Pursuant to a congressional request, GAO examined the Department of Veterans Affairs' (VA) physician credentialing and privileging processes, focusing on: (1) policies, procedures, and implementation of the credentialing program required by law; and (2) VA policies and procedures on granting or rescinding physician privileges. GAO found that: (1) although VA was required to obtain physician licensing information from state boards, it had only verified and properly documented 102 of 207 physicians it hired between 1986 and 1988; (2) in 34 of the 105 undocumented cases, medical center officials had contacted a cognizant state board, but failed to document the contact; (3) VA planned to require VA-affiliated medical schools to conduct background investigations on the residents they sent to VA; (4) VA took few actions to correct identified problems with its privileging processes; (5) VA had no documentation to show whether it considered current competence, treatment results, or conclusions in its privileging decisions; (6) VA provided only minimal guidance to its medical centers on privileges and no guidance on the documentation required to support privileging decisions; (7) medical centers were reluctant to reduce or revoke physicians' privileges for fear of litigation; (8) although VA was required to notify state licensing boards of physicians who had their privileges formally revoked, the law limited VA to reporting physicians for clinical incompetence; and (9) VA was also reluctant to report physicians who retired or resigned before receiving a hearing because of its concern over their due process rights.