will be no cutbacks in service, a Department memorandum for at least one medical center dated January 16, 1990 states that all Category B and C veterans will now be denied both inpatient and outpatient care, except in emergencies. Non-service-connected (NSC) Category A veterans will not receive outpatient care and will receive inpatient care only in cases where hospitalization is necessary at the time that treatment is sought. Furthermore, some service-connected veterans, those rated at 30 percent service-connected or less, will receive care for only their service-connected disabilities. They will be treated in the same manner as NSC Category A veterans for all other instances of care. The proposed fiscal year 1991 budget will yield a similar situation, compounded by fiscal year 1990 shortfalls.

This situation is largely because the fiscal year 1991 increase includes funds which do not translate into increased capacity to deliver care. Of the $900 million increase, $453 million is accounted for by payroll increases for existing employees and $232 million represents the costs for inflation and rate changes in programs such as the state veterans home per diem payment and increases in lease payments. The result of these items is an actual fiscal year 1991 funding shortfall, despite the apparent increase, which can be seen in the adjustments to the capacity to deliver medical care as follows: a decrease of approximately 1,000 average hospital operating beds; an increase of only 1 percent in the number of patients expected to receive treatment in Department hospitals, despite both the recent turnaway of almost all Category B and C veterans from DVA care and the anticipated aging of the eligible population; and an increase of 4 percent in the number of patients expected to receive treatment in long-term care institutions and a decrease in the duration of that care. The Committee recommends adding $69 million to the Department's fiscal year 1991 budget to restore the number of veterans treated by DVA in outpatients settings to fiscal year 1988 levels.

Restore Proposed Computer Implementation Cut.-The budget includes a proposed decrease of over $31 million (a 16 percent decrease) and 106 FTEE in medical computer funds, computer assistance "considered essential for effective management of a health delivery system" according to budget documents delivered to the Congress. Of the proposed decrease, $26 million and 105 FTEE is proposed for the Decentralized Hospital Computer Program, the essential clinical support function in medical facilities. No explanation of the basis for this reduction was included in the budget documents nor during the hearings.

The Decentralized Hospital Computer Program (DHCP) is an important and highly visible program. Various studies performed by such organizations as the General Accounting Office (GAO), the DVA Inspector General (IG), Booz-Allen and Hamilton, and the Congressional Office of Technology Assessment (OTA) have been consistent in their observations that the DHCP has widespread user acceptance and has become vital to hospital operations.

Therefore, the Committee recommends restoring the $31 million and 106 FTEE. The Committee expects these funds to be used to maintain the rate of implementation of the enhanced DHCP system and to develop an automated medical record and state-of

the-art computer technology support for physicians and nurses. The Committee believes that the availability and use of modern computer technology will put the DVA in a more competitive position in the recruitment and retention of scarce medical professionals as well as improving patient care. While the Committee recognizes the remarkable progress made with the DHCP effort in past years, it is concerned by the equipment procurement difficulties mentioned in the Quarterly DHCP Report. These delays must not be allowed to impede the continued progress of this critical system.

CONSTRUCTION

The construction request for fiscal year 1990 is $530 million, an increase of $164 million (about 30 percent) in construction funds for major projects (those costing over $2 million). The bulk of the major construction funds are earmarked for replacement and modernization projects ($338.1 million), with $240 million allocated to the Detroit, MI replacement facility. Two of the eleven unfunded projects approved by the Committee in fiscal year 1990 are included in the proposal: Montgomery, AL regional office collocation and a 120-bed nursing home care unit at Palm Beach, FL. A $33.7 million increase (about 30 percent) is proposed for the minor construction account.

The DVA's Capital Facilities Study documented that 69 of 132 DVA medical facilities built before 1970 received a fair, poor or failing rating of their physical condition. According to the Department, these ratings indicate that major construction projects affecting major physical systems will be required in the next five years. In addition, over half of DVA's medical facilities are over 30 years old. Changes in the practice of medicine, the development of new equipment for diagnosis and treatment, the need to create work environments which make more efficient use of scarce medical professionals such as nurses, conversion of existing space to new uses (e.g., acute beds to long-term care use), and the imperative to maintain high-quality care justify a reasonable schedule of capital modernizations, clinical improvements and patient safety modifications. In particular, the need for additional outpatient care capacity has been documented as having resulted in a shift to this locus for care delivery in U.S. medicine due to new technologies and the opportunity for cost savings when compared to inpatient settings. A more detailed analysis of long-term care needs follows below.

