Office of Inspector General

Washington DC 20420

Memorandum to the Under Secretary for Health (10)

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Audit of Lithotripter Utilization

1. The Office of Inspector General audited the use of lithotripters in the Veterans Health Administration

(VHA) to determine if existing lithotripsy units (i) were operating economically and efficiently, and (ii) were

sufficient to meet VHA's workload. Lithotripters are used to treat kidney and urinary tract stones without

surgery by crushing them with shock waves. Lithotripters became commercially available in 1984. From 1986

through 1995, VHA opened lithotripsy suites at 13 medical centers across the nation. The audit included site

visits at four of these medical centers, including one medical center that closed its suite and now obtains

lithotripsy through a private contractor. Additionally, we contacted officials at all other Veterans Affairs

Medical Centers (VAMC) with existing lithotripter units and other facilities with planned units to obtain data

about workload and costs.

2. VHA stopped approving additional suites in 1992 because program management believed existing

lithotripsy suites were sufficient to handle VHA's nationwide workload. However, VHA removed lithotripters

and other surgical equipment as controlled equipment items at about the same time. Controlled equipment

items generally require VHA Central Office approval for purchase. Recently, several medical centers have

opened or plan to open new lithotripsy suites. VAMC Tampa opened a suite in 1994, and three new lithotripsy

suites were under construction at VAMCs Atlanta, New York, and Dallas in fiscal year (FY) 1996. VAMC

Augusta, Georgia, 150 miles from Atlanta, also plans to build a lithotripsy suite.

3. The audit showed that VHA can significantly reduce operating costs of the 12 existing lithotripsy units by:

Providing treatment on an outpatient basis whenever possible.

Developing guidelines for staffing and treatment.

Using in-house maintenance.

Improving contract administration over shared resources.

Obtaining electrodes through the least costly source.

4. The audit also showed that VHA currently has significantly more lithotripsy capability than can be

effectively utilized. In FY 1995, the 12 medical centers with VA-owned lithotripters performed only 1,626

procedures, about 11 percent of total capacity. Clearly, additional capacity is not needed. However, several

facilities plan to open new lithotripsy suites in the near future. Additionally, VHA faces replacement expenses

as existing units reach the end of their expected useful life.

5. Rather than expanding the number of lithotripters and replacing all outdated units, we believe VHA should

realign and consolidate lithotripsy capability. By designating a small number of medical centers with existing

units as lithotripter resource centers, VHA could provide lithotripsy services more efficiently and effectively.

Establishing six lithotripsy resource centers, each serving several Veterans Integrated Service Networks

(VISNs), would eliminate replacement equipment costs at three to six medical centers resulting in savings of

at least $2.2 to $4.3 million. Canceling planned additional units could further reduce equipment and

construction costs.

6. The report contains recommendations for the Under Secretary for Health to:

1. Establish guidelines for best practices in management of existing lithotripter units.

Establish lithotripsy resource centers, each serving several VISNs, by (i) designating six medical centers

with existing units as lithotripsy resource centers; (ii) closing other lithotripsy suites as equipment

becomes obsolete; and (iii) canceling plans for lithotripsy suites at sites not designated as lithotripsy

resource centers.

1. 

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7. The Under Secretary for Health concurred in principle with our recommendations and provided acceptable

implementation plans. Rather than designating specific facilities as lithotripsy resource centers, as we

recommended, the Under Secretary tasked the Network Directors to assess various options in obtaining

lithotripsy services. The Network Directors agreed that other options, including selling excess capacity and

increased use of contracts for community services, may be more effective. The options would be used to assess

the use/replacement of existing equipment and to determine the most efficient and cost effective ways of

obtaining lithotripsy services. Such assessments meet the intent of our recommendation. The Under Secretary

also agreed to develop guidelines for best practices in managing lithotripter units and canceled two planned

lithotripsy suites. Lithotripsy is a good candidate for consolidation and realignment using the guidelines in the

Under Secretary for Health's "Prescription for Change", and we believe that the assessments to be conducted

by the Network Directors could achieve that end.

ii

8. The Under Secretary for Health also agreed that improved management of existing lithotripsy units may

result in better use of funds estimated at $530,000 in the report. However, based on recent changes in the

health care setting, the Under Secretary stated that it is difficult to quantify these costs in the near term. We

agree, but believe that our estimate of better use of funds is reasonable. The Under Secretary further agreed

that significant savings in equipment and construction funds over the next 5 years could be realized if VHA

did not automatically replace or add new lithotripsy units. According to the Under Secretary, his cancellation

of plans for two new lithotripsy units at VAMCs Atlanta and Augusta, Georgia, are consistent with the $2.2

million estimated better use of funds cited in the report.

9. We consider all issues in the report resolved and will continue to follow up on planned actions by VHA until

they are completed.

