VA DIALYSIS PILOT

Increased Attention to 

Planning, 

Implementation, and 

Performance 

Measurement Needed 

to Help Achieve Goals

Report to Congressional Requesters

May 2012

GAO-12-584

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United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-584, a report to 

congressional requesters

May 2012

VA DIALYSIS PILOT

Increased Attention to Planning, Implementation, 

and Performance Measurement Needed to Help 

Achieve Goals

Why GAO Did This Study

Veterans diagnosed with end-stage 

renal disease—a condition of

permanent kidney failure—represent 

one of the most resource-intensive 

patient populations at VA. These 

veterans are often prescribed dialysis, 

which is a life-saving and relatively 

expensive medical procedure that 

removes excess fluids and toxins from 

the bloodstream. VA began developing 

its Dialysis Pilot in 2009 with four 

goals: (1) improved quality of care, 

(2) increased veteran access, 

(3) additional medical research 

opportunities, and (4) cost savings. 

Through this pilot, VA will establish 

four VA-operated outpatient dialysis 

clinics in communities surrounding 

select VA medical centers by the end 

of fiscal year 2012 using start-up 

funding provided by VA Central Office. 

Pilot locations are expected to achieve 

cost savings and to repay their start-up 

funding. GAO examined VA’s planning 

and early implementation efforts for the 

Dialysis Pilot, and how VA plans to 

evaluate the pilot.

GAO reviewed relevant VA documents, 

including those related to pilot location 

selection and cost estimation, and 

spoke with VA officials responsible for 

overseeing the Dialysis Pilot and 

representatives from all pilot locations.

What GAO Recommends

Among other actions, GAO 

recommends that VA improve its 

Dialysis Pilot by providing guidance for 

start-up fund repayment, as well as 

developing an evaluation plan that 

includes performance measures for the 

pilot locations. VA concurred with 

GAO’s recommendations and provided 

an action plan to address them.

What GAO Found

GAO found a number of weaknesses in the Department of Veterans Affairs’ (VA) 

execution of the planning and early implementation phases of the Dialysis Pilot. 

These weaknesses involved pilot location selection, cost estimation practices, 

and cost savings calculations that could collectively limit the achievement of the

pilot’s goals. Specifically, VA did not do the following:

• Appropriately document its pilot location selection process. VA did not 

maintain a clear and transparent pilot location selection process; it did not 

document how its criteria for pilot location selection were applied to all 153 

VA medical centers (VAMC) or why substitutions in pilot locations were 

made. However, VA officials reported that several criteria, including dialysis 

patient prevalence and average treatment costs, were used to select the pilot 

locations in Durham and Fayetteville, North Carolina; Philadelphia, 

Pennsylvania; and Cleveland, Ohio. 

• Produce consistent and comparable cost estimates for pilot locations. 

VA did not complete consistent and comparable cost estimates for the four 

pilot locations. Specifically, GAO found several cases where pilot locations 

did not complete reliable cost estimates because they made changes to 

formulas and assumptions of the Dialysis Pilot cost estimation model, which 

was developed by VA systems redesign engineers.

• Provide clear and timely guidance on start-up fund repayment and cost 

savings calculations. VA did not provide Veterans Integrated Service 

Network and VAMC officials with clear and timely written guidance or 

instructions on how to pay back start-up funds, or how to calculate cost 

savings generated by the pilot locations. 

VA Central Office has not yet determined how it will achieve its goals for the 

Dialysis Pilot or created clear performance measures for the pilot locations. 

Previously, GAO found that leading public sector organizations take three steps 

to improve their performance and help their organizations become more 

effective: (1) define a clear mission and goals, (2) measure performance to 

gauge progress toward achieving goals, and (3) use performance information as 

a basis for decision making. While VA has defined a clear mission and goals for 

the Dialysis Pilot, it has only made limited progress in the remaining two steps. In 

March 2012, VA reported that it was in the early stages of establishing an 

agreement with a leading university research center to conduct an evaluation of 

the Dialysis Pilot; however, no target dates were provided for when this 

evaluation would begin or what aspects of the Dialysis Pilot it would evaluate. 

Because VA has not yet developed an evaluation plan or defined performance 

measures for pilot locations, it is not collecting consistent and reliable information 

on the performance of the pilot locations and thus may not have this information 

available when it is time to either make midcourse corrections to the Dialysis Pilot 

or decide whether and how to open additional VA-operated outpatient dialysis 

clinics. VA officials also told GAO they have developed a limited plan for 

expanding the Dialysis Pilot despite not having access to performance 

information on the existing four pilot locations.

View GAO-12-584. For more information, 

contact Randall B. Williamson at (202) 512-

7114 or williamsonr@gao.gov.
Page i GAO-12-584 VA Dialysis Pilot

Letter 1 

Background 3

Planning and Early Implementation Phases of the Dialysis Pilot 

Had Significant Weaknesses 7

VA’s Dialysis Pilot Has a Stated Mission but Lacks Clearly Defined 

Performance Criteria and an Evaluation Plan 14

Conclusions 17

Recommendations for Executive Action 19

Agency Comments and Our Evaluation 20

Appendix I Status of VA Dialysis Pilot Locations 23

Appendix II Comments from the Department of Veterans Affairs 24

Appendix III GAO Contact and Staff Acknowledgments 30

Table

Table 1: Status of Dialysis Pilot Locations as of March 2012 23

Figure

Figure 1: Selected Components of the Dialysis Pilot Cost 

Estimation Model 10

Contents
Page ii GAO-12-584 VA Dialysis Pilot

Abbreviations

CMS Centers for Medicare & Medicaid Services 

ESRD end-stage renal disease

VA Department of Veterans Affairs

VAMC Veterans Affairs medical center

VHA Veterans Health Administration

VISN Veterans Integrated Service Network

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Page 1 GAO-12-584 VA Dialysis Pilot

United States Government Accountability Office

Washington, DC 20548

May 23, 2012

Congressional Requesters

Veterans diagnosed with end-stage renal disease (ESRD)—a condition of 

permanent kidney failure—are one of the most resource-intensive patient 

populations the Department of Veterans Affairs’ (VA) health care system 

serves. To treat the effects of ESRD, veterans with the disease are often 

prescribed dialysis, which is a life-saving medical procedure that removes 

excess fluids and toxins from the bloodstream.1 Veterans diagnosed with 

ESRD must receive dialysis treatments for the rest of their lives unless 

they receive a kidney transplant. These treatments are time intensive for 

veterans and relatively expensive for VA. Dialysis typically requires 

veterans to undergo three outpatient treatments per week that each last 

about 4 hours. Due to VA’s limited dialysis capacity in its own facilities, 

VA most commonly provides these dialysis treatments to veterans by 

referring them to non-VA outpatient dialysis clinics in their local 

communities through VA’s fee basis program.2,3

To help address these rising costs, VA began developing its Dialysis Pilot 

in 2009. Through this pilot, VA will establish four VA-operated outpatient 

dialysis clinics in communities surrounding select VA medical centers 

(VAMC) by the end of fiscal year 2012. VA officials expect these new 

clinics will reduce the number of veterans referred to fee basis providers 

for dialysis treatments. Ultimately, VA believes the Dialysis Pilot will lead 

In fiscal year 2011, VA 

referred about 9,600 veterans to fee basis providers for dialysis 

treatments at a cost of about $314 million, up from about 6,900 veterans 

at a cost of about $133 million in fiscal year 2008.

