veterans, of the country. and i think we agree with you. let me ask you, how smart was that press release? did you sign off on that press release? and how can numbers that were refuted by the people that are actually doing the investigations of v.a. facilities, how can they refute the numbers and the next day, v.a. come out with the same numbers and tout them? >> senator, i think, as you have noted, trust is the foundation of everything we do. and where there are questions about data integrity, i think we've got to bore into those very deeply. there are a number of issues that have been raised there. i could sit and go through and pick at an item or two, but the

fundamental issue remains. that there is -- there are questions about whether or not we've got good data integrity there, and just as we're undertaking independent reviews in the v.h.a. site, we'll undertake those in the vba. >> mr. secretary, they have been under way. much of it initiated by members of the committee with the inspector general, with the general accounting office. and you've acknowledged the shortcomings on the vha side. this is fresh. this is this week. and still that press release stresses that the v.a. will continue to post these performance datas on its website. how does publicizing suspect data increase the integrity and the trust -- >> senator burr, i would tell you, i come into this organization from the private sector and i look at the transformation that has been

wrought in vba over the last two to three years and can defy anybody to show me any major part of the federal government anywhere that has transformed that much in that period of time. i think it's amazing looking at it from a private sector perspective, much less doing it in the context of a federal government agency. there are -- there is room to improve there. i got it. we've got to restore trust there. i got it. they pulled the 100% provisional ratings out, and those didn't get counted in the backlog. i got it. my recollection of round numbers, it was about 12,000. i may not have that exactly right. the backlog is down 350,000, round numbers. so i get it. we need to make sure that the data integrity is there. but i'm not going to pull back from standing by that department and the good work that's been done. you know, we can't have back and forth between ig. ig has findings and we have to embrace those findings. >> well, i appreciate the

chairman's leniency. i'm not sure you're embracing those findings. especially in comparison to how you have embraced the vha findings. it concerns me because these are veterans that are waiting for their determinations to be made. in some cases, as the ig has pointed out and gao, it involves overpayments. overpayments that are due the american taxpayer that are due back to the v.a. to help fund other things. and it just strikes me, and i realize this was a vha hearing. it strikes me that you could have testimony like we had on monday night and yet turn around and put out a press release still stating the same numbers the next day when every one of the investigators found that those numbers couldn't be trusted. so i'll work with you. it's an area of great concern. it's as big if not bigger problem than the vha because the budget is the biggest budget at the v.a. i thank the chair.

>> senator murray. >> thank you, mr. chairman. secretary, the v.a. has removed the wait time criteria from the performance contracts of network and medical center directors, and i do understand the need to be wary of creating incentives for people to game the numbers, but we also have a serious accountability problem. how will you still hold a network and a medical center director accountable for wait times if it's not in their performance contract? >> i think the first step that we've got to do is get the integrity in the data. and so the idea behind pulling that out at this stage of the game was to eliminate any questionable motivation. >> understood. >> i think as we move forward, what we're going to find is that average wait times are a very poor gauge for timeliness of care for a large integrated health system. you don't really find that out in the private sector.

that's one of the reasons we're boosting our patient satisfaction measurement activities. because i think patient satisfaction is going to become central, even at a 14-day standard, if the veteran needs to be seen today, we have failed that veteran. >> so you're looking for different ways -- >> i think we're going to be looking at different ways to evaluate timeliness of care. a combination of patient satisfaction, a combination of veterans that are waiting too long and seeing that number coming down steadily, and then as we have the system capability to do things like you see over in the private sector, metrics like the third next available appointment, which gives you some gauge of the capacity of the system to be able to handle that veteran as they come in. today, at least, we're able to look at same-day appointments, roughly, in the primary care area. we see about 100,000 veterans on a same-day basis every single month in primary care.

that, to me, suggests that there is capacity that's being maintained to take care of that veteran who can't wait 14 days or 21 days or 30 days. >> okay. health care from the private sector does play a critical role in making sure that veterans get the care in timely fashion, but there are some drawbacks to that care that v.a. has been trying to overcome, like not being able to get medical records returned to the department and very little ability to see the quality of care that's provided. if congress were to expand the authority for non-v.a. health care, what steps would be nesssary to address those kinds of problems. >> i'm going to ask philip to jump in here in a moment. one of the biggest challenges we have with purchase care in the community is maintaining continuity of care for the veteran. and so the ability to get information, medical information, medical record information back and forth is a vital part of this. insuring the quality of care.

i would tell you if the flood gates open, it will present the department with challenges. but the fact remains, we are right now referring out roughly a quarter of a million referrals every month to purchase care, and as i mentioned before, every one of those referrals on average will result in roughly seven appointments. that's an awful lot of activity. last year, 15 million visits to non-v.a. providers over the course of the year added to the 85 million outpatient clinic visits. we have 100 million outpatient visits a year that we're managing, so it's already a very large number and a challenge for us, but it would be if we open the floodgates, it would be an even bigger challenge. anything to add there, philip? >> no, sir, senator murray, the one thing i would add is purchasing care in the community does not absolve us of the requirement, the responsibility to coordinate that care. in addition to the assurance we can send both send and receive

clinical data, there's just the hands-on coordination required to make sure an appointment has occurred, that a veteran knows where to go, that their family is involved. all the rest of that, if we just look at the cost of the care loan, we're missing a big responsibility -- >> when we look at how we do this and expand that, we have too look at all those issues as well and get them right or we're going to create a bigger problem for the future, right? okay, finally, v.a. has had a lot of difficulty hiring providers for a number of reasons, including the pay that's lower than the private sector and a very long, as you mentioned, cumbersome hiring process, and the challenge itself of just hiring health care anyway. so because we know there's national shortages as well. now, v.a. does a lot of training for doctors and nurses and works very closely with a lot of our universities. what more can the v.a. do to help build the health care work force that's necessary to meet the needs of the department and our country? >> that's a great question,

ma'am. i think one of the significant opportunities, and the chairman and i have talked about this before, are opportunities where we can work collaboratively there, maybe tuition payment programs or tuition reimbursement programs, ways we can encourage that. we certainly rely very heavily on our academic affiliations as a source for new clinicians. and we are doing some things from a compensation standpoint as well, where we're got some flexibility to be able to meet local market. >> i'm very interested in that because i think that's part of the reason for our backlog as well. there's a variety of reasons, but we can't ignore that side of it. >> yes, ma'am. >> thank you very much, mr. chairman. >> thank you, senator murray. senator isakson. >> following up on the question about referrals into the private sector. i wrote down from your statement, you made 543,000 referrals for private veterans for private care? what percentage of those would you guess were mental health referrals?