For the Assistant Inspector General for Auditing

JAMES R. HUDSON

Director, Atlanta Operations Division

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TABLE OF CONTENTS

Page

Memorandum to the Under Secretary for Health (10) i

RESULTS AND RECOMMENDATIONS

1. The Veterans Health Administration Can Significantly

Reduce Lithotripsy Operating Costs 1

Conclusion 5

Recommendation 1 5

2. Developing Lithotripsy Resource Centers Would Improve

Program Effectiveness 7

Conclusion 11

Recommendation 2 11

APPENDIXES

I OBJECTIVES, SCOPE, AND METHODOLOGY 13

II BACKGROUND 15

III UNDER SECRETARY FOR HEALTH COMMENTS 17

IV MONETARY BENEFITS IN ACCORDANCE WITH

OIG ACT AMENDMENTS 20

V FINAL REPORT DISTRIBUTION 21

RESULTS AND RECOMMENDATIONS

1. The Veterans Health Administration Can Significantly Reduce Lithotripsy Operating Costs

The Veterans Health Administration (VHA) can significantly reduce operating costs of its 12 existing

lithotripsy units by:

Providing treatment on an outpatient basis whenever possible.

Developing standard guidelines for staffing and treatment.

Using in-house maintenance.

Improving contract administration over shared resources.

Obtaining electrodes through the least costly source.

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Currently, VHA has no national guidelines for performing lithotripsy in the most effective and cost efficient

manner. By drawing on the expertise of physicians and support staff at medical centers with lithotripters, VHA

could develop standards for providing optimum care at the lowest cost. Implementation of such guidelines at

the 12 existing lithotripsy units would result in annual savings of over $200,000 in maintenance and supply

costs and increased revenues of at least $330,000 from shared resources. VHA would also achieve significant

savings from increased outpatient treatment and more efficient staffing of lithotripsy suites.

Lithotripsy and VHA's "Prescription for Change"

In March 1996, the Under Secretary for Health published his mission statement and objectives for improving

veterans' healthcare in a document entitled "Prescription for Change". This document included several goals

that are particularly relevant to lithotripsy, including:

Transforming "the veterans healthcare system from a hospital bed-based system to an ambulatory

care-based system."

Increasing "VA's temporary lodging and residential care capacities to accommodate patients needing

housing but not acute hospital care while undergoing diagnostic evaluation or treatment."

Standardizing clinical processes with nationally developed clinical guidelines and delegating clinical care

responsibility to non-physician caregivers when appropriate.

Seeking "opportunities for sharing activities with private sector entities when doing so would be cost

effective and improve service to VA patients."

Providing Treatment on an Outpatient Basis Would Reduce Program Costs

Several facilities, such as VAMCs Tampa and Richmond, routinely performed lithotripsy on an outpatient

basis. However, system-wide most procedures were performed on an inpatient basis. According to automated

patient records from the Austin Automation Center, VHA facilities performed 2,862 lithotripsy procedures

from October 1, 1993, through December 31, 1995. Of these, 2,494 (87 percent) were performed on an

inpatient basis, while only 368 (13 percent) were performed on an outpatient basis.

VAMC Memphis, with the most active lithotripsy unit, performed almost all procedures on an inpatient basis.

During the audit, staff at Memphis told us they were in the process of converting lithotripsy to an outpatient

procedure. New patients would be treated on an outpatient basis whenever possible and persons needing

lodging because of travel distances would be lodged overnight on a self-care ward.

VAMC Memphis performed 301 procedures on 214 patients in FY 1995, including 253 performed on patients

referred from other VA medical centers. We estimate that total inpatient costs for lithotripsy at VAMC

Memphis in FY 1995 were $497,000. Resources used for these inpatient stays could be more effectively used

elsewhere. Although a portion of cost efficiencies would be offset by the cost of lodging for out-of-town

patients, net cost savings would still be significant.

VHA should ensure that lithotripsy is performed on an outpatient basis to the extent possible at all facilities

with lithotripters.

Standardizing the Lithotripsy Process Would Improve Productivity and Patient Care

The Under Secretary's "Prescription for Change" contains a goal of standardizing clinical processes with

nationally developed clinical guidelines and delegating clinical care responsibility to non-physician caregivers

when appropriate. VHA has not developed a staffing protocol or a standard clinical process for lithotripsy.

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Staffing at facilities varied and some staff were unnecessarily assigned full-time to the lithotripsy program.

The administration of treatment also varied from facility to facility. For example:

VAMCs Albuquerque, Bronx, Long Beach, and Palo Alto required both an attending physician and a

resident to be present at each procedure. However, VAMCs Memphis and Milwaukee used resident

urologists to supervise procedures; an attending physician was available but not present during the

procedure.

VAMC Palo Alto reported to us that it did not routinely have a nurse anesthetist present because the

Medstone equipment used did not produce significant discomfort in the patient. However, at VAMC

Tampa with the same type equipment, a nurse anesthetist was generally present.

Stents were placed in almost all patients at VAMC Memphis but not at other facilities reviewed.

