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Financial Efficiency Review of the Marion VA Medical Center in Illinois

Report Information

Issue Date
Report Number
21-00960-17
VISN
15
State
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
Leadership and Governance
Recommendations
8
Questioned Costs
$0
Better Use of Funds
$0
Congressionally Mandated
No

Summary

Summary
The OIG assessed the oversight and stewardship of funds and identified opportunities for cost efficiency at the Marion VA Healthcare System in Illinois. The review focused on four areas: 1. Use of the Medical/Surgical Prime Vendor-Next Generation program. The program is a collection of contracts that streamlines purchasing and distribution for certain supplies. The team found that the system was unable to fully achieve the program’s cost savings, in part because some items were in short supply during the pandemic or on back order with the prime vendor. 2. Purchase card use. The team did not find staff were improperly splitting purchases to stay below the card purchase limits. Moreover, system staff properly maintained supporting documentation for the sampled transactions and considered contracts instead of purchase cards when appropriate. However, the purchase card program coordinator did not always perform required quarterly audits, and oversight on training for cardholders could be strengthened. 3. Open obligations. The team found that the system’s fiscal staff did not always review open obligations for goods and services to determine if they were still valid and necessary. This leaves the system vulnerable to the risk that those funds will be not used in the year they were appropriated, as required. 4. Pharmacy operations and cost-savings efforts. The review team found the system had a significant gap between actual and expected drug costs when compared with like facilities. However, it achieved a higher inventory turnover rate than VA’s target rate, which helps reduce the cost of storing inventory. The OIG made eight recommendations for improving cost efficiency. The number of recommendations should not be used, however, to gauge the system’s overall financial health. The intent is for system leaders to use these recommendations as a road map for improvement in the areas reviewed.

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)
Develop a plan to routinely provide updates when changes in stock levels are anticipated and work with the prime vendor to address having adequate stock to meet orders.
No. 2
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Ensure logistics staff and contracting officer’s representative use the tools available to inform the Medical Supplies Program Office and Strategic Acquisition Center of prime vendor performance concerns and challenges.
No. 3
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Implement a process to routinely check the formulary for additions and update the ordering system to reflect the prime vendor as the source for purchasing newly added supplies.
No. 4
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Ensure quarterly purchase card audits are performed as required by the Veterans Health Administration standard operating procedure, “Internal Audits—Purchase Cards and Convenience Checks.”
No. 5
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Ensure healthcare system finance office staff are made aware of policy requirements and the responsible finance office conducts reviews on all open obligations as required by VA Financial Policies and Procedures, vol. II, chap. 5, “Obligations Policy,” January 2018.
No. 6
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Promote veterans’ use of the Consolidated Mail Outpatient Pharmacy.
No. 7
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Educate non-VA providers on prescribing lower-cost drugs.
No. 8
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Implement Veterans Integrated Service Network 15 recommendations to ensure the cost-saving initiatives are implemented, tracked, and monitored to achieve identified efficiency targets and use available pharmacy data to make business decisions.