Phoenix 2014 and the Secret Wait Lists That Changed Veterans' Health Care

Imagine you run a restaurant, and the owner tells you that every customer must be seated within fourteen days, and your bonus depends on it. Now imagine that you cannot seat them within fourteen days. You have two choices. You can fix the kitchen, or you can fix the clipboard. Guess which is cheaper.

Folks, that is the Phoenix story in one paragraph. It was not a mystery of medicine. It was a mystery of arithmetic: how a system that was supposed to serve veterans learned to serve its own scorecard. And what makes it worth telling again is not the outrage, which has faded, but the fix, which was one of the few times in modern memory that Congress and a president of the opposite party agreed that part of the answer to a failing government program was to give the customers an exit.

The setup: a number on a wall

To understand what happened in Phoenix you have to understand what the Veterans Health Administration was being measured on. For years the department had a performance goal for how quickly a veteran should be seen for a first appointment. The target most people remember is fourteen days. It was a reasonable goal. A veteran who needs primary care should not wait months.

But a goal is only as honest as the way it is counted, and the wait is not a physical thing you can weigh. It is a date on a form. The clock starts when a "desired date" is entered, and if the person who enters the desired date can choose it, then the wait can be made as short as you like. Enter a desired date that is the same day the first appointment is available, and the wait on paper is zero. The veteran, of course, has been waiting for weeks, but the clipboard does not know that.

When a manager's performance review and pay depend on the number, you do not need a conspiracy to bend the number. You need only an incentive and a form with a blank on it. That is the lesson I want you to carry out of this post. Measure a government agency on a figure it controls, and you will get the figure. Whether you get the thing the figure was supposed to represent is a separate question.

April 2014: the allegations go public

In the spring of 2014, reports surfaced out of the Phoenix VA Health Care System that staff there were keeping off-the-books wait lists. The claim, made by a retired physician from that facility among others and picked up by national news, was that the official electronic list looked good because patients who were waiting for care were being parked on a separate, unofficial list that never reached the reporting system. Veterans, the allegation ran, had waited months and some had never been seen. The coverage called it the secret wait list, and the name stuck.

I want to be careful here, because this is a story where it is easy to overstate. I am not going to tell you the story of any individual veteran, because I do not have one I can vouch for, and this post will not invent one. What the record shows is what the investigators found, and that is plenty.

What the Inspector General found

The VA's Office of Inspector General, an independent watchdog inside the department, opened an investigation. In an interim report on May 28, 2014, it found that Phoenix's wait-time numbers could not be trusted. Its report described roughly 1,700 veterans who appeared to be waiting for a primary-care appointment but were not on the official electronic wait list, and so were at risk of being lost or forgotten. In a sample of 226 new-patient primary-care appointments from fiscal year 2013, it found an average wait of about 115 days for a first appointment, while the VA's data, as reported by Phoenix, put the same appointments at about 24 days. A gap that size is not a rounding error. It is two different realities, one for the veteran and one for the report.

The final report came in August 2014 and confirmed the pattern across the Phoenix system and found similar scheduling problems beyond it. The investigators found that the problem reached beyond a single clerk with a bad habit. It was a feature of how the scheduling system and its incentives worked together. If you want to see what a bureaucracy does when it is measured on paper and not on outcomes, here it is, written up by the bureaucracy's own watchdog.

I will leave the precise figures for you to confirm in the Inspector General's published reports, which are public and readable. The core finding, that the official wait times were far shorter than the real ones, is not in dispute.

The resignation

On May 30, 2014, two days after the interim report, Secretary of Veterans Affairs Eric Shinseki resigned. Shinseki was a retired Army general, a wounded Vietnam veteran and a man of long public service, and nothing in the record suggests that he personally kept a secret list. But the department's leader owns the department's failures, and the scandal fell on his watch. The president accepted the resignation, and an acting secretary took over.