Memphis assigned technicians to other procedure rooms when the lithotripsy suite was not in use. Other

facilities had dedicated technicians for the lithotripter who were not effectively used when the lithotripter

was not in use.

Some facilities administered the same numbers of shocks to each patient regardless of individual factors,

while other facilities varied the number of shocks according to the size and location of the stone and the

weight of the patient.

By drawing on experienced physicians and support staff, VHA could develop standardized protocols for

lithotripsy procedures that would reflect best practices in terms of both patient care and cost effectiveness.

In-House Maintenance Can Decrease Operating Costs

Of the 12 facilities with VA-owned equipment, four contracted or planned to contract with private sources to

perform routine maintenance on lithotripters. Annual cost of the contracts ranged from $44,700 to an

estimated $105,000. In contrast, three medical centers maintained the equipment using a combination of

biomedical engineering staff and periodic preventative maintenance by manufacturers' representative at a

much lower cost. For example, VAMC Memphis' maintenance costs were about $27,600 annually:

approximately $9,100 for parts and VA staff time, and $18,500 for periodic preventive maintenance by the

manufacturer. One biomedical engineering technician spent about 10 percent of his duty time performing

maintenance. We estimate that total cost reduction VA-wide would be about $215,000 annually if the four

medical centers with existing contracts performed maintenance in-house.

Improving Contract Administration Can Reduce Costs

Several VA medical facilities, including VAMC Asheville, obtained lithotripters through joint purchase

agreements with local hospitals or affiliated medical schools. Joint purchase of the equipment should

significantly reduce VA's costs. However, VAMC Asheville did not effectively manage the contract for sharing

costs with their partner, a local hospital. We found that VA paid an average of $1,730 per procedure in FY

1995 for services provided by the local hospital on VA-owned equipment placed in the local hospital's space.

This price included excessive charges for electrodes and charges for staff time in excess of that spent

providing services to VA patients.

Additionally, VAMC Asheville did not recover $330,000 from the local hospital for use of the lithotripter in

FY 1995. The medical center's contracting officer added a clause to the contract allowing payments to be

credited towards a gift made by the local hospital in 1986 to help VA buy the lithotripter. However, under the

terms of the original contract, the local hospital had already recovered the donation through free use of the

equipment during the first 5 years of operation. We brought this condition to the attention of the medical center

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director for his action.

In comparison, VAMC Richmond effectively negotiated an agreement to obtain lithotripsy treatments from a

mobile unit owned by a private contractor. VAMC Richmond had only small startup costs for paving an area

for the contractor's mobile unit. Richmond paid $1,200 per procedure plus the cost of electrodes and VA staff

in attendance during the procedure.

The need to improve contract administration is indicated by (i) the loss of revenue at VAMC Asheville from

the private hospital, and (ii) the high cost per procedure paid by Asheville while using VA-owned equipment

(an average of $1,730 at VAMC Asheville vs. $1,200 at Richmond). VHA should issue guidance to medical

centers with joint use agreements to ensure (i) VA is paid a reasonable rate by sharing partners for the use of

VA-owned equipment and (ii) any charges to VA for staff time, supplies, or maintenance of the equipment are

reasonable.

Electrodes Should be Purchased at the Lowest Rate Available

VHA can further reduce operating costs by ensuring that all facilities purchase electrodes from the least costly

source. In early 1990, Memphis joined with other government facilities in a consolidated procurement

agreement to buy electrodes for Dornier model lithotripters. For the year ending March 1996, the contract

price for a new electrode was $80. Effective April 1, 1996, new electrodes were $75, and refurbished

electrodes were added to the contract for $35 (subject to lower prices based on volume). Most facilities with

Dornier equipment paid these amounts for the electrodes. However, VAMC Asheville was paying $140 per

electrode through an agreement with its sharing partner. By reducing the cost to $35 per electrode, VAMC

Asheville could save $5,880 annually.

Two stations had Medstone STS lithotripters, VAMC Tampa and VAMC Palo Alto. Tampa paid $250 for a

refurbished electrode, while Palo Alto paid $350. The cost paid by Palo Alto could be reduced by at least $100

per electrode, resulting in annual savings of about $11,000 annually. It is likely that further reductions at

Tampa and Palo Alto could be achieved through a consolidated procurement.

Conclusion

VHA has the opportunity to reduce operating costs and improve patient care at existing lithotripsy suites by

implementing the Under Secretary's "Prescription for Change." Consistent with the goals in this document,

VHA should perform lithotripsy as an outpatient procedure to the extent possible, using VA's capabilities for

temporary lodging for out-of-town patients, and develop staffing guidelines for best practices in staffing and

managing the clinical process. VHA can also maintain equipment using VA biomedical engineering staff

whenever possible and obtain electrodes from the least costly source.

By drawing on the expertise of physicians and support staff at VHA facilities with existing lithotripters to

develop guidelines, VHA could improve the overall program and make better use of significant operating

funds.

