Consolidating Services Into Three Chicago Hospitals Appears to Be a Viable Option for Meeting Veterans’ Health Care Needs

Based on the extent of unused inpatient capacity and the decreasing demand for services, VHA can meet veterans’ current and future inpatient and outpatient demands by closing one of its four Chicago hospitals. Veterans’ access to VHA care would remain essentially unchanged, because most veterans using the Lakeside and West Side hospitals live in the same area now served by three of the four hospitals. VHA’s four Chicago hospitals operated 1,665 medicine, surgery, and psychiatry beds at the beginning of fiscal year 1997. Veterans used an average of 850 of these beds a day during 1997. For example, if VHA closed West Side, then it could use 51 beds at Lakeside, 244 beds at North Chicago, and the 262 beds at Hines. Chicago-area veterans’ demand for inpatient care (currently at 850 beds) is expected to decrease, which will further increase VHA’s supply of unused beds. On the basis of the 56 hospitals that responded to a 1995 American Hospital Association survey, these hospitals have more than 5,700 excess beds a day. By reopening some wards, VHA can close one of the facilities, shift the workload to the other three hospitals, and continue to provide the same level of inpatient service that is now available to veterans in the Chicago area. Meeting Veterans’ Health Care Needs in Three Rather Than Four Hospitals Could Save Millions

If VHA consolidated services into three hospitals it could reduce expenditures over the next 10 years by about $200 million or more for (1) facility operating and maintenance costs and (2) renovation costs. Additionally, VHA may be able to generate revenues through the lease or sale of the fourth hospital. VHA could save millions of dollars by consolidating into three locations and avoiding future capital investments at the Lakeside or West Side location. VHA engineers at both hospitals estimate that a total of almost $73 million will be needed to improve these facilities so that VHA can continue to meet veterans’ health care needs, about $6 million to $27 million of which will be needed within the next 5 years for West Side and Lakeside, respectively. As with education opportunities, the medical schools would likely need to share research laboratories as well as patients. But in 1997, these hospitals planned to provide 686 (about 40 percent) of their 1,665 operating beds. We believe that our study provides sufficient data to show how workload could be accommodated if a hospital is closed. In addition, we considered whether outpatient clinics can be used to a greater extent to meet veterans’ primary care needs. Cook County Public and Private Sector Hospitals

St. Francis Hospital and Health Center St. James Hospital and Health Centers Doctor’s Hospital of Hyde Park Mercy Hospital and Medical Center Michael Reese Hospital and Medical Center Mount Sinai Hospital and Medical Center Our Lady of the Resurrection Medical Center Provident Hospital of Cook County (continued)
Rush-Presbyterian-St. Luke’s Medical Center Saint Joseph Health Centers and Hospital Thorek Hospital and Medical Center University of Illinois Medical Center Little Company of Mary and Health Centers Suburban Cook County TB Sanitorium District (continued)

Veterans’ Usage of VHA Hospitals, by City of Chicago Zip Code

City of Chicago zip code (continued)

Comments From Northwestern University Medical School

Comments From the University of Illinois at Chicago

GAO Contacts and Staff Acknowledgments

	GAO Contacts

	Staff Acknowledgments

In addition to those named above, the following individuals made important contributions to this report: Walter Gembacz collected and analyzed facility operating and maintenance costs data and acted as an adviser throughout this assignment; John Borrelli assessed the impact on VHA’s health care missions related to medical education and research; Lesia Mandzia conducted a survey to determine the impact on veterans of closing a hospital; John Kirstein helped collect and analyze facility operating and maintenance costs data; Jonathan Ratner provided guidance in analyzing and reporting the costs of closing a facility; and Joan Vogel and Ann McDermott provided technical support.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed whether the Veterans Health Administration (VHA) could serve veterans in Chicago, Illinois, with three hospitals, focusing on: (1) the extent of the resources that could be redirected to improve patient care; and (2) the potential impact of one hospital closure on VHA's other missions.

What GAO Found

GAO noted that: (1) VHA can meet the health care needs of Chicago-area veterans by operating three hospitals instead of four; (2) VHA began fiscal year (FY) 1997 operating 1,665 inpatient medicine, surgery, and psychiatry beds at the four Chicago hospitals, and veterans used 850 beds a day, on average; (3) the large supply of unused beds provides sufficient capacity to meet the needs of veterans now using Lakeside or West Side Hospitals; (4) for example, during FY 1997, veterans used an average of 145 and 198 beds a day at Lakeside and West Side, respectively, while during the same period Hines Hospital closed 262 beds and North Chicago Hospital closed 244 beds; (5) moreover, veterans' demand for VHA hospital care is expected to continue declining as: (a) treatments shift from inpatient to outpatient settings; and (b) the Chicago-area veteran population continues to decrease; (6) in addition, other Chicago public and private hospitals have about 5,700 excess beds, which VHA could use on a contract basis to meet veterans' inpatient needs closer to their homes, as VHA does elsewhere; (7) regardless, veterans would continue to have good access to health care if either Lakeside or West Side hospital is closed because most of the veterans using these facilities live in essentially the same residential areas; (8) GAO's analysis showed that consolidating services into three locations could reduce VHA expenditures an estimated $200 million over the next 10 years by lowering facility operating and maintenance costs as well as avoiding $6 million to $27 million in renovation costs; (9) in addition, VHA could potentially generate millions of dollars in revenues through the lease or sale of property from the closed location; (10) VHA would, however, incur one-time costs for relocating some clinical services, but the savings could be used to enhance services to veterans, including adding needed new community-based outpatient clinics and buying new equipment; (11) VHA would also be able to meet its education, research, and Department of Defense contingency missions by operating three hospitals; (12) this is because the three remaining locations would likely carry the same workload that four locations would have, thereby providing a sufficient number of patients for VHA to maintain a comparable level of education and research opportunities; and (13) VHA will also be able to provide a flexible portion of its operating beds for military casualties, if needed, which was set at about 40 percent in 1997.