Remarks by Former Deputy Secretary W. Scott Gould
San Diego, CA
November 9, 2011
On behalf of Secretary Eric Shinseki, and the more than 300,000 VA employees, I want to thank Palladium for all you do to put the spotlight of excellence on the Nation's most forward-leaning, strategy-based businesses and government agencies like VA, and our management team.
At VA, we are exceedingly proud of our accomplishments on behalf of our Nation's Veterans. Two of the folks who are crucial to that mission are here today—Dan Tucker and Richard Sassoon. If you get a chance, please introduce yourselves to them during the conference.
I also want to welcome Jeffrey Zients, Deputy Director for Management and Chief Performance Officer.
Over the next few minutes, you'll get to know us a bit better—who we are, who we serve, and how we employ the Balanced Scorecard as part of our performance management system. I'll also talk about the commonsense values that guide us as we work to meet the high standards our Veterans, the President, and taxpayers expect of us.
Many of you here today represent organizations already familiar with VA at several levels. We have several healthcare organizations here: Kaiser Permanente, Nemours, and Glaxo Smith Kline. We have several significant insurance corporations—State Farm and Met Life. Major players in the IT sector—Cisco and IBM. An institution of higher education open to Veterans, offering programs in business and healthcare—San Joaquin Valley College. And a federal colleague of ours—the Department of the Interior.
There are quite a number of shared missions here: healthcare, insurance, education, technology, and government. You represent the best of America's businesses and government agencies—high standards, high ideals, and high expectations—for yourselves as leaders, and for your employees. I expect that the dialogue over the next few days will be quite rich as a result. I've had the opportunity to work in both public- and private-sector enterprises, so I appreciate what many of you may have experienced—the profound commonality and substantive differences between public- and private-sector enterprises.
The Federal sector may not be concerned about quarterly P/L statements or dividends, but it does have a bottom line. Instead of shareholders, we have taxpayers. And instead of shareholder value, our corporate goal is to enhance the value of government's contribution to the security, health, and general welfare of our citizens. And we share comparable challenges of delivering results at significant scope and scale and complexity, and a customer base with needs that must be met.
Of three possible responses to change—suffer, adapt, or manage—at VA we have chosen to manage. We manage these active collaborations through partnerships, teaming, and alliances of all sorts.
We also have to deal with substantial complexity. The following facts and figures should convey a sense of scope and scale of operations of the Department of Veterans Affairs, the second-largest agency in government. Last year, we spent more than $126 billion. We run:
- The Nation's largest healthcare system—8.3 million Veterans enrolled.
- 152 Medical Centers affiliated with 107 of the best medical schools in the country;
- Over 800 Community-Based Outpatient Clinics;
- 280 Vet Counseling Centers;
- 58 regional benefits offices processing disability compensation for almost 3.3 million Veterans.
- 131 National cemeteries—the largest system in the country.
- Second only to the Department of Education in providing benefits to more than 840,000 Veterans and eligible family members.
- 57 million individual home loans guaranteed.
- The only zero-down lending institution in the country with a foreclosure rate that is the lowest among all financial institutions.
- The Nation's eighth-largest life insurance enterprise;
- $1.3 trillion in coverage for over seven million clients.
We have 315,971 employees, representing over 300 job series, walk through our doors, every day, to deliver services in VA facilities located from Maine to Manila. Those outsized numbers translate to parity with a Fortune 15 company! Our job at VA is to deploy services to accomplish the mission voiced nearly 150 years ago by Abraham Lincoln: "To care for him who shall have borne the battle, and for his widow and orphan."
Given the importance of our mission and the scope, scale, and risks of our operations, it was essential that we employ a performance management system that included a means to view the enterprise, inform executive decision-making, and track outcomes achieved for our Veterans. For that, we turned to the Balanced Scorecard.
We needed to know that our priorities were actually steering the performance of our enterprise in a way that would make sense to our leadership team and stakeholders. With the Balanced Scorecard to guide us we had the right navigational aid through VA waters. We embraced the Balanced Scorecard approach specifically as a tool to drive our performance and execute our strategy—we used it to make sense of what we were doing in terms that anyone could understand.
Why we chose the Balanced Scorecard
When senior leaders arrived at the VA in the vanguard of President Obama's administration in 2009, it was evident to them that the Department had a strong identification with its customers: America's Veterans. However, it was also evident that VA lacked focus to marshal its tremendous commitment and resources consistently and predictably to achieve breakthrough performance for Veterans.
What was also evident was that the stovepiping of the department had rendered virtually impossible any opportunity to see across VA broadly, and, more importantly, to fully appreciate our Veterans' needs in their totality.
We needed to knock down those stovepipes and take a hard look at both our internal operations in a less-obscured light, and to look at what we were actually offering our Veterans; were we meeting their needs, or were we serving our own operational processes to the detriment of customer service? The Balanced Scorecard (BSC) was a tool to let us see both sides of that equation.
