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Spokane, Washington  Est. May 19, 1883

Spokane VA director warns budget trouble caused by computer system is forcing staff cuts

The Mann-Grandstaff VA Medical Center, photographed Tuesday, Nov. 30, 2021.  (COLIN MULVANY/THE SPOKESMAN-REVI)

WASHINGTON, D.C. – A projected $35 million budget deficit at Mann-Grandstaff VA Medical Center caused largely by the use of a flawed computer system is forcing the Spokane hospital to reduce its staff, according to an internal email, despite the ongoing effects of the Department of Veterans Affairs’ decision to test the system there.

In a May 9 email to supervisors, obtained by The Spokesman-Review, Mann-Grandstaff Director Robert Fischer wrote that the hospital would need to reduce its authorized staffing level by more than 15% because of the projected shortfall. That would mean eliminating the equivalent of 146 filled full-time positions as they become vacant, he said, even as national VA leaders acknowledge the new electronic health record system has reduced the number of veterans each clinician can see.

Hampered by the system and lacking clinicians in key specialties, Mann-Grandstaff has increasingly relied on the private sector for care. According to separate documents obtained by The Spokesman-Review, that has put the hospital on track to spend roughly an additional $38 million over budget while veterans face long waits for care outside of the VA.

In a call with reporters Friday, VA health care chief Shereef Elnahal said the department already had provided additional funding to the regional office that allocates funds to each VA medical center in the Northwest to account for the system’s impact. But in his email, Fischer said Mann-Grandstaff must pare down its staff because the bloated payroll in Spokane is effectively cutting the budgets of hospitals in Puget Sound, Portland and Boise.

In a statement, Sen. Patty Murray, the Washington Democrat who controls federal spending as chair of the Senate Appropriations Committee, said cutting staff in Spokane is “completely unacceptable,” adding that “there is no question” that the VA has the money it needs to keep the jobs.

“Facilities operating the new health record should absolutely not be cutting staff,” Murray said, especially when the VA announced in April it would halt the system’s rollout and focus its resources on making it work at the five hospitals where it’s already deployed. “Mann-Grandstaff can’t do that if its budget and staffing needs are not being met.”

Murray said she raised the staffing issue when she met Thursday with VA Chief of Staff Tanya Bradsher, whom President Joe Biden has nominated to serve as the department’s deputy secretary.

“If VA needs more funding, they should ask for it – and they haven’t,” Murray said. “I will be following this closely to ensure Mann-Grandstaff has the resources it needs to support providers and get Washington state veterans the care they deserve.”

A spokesman for Rep. Cathy McMorris Rodgers said the Spokane Republican would “under no circumstances” accept a reduction in staff or services at Mann-Grandstaff, especially as a result of the Cerner system’s rollout.

“Even suggesting that as an option is entirely unacceptable, so the congresswoman will be looking at every available option to ensure veterans in Eastern Washington have access to the care they need,” spokesman Kyle VonEnde said in a statement.

‘Cerner mitigation’

In an email to VA staff across the Northwest on Wednesday, Teresa Boyd, the director of the regional office, thanked her colleagues at hospitals in Eastern Washington and Oregon for putting up with the new computer system, developed by the health technology company Cerner under a $10 billion contract awarded by the Trump administration in 2018.

Since the VA began testing the system in the Inland Northwest in October 2020, it has repeatedly crashed, hamstrung health care providers and contributed to incidents of harm, including the deaths of four veterans. After problems emerged at the pilot site in Spokane, VA Secretary Denis McDonough stopped the system’s rollout and ordered a review in 2021, then launched it at additional sites in 2022.

In her email, Boyd explained that the department and the company that now owns the system, the tech giant Oracle, had agreed a day earlier to restructure the 10-year contract when a five-year option period ended. Oracle, which acquired Cerner for $28.3 billion last June, will need to meet stricter performance targets under the reworked contract, which the VA could renegotiate again after a year.

“THANK YOU,” Boyd wrote in the email, obtained by The Spokesman-Review, addressing staff at the VA medical centers in Spokane, Walla Walla and White City and Roseburg, Oregon. The Cerner system also has been deployed in Columbus, Ohio.

“You have my full support as you continue trying, communicating and giving your all to improve the lives of Veterans and, ultimately, make your work more efficient and effective as we move forward together on this journey,” she wrote. “I know it has at times been difficult, stressful and exhausting.”

But according to the email Fischer sent a week earlier, the Spokane hospital has been getting less than full support from the regional office, which allocates funding for VA facilities in Washington, Oregon, Alaska, most of Idaho and small parts of Montana and California.

Fischer wrote that the new system – which is meant to replace the VA’s aging but highly specialized electronic health record system, called VistA – has affected Mann-Grandstaff’s budget in several ways.

Surges in authorized staffing for “Cerner mitigation” in September 2018 and July 2021 have increased payroll costs. Pay raises and bonuses meant to aid recruiting and employee retention have further boosted those expenses. But because the system’s inefficient design and functionality problems slow employees down, they see fewer patients, which is reflected in a lower allocation of funds to the hospital.

Because the Cerner system has trouble billing insurance companies and collecting copays, revenue from those sources has decreased. Meanwhile, Mann-Grandstaff has increasingly referred veterans to private-sector doctors in each of the past five years.

“As a consequence of all of these factors, we have no option but to change the trajectory of staffing,” Fischer wrote.

He said the hospital’s “target” staffing level – equivalent to 1,508 full-time employees – would be reduced to 1,278, the “ceiling” set by the regional office’s funding formula and chief financial officer. While not all of those positions are currently filled, he said the cuts would mean eliminating 146 full-time positions “over a number of years.”

