Financial Efficiency Inspection of the VA Philadelphia Healthcare System

Report Information

Issue Date
Report Number
22-03503-131
VISN
4
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
Recommendations
12
Questioned Costs
$0
Better Use of Funds
$0
Congressionally Mandated
No

Summary

Summary
The VA Office of Inspector General (OIG) conducted this review to assess the VA Philadelphia Healthcare System’s oversight and stewardship of funds and to identify potential cost efficiencies. The review assessed the following financial activities and administrative processes to determine whether the healthcare system had appropriate oversight and controls in place: open obligations oversight, purchase card use and oversight, inventory and supply management, and pharmacy operations. The OIG found that the healthcare system could improve the following: • Deobligation of residual funds. Six of 10 sampled open obligations had residual funds totaling about $44,500 that should have been promptly deobligated. • Management of purchase card transactions. Potential noncompliance errors in about 18,500 purchase card transactions led to about $16 million in questioned costs. The healthcare system also may have missed cost savings on frequently used goods. • Inventory management. Inventory management could be made more efficient by ensuring stock levels and inventory values are recorded correctly, establishing local processes and procedures for monitoring inventory reports, implementing a plan for staff training to increase awareness of internal controls and data reliability in the inventory system, and ensuring all supply chain performance measures are maintained in compliance with VA policy. • Pharmacy efficiency. The healthcare system could narrow the gap between observed and expected drug costs, avoid end-of-year purchases, and meet requirements for monthly reconciliation reporting. VA concurred with the OIG’s 12 recommendations made to the healthcare system director to use as a road map to improve financial operations. The recommendations address issues that, if left unattended, may eventually interfere with effective financial efficiency practices and the strong stewardship of VA resources.

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)

Ensure that healthcare system finance office staff are made aware of all VA financial policy requirements in the review and management of inactive open obligations, and deobligate any identified excess funds.

No. 2
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)

Ensure cardholders comply with VA financial policy record retention requirements

No. 3
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)

Establish controls to confirm approving officials and purchase cardholders review purchases for VA policy compliance and ensure contracting 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)

Require purchase cardholders to submit a request for ratification for any unauthorized commitments identified.

No. 5
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)

Ensure the chief supply chain officer establishes local processes and procedures so that all necessary reports are routinely monitored on the Supply Chain Common Operating Picture, the Generic Inventory Package, or other inventory sites or software systems to ensure performance measures are maintained, as required in the Veterans Health Administration’s Directive 1761, Supply Chain Management Operations.

No. 6
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)

Ensure supply chain managers implement a plan for staff training to increase awareness of internal controls and data reliability issues, such as conversion factor, within the Generic Inventory Package.

No. 7
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)

Ensure the chief of supply chain services provides quarterly physical inventory memoranda of “A” classified items to Veterans Integrated Service Network personnel, as required in the Veterans Health Administration’s Directive 1761, Supply Chain Management Operations.

No. 8
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)

Ensure the chief supply chain officer reviews the facility item master file edit access list of all individuals at the VA medical facility who have permissions to enter or modify data within the item master file each calendar year, as required in the Veterans Health Administration’s Directive 1761, Supply Chain Management Operations.

No. 9
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)

Develop formalized processes for monitoring and achieving identified efficiency targets and use available pharmacy data to make business decisions.

No. 10
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)

Establish measures to improve compliance with the VA directive to avoid end-of-year pharmaceutical purchases.

No. 11
Open Recommendation Image, Square
to Veterans Health Administration (VHA)
Develop a plan to align inventory management practices, such as the use of handheld scanners, bar code labeling, and ABC inventory analysis methodology with VHA policy.
No. 12
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)

Establish processes to ensure compliance with the Veterans Health Administration directive to complete the B09 reconciliation process.

Total Monetary Impact of All Recommendations
Open: $ 0.00
Closed: $ 16,044,457.00