(New throughout with Bush announcement)

By Caren Bohan

WASHINGTON, Oct 30 (Reuters) - President George W. Bush on Tuesday chose a retired military doctor and decorated Vietnam veteran to head the veterans agency criticized over shoddy health care for soldiers wounded in the Iraq and Afghan wars.

Lt. Gen. James Peake was chosen as Bush's nominee as secretary of the Veterans Affairs Department. If confirmed by the Senate, he would replace Jim Nicholson, who left government to join the private sector.

Peake, a former Army surgeon general, would be the first physican and first general to hold the job. As someone who was wounded twice in combat, Peake "understands the view from both sides of the hospital bed," Bush said.

The selection of Peake came eight months after a scandal erupted over reports of poor health care for veterans of fighting in Iraq and Afghanistan.

Bush has apologized for the problems, which included dilapidated conditions at the flagship Walter Reed Army Medical Center and bureaucratic delays faced by soldiers seeking care for their injuries.

He also has embraced the findings of a panel formed to recommend how to fix the problems in veterans care.

The veterans agency was also criticized after the revelation in 2006 that a laptop computer containing data on 26.5 million veterans had been stolen. The laptop was later recovered.

At the White House ceremony where his selection was announced, Peake acknowledged continued flaws with some of the services provided to veterans and pledged to overhaul them.

"The disability system is largely a 1945 product, 1945 processes, around a 1945 family unit. About everybody that has studied it recently said it is time to do some revisions," Peake said.

Peake was nominated by President Bill Clinton as Army surgeon general and served in that role from 2000-2004. After leaving that post, he worked for Project Hope, a nonprofit international health organization.

Most recently, Peake was chief medical director for QTC Management Inc., a private firm that provides medical exams and electronic medical records services for veterans.

Congressional Democrats this week criticized Bush for taking too long to name a replacement for Nicholson, a former U.S. ambassador to the Vatican and a former chairman of the Republican National Committee who said in July he was leaving.

Peake has served in military medicine for more than 40 years and served in the Vietnam War. He was awarded a Purple Heart for wounds suffered in combat and a Bronze Star for acts for valor.

He graduated from the U.S. military academy at West Point and got his medical training at Cornell University.

Sen. Barack Obama, an Illinois Democrat who is running for president, said he hoped Peake would bring a "new era of leadership" to the veterans agency. But Obama said budget shortfalls, inadequate care and other problems had marked the Bush administration's oversight of the agency.

(Additional reporting by Tabassum Zakaria)

AlertNet news is provided by