The best care anywhere: ten years ago, veterans hospitals were dangerous, dirty, and scandal-ridden. Today, they're producing the highest quality care in the country. Their turnaround points the way toward solving America's health-care crisis.

• Author: Longman, Phillip

Quick. When you read "veterans hospital," what comes to mind? Maybe you recall the headlines from a dozen years ago about the three decomposed bodies found near a veterans medical center in Salem, Va. Two turned out to be the remains of patients who had wandered off months before. The other body had been resting in place for more than 15 years. The Veterans Health Administration (VHA) admitted that its search for the missing patients had been "cursory."

Or maybe you recall images from movies Fake Barn on the Fourth of July, in which Tom Cruise plays a wounded Vietnam vet who becomes radicalized by his shabby treatment in a crumbling, rat-infested veterans hospital in the Bronx. Sample dialogue: "This place is a fuckin' slum!"

By the mid-1990s, the reputation of veterans hospitals had sunk so low that conservatives routinely used their example as a kind of reductio ad absurdum critique of any move toward "socialized medicine." Here, for instance, is Jarret B. Wollstein, a right-wing activist/author, railing against the Clinton health-care plan in 1994: "To see the future of health care in America for you and your children under Clinton's plan," Wollstein warned, "just visit any Veterans Administration hospital. You'll find filthy conditions, shortages of everything, and treatment bordering on barbarism."

And so it goes today. If the debate is over health-care reform, it won't be long before some free-market conservative will jump up and say that the sorry shape of the nation's veterans hospitals just proves what happens when government gets into the health-care business. And if he's a true believer, he'll then probably go on to suggest, quoting William Satire and other free marketers, that the government should just shut down the whole miserable system and provide veterans with health-care vouchers.

Yet here's a curious fact that few conservatives or liberals know. Who do you think receives higher-quality health care. Medicare patients who are free to pick their own doctors and specialists? Or aging veterans stuck in those presumably filthy VA hospitals with their antiquated equipment, uncaring administrators, and incompetent staff?. An answer came in 2003, when the prestigious New England Journal of Medicine published a study that compared veterans health facilities on 11 measures of quality with fee-for-service Medicare. On all 11 measures, the quality of care in veterans facilities proved to be "significantly better."

Here's another curious fact. The Annals of Internal Medicine recently published a study that compared veterans health facilities with commercial managed-care systems in their treatment of diabetes patients. In seven out of seven measures of quality, the VA provided better care.

It gets stranger. Pushed by large employers who are eager to know what they are buying when they purchase health care for their employees, an outfit called the National Committee for Quality Assurance today ranks health-care plans on 17 different performance measures. These include how well the plans manage high blood pressure or how precisely they adhere to standard protocols of evidence-based medicine such as prescribing beta blockers for patients recovering from a heart attack. Winning NCQA's seal of approval is the gold standard in the health-care industry. And who do you suppose this year's winner is: Johns Hopkins? Mayo Clinic? Massachusetts General? Nope. In every single category, the VHA system outperforms the highest rated non-VHA hospitals.

Not convinced? Consider what vets themselves think. Sure, it's not hard to find vets who complain about difficulties in establishing eligibility. Many are outraged that the Bush administration has decided to deny previously promised health-care benefits to veterans who don't have service-related illnesses or who can't meet a strict means test. Yet these grievances are about access to the system, not about the quality of care received by those who get in. Veterans groups tenaciously defend the VHA and applaud its turnaround. "The quality of care is outstanding," says Peter Gayton, deputy director for veterans affairs and rehabilitation at the American Legion. In the latest independent survey, 81 percent of VHA hospital patients express satisfaction with the care they receive, compared to 77 percent of Medicare and Medicaid patients.

Outside experts agree that the VHA has become an industry leader in its safety and quality measures. Dr. Donald M. Berwick, president of the Institute for Health Care Improvement and one of the nation's top health-care quality experts, praises the VHA's information technology as "spectacular". The venerable Institute of Medicine notes that the VHA's "integrated health information system, including its framework for using performance measures to improve quality, is considered one of the best in the nation."

