Financial Efficiency Review of the Southeast Louisiana Veterans Health Care System in New Orleans

Report Information

Issue Date
Report Number
20-00971-235
VISN
16
State
Louisiana
District
VA Office
Veterans Health Administration (VHA)
Report Author
Office of Audits and Evaluations
Report Type
Financial Inspection
Report Topic
Financial Management
Major Management Challenges
Stewardship of Taxpayer Dollars
Recommendations
6
Questioned Costs
$0
Better Use of Funds
$0
Congressionally Mandated
No

Summary

Summary
The VA OIG assessed the Southeast Louisiana Veterans Health Care System’s oversight and stewardship of funds for fiscal year 2019 and identified opportunities to improve cost efficiency. The review focused on four areas: I. Use of the Medical/Surgical Prime Vendor Next Generation program. VA maintains contracts with vendors to streamline medical supply purchasing and distribution. Because its prime vendor did not fill orders consistently, the system bought only about 75 percent of its supplies through the program, falling short of VA’s recommended 90 percent goal. The system also did not always monitor the prime vendor’s performance or report performance problems to VA. II. Purchase card use. The team sampled 102 purchase card transactions and determined the system could instead have pursued contracts for 19 of them. Quarterly internal audits were also not completed on time, and approving officials did not adequately monitor cardholder purchases. In addition, the team identified 16 purchases that were split into smaller transactions to circumvent purchase limits, resulting in improper payments of about $140,016. III. Administrative staffing levels and accuracy of labor costs. The system used 251.6 more administrative full-time equivalents than other systems of similar size and complexity. The system’s director said this was partly due to initial staffing costs associated with a new medical center. The system has, however, implemented strategies to improve staffing efficiency and management. IV. Pharmacy operations and cost avoidance efforts. The system spent approximately $9 million more on prescription drugs than similar systems did. This was partly due to inaccurate or outdated prices in the system’s list of drugs and to low annual turnover of its drug supplies, but the system has made progress in improving efficiency and cost-saving efforts. The OIG made six recommendations to the healthcare system director to address the issues identified in this review.

Open Recommendation Image, SquareOpenClosed and Implemented Recommendation Image, CheckmarkClosed-ImplementedNot Implemented Recommendation Image, X character'Closed-Not Implemented
No. 1
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
The OIG recommended the director of the Southeast Louisiana Veterans Health Care System develop a plan to work with the prime vendor to address having adequate stock from the facility’s formulary list in its warehouse to provide supplies when ordered.
No. 2
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
The OIG recommended the director of the Southeast Louisiana Veterans Health Care System ensure logistics staff and the contracting officer’s representative use the tools available to inform the Medical Supplies Program Office and Strategic Acquisition Center of prime vendor performance issues.
No. 3
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
The OIG recommended the director of the Southeast Louisiana Veterans Health Care System and the director of contracting for South Central VA Health Care Network Contracting Office 16 ensure approving officials and cardholders review their purchases and make sure strategic sourcing is used when it is in the best interest of the government.
No. 4
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
The OIG recommended the director of the Southeast Louisiana Veterans Health Care System in coordination with the network purchase card program manager, require purchase cardholders to submit ratification requests to the director of contracting for Network Contracting Office 16 for any unauthorized commitments identified.
No. 5
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
The OIG recommended the director of contracting for South Central VA Health Care Network Contracting Office 16 ensure quarterly audits of the purchase card program are completed as required by the Veterans Health Administration standard operating procedure, “Internal Audits—Purchase Cards and Convenience Checks.”
No. 6
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
The OIG recommended the director of the Southeast Louisiana Veterans Health Care System ensure that the facility meets the Veterans Health Administration’s recommended inventory turnover rate of 12 per year, established by the National Pharmacy Benefits Management program office.
Total Monetary Impact of All Recommendations
Open: $ 0.00
Closed: $ 192,070.00