 

1

In this report, we use the term dialysis to describe hemodialysis—the most common form 

of dialysis treatment provided in the United States. VA provides dialysis as part of the 

medical benefits package it provides to all veterans enrolled in its health care system—a 

full range of hospital and outpatient services, prescription drugs, and noninstitutional longterm care services. See 38 C.F.R. § 17.38.

2

Outpatient dialysis clinics are freestanding clinics that are typically located in convenient 

areas, such as shopping centers, and vary in the number of patients served. These clinics 

make these chronic treatments accessible to those who need them. 

3

Through its fee basis program, VA can pay for veterans to receive care from non-VA 

providers in the community for certain health care services that it is not capable of 

providing in its own medical facilities—such as dialysis treatment.

 
 

Page 2 GAO-12-584 VA Dialysis Pilot

to the development of a business model with a mission of providing more 

veterans’ dialysis treatments in VA facilities rather than through the fee 

basis program. To meet this mission, VA set four goals for the Dialysis 

Pilot: (1) to improve the quality of dialysis care veterans receive, (2) to 

increase veterans’ access to dialysis care, (3) to provide additional 

dialysis research opportunities, and (4) to achieve cost savings for VAfunded dialysis treatments.

Congressional requesters expressed interest in the analysis VA 

performed to determine the cost-effectiveness of providing more veterans’ 

dialysis treatments in VA-operated facilities. This report examines 

(1) VA’s early planning and implementation efforts for the Dialysis Pilot 

and (2) how VA plans to evaluate the Dialysis Pilot.

To examine VA’s early planning and implementation efforts for the 

Dialysis Pilot, we reviewed relevant VA Central Office, Veterans 

Integrated Service Network (VISN), and VAMC documents related to 

(1) pilot location selection, (2) cost estimation, and (3) pilot location startup funding.4 We also interviewed VA Central Office, VISN, and VAMC 

officials involved with the Dialysis Pilot—including officials from each 

VISN and VAMC operating a pilot location, the Veterans Health 

Administration’s (VHA) Chief Business Office, the VHA Dialysis Steering 

Committee, the Dialysis Workgroup, and VA systems redesign 

engineers.5

 

4

Each VISN is responsible for the day-to-day management of facilities within its network.

In addition, we analyzed VA’s key decision-making tools—

including the cost estimation models used to assess pilot costs—for each 

Dialysis Pilot location and the pilot as a whole. We also analyzed VA’s 

data on dialysis fee basis expenditures. We verified these data with VA 

officials and found information derived from analysis of these expenditure 

data to be sufficiently reliable for our purposes.

5

The VHA Chief Business Office oversees the development of administrative processes, 

policy, regulations, and directives associated with the delivery of VA health benefit 

programs. The VHA Dialysis Steering Committee includes VA clinicians and officials who 

assess and assist in the management of the delivery of dialysis services for veterans 

enrolled at VA. The Dialysis Workgroup was created to research, design, and implement 

VA’s Dialysis Pilot. VA’s systems redesign engineers work at one of VA’s Veterans 

Engineering Resource Centers. These centers support collaboration between 

researchers, systems redesign engineers, and clinicians to improve VA health care 

delivery.
 

Page 3 GAO-12-584 VA Dialysis Pilot

To examine VA’s plans to evaluate the Dialysis Pilot, we reviewed 

relevant VA and VISN documentation of key pilot plans and meetings—

including business plans, implementation plans, approval documents, and 

meeting minutes. We also spoke with officials from VA Central Office and 

all three VISNs and four VAMCs operating pilot locations regarding 

(1) reporting responsibilities and expectations for the Dialysis Pilot and 

(2) any ongoing or planned evaluations of the Dialysis Pilot.

We conducted this performance audit from September 2011 to May 2012 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

VHA oversees VA’s health care system, which includes 153 VAMCs 

organized into 21 VISNs. Each VISN is charged with the day-to-day 

management of the VAMCs within its network. VA Central Office 

decentralized its budgetary, planning, and decision-making functions to 

the VISN offices in an effort to improve accountability and oversight of 

daily facility operations. However, VA Central Office maintains 

responsibility for monitoring and overseeing both VISN and VAMC 

operations.

Veterans may elect to have their dialysis treatments through VA or 

Medicare but cannot receive dialysis benefits from both simultaneously. In 

2008, there were over 18,000 veterans enrolled in VA’s health care 

system diagnosed with ESRD who required dialysis treatments.6

 

6

See Corrigo Health Care Solutions, LLC, Purchase of Non-VA Hemodialysis Treatments, 

a report prepared at the request of the Department of Veterans Affairs, Veterans Health 

Administration, January 30, 2009. The VHA Chief Business Office awarded a contract to 

Corrigo Health Care Solutions, a professional services firm, to complete this study on VA’s 

ability to purchase dialysis services both now and in the future.

Of these 

enrolled veterans, about two-thirds elected to receive their dialysis 

treatments through VA. However, VA treated less than half of these 

veterans in VAMC-based dialysis clinics because of capacity limitations 

and other factors, such as long distances veterans may have to travel to 

Background 

Providing Dialysis 

Treatments to Veterans
 

Page 4 GAO-12-584 VA Dialysis Pilot

the VAMC.7

The remaining one-third of all veterans enrolled in VA’s health care 

system who were diagnosed with ESRD, in fiscal year 2008, elected to 

have their dialysis treatments paid for by Medicare.

This limited internal capacity and other factors resulted in 

most of these veterans receiving their dialysis treatments through VA’s 

fee basis program. Through VA’s fee basis program, veterans can select 

any dialysis provider, as long as their chosen provider accepts VA’s 

established payment rate for dialysis treatment. Currently, fee basis rates 

differ by VISN; however, several VISNs are currently paying for dialysis 

treatments through several multi-VISN-negotiated agreements with 

dialysis providers. Under these agreements, per-treatment costs for these 

VISNs currently range from $248 to $310. Veterans who elect to have 

their dialysis treatments provided through VA—either in VAMCs or 

through the fee basis program—may not incur any out-of-pocket 

expenses.

8 The veteran can 

select any Medicare-certified dialysis provider that accepts Medicare 

payment and there are few, if any, restrictions on this choice since all 

major dialysis providers accept individuals covered by Medicare. 