>> i'm sorry. i could hasten a guess, but i would take that one for the record. >> reason i asked that question is i got into the atlanta v.a. starting in august of last year when we had two suicides and a drug overdose. when we dug down, they were using a community-based provider for mental health. v.a. would see the patient, refer them to the community-based provider with no follow-up between the referral and the appointment, and during that period of time, when the perm was determined to be a risk for themselves and their own life, in two cases they took their own life because they didn't get timely services on the referral. i think -- mr. matkovsky made an interesting observation about coordinated care. as we expand options in veterans health care, which we may or may not do, i hope we do, but care coordination is going to be one of the secrets to making that

work, not just in reducing wait times but increasing the quality of care to the veterans. particularly with the number of, as chairman sanders said, the number of mental health people coming forward. that's going to be an ongoing process. it's one that will have to be coordinated and monitored. my question, did you ever see the william shaunhard memorandum? in may, when secretary shinseki and doctor peters were here for testimony, i asked them both a question, had they seen it. dr. peters said he had seen it and read it, and secretary shinseki said he had not. i think both of them told me the truth. i don't think secretary shinseki ever saw it, and i don't think he ever saw it because i don't think the senior leadership at the v.a. didn't let him so it. my experience is it lays in the highest levels of the veterans medical services that insulated the leadership of the v.a. from the problems they had. why else would a memorandum written four years ago

describing what we're all discovering now in 2014 not have been acted on? the last sentence of the third paragraph said these practices will not be tolerated. it doesn't say look at this when you get a chance. it delineates each of the programs like the testimony of the whistleblowers did the other night in the house hearing. you're an interim director, interim secretary. you're going to be handing off presumably to mr. mcdonald who i understand is a well qualified individual. what are you doing to put in place the type of information transfer and conduits that will see to the mr. mcdonald doesn't become a rookie victim of what a distinguished general was in mr. shinseki. >> i'm not going to let my old friend be a rookie victim of anything. >> i'm not being trite when i ask this question. >> no, no, i understand. >> for four years the v.a. has insulated its leader. >> i would tell you from my own personal perspective, i have learned to never have all my

information filtered through a couple of people. and so from the first day that i got to v.a., i started reaching down in the organization to get additional information. i think your sentence is a very accurate one. i think historically, vha has operated a fairly insular organizati organization. not fairly. a very insular organization. i think part of what we have been doing is dismantling a lot of those barriers. since my first day as acting secretary, every single morning at 9:00 a.m., we have something called access stand-up. we have senior leaders from across vha as well as senior leaders from across the department. we're up in our integrated operations center, and we're boring into data around access to care. what's the status, what are we doing? how many contacts, how many appointments? what are the wait times? what's the status on many of these different initiatives that i have alluded to in my opening

statement? it's just part of what we're putting in place. i would have to say this young guy right here, i have said before, if i was half as smart as philip, i would be darn smart. he's been doing an awful lot of the work to put in place the kind of management information that you're talking about. so that we're not just relying on by chance that information filters up. that we've got dashboards in place that will help us identify where there are scheduling malpractice that's in place right now. where there are productivity opportunities for us to wring more productivity out of a particular clinic, that we're able to identify those things, and in tandem, requiring medical center directors and visiting directors to get out in their clinics so they take direct ownership for the consequences. the first sentence in the memo that provided that direction was, medical center directors and visiting directors are directly accountable for the quality of care and timeliness of care districted by the v.a.

that was the first sentence and it's in there because i wrote it. that's part of insuring that we've got that kind of accountability, and frankly, it's part of the culture change for the organization. vha is not used to operating that way. >> my time is up, but with that endorsement of philip, i have to ask this question, you're not leaving when secretary sloan leaves, are you? >> i'm not going anywhere, either. i'm going to stick around. >> i'm talking about in the leadership. make sure he's at the right hand of mr. mcdonald. >> there are a lot of good people, a lot of good people building a lot of good tools. one of the things we have a team working on right now is to actually take that memo and actually develop tools that allow us to mine data to look for those patterns, so give us a risk score at the timeliness data we're looking at, so as we're looking at our timeliness data, secretary gibson has directed us to go look at an integrity score against it and rate it. are there certain questions and if the questions persist, have an audit come in and take a look at it and manage it.

>> thank you both very much. >> thank you, senator. senator tester. >> thank you, mr. chairman. you're right, there are a lot of good people in the v.a., building tools, and there's also a lot of them delivering damn good health care on the ground, and we need more of them, and we need to get rid of the bad apples in that bunch. mr. sloan, you said you have a concern about purchase care trumping v.a. capacity when i assume that's during this conference committee and other times. where we'll put more emphasis on purchase care and not enough emphasis on v.a. capacity. have you been able to do any sort of cost analysis on providing fair care for veterans outside the v.a.? is it more expensive, less expensive, or about the same? you can kick it over to mruczkowski if you like. >> there's instances where we have taken the mix of patients, veteran patients and the times of services we provide, and we compare them to a private sector model. sometimes we do it for a community-basedout-patient

linick, sometimes larger. as a general rule, it tends to be more expensivexpensive. there's two times of contract, capitated models and fee for service models. they both have their problems. >> come from a state where it's a frontier in a lot of areas in the private care may or may not solve the problems, but it looks pretty attractive. if it breaks the budget of the v.a. and we don't get better health care in the private sector, which i think both of those are up for debate, it can be a problem. that's why i agree with your capacity issue at the v.a. in the meantime, i want to talk about an issue that senator moran worked on. that's projectanch. it has worked well. it has not been perfect, but it has worked well. could i get an insurance from you that arch will not be prematurely shut down before it's reauthorized? >> the discussion that senator moran and i had the other day was exactly to that issue. my commitment is we will not to the extent that i've got the authority, and there is some question there, but we will not

end the program that is providing access to veterans until we have the robust replacement in place so that there is no lapse in care for the veterans that are being served in project arch. that's my commitment to senator moran. it's my commitment to you and to the veterans. >> that's good. i think the project arch definitely works. it definitely allows you to have control of the medical records, too, as you move forward, which is sabig turn when we start going to the private sector. could i ask you, what do you say to folks who say that v.a.'s work shortages are a myth and that the real problem is the medical personnel is not working hard enough or fast enough? >> i'll start and then i'll probably pass it over here to philip for a wrap-up. i think when you look, i mentioned earlier in my opening remarks, older, sicker, and poorer. when you look at the typical v.a. patient. so the first one, you start talking panel sizes or rvus when you're looking at specialty care.

you have to take into account the very different patient population that v.a. is dealing with. so the number of primary care patients that a clinician sees at v.a.s is in all likelihood going to be different than what you see in the private sector. secondly, there are often times factors that bear on their ability to see, for example, space. we talked about that earlier. i think the average in the private sector for primary care is two and a half treatment rooms for a primary care provider. i don't know that we've got good data on what that looks like across v.a., but i strongly suspect we don't have those resources. in the case of specialty care, i would tell you one of the places we're significantly underleveraged and it's addressed in these numbers in this request is on average, we have one support person for every specialty care provider at v.a. that compares to a goal or a target of three and a half to one in primary care. we're under leveraging our

specialty care providers. as a result, they're not seeing as many patients as they ought to be able to see. we get these differences in the comparison to the private sector. i'm convinced we're going to see productivity enhancement, but it also means investments to make able to deliver those. >> that productivity enhancement meet the needs of the veterans who don't have access to the va? in other words, what i'm saying is, i was told, for instance, va montana has 22 slots short on docs, nurses significantly higher than that. productivity can probably take care of some of those docs. maybe, maybe not. but, mike, my point is is that if we're 22 short on docs, it just means we're working the doctors there harder. it becomes an issue of are they going to be as happy with the va? nine out of ten say they're happy with the service now, the ones who get through the door. >> let me ask phillip to take just a moment and summarize the