For More Information

More detailed information about the audit scope and methodology is provided in APPENDIX I. More detailed

background information is provided in APPENDIX II.

Recommendation 1

We recommend that the Under Secretary of Health establish guidelines for best practices in staffing and

managing existing lithotripter units.

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Under Secretary for Health Comments

The Under Secretary for Health concurred in principle with the report recommendation to establish guidelines

for best practices in managing lithotripter units. The Under Secretary suggested that "staff should not be part

of the guidelines because staffing should be based on local conditions."

(Comments of the Under Secretary for Health are provided in their entirety in APPENDIX III.)

Implementation Plan

Patient Care Services (11) and Performance Management Service (105A) will develop guidelines for best

practices for managing lithotripsy units within VHA's existing priorities for clinical guideline development.

The target completion date for developing the guidelines is December 31, 1997.

Office of Inspector General Comments

We acknowledge the Under Secretary for Health's comment concerning the inclusion of staffing in the

guidelines and have revised our recommendation accordingly. The Under Secretary's implementation plan is

responsive to the report recommendation and we consider the report issue resolved. We will follow up on

planned actions by VHA until they are completed.

2. Developing Lithotripsy Resource Centers Would Improve Program Effectiveness

VHA currently has significantly more lithotripsy capability than can be effectively utilized. In FY 1995, the 12

medical centers with VA-owned lithotripters performed only 1,626 procedures on VA patients, 11 percent of

total capacity. Current utilization demonstrates that additional lithotripsy capacity is not needed. However,

several facilities plan to open new lithotripsy suites in the near future. Additionally, VHA faces replacement

expenses as existing units reach the end of their expected useful life. Rather than expanding the number of

lithotripters and replacing all outdated units, VHA should realign and consolidate lithotripsy capability. By

designating a small number of medical centers with existing units as lithotripter resource centers, VHA could

provide lithotripsy services more efficiently and effectively. Establishing six lithotripsy resource centers, each

serving several Veterans Integrated Service Networks (VISNs), would eliminate replacement equipment costs

at three to six medical centers, resulting in savings of at least $2.2 to $4.3 million. Canceling planned

additional units could further reduce equipment and construction costs.

The Under Secretary's "Prescription for Change" Includes Realignment of Inefficient Programs

The Under Secretary for Health stated in his "Prescription for Change" published in March 1996, that VA must

provide excellence in healthcare value. This document contains criteria for potential realignment of VHA

facilities and programs so that resources may be used more effectively. Considerations for realignment to

increase cost efficiency include:

The availability of the same kind of service of equal or higher quality at another VA facility.

Disproportionate or unjustifiably high resource consumption.

Possible integration, consolidation, or merger of duplicate or similarly intended services at nearby VA

facilities.

VHA Plans To Purchase New Lithotripsy Units Even Though It Has Excess Capacity

VHA has more lithotripsy capacity than can be effectively used. In FY 1995, the 12 VA-owned lithotripsy

units performed only 1,626 procedures on VA patients as shown in the following table.

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Lithotripsy Procedures Performed

In Fiscal Year 1995

Number of

Medical Center Procedures

Albuquerque 261

Asheville 56

Bronx 113

Houston 40

Long Beach 155

Memphis 301

Milwaukee 208

Palo Alto 110

Salt Lake City 123

San Juan 44

Syracuse 56

Tampa 159

Total 1,626

Each lithotripter has the capability of performing about 1,200 procedures annually. Even the most active

lithotripters at VAMCs Memphis, Albuquerque, and Milwaukee are operating well below their capacity and

are consequently below maximum efficiency. The total of 1,626 procedures represents only about 11 percent

of VHA's total capacity. We also found there was not a large demand for lithotripsy services that was being

met through community sources. During the 27-month period from October 1993 through December 1995, VA

obtained fee-basis lithotripsy services on only 533 occasions.

Despite having excess capacity nationwide, three new lithotripsy suites were under construction at VAMCs

Atlanta, New York, and Dallas in FY 1996. VAMC Augusta, Georgia, 150 miles from Atlanta, also plans to

build a lithotripsy suite.

Replacing Aging Lithotripsy Units and Adding New Units Will Cost At Least $11.7 Million Over the

Next 5 Years

Lithotripters are expensive pieces of equipment, with prices ranging from $725,000 to $1.9 million. New units

also require construction or renovation of a lithotripsy suite, which ranged from $164,000 to $450,000. In

addition to the equipment and construction costs, each unit will have significant staffing and maintenance

costs.

Of the 12 VA-owned lithotripters in operation in 1995, 9 will have exceeded their expected useful life of about

10 years by the year 2000. If VHA replaces each of the nine units, equipment costs alone would be $6.5

million, assuming VHA purchased the lowest priced units.