Medicare reimburses dialysis providers 80 percent of a specified pertreatment base bundled rate—about $230 in 2011—and beneficiaries 

or private insurance companies are responsible for the remaining 

20 percent.9

 

7

See Corrigo Health Care Solutions, LLC, Non-VA Hemodialysis Treatments. At the end 

of fiscal year 2008, VA operated 64 VAMC-based dialysis clinics that treated both 

veterans in need of acute inpatient dialysis treatments and veterans receiving outpatient 

chronic dialysis treatments for ESRD. 

For veterans who elect to have their dialysis treatments paid 

for by Medicare, the remaining 20 percent may be an out-of-pocket 

expense that was about $7,600 per year in 2008, because VA is not 

authorized to pay these out-of-pocket expenses incurred by veterans 

covered by Medicare.

8

See Corrigo Health Care Solutions, LLC, Non-VA Hemodialysis Treatments. Medicare 

covers dialysis treatment for most individuals with ESRD regardless of age. Medicare 

coverage generally begins in the fourth month after they start dialysis. If an individual 

entitled to Medicare because of ESRD is covered by a commercial health insurance plan, 

the commercial plan is the primary payer and Medicare is secondary for the first 

30 months of Medicare entitlement, after which Medicare becomes the primary payer. 

See 42 U.S.C. § 1395y(b)(1)(C).

9

Medicare pays dialysis providers a single rate for providing dialysis treatment and certain 

related items and services, which is a common form of Medicare payment known as 

bundling.
 

Page 5 GAO-12-584 VA Dialysis Pilot

In 2009, VA began developing the Dialysis Pilot to build its in-house 

capacity to provide dialysis treatments to veterans in response to several 

issues, including the following:

• Rising numbers of veterans needing dialysis. A VA-funded study 

found that the number of veterans requiring dialysis treatments was 

projected to increase 6 percent from fiscal year 2008 to fiscal year 

2015 and the number of veterans receiving these dialysis treatments 

from community providers through the fee basis program was 

projected to increase 16 percent.10

• Rising costs of providing dialysis through the fee basis program. 

The same VA-funded study also found that VA’s fee basis pertreatment costs were projected to increase about 59 percent from 

$337 per treatment in fiscal year 2008 to $535 per treatment in fiscal 

year 2015.11

• Unsuccessful efforts to achieve lower reimbursement rates with 

fee basis dialysis providers. Another VA-funded study found that if 

VA adopted Medicare rates, set by the Centers for Medicare & 

Medicaid Services (CMS), for outpatient dialysis treatments, it would 

reduce its dialysis fee basis expenditures by 39 percent resulting in 

projected cost reductions from fiscal year 2011 through fiscal year 

2020 of about $2 billion.12 As a result of this study, VA Central Office 

instructed VISN directors to begin using Medicare rates as the 

prevailing reimbursement rate for fee basis dialysis treatments in 

2009. However, the major fee basis dialysis providers did not agree to 

provide dialysis treatments to veterans through VA’s fee basis 

program at these reduced rates.13

 

10See Corrigo Health Care Solutions, LLC, Non-VA Hemodialysis Treatments. 

This resulted in VA continuing to 

11See Corrigo Health Care Solutions, LLC, Non-VA Hemodialysis Treatments. 

12See Kennell and Associates, Inc., Report on Medicare Pricing of Outpatient Services, a 

report prepared at the request of the Department of Veterans Affairs, Veterans Health 

Administration, November 18, 2009.

13The dialysis industry is very concentrated, with many facilities owned and operated by a 

few organizations. For example, about 61 percent of the approximately 5,600 dialysis 

facilities nationwide are owned by three large organizations.

Development of the 

Dialysis Pilot
 

Page 6 GAO-12-584 VA Dialysis Pilot

pay for these treatments according to previously established rates, 

which are typically higher than Medicare rates.14

In response to these issues, VA Central Office charged VISN 6, a VISN 

with a significant volume of veterans who require dialysis treatments, with 

establishing a dialysis workgroup to evaluate VA’s options for dialysis 

treatment delivery.15 The Dialysis Workgroup—led by officials from 

VISN 6, with representatives from VA Central Office and the VHA Chief 

Business Office and others with financial and clinical expertise—met in 

2009 to discuss various options for providing dialysis care for veterans. 

This workgroup identified several options VA could take to build its 

internal capacity to provide dialysis treatments to veterans and identified 

several ways VA could address the rising costs of dialysis care provided 

through the fee basis program, including (1) building dialysis units in 

leased space in communities surrounding select VAMCs, (2) purchasing 

modular dialysis units, (3) modifying existing space in selected VAMCs to 

expand or build dialysis units, and (4) negotiating pricing agreements with 

select dialysis providers to allow VAMCs to pay a lower rate for fee basis 

dialysis treatments.16

In March 2010, after discussing these options and exploring potential 

solutions, the Dialysis Workgroup began designing the Dialysis Pilot as 

an effort to build VA’s capacity to provide dialysis treatments to veterans 

in VA-operated facilities and reduce fee basis costs. The Dialysis 

Workgroup projected that the Dialysis Pilot would result in a 5-year cost 

savings of about $33 million by operating four outpatient dialysis clinics 

that could each treat 48 veterans a week. The Dialysis Pilot was 

approved by the Under Secretary for Health in August 2010 and by the 

Secretary of Veterans Affairs in September 2010. The final four pilot 

locations selected by the Dialysis Workgroup were Durham and 

Fayetteville, North Carolina; Philadelphia, Pennsylvania; and Cleveland, 

 

14In December 2010, VA amended its regulations to apply CMS rates to all non-VA 

inpatient and outpatient medical services, including dialysis. See 75 Fed. Reg. 78,901 

(Dec. 17, 2010) (amending 38 C.F.R. §§ 17.52, 17.56).

15VISN 6 oversees eight VAMCs in North Carolina, Virginia, and West Virginia and serves 

a veteran population with a high prevalence of ESRD. 

16Modular dialysis units are buildings or trailers that are predesigned and can be installed 

on VAMC property. These units are designed to meet the standards of several health care 

accrediting and surveying entities, including CMS, state agencies, and The Joint 

Commission.
 

Page 7 GAO-12-584 VA Dialysis Pilot

Ohio. Each of these locations was provided approximately $2.5 million in 

start-up funding by VA Central Office to establish an outpatient dialysis 

clinic with 12 dialysis stations that could treat 48 veterans per week. VA 

Central Office expected this start-up funding would be repaid by the pilot 

locations. (See app. I for more information on the current status of each 

pilot location.)

The pilot locations in Durham and Fayetteville, North Carolina, began 

treating veterans in June 2011. The Philadelphia, Pennsylvania, pilot 

location is scheduled to open in May 2012, and the Cleveland, Ohio, pilot 

location is scheduled to open in September 2012.