If this gives you cognitive dissonance, it should. The story of how and why the VHA became the benchmark for quality medicine in the United States suggests that much of what we think we know about health care and medical economics is just wrong. It's natural to believe that more competition and consumer choice in health care would lead to greater quality and lower costs, because in almost every other realm, it does. That's why the Bush administration-which has been promoting greater use of information technology and other quality improvement in health care--also wants to give individuals new tax-free "health savings accounts" and high-deductible insurance plans. Together, these measures are supposed to encourage patients to do more comparison shopping and haggling with their doctors; therefore, they create more market discipline in the system.

But when it comes to health care, it's a government bureaucracy that's setting the standard for maintaining best practices while reducing costs, and it's the private sector that's lagging in quality. That unexpected reality needs examining if we're to have any hope of understanding what's wrong with America's health-care system and how to fix it. It turns out that precisely because the VHA is a big, government-run system that has nearly a lifetime relationship with its patients, it has incentives for investing in quality and keeping its patients well--incentives that are lacking in for-profit medicine.

Hitting bottom

By the mid-1990s, the veterans health-care system was in deep crisis. A quarter of its hospital beds were empty. Government audits showed that many VHA surgeons had gone a year without picking up a scalpel. The population of veterans was falling sharply, as aging World War II and Korean War vets began to pass away. At the same time, a mass migration of veterans from the Snowbelt to the Stunbelt overwhelmed hospitals in places such as Tampa with new patients, while those in places such as Pittsburgh had wards of empty beds.

Serious voices called for simply dismantling the VA system. Richard Cogan, a senior fellow at the Center on Budget and Policy Priorities in Washington, told The New York Times in 1994: "The real question is whether there should be a veterans health care system at all." At a time when the other health-care systems were expanding outpatient clinics, the VHA still required hospital stays for routine operations like cataract surgery. A patient couldn't even receive a pair of crutches without checking in. Its management system was so ossified and top-down that permission for inch trivial expenditures as $9.82 for a computer cable had to be approved in Washington at the highest levels of the bureaucracy.

Yet few politicians dared to go up against the powerful veterans lobby, or against the many rations that represented much of the VHA'S workforce. Instead, members of Congress fought to have new veterans hospitals built in their districts, or to keep old ones from being shuttered. Three weeks before the 1996 presidential election, in part to keep pace with Bob Doles promises to veterans, President Clinton signed a bill that planned, as he put it, to "furnish comprehensive medical services to all veterans," regardless of their income or whether they had service-related disabilities.

So, it may have been politics as usual that kept the floundering veterans health-care system going. Yet behind the scenes, a few key players within the VHA had begun to look at ways in which the system might hen itself. Chief among them was Kenneth W. Kizer, who in 1994 had become VHA's undersecretary for health, or, in effect, the system's CEO.

A physician warned in emergency medicine and public health, Kizer was an outsider who immediately started upending the VHA'S entrenched bureaucracy. He oversaw a radical downsizing and decentralization of management power, implemented pay-for-performance contracts with top executives, and won the right to fire incompetent doctors. He and his team also began to transform the VHA from an acute care, hospital-based system into one that put far more resources into primary Care and outpatient services for the growing number of agog veterans beset by chronic conditions.

By 1998, Kizer's shake-up of the VHA's operating system was already earning him management guru status in an era in which management gurus were practically demigods. His story appeared that year in a book titled Straight from the CEO: The World's Top Business Leaders Reveal Ideas That Every Manager Can Use published by Price Waterhouse and Simon & Schuster. Yet the most dramatic transformation of the VHA didn't just involve such trendy, 1990s ideas as downsizing and reengineering. It also involved an obsession with systematically improving quality and safety that to this day is still largely lacking throughout the rest of the private health-care system.

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