The Capital Budget
The Veterans Health Administration (VHA) is the largest integrated healthcare system in the United States and provides public-sector care for honorably discharged veterans of the U.S. armed forces. The VHA is mostly financed from general taxation, offers a broad range of health care services to meet veterans’ needs, and can be characterized as a veteran-specific national health service. Historically, since the 1970s, the quality of the VHA’s service was considered poor by almost all relevant stakeholders who have significance to the organization. Currently, VHA is a large vital system that offers a useful consensus for the opponents of integrated publicly financed and provided health care. In recent years, many articles has been published in academic and popular press reporting a significant change in the VHA’s performance indicating that U.S. health policymakers have interesting facets to learn from the system in the context of its high cost and apparent underperformance of the predominant, market-based sector (www.ncbi.nlm.nih.gov). The Department of Veteran Administration (VA) primary responsibility and accountability is to provide effective usage of taxpayer dollars and continues to eliminate wasteful spending.
The Veteran Administrations’ compensation reported new rates for compensation and pension benefits in 2014 are subjected to the types of compensation. VA disability compensation provides monthly benefits to Veterans in recognition of the effects of disabilities, diseases, or injuries incurred or aggravated during active military service. The program also provides monthly payments to surviving spouses, dependent children, and dependent parents in recognition of the economic loss caused by a Veteran’s death during military service or after discharge from military service as a result of a service-connected disability (www.benefits.va.gov). U.S. Department of Veteran Affairs, Office of Public and Intergovernmental Affairs reported that Veterans, their families and survivors that get disability compensation and pension benefits received a 1.5% for a cost-of-living increase embedded into their monthly payments which began on Jan. 1, 2014. This sentiment provided the increase expresses a substantial way that our Nation’s gratitude of the sacrifices given by our disabled and wartime serviced Veterans. As required by law, the disability payments did not round down to the nearest dollar figure, and that Veterans and survivors will receive an additional increase to their monthly benefit compensation payment. For Veterans without dependents, the new compensation rates ranged from $130.94 monthly with a disability rate at 10% to $2,858.24 monthly. The COLA increase applied to disability and death pension recipients, survivors receiving dependency and indemnity compensation, and other benefits like automobile and clothing allowances. Under federal law, the cost-of-living adjustments for VA’s compensation and pension matched those for Social Security benefits. In January 2013, the last adjustment was made when the Social Security benefits rate increased to 1.7 percent. In FY2013, VA provided over $59 billion in compensation benefits to nearly 4 million Veterans and survivors, and more than 515,000 Veterans and survivors spent $5 billion in pension benefits (www.va.gov/opa/pressrel).
Noticeably, the competition in healthcare and the evolution over the past decade has been a rollercoaster dilemma and the use of market forces in healthcare has provided important discussions for future healthcare developments. During the period when managed care was accepted to transform the way Medicare care organization provided services in which the reversal of many of the changes took place. With the integrated delivery vision implemented is now being replaced that consumers take a more active role in their well-being and healthcare services. This evolution now provides a greater role for consumers to apply more competitive pressure on providers to improve their quality of care and reduced costs. Therefore, future competition might revolve around consumers’ to choose healthcare providers with the quality ratings and better efficiencies. The Center for Studying Health System Change (HSC) periodically surveys households and physicians which effective responses have the potential that may evolve in different directions in the future. Unfortunately, the market and policymakers reacted and the responses to the backlash in opposition to managed care that concluded some perspectives on the healthcare evolution for competition fostering in the next few years (www.healthaffairs.org).
The Department of Veteran Administration advocating being a responsible steward and closely monitor the resources and essential needs. VA continues to work to decrease improper payments, recoup misallocated funds and to effectively dispose of unwarranted real estate. In addition, VA continued to improve the systems used that forecast and capture cost by adopting the process of direct tracking of people, equipment and consumables goods through the implementation of a modernized financial management system. As the Department continues to plan, program, budgets, and execute (PPBE) processes that connect strategy to budget and subsequently budget to performance. Also, it will continue to review internal buying patterns including identifying opportunities for strategic sourcing that will achieve considerable savings for recurring requirements (www.va.gov).
3. Expenditure Forecast
The Veteran Administration FY2014-2020 Strategic Plan builds on past accomplishments to drive improvements in quality, customer service, preparedness and management systems. The Plan includes emphasis on Veteran by allowing them to control how, when and where they wish to be served. The FY 2014-2015 agency priority goals are: 1) Improve veteran access to benefits and services, 2) Eliminate the disability claims backlog, and 3) Eliminate veteran homelessness. Since the CBO examined the demands on VA and projects, the resources the agency need to provide medical care for all enrolled veterans during the next 10 years (2011–2020) with no predicted appropriations for VA (www.va.gov). In developing the strategic plan and looking beyond FY2014-2020 timeframe, the strategic goals and objectives is to improve VA in the short term while positioning the VA Department the capability to respond to many challenges and opportunities they face in the next 15-20 years. The FY 2014-2020 Strategic Plan is based on rigorous analysis of long-term trends that affect veterans includes their benefits, service delivery and the workforce by conducting scenarios which describe a range of future challenges and opportunities the VA Department may confront 20 years from now in order to respond and adjust to vital trends, challenges and opportunities (www.va.gov).
On November 7, 2014, the Department of Veterans Affairs (VA) released “The 2010 National Survey of Veterans (NSV) public data file in Excel format. The file contains results of the data collection such as veterans’ demographic and socio-economic characteristics and identifies VA benefits and services most utilized by Veterans. The expenditures vary according to each state from highest/lowest usages in thousands of dollars. For the State of Indiana, recorded the Veteran Population: 490,380; Compensation & Pensions: $1,092,855; Education & Vocational Rehab: $150,033; Insurance & Indemnities: $27,941; Construction: $8,783; Loan Guaranty #: $0; General Operating Expenses: $48,931; Medical Care: $1,149,224 for a total expenditure equal $2,477,767 (www.va.gov/vetdata/expenditures.asp).
Compare two (2) options for predicting the cost of needed repairs to the current building that houses the selected agency by completing Exercise 1 at the end of Chapter 1 (page 92). Provide a rationale for recommending one (1) of the two (2) options. Include the figures to support the rationale. The city administration is considering refurbishing the lighting system of its administration building. After an initial investigation, the city procurement office has narrowed down the choices to the following two options:
Both systems are expected to last for 20 years.
Assume that the discount rate is 4% and all future costs are paid at end of year.
|PROJECTED INSTALLATION SYSTEMS|
|OPTION 1: Urgolight||OPTION 2: Conventional||Cost Efficiency|
|Net Present Value (NPV)||$ 500,000||$ 100,000||2|
|Payback Period (PP)||Year End||Year End||1 & 2|
|Discount Rate 4%||480,000||96,000||2|
|Expectation: 20 Years||X||X||1 & 2|
(Chen, Forsythe, Weikart & Williams, 2009, p.92). Capital expenditures refer to expenditures for expensive and long-lasting goods in which organizations set a minimum life expectancy such as five years before it is called a capital good. Also, a minimum value is set such as $50,000 before it is classified as a good or group of goods bought at once. Therefore, recommend to elect Option2 “Conventional” due to the initial savings between the two choices.
The Department of Veteran Administration (VA) has a fundamental responsibility to be an effective steward of taxpayer dollars and continue to eliminate wasteful spending, as well as, make sure that effective controls, practices and safeguards methods are in position that prohibits misspending of tax dollars (www.va.gov).
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