There were a number of weaknesses in VA’s execution of the planning 

and early implementation phases of the Dialysis Pilot that collectively 

could limit the achievement of its goals. Specifically, weaknesses in pilot 

location selection, cost estimation practices, and cost savings calculations 

could hamper the Dialysis Pilot’s effectiveness.

While the Dialysis Workgroup reported using several criteria to select the 

Dialysis Pilot locations and documented some of these criteria in the 

approval documents for the Dialysis Pilot, it did not document how these 

criteria were applied or whether it assessed all 153 VAMCs for potential 

inclusion in the Dialysis Pilot. According to GAO internal control 

standards, clearly documenting key information is necessary to ensure 

that appropriate internal controls for communicating and recording 

decision-making activities are in place.17

 

17See GAO, Standards for Internal Control in the Federal Government, 

According to Dialysis Workgroup 

officials, the Dialysis Workgroup began its pilot location selection process 

by identifying 13 potential pilot locations using several criteria, including 

(1) the number of veterans receiving outpatient dialysis treatments living 

within a 30-mile radius or a 30-minute drive of a VAMC, (2) a VAMC’s 

potential to achieve cost savings by operating a pilot location, and (3) the 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). Standards for internal control 

in the federal government state that information should be recorded and communicated to 

management and others within the agency that need it in a format and time frame that 

enables them to carry out their responsibilities.

Planning and Early 

Implementation 

Phases of the Dialysis 

Pilot Had Significant 

Weaknesses 

VA’s Pilot Location 

Selection Process Was Not 

Transparent or 

Appropriately Documented
 

Page 8 GAO-12-584 VA Dialysis Pilot

perceived level of dialysis-related clinical expertise available at each 

VAMC.18 Dialysis Workgroup officials told us that the final four pilot 

locations in Durham, Fayetteville, Philadelphia, and Cleveland were all 

ultimately selected because they had a high number of veterans receiving 

dialysis treatments and, in some cases, had access to high-quality clinical 

expertise. However, no documentation was provided by VA discussing 

how these criteria were applied to all 153 medical centers and why 

Durham, one of the final four pilot locations, was omitted from the list of 

13 potential pilot locations when it clearly met these selection criteria.19

The transparency of the pilot site selection process was further 

compromised by the manner in which the Durham VAMC was selected as 

a pilot location. Dialysis Workgroup officials did not document their 

rationale for selecting this VAMC—a site not included in the original 

13 potential pilot locations—as one of the four final pilot locations. 

According to Dialysis Workgroup officials, the VAMC in Salisbury was 

originally selected as one of the four final pilot locations; however, this 

VAMC was undergoing managerial changes at that time and the VAMC in 

Durham, located in the same VISN, was selected as a replacement pilot 

location. In April 2012, Dialysis Workgroup officials reported that the 

Durham VAMC’s high number of veterans receiving dialysis and 

nephrology expertise also contributed to its selection as one of the four 

final pilot locations. However, VA did not document either the initial 

In 

addition, VA officials from the Dialysis Workgroup whom we spoke with 

could not recall complete details regarding the pilot location selection 

process that occurred in 2009, including whether additional VAMCs were

assessed against the various criteria. As a result, it is not possible for VA 

or an external party to definitively determine if there were any other 

VAMCs that could have been viable pilot locations beyond the 

13 considered by the Dialysis Workgroup.

 

18The 13 potential pilot locations were VAMCs located in Ann Arbor, Michigan; Augusta, 

Georgia; Cleveland, Ohio; Dublin, Georgia; Erie, Pennsylvania; Fayetteville, North 

Carolina; Los Angeles, California; Kansas City, Missouri; Loma Linda, California; 

Philadelphia, Pennsylvania; Phoenix, Arizona; Sacramento, California; and Salisbury, 

North Carolina. 

19In April 2012, Dialysis Workgroup officials told us that how the pilot location selection 

criteria were applied was documented in a series of e-mails between VA systems redesign 

engineers. However, these e-mail messages did not contain a transparent and clear 

description of the application of these criteria and included some information that 

contradicts other documentation of the selection process provided by the Dialysis 

Workgroup. 
 

Page 9 GAO-12-584 VA Dialysis Pilot

selection of the VAMC in Salisbury as a pilot location or the rationale for 

why the VAMC in Durham was a better final selection for the Dialysis Pilot 

than one of the other 13 potential pilot locations that was not selected. 

The lack of documentation on this particular selection further reduced the 

transparency of the decision-making process.

VA Central Office officials do not have complete information about how or 

why pilot locations were selected because key decisions and the rationale 

behind them were not documented. Such documentation of decisionmaking processes is necessary to ensure that VA decision makers have 

access to relevant, reliable, and timely information and could follow a 

rigorous and fair decision-making process for this critical aspect of the 

Dialysis Pilot. The lack of documentation related to a key planning 

decision—such as the complete process used to select pilot locations—

limits VA’s ability to access this information in the future, evaluate the 

success of the Dialysis Pilot, and make decisions about how best to 

expand the pilot to additional locations.

It is not possible to determine whether pilot locations completed reliable 

cost estimations because these estimates are not consistent and 

comparable. This will limit VA’s ability to determine if the Dialysis Pilot has 

met its mission to reduce the cost of dialysis treatments paid for by VA. 

Reliable cost estimates are necessary to ensure that pilot location costs 

are comparable across the four pilot locations.20

 

20See 

Generating reliable and 

comparable cost estimates prior to opening the pilot locations was critical 

to the early implementation of the Dialysis Pilot in order to ensure that 

appropriate site-specific baseline cost estimates were generated that 

would allow VA to evaluate the cost of the Dialysis Pilot and ensure that 

any cost savings generated by the pilot locations could be accurately 

calculated. The importance of thorough and reliable cost estimation 

processes was included in VA’s own business analysis of the Dialysis 

Pilot, which stated that pilot locations were intended to use the same cost 

estimation methodology to facilitate uniformity and ensure that all pilot 

locations produced reliable information.

GAO/AIMD-00-21.3.1. Standards for internal control in the federal government state 

that information should be recorded and communicated to management and others within 

the agency that need it in a format and time frame that enables them to carry out their 

responsibilities.

VA Did Not Produce 

Consistent and 

Comparable Cost 

Estimates for Pilot 

Locations 
 

Page 10 GAO-12-584 VA Dialysis Pilot

To its credit, the Dialysis Workgroup worked with VA systems redesign 

engineers to develop a sophisticated cost estimation model to help VISN 

and VAMC officials estimate costs for their pilot locations. VA systems 

redesign engineers built the cost estimation model using validated 

research as the foundation for its general baseline cost estimates. The 

cost estimation model included information on several aspects of 

establishing and operating an outpatient dialysis clinic—including 

equipment costs, leased-space costs, staff costs, and veteran travel 

costs.21

Figure 1: Selected Components of the Dialysis Pilot Cost Estimation Model

(See fig. 1.)

