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HEALTH CAREcrucial to improving care and reducing costs. For
one, it offers an alternative to “fee-for-service” re-
imbursement, in which hospitals are paid more for
providing more treatments, a perverse incentive
that contributes to high costs and lack of preventa-
tive care. The VA, by contrast, practices value-based
care, under which health care providers are finan-
cially incentivized to keep patients healthier. The
private-health care industry, which has thrived on
fee-for-service, is in no hurry to make the switch
even while health care costs have soared to more
than $11,500 per person, a 30 percent rise in infla-
tion-adjusted dollars since 2003.
Under value-based care, the healthier patients
stay, the less the VA has to dig into its budget to pro-
vide more treatment. Does this save on costs? It’s
nearly impossible to compare costs in such health
care systems. The VA, for instance, doesn’t even bill
patients for the care it provides. Its patients tend
to have more health challenges than other patients,
which include ordinary back injuries as well as ex-
posure to Agent Orange and traumatic brain injury
from combat. And they tend to stay with the VA
longer because it provides nursing-home and end-
of-life care. Studies have shown that many of the
VA’s patients would be turned away by most private
health care insurance companies. “About a third
of Americans have chronic, non-cancer pain,” says
Carolyn Clancy, a physician and the deputy under
secretary for discovery, education and affiliate net-
works at the VA. “For vets it’s about 60 percent.”
Still, studies suggest that where comparisons
can be made, care in the VA costs about 10 percent
less than Medicare, even though Medicare pays
about half as much as private insurance does for
similar treatments, according to another Rand
study. That’s because the VA is constantly hunting
for ways to eliminate inefficiencies, including tests
and treatments that don’t offer much benefit for
patients, says Ryan Vega, a physician who heads the
VA’s health care innovation efforts. “If we can do
something for a vet that will make their lives better,
we’ll do it, even if it costs more,” insists Vega. “But if
it doesn’t provide better care, we look to reduce it.”
Vega says the VA regularly “de-prescribes” medi-
cines that haven’t ended up producing the hoped-
for benefits, eliminates tests that aren’t leading to
better outcomes and constantly hunts down cheaper
ways to get good results. For example, the VA hasDO IT, EVEN IF IT COSTS MORE.
IDE BETTER CARE, WE LOOK TO REDUCE IT.”