Since the VA chose Mann-Grandstaff as the pilot site for the new system, the hospital received three surges in staffing, Fischer wrote: in September 2018 for “Cerner mitigation,” in April 2020 to combat the COVID-19 pandemic and again in July 2021 for the Cerner system’s impact. Since coronavirus cases peaked nationwide in early 2022, Fischer said, “essentially all filled mitigation positions have been applied to Cerner mitigation for maintaining safety, quality, and access.”

By January 2022, Fischer said, those staffing surges had created a projected budget deficit of $50 million for the fiscal year that ended Sept. 30, 2022. As a result, the regional office created a task force to review all proposed hires in Spokane. Starting in late summer 2022, he said, the task force’s reviews applied only to new hires.

In a news conference in January after The Spokesman-Review reported that Mann-Grandstaff was reducing its workforce because of those budget problems, McDonough denied that such a thing had happened. When The Spokesman-Review followed up with a VA spokesman, he said the department was “not cutting staff” in Spokane and pointed out that the hospital added staff since adopting the Cerner system.

“In an effort to practice sound position management, as we do at all our sites, we review and evaluate the need for each position as circumstances change and new efficiencies are implemented,” spokesman John Santos said in a statement March 2.

As part of an ongoing review at Mann-Grandstaff, Santos said, “leadership eliminated some but not all of the mitigation positions in consultation with the leaders across the facility – with no adverse impact on operations or service to Veterans.”

Based on a common method of calculating a clinician’s workload called “relative value units,” Santos said, productivity at Mann-Grandstaff was about 18% lower at the end of the 2022 fiscal year than it was just before the Cerner system launched two years earlier – during a surge in COVID-19 cases.

The VA spokesman attributed that decline to multiple factors, including staff turnover, the long-term effects of the pandemic on health access and the Cerner system. He added that productivity had improved 70% since the initial days after the system launched, when work slowed to a crawl, according to Mann-Grandstaff employees.

Non-VA care increases

That reduced productivity has forced the Spokane hospital to refer more patients to the private sector, through a program the VA calls community care. Congress created that option in response to a 2014 scandal over long delays in care at VA medical centers, but documents obtained by The Spokesman-Review show that Inland Northwest veterans now face long waits to see non-VA doctors.

New patients have to wait between six months and a year to see a mental health therapist, four to six months to see an endocrinologist and nine to 18 months to see a kidney specialist in Eastern Washington.

According to the documents, Mann-Grandstaff’s annual spending on community care is on track to grow by more than $71 million since the Cerner system arrived, from about $190 million in the fiscal year that began in October 2020 to a projected total of over $262 million in the current fiscal year. With a budget of about $223 million, that would mean an additional deficit of more than $38 million for private-sector care.

Community care spending at Mann-Grandstaff was about $60 million in fiscal year 2017, $101 million in fiscal 2018, $117 million in fiscal 2019, $179 million in fiscal 2020, $190 million in fiscal 2021 and $235 million in fiscal 2022.

That spending has spiked despite the number of veterans enrolled for care at the Spokane hospital – about 47,000 – staying nearly the same over the past two years, according to Mann-Grandstaff spokesman Bret Bowers.

Those community care funds are separate from the “general purpose” funds that cover payroll, and Fischer didn’t mention that additional budget deficit as affecting staffing in Spokane.

The VA uses a complex formula to allocate funding to each of its 18 regional offices, each of which then uses another model to allocate those funds to individual medical centers. According to the Government Accountability Office, a nonpartisan watchdog agency, both models are based on the number of veterans who receive care and the complexity of that care.

That means that by sending more patients into the private sector because of lost staff and the Cerner system’s impact on productivity, Mann-Grandstaff’s share of funding allocated by that model could decline as a result of being chosen as the testing ground for the troubled system.

Elnahal, who was confirmed by the Senate as undersecretary for health in July 2022, said Friday that the VA had provided extra funds to the Northwest regional office, recognizing that the standard formula “wouldn’t adequately fund those facilities, because we have not yet reached baseline productivity clinically in those sites.”

“In other words, we are making these facilities whole,” Elnahal said. “We have a plan to do so this fiscal year as well. And we will make sure that veterans are not impacted in any way in terms of the services available to them, with that strategy of being able to fund these facilities to the extent that they need to.”

Fischer began his email by thanking Mann-Grandstaff’s managers and department heads for their help determining the hospital’s staffing needs “to ensure patient safety, quality, and access to care” – a project he said began in fall of 2022 and concluded in March.

He said that Boyd, the regional director, had been briefed on the results of that work. But in an April meeting with the directors of all the Northwest medical centers, she decided that all hiring in Spokane would be subject to the task force’s review.

“There will be considerable scrutiny” of each proposed hire, Fischer wrote, “and therefore robust justification must accompany each request.”

The Mann-Grandstaff director’s email ended with an expression of gratitude for the employees who have borne the brunt of the VA’s decision to adopt a vital computer system that the department’s leaders now acknowledge is still not ready to be safely deployed anywhere else.

“As we charter a strategic plan that incorporates the requirements above, we cannot lose sight of our responsibility to provide safe and high-quality health care to Veterans entrusted to our care,” Fischer wrote. “In the meantime, please know that I am extremely sensitive to the many trials and tribulations you have experienced in meeting our VA mission despite often treacherous seas.”

When VA leaders announced a “reset” of the Cerner system’s rollout in April, they told Congress they would no longer need all of the money they had requested earlier in the year. They have said they intend to use some of the remaining money to improve the quality of care for veterans at the affected hospitals and clinics, but they have yet to specify how that will happen.