process that we've been going through. >> that's fine. >> across va. >> when we did accelerate in care, one of the things we pushed out was productivity data for specialty care. i may touch on panel size a little bit, because i think there's some criticism there, bu we sometimes miss the comparative patient populations when we do that. we are looking at productivity. we are comparing productivity internally where we've got high productive facilities. we're looking at how they get there. part of that is a smart use of support staff, but part of it is actually just monitoring rbus and productivity in our appoi appointments we have available. some can be covered internally, some require additional resources. we asked every facility to look at productivity numbers as well as whether or not they could increase them. they could not, to give us a requirement for some nonva care resources and used that as a

basis to accelerate care. >> senator moran? >> chairman, thank you very much. again, secretary sloan, thank you for your presence today. senator burr and others, including you, have used the word trust. when i -- i've nevering a askeda cabinet secretary's resignation. this is the first time i've done that in my time in congress. we were indicating at the time fl there was a problem with the culture, system inproblic problk of leadership. it was my sense all that wases true or i would not have taken the steps i took. i was somewhat comforted in the position, but actually, you know, very concerned by what i heard secretary shinseki say on the day that he announced his departure which was something to the point that he had been surrounded by people whose views he trusted that he should not have trusted. the reason that there was some a assurance to me, it seems to me

we were right, there is a culture and systemic problem. if the secretary can't trust the people that he or she must deal with on a day-to-day basis to provide information. i want my comments here today to be broad and not provincial just to kansas. i appreciate the senator from m montana raising this issue of arch. i want to use that program as an example of why i as a member of congress have had difficulty entrusting the department of veterans affairs. i don't mean this in a personal way. i don't mean to suggest that i'm personally offended by the circumstances that have developed over a period of time. what i mean is that my ability to assess what you're doing, make decisions as a member of the appropriations committee, but most importantly my ability to care for the veterans back home in kansas is handicapped by the sense that i've had that the department of veterans affairs doesn't trust us, doesn't share information with us, is not

honest with us, and perhaps most importantly, has rarely responded to issues that we've raised, again, not -- this isn't a personal concern of mine, it's not like i'm personally offended, but when a veteran in kansas brings an issue to me and i raise it with the secretary or anyone else at the department of veterans affairs, i think we should be able to expect an honest, fair, and timely response and it hasn't occurred. so my ability to trust the department of veterans affairs had been significantly handicapped. an example of that is this arch program. i authored legislation that created a pilot, ultimately a pilot program, narrowed down to be a pilot program, that says if you live long distances from va hospital outpatient facility, you can access that at home by the veterans department giving you the ability to do that, paying for the service. that pilot program, five of them across the country in rural areas of our country were created in 2011. i kept continually asking

questions the va, how's it going? some pride of authorship, but mostly is it working? our veterans, are they liking it, is it cost effective? does the technology work? we virtually got no answers over a long period of time. finally at the hearing with secretary shinseki, this program about to end. its three-year pilot program is coming to a conclusion, although we're pleased to know you have the authority to extend it. and secretary shinseki, in march of this year, indicated to me that i would have an answer to my question by sunset. those were his words. by sunset. never had an answer yet. then in march of 20 -- and incidentally, one of the things i've learned since then is that in the spring of 2012, a year after the pilot program gets started, the wichita va is interested in promoting this program to rural veterans. and they were instructed by folks in washington, d.c., that

you cannot recruit veterans for arch, and you cannot, quote, market arch. who -- i mean, my concern is we've created a program that somebody at the department of veterans affairs doesn't like, so they're out and about trying to make certain they prove it doesn't work. for somebody at the va to tell folks in kansas, don't market this, don't encourage veterans to participate, suggests that they wanted a failure. then i become more suspicious as you learn this -- as i learn this. on march the 26th of this year, the national program director directed the five pilot programs to notify veterans the program was coming to a conclusion. at the same time, in fact, in april, a few -- a week or so later, senior staff at the va assures my staff and committee staff that we are continuing to assess the program. subs kequently we learned alrea

the memo has gone out, the five pilot programs, to notify veterans program will no longer exist, but ten days later, two weeks later, we're assured we're continue to assess. that then, again, makes me suspicious about the inability to get the report promised by the secretary of veterans affairs by sunset that i will know what's going on in arch. then in june, we discovered that -- june of this year -- we discovered there was an e-mail ready to be sen terminating the program. i and several other senators, including some on this committee, asked that not to be the case. we were told just in time the send button was never pushed. so, a series of things that cause us to have great doubts about what's telling us what, what the truth is, and i fwgues in a more fundamental way, our program authorized by congress, can they be easily undermined by personnel at the department of

veterans affairs who don't apparently like the suggestion we made? it's no a suggestion. the law we passed. ti finally, then, our telephone conversation. i appreciate you reiterating what you just said to senator tester. that's what i find myself in as somebody who's a supporter of veterans, supporter of the veterans affairs, whose mission it is to take care of veterans across our country and our state. >> just a quick comment. i alluded in my opening remarks to openness and transparency. i think that is central to maintaining trust and the position we're in right now, reestablishing trust. this is one of the central cultural issues that we have to deal with as an organization. i would tell you that in is a -- i mentioned the used the word insular earlier to describe particularly vha.

as i find it coming into the department of. i think that's the case. you know, what i've been doing over the last six weeks is pushing information out the door as fast and as hard as i can push it out. i prod behind the scenes for responses to congress, and we've got a lot of work to do that in regard. have to earn the trust back. yes, sir? >> okay. thank you. senator? >> thank you. we know there are capacity issues at the va and i just would like some clarification on some meancomments or statementst you made. did you say based on your assessment of the capacity issues that you would need 10,000 additional staff? i think you were talking about some $17.6 billion that you would be requesting? >> that is correct, yes, ma'am. that's -- i know that sounds like a huge number.

there are 300,000 people in vha, alone. >> so is that 10,000 additional staff -- i know you broke it down to how many doctors, et cetera, within the specialties, et cetera. so is that for the emergency situation we have now? or is this an assessment that reflects your long-term staffing needs? >> there was a reference made in one of the opening statements earlier about the findings of the field audit and the number one cause for scheduling difficulties was that there weren't sufficient provider slots to be able to schedule patients into. so what we're talking about here, my comment earlier that we have not historically managed the requirements, we've managed to a budget number. and so basically we took a budget number and then we did what folks thought they could do. and the veterans wound up being the shock absorber in that process. >> meanwhile, if you look at what your true needs are, then you're saying that you would

need to hire 10,000 additional staff. >> yes, ma'am. >> that would of course depend on the appropriations that we provide. >> yes, ma'am. >> so if you were to have the appropriations to hire 10,000 people, what would -- how long do you think it would take for 10,000 people to be hired? because one of the things that i did hear about the hiring in va is that it takes a long time to hire a doctor. so i hope that in your review you're also looking at your hiring processes, because it shouldn't take a long time. whatever that means. so that's one question. and then to hire 10,000, do you have any sense of how long this would take should you get the money from us? >> couple of comments. one, at every single medical center i visit, i hear from rank and file staff that it takes too long to hire. though staffing practices is one