 

21VA reimburses some veterans for travel expenses associated with their care and 

treatment. Eligibility for these travel reimbursements is determined by several factors, 

including a veteran’s service-connected disability rating, pension status, and annual 

income. 
 

Page 11 GAO-12-584 VA Dialysis Pilot

Despite this effort to build a robust model for estimating Dialysis Pilot 

costs, VA did not maintain proper control over the cost estimation model 

following its release for use by VISNs and VAMCs. While there were 

designated areas in the cost estimation model for each pilot location to 

enter its specific cost inputs, a VA systems redesign engineer we spoke 

with explained that the formulas in the cost estimation model should not 

be customized by pilot locations. These formulas were validated by VA 

systems redesign engineers and were meant to remain constant across 

all pilot locations to ensure that comparable and consistent cost estimates 

were produced. However, VA Central Office requested that the cost 

estimation model be fully customizable—including all cost inputs and 

formulas—in order to encourage pilot locations to use the model. 

Because the model was fully customizable, some pilot locations both 

appropriately altered their pilot location-specific inputs and inappropriately 

altered the formulas that were intended to remain constant. As a result of 

the inappropriately altered formulas, final cost estimates for the four pilot 

locations are inconsistent and do not include comparable information.

We found several inconsistencies in pilot locations’ use of the cost 

estimation model, including the following:

• Not all pilot locations used validated formulas for developing 

cost estimates. We found that not all pilot locations used the 

validated formulas developed by VA systems redesign engineers to 

calculate their cost estimates. For example, Philadelphia’s cost 

estimation model did not use the validated formula for calculating the 

pilot location’s equipment costs. While the validated equipment cost 

formula included a patient transport cardiac monitor for each dialysis 

pilot location, the Philadelphia pilot location’s model omitted this 

equipment from its calculation. Also, instead of using the validated 

formulas, the Cleveland pilot location deleted some formulas related 

to annual patient demand and leased-space costs and replaced them 

with specific numeric values. As a result of these changes, some of 

Cleveland’s cost estimations cannot be confidently compared with 

those from the other three pilot locations because it is unclear what 

the location used to calculate these numeric values. Consistent use of 

the cost estimation model and its validated formulas is necessary to 

ensure that the cost estimations of each pilot location can be 

compared and evaluated.
 

Page 12 GAO-12-584 VA Dialysis Pilot

• Pilot location capacity changes. Two pilot locations increased the 

capacity of their outpatient dialysis clinics, despite the fact that the 

Dialysis Workgroup specifically established clear capacity limits and 

the cost estimation model was developed for these specific capacity 

limits. According to the Dialysis Workgroup and the Dialysis Pilot 

approval document signed by the Secretary of Veterans Affairs, each 

pilot location’s capacity was limited to 12 dialysis stations that could 

provide up to 48 veterans with dialysis treatments each week.22

However, the Fayetteville pilot location increased its capacity from 12 

to 16 dialysis stations and the Cleveland pilot location increased its 

capacity from 12 to 20 dialysis stations. These capacity increases 

were not validated by VA systems redesign engineers, and as a 

result, it is unclear how these changes may affect the efficiency of 

these pilot locations. In addition, it is unclear whether these capacity 

increases were approved by VA Central Office since the size of these 

two pilot locations is larger than what was originally approved by the 

Secretary of Veterans Affairs.

According to Dialysis Workgroup officials, pilot location-specific baseline 

cost estimates were included in VA’s own business analysis of the 

Dialysis Pilot. However, the baseline cost estimates included in this 

document are unreliable for the following reasons:

• The baseline cost estimates included in VA’s business analysis of the 

Dialysis Pilot are based on the assumption that all pilot locations will 

be limited to 12 dialysis stations. However, the Cleveland and 

Fayetteville pilot locations currently have considerably more dialysis 

stations, with 20 and 16 dialysis stations, respectively.

• The baseline cost estimates included in VA’s business analysis of the 

Dialysis Pilot were generated prior to the cost estimation model’s 

distribution to pilot locations for customization. Therefore, these 

estimates do not account for the pilot location-specific customization 

of several model inputs, such as actual leased-space costs. During 

 

22The Dialysis Workgroup’s review of private sector dialysis models and dialysis 

operations of academically affiliated medical centers found that 12 dialysis stations is the 

minimum required size for a dialysis unit to achieve operating efficiencies. According to 

VA’s business analysis of the Dialysis Pilot, this finding is consistent with the private 

sector staffing standard of one dialysis technician for every 4 patients and one registered 

nurse for every 12 patients. As a result of these findings, the Dialysis Workgroup 

recommended that the four pilot locations be limited to 12 dialysis stations.
 

Page 13 GAO-12-584 VA Dialysis Pilot

the site-specific customization process, several of the costs 

associated with these customizable inputs increased significantly due 

to either changes in pilot location size or other factors. For example, 

the Cleveland pilot location’s customized model includes about 

$400,000 in annual lease expenses, while the baseline cost estimate 

for Cleveland’s lease expenses from VA’s business analysis is only 

about $220,000.

VA Central Office officials did not provide VISN and VAMC officials with 

clear and timely written guidance or instructions on how to pay back 

start-up funds or how to calculate cost savings from the Dialysis Pilot. VA 

Central Office provided a total of approximately $10 million in start-up 

funding for the Dialysis Pilot to the three VISNs associated with the pilot 

locations. Each pilot location received about $2.5 million in start-up 

funding to establish its outpatient dialysis clinic. Pilot locations are 

expected to achieve cost savings through the outpatient dialysis clinics 

and to repay their start-up funding. Specifically, the memorandum 

approving the Dialysis Pilot signed by the Secretary of Veterans Affairs 

and the Under Secretary for Health states that pilot location start-up funds 

are to be repaid in two equal payments in fiscal year 2012 and fiscal year 

2014.

A lack of communication—including ongoing discussions, reporting, and 

guidance—regarding the repayment of pilot location start-up funds could 

make it difficult for VA and external parties to determine if the pilot 

locations are making reasonable progress toward repaying these funds 

and realizing cost savings from the Dialysis Pilot.23

 

23See 

VISN and VAMC 

officials reported a lack of clarity about how Dialysis Pilot start-up funds 

must be repaid. Specifically, officials from two of the three VISNs 

associated with pilot locations—VISNs 4 and 10—told us that they have 

not discussed the repayment of their pilot locations’ start-up funding with 

VA Central Office. Similarly, officials from the VAMCs associated with the 

two operational pilot locations acknowledged their understanding that 

start-up fund repayment would likely be included as part of their cost 

GAO/AIMD-00-21.3.1. Standards for internal control in the federal government state 

that information should be recorded and communicated to management and others within 

the agency that need it in a format and time frame that enables them to carry out their 

responsibilities.

