Can caring cure?

October 10, 2013, 11:23 AM UTC

Tracy Gaudet is tearing up. She is talking about patients, her patients, all 8.76 million of them. Gaudet, an MD and the former executive director of Duke Integrative Medicine, is the director of the Office of Patient Centered Care and Cultural Transformation at the Veterans Health Administration (VHA). Yes, it’s a wordy title, but Gaudet’s mandate is simple: Humanize the U.S. Department of Veterans Affairs. The extent of her challenge, at least from a public-relations standpoint, is illustrated by the fact that most people would be surprised to see “patient-centered” and “cultural transformation” attached to the VA, let alone the health care industry.

To describe the VA as the nation’s largest health care system doesn’t even begin to get at the department’s bigness. Its proposed budget next year is $152.7 billion; the VHA employs about 280,000 people; there is currently a backlog of more than 420,000 benefit claims in its system. The only branch of government larger in budget and personnel than the VA is the Department of Defense. And just like the rest of our (sprawling, inefficient) medical system, the VA has been hampered by a landslide of paperwork and the changing role of technology in health care. Gaudet may not be responsible for fixing all the problems at the VA, but she’ll have to take on quite a lot.

When Gaudet took on the role in 2011, it was a newly created position in a newly created office. Like the majority of health care providers, the VA was set up to practice a disease-focused reactive model of medicine. Gaudet was tasked with helping transform the organization into a system that focused on more than veterans’ medical problems: one that could manage health holistically and keep problems from arising in the first place. The VA leadership’s No. 1 strategic goal for the next five years is to change the way the organization delivers health care — personalized, proactive, patient-driven is the preferred language — and Gaudet and her team are responsible for making it happen.

The VA, of course, is the largest integrated health care system in the country. The opportunity to shake things up there was the main reason Gaudet left her position as executive director of Duke Integrative Medicine. If the VA could change, it could act as a model for the rest of the health care industry. “You have a massive health care crisis in the country,” Gaudet says. “Somebody’s got to fix it and demonstrate how it can be done differently.” Because the organization tracks veterans across their whole lives, it would also give her plenty of data, which Gaudet could arm herself with to prove which approaches work and which do not.

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Gaudet is trying to expand what we see as falling under the banner of health care. Under the current paradigm, doctors diagnose and treat existing medical problems. But the majority of health issues in this country — heart disease, hypertension, diabetes — are not simply “find it and fix it” conditions. Gaudet gives the example of suicide among veterans. Depression, posttraumatic stress disorder, chronic pain, sleep disorders, and substance abuse are all indicators of at-risk veterans. “When I look at those five things, there’s no easy fix for this,” she says. “It’s an example of the system’s failure. We are not good at solving these complex problems.”

Gaudet points to an example from her medical history to illustrate what proactive health care might look like. In 2005 she needed to have a mass in her throat removed, a surgery that entailed detaching the base of her tongue. Afterward she would need to relearn how to speak and swallow. Her surgeon was technically skilled, but he didn’t offer anything to help her prepare. Gaudet started doing acupuncture, imagery work, expressive art therapy, and hypnosis. She made tapes of her voice for her 1 1/2-year-old son, who was just learning how to talk.

“I felt extremely prepared psychologically, emotionally, and spiritually, which we know changes psychically how we go into surgery,” she says. By the time she went in for the procedure, the mass was smaller. Afterward she was talking in two days. Her surgeon now recommends everyone go through Duke Integrative Medicine before he operates.

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Gaudet was fortunate: She worked in the field and knew exactly how to best prepare for her surgery. Not all patients fit into their medical plans so neatly. Gaudet realized just how different a medical approach to bettering patients could be during a Duke research project tracking care for people at risk for heart conditions. One participant told Gaudet that what had changed the most in her life over the course of the study was that for the first time in 15 years, she could bend over to tie her shoes. The patient’s health coach leaned over and whispered in her ear, prompting her to add that, by the way, she’d lost 70 pounds. “You forgot that you lost 70 pounds?” Gaudet says. “That wasn’t what mattered to her.”

It was then she realized that medicine, which usually measures results quantitatively, often does not square with the wishes of patients, which are usually qualitative — bending over to tie one’s shoes rather than the precise number of pounds shed. Gaudet has incorporated this insight into the VA’s plan. Now doctors ask patients what their “personal mission” might be and fit their answers into a health plan.

The VA currently has nine centers of innovation around the country. Each approaches its problems differently, but all work on skill building — not just telling people to eat differently or to reduce their stress, but showing them how to do so. Some have nutritionists on staff, along with kitchens and vegetable gardens; others have massage therapists, yoga instructors, acupuncturists, and mindfulness and biofeedback providers for issues such as substance-abuse treatment and pain management. The New Orleans facility, which is rebuilding post-Katrina, is piloting a new approach to interviewing and training employees to shape the culture from the ground up.

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The VA has also funded more than 200 pilot programs. One in California, called From Warrior to Soul Mate, helps veterans and their significant others reconnect after the vets return from the battlefield. An outcomes research arm examines what’s working, and a field implementation division partners with different facilities to help them figure out how they can best adopt the new mindset.

Gaudet admits that the results of her team’s work are going to take time to show up. But when she thinks about transforming a system, she’s not just thinking about the VA. “You’re not going to change an entire paradigm of health care and an entire system quickly,” she says. “It’s going to take at least a decade.” Lawton Robert Burns, a professor of health care management at the Wharton School at the University of Pennsylvania, feels similarly: “We’re talking about changing a bureaucracy and a mindset and breaking down silos … This is difficult work.”

Gaudet almost skipped medicine altogether. She had a background in sociology and psychology, and thought that she had too holistic a philosophy to be a good match. She changed her mind when as an undergraduate at Duke University (she was the first in her family to go to college), she broke her finger and had to have orthopedic surgery. Her doctor was personable and funny and put her at ease. “I thought, That mattered to me, and all I have is a broken finger.” She did her residency in ob/gyn. “I liked being able to be the person who could give someone long-term care — deliver their babies, take out their uterus,” she quips. “I don’t have to send you to a surgeon. That whole experience was important to me.”

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During her residency at the University of Texas, Gaudet came across a brochure on an integrative-medicine program at the University of Arizona. She’d never heard the term before, but it matched her philosophy of wanting to treat the whole person, not just a diseased body part. She became the founding executive director and after four years moved to Duke.

Gaudet’s personal connection to the VA also drew her to the job. Her father was a World War II veteran, and through him she understood the wounds of war. “My father was an alcoholic, and he was a wonderful man, but he had a serious problem,” she says. Growing up in Belvidere, N.J., the family would go to his squadron reunions with his Air Force buddies, many of whom Gaudet says were alcoholics. “It’s how they dealt with the pain and suffering still 30 years later and 40 years later,” she says. “That’s a part of who I am, and we need to and can do better.”

This story is from the October 28, 2013 issue of Fortune.