of our areas of concentration. my guess is, there are some of those things we're going to find it just a function of being in the federal government, and that's the regulation and statute we've got to follow. my guess is we're going to find a large portion of that is self-inflicted and have to clear that stuff away so we can hire more expeditiously. second, round numbers, i would say in vha we probably hire 30,000 people every year, ye anyway. 10,000 sounds like a large number. it's about 3% of staff. maybe a little bit less than that. but recognize that some of these are in places like primary care physicians, and mental health providers. and we know, and you all know, that those are tough to find. and so it will take time for us to be able to hire them. quite frankly, the other problem we have, even if we could go out and hire them all tomorrow, we don't have a place to put them all. in some instances, what we're going to have to do is deal with

some of the space issues in tandem with this. we may be able to do -- there are actually some provisions in here for what are called emergency leases. i actually authorized some of these when i go out to the field, where somebody's found some clinic space that's local that could be occupied quickly. 10,000 care feet. something like that. they could put three patient line care teams in there and take -- >> i don't mean to interrupt you, but my time is running out. >> yes, ma'am. >> my concern is mainly that you're addressing the length of time it takes, and if you're hiring 30,000 people every year, there are probably some retention issues that you are also probably addressing. >> 10% turnover. that's not -- >> oh. >> in fact, it's relatively low as you look at health care organizations. >> that's good. you have mentioned that in response to a question that when the ig has findings to, quote, you were embracing those findings. and since the problems and challenges at the va have been

longstanding, i wonder whether you have a process or someone in the va who provides a response to the ig's findings that should you be providing a report to congress to respond to the ig's findings so that we also can provide the kind of oversight that congress should provide as to what is happening at va? >> there are responses to those, and if -- unless i'm miss taken, i believe those responses are shared. is that correct? yes. so there are responses. what i would tell you is that i don't believe that those have always gotten the visibility and the attention. you know, some of the examples surrounding the office of the medical inspector and some of those reports, quite frankly, i don't think those were getting the attention they deserved. as we look at overhauling certain of our processes, part of what we've got to do is make sure that the issues that need to be elevated all the way to the office of the secretary are, in fact, being elevated. >> yes. >> and where somebody says we've

taken care of this issue that we know what's been done and we have confirmed that. >> i just have, mr. chairman, just one more item. i was told by the veterans that i've been talking with, many of them live on islands, so these are rural issues. and i was told that even if they got vouchers to go out to get private care, that the doctors on the big island, maui, they wouldn't take veterans, so it wouldn't help them. have you heard that concern? >> i would tell you there are issues around pc3, primary care close to the community contract that we've got with two different national providers for specialty care. and we do find instances where i think we've got room for improvement. that's a new program. just launched earlier this year. and i don't think we're executing it as well as it needs to be executed. and there are discussions going on this week, today, with the leadership of those two programs. to make sure that we address those issues. i get that feedback from staff

and veterans as well when i'm out in the field. >> main thing, you're addressing that issue also. >> yes, ma'am. >> thank you. >> thank you, senator. senator johanns? >> mr. chairman, thank you. mr. secretary, in your request for more money, a lot more money, one of the things that you mentioned was new facilities and the idea behind that is that new facilities may improve productivity and hopefully that results in better services to veterans. that sort of thing. you mentioned that there were eight facilities that would be construction projects. how did you pick those eight? i know of a list out there that if you have a need for a facility, new hospital, say, it makes its way up the list. t did you just pick the top eight?

and if you want to toss it over to phillip, that's fine, too. >> i am going to toss this one to phillip, if i could, please. >> sure. >> so this is -- we have a backlog of major production projects. this is the major construction items. not the minor construction or nonrecurring main innocence. and there's a prioritized ranking system that typically -- not typically -- has rated safety and security as the highest. seismic corrections where we've got seismic deficiencies with, if there were an earthquake, the building would crumble. those have to get fixed. there's a number of those. we also have longstanding space shortages. every single one of our facilities has a space shortage in terms of meeting patient care and needs. i think we need to understand that. these aren't abstract numbers. there's not enough space. but the vast majority of these, the eight projects, st. louis, louisville, american lake, san francisco, palo alto, west l.a., long beach. for the most part are safety and

security high prioritized items because of structural deficiencies. some of them do have patient care for additional space. >> would this top eight be the same top eight as the list of 20-some projects that are out there waiting to make their way? >> it's from that list, yes, sir. >> okay. would they match? if i took that list and matched it with what you just described for me? >> are you talking b about the 26 or 27 major leases or -- >> no, it's not leases. >> i think you're talking about the historical projects that were ranked and prioritized. >> yeah. >> it would match and would match against that list for the most part. yes? >> okay. for the most part. what's the most part missing here? >> so for the most part, just to give you a direct answer, might be the ability to complete a project given the size of the required funding. it would fit in, whereas somewhere else that might only

be 20% of that project. that's what i mean. >> okay. at the committee's hearing in may, one of the things i talked about, and other members did, too, is the expanded use of non va care to deal with the urgent treatment issues. you know, this isn't an academic issue. it never was. it very definitely isn't today because we know people died on the va waiting list. and we know that throughout the system, the list was gamed intentionally and dishonestly to the detriment of veterans. now, there's a lot of ways of handling that, and mr. secretary, let me be just candid with you. i've sat on this committee now nearly six years. other members have sat on committee a lot longer.

this committee has been, i think, very, very generous to the va. and i kind of find it remarkable. republicans, democrats, liberals, conservatives. it's kind of -- when shinseki would come in, general shin sensen shinseki was kind of like, what do you need, general? it's almost like we'd salute when he said what he needed, and out the door he'd go with more promise. always the promise that we were doing better. here's my concern. this sounds so similar to what we've heard over the years. i need more money. i need to be bigger, faster, grander. i need a bigger bureaucracy. i need to hire more people and on and on and on. i think what you need, personally, is competition. i think if somebody were biting at your backside because they were providing better care, faster care, honest waiting

lists, et cetera, people would go holy smokes. if we don't put our act together, we're going to lose out on this. if we don't see more patients during the day, we're going to lose out on this. just let me ask you, what am i missing here? >> i think you're -- i don't know what you're missing. i know that millions of veterans turn to va for their health air. as a number of folks have mentioned at various points this morning, an awful lot of veterans con to believe they get great care. access to care is a challenge for many, particularly for new patients, but there's a lot of great care that's being delivered every single day. >> here's my offer, because i'm out of time. you know, and i hear this. but at the end of the day, these veterans fight for our freedoms. why don't they have the freedom to make their own choice ablout

their health care, and maybe they say, by golly, i love the va, i'll stay with the va until the day i die. maybe they say that hospital, 20 mn minutes down the road from where i'm at, is simply a better situation for me than the hospital that's 250 miles from where i'm at with a long waiting list. and, you know, i'm totally out of time and i don't want to impose upon the chairman's patience. but i just think you guys need competition. and i feel very, very strongly about that. and if you can't clean up your act, then guess what? you lose out. and that's what i think you need. i don't think you need more billions and billions of dollars. so, thank you. >> thank you, senator johanns. senator begich did not make an opening statement so we'll give

you a modest amount of additional time. >> thank you, mr. chairman. thank you both for being here. i appreciate it. it's amazing to me, i've been here now just about six years, but i'm looking at a 2003 rep t report, improve health care, delivery for our national veterans. okay. if not, you should read it. i'm really doing it for my colleagues because when i turn to one page here, why i'm doing this is to make part of your point. although enrollments have access to va long waiting times, appointments with health care providers continue to be problematic for a significant number of veterans. as of january 2003, at least 236,000 veterans were on a waiting list. six months or more for their first deployment. lack of efficient capacity or at a minimum a lack of adequate resources to provide the required care. this is not new.