VA Did Not Provide Clear 

and Timely Guidance to 

Pilot Locations on Start-up 

Fund Repayment and Cost 

Savings Calculations
 

Page 14 GAO-12-584 VA Dialysis Pilot

savings calculations, but told us that they were not aware of any specific 

agreements or plans for repayment.24

In addition, while the Dialysis Workgroup provided pilot locations with 

5-year cost savings projections and articulated plans for calculating actual 

cost savings in a document that was published prior to the approval of the 

Dialysis Pilot, VISN officials we spoke with were uncertain about how cost 

savings would be calculated. According to VA’s own business analysis of 

the Dialysis Pilot, actual cost savings will be calculated by comparing the 

cost per treatment at each pilot location to actual fee basis per-treatment 

rates for each pilot location’s corresponding VAMC.25 This document also 

states that cost saving calculations will be a collaborative effort between 

pilot location leadership, VA researchers, and the VHA Chief Business 

Office. However, VISN officials stated that while they expect that the cost 

savings from their pilot locations will be examined, they did not receive 

written guidance about how cost savings will be calculated. Given the lack 

of specific and timely guidance to VISN and VAMC officials on the 

calculation of cost savings, officials at the pilot locations may not use the 

same methodology to track these savings.

VA Central Office has not yet determined how it will define success for 

the Dialysis Pilot or created clear performance measures linked to the 

four Dialysis Pilot goals. When other leading public sector organizations 

are engaged in efforts to improve their performance and help their 

organizations become more effective—similar to VA’s goals for the 

Dialysis Pilot—we found that these organizations commonly take three 

steps: (1) define a clear mission and goals, (2) measure performance to 

gauge progress toward achieving goals, and (3) use performance 

information as a basis for decision making.26

 

24Only the pilot locations in Durham and Fayetteville, North Carolina are currently 

operational. The pilot locations in Philadelphia, Pennsylvania; and Cleveland, Ohio; are 

scheduled to open in May and September 2012, respectively.

25Each pilot location’s cost per treatment will be calculated using VA’s standard cost 

assignment methodology contained in its Decision Support System.

26GAO, Executive Guide: Effectively Implementing the Government Performance and 

Results Act, GAO/GGD-96-118 (Washington, D.C.: June 1996).

VA’s Dialysis Pilot Has 

a Stated Mission but 

Lacks Clearly Defined 

Performance Criteria 

and an Evaluation 

Plan
 

Page 15 GAO-12-584 VA Dialysis Pilot

Step 1—Defining a clear mission and goals. VA has completed the first 

of these steps by defining a clear mission and goals for the Dialysis Pilot. 

Specifically, the Dialysis Workgroup noted that the Dialysis Pilot would 

allow VA to develop a cost-effective business model that could be used to 

optimize VA’s resources and increase its capacity to provide dialysis 

treatment to veterans. This workgroup also outlined four goals of the 

Dialysis Pilot: (1) improved quality of care, (2) increased access for 

veterans, (3) additional dialysis research opportunities, and (4) cost 

savings for VA-funded dialysis treatments. Through the participation of its 

membership in developing this mission and these goals, the Dialysis 

Workgroup was able to incorporate the input of several VA internal 

stakeholders—including VA Central Office representatives, VISN 

leadership, clinical experts with experience treating veterans with ESRD, 

and VA systems redesign engineers. This process included a thorough 

assessment of VA’s options for providing dialysis treatments to 

veterans—including the resources, equipment, and staffing needed to 

operate a cost-effective outpatient dialysis clinic.

Step 2—Measuring performance to gauge progress. Despite its 

success in defining a clear mission and goals for the Dialysis Pilot, VA 

has not developed a clear plan for evaluating the pilot. Specifically, while 

two pilot locations (Durham and Fayetteville) began treating veterans in 

June 2011, VA has not yet begun an evaluation of the establishment and 

management of the pilot locations—including causes for opening delays, 

operating challenges, or the sufficiency of start-up funding. Previously, we 

found that developing sound evaluation plans before a pilot program is 

implemented can increase confidence in results and facilitate decision 

making about broader applications of the pilot.27 In March 2012, the VHA 

Chief Business Office reported that VA is in the early stages of 

establishing an agreement with a leading university research center to 

conduct an evaluation of the Dialysis Pilot; however, no target dates were 

provided for when this evaluation would begin or what aspects of the 

Dialysis Pilot beyond cost-effectiveness it would evaluate.

 

27See GAO, Limitations in DOD’s Evaluation Plan for EEO Complaint Pilot Program 

Hinder Determination of Pilot Results, GAO-08-387R (Washington, D.C.: Feb. 22, 2008), 

and Tax Administration: IRS Needs to Strengthen Its Approach for Evaluating the SRFMI 

Data-Sharing Pilot Program, GAO-09-45 (Washington, D.C.: Nov. 7, 2008).
 

Page 16 GAO-12-584 VA Dialysis Pilot

In addition, VA Central Office has not developed a cohesive strategy for 

evaluating the Dialysis Pilot and has not yet formally defined its criteria for 

measuring the performance of the pilot locations or the success of the 

Dialysis Pilot in general. Several potential performance measures could 

be used to measure the pilot locations’ progress toward the achievement 

of each Dialysis Pilot goal:

• Improved quality of care. Officials from the Dialysis Workgroup told 

us that quality assurance outcomes, specifically those used by CMS 

to certify outpatient dialysis clinics, could be used to assess pilot 

locations.28 These metrics would likely help VA assess the quality of 

dialysis care provided by the pilot locations.

• Increased access for veterans. Dialysis Workgroup officials told us 

that patient satisfaction information could be used to assess pilot 

locations. This potential metric could help determine if the pilot 

locations increased veterans’ access to dialysis care.

• Additional dialysis research opportunities. In its business analysis 

of the Dialysis Pilot, the Dialysis Workgroup recommended that VA 

fund a 4-year research study to evaluate the quality of care at all pilot 

locations and identify best practices in veteran dialysis care. 

According to this business analysis, the findings of this study would 

enable VA to develop an evidence-based strategy for veteran dialysis 

care that ensures veterans receive the highest quality of care. 

• Cost savings for VA-funded dialysis treatments. In its business 

analysis of the Dialysis Pilot, the Dialysis Workgroup suggested that 

pilot locations could use the cost estimation model to calculate cost 

savings generated by the pilot locations by comparing the cost of 

providing dialysis at each pilot location to the cost of providing this 

treatment through fee basis providers. However, this potential 

performance metric may be limited by VA’s failure to maintain control 

 

28State survey agencies monitor the quality of dialysis care by periodically evaluating 

dialysis organizations’ adherence to Medicare’s Conditions for Coverage for ESRD 

Facilities. These conditions for coverage are the minimum health and safety rules that 

dialysis facilities participating in Medicare must meet. 42 C.F.R. Part 494. In particular, the 

conditions for coverage direct dialysis facilities to develop, implement, and maintain an 

ongoing internal quality oversight program that focuses on indicators related to improved 

health outcomes. 42 C.F.R. § 494.110. 
 

