Research support was provided by the Puffin Foundation Investigative Fund of The Nation Institute.
The regional office of the Department of Veterans Affairs in Louisville, Kentucky, has a metal detector at the entrance and a sheet of paper taped on the door that says, 100% I.D. Check. No Exceptions. Two floors higher in the same building is Humana Veterans Healthcare Services. The front door is decorated with stenciled glass, and people meet in a conference room with phrases like Increase Utilization written on a dry-erase board. These two offices represent vastly different cultures: one is corporate and clean, smelling of fresh paint; the other is battered and scruffy-looking, funded by taxpayer dollars. Yet despite the difference in style and approach, both offices are working together on Project HERO, an ambitious “public-private partnership” that allows Humana staffers to help “manage the quality and cost of health care” provided through the federal agency.
Project HERO, which stands for Healthcare Effectiveness Through Resource Optimization–“an attempt at a catchy acronym,” says Gary Baker, chief business officer of the VA’s Veterans Health Administration–was launched quietly in 2007. According to its critics, the $915 million program represents a major shift in priorities for the VA, a vast expansion of private-sector involvement that could threaten the agency’s ability to honor veterans with top-notch service. But VA officials say it is not designed to hand veterans’ healthcare over to Humana. Project HERO, they argue, is simply an effort to help the strapped federal agency run more smoothly.
The VA is a mammoth organization, serving 7.9 million men and women across the country. There are 153 VA medical centers, where patients have surgery and are treated for serious illness; 755 community-based outpatient clinics; and 232 counseling centers, which provide assistance to soldiers readjusting to life after wartime. Yet despite the outlay of resources and facilities, there are some services the agency cannot provide, particularly in rural areas. In order to avoid delays, veterans may visit a private healthcare provider in a “fee basis” program that allows them to receive care outside the VA system. The veteran makes an appointment with a private physician or diagnostician, and the VA pays for the visit. The fee-basis system is limited in scope, a small piece of a massive, full-service organization. In 2007, according to Baker, it represented $2.5 billion of the $33 billion in veterans’ healthcare costs.