Systems Doctor

All was not well at the Bay Pines Veteran Affairs Medical Center in Florida during the winter of 2003-2004. Surgery had to be canceled for a patient already in a holding room because the supply of disposable tubing needed for the procedure had run out. Other patients were affected, too; 81 surgeries at the medical center were postponed between November 2003 and February 2004, in large part due to a lack of supplies.

One big reason for the fiascos was the Veterans Affairs Department's failed implementation of a new financial system, using the Bay Pines center as a test case. In the summer of 2004, VA pulled the plug on the system -- and $342 million went down the drain.

VA's information technology function is run mostly by tenured civil servants who use their personal connections to bypass organizational processes, according to a recent analysis by Stamford, Conn.-based Gartner Consulting. VA is known for providing some of the world's best health care, but many find it a dismal steward of information technology.

Until recently, the department's three semi-autonomous components -- the Veterans Health Administration, Veterans Benefits Administration and National Cemetery Administration-made their own spending decisions. As a result, no one could say with certainty how much they spent on IT annually. Redundancy became rife; at one point, 535 e-mail servers were spread out across 271 locations. Software development projects often spiraled out of control.

Robert McFarland, VA's chief information officer for the past two years, is changing all that. He's phasing in an order signed late last year by Veterans Affairs Secretary R. James Nicholson, which gives the CIO budget control over technology spending. Previously, McFarland was in charge of direct appropriations worth about $50 million a year, mostly limited to departmentwide projects such as enterprise architecture. Now his budget is $1.2 billion, almost all planned information technology spending. McFarland's new duties include quarterly decisions on whether to continue funding the agencies' software development projects. "It's within my power to refuse to fund," he says, adding that the department's secretary or deputy secretary can overrule him.

Still, McFarland wants more. All employees responsible for information technology operations and maintenance, for example, will report to him. But the separate VA agencies will continue to pay the salaries of software development employees. McFarland has oversight and funding powers over development projects, but not direct control. It's no secret, he says, that he favors further centralizing the IT governance structure. Some in Congress are behind him -- although many inside the department think McFarland already has too much control.

Standing apart from the litany of failed VA information technology projects is the department's electronic health records system. The Veterans Health Information Systems and Technology Architecture (VistA) was cutting edge when it emerged in the early 1980s. But VistA is aging badly. Based on an obscure programming language from the 1960s, the system is expensive to maintain and hard to update.

VA is developing software called HealtheVet to replace VistA, but the program has a way to go. A 2004 review by Carnegie Mellon University's Software Engineering Institute found HealtheVet to be in serious danger. Requirements were not documented and risks unaccounted for, the report found. "They can't put on a piece of paper what they want to do and when they want to have it done," says a House staffer, who asked not to be named.

The stakes are high. Theoretically, VA could keep its legacy system running indefinitely, but if HealtheVet were to tank like the failed financial system, the howls from Congress would be deafening. "At some point you make a decision that either you can do this job called HealtheVet inside, or maybe you draw back and say, 'I can't do it inside anymore, maybe I need to do it outside,' " McFarland says. Cutting off funding for failing projects would be a measure of last resort, he says. The department hired the Software Engineering Institute to find HealtheVet's flaws, and quarterly reviews will ensure that the department catches development errors early, he says.

But McFarland's main duties are managing the department's vast IT operations and maintenance, not software development. Congress already has imposed some fiscal discipline on VA agencies by giving information technology its own line item in the fiscal 2006 budget and handing control of that fund over to McFarland. Detractors worry that exposing IT spending -- previously, it was buried within other line items -- makes it vulnerable to budget cuts, an argument McFarland rejects.

McFarland's predecessor, John Gauss, wonders whether pouring the IT budget into a congressional mold might end up harming patients. When the agencies had spending flexibility, they could use information technology to make up for unexpected shortfalls in medical care dollars, says Gauss. Budgeting is a two-year process, so anticipating veterans' future needs is a gamble. "You've got trade-offs. Do you spend the money on information technology, or do you spend the money on these newly disabled veterans?" Gauss says.

Without central control, McFarland says, IT spending will continue to be inefficient and duplicative. "You're never going to have an information technology program that's going to deliver or complete anything," as long as funds can be as freely transferred as they have been, he says.

Others argue that taking responsibility for the operations and maintenance staff away from local hospitals or administrative networks dilutes their accountability. Local VA centers are responsible for the quality of their service, but now IT staffs report to headquarters in Washington, which might not have enough personnel for support and assistance, some say. McFarland acknowledges there's pushback from within the department. "Is this a popular thing with the agency? Of course not," he says.

But pruning redundant systems and implementing standards alone aren't going to solve VA's problems. McFarland says: "Where most of our failures have been is in development." Rep. Steve Buyer, R-Ind., wants to place software development into the CIO's portfolio. "VA's plan looks like the department wants to carry on, really, business as usual," he said last November on the House floor. As chairman of the House Committee on Veterans Affairs, Buyer has reeled off stalled and failed projects during congressional hearings and in speeches. During the past decade, VA has spent $600 million on VetsNet to automate compensation and pension claims processing, for example, and the project still is not complete.

Buyer is sponsor of a bill that would give McFarland authority over all information technology functions -- development, approval, implementation, integration and oversight. It passed the House 408-0 in November, but the Senate Veterans Affairs Committee's chairman, Sen. Larry Craig, R-Idaho, is in no hurry to mark it up or act on similar legislation sponsored by Sen. John Thune, R-S.D. A meeting between Craig and Buyer in late December brooked no compromise.

Meanwhile, McFarland is pressing forward. VA will hire a contractor to determine where and how to consolidate operations and maintenance. The task will be finished in about two years, and during that time McFarland can be comforted with the thought that total centralization has come at least one step closer to reality. "I would think that it is certainly one of the steps that you would take if you were going to ultimately centralize, yes," he says. "But I'm not speaking on behalf of the agency there."