‘$23 Billion Up for Grabs’

by
Bill Haskell
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Just got done exchanging a couple of emails with Steve about Suzanne’s and his latest commentary about the growing privatization of the VA. Looks like the VA is farming out more of the veteran’s care to contractors which will come at a much higher cost. Outsourcing to for-profit entities is not a good practice. We can see how Medicare Advantage plans are costing far more than Medicare and depleting Medicare funding. Similar is happening with the VA today and greater costs will be incurred with this initiative.

‘$23 Billion Up for Grabs’ The American Prospect, Suzanne Gordon and Steve Early

The Department of Veterans Affairs (VA) has been suffering from continuing staffing shortages at the nation’s largest public health care system, which has hampered the ability to directly care for veterans. But under President Biden, the VA has decided to deal with this problem by contracting it out.

The VA-run Veterans Health Administration (VHA) has just unveiled what it calls an “Integrated Critical Staffing Program” (ICSP). The acronym may be new, but the “staffing solution” behind it is not: Like many employers, the VA is turning to private-sector “temporary staffing” agencies.

In early September, D.C.-based GDI Consulting touted this news to current and future clients seeking to “capture enterprise-level government contracts.” As GDI reported, there is now a “$23 billion opportunity up for grabs” for those who provide key human resources functions, like “recruitment, retention, and staffing,” which are now handled in-house by the third-largest federal department.

Although the VHA has used temporary employees in the past, this “costly and massive solicitation is unprecedented,” one former medical center director told the Prospect. “These HR firms have no appreciation or understanding of the VA’s special mission and culture. And temp workers, by definition, have no loyalty to the VHA or knowledge of the complex conditions of the veterans we treat.” Others noted, not admiringly, that this “staff augmentation” model seems to be borrowed from the Department of Defense (DOD), which has thousands of contract employees working alongside its regular civilian workforce.

Temps hired though ICSP contractors will fill jobs in every VHA “labor category,” including its own HR department. It is highly unlikely that anyone hired on this basis—physicians, nurses, pharmacists, therapists, technicians, social workers, administrative, or clerical staffers—will be eligible to have union representation, like the 300,000 VHA staffers who just renegotiated a new contract this year. It is not even clear if these contractors will have workplace protections as federal employees. (The VA did not respond to our request for clarification on these issues.)

Without union protection or other rights, if temps speak out about patient safety issues or otherwise try to ally with concerned co-workers who are federal employees, it will take just one management call to their private-sector “employer of record” to terminate their services.

Some temps may opt to become direct employees of the federal government, if given the opportunity later on. But ICSP critics fear that temporary staff could become like “perma-temps” at tech firms, or the 1.7 million “travel nurses” who have become a fixture of the private health care industry, despite being much criticized by RN unions. VHA defenders warn that creating a transient workforce within veterans hospitals and clinics will erode the high-quality care now delivered by a system that outperforms its private-sector competitors.

That is the kind of end run around workplace protections that even VA Secretary Denis McDonough’s anti-union predecessor didn’t take. During his tenure, right-wing Republican Robert Wilkie left as many as 50,000 VHA vacancies unfilled in order to bolster President Trump’s rationale for referring millions of veterans to private-sector providers to speed up their medical appointments. When the VA, under Wilkie, fired or disciplined thousands of federal workers to further reduce its head count, his due process violations ended up costing the agency hundreds of millions of dollars when a union legal challenge was settled, providing back pay and/or reinstatement for many of them.

Doubling Down on Outsourcing

As the Prospect has previously reported, the VHA already operates a costly and burdensome outsourcing network, with more than a million vendors, called the Veterans Community Care Program (VCCP). Thanks to the VA MISSION Act of 2018 and administrative rules promulgated by the Trump administration and never amended by President Biden, more than one-quarter of the VHA’s $122 billion operational budget is now diverted to paying outside hospitals and medical practices.

