Doctors and dentists working for the Department of Veteran Affairs are milking the agency’s system of performance-based pay, receiving bonuses despite documented instances of poor treatment or bad behavior, according to a report released by the Government Accountability Office (GAO) in July.

Run by the Veterans Health Administration (VHA), the bonus system includes both performance pay, a lump sum payment based on specific goals available only to doctors and dentists (known as providers), and performance awards, which are available to all staff on the basis of annual performance reviews.

In addition to reviewing documents and interviewing VA officials, GAO analyzed data from a random sample of about 25 providers at each of four medical centers—in Atlanta, Georgia; Togus, Maine; Dallas, Texas; and Seattle, Washington—visited by GAO where there was at least one provider who was the subject of a disciplinary action related to clinical performance.

The report found what would be called “grade inflation” on a college campus. In fiscal 2011, about 80% of VHA’s nearly 22,500 providers received $150 million in performance pay, and about 20% of providers received $10 million in performance awards.

Every provider who was eligible for performance pay at the four medical centers received it, including five who had been disciplined for their clinical performance. 

• One physician was “reprimanded” for practicing with an expired license for three months (a crime in every state), but was awarded $7,663 in performance pay—two-thirds of what he could have gotten that year—because having a current license was “not a factor” the VA considered. 

• A provider refused to see patients in the emergency room because he believed the admitting nurse was triaging them improperly. Although he failed on 12 of his 13 performance goals, the doctor received $7,500 in performance pay, half of what he could have gotten.

• A radiologist who, according to a professional standards board, had “failed to read mammograms and other complex images competently,” received $8,216 in performance pay, more than two-thirds of what he could have gotten.

• A surgeon left the operating room during a procedure, forcing residents to continue unsupervised until another surgeon was found. Although he was suspended for 14 days without pay, the surgeon got $11,189 in performance pay, nearly three-quarters of what he could have gotten.

• A doctor received a three-day suspension for not responding when on call and creating “an atmosphere of fear and poor morale” by yelling at co-workers in front of patients. Although the doctor was suspended for 3 days without pay and received a “letter of alternative discipline,” he received a performance payment of $10,529—83% of what he could have gotten.

The problem, according to the report, is that the VA has failed to explain the “overarching purpose” behind the bonuses, leaving each medical center to award them on its own, leading to weak oversight and a culture where everyone gets a bonus. GAO recommends that VA clarify the purpose of the incentive system and strengthen its oversight over the award process, which the VA has committed to do, according to the report.

“This is irrefutable proof of what we’ve known for quite some time: that in many cases, VA’s performance pay and bonus system has absolutely nothing to do with performance,” said Rep. Jeff Miller, (R-Florida), chairman of the House Committee on Veterans’ Affairs, who has criticized VA bonuses in the past.

-Matt Bewig

To Learn More:

Suspended and Unlicensed VA Physicians Receive Pay Bonuses (by Eric Katz, Government Executive)

GAO: VA Gave Doctors Bonus Pay without a Clear Link to Performance (by Steve Vogel, Washington Post)

VA Health Care: Actions Needed to Improve Administration of the Provider Performance Pay and Award Systems (GAO) (pdf)

VA Office Gave Bonuses While Disability Claims Piled Up (by Noel Brinkerhoff, AllGov)