it's just they didn't get the funding years ago and now we're playing catchup. because you've also had a $1.4 million net new va patients. we didn't do it. i wasn't here. somehow people missed this report. for the record, mr. chairman. i think, you know, it's like somehow suddenly it's all a new problem. it just occurred yesterday. no, it's right here in this report. because they were not funded properly, it built up. new patients were added to the list. from afghanistan, iraq wars. i don't know. pretty simple. third page of the report. not complicated. done under a different administration. so i want to put that to the record because of the issues you're bringing up are relevant. you know, do i think it's a lot of money? yes. is it money well deserved for our veterans? absolutely. because if they would have had

it here, we might have been recruiting doctors back then. because the problem we're going to have is to senator hirona's question, is hiring 10,000 people, i agree, you have a hiring system that's great, but to get mental health providers and primary care doctors, you don't just turn a switch. every private hospital in this country is behind the curve getting doctors. nurses are backed up. we don't have the capacity to fill it. so i want to make this clear, because i think there's a lot of good bumper stickers being talked about today. i get it. but this is a systemic problem that's been around for a decade or more. and, yet, it is now suddenly -- and thanks to the vsos and others who have come forward and said, look -- they've been fighting for this for years and now we're finally figuring this out. i will fell you, i know my chairman gets aggravated -- not aggravated, but he knows i'll bring it up all the time. that's what we're doing is alaska. we talked about this. we saw this problem when i came into office in '09. we said, what are we doing?

we had 1,000 people on our waiting list in alaska. we didn't go to the private sector. honestly, all of that thgo to t private sector to get a doctor, it's hard enough to get our appointments. we looked at our current system of federal tax dollars and how they're being used. eindian health services deliverd by our tribes in alaska. federally qualified federally funded. we maximize the resources at our fingertips today. what's our wait time in alaska? northwest region? it's one of the lowest. one of the lowest in the country. because wu with ne now have acc. matter of fact, in anchorage, when you use a qualified clinic there -- again, you have to be on the list. sign up, get in the system, get on the list. for non major medical, same-daycare. that's pretty significant.

if we shove it out only to the private sector, some magic will happen. we do closer to care program, as you know, which uses private sector. that doesn't mean it's the panacea that every veteran is going to get care overnight. we have to look at the systemic problems here. that i know you and i have talked about this idea and what we're doing in alaska. and i think it has been successful. we have some problems still. we have logistics problems, billing problems still. we have some scheduling issues and how to make sure the records are transferred properly between federal agencies and so forth. i know we're going to figure this out. but doesn't that seem like something we should be expanding and looking at around the country? i mean, federally qualified clinics, one reason you have certain pay levels for doctors. so you have a controlled cost unit. and the private sector you're not going to have a controlled cost unit. now it does mean still we'll use private sector resources as we're doing in alaska along with

federally qualified clinics and our indian hills services, otherwise known as what we call the nuka model, impressive model of delivery of health care. don't you think this is a model that we could actually go after some of this? i mean, again, i didn't mean to get so aggravated about this. just aggravates me when people tell me it's suddenly a newfound problem. people who have been here a lot longer than me should have read this report. not you. not you two. congressional people. go ahead. sorry. there's my rant. there was a question there, i know. >> i'll try to address it, sir. very quickly. the model in anchorage, the director then, who actually was a actually blaztrail blazer for established a number of the agreements with local alaska tribes. >> 26 of them now. >> phenomenal work that he did. earned the trust. literally extended the network of community providers into a seamless integrated system up

there and allowed us to avoid folks having to travel long distances. the norm before used to be folks flying down to washington state if you recall. they were able to stay there. remarkable work by the director. some of that has actually become sort of a pattern that we've used elsewhere in the country with local tribes and with ihs. signing the agreement with ihs to extend health care services, but most importantly as well with the tribes and the dakotas and oklahoma. across the country. we have tribal agreements in place where we can reimburse for care. it is not perfectly seamless, but it is something that has really taken root for us. >> you didn't need new rules. >> no, we tdidn't. we shared agreement sharing. >> you can do that also with federally qualified clinics. >> we can, under sharing authority. >> again, in alaska we're doing that with a cupping, one went from a private to a federally qualified clinic to deliver care in seward, alaska, because there's no veteran care down there which is a great example of how you can do this with your

existing rules. let me ask you, on having the va utilize -- we talked about this on -- i may send a letter to general shinseki on this regarding positions the indian health services uses which are some of the core there to use for their medical delivery system. see if the va can do the same thing. it's in the bill to fund some of these. in other words, the health care corps. can you tell me if your regulations allow you -- i know we talked about this briefly. i don't know if you had time to check on that. this is a resource of over 5,000 medical professionals sitting there ready to go. >> are you talking about the national health service? >> yes. >> yeah, i think we'd have to look at credentialing and privileging issues that would allow us to credential and privilege and share those authorities to treat in our system as well. i'd have to take that back and look at it. >> can you do that for me? >> i will. >> last thing is on -- i have a

bill on -- i know senator murray talked about it, and that is reimbursements for doctors in the sense of serving our va system. i have a bill on mental health providers, psychiatric care, which is a huge gap. doing loan forgiveness. have you had a chance to look at that bill? if not, can you give us feedback on that at an appropriate time? >> mark, if you'd yield to me for a second. >> yes. >> the issues senator begich are raising are very important, and that has to do with how we not raid other facilities and steal doctors and psychiatrists but develop more. the issues are is you guys have a health education assistance program which "a" needs to be rethorszed and "b" needs to be significantly increased. right now the maximum you can provide is $60,000. >> matter of fact, under aca, affordable care act, it's up

