Financial Efficiency Review of the VA Cincinnati Healthcare System

The VA Office of Inspector General (OIG) assessed the oversight and stewardship of funds by the VA Cincinnati Healthcare System. The review team looked at four areas to determine if appropriate controls and oversight were in place for open obligations oversight, purchase card use, Medical/Surgical Prime Vendor–Next Generation (MSPV-NG) program use, and pharmacy operations. The team reviewed data from fiscal years 2019 through 2021. The report includes the below findings: • Reviews were not completed for nine inactive obligations from a judgmental sample of 20 obligations that totaled about $7.2 million from September 30, 2021. • The healthcare system did not comply with VA policy for three of the 36 sampled transactions (about 8 percent), totaling about $10,200. • The healthcare system did not meet the formulary utilization goal recommended by the VA Medical Supplies Program Office (MSPO) to purchase 90 percent of formulary items from the MSPV-NG prime vendor. • Pharmacy efficiency could be improved by narrowing the gap between observed and expected drug costs. The OIG made eight recommendations to the healthcare system director: ensure finance office staff review inactive open obligations and pharmacy invoice reconciliations, develop a plan to work with the prime vendor to address having adequate stock for system needs, submit MSPV-NG waiver requests and obtain approval before purchasing formulary items from nonprime vendor sources, ensure logistics staff and contracting officer’s representatives use tools to inform the MSPO and Strategic Acquisition Center of prime vendor performance concerns and challenges, create formal processes for achieving efficiency targets and use data to make business decisions, prepare and implement a plan to increase inventory turnover closer to the VHA-recommended level, and develop a plan to complete facility-based inventory audits of noncontrolled drug line items.