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THE VA AFFILIATED NONPROFIT RESEARCH AND EDUCATION CORPORATIONS
VA and
the VA Affiliated Nonprofits – A Unique Public/Private Partnership
In 1988 Congress
passed legislation that allowed Department of Veterans Affairs (VA) medical
centers to establish nonprofit research corporations (NPCs), forming a unique
public/private partnership that dramatically broadened VA’s ability to benefit
from private and non-VA public support for research conducted at VA medical
centers.
A Brief History
With passage of P.L.
100-322 in 1988 [codified at 38 U.S.C. §§7361-7366], Congress authorized VA
medical centers to establish nonprofit research corporations to serve as
“flexible funding mechanisms for the conduct of approved research and education”
[§7361(a)]. Twenty years after enactment, VA has 85 separate, state-chartered
corporations scattered throughout the country, all subject to VA oversight and
regulation.
Prior to 1988,
private and non-VA federal funds available to support VA-approved research could
be administered only through ill-suited mechanisms such as General Post Funds.
These were established primarily to give gifts to veterans and to administer
their bequests, and they are subject to restrictive policies regarding use of
funds. Alternatively, non-VA funds were administered by the affiliated medical
school which charged substantial "overhead" rates and generally retained such
amounts for university purposes. Clearly, a more effective mechanism for
handling non-VA research funds was needed.
After deliberation,
Congress settled on allowing VA medical centers to establish independent,
state-chartered nonprofit corporations. The objective was to delineate
separation between VA and the corporations, and to provide the convenience and
oversight of local management. Making them subject to federal oversight provided
assurance that they would be operated in accordance with the highest standards
of fiscal and administrative management.
The initial purpose
of the VA affiliated NPCs was to facilitate research at the VA medical centers
where they were established. Subsequently, Congress expanded their authority to
include supporting VA’s patient and staff education and training missions.
Eighty-Five NPCs
Enhance VA Research and Education at VA Medical Centers
In reports submitted
in June 2009, eighty-five NPCs reported previous year revenues totaling nearly $250
million. Individual corporations’ revenues ranged from a few thousand dollars to
nearly $50 million with forty foundations reporting income of more than $1
million. Although it was originally anticipated that the NPCs would primarily
accept clinical research grants from private sector organizations,
administration of non-VA federal grants is increasing. Grants from non-VA
federal agencies, including the Department of Health and Human Services –
primarily NIH – and the Department of Defense, amounted to 61 percent of the
NPCs' total revenues reported in 2009.
NPC expenditures on
behalf of over 4,000 NPC-administered research projects totaled nearly $244
million, nearly half of which was used to pay salaries for clinical research
nurses, technicians and other research personnel. The average management expense
was 15 percent of total expenditures, reflecting efficient management and low
overhead.
Supporting VA
Research and Education with More than Money
VA regulations
require that every expenditure by an NPC must support VA research projects and
related functions, education and training activities or the business operations
of the NPC itself. Within this principle, the NPCs provide diverse services to
their affiliated medical centers and VA investigators. Low administrative
overhead charges and a high level of service - quick turnaround on hiring
personnel, processing paperwork, and ordering supplies and equipment as well
support for grant submissions - are major features of the NPCs.
However, many NPCs do
much more to promote research. Several support clinical research centers within
their VAMCs to increase efficient management of clinical trials. Others hire
clinical research nurses who assist principal investigators with all aspects of
studies from preparing the grant proposal through submission of the final study
results. Others facilitate identification of research sponsors and grant-making
organizations, and make the initial contact on behalf of the investigator. Many
provide seed funding and bridge money to investigators to foster their VA
research careers. Several sponsor year round or summer research internships and
mentoring programs for local college students.
In supporting a large
number of clinical trials, the NPCs support a significant amount of
research-related patient care and offer veterans access to the latest drugs in a
closely supervised setting and at no cost to VA. Further, NPCs often cover the
expense of upgrading research space; purchase research equipment; support travel
related to recruiting research staff; donate pharmaceutical, custodial,
secretarial, and clerical staff; conduct seminars on study results; and make
equipment such as computers and copiers as well as scientific equipment
available to researchers. Added to the intangible benefits of high quality
patient care and the intellectual excitement that pervades a medical center with
a successful research program, NPCs are fully dedicated to supporting VA and are
an asset to VA in ways far beyond simply providing a mechanism to administer
research and education funds.
Balancing VA
Oversight with Flexibility
In authorizing VA
medical centers to establish NPCs, Congress mandated multiple layers of national
and local oversight. Subsequently, VA has added more, all of which are in
addition to required audits and scrutiny by federal and state funding and
oversight agencies. However, to ensure that the NPCs act as a "flexible funding
mechanism for approved research and education," Congress has been intentionally
reticent about operation of the NPCs, leaving this largely up to local
determinations. As a result, each NPC has a unique style and plays a singular
role in supporting training and research at its medical center according to its
own locally developed policies and procedures. When management questions arise,
the executive directors and NPC boards strive mightily to accommodate principal
investigators' requests while remaining cognizant of the constraints imposed on
the NPCs and the possibility of IG and Comptroller General scrutiny.
