Chief Logistics Officer Meeting

Before I get going, let me take you back a few years. You know about the access crisis in 2014. You may not know about an earlier crisis.

On June 16, 2009, the VA IG published its report “Use and Reprocessing of Flexible Fiberoptic Endoscopes at VA Medical Facilities.” In layman’s terms, the report’s about how VA was cleaning colonoscopy equipment, before using it on the next Veteran.

Here’s an excerpt from the report’s conclusion. “[Sterilization],” the report said, “requires a standardized, monitored approach to ensure that these instruments are safe for use in patient care.”

Eight days later, VA senior leaders testified to Congress on the failure.

Here are a few key points from that testimony:

• Flexible endoscopes are particularly difficult to disinfect . . . .because of the large variety of types and models of endoscopic equipment.
• A single, standard process for reprocessing all reusable endoscope equipment does not exist….
• [That’s] further complicated by the . . . plethora of equipment, as each type of equipment or each piece and component requires unique reprocessing techniques.
• In short, a central aspect of the failure that put thousands of Veterans at potential risk of Hepatitis C, Hepatitis B, and HIV was a failure to standardize equipment at facilities across the Nation.
• Fast forward to 2015—the Independent Assessment was released this past September. Assessment J, Supplies, is of particular importance to our purposes here. By a show of hands, how many have read Assessment J?

It’s an accurate snapshot of where we are. It’s not pretty. But, we own it. It’s our problem, and we will fix it.

One point’s particularly instructive:

“VA has not taken full advantage of its scale or potential for product standardization . . . .”

That problem—the lack of standardization—in part, caused dangerous outcomes in 2009, and its effects are no less troubling today. Here’s what else it says about the supply chain for clinical supplies and medical devices:

• Contracting processes are bureaucratic and slow, which can delay Veterans’ access to care;
• Purchasing processes are cumbersome, which has driven VHA staff to workarounds . . .
• Utilization is difficult to measure or manage given lack of data, which likely leads to significant avoidable expense for the VA.

Why?

Because in the final analysis, it’s the Veteran who bears the brunt of everything VA as an enterprise does. It affects the Veteran. It affects the employee serving the Veteran. And it affects the American people—we have to be good stewards of the taxpayers’ dollars in caring for their Veterans.

We already know our VA supply chain is not what it should be, in terms of its ability to manage spending and ensure deliveries. For example, if someone in VHA needs to order suction tubing and types that into the current system, the system gives them 40 pages of products. It’s a bewildering mix of different sizes, amounts, purposes, prices, and vendors. It takes time to figure out what to buy, and the likelihood of a wrong purchase is high.

Our purchases are also spread among the many different vendors, so we lose a lot of buying power.

We have a solicitation out for a next-generation system that will focus the buyer on preferred products—fewer choices, but easier selection—more ordering, less purchasing. That way, we can be better customers and negotiate terms of service like pricing and delivery based on our actual purchasing history. Ideally, we’d like it to be as easy as ordering from Amazon—simple point-and-click—with ordering authority delegated as low as possible.

In other words, we need our logistics processes streamlined, and product procurement standardized.

The downstream effects that Veterans shoulder is one of the key reasons we’re changing how we do business at VA—not just in logistics, but across the organization. We’re building a world-class customer-service enterprise, oriented around the needs of Veterans.

The vision is called MyVA, and it’s about transforming the entire institution, changing how we serve Veterans. We call the effort MyVA because that’s how we want Veterans to think of us—an organization committed to treating and serving Veterans the way they want and need to be served.

Our five MyVA objectives are:

1. Improving the Veteran experience: seamless, integrated, and responsive customer service experiences for every Veteran, every time.
2. Improving employee experience: eliminate barriers to customer service, and focusing on our “people and culture” so we can better serve Veterans.
3. Improving our internal support services, including acquisitions and logistics.
4. Establishing a culture of continuous improvement: Identify and correcting problems faster, replicate solutions across the enterprise, train thousands of employees in Lean Six Sigma.
5. Enhancing strategic partnerships, working closer and smarter with public and private partners to serve Veterans in ways VA alone can’t.

How hard is it to transform an organization as large as VA? Let me tell you.

In the private sector, overhauling the largest healthcare system in America, transforming business processes, and implementing organization-wide cultural change would be quite a challenge.

Now, think about getting all that done in the Federal Government.

We have 535 board members—Congress.

We have onerous budget and acquisition processes and operate in an entrenched bureaucracy. Everything we do is highly visible, subject to scrutiny and critique by powerful and vocal competing interests.

If there’s an organization in America facing greater leadership and management challenges than VA, I’d like to know who it is.

