Innovator at Veterans Affairs pays the price

By Burt Solomon

July 20, 1999

Now we know, yet again, the price of innovation. At the Veterans Affairs Department, with its stodgy bureaucratic traditions and hyper-attentive constituencies, the Innovator in Chief has quit. Done in by the political forces he had stirred up, Kenneth W. Kizer, the head of the agency's mammoth medical system, has asked the White House to withdraw his nomination for a second four-year term.

Kizer's hand-picked deputy, Thomas L. Garthwaite, has been named as the acting undersecretary for health and will doubtless remain so until 2001, the tail end of an administration being a rotten time to fill senior posts. The Veterans Health Administration "has changed more rapidly and more dramatically than any health care system in the country, if not the world, in a shorter period of time," Kizer, 48, said in an interview before his surprise June 29 announcement. Even without him, the restructuring that he led-consolidating under-used hospitals, decentralizing decision-making, and encouraging innovation-is expected to continue.

That includes an intriguing, very 21st-century idea that VA officials plan to test by the end of 1999, and possibly sooner: to set up Web pages for individual patients, so that the patients can store all their medical information electronically in a single place. There they could keep track of their diagnostic test results, EKGs, lab work, X-rays, pathology slides, and other relevant records. Robert M. Kolodner, an associate chief information officer at the Veterans Health Administration who oversees the project, said "a real system" might be up and running in as little as three years-or as many as 20.

The idea is simple but still unformed. Kolodner has two principles in mind: that individuals should "own" their own data, so that they control how the information is used and (probably more important) isn't used; and that the Internet service should help veterans chart their health care "to the degree they desire." But the precise form such an electronic system might take-likely to be "so complex that there's no way we could design it right," Kolodner says-will evolve as people start to use it.

Currently, an individual's health care record "never really all comes together," says Garthwaite. Rather, it's made up of "illegible doctors' handwriting," hospital records, and pharmacy prescriptions. But, he says, "a few years from now, if we do this right," a network of electronic medical records could bring dramatic changes. Experts have explored the important changes in health care financing, Garthwaite points out, but "the infomatics piece will [be] more unsettling-and helpful."

The possibilities are exciting. Keeping a patient's medical records together in an easily portable form would make it simpler to seek a second opinion, even at a distance. Patients of the future might hire a company that, for a presumably modest monthly fee, would maintain individuals' Web sites, offer suggestions for preventive care, and routinely search medical literature on the World Wide Web to learn of advances in treatment for whatever ails them.

Or a researcher conducting a study of, say, the effects of Prozac on Asian-American women of a given age could use the network of Web sites to collect a statistically credible sample, in a fashion that preserves the privacy of the participants. State-of-the-art security measures-including moving the storage "vault" off-line, beyond hackers' reach-can be developed to assure the sanctity of patients' confidential information, advocates say, while providing a "break-glass" arrangement so that a hospital's emergency room can gain access if it must. "What we're conceiving of now," Kolodner says, "is just the beginning."

The idea of individual patients' Web pages fits in nicely with other changes that Kizer ushered in at the VA. All of these changes are the product of what Kizer described as "a very patient-centered approach" to medical care, one in which patients are "really going to be in control of the process much more than in the latter part of the 20th century, [when] the physician and the establishment-i.e., the hospital-is the one in complete control."

For instance, Kizer has directed VA hospitals to start monitoring pain as a fifth vital sign and to design treatment programs for dying patients that, he says, "may not necessarily be all the high-tech stuff, what the doctor might want to do, but what the patient wants." He has also moved to improve medical safety by insisting that pharmaceutical manufacturers apply bar codes to drugs so that patients aren't inadvertently given the wrong medicine.

The proposed Web sites might also be considered the ultimate in decentralization. Kizer has overseen the reorganization of the VA's sprawling medical system-the largest in the noncommunist world-into 22 regional networks, each boasting considerable control over its own operations. Policy decisions used to be made by three to five people at the agency's headquarters in Washington. Now, "probably close to 40 people" take part, including the 22 regional directors and numerous program officials, an insider said-"a profound change for this organization."