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Additional units are planned for VAMCs Dallas, Atlanta, New York, and Augusta. The equipment costs at

Dallas and Atlanta are estimated to total $3.1 million. Additional units in New York and Augusta will total at

least $1.5 million, assuming the lowest equipment costs. Construction and renovations for the four additional

units will cost an estimated $656,000, assuming the lowest construction costs. Total costs for nine replacement

units and four new units would exceed $11.7 million.

Project Justifications Overstated VA's Lithotripsy Workload

We believe VHA has excessive lithotripsy capacity primarily because documents justifying the need for the

lithotripter overstated anticipated workload. For example, the justification for the unit at VAMC Asheville

anticipated an annual VA workload of 404 procedures. However, in FY 1995, the unit at VAMC Asheville

performed a total of only 56 procedures on VA patients; 22 patients from Asheville and 34 referrals from other

VAMCs. The justification for building a new lithotripsy suite at VAMC Atlanta projected 629 procedures

annually, about one-fourth of VA's entire nationwide workload in FY 1995. However, in FY 1995, Atlanta

referred only 21 patients to other VA facilities for lithotripsy and had no reported fee-basis procedures.

Medical center officials at VAMC Albuquerque anticipated the unit would perform 882 procedures annually.

However, only 261 procedures were performed in FY 1995. Workload projections at VAMC Tampa were 320

patients a year, including 100 spinal cord injury patients. However, in FY 1995, Tampa performed 159

procedures, including 36 procedures on spinal cord injury patients.

Several facilities used their spinal cord injury workload as a unique justification for placing a lithotripter at

their facility. However, the number of procedures on spinal cord injury patients did not make a significant

difference in the total number performed. For example, at VAMC Memphis, which had the most active

lithotripsy unit, only 33 of 301 procedures (11 percent) in FY 1995 were performed on spinal cord injury

patients. During the 27-month period from October 1993 through December 1995, VA performed a total of

2,494 lithotripsy procedures on VA inpatients. Only 212 (8.5 percent) were performed on spinal cord injury

patients.

No Centralized Control Over the Acquisition of Lithotripters

An additional cause of the excess capacity is the removal of controls over the purchase of lithotripters. VA

began purchasing lithotripter units in 1986. By 1992, VHA Central Office stopped approving additional units

because program management believed existing lithotripsy suites were sufficient to handle VHA's nationwide

workload. However, VHA removed lithotripters and other surgical equipment as controlled equipment items at

about the same time. Since 1994, several facilities have purchased new units or have plans to do so.

Under VHA's current organizational structure there is nothing to prohibit or discourage each VISN from

purchasing its own unit. For example, the justification for the new lithotripter at VAMC Dallas stated there

was no lithotripter in VISN 17. However, there is an underutilized lithotripter in VISN 16 at VAMC Houston

which performed only 40 procedures in FY 1995. The unit at Houston could easily handle the workload from

VISNs 16 and 17.

Establishing a Small Number of Lithotripsy Resource Centers Would Increase Efficiency and Save

Significant Equipment Costs

We believe that VHA can more effectively provide lithotripsy service to the veteran population by realigning

and consolidating existing lithotripsy resources. VHA should establish a small number of lithotripsy resource

centers at facilities with existing units. Each resource center would serve several VISNs. By designating six

facilities with existing units as lithotripsy resource centers, VHA could:

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Avoid the cost of replacing existing equipment at 3 to 6 facilities saving at least $2.2 million to $4.3

million.

Avoid the additional equipment and construction costs at facilities planning new lithotripsy units.

Increase cost efficiency and proficiency in the operation of the resource centers.

A small portion of the savings achieved from establishing lithotripsy resource centers would be offset by

increased travel costs associated with transporting patients to the resource centers. However, under the current

alignment of lithotripter units, VA is already paying for many patients to travel to medical centers with units.

For example, at VAMC Memphis, with the most active lithotripsy unit, 253 (84 percent) of the 301 FY 1995

procedures were performed on patients referred from other medical centers.

In cases in which travel would not be feasible due to extraordinary cost or the condition of the veteran,

facilities without lithotripter units would use community sources. Facilities using community sources for

lithotripsy services should limit payments to the allowable Medicare rate.

Conclusion

Lithotripsy is a good candidate for consolidation and realignment using the guidelines in the Under Secretary

for Health's "Prescription for Change":

The number of procedures performed is below generally accepted productivity or proficiency standards.

There has been a disproportionate or unjustifiably high resource consumption for the program.

Integration and consolidation of lithotripsy at a few select facilities would yield significant

administrative and/or staffing efficiencies.

By designating a small number of facilities as lithotripsy resource centers, each serving several VISNs, VHA

could save significant equipment and construction funds over the next 5 years. By not replacing six outdated

lithotripsy units, VHA would save between $2.2 and $4.3 million. VHA could save additional equipment and

construction costs by canceling planned units.

For More Information

More detailed information about the audit scope and methodology is provided in APPENDIX I. More detailed

background information is provided in APPENDIX II.