And you senior leaders are on the front line of that challenge. Here’s what the Independent Assessment said about changing VA, about transforming the Department:

• The scale of the transformation needed [at VA] … has few precedents in the private or public sector …
• The nature of the current system—with hundreds of unique locations, partnerships, and performance measures—only increases the complexity of the opportunity.

Let me put that complexity in some context.

If VA were in the private sector, we’d be a Fortune 10 company. VA’s the second largest agency in the Federal government with 340,000 employees—a third of them Veterans—and a $169 billion budget. Eleven million of the 22 million Veterans living today are registered, enrolled, or use at least one VA benefit or service.

Among our nine lines of business . . .

• Last year, we provided $58 billion in compensation benefits to four million Veterans and their survivors.
• We supported 100,000 disabled Veterans with $1.2 billion in vocational rehabilitation and employment benefits.
• Since 2009, we’ve paid $57 billion in Post 9/11 GI Bill education benefits to 1.4 million Veterans and family members.
• In 2015 alone, we guaranteed 631,000 home loans with a balance of $100 billion, and for the nearly 2.4 million home loans on our books, we’ve have the lowest foreclosure rate in the industry.
• Not many realize VA is the Nation’s 10th largest insurance enterprise with nearly $1.3 trillion in coverage under 6.3 million policies for Veterans, Servicemembers, and families.
• We operate 133 National Cemeteries, maintain 3.4 million gravesites, and perform over 130,000 interments each year,
• And for the past decade, the American Customer Satisfaction Index has ranked our cemetery system the top customer-service organization in the Nation, public or private.
• And I haven’t even gotten to healthcare yet.
• Nine million of the Nation’s 22 million Veterans are enrolled for healthcare—our 9th line of business.
• We’re the largest healthcare system in America. We provide services from primary care to polytrauma care to complex specialized procedures like organ transplants and neurosurgery.
• We have 150 hospitals and nearly a thousand outpatient clinics, some as large as 250,000 square feet.
• We have 300 Vet Centers where we provide counseling and support for combat Veterans and their families.
• We have 135 nursing homes, 104 residential rehabilitation treatment facilities, and scores of outreach and mobile medical clinics to serve our most rural Veterans.
• We complete 80 million appointments a year. That’s about 250,000 each weekday.
• We have 23,000 doctors, and our 91,000 nurses make VA the largest employer of nurses in the country.

However, there is plenty of room to improve access to quality care and to better serve our customers—Veterans.

It should be done, and here’s why.

Imagine what MyVA can mean to Veterans.

Imagine Veterans talking about timely access to great care, customer service that matches anything in the private sector, thoughtful and caring employees, and state-of-the-art technology making it easy for Veterans to use VA services.

Imagine our 350,000 staff directly engaged in improving the customer experience in their own area—a dedicated workforce committed to the mission of serving Americas’ Veterans.

Imagine support services like Human Resources, Information Technology, supply chain, and construction as critical enablers to our frontline staff, all delivered at better value for taxpayers.

Imagine a vital network of collaborative relationships and partnerships across federal state and local governments, and with both non-profit and for-profit organizations, much like the excellent work we’ve seen on Veteran homelessness.

The goal is to enhance strategic partnerships, while working closer and smarter with public and private partners to serve Veterans in ways VA alone can’t. Speaking of partnerships—as businessmen, Bob and I know that you want your suppliers to become your partners.

You want to help them do their job, so they can help you do yours.

But what Bob and I have learned from years of work in the private sector is that organizations—especially service-based organizations—that neglect to do the simplest things to improve customer satisfaction and gain efficiency fail to flourish and suffer significantly.

All of you understand that.

My natural tendency upon arriving at VA was to reach out to its business partners—its contractors and suppliers, and I’ve done that at VA—in places like Orlando, New Orleans, and Denver—where VA and its business partners have been at odds.

But the initial reaction within VA to my reaching out was what you absolutely don’t want to do—keep your distance. At times, it seemed that we were treating contractors like the enemy. That’s no way to do business. We have strict laws governing contracting. We can’t change that without legislation. But we still need to be working with our contractors more like valued partners and involving them in our business processes.

VA is charged to do what is right for Veterans and be good stewards of taxpayer resources. It’s not one or the other—it’s both.

All of you must ensure MyVA succeeds.

Focus on leveraging our current capabilities with developing innovative ways to standardize our supply systems. Identify where you can have the biggest impact on fixing the problems identified in the independent assessment.

Given the range of the challenges we face, all of us must work together to improve them. Advances in logistics should not focus solely on how we buy supplies but also on how we support and care for our Veterans.

At the end of the day, our mission is to provide quality care and services to our Veterans. We can’t lose sight of the impact of how we serve Veterans, and that includes their families.

Remember, Lincoln charged us to care for those who have “borne the battle,” and their family.

So I don’t know of any organization with a greater opportunity or a more inspiring and noble mission.

Thank you.