The Committee recommends that two projects at the Big Spring, Texas Medical Center, a new surgery unit at an approximate cost of $2.2 million and a new supply processing and distribution Center at an approximate cost of $1.25 million, be elevated to fiscal year 1990 design/construction and 1991 activation. The Committee urges that special attention be given to the following construction projects: Asheville, North Carolina-expansion and modernization of clinical facilities; Tuscaloosa, Alabama-renovation of existing facilities and installation of an aquifer system; Youngstown, Ohiolease purchase for an outpatient clinic; Northport, New York—renovation of existing facilities and construction of an outpatient clinic.

long Term Care.-The budget proposes a single 120-bed nursing home for fiscal year 1991. This is only the second year in the last five years that a new nursing home bed care unit has been proposed. The budget projects an increase for fiscal year 1991 of 556 average operating DVA nursing home beds from the fiscal year 1990 level. The budget also proposes an increase of $1.5 million for conversion of 159 acute care beds to nursing home care beds.

The Committee recognizes that nursing home care is an important, but by no means the only, program within the DVA extendedcare mission. The description and recommendations of the Independent Budget jointly prepared by four veterans service organizations concerning alternatives to institution-based extended care should be reviewed by the Department.

The projected increase in the elderly population of the United States is being experienced earlier in the veteran population than in the general population. The number of veterans over the age of 65 was 4.6 million in 1985 and is predicted to increase to 7.2 million by 1991 and to peak at 8.9 million veterans in 1999. In 1991, 60 percent of all males over the age of 65 will be veterans. In 1991, 3.8 million veterans will be over the age of 75.

Against this background, the recent history in this program is troubling. The Committee notes the Administration's delay in producing a plan for extended care. The long-predicted need for medical and long-term care of the aging veteran population is already beginning to affect the DVA. As long ago as October of 1989, Chairman Montgomery requested copies of two reports from the statutory Geriatric and Gerontology Advisory Committee (GGAC) which would bear on the need for extended care services. The Committee has yet to receive copies of these reports. The Committee will amend current law to require that as reports are submitted to the Secretary by the GGAC, copies will be submitted directly to the appropriate committees of the Congress.

The Department projected a fiscal year 1989 increase of 1,000 nursing home care beds, but actually achieved only a 200-bed increase. In its fiscal year 1990 budget submission, the Department projected an 1,800 bed increase over the projected fiscal year 1989 level. However, the Department's latest projection is that only 200 additional beds will be in operation on average. Thus, 1,600 beds that were projected to be available to veterans in 1990 will not be available.

The Department's planning strategy calls for a decreased emphasis on DVA-owned and operated nursing home beds in favor of increased reliance on privately-operated community nursing home beds and beds operated by the various States through the DVA-assisted State veterans home program. Due to shortfalls in the fiscal year 1989 budget, DVA hospital directors were forced to curtail placement of veterans in community nursing homes, thus reducing beds available for the care of veterans requiring nursing home care. In fiscal year 1990, the community nursing home funds have been earmarked for community nursing home care but at a level significantly lower than fiscal year 1988. This has resulted in a reduction of 5,315 patients treated in the community nursing home care program during fiscal year 1990. Testimony received by the Committee reveals that a non-service-connected veteran needing

nursing home care receives about 60 days of such care at DVA expense compared to the previous 180 days of such care as authorized by statute. Thus, not only are fewer veterans receiving care, but they are receiving less of it.

Therefore, the Committee recommends an addition of $96 million to increase the level of community nursing home service to the level that existed in fiscal year 1988. In addition, the Committee recommends the conversion of 1,500 beds to long-term care use at a cost of $50 million.