$200,000. the question is, have you had a chance to look at that bill and do you support this context? >> i think we support the concept. we have to look at the funding requirements associated with it. in practice, it's something that will allow us it recruit and retain highly qualified staff. >> very good. mr. chairman, i have other questions. i'll submit them for the record. i appreciate you allowing me to ask questions. it's very frustrating when i see a report like this and people think it's a newfound problem and it's been around for ten years. we need to get after it and deal with it. going to take years to change it. thank you, mr. chairman. >> thank you, senator begich. senator heller, you'll have additional time because you didn't make remarks. >> what i want to is submit opening remarks to the record. i'll keep this on a timly show. >> one of the few senator who wants less time than being offered. >> having said that, if i go over, please don't cut me off. having said that, thank you for holding this hearing, both the

chairman and ranking member. at risk of irritating you like senator begich claimed, you know i'll be talking about backlog statistics and certainly appreciate a rescheduling of the hearing on the backlog information. i'll talk about that in just a minute. i am looking at the latest statistics. i want to thank you for being here, secretary, and smartest guy in the room, phillip here, for taking some time. but i'm looking at the latest average days of completion. and i bring this up because reno has the worst va regional office in the country, and i've been hitting on this and hitting on this. i think it's a management problem. i don't think the rank and file in that office are at fault here. i truly do believe it's a management problem. i'm certainly hoping and have called for changes in that particular office. but the average days to complete now a pending claim is about $340 days. i have been harping on this for five years. and they're making progress.

in five years they've reduced it ten days. gone from 350 to 351 days down to 340 days. over five years. you have to imagine it's pretty frustrating. i'm not fruf rated for myself. i'm frustrated for every veteran in the state of nevada that truly needs the help, benefits, and health care they deserve. on top of that, we had an inspector general report. found that 51%, 51% of the disability claims that were reviewed in this were inaccurate. i have to tell you, i appreciate, i appreciate your opening statement, your openness and concern for openness. i think that's important. transparency is important. bob casey, senator casey and i, have -- because he has similar problems in pennsylvania, worked together. our staff worked very, very hard. we came up with this va claims backlog working group. submitted legislation with that. are you familiar with the

information in this? >> i would tell you that i'm aware of it. it would be a stretch for me to say that i'm familiar with it. >> okay. fortunately i'll be able to meet with the nominee tomorrow. >> good. >> and get an opportunity for him to also address or take a look at it and because i think it's very clear. the concerns and problems we have. i think it does address some of those problems. legislation is available. what's good news is is senator moran and senator tester from this committee are also co-sponsors of this legislation. i think it would tgo a long way so we don't in five years have a ten-day improvement, that hopefully in less than a year, we can see, perhaps, a much greater, much greater improvement. i want to get on another topic real quickly, if you don't mind. and that is an issue that we have in the state of nevada. there's a small city in southern nevada called prump.

prump has 6,000 veterans down there. you're shaking your head, phillip. i'm glad to see that. they have been waiting for a va clinic for several years now. and the director in las vegas, director duff, has approved it. they're now waiting for the national va officials here in d.c. to get this done. what is the status? >> i have to get back on the detailed status. we've had some issues with our, if i may, our lease authorities that we've been trying to work through. and i think some folks here may be familiar with that that have resulted in some delays in getting leases enacted. we had some challenges on the procurement side of that. as i think your staff has been briefed over the years. right now we're working through trying to make sure that we can exercise our lease authority in the current environment. that is the challenge we have, sir. >> do you have any timeline for approval of this clinic? >> i don't right now. it's not an issue of approval. it's an issue of actually

affecting a lease aagreement. >> you think we can get an answer perhaps by this fall or something? >> i'll get it to you sooner than fall. i will personally go in and look at it. >> i want to talk about -- just a few -- another minute here. about the face-to-face audits, reviews, and the problems we have scheduling. we had an audit, first phase was released on june 9th. this is the southwest va clinic in nevada. they say it needs further review. do you know if those reviews have been completed? >> we have referred all of those cases to the inspector general. and we have prepared a detailed set of briefings. i think we're trying to schedule it now with the committees and with delegations to walk through the audit findings as well as why someone would have wound up on a further review list. i know it's taken us a while to do that. i want to apologize for the amount of time. >> i want to make sure there

isn't -- we don't miss the follow-up. i don't anticipate you would. do we have any timeline as to when -- >> i would tell you, the question there, the somebody mentioned earlier the igs in over 70 different locations, any location where the i fwrks is, we're not able to go in and do any additional review. we've created accountability audit teams to go into all of those where the ig isn't and those are scheduled to be kbleeted,kbleet completed, i think by mid-august is the completion time. in the meantime, we're going to provide briefings on what the findings were. i'm going to be in reno in august. i have to go out there to speak. we'll get you the ladates when m going to be there and i will go visit while i'm in. >> if you could. thank you very much. mr. chairman, thank you. >> lastly, we appreciate the opportunity to provide technical input on the leashing issue. i think we furnished some of that information to the staff, mr. chairman, that would help

us -- be very helpful for us to be able to move forward. >> thank you. senator blumenthal, you have eight members. i alert the members there will be a vote at 8:20. senator blumenthal, eight minutes. >> thank you, mr. chairman. i appreciate you holding this hearing and your leadership along with ranking member burr, and thank you, mr. gibson and mr. matkovsky for your service to our nation. i think you folks are in a difficult, if not impossible, position, because you are temporarily before us without the head of an agency, and my hope is there will soon be a secretary of the va. but right now, in effect, there's an empty desk where the buck should stop. and i think that situation has to be remedied as soon as possible. and that's on us, not on you.

leadership has to include an overhaul top to bottom of the people who run the agency. very simply, my view is that there has to be accountability for what's done in the past, but also a change in leadership which you are commendably seeking as well. top to bottom, across the country. and my experience in the last few months has been that the failure of the agency being more responsive and accurate and some of what it is saying to the public is actually aggravating its credibility and trust problems. senator burr raised one instance earlier with the press release that he mentioned. i have found that there simply have been no answers to some of the questions that i posed in letters to the agency. letters asking for site-specific

information about the audits that were performed. the va officials locally and the audits seem to confirm that there have been no problems in connecticut with these delays and destruction of documents and manipulation of waiting lists, yet we found in recent data released by the va that, in fact, wait times have increased over the may to july period. in fact, those wait times have tripled. what's the meaning of that data? so i've asked not only for the site-specific information resulting from the audit that was performed, result of general shinseki's order, but also for an explanation of those wait times. and i have yet to receive responses from the agencies that are really complete and satisfactory in writing to the

questions that i have posed. now, i understand you have a lot going on, but i would suggest that that kind of responsiveness in providing information is part of the mission that's all the more important. it's always existed, but it's all the more important now. so i would like a commitment from you that the agency will respond to my inquiries in writing as soon as you are able to do so. and that you will respond in the future to the inquiries that i posed. >> two quick comments. first of all, the answer is we absolutely will. it might even be more effective for us to arrange to come in and deliver a briefing. also walk through, as phillip mentioned a second ago, briefing material around the access audits that's being provided.