Indeed, it has been. And it was Kizer's doing, more than anyone's. Board-certified in five specialities, he is a self-confident, assertive, even visionary physician who had spent six years at the helm of California's Department of Health Services. A registered Republican, he nevertheless finished first in the formal competition among aspirants for the VA post, which is regarded as less partisan than most administration positions.

There is little question that the VA, which became a Cabinet department under the Bush administration more than 10 years ago, needed shaking up. The agency was "extremely hierarchical, [used] centralized decision-making, lots of rigid policies and procedures-all of the things that you would want if you wanted to discourage innovation," Kizer recounts. When he arrived in Washington in fall 1994, "innovation was not cherished or valued," he says. "It's exceedingly difficult in government, frankly, to be innovative, because when you innovate you make mistakes, and government has a very low threshold for mistakes"-especially at an agency presiding over issues of life and death.

The agency's restructuring, including Kizer's use of performance contracts to ensure that VA field offices do what they had promised, wasn't easy to accomplish. Nor was a rougher sort of restructuring-a budget-driven effort to reduce the VA's bloated facilities to fit a declining need. With the population of veterans on the decline-the U.S. military force has shrunk from more than 2.1 million troops in 1989 to 1.4 million today-and with medical bean-counters distraught at the cost of hospitalizations, the VA has pruned its acute-care hospital beds by more than half while keeping its medical budget from rising faster than inflation. The idea was to wring inefficiencies out of the system while using the savings to offer medical services to veterans who haven't received them before. In practice, though, the department's new formulas for spending on VA hospitals-based partly on each region's population of veterans-have prompted reductions in spending in certain states.

That has been the case in the Northeast, more than anywhere, because of the many veterans who have fled the cold winters for Southern climes. In Massachusetts, where the VA has already merged two Boston-area hospitals and is trying to do the same with a third, the state's congressional delegation has complained to the VA about a "serious budget strain." So when Kizer's four-year term expired, Sen. John F. Kerry, D-Mass., a Vietnam veteran, put a legislative hold on the White House's renomination. Sen. John D. Rockefeller IV, D-W.Va., also raised an objection, officials say, along with Republican Sens. Susan Collins of Maine, Ben Nighthorse Campbell of Colorado and Larry Craig of Idaho. Some, though not all, of the politically potent veterans' groups also squawked, especially the Paralyzed Veterans of America, who were upset about closings of VA centers devoted to spinal cord injuries.

It's no wonder, really. It stands to reason that efficiencies will prove politically unpopular. (Hence the federal government's resort to a nonpolitical commission to close unneeded military bases.) Besides, Kolodner laments, "when you make changes, even positive changes, you make enemies."

Indeed, Kizer's political problems went beyond Capitol Hill to the White House, where officials were annoyed by how much Kizer wanted to spend on long-term care and on providing medical care to low-priority veterans. He was also accused of "dissing the Administration," as an official put it, by making policy suggestions in testimony before Congress that the White House hadn't approved.

It was Kizer's command-and-control style-so useful in accomplishing his policy ambitions-that helped bring his downfall. His policy might have been one of decentralization, but he instituted it in a top-down fashion. A government agency, after all, has certain advantages in producing innovation that the private sector can't match: It can do what it thinks is right, even if the stockholders wouldn't agree. That's especially an advantage in the health care market as it has irrationally evolved: The customers move so frequently from one plan to another that they discourage insurance plans from offering the kind of preventive medicine that yields savings in the long run but is expensive in the short run. Something that makes economic sense for health care as a whole doesn't necessarily, given the dynamics of competition, make sense for any one company.

But individual companies may be ready for the VA's notion of patient Web sites-Kaiser Permanente and a few computer companies have expressed interest, and the VA has opened discussions with some of them. But in other instances, the agency's ability to command and control a vast government-run health network-socialized medicine, as it were-means that some of its innovations and appealing directives may be hard to replicate where capitalism reigns.


By Burt Solomon

July 20, 1999

http://www.govexec.com/federal-news/1999/07/innovator-at-veterans-affairs-pays-the-price/3870/