We decided to develop our strategy around four objectives to achieve outcomes in healthcare access, homelessness, and claims backlog. Then, critically, VA implemented BSC as a means to operationalize our strategy and hold officials accountable for the effective use of their resources. That doesn't just mean, as I noted a moment ago, simply fixing our internal process—it means making sure that all our processes, internal and external, were aligned to meet our customer's needs.
The Balanced Scorecard approach is based on the simple premise that "what gets measured is what gets done." The measures inform us about how our organizations are doing. The BSC helps drive performance from the VA's strategy framework.
The value of BSC is to create a set of insights and use them to drive action and to translate performance at a moment in time into a sustained progression of achievement to accomplish the agency's goals.
VA will continue to seek alignment along the customer dimension. We will continue to use alignment as a means to drive cost savings and streamline operations. And we will hold ourselves accountable through meaningful and timely mission-oriented metrics for the Department's goals.
How we applied it
The challenge has been to operationalize the Balanced Scorecard. We implemented the MPR, which is a governance structure that serves as a forum for analysis, action, and accountability. It provides a corporate view of performance, highlights performance changes, and maintains urgency in our programs.
What we gain
What we gain is a means to broaden understanding of our organization, both internally and externally. It helps us understand how the parts of performance relate to the whole of our mission.
The Balanced Scorecard approach also did something for VA that was surprising to me: While we are all about serving the Veteran, we realized that our customer-service approach was not adequately highlighted in our customer quadrant. We lacked measures of customer satisfaction, quality, and service standards reported at the executive level. These measures were intended to be retained at regional and local levels, but the full VA had not had a meaningful dialogue about expectations for performance.
Tool for change
Driving performance, or "executing the strategy," is one of the real benefits to the enterprise in developing a Balanced Scorecard. Here are some examples:
- Decrease in ventilator-associated pneumonia infections from 6.5 infections per 1,000 ventilator days to 1.8 infections from 2006 to 2011.
- Increased the Default Resolution Rate to 83 percent compared to 76.3 percent in 2010. Annual Target is 73 percent.
- Percentage of medical new-patient–care appointments completed within 14 days of a patient's desired date improved to 89 percent compared to 84 percent in 2010. Annual target is 85 percent.
- Completed supplemental education claims benefits in an average of 12 days, faster than last year's average of 16 days. Annual target is 12 days.
Not only is faster turnaround of value to our Veterans, but it is good for our operations to ensure we don't build costly backlogs that require special efforts to reduce.
Using the Balanced Scorecard, we were able to observe very quickly the proof of concept and begin to have operational impact with our decisions quickly.
Leverage point for leader development
At VA, we adopted the Balanced Scorecard approach because we needed a tool to help us improve performance and develop leadership. Basic for leader development is awareness—lateral vision, horizontal perspective as we move from quadrant to quadrant, operating units to operating units and among internal and external stakeholders.
Balanced Scorecard reporting points the way for leadership, managers, and employees to short-circuit the negative spiral of individual decisions made without the context of the entire organization and decisions of any significance made without hard data.
When a leadership team is committed to making operational choices based on metrics in a Balanced Scorecard framework, leaders are able to ask questions they might not have asked before.
Where we need to improve
We have recently instituted a new format where we review action plans established for those high-risk metrics that were long-standing red.
Additionally, in order to provide adequate leadership focus on the issues I just mentioned, we work to analyze, and prepare decision options before and after the MPR. In the future, we hope to add a more formal risk management construct to the process. And VA is committed to continuing to improve in every area of our work on behalf of Veterans and their families. The Balanced Scorecard ensures we see potentially critical vulnerabilities on the horizon and helps us drive business insights and to manage operations more effectively. That means we are more accountable to one another and to our stakeholders because we are clear in what we are doing and are using terms that everyone can understand.
What we learned
We have so many examples of how we leveraged BSC, but let me share two with you: our National Cemetery Administration (NCA) and Veteran homelessness:
By using the Balanced Scorecard perspective, and challenging ourselves to do better, we were able to set world-class levels of customer satisfaction with the National Cemetery Administration. We achieved breakaway performance in NCA by observing that even though we had outstanding performance, we could do even better for Veterans' families, so we held customer focus groups to see what additional gains we could make.
In 2010, the National Cemetery Administration received 94 out of 100 points from the American Customer Satisfaction Index, the highest customer satisfaction ranking among federal agencies and throughout the private sector in the United States.
Veteran homelessness is a problem today, and it is one that we as a country have dealt with for decades. In 2009, President Obama and Secretary Shinseki decided that it was a problem that could be solved, not just managed or dealt with. We set a goal to eliminate Veteran homelessness by 2015.