About 60 percent of the VHA’s nine million patients are being referred to non-VHA providers, even though many studies show that outside care is less timely and of lower quality than in-house treatment. Rather than delivering direct care themselves, as they were hired to do, thousands of VHA staff members have been reassigned to keep track of veterans shuffling back and forth between in-house care and outsourced treatment. And this misallocation of resources is occurring at a time when, according to a recent report from the VA’s own inspector general, its medical facilities still suffer from “severe occupational staffing shortages” inherited from the Trump administration.

Another enduring legacy of the Trump era is a “human resources modernization” (HRM) initiative that was supposed to streamline VHA hiring. Instead, HR staff were removed from local facilities, and both prospective and existing employees were saddled with a new web-based HR management system that made recruitment, retention, and personnel problem-solving more difficult. Frontline staff and managers have urged McDonough to undo the damage of this failed reorganization. (“This is a patient safety issue,” one VHA medical center chief of staff begged. “HELP US!!!”)

To the astonishment of many VHA leaders, VA official Jessica Bonjorni, who helped implement the HRM project, was given a Distinguished Executive/Presidential Rank Award, which came with a stipend that equaled 35 percent of her base salary. And now comes the ICSP, which doubles down on the subcontracting that has already disrupted and partially defunded in-house care.

Going Down the “Travel Nurse” Road?

By budgeting billions for temp hiring, Secretary McDonough is mimicking the private hospital industry’s response to job stress and burnout experienced by hundreds of thousands of registered nurses. Rather than improving nurse-patient staffing ratios and working conditions, the health care industry has mainly addressed chronic RN shortages by hiring tens of thousands of “travel nurses” through staffing agencies. Such travelers have long been used as strike replacements when unionized nurses engaged in work stoppages to win contract improvements. But now, travel nurses are regularly employed to augment full-time staff in hospitals and nursing homes.

“Sometimes firms think they will save money on outsourcing HR,” says Ben August, former CEO of a Texas-based firm that provided outsourced HR services. “That may be true in the short term when contractors offer a cheaper price but it’s never true over the long term. The business of for-profit companies is, after all, to make money and continue making money.”

As recently documented in Massachusetts, the presence of travel nurses creates a host of new problems. Between 2019 and 2022, RN vacancy rates in Massachusetts doubled, while payments to temporary nurses increased by 154 percent in just one year. Travel nurses are often paid nearly double what regularly employed nurses earn in the same hospital, while also getting preferential schedules, reimbursement for temporary lodging, and even mortgage payments back home. RNs who work alongside these “travelers” have critical institutional knowledge that their transient co-workers lack. So, as the Massachusetts report confirmed, RNs must assume “additional roles, including administrative and training tasks” to ensure patient safety. This adds to job stress and eventual burnout, which in turn has led many to quit and join the better-compensated travel nurse workforce, a vicious cycle that robs hospitals of experience and cohesion.

Until the Trump era, VA recruiters were able to attract job applicants willing to forgo higher private-sector salaries, because the VHA was known to be a good place to work, with job security and solid benefits. Primary care providers could spend more time with patients, rather than 15-minute visits demanded by the profit maximization. Mental health professionals were not subject to insurance company restrictions on how many therapy sessions they could offer a patient. VHA caregivers could focus on providing direct care rather than filling out paperwork and fielding calls from “utilization reviewers.” Collective bargaining gave union-represented employees workplace rights and protections that only a minority of private-sector health care workers have. Staff was driven by mission rather than profit.

The new system could see this all change. As one VHA physician, currently serving as a federal employee, told us in reaction to the ICSP: “Wow, I know what I’m going to do: quit and become a temp worker.”

Rank-and-File Complaints

Short-staffing, outsourcing, and shop-floor frustration with HR dysfunction have not been alleviated under Biden. “Our primary care providers and nurse practitioners are leaving because the workload has become overwhelming,” says Laura Bailey, a licensed practical nurse at the Beckley, West Virginia, VA Medical Center, who serves as an officer of AFGE Local 2198. Bailey says providers are overwhelmed by requests to approve and monitor referrals to private-sector care.