Page 17 GAO-12-584 VA Dialysis Pilot

over the cost estimation model or provide sufficient guidance to pilot 

locations about how to properly use it.

Because VA has not yet developed an evaluation plan or formally defined 

performance measures for pilot locations, it does not have access to 

consistent and reliable information on the performance of the pilot 

locations and may not have this information accessible when it is time to 

either make midcourse corrections for the Dialysis Pilot or decide whether 

and how to open additional VA-operated outpatient dialysis clinics.

Step 3—Using performance as a basis for decision making. Despite 

not having fully developed performance measures for assessing the pilot 

locations, VA has already begun planning for the expansion of the 

Dialysis Pilot, which should not occur until after VA has defined clear 

performance measures for the existing pilot locations and evaluated their 

success. Specifically, a member of the VHA Dialysis Steering Committee 

told us that the committee has already developed a limited plan for 

expansion of the Dialysis Pilot. However, this plan does not incorporate 

the results of a performance assessment for the existing four pilot 

locations. In addition, VA systems redesign engineers have begun 

developing three additional cost estimation models despite not having 

fully evaluated the effectiveness of the cost estimation model used in the 

Dialysis Pilot.29 Taken together, these two actions indicate that VA is 

beginning to make decisions about the future of the Dialysis Pilot and the 

cost estimation model, even though VA decision makers currently lack 

critical performance information on the existing four pilot locations.

To its credit, VA developed the Dialysis Pilot as a potential way of 

addressing the rising cost and utilization of fee basis dialysis treatments 

among veterans. Through the Dialysis Pilot, VA intends to test the viability 

of increasing its capacity to provide dialysis treatments in VA-operated 

outpatient dialysis clinics. VA set four goals for its Dialysis Pilot: 

(1) improve quality of care, (2) increase access for veterans, (3) provide 

additional dialysis research opportunities, and (4) achieve cost savings for 

VA-funded dialysis treatments. While these are commendable goals, 

there were weaknesses in VA’s planning and early implementation of the 

Dialysis Pilot that if not corrected, will make it difficult to determine 

 

29These new models analyze the feasibility of VAMCs expanding existing on-site dialysis, 

gastroenterology, and polysomnography (sleep study) units.

Conclusions 
 

Page 18 GAO-12-584 VA Dialysis Pilot

whether the Dialysis Pilot has met its goals and will provide cost-effective 

care if expanded. Specifically, VA did not conduct a transparent and welldocumented pilot location selection process, provide clear and timely 

guidance to participating VISNs and VAMCs on key financial aspects of 

the Dialysis Pilot, or articulate clear performance measures for pilot 

locations. We believe that VA can rectify these weaknesses, but must act 

prior to full implementation of the four pilot locations to ensure that the 

Dialysis Pilot is not compromised and can serve as an effective 

demonstration effort. Moreover, until VA has reliable data, we believe it 

would be unwise for VA to expand the Dialysis Pilot beyond the current 

four pilot locations, as doing so may risk investing resources 

inappropriately.

Moving forward, we believe four critical areas should be addressed. First, 

VA must clearly document the selection process it used to identify the 

existing four pilot locations and may use to identify any future pilot 

locations. VA relied on a decentralized and ad hoc selection process to 

choose the existing four pilot locations and failed to properly document 

the results of this key decision-making effort. Such inattention to 

documenting critical decisions results in a lack of transparency and 

weakens the credibility of the Dialysis Pilot.

Second, VA needs to ensure that changes to its cost estimation model 

are reviewed by knowledgeable staff. This step is necessary to ensure 

that this model produces comparable data for all pilot locations that can 

serve as an accurate basis for evaluating the financial success of the 

Dialysis Pilot. To date, pilot locations altered existing formulas and model 

assumptions, which resulted in cost estimation data with questionable 

reliability that may limit VA’s ability to compare results consistently across 

the pilot locations.

Third, VISN and VAMC officials need specific guidance for the repayment 

of Dialysis Pilot start-up funds and the calculation of cost savings realized 

from the pilot locations. To date, VA Central Office has not articulated its 

expectations regarding these two critical aspects of the Dialysis Pilot. 

Without a clear understanding of the terms for start-up fund repayment, it 

is difficult for VA or external entities to determine if the four pilot locations 

are making significant progress toward repaying these funds and 

generating cost savings that can be used to offset the cost of treating the 

projected increased number of veterans who will need dialysis treatment 

in the coming years.
 

Page 19 GAO-12-584 VA Dialysis Pilot

Finally, VA must develop clear and measurable performance criteria that 

can be consistently applied to evaluate the Dialysis Pilot. Despite defining 

the mission and goals for the Dialysis Pilot, VA has not developed a plan 

for evaluating its success or developed performance measures to track 

pilot locations’ progress toward meeting its stated mission and goals. An 

effective evaluation plan and clear performance measures are needed to 

help ensure that the Dialysis Pilot operates in an environment of 

accountability.

In order to increase VA’s attention to planning, implementation and 

performance measurement of the Dialysis Pilot we are making five 

recommendations.

To improve VA’s communication related to the Dialysis Pilot, we 

recommend that the Secretary of Veterans Affairs direct the Under 

Secretary for Health to ensure that key decisions made regarding pilot 

location selection and efforts to continue or expand the Dialysis Pilot are 

clearly documented.

To ensure that reasonable cost estimates are created for the Dialysis 

Pilot and other similar programs, we recommend that the Secretary of 

Veterans Affairs direct the Under Secretary for Health to restrict or 

evaluate changes made to cost estimation models at the VISN and VAMC 

levels that affect pilot development and analysis.

To ensure that start-up funds are repaid and cost savings are accurately 

calculated for the Dialysis Pilot, we recommend that the Secretary of 

Veterans Affairs direct the Under Secretary for Health to develop written 

guidance about expectations for the repayment of start-up funds and how 

the cost savings generated by the four pilot locations should be 

calculated.

To ensure that VA Central Office effectively evaluates the Dialysis Pilot, 

we recommend that the Secretary of Veterans Affairs direct the Under 

Secretary for Health to take the following two actions:

• Develop an evaluation plan that outlines how the Dialysis Pilot will be

assessed and provides target dates for the completion of this 

assessment. 

Recommendations for 

Executive Action
 

Page 20 GAO-12-584 VA Dialysis Pilot

• Develop clear measures for assessing the performance of the four 

Dialysis Pilot locations in key areas—including quality, access, and 

cost. 

VA provided written comments on a draft of this report, which we have 

reprinted in appendix II. In its comments, VA generally agreed with our 

conclusions, concurred with our recommendations, and described the 

department’s plans to implement each of our five recommendations. VA 

did not provide any technical comments.