I say this with respect for the man's service. A resignation is not a fix, though. A new name on the door does not rewrite the scheduling rules, and it does not change what a manager is paid to report. That took a law.

The first law: the Choice Act of 2014

Congress moved quickly, and what it did next is the heart of this story. On August 7, 2014, President Obama signed the Veterans Access, Choice, and Accountability Act of 2014. It passed with large bipartisan majorities, and I would encourage you to look up the final votes, which were remarkably lopsided for a bill of its size.

The idea was simple and, for Washington, almost radical. If a veteran could not get an appointment at a VA facility within a set time, or lived too far from one, he should be allowed to see a private doctor, with the government paying. The thresholds in the law were wait times of more than thirty days and a distance of more than forty miles from a VA facility. The law set aside billions of dollars for this purpose and it was meant to last only a few years.

Think about what that means. For the first time in a long time, the answer to "the government's service is too slow" was not "give the government more money and a task force." It was "let the customer go somewhere else." That is the principle behind every school choice program and every voucher and it is the same principle behind the GI Bill. Veterans Should Carry Their Health Care Dollars the Way They Carry the GI Bill makes the case that veterans should carry their care dollars the way they carried their tuition after World War II.

The Choice program was designed as a temporary program: its authority ran until August 7, 2017, or until its $10 billion fund was exhausted, whichever came first. Whatever you think of how it worked in practice, it established a principle, and the principle outlived the program.

The second law: accountability in 2017

The Phoenix revelations raised a second question: why did it take a newspaper story and an Inspector General to uncover this, and why did so few people lose their jobs over it? The answer lay in the civil service rules, which make it slow and difficult to discipline or remove a federal employee, including a manager.

In June 2017 President Trump signed the Department of Veterans Affairs Accountability and Whistleblower Protection Act of 2017. It created an office inside the department to receive whistleblower complaints and to hold managers accountable, and it gave the secretary faster tools to remove, demote or suspend employees for poor performance or misconduct, with a shorter appeals process than the standard federal system.

Why does that matter? Because the people who told the truth in Phoenix were the ones who took the risk. A government that punishes the truth-teller and protects the manager who hid the list will get more hidden lists. Protecting whistleblowers is not a favor to them. It is the only way a big institution can learn what is wrong with itself. Some legal and procedural challenges followed in the courts and in the department's implementation, so if you want the current state of those rules, check the text of the statute and the department's own guidance and do not assume this post is the last word.

The third law: the MISSION Act of 2018

The Choice program was temporary, and its rules were tangled. So Congress went back for a permanent fix. On June 6, 2018, President Trump signed the VA MISSION Act, whose name stands for Maintaining Internal Systems and Strengthening Integrated Outside Networks.

The Act replaced the Choice program with a permanent Veterans Community Care Program and set new, clearer standards for when a veteran can choose a private provider. Under the access standards the department put into place when the program launched in June 2019, the main tests were average drive time and appointment wait: a drive of more than thirty minutes for primary care and mental health care, or more than sixty minutes for specialty care, or a wait of more than twenty days for primary care and mental health, or more than twenty-eight days for specialty care. The Act also created a commission process to review the department's facilities. If the veteran and his doctor agree that care in the community is in the veteran's best interest, the law allows that route too.

The VA MISSION Act Let Veterans See Private Doctors, What It Changed walks through what changed in more detail. For our purposes, the key point is the shape of the reform. A scandal about hidden lists produced, within about four years, three laws, and every one of them either exposed the clipboard, punished the clipboard's abuse, or let the veteran walk past it.

Here's what nobody in that room wants to say out loud

Now let me do what I do and say the thing that is awkward. The Phoenix story is not a story about bad people, mostly. It is a story about a system. A government-run health system faces three structural facts that private systems face differently.

1. It has no price signal to tell it where the demand is. A hospital that must compete for patients learns quickly where it is short of capacity, because patients leave. A government facility with a fixed budget learns it only from a report, and the report can be gamed.