“When they set up the Veterans Community Care Program, no one factored in how much time it would take for a cardiologist to approve and monitor referrals to the private sector, or how much time it takes a medical support assistant to scan hundreds of pages of documents for just one patient seen outside the VHA,” reports Jeanine Packham, a cardiac nurse practitioner at the VA Medical Center in Reno, Nevada.

At Fort Miley, the VA Medical Center in San Francisco, scores of angry union members represented by the National Federation of Federal Employees (NFFE) protested on October 18 against local management’s threat to reverse a popular program that is used in every local hospital allowing nurses to work 72 hours and be paid for 80. “First they start a program to give us flexible schedules that make us competitive with other hospitals in the area,” one picketing RN told the Prospect. “Now, after all we did for veterans during the pandemic, they want to take it back and make us work more for no extra money in the most expensive city in the country?”

Psychologists and other mental health professionals all over the country are similarly up in arms about a productivity measurement, known as “bookable hours,” that was introduced under Trump but not changed by Biden appointees.

This system forces therapists to fill 80 percent of their clinical hours with patient visits even though they have other time-consuming duties like teaching professionals in training and coordinating care with other providers. One San Francisco psychologist told the Prospect that his caseload tripled when he had to take on 14 new patients while still supervising psychology interns.

“There’s a national staffing shortage of mental health providers,” said psychologist Jonathon Rose, who worked at the Palo Alto VA Medical Center for over 30 years. “One of the ways VA has tried to resolve the issue of appointment delays is by lengthening the time between appointments in order to get more new patients in more quickly.” However, as Rose notes, “in psychotherapy, when you stretch out the time between appointments, people don’t get better.”

VA’s new undersecretary for health, Dr. Shereef Elnahal, convened a virtual town hall meeting in July with mental health staff from around the country, who raised similar workload complaints. During this exchange, Tamara Campbell, executive director of the VHA’s Office of Mental Health and Suicide Prevention, acknowledged that “adhering to the bookable hours is resulting in a significant amount of burnout and stress.” Yet Elnahal and Campbell offered only vague assurances about solving such problems.

Whatever they come up with won’t keep the San Francisco psychologist on the job. Like 20 of his colleagues already, he is leaving soon for a private-sector hospital position, with more favorable conditions.

A Botched Bonus Plan

As part of the PACT Act’s $280 billion allocation over ten years to expand health coverage and disability benefit eligibility for 3.5 million veterans exposed to burn pits in the Middle East (and other service-related hazards), Congress in 2022 earmarked $100 million for “critical skill incentive” pay to help retain experienced frontline caregivers, and recruit new ones for high-demand jobs.

Secretary McDonough’s already controversial handling of that pot of money does not bode well for how $23 billion may get spent on his “critical staffing program.” Nearly one-tenth of the PACT Act–created incentive pay pool was allocated to VA officials in Washington (who are not in short supply or high demand as the incentive program required), with the rest reserved for employees in the field. When frontline staff and legislators protested this use of the program, Secretary McDonough informed headquarters staff that they would have to return the money. In an angry response last month, Senate Veterans’ Affairs Committee Chair Jon Tester (D-MT) wrote that it was “unacceptable that any of these resources were misused and directed towards senior executives at VA headquarters who didn’t meet the appropriate criteria.”

Tester applauded the full recoupment of these funds from the “career senior executives” who received them improperly—but the personal impact on them wasn’t great for headquarters morale either. (As one longtime VA insider told the Prospect, “You can imagine the response this produced. Someone cashed a check for say $50,000 to pay off their kid’s college loans, and then they are told they have to pay it back?”)

Tester was joined by other Veterans’ Affairs Committee leaders, who sent a letter reminding McDonough that the intent of Congress was to “improve staffing … for the day-to-day operations at VA” by providing incentive pay for occupations “which have faced hiring shortages for years.” The signers told the VA secretary that they “expect a much higher level of due diligence, oversight, and planning at the executive level” in the future. The VA did not respond to the Prospect’s queries about this issue.

If legislators are so concerned about the misuse of $10 million, they can direct their oversight to preventing the “Integrated Critical Staffing Program” from becoming a $23 billion “misuse of workplace authority,” with far worse consequences for VA caregivers and their patients.