you haven't had the opportunity to hear other comments, but, you know, we've been pushing information out the door as fast and as hard as we can over the last six weeks. that openness and transparency, to your very point, is an essential part of earning back trust. last thing, i told the president of the united states when he tapped me to be the acting secretary, i said, don't expect me to behave like the word acting is in front of my title. if anybody has seen behavior out of me that seemed like i was acting as a caregiver, let me know what it was so i expla plp what you were looking at. >> i welcome that comment and i second it and support it. can you tell us anything about the ongoing inquiry internally, what its status is, when you expect it to be completed, and second, about the department of justice investigation? i called for a criminal investigation by the department of justice with great reluctance

and regret, but i do think that criminal responsibility has to be applied. if there was obstruction of justice, destruction of documents, fraud in reporting, because those crimes, even with an agency as important as the va, or perhaps especially because of its very important mission, has to be implemented where necessary. >> there was a mention earlier to the fact that the ig has reviews under way at 70-some locations across the organization. i should explain here, before the ig goes into any location to any kind of review for any purpose, they inform the fbi. and at any point during the course of their review of activities they uncover evidence of criminal wrongdoing, those routinely get referred to the department of justice. in fact, there is a criminal

investigation division of va's ig. so routinely there are criminal investigations undertaken and completed and prosecutions that occur as a result of ig investigations. so it's a routine matter. i would tell you of the 70-some-odd locations that the ig has been reviewing, at the end of june, i got the first set of reports on the first location, and so we have been working more than 1,000 pages of transcripts of sworn testimony. turned out we actually needed some additional information so we dispatched an official fact-finding group to go to that particular location. we've reviewed hundreds, if not thousands of e-mail traffic, and i expect by the end of this week to have proposed personnel actions on my desk for that -- for a number of individuals at

that one particular location. there is nobody that wants to see this process move faster, move forward faster than i do. it is painstaking. you know, i would say the other general category here of issues have to do with the referrals coming from the office of special counsel. i've met directly with carolyn lerner. we're expecting a stabl number of those to come to us very quickly and we've agreed on some expedited processes that we will work through to ensure that the whistleblowers are properly producted a protected and to launch the appropriate personnel actions in the wake of that. >> and my time is about to expire, so i apologize, i'm not going to have more questions in this setting. i'd like to follow up on the department of justice investigation. i know you can't really comment in this setting about it. and most important, about protection for whistleblowers. i think one of the unexplored

areas here has been the potential for retaliation against whistleblowers. i'd like to know from you in the course of a future briefing what has been done to protect them, but just one last comment, there is nothing routine about what happened here. you said that routinely, the fbi is involved. there's nothing routine about what happened here and the fbi should fully engaged and the department of justice involved. >> thank you, start. >> senator bozeman, you'll also have additional time. >> thank you, chairman sanders, ranking member burr, for having this very, very important meeting. i want to thank you all for being here. i know that you're working very, very hard to try to resolve these things. i also want to commend you, mr. gibs gibson, for getting out to, you know, to the places that are really struggling, and also the places that are doing well in trying to figure out best practices, then, again, why others are struggling so much.

dr. perlman is important in the situation, bringing him on as an adviser. i think that was a really good move. in regard to your request as far as additional personnel and things like that, is that based on current practice, or is that based on reforms in the future that are going to, you significantly change things, hopefully? >> the methodology we used is largely framed in the current context, senator boozman. so what we looked at is looking a our concern appointment volume, looking at our current delays in care, forecasting those through the years, and trying to attenuate them year-on-year. it's not any subsequent reform. it's in our current context. >> right. i had the opportunity to serve with tim osborn over in the house, the great coach from nebraska. people used to talk to him about winning. he'd say, we didn't talk about

winning. what we talked about was doing the little things. one of the little things that has to be done -- i'm concerned because you said it would take two years and probably in va lingo, that's probably more like four or five is the schedule. that's one of the little things that if you don't get that done tomorrow, my understanding is they don't call people the day before and tell them they've got an appointment. you could catch it right significantly just by doing that then taking somebody that's on a backlog and sticking them into those slots. that's just common sense practice that's done throughout the country with anybody in the private sector. so you have to get the scheduling under control. and there's no reason not to do that in a rampant situation, particularly targeting the areas that are having problems. you know, your facilities that are doing okay right now by whatever standards you're measuring, but it does seem like you would put that in place

right aaway. >> you may have mentioned, missed the comments earlier. there were actually four different major initiatives underway on scheduling. one has to do with fixing existing issues. there are 11 of those fixes in the process right now. there are four separate applications under development to make it easier for schedulers to interface with the system as well as to give veterans the ability to directly request schedules. there's a contract that's already been let that will make major modifications to the existing scheduling system, on the 11th of july and we expect that to bear fruit in the may through august time period of next year. to deal with some of the toughest, some of the most difficult issues associated with the existing schedule system. all of that is in parallel while we are working to acquire a commercial -- >> there are good over-the-counter systems in place right now that major

medical centers are using without any problem at all. that's basis of medical practice. >> you want to answer this one? in su ? >> sure. i would agree with you, sir. you have two comments. one is the underlying system. i don't think we're looking to go build sting from scratch this time. >> no, i mean that -- i would hope not. >> we're not. no. >> that's something that people have been doing for years, and i'm an optometrist by training, and, again, that is the basis of your practice, is scheduling. you mentioned that one assistant per specialist, and i would, you know, right now in the va system, and i think you said 2 1/2 or whatever, that might even be a little bit low. but what is the -- what i'd like to know is what is the relationship between if you take a major va medical center and you look at total staffing, you look at the staffing that it

takes to support that medical center, okay? what is the comparison with a major private entity as far as numbers? >> i don't have the exact percentages, but if you look at the overhead rate in the va, or the indirect rate in the va for support staff, it's considerably lower in each one of our major areas, primary, specialty, mental health. i don't have the specific counts. >> as far as the total numbers. i'm talking about administration, the whole bit. >> i'm looking just at the field cost. not looking at everything else for a blended overhead rate. i think we could come up with something like that that would look at a blended rate and see where the overrate and charges come in. in terms of our facilities, the lab labor share is lower in the va for support than -- >> not as dollars, but people. >> in terms of people, it's lower in the va than it is in the private sector. what you may be asking, as well, would be could we construct a

blended rate that looked at the overall cost factors? we could. we have not done that. >> i'd like to see that. i think that would be interesting. the other thing is, is that right now if you go to a -- to your medicare doctor, you know, if you're a veteran and you get a, you know, you have a physical and the medicare doctor decides that you need high blood pressure medicine, then you go to the va. instead of filling that prescription, which is a pretty good deal, you know, for the veteran, they have to have a physical in order for that to be done. >> i understand. >> why is that? is there any logical reason for that at all? how many slots would that free up if you made that one change? how much money would that save? >> i am not a clinician, so i can't in a learned way describe why that is the case, but there are certain reasons why that would be appropriate and why that does make sense. but i will tell you that we are

looking at things like referrals to oaudiology and where that could obviate and where we could bypass the primary care step as an additional item, but we need to look at that carefully. i think folks are looking at that now. audiolog audiology. maybe some pharmacy. not all pharmacy. we need to be careful. we are looking at that. >> i can see the schedule drugs and things like that, but to me it makes no sense at all that if a guy who is licensed and taking medicare dollars, another entity that is licensed by the government, why a prescription can't be filled for diabetes, high blood pressure, the vast majority of stuff that actually comes across. could you look and see how many slots that would save? >> we will look at that, but the one thing -- just one point of caution would be not to overcorrect in that direction. but we are -- we do have folks

looking at the pattern between primary care and certain specialty, the pattern between primary and pharmacy -- >> how do you mean overcorrect? >> just to not be vigilant for pharmacy-filled requests that would be coming in from the private sector. that's the only thing that i mean. just to make sure that we're determining the appropriateness of certain prescription fills. the examples you've given, they seem pretty straightforward. but we just need to make sure that those are the only examples. >> there is a large percentage of veterans served by both va and medicare. >> yes. >> and so -- and so part of this is understanding what the second and third-order effects are of a kind of hachange that you're talking about. one of the impacts is it would . phillip's point about being -- >> well, it probably would decrease the backlog. >> pardon? >> it probably would decrease the backlog if you had primary -- >> yes? >> i'm sorry.