Recommendation 2

We recommend that the Under Secretary for Health increase the utilization of lithotripsy resources by (i)

designating six medical centers with existing lithotripsy units as lithotripsy resource centers; (ii) closing other

lithotripsy suites as equipment becomes obsolete; and (iii) canceling plans for lithotripsy suites in sites not

designated as lithotripsy resource centers.

Under Secretary for Health Comments

The Under Secretary for Health concurred in principle with our report recommendation to increase the

utilization of lithotripter resources. The Chief Network Officer presented the report findings to the Network

Directors at their November 1996 meeting and discussed this recommendation. Rather than adopting the

concept of six resource centers, the Network Directors tasked the Clinical Managers with assessing various

options to consider in obtaining lithotripsy services or using existing resources. The options would be used by

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Network Directors to assess the use/replacement of existing equipment and to determine the most efficient and

cost effective ways of obtaining these resources.

The Under Secretary for Health also reported that action has been taken to cancel plans for both the VAMC

Atlanta and Augusta, Georgia lithotripters which would result in better use of funds of $2.2 million.

(Comments of the Under Secretary for Health are provided in their entirety in APPENDIX III.)

Implementation Plan

Network Directors have tasked Clinical Managers with assessing various options to consider in obtaining

lithotripsy services. These options will be used by Network Directors to assess in the use/replacement of

existing equipment and to determine the most efficient and cost effective ways of obtaining these resources.

The target date for completing these assessments is March 31, 1997.

Office of Inspector General Comments

The Under Secretary for Health's implementation plans are responsive to the intent of our report

recommendation and we consider the report issues resolved. We will follow up on planned actions by VHA

until they are completed.

The development of guidelines for best practices in managing lithotripter units, an assessment by each of the

Network Directors to determine the most efficient and cost effective ways of obtaining lithotripsy services, and

the cancellation of two planned lithotripsy suites is responsive to the intent of our recommendations. We

continue to believe that lithotripsy is a good candidate for consolidation and realignment using the guidelines

in the Under Secretary for Health's "Prescription for Change".

APPENDIX I

OBJECTIVES, SCOPE, AND METHODOLOGY

Objectives

We audited VHA's lithotripsy program to determine if:

Existing lithotripsy units were operating economically and efficiently.

Lithotripsy capacity was sufficient to meet patient needs.

Scope

The audit focused on FY 1995 operations at facilities with VA-owned lithotripter units and included selected

data from FY 1986 through FY 1995. In FY 1995, VHA had 12 lithotripsy suites in operation nationwide. We

conducted onsite reviews at three facilities with VA-owned units:

Asheville, North Carolina.

Memphis, Tennessee.

Tampa, Florida.

We also visited VAMC Richmond to assess costs and workload for the contractor furnished mobile unit.

Additionally, we contacted officials at all other VAMCs with existing lithotripter units and other facilities with

planned units to obtain data about workload and costs.

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We reviewed pertinent administrative and fiscal records related to lithotripter workload and costs. Records

reviewed include written justification for the lithotripter, purchase orders, contracts with a community hospital

for shared use of a lithotripter, and logs showing actual use of the equipment. We interviewed responsible

employees at VAMCs and VA Central Office and discussed our audit results with VHA management.

Our audit was made in accordance with generally accepted government auditing standards and included such

tests as we considered necessary under the circumstances.

APPENDIX I

Methodology

A combination of sources was needed to identify facilities which own or plan to acquire a lithotripter because

VHA did not maintain complete records of facilities with lithotripters. The sources included the National

Acquisition Center in Hines, Illinois, which purchased several units and Surgical Service which approved

purchases of lithotripters prior to 1992. After identifying the 12 sites which had operational lithotripters and

one facility, VAMC Richmond, Virginia, which had purchased a unit but was no longer using it, we then

scheduled site visits at four facilities that would offer us a wide variety of program operations. We visited:

VAMC Asheville, North Carolina, which owned a lithotripter that was physically located at a nearby

private hospital under a shared use agreement.

VAMC Memphis, Tennessee, which had the most active lithotripsy program in VA.

VAMC Richmond, Virginia, which had recently closed the VA-owned lithotripsy suite and currently

obtains lithotripsy from a mobile van owned and operated by a private contractor.

VAMC Tampa, Florida, the newest location and one of only two with a Medstone lithotripter rather than

the more common Dornier.

We analyzed workload and cost data at each site we visited. The cost data included equipment costs,

construction and renovation costs, maintenance and repair, staffing, and supplies. We assessed the validity of

the original justification for the equipment (projected vs. actual workload). We also observed procedures at

three of the facilities visited and compared the staffing levels and protocols used at each facility.

In addition to the facilities visited, we contacted all other medical centers with a VA-owned lithotripter by

telephone to obtain additional information, including the number of procedures, the type of lithotripter in use,

the cost of equipment and supplies, and the staff involved in each procedure. We also obtained program data

from the automated Patient Treatment File and automated Outpatient Clinic File at the Austin Automation

Center to obtain overall program data.

