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Ex-P&G Chief Approved by Senate Panel to Lead U.S. VA

Photographer: Pete Marovich/Bloomberg

Bob McDonald, former chief executive officer of Procter & Gamble Co., listens while testifying during a nomination hearing before the Senate Veterans Affairs Committee in Washington, D.C., on July 22, 2014. Close

Bob McDonald, former chief executive officer of Procter & Gamble Co., listens while... Read More

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Photographer: Pete Marovich/Bloomberg

Bob McDonald, former chief executive officer of Procter & Gamble Co., listens while testifying during a nomination hearing before the Senate Veterans Affairs Committee in Washington, D.C., on July 22, 2014.

A U.S. Senate committee approved former Procter & Gamble Co. (PG) Chief Executive Officer Bob McDonald to lead the troubled Department of Veterans Affairs, sending his nomination to the full Senate.

The Senate Veterans Affairs Committee today voted unanimously for President Barack Obama’s choice, who told lawmakers he would use skills he gained in the private sector to restructure the VA.

McDonald, who spent more than three decades at P&G, said he would expand the VA’s use of digital technology to “free human resources that can be applied to care for the veterans.” He promised to travel extensively, hold quarterly video conferences and “improve productivity” at the nation’s fifth-largest agency by spending.

“I am a forward-looking leader who spent my business career expanding P&G to serve new, emerging and under-served customers,” McDonald, 61, told the panel yesterday. “That’s the experience needed to modernize VA to serve the next generation of returning warriors.”

The VA has been criticized following inspector general reports showing lengthy waits for veterans seeking medical care, VA staff falsifying records to hide those waiting times, and improper management of disability and college tuition benefits.

“It’s tough to envision why anyone would want to take this job,” Senator Richard Burr, the top Republican on the Senate VA panel, said yesterday.

Winning Praise

McDonald was praised by Republicans and Democrats on the Senate VA committee, including Chairman Bernie Sanders, an independent and self-described socialist from Vermont, who cheered McDonald’s corporate background.

“We need good quality management, we need transparency, we need accountability,” Sanders said. “I hope that Mr. McDonald’s corporate experience will give him the tools he needs to create a well-run and accountable VA.”

Interim VA Secretary Sloan Gibson has been overseeing the agency, which has a $160 billion budget and runs the nation’s largest integrated health-care system, since May 30. He took over after the VA inspector general reported widespread mismanagement, including the falsification of records to hide the long waits veterans faced for medical appointments, leading to former Secretary Eric Shinseki’s resignation.

As many as 35 veterans died while awaiting care at a Phoenix facility, Gibson has said.

Private Doctors

In the past two months, Gibson said yesterday, the VA referred more than 570,000 veterans to private doctors, an 18 percent jump from the same time last year.

“The Department of Veterans Affairs is in the midst of its most serious crisis in more than a generation,” Gibson said at the Veterans of Foreign Wars national convention in St. Louis.

Gibson said the “greatest risk to veterans” is the lack of resources to “remedy the historic shortfall in internal VA capacity.” He asked Congress last week for an additional $17.6 billion through 2017 to hire 10,000 more workers, among other things.

Failure to provide the resources “would leave VA even more poorly positioned to meet future demand,” Gibson said at the VFW convention.

About half of the 1.9 million troops discharged after serving in Afghanistan or Iraq returned to the U.S. in need of medical care, according to VA data.

An internal VA audit in June showed that more than 120,000 veterans hadn’t received a medical appointment or were waiting more than 90 days for care. That number had been cut to about 42,400 by July 1, VA data show.

‘Corrosive Culture’

In a report issued by the White House on June 27, the department was portrayed as hobbled by a “corrosive culture” and lack of accountability. VA officials often ignore orders from the central office, according to a summary of the report by White House Deputy Chief of Staff Rob Nabors.

The office earlier this month found delays and improper oversight of other military benefits, including disability payments and college tuition. The management of benefits will cost taxpayers at least $1.14 billion over the next five years without improvements, according to the July 14 report.

The agency has eliminated bonuses for senior leaders at the Veterans Health Administration this year. Performance reviews will no longer be based on whether veterans can see a doctor in fewer than 14 days. Gibson said the agency is building a “robust system” to instead measure patient satisfaction.

Congress is also working on legislation to address veterans’ health care.

Measure’s Cost

Sanders said July 21 that he’s willing to consider offsetting some costs of the measure with other budget changes, a position that helped kick-start negotiations that stalled last week.

Senate Majority Leader Harry Reid, a Nevada Democrat, said progress was being made on negotiations, optimism that wasn’t share by some Republicans.

“While it’s been easy to criticize the Department of Veterans Affairs for their failure to our veterans, if we don’t reach a conclusion on this legislation the United States Senate is deserving of that same condemnation,” said Senator Jerry Moran, a Kansas Republican on the committee.

Seeking Agreement

House and Senate negotiators are trying to reach agreement on proposals designed to streamline waits at VA hospitals and clinics and empower the veterans secretary to fire incompetent senior officials. The Senate legislation would allow veterans who have waited too long or live too far from a VA facility to be treated by a private doctor or hospital.

Republicans and Democrats have said they want to pass legislation before leaving for their August break.

McDonald, who oversaw more than 120,000 employees as the chief executive at P&G, would lead a department that serves more than 8 million veterans annually.

After P&G lost market share to such rivals as Unilever, McDonald embarked on a turnaround plan in 2012 to cut $10 billion in costs through 2016 and renew focus on the company’s leading businesses. The company’s stock rose 51 percent while he was CEO.

McDonald, who graduated from West Point in 1975 with an engineering degree, served as a captain in the Army for five years before joining P&G in 1980. He retired from the Cincinnati-based company in June 2013.

To contact the reporter on this story: Michael C. Bender in Washington at mbender10@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net Laurie Asseo

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