>> thank you. >> sorry. >> well, we have reached the end of what i think has been an important and productive hearing. mr. acting secretary, i want to thank you very much for stepping in. clearly unexpectedly. and a very important position and very difficult moment in the history of the va, and thank you very much for the work that you're doing. and thank you very much for what you're doing. we look forward to working with you in the days, weeks, and months to come. thank you are much. hearing is adjourned.

tonight on c-span, some of today's events related to the situation in ukraine and the downing of malaysian airlines flight 17. we'll have remarks from president obama, members of the u.n. security council, and british prime minister david cameron. here's a preview. >> good, mr. speaker. this is a defining moment for russia. the world is watching. and president putin faces a clear choice in how he decides to respond to this appalling tragedy. i hope that he will use this moment to find a path out of this festering and dangerous crisis by ending russia's support for the separatists. but if he does not change his approach to ukraine in this way, then europe and the west must

fundamentally change our approach to russia. those of us in europe should not need to be reminded of the consequences of turning a blind eye when big countries bully smaller countries. we should not shrink from standing up for the principles that govern conduct between independent nations in europe and which ultimately keep the peace on our continent. for too long, there's been a reluctance on the part of too many european countries to face up to the implications of what's happening in eastern ukraine. it's time to make our power, influence, and resources felt. over the weekend, i agreed with chancellor merkel and president hollande we should push our partners in the european union to consider a new range of hard-hitting economic sanctions against russia. we should take the first step in the foreign minister's meeting in brussels tomorrow. and if russia does not change course, we must be clear europe must keep increasing the pressure. russia cannot expect to continue enjoying access to european markets, capital, european

technical expertise while she feels conflict with one of the neighbors. we must do what is necessary to stand up to russia and put an end to conflict in ukraine before any more innocent lives are lost. >> you an see more from that and the other events today related to the situation in ukraine. tonight beginning at 8:00 p.m. eastern on c-span. next, a look at the housing and mortgage finance systems. among the speakers, kevin balany who begins with a historical overview of the banking system. from the cato institute, this is just over an hour. >> thank you, all, for coming today. i am john, the director of congressional affairs at the cato institute. and today's hill briefing discussion is on housing finance reform. past, present, and future. and just about every explanation of the 2008 financial crisis

contains some role for our mortgage finance system, and although the government's major response to that crisis, the dodd/frank act, attempted to improve mortgage standards, these efforts have not addressed the vast >> but evidence suggests that a private housing market can work just fine without government backing. it should alts be noted that government guarantees do not eliminate risk. they transfer millions of taxpayer dollars to be on the hook for another potential bailout. we have two distinguished callers with us today.

first up, we'll have kevin valonnni. dr. valonni is a principal of university associates. most recently, he was vice chairman of mortgage investment corporation. he served various capacities with freddie mack and prior to that, he was deputy assistant secretary of housing and urban development. second, we'll have mark clabrat. prior to joining kado in 200ed, he joined the senior professional staff. in that position, mark handled issues related to housing, economics and insurance for richard selby. with that, i will turn it over to kevin. >> i could never hold a job very long, so i have a lot of experience. i'm going to go very quick.

i'm always stunned by the irony of a free-market think tank serving the lib ratarian lunch. i going to go very fast, so if anybody want it is slides, feel free to e-mail me. or you can buy my book, limited edition on amazon. you can get it 99 cents, i think. i left washington 30 years ago. it's always good to be back. this is a very magical city. i it's really disneyland east. he was a total failure because the system had such inherent flaws, that it couldn't be saved. i thought of that yesterday when it comes to the housing finance system of the united states.

politicians determine everything where bargaining, the strumts and there's not much left of the market to do. they do the custodial-type things originating and they usually take the things when they go bad. we had a croney capital system. we've been bargaining over how to fix that system for over six years. there's really about a complete denial about the nature in the first place and an attempt to try to restore that system.

we've got to go through the stages of the death of a system. >> i will talk about all of these topics. they're all policy issues that have yet to be addressed. very simply, for consumer finance, that involves the borrowing, saving and insurance decision of consumers. those are not only all tied together, they're tied together with their investment decisions. more importantly, investment decisions are tied with their ultimate work decisions. consumers don't make any of these decisions in a vacuum.

we had customers with contracts dating back to the 1800s that it saved with us for 40, 45 years in life insurance contracts. now we're getting fixed annuity payments for the next 30-40 years, as long as they lived. these were all fixed nominal contracts. so lifetime savings. and the amazing thing about it is we had no regulators. this system worked. savings and loans, mutual savings banks, mutual assurance associations. why did it work? the interest of the borrowers, the savers, the intermediaries were all balanced. we used capital requirements to balance and mitigate their incentive conflicts. we used actuarial pricing so that the borrows weren't disfavored. and that's really why the system worked. what happens when we introduced politics into that equation?

well, very simply, two big things. both have the same impact. they caused people to over-leverage. we call it mall investment. when the investments don't generate enough return, what do you do? you default. how big of an impact did they have in practice? and the biggest one is saving investment over the life cycle because this is the benefit or problem of compound interest.

the child psychologist asked young children the following question. would you accept one marshmallow now or we'll give you two marshmallows in 15 minutes. they found, over time, the child that took the one one marshmallow now was much more likely to be a criminal when he grew up. if the child grabbed the marshmall marshmallow, ate it and demanded two more now, then he bim a politician. this has been the source of every crisis that we've had.

>> the source of all of our financial crisis is really politics and regulators repressing risks which end up becoming systemic. this is really a theory known as popularized by minske, many decades ago. the second is mission creepment you end up doing much more than

you thought you were going do do. we end up with real costs to the treasury but they weren't budgeted and voted on. and the fourth is that obviously, with the great depression, there was a lot of economic stress. so we've formed a safety net. and, again, that group was created tremendously. the u.s. banking system was fragile by design. why? thomas jefferson wrote the northwest passages not for plantations, but the size of the family farm. the next hundred years, the entire country was settled by family farmers and those were both households in business. so they were very popular and concerned with how they got credit. but the constitution left bank chartering to the state. so you couldn't have a narnl bank to distribute money nationwide. and what that meant was the banks always failed with respect to the farm crisis. but they would never give up this right. bank chartering fees with as much as a third for all state revenues.

this was the form of economic rent. we went to the second best. we went to all of these institutions. they all came about to try to get around this problem of only state banking. and they all started with very limited missions. to provide liquidity because the banks were ill liquid. and the word liquidity is the most mis-used word in the english language. we'll see a little bit about that later. we created these things, they didn't work for what they were supposed to do at the time. they expanded to new missions later on. deposit insurance was the worst solution to the wrong problem.