APPENDIX II

BACKGROUND

A lithotripter is a large item of medical equipment used to treat kidney and urinary tract stones without surgery

by crushing them with shock waves. Lithotripters became commercially available in 1984. VA purchased its

first lithotripter in 1986. By 1995, VHA had opened 13 lithotripsy suites across the nation at the following

facilities:

VAMC Albuquerque, New Mexico.

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VAMC Asheville, North Carolina.

VAMC Bronx, New York.

VAMC Houston, Texas.

VAMC Long Beach, California.

VAMC Memphis, Tennessee.

VAMC Milwaukee, Wisconsin.

VAMC Palo Alto, California.

VAMC Richmond, Virginia.

VAMC Salt Lake City, Utah.

VAMC San Juan, Puerto Rico.

VAMC Syracuse, New York.

VAMC Tampa, Florida.

The lithotripter owned by VAMC Richmond was removed from operation in FY 1995. The Richmond center

currently purchases lithotripter services from a private contractor with a mobile unit which visits the medical

center twice a month. As of FY 1996, three new lithotripsy suites were under construction at VAMCs Atlanta,

New York, and Dallas. VAMC Augusta, Georgia also has plans to build a lithotripsy suite in FY 1997 or later.

During FY 1995, the main focus of our review, the 12 facilities with lithotripters in operation performed a total

of 1,626 procedures. According to automated patient records from the Austin Automation Center, VHA

facilities performed 2,862 lithotripsy procedures from October 1, 1993, through December 31, 1995. Of these,

2,494 (87 percent) were performed on an inpatient basis and 368 (13 percent) were performed on an outpatient

basis.

Lithotripters are costly items, ranging in price from $725,000 to $1.9 million and were initially a controlled

equipment item, requiring approval by Surgical Service in VA Central Office. Surgical Service stopped

approving additional suites in 1992 because Service management believed existing lithotripsy suites were

sufficient to handle VHA's nationwide workload. However, VHA removed lithotripters and other surgical

equipment

APPENDIX II

from the controlled equipment item list at about the same time. There are currently no centralized controls

over the purchase of lithotripters or centralized data source about cost, workload, or staffing of lithotripters.

Due to the high cost of the units and limited veteran workload, many of the lithotripters were joint ventures

with local hospitals. We identified lithotripters at the following medical facilities as being jointly purchased:

VAMCs Asheville, Bronx, Salt Lake City, San Juan, and Syracuse.

APPENDIX III

UNDER SECRETARY FOR HEALTH COMMENTS

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Department of Veterans Affairs

Date Jan 2, 1997

From: Under Secretary for Health (10/105E)

Subj: OIG Draft Report, Audit of Lithotripter Utilization, Project No 6R3-049

To: Assistant Inspector General for Auditing (52)

1. This report has been reviewed by the appropriate VHA program offices, and we concur in

principle with the report findings and recommendations. Your report identifies an area that

is particularly suited for restructuring as outlined in the Prescription for Change. Your

analysis will be useful to us as we consider the most efficient and cost effective ways of

using lithotripsy services in VHA.

2. We are taking several actions to assess lithotripter utilization which also address the

report recommendations. Patient Care Services (11), working with the networks and the

Performance Management Service (105A) in Headquarters, plans to develop productivity

and best practices guidelines for lithotripsy services. VHA has already identified priority

areas for which guidelines are being developed; however, lithotripsy is not one of these.

Guidelines for lithotripsy will be completed as progress on the priority areas permit, a

process which we anticipate could take at least twelve months. In addition, while we concur

in principle with the need to develop guidelines for best practices in managing lithotripsy

services, the specific recommendation needs to be clarified to reflect VHA's approach to

developing guidelines within the decentralized network structure. This means that staffing

would have to be deleted as part of the guideline, as we consider staffing to be one of many

pathways, generated in response to local conditions, that help ensure that the mandates of a

guideline are achieved. Guidelines developed for lithotripsy services will not address

staffing other than within this context.

3. The Chief Network Officer presented the report findings to the Network Directors at their

November meeting (held the week of November 1822, 1996) and discussed ways to increase

efficiency of lithotripsy services, including those recommended in this report. Rather than

adopting the concept you propose of establishing six lithotripsy resource centers, the

Network Directors agreed that other options may be more effective. The network Clinical

Managers were tasked with reviewing other possible options including selling excess

capacity and increased use of contracts for community services. Network Directors will use

tile recommendations from the Clinical Managers as equipment becomes obsolete, to assess

the most efficient and costeffective way to obtain these services.

