Financial Efficiency Review of the Durham VA Health Care System in North Carolina

The VA Office of Inspector General (OIG) assessed the stewardship and oversight of funds by the Durham VA Health Care System in North Carolina and identified potential cost efficiencies in carrying out medical center functions from October 1, 2020, through March 31, 2021. The healthcare system had 309 inactive obligations totaling $81.7 million. Of these 309 obligations, 200 (totaling over $74 million) had no activity for 181 days or more. In a subsample of 20 obligations, VA staff had not reviewed 17, as required. If inactive obligations are not reviewed, these funds cannot be reobligated and used in that fiscal year to support veterans. The OIG also found that, contrary to VA policy, healthcare system staff used purchase cards instead of contracts for 21 of 40 sampled transactions (53 percent), totaling approximately $328,000. These 21 transactions were missing required supporting documentation to verify that the transactions were approved and payments were accurate, resulting in $308,000 in questioned costs. Furthermore, the purchase card coordinator did not conduct required quarterly audits. The healthcare system had 105 more administrative full time equivalent staff than the expected number, which suggests the potential opportunity to improve efficiency. The healthcare system could improve pharmacy efficiency by narrowing the gap between the facility’s observed drug costs and expected drug costs, bringing the turnover rates closer to the Veterans Health Administration–recommended level, and meeting requirements for noncontrolled drug line audits. The OIG made nine recommendations to the healthcare system director and one recommendation to the director of contracting for Network Contracting Office 6, VA Mid-Atlantic Health Care Network.