Cutting VA Bonuses Could Hurt Veterans More Than Execs

Bonuses have long been a sensitive and controversial topic at the Veterans Affairs Department.

A 2011 Government Accountability Office report found that 80 percent of VA’s medical care providers together received $150 million in performance pay despite “no clear link between performance pay and providers’ performance.”

Since then, as VA struggled with a mounting backlog of disability claims and now a patient scheduling scandal, members of Congress have repeatedly targeted the department’s bonus program.

But eliminating bonuses could make things much worse for veterans by driving out good doctors and administrators who typically make far less money than their counterparts in the private sector, former executives say.

W. Scott Gould, a former deputy Veterans Affairs secretary now in private health care, said VA confronts a 20 percent vacancy rate due to poor compensation relative to commercial hospital pay. Private-sector administrators often make $600,000 annually, three times what their VA counterparts earn, while VA medical specialists, such as cardiologists, despite making up to $400,000, are still in the bottom half of their fields in pay, Gould said.

Gould said a centralized effort by the Office of Personnel Management in recent years has driven down the number of “outstanding” performance evaluations for senior executives and the average amount of bonuses. “This made an outstanding rating more valuable, because there are fewer, but it denied the ability to provide some variable compensation for top performers.”

W. Todd Grams, VA’s former chief financial officer now a director at Deloitte & Touche LLP, said complaints about VA bonuses are unfair. “When people say ‘bonuses’ it’s just pay in a recognized specialty and for years of experience. That has been a good thing. Data show that VA’s [bonuses] fall in the middle of the pack of average agencies.

“I’ve been a CFO, CIO, chief of staff, and performance officer at a variety of agencies both centralized and decentralized,” Grams said. “I’ve never felt that was the be-all and end-all issue. It’s not the main driver of whether you’re successful or unsuccessful. You’ve got to set out policies and expectations people operate under, give them the tools and resources to do the job, and then have a line of sight into how they’re performing.”

The nonprofit Partnership for Public Service has advocated restructuring federal pay to make it more market-sensitive. “We want VA to compete for the very best, who would work with the added benefit that they’re serving veterans, whether that’s through base salary or bonuses,” said Max Stier, the group’s president and CEO.