Bloomberg News

Ex-P&G CEO McDonald Confirmed as U.S. Veterans’ Secretary

July 29, 2014

The Senate confirmed former Procter & Gamble Co. (PG:US) Chief Executive Officer Bob McDonald to lead the troubled U.S. Department of Veterans Affairs a day after negotiators in Congress agreed on a plan to bolster the agency.

McDonald, confirmed on a 97-0 vote, has said he’ll use skills he gained in the private sector to restructure the agency, where disclosure of long waits for care at veterans’ hospitals led to his predecessor’s resignation. McDonald, a former Army captain, spent more than three decades at P&G.

McDonald, 61, told lawmakers at a confirmation hearing this month that he will expand the VA’s use of digital technology, travel extensively, hold quarterly video conferences and improve productivity at the nation’s fifth-largest agency by spending.

“He will bring the tools of a CEO in a private corporation to the VA, a huge bureaucracy which needs a significant improvement in accountability and management,” Senate Veterans Affairs Committee Chairman Bernie Sanders, a Vermont independent, said before today’s vote.

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.

‘Tough Job’

“We all know he has a tough job ahead of him,” Senate Minority Leader Mitch McConnell, a Kentucky Republican, said about McDonald on the chamber floor today. “If Mr. McDonald is willing to work in a collaborative and open way with Congress, and I expect he will, he will find a constructive partner on this side of the aisle.”

As many as 35 veterans died while awaiting care at a Phoenix facility, interim VA Secretary Sloan Gibson has said. Gibson has been overseeing the agency, which has a $160 billion budget and runs the nation’s largest integrated health-care system, since former VA Secretary Eric Shinseki resigned in May.

Lawmakers from the House and Senate agreed on a deal yesterday that would spend about $17 billion to help ease the long waits for care. Leaders in both parties have said they expect votes by week’s end.

Most of the spending in the measure would be used to hire doctors and nurses and to allow treatment at non-VA hospitals for veterans who live far from a government hospital or clinic or who can’t get a timely appointment.

Increased Payments

Increased payments in the deal could triple health-care providers’ revenue from the VA in the next year, according to Bloomberg Intelligence. In 2013, HCA Holdings Inc. (HCA:US) and Universal Health Services Inc. (UHS:US) hospitals had the most admissions for veterans’ care among publicly traded hospitals in California, Texas and Florida, the three states with the most veterans.

The rare bipartisan agreement would authorize leases for 27 new VA facilities and expand the types of non-VA hospitals and clinics where veterans can receive care. It also would allow the VA secretary to fire senior executives, with a streamlined appeals process.

The deal would paid for by about $12 billion in emergency spending and $5 billion in offsets from elsewhere in the VA budget, said Sanders and Representative Jeff Miller. Miller, a Florida Republican, is chairman of the House Veterans Affairs Committee.

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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Companies Mentioned

  • PG
    (Procter & Gamble Co/The)
    • $92.05 USD
    • 0.05
    • 0.05%
  • HCA
    (HCA Holdings Inc)
    • $74.47 USD
    • 0.25
    • 0.34%
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