Budget Formulation and Planning Efforts Are Centrally Managed, While Budget Execution and Planning Are Linked in Networks

Although VHA’s budget formulation and planning processes are both  centrally managed, they are not closely linked. The Office of Policy and Planning prepares VHA Network Strategic  Planning Guidance, directing networks on how to develop their individual  strategic plans. Performance Information Influences Resource Allocation Decisions in a Variety of Ways at These Networks

Integrating performance information into resource allocation decisions is  apparent at the network level during budget execution. At the two  networks we visited, managers told us that they use an internal data system  that compares cost and performance data across facilities as a tool to make  resource allocation decisions. Network managers also use various communication methods, both within  their networks and across other networks, to share information on  performance measures and ways to meet those measures. It is also used to analyze resource utilization and  the cost of providing health care services. Performance target: 100 percent  of diabetic veterans should receive  retinal eye exams to decrease the  potential incidence of blindness. However, this requires the services of an ophthalmologist who must  interpret the exam results. The network did not have resources to  maintain an ophthalmologist on staff at each site, so many diabetics were  not being tested. A Network 2 manager found that a particular piece of  equipment could record test results, then transmit them to an  ophthalmologist at another location. Thus, the network invested resources  in a number of these machines for Community Based Outpatient Clinics  (CBOCs) to use, thereby increasing the network’s capacity for meeting this  performance target. Challenges

VHA has undergone a cultural shift over the past 7 years that has helped to  integrate budget and performance, but managers face continuing  challenges to further integration and in defining areas for improvement. The agency’s budgeting and planning processes are not directly linked, so  opportunities are missed to fully use planning information in the budget  process. VHA officials acknowledged the  offices in charge of these processes did not work closely together in the  past, but steps are being taken to improve this linkage. Performance Information is Available but Not Included in Resource Allocation Decisions

VHA does not include the most complete information available when  allocating resources. 1.
Why GAO Did This Study

Encouraging a clearer and closer link between budgeting and planning is essential to improving federal management and instilling a greater focus on results. Through work at various levels within the organization, this report on the Veterans Health Administration (VHA)--and its two companion studies on the Administration on Children and Families (GAO-03-09) and the Nuclear Regulatory Commission (GAO-03-258)--documents (1) what managers considered successful efforts at creating linkages between planning and performance information to influence resource choices and (2) the challenges managers face in creating these linkages.

What GAO Found

VHA's budget formulation and planning processes are centrally managed, but are not closely linked. Resource distribution to VHA's health care networks is mostly formulaic, determined primarily by the distribution of the veterans being served. VHA offices involved in budget formulation and strategic planning provide guidance to health care networks in developing their financial and strategic plans. Integrating performance information into resource allocation decisions is apparent at the health care network level during budget execution. Health care network managers told us that they use an internal data system as a tool to decide how to allocate resources to their facilities and programs. They also use various communication methods to share information on performance measures, and are held responsible for meeting those measures. Network managers provided specific examples where performance information influenced their resource allocation decisions. For example, one performance target specifies that all diabetic veterans are expected to receive retinal eye exams. An ophthalmologist must interpret the results of such an exam; however, most outpatient clinics do not have the resources to maintain an ophthalmologist on staff. One network invested in machines that record test results and transmit them to an ophthalmologist at another location, thereby increasing the network's capacity for meeting this performance target. While budget and performance integration has improved, VHA managers still face additional challenges. VHA's budgeting and planning processes are not directly linked, but VHA officials noted that steps are being taken to better integrate them. Also, VHA does not use the most complete information available when making resource allocation decisions to its health care networks, so the link between resources and results could be improved.