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Congress and Hospitals Team Up For Veterans' Medical Care

The Department of Veterans Affairs is scrambling to clear a logjam of thousands of patients who remain on wait lists for medical treatment by creating a Veteran's Choice Fund. That scramble may increase the amount of care that is being offered to VA members through private health care providers, particularly in states with large veteran populations, including California, Texas, and Florida.

Clearing the backlog
In April 2013, 67 senators sent a letter to President Barack Obama calling for his direct involvement in fixing the VA's 600,000-claim backlog. That backlog had caused the average wait time for initial disability claims to soar to 586 days in Houston and 619 days in Los Angeles. 

Then reports surfacing earlier this year that some officials in Phoenix may have been fudging wait-list data led to an inquiry by the Senate Veterans' Affairs Committee, including a review of information provided by the American Legion suggesting that creative accounting could be happening in at least 10 states.

Moving in the right direction
As a result of increased oversight by the White House and Congress, significant advances are being made in reducing the number of veterans waiting for care.

According to VA reports in July, the agency has reached out to more than 217,000 veterans on wait lists and referred at least 543,000 patients for care at private hospitals, 91,000 more than were referred in the same period a year ago. Overall, the VA claims that its wait list had fallen by 55% from its peak; still, there's considerably more work to do.

That's because patients are waiting between 61 and 90 days for more than 178,000 appointments and at least 120 days for an additional 38,000+ appointments.

Big money problem 
This week, Congress responded to the VA's struggles with the approval of a $17 billion emergency funding bill. 

If President Barack Obama signs off on this funding, $10 billion will be placed in a Veteran's Choice Fund at the U.S. Treasury that will be used to pay for veteran care at non-VA private healthcare facilities. The VA will also spend $5 billion hiring new doctors and nurses and the remaining $2 billion to lease 27 new medical facilities.  

Source: U.S. Department of Veterans Affairs.

Filling the void
According to the Department of Veterans Affairs, California, Florida, and Texas are home to nearly a quarter of the nation's 22 million veterans.

As a result, the VA last year spent more than $13.5 billion providing medical care to veterans in those three states. This suggests that the VA may rely heavily on hospital systems operating in those states to help clear its remaining backlog.

For example, in California, the VA may turn to publicly-traded hospital operator Universal Health Services to help bridge the gap in care. Universal operates six behavioral health facilities and five acute care hospitals in the state, including a new 140-bed hospital it opened last year in the Inland Empire region. Universal may also help the VA out in Texas, where it operates seven hospitals and 22 behavioral facilities.

However, Dallas-based Tenet Healthcare and Nashville-based HCA Holdings may play a much larger role. Tenet operates 17 hospitals in Texas, 11 hospitals in California, and another 10 hospitals in Florida. Additionally, outpatient facilities in those three states represent nearly two-thirds of all of Tenet's outpatient locations. HCA has an even broader network of facilities, including 78 hospitals in Texas and Florida alone.  

Fool-worthy final thoughts
According to the spending bill, veterans who live far away from VA facilities, or with long wait times, can tap into the Veterans Choice Fund to pay for care at private facilities. But that doesn't mean that the system won't face hurdles. Veterans will need to have private care pre-approved by the VA, and some doctors may choose not to participate in the VA program. Regardless, the creation of the Veterans Choice Fund is a great step toward making sure veterans receive timely care, and that's good news for everyone.  


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Todd Campbell

Todd has been helping buy side portfolio managers as an independent researcher for over a decade. In 2003, Todd founded E.B. Capital Markets, LLC, a research firm providing action oriented ideas to professional investors. Todd has provided insight to a variety of publications, including SmartMoney, Barron's, and CNN/fn.

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