APPENDIX III

UNDER SECRETARY FOR HEALTH COMMENTS

2. Assistant Inspector General for Auditing (52)

4. We believe our planned actions meet the intent of the recommendations. An implementation

plan detailing specific actions for each recommendation is attached. We agree improved

management of existing lithotripsy units, viewed retrospectively, may have resulted in the better

use of funds estimated at $530,000 in the report. Recent changes in the health care setting,

including fresh emphasis on contracting for services, and the continued changes in lithotripter

technology and practice guidelines make it difficult, if not unrealistic, to quantify these costs in

the near term. For these reasons, in conjunction with the continued development of the VHA

network structure, we do not believe your estimated better use of funds is applicable to current

or future circumstances. We agree that there could be significant savings in equipment and

construction funds over the next 5 years, if we did not automatically replace or add new

lithotripter units. We have already taken action in this area and canceled plans for both the

Atlanta and Augusta, GA lithotripters which we believe is consistent with your estimate of better

use of funds of $2.2 million cited in the report.

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5. Thank you for the opportunity to review the draft report. If you have any questions, please

contact Paul C. Gibert, Jr., Director, Management Review Service (105E), Office of Policy,

Planning and Performance, at 273.8355.

Kenneth W. Kizer, M.D., M.P.H.

Attachment

APPENDIX III

UNDER SECRETARY FOR HEALTH COMMENTS

Action Plan in Response to OIG/GAO/MI Audits/Programs Evaluations/Reviews

Name of Report: Audit of Lithotripter Utilization

Project No: 6R3-049

Date of Report: Undated draft report

Recommendations/

Actions

Status

Completion

Date

Recommendation 1: We recommend that the Under Secretary for Health establish guidelines for best

practices in staffing and managing existing lithotripter units.

Concur in principle

We would suggest that the "in staffing and" portion of the recommendation be deleted as including

staffing in the guidelines blurs the difference between a guideline and a pathway. Clinical guidelines are

general mandates about the conduct of a care process. Within a guideline can be a number of specific

pathways (such as staffing) that are generated locally based on local conditions.

Given this qualification, Patient Care Services (11) in conjunction with the networks and Performance

Management Service (105A) will develop guidelines for best practices for managing lithotripsy units

within VHA's existing priorities for clinical guideline development.

In-process 12/31/97

Recommendation 2: We recommend that the Under Secretary for Health increase the efficiency of

lithotripsy resources by (i) designating six medical centers with existing lithotripsy units as

lithotripsy resource centers; (ii) closing other lithotripsy suites as equipment becomes obsolete; and

(iii) canceling plans for lithotripsy suites in sites not designated as lithotripsy resource centers.

Concur in principle

The Chief Network Officer presented the report findings to the Network Directors at their November

1996 meeting (the week of 11/1822/96) and discussed this recommendation. Rather than adopting the

concept of six resource centers, the Network Directors tasked the Clinical Managers with assessing

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various options to consider in obtaining lithotripsy services. These options will be used by the Network

Directors to assess the use/replacement of existing equipment and to determine most efficient and cost

effective way of obtaining these resources.

In-process 3/31/97

APPENDIX IV

MONETARY BENEFITS

IN ACCORDANCE WITH OIG ACT AMENDMENTS

REPORT TITLE: Audit of Lithotripter Utilization

PROJECT NUMBER: 6R3-242

Recommendation Category/Explanation Better Use Questioned

Number of Benefits of Funds Costs

1 Recurring cost reduction by $ 530,000

improved management of

existing lithotripsy units

2 Savings in equipment costs 2,200,000

by consolidating and realigning

lithotripter resources. _________

TOTAL $2,730,000

APPENDIX V

FINAL REPORT DISTRIBUTION

VA DISTRIBUTION

Secretary (00)

Under Secretary for Health (105E)

Assistant Secretary for Policy and Planning (008)

Deputy Assistant Secretary for Congressional Affairs (60C)

Deputy Assistant Secretary for Public Affairs (80)

Director, Office of Management Controls (004B)

General Counsel (02)

Directors, Veterans Integrated Service Networks #1-22

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NON-VA DISTRIBUTION

Office of Management and Budget

U.S. General Accounting Office

Congressional Committees:

Chairman, Senate Committee on Veterans' Affairs

Ranking Member, Senate Committee on Veterans' Affairs

Chairman, House Committee on Veterans' Affairs

Ranking Member, House Committee on Veterans Affairs

Chairman, Senate Committee on Appropriations

Ranking Member, Senate Committee on Appropriations

Chairman, House Committee on Appropriations

Ranking Member, House Committee on Appropriations

Chairman, Senate Committee on Appropriations,

Subcommittee on VA, HUD, and Independent Agencies

Ranking Member, Senate Committee on Appropriations,

Subcommittee on VA, HUD, and Independent Agencies

Chairman, House Committee on Appropriations,

Subcommittee on VA, HUD, and Independent Agencies

Ranking Member, House Committee on Appropriations,

Subcommittee on VA, HUD, and Independent Agencies

Chairman, Senate Committee on Governmental Affairs

Ranking Member, Senate Committee on Governmental Affairs

Chairman, House Committee on Government Reform and Oversight

Ranking Member, House Committee on Government Reform and Oversight

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