A Good Idea that
Grew
During a 1998
ceremony commemorating the tenth anniversary of authorization of the NPCs, the
late Congressman Sonny Montgomery said, "Ten years ago these foundations were
just an idea. Obviously they were a good idea. Now I can't imagine VA research
without them." The VA-NPC partnership continues to evolve, but there is broad
agreement that the relationship has positive benefits for veterans, VA research
and VA researchers.
With passage of PL 100-322 in 1988, the Department of Veterans Affairs Health Administration's Medical, Prosthetic and Rehabilitation, and Health Services Research program entered a new phase. This legislation dramatically broadened VA's ability to conduct research by authorizing the establishment of nonprofit research corporations affiliated with VA medical centers and, through these corporations, opening the door to new sources of research funding.
Legally, the corporation has traditionally been a creature of the state. With the arrival of federalism and privatization in government, however, many variations have arisen and a number of federally chartered corporations have been formed to serve specific purposes. Congress broke new ground in establishing a unique arrangement at the Department of Veterans Affairs. Other federal agencies have congressional authority to establish or manage corporations; only VA has separate, state-chartered corporations scattered throughout the country, each of which can be scrutinized by several levels of federal investigators at any time.
Congress establishes the statutory missions of the Department of Veterans Affairs, as well as its organization and mechanisms for carrying out those missions. Congress specifically prohibits executive branch departments from establishing or acquiring a corporation to act as an agency of the government except pursuant to statutory authority.
Prior to 1988, private and non-VA federal funds available to support VA-approved research could be administered only through ill-suited mechanisms such as the General Post Fund, established primarily to give gifts to veterans and to administer their bequests, which has restrictive policies regarding transfers of funds. Alternatively, non-VA funds were administered by the affiliated medical school which significantly reduced the amount available for research projects by charging substantial "overhead"
rates and retaining such amounts for university purposes. Clearly, a more effective mechanism for handling non-VA research funds was needed.
The 1988 legislation allowed state chartered nonprofit research corporations to provide a flexible funding mechanism to administer non-VA research funds. Making these corporations separate, state-chartered entities was important in delineating the separation between VA and the corporations, and in providing the convenience and oversight of local management. Making them subject to federal oversight provided assurance that they would be operated in accordance with the highest standards
of fiscal and administrative management.
These NPCs are based loosely on the Henry M. Jackson Foundation for the Advancement of Military Medicine which carries out cooperative research projects with the Uniformed Services University of the Health Sciences (USUHS); allows interaction between military and civilian personnel; and encourages medical professionals to participate in work that benefits both military and civilian medicine. Some federal agencies sponsor Federally Funded research and Development Centers (FFRDCs) which are actually contractors to the government. FFRDCs are administered by universities, nonprofit organizations or industrial firms, and are established to meet a special long-term R&D need of an agency that cannot be met as effectively by existing government or private resources.
In comparison, the initial purpose of the VA affiliated NPCs was to facilitate research at the VA medical centers where they have been established. Subsequently, Congress expanded their authority to include supporting VA’s patient and staff education and training missions. All funds administered by the NPCs must be used to support research related activities or education and training.
To keep the statute brief, Congress left it up to VA to develop appropriate regulations for the VA NPCs which are specified in
VHA Handbooks 1200.17 and 1400.2. In addition, a compendium of General Counsel opinions issued in response to specific questions has fleshed out the "do's and don'ts" of operating a VA
affiliated NPC.
Supporting VA Research and Medical Care
The VA affiliated nonprofit research corporations enhance the VA research program in four major ways:
- The NPCs provide a flexible funding mechanism for private and public grants to support VA-approved research. Corporation funded research projects bring additional resources to VA in a time of increasingly constrained federal funding. Ironically, because the VA research program has been largely flatlined for several years, a number of NPCs administer more projects and larger budgets than their affiliated VA research office.
- The NPCs bring additional resources to VA that ultimately benefit veterans' medical care. Nurses and doctors hired to administer research projects also provide care for veterans during the course of studies. Computers, copiers, and medical equipment are among the many purchases made by corporations to support research projects, but which also enhance care for veterans.
- Corporation funded research increases veterans' access to the latest drugs and technology. By participating in development of new treatments, veterans are offered new medications in a closely supervised setting. Veterans benefit from the improved treatments and the extra care they receive when they participate in an approved study. The overwhelming majority of corporation funded research is clinically focused with a direct impact on patient care.
- The NPCs help to attract high caliber
physicians to careers in VA. The additional funds made available through
grants and donations to the corporations greatly increase opportunities for
VA researchers to secure research funding and foster VA's commitment to
research. The corporations' success is highly dependent on the VA research
infrastructure and the VA's ability to attract intellectually inquisitive
investigator-clinicians to careers in VA.
As successful as these corporations have become in enhancing the VA research program, the funds they administer can never replace a robust federal VA research appropriation.
Conclusion
As government moves toward privatization, the VA affiliated nonprofit research corporations will continue to make a substantial contribution to the success of the VA research program. This unique partnership of a public agency and private nonprofits has already proven its worth and has demonstrated a value that exceeds the amount they administer each year on behalf of VA research.
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last updated:
01/04/10
©2010, National Association of
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