STATE VETERANS HOMES

The budget proposes $42 million in funding for the State Veterans Home Grant Program. This is the same level that has been requested for the past four years. The State Veterans Home Program assists States through two grant-in-aid programs. First, the DVA makes per diem payments for care provided to eligible veterans in recognized State veterans homes. Second, the DVA provides up to 65 percent of the construction, renovation, or acquisition costs for new state veterans homes. This program has been very successful in helping to meet the DVA's growing need for long-term care facilities as seen in the projected increase in the average daily census of 1,063 in the proposed budget.

Public Law 99-576 made modifications to statute related to the award of grants to States, among which was the requirement that grants be awarded in priority order. The first priority is applications for which the State portion of the funding for the projects has been appropriated by the State and are available; second, applications from States that do not have any State home facilities; third, applications from States that have the greatest need for nursing home or domiciliary beds as determined by criteria and procedures specified in regulations; and fourth, applications meeting any other criteria as determined by regulations. At the time of consideration of this change, the Committee noted that the intent of Congress in Public Law 99-576 and its predecessor, Public Law 99-166, was to move toward a State home program focused on States that demonstrate interest in a State home by way of appropriation of the State portion of the funds. This incentive resulted in applications in the first priority category that exceeded the $42 million fiscal year appropriation by $16 million dollars. Therefore, the Committee recommends a $16 million increase over the proposed fiscal year 1991 request.

MEDICAL AND PROSTHETIC RESEARCH

The budget proposes a decrease in medical and prosthetic research funds of $14.1 million and 440 FTEE, including a decrease in investigator-initiated studies and a decrease in career development studies. This decrease follows several years of fluctuating and generally decreasing research budgets. The Administration requested $197 million in fiscal year 1990 for medical and prosthetic research, a decrease of $12.9 million. This request was rejected by the Appropriations committee which provided fiscal year 1990 funding in the amount of $216 million.

Unfortunately, the DVA's research budget has not kept pace with other federal research programs. For example, the budget for the National Institutes of Health has increased 110 percent in the last ten years, while the DVA research budget has been increased only 51 percent.

In addition to the extraordinary contribution of DVA research to new knowledge, a quality research program is also an important recruitment and retention factor for doctors and other health care staff. By attracting new researchers, the DVA thereby improves the caliber of direct patient care. The Committee found in testimony that the value of the DVA's research program goes far beyond the acquisition of new knowledge. Such programs have a profound effect on the ability of the Department to recruit and retain high quality health care professionals, particularly physicians by partially offsetting the substantially lower salaries offered by the DVA. In addition, the presence of research programs has a positive effect on direct health care by improving the quality of care delivered.

In light of the current difficulties in the recruitment and retention of DVA physicians and other health care providers, the Committee believes it would be detrimental to accept the budget level as proposed. The Committee believes that increasing physician and dentist salaries while at the same time reducing the opportunity to engage in research would be counterproductive to the recruitment and retention goals of the Department. In addition, the Secretary has announced the establishment of a Blue Ribbon Panel to study the future of DVA research and to make recommendations based on its assessment. The Committee finds it imprudent to request such a serious decrease in the program funding levels prior to the convening of the panel. To do so would prejudice the future of these programs. Therefore, the Committee recommends an increase of $40 million (for a total of $238.5 million) be added above the Administration's request.

SPECIAL MEDICAL PROGRAMS

The budget proposes funding for treatment of Acquired Immune Deficiency Syndrome (AIDS) ($50 million increase in outlays over fiscal year 1990), Post Traumatic Stress Disorder (PTSD) (no increase over the fiscal year 1990 level), substance abuse (no increase over the fiscal year 1990 level), homeless programs (no increase over the fiscal year 1990 level), and blind rehabilitation (no increase). In all of these special medical programs over the years, funds have been taken from the straight-line budget as described earlier. The result has been routine underfunding to meet the special needs and significant drains on the rest of the medical care budget.

In the case of AIDS, approximately 7,300 patients have been treated in DVA facilities since the beginning of the epidemic with 2,246 cases in fiscal year 1989 alone, demonstrating that the proportion of new cases applying for care from the DVA is rising. This cumulative figure accounts for about 7 percent of the total adult AIDS cases in the Nation. Yet, no increase is proposed in the budget for treatment of this increasing caseload.