WASHINGTON (December 3, 2004) - President George Bush today signed a bill that will improve the Department of Veterans Affairs' (VA's) ability to recruit and retain top-quality physicians, dentists and nurses.

"Thanks to this legislation, we will have the flexibility to adjust salaries for market pressures and reward performance so VA can meet the needs of a growing number of veteran patients," said Secretary of Veterans Affairs Anthony J. Principi.

Principi said the current pay system does not adequately consider regional differences in pay among private-sector medical specialists. As a result, VA depends heavily on contract medical specialists. These contracts often are more expensive than the costs of employing the same specialists as VA physicians and dentists.

Under the new law, the VA Health Care Personnel Enhancement Act of 2004 (S.2484), VA's pay system for physicians and dentists, beginning Jan. 8, 2006, will consist of three elements - base pay levels matched to years of VA service, regionally based market pay and performance pay.

No current employees will have their pay decreased. The new pay levels create a base pay for current employees and future hires that won't be decreased even if market pay levels for their specialties go down. The "market" portion of pay levels will vary from time to time for new employees.

Determination of market pay for a physician or dentist will consider several criteria, including length of experience in the specialty, degree of need for certain specialists at a facility, the labor market in the area, board certifications of the professional and prior VA service.

Performance pay will clearly link a portion of each physician's and dentist's compensation to quality and performance outcomes, rewarding such things as quality of care, timeliness and patient satisfaction.

"This new system retains the most positive feature of the old - assurance of regular salary increases with continued VA service - and adds rewards for performance as well as market sensitivity so VA can maintain a competitive stance in serving veterans," said VA Acting Under Secretary for Health Dr. Jonathan Perlin.

"The current system only marginally considers market-rate salaries," said Perlin. "This will give facility and regional executives the flexibility to meet their local needs."

VA officials said within a few years the added cost of the salary increases will actually decline as higher-cost contracts for medical and dental care are eliminated.

The law also authorizes VA to offer registered nurses flexible work schedules in which longer workdays could be selected in exchange for fewer total working hours. Nurses would receive the same pay. Congress will receive VA certification annually that VA facilities have policies to prevent nurses in direct patient care from working longer than 12 consecutive hours or more than 60 hours in a week.

Additionally, the law allows VA to approve special pay to the top nurse - nurse executive - at each VA medical center. The added pay will range from $10,000 to $25,000 per year to bring the executives' salaries closer to that of their private-sector counterparts.