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Financial Efficiency Inspection of the VA Memphis Healthcare System in Tennessee

Report Information

Issue Date
Report Number
23-01198-47
VISN
9
State
Tennessee
District
Southeast
VA Office
Veterans Health Administration (VHA)
Report Author
Office of Audits and Evaluations
Report Type
Financial Inspection
Report Topic
Financial Management
Major Management Challenges
Leadership and Governance
Stewardship of Taxpayer Dollars
Recommendations
9
Questioned Costs
$20,064,000
Better Use of Funds
$7,200
Congressionally Mandated
No

Summary

Summary

The OIG conducted this inspection to assess the stewardship and oversight of funds by the VA Memphis Healthcare System in Tennessee. This inspection assessed financial activities and administrative processes to determine whether appropriate controls and oversight were in place. These included open obligations, purchase card use, inventory and supply management, and pharmacy operations.

After analyzing a judgmental sample of 20 open obligations, the team found that 10 obligations totaling approximately $11.5 million were more than 90 days past the end of the performance period, and the team could not verify whether healthcare system staff reviewed these obligations, as required. In another sample, the team found that four obligations had residual funds of $7,200 that should have been deobligated.

Using a sample of 40 purchase card transactions, the team estimated that staff may have made noncompliance errors in over 18,500 transactions resulting in approximately $19.8 million in questioned costs.

For inventory and supply management, the team found that training issues, inadequate staffing levels, poor oversight, and data validity issues affected the healthcare system’s stock levels. Healthcare system staff also could not provide documentation to show that required physical inventories were completed or that the chief supply chain officer reviewed the list of personnel with access to the inventory system.

The team also found that the healthcare system can further improve pharmacy efficiency by adhering to inventory management best practices, such as adding scannable barcodes to shelving, increasing inventory turnover rates for “A” and “C” items in accordance with Pharmacy Benefit Management target rates, and ensuring compliance with the B09 reconciliation process.

The OIG made nine recommendations to the healthcare system director to address the issues identified.

Open Recommendation Image, SquareOpenClosed and Implemented Recommendation Image, CheckmarkClosed-ImplementedNot Implemented Recommendation Image, X character'