VA’s Charleston medical facility is affiliated with MUSC. VA Determined That the Charleston Facility Is in Good Condition and Is Currently Investing in Minor Renovations

VA and the CARES Commission concluded that the Charleston facility is in  overall good condition and, with relatively minor renovations, can  continue to meet veterans’ health care needs in the future. According to VA officials, the facility’s current condition is a  result of targeted capital investments. In particular, VA invested about  $11.6 million in nonrecurring maintenance projects over the last 5 years. The CARES Commission did not recommend replacing VA’s facility in  Charleston as it did with facilities in some other locations. VA officials at the Charleston medical facility have a number of ongoing  and planned capital maintenance and improvement projects to address the  CARES Commission recommendations and to maintain the condition of  the current medical center. VA officials  estimate that the total cost for all planned capital maintenance and  improvement projects is approximately $62 million. Limited Collaboration between VA and MUSC on a Joint Venture Facility Characterized Negotiations until Recently

VA and MUSC have collaborated and communicated to a limited extent on  a proposal for a joint venture medical center over the past 3 years. As a  result of the limited collaboration, negotiations over the proposal stalled. In August 2005, however, initial steps were taken to move the negotiations  forward. Specifically, four workgroups were created—which include both  VA and MUSC officials—and tasked with examining critical issues related  to the proposal. In November 2002, the President of MUSC sent a proposal to the Secretary  of VA about partnering with MUSC in the construction and operation of a  new medical center in phase II of MUSC’s construction project. Under  MUSC’s proposal, VA would vacate its current facility and move to a new  facility located on MUSC property to the south of phase I. MUSC also  indicated that sharing medical services would be a component of the joint  venture—that is, VA and MUSC would enter into sharing agreements to  buy, sell, or barter medical and support services. 3 for MUSC’s proposal and VA’s  counterproposal.) In particular, before this summer,  VA and MUSC had not exchanged critical information that would help  facilitate negotiations. Recent Events Have Spurred Discussion and Collaboration Between VA and MUSC

On August 1, 2005, a congressional delegation visited Charleston to meet  with VA and MUSC officials to discuss the joint venture proposal. After  this visit, VA and MUSC agreed to establish workgroups to examine key  issues associated with the joint venture proposal. Joint Venture Proposal Raises a Variety of Issues

The possibility of participating in the joint venture raises a number of  issues for VA to consider. Some of these issues  will be directly addressed by the workgroups, while others, such as the  concerns of stakeholders, will not. In addition, some issues can be  addressed through collaboration between VA and MUSC, while others may  require VA to seek legislative remedies. Nevertheless, exploring the potential  costs and benefits of a joint venture gives VA an opportunity to reexamine  how it delivers health care services to the nation’s veterans and uses its  affiliations with medical universities now and in the future. The prospect of establishing a joint venture medical center  with MUSC presents a good opportunity for VA to study the feasibility of  one method—expanding its relationships with university medical school  affiliates to include the sharing of medical services in an integrated facility. VA Health Care: Framework for Analyzing Capital Asset Realignment  for Enhanced Services Decisions.
Why GAO Did This Study

The Department of Veterans Affairs (VA) maintains partnerships, or affiliations, with university medical schools to obtain medical services for veterans and provide training for medical residents. In 2002, the Medical University of South Carolina (MUSC)--which is affiliated with VA's medical facility in Charleston--proposed that VA and MUSC enter into a joint venture for a new VA facility as part of MUSC's plan to expand its medical campus. Under the proposal, MUSC and VA would jointly construct and operate a new medical center in Charleston. In 2004, the Capital Asset Realignment for Enhanced Services (CARES) Commission, an independent body charged with assessing VA's capital asset requirements, issued its recommendations on the realignment and modernization of VA's capital assets. Although the Commission did not recommend a replacement facility for Charleston, it did recommend, among other things, that VA promptly evaluate MUSC's proposal. This testimony discusses GAO's preliminary findings on the (1) current condition of the Charleston facility, (2) extent to which VA and MUSC collaborated on the joint venture proposal, and (3) issues for VA to consider when exploring the opportunity to participate in the joint venture. VA concurred with GAO's preliminary findings.

What GAO Found

The most recent VA facility assessment and the CARES Commission concluded that the Charleston medical facility is in overall good condition and, with some renovations, can continue to meet veterans' health care needs in the future. VA officials attribute this to VA's continued capital investments in the facility. For example, over the last 5 years, VA has invested approximately $11.6 million in nonrecurring maintenance projects, such as replacing the fire alarm system and roofing. To maintain the facility's condition over the next 10 years, VA officials from the Charleston facility have identified a number of planned capital maintenance and improvement projects, totaling approximately $62 million. VA and MUSC have collaborated and communicated to a limited extent over the past 3 years on a proposal for a joint venture medical center. For example, before this summer, VA and MUSC had not exchanged critical information that would help facilitate negotiations, such as cost analyses of the proposal. As a result of the limited collaboration, negotiations over the proposal stalled. However, after a congressional delegation visit in August 2005, VA and MUSC took steps to move the negotiations forward. Specifically, VA and MUSC established four workgroups to examine critical issues related to the proposal. The MUSC proposal for a new joint venture medical center presents an opportunity for exploring new ways of providing health care to Charleston's veterans, but it also raises a variety of complex issues for VA. These include the benefits and costs of investing in a joint facility compared with other alternatives, legal issues associated with the new facility such as leasing or transferring property, and potential concerns of stakeholders, including VA patients and employees. The workgroups established by VA and MUSC are expected to examine some, but not all, of these issues. Additionally, some issues can be addressed through collaboration between VA and MUSC, but others may require VA to seek legislative remedies.