In its general comments, VA noted that it has established a 

comprehensive strategic plan for chronic kidney disease and dialysis 

services; however, a copy of this strategic plan was not provided as part 

of VA’s response to the draft report. According to VA, this plan 

incorporates aspects of several of our recommendations. In addition, VA 

stated that it is in the process of developing longer-range plans for the 

expansion of dialysis services, including establishing additional 

freestanding outpatient dialysis clinics similar to the current four pilot 

locations. We support VA’s efforts to carefully analyze its delivery of 

dialysis services to veterans, including the most cost-effective method of 

providing these life-saving medical treatments, and make reasoned 

decisions based on a thorough evaluation of its current pilot locations. In 

this regard, we continue to believe that it is unwise to establish additional 

freestanding outpatient dialysis clinics until the current four pilot locations 

are fully evaluated and VA rectifies the weaknesses we identified in this 

report.

In its plan for addressing our recommendations, VA stated that it is 

developing a plan for the Dialysis Pilot that will address three of our 

recommendations related to (1) the documentation of Dialysis Pilot key 

decisions, including the selection of future pilot locations; (2) the creation 

of reasonable cost estimates for pilot locations; and (3) guidance for the 

repayment of start-up funding and cost savings calculations. According to 

VA, this plan will ensure better communication and documentation of 

decisions for future pilot site selections; more rigorous oversight of cost 

estimation tools and analysis of financial and clinical outcomes; and a 

thorough analysis of start-up fund repayment, including whether VA will 

reverse its decision to require repayment of these funds. VA’s anticipated 

completion date for these actions is July 1, 2012.

Agency Comments 

and Our Evaluation
 

Page 21 GAO-12-584 VA Dialysis Pilot

Finally, to address our remaining two recommendations, VA intends to 

develop a detailed evaluation plan for the Dialysis Pilot by July 1, 2012. 

According to VA, this plan will include specific criteria, target dates, and 

activities that must occur throughout the remainder of the pilot. VA 

intends to use this plan to periodically review and evaluate the Dialysis 

Pilot. In addition, VA described its efforts to significantly enhance the 

decision-making tools used for the Dialysis Pilot, including the cost 

estimation model. VA reported that these enhancements will include more 

rigorous accounting for facility costs, such as those for staffing and 

equipment. In addition, VA plans to task its systems redesign engineers 

with assessing pilot locations’ performance using metrics for cost, access, 

and quality.

We are sending copies of this report to the Secretary of Veterans Affairs, 

appropriate congressional committees, and other interested parties. In 

addition, the report is available at no charge on the GAO website at 

http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-7114 or williamsonr@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix III.

Randall B. Williamson

Director, Health Care
Page 22 GAO-12-584 VA Dialysis Pilot

List of Requesters

The Honorable Patty Murray

Chairman

The Honorable Richard Burr

Ranking Member

Committee on Veterans’ Affairs

United States Senate

The Honorable Jeff Miller

Chairman

Committee on Veterans’ Affairs

House of Representatives

The Honorable Bill Johnson

Chairman

Subcommittee on Oversight and Investigations

Committee on Veterans’ Affairs

House of Representatives

The Honorable Michael Michaud

Ranking Member

Subcommittee on Health

Committee on Veterans’ Affairs

House of Representatives
Appendix I: Status of VA Dialysis Pilot 

Locations

Page 23 GAO-12-584 VA Dialysis Pilot

Table 1 provides additional information on the current operating status of 

the four Dialysis Pilot locations at the Department of Veterans Affairs (VA) 

medical centers (VAMC) in Durham, North Carolina; Fayetteville, North 

Carolina; Philadelphia, Pennsylvania; and Cleveland, Ohio.

Table 1: Status of Dialysis Pilot Locations as of March 2012

Pilot VAMC 

location

Anticipated 

capacity Current operating status Implementation challenges pilot locations reported

Fayetteville Sixteen dialysis 

stations serving 

64 veterans

Operational since June 2011 • Planning and building issues. The pilot location’s 

leased space required that floor drains be installed, 

which delayed the progress of constructing the 

outpatient dialysis clinic. 

Durham Twelve dialysis 

stations serving 

48 veterans

Operational since June 2011 • Difficulty finding an appropriate clinic location. 

Identifying an appropriate location and entering into 

a contract and lease for the outpatient dialysis clinic 

took longer than anticipated.

• Equipment testing. The pilot location’s water 

purification system, a necessary component of the 

dialysis process, needed additional testing prior to 

the opening of the outpatient dialysis clinic. 

Philadelphia Twelve dialysis 

stations serving 

48 veterans

Not yet operational; scheduled to 

become operational in May 2012

• Contracting challenges. The pilot location’s first 

contract for leased space was canceled due to 

zoning issues that the contractor did not disclose. A 

second location and a new contractor were 

identified and construction of the pilot location is 

under way. 

Cleveland Twenty dialysis 

stations serving 

80 veterans

Not yet operational; scheduled 

to become operational in 

September 2012

• Difficulty finding an appropriate clinic location. 

The VAMC initially planned to incorporate the pilot 

location into an existing VAMC enhanced-use lease 

project.a

Source: GAO.

However, VA Central Office determined 

that the clinic could not be added to this enhanceduse lease. A lease for space in a new location is 

pending. 

a

Under VA’s enhanced-use lease program, VA property may be leased for non-VA uses, provided 

those uses are compatible with or benefit the department’s mission. VA requires lessees either pay 

rent or offer VA “in-kind” consideration.

Appendix I: Status of VA Dialysis Pilot 

Locations 
Appendix II: Comments from the Department 

of Veterans Affairs

Page 24 GAO-12-584 VA Dialysis Pilot

Appendix II: Comments from the Department 

of Veterans Affairs
Appendix II: Comments from the Department 

of Veterans Affairs

Page 25 GAO-12-584 VA Dialysis Pilot
Appendix II: Comments from the Department 

of Veterans Affairs

Page 26 GAO-12-584 VA Dialysis Pilot
Appendix II: Comments from the Department 

of Veterans Affairs

Page 27 GAO-12-584 VA Dialysis Pilot
Appendix II: Comments from the Department 

of Veterans Affairs

Page 28 GAO-12-584 VA Dialysis Pilot
Appendix II: Comments from the Department 

of Veterans Affairs

Page 29 GAO-12-584 VA Dialysis Pilot
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 30 GAO-12-584 VA Dialysis Pilot

Randall B. Williamson, (202) 512-7114 or williamsonr@gao.gov

In addition to the contact named above, Marcia A. Mann, Assistant 

Director; Kathleen Diamond; Katherine Nicole Laubacher; Rebecca Rust; 

and Malissa G. Winograd made key contributions to this report. Lisa 

Motley provided legal support.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(290966)
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