1. It is accountable upward, not outward. A manager answers to superiors who read a dashboard. A competitive provider answers to patients who vote with their feet. When the dashboard is the audience, the dashboard gets the attention.

1. Its employees are protected from the consequences of failure. The civil-service rules that protect good public servants from political retaliation also protect bad ones from accountability. That is not a flaw in any individual. It is a design.

None of this is a claim that the doctors and nurses of the VA are anything but dedicated. Many are veterans themselves, and many do excellent work in a hard job. The claim is about incentives, and about what happens when a system is shielded from the signals that keep others honest.

The best case for the VA, fairly stated

I promised a numbered argument and a fair hearing, so here is the other side.

The defenders of the VA make a strong case. They say that the department's specialized services, for conditions such as combat injuries, prosthetics and post-traumatic stress, are among the best and most experienced in the country, and that private doctors often lack that background. They say the VA's integrated records and its focus on veterans create a coordination private care often lacks. They point out that the department's own surveys and several independent studies have, in various years, rated its care as comparable to private care on some measures. And they warn that sending veterans into the community drains the department of patients and money, weakening the very facilities that serve the sickest.

I take that argument seriously, and I think much of it is true. A veteran who prefers the VA should have it, and it should be good. But the rebuttal is built into the question. If the VA is as good as its defenders say, it has nothing to fear from choice, because veterans will choose it. The only reason to oppose an exit is a lack of confidence in the thing you are asking people to stay in. Competition is not an attack on a good institution. It is the proof that it is one.

The anchor: Madison and the angels

James Madison put the principle in a single sentence in Federalist 51: "If men were angels, no government would be necessary." And he followed it with the other half: if angels governed men, neither external nor internal controls on government would be necessary. We are not governed by angels, and the people who run the Phoenix scheduling system were not angels, any more than the rest of us. Therefore, Madison argued, we must arrange the system so that ambition checks ambition and so that no one can grade his own work.

That is the case for outside inspectors, whistleblower protections and an exit for the customer. They are not insults to public servants. They are the ordinary machinery of a government built for imperfect people. Lincoln, in his second inaugural address, spoke of the nation's duty "to care for him who shall have borne the battle and for his widow and his orphan." That promise deserves a system that can be checked, not one that merely asks to be trusted. Seven Myths About Veterans That Shape Bad Policy, and the Facts clears away some of the confusion around these debates.

What the story should teach us

There are a few lessons I'd stack on the table.

• Be suspicious of any number a government agency produces about itself. Ask who counted, who benefits, and whether anyone outside checked.
• Give the people a way out. Choice is the most effective inspector there is.
• Protect the truth-teller. The reform that matters most may be the dullest: a place to report a problem without fear.
• Do not confuse a scandal's resolution with its cause. Phoenix was handled when the law changed the incentives, not when the headlines faded.

And a larger point, which I'll just say plainly. The coverage of the scandal, as it ran, framed much of it as a story about a few bad managers or a failure of resources, the standard menu. Only some of it asked whether a centralized system with no competitor and no outside audience would have drifted this way anywhere. I think the more interesting question is the second one, and it is the one Congress eventually acted on.

The case in brief

1. In 2014 it became public that Phoenix VA staff kept unofficial wait lists, and the Inspector General found official wait times far shorter than real ones.
2. Secretary Shinseki resigned on May 30, 2014, but a resignation does not change incentives; laws do.
3. The Choice Act of 2014, the 2017 Accountability and Whistleblower Protection Act, and the MISSION Act of June 6, 2018 gave veterans an exit, protected whistleblowers and eased the removal of failing employees.
4. The best case for the VA's specialized care is a reason to trust veterans to choose it, not to deny them a choice.
5. Madison's rule holds: a government of imperfect people needs outside checks, and an exit is the cheapest of them.

What you can do: read the executive summary of the VA Inspector General's 2014 Phoenix report on the Inspector General's public website, then write your member of Congress and ask what oversight their office exercises over VA wait-time reporting.