We started by reviewing the performance data. Before the Balanced Scorecard, it was clear that VA had been pouring significant resources against this issue, upwards of $3 billion to $4 billion per year in medical care. Caring for a homeless Veteran in the VA hospital system cost 3 times more than caring for a Veteran who did not live on the street.
The reasons for the higher costs of care were somewhat known: reliance on emergency care instead of prevention, inconsistent treatment of chronic conditions, and the obvious harsh conditions of life on the street. However, it was also clear that despite these costly outlays for healthcare we were not getting our homeless off the streets. The population was steadily growing. Eliminating Veteran homelessness by 2015 using this method, we would save government $35 billion.
The Balanced Scorecard put into stark relief the lopsided investment strategy we had been following: A focus on keeping our homeless Vets healthy was merely a financial measure showing the dollars going out the door. The BSC made it clear that our strategy needed to include a greater emphasis on transitional and permanent housing. The resources for this effort were not in healthcare, but in a completely different section of VA's bureaucracy called intergovernmental affairs.
The BSC allowed VA management to see the disconnect and align both the resources and incentives to attack the problem of Veteran homelessness with a more comprehensive set of tools. Today, we still spend $3.5 billion on medical care for homeless Veterans. But our use of housing vouchers jumped from 7,511 to 32,597 in the last two years. And the overall population of homeless Veterans is down from 107,000 in 2009, to 75,609 in 2010.
Government works best when we work with high quality tools, sharing ideas and spreading sound practices across the broad landscape of government services. The Balanced Scorecard gives government leadership teams the power to break down the status quo and commit to making tangible business decisions based on the measures that ultimately comprise their scorecard.
Prior to the Balanced Scorecard, we lacked a framework in which they could convey meaning and which would give us the confidence that our decisions would impact operations.
The Balanced Scorecard promotes a structure of standards that allows any organization to build a more responsive, flexible, efficient environment for success. We need the Balanced Scorecard to drive business insights and to manage operations more effectively. Ultimately, that is good for the VA "business," and it helps assure taxpayers that we are outstanding stewards of their trust in us.
Values (I CARE)
Earlier this year, after months of consideration and input by our employees, we drew up a simple but powerful VA credo that guides our progress toward excellence in everything we do for our Veterans. Allow me to share "I CARE" with you.
- Integrity: Act with high moral principle. Adhere to the highest professional standards. Maintain the trust and confidence of all with whom I engage.
- Commitment: Work diligently to serve Veterans and other beneficiaries. Be driven by an earnest belief in VA's mission. Fulfill my individual and organizational responsibilities.
- Advocacy: Be truly Veteran-centric by indentifying, fully considering, and appropriately advancing the interests of Veterans and other beneficiaries.
Let me say here, by way of an unvarnished pitch to the business community you represent: VA doesn't work alone in a vacuum to open the doors to opportunities for our Nation's Veterans. We are just one Veteran resource. America's businesses are a far greater resource—and America's Veterans, when you hire them, can be the best assets you will ever have.
Veterans bring value to any company smart enough to hire them and place them in positions where their leadership will shine, their innovative thinking leads to better products, services, or operations, and their dedication to getting a job done no matter the challenge will keep your company strong. We all know that the unemployment figures hit Veterans hardest, but that doesn't have to be the case. I ask you to be part of the employment solution by giving Veterans an opportunity to show just what they are made of, and how they can help advance your corporate mission deep into the 21st century.
- Respect: Treat all those I serve and with whom I work with dignity and respect. Show respect to earn it.
- Excellence: Strive for the highest quality and continuous improvement. Be thoughtful and decisive in leadership, accountable for my actions, willing to admit mistakes, and rigorous in correcting them.
I CARE empowers VA employees, our managers, and our leadership team to act in the best interests of the Veterans always. In today's world, Veterans and their families are receiving the recognition they deserve for their many sacrifices. All of us in government are committed to unprecedented transparency and accountability, all while having to do more for Americans with less. To manage these demands, we in the VA are grateful that the Balanced Scorecard approach has been there for us, and, by extension, for our Veterans as they work to rejoin the society they left behind.
While those competing goals are never easy to reconcile, we in the VA are grateful that the Balanced Scorecard approach has been there for us, and, by extension, for our Veterans as they work to rejoin the society they left behind. They ask for little more than the opportunity to learn, work, and take on the challenges of home and family. They earned the right to ask for that. Whether we are advancing Veteran employment, or providing world-class medical care, or processing GI Bill claims, or memorializing our Veterans, the VA looks for every advantage we can get on behalf of today's heroes.
Our Nation's Veterans deserve nothing less. Thank you, again, for this opportunity to meet with you and share a few of my thoughts on the excellence in service that is the foundation of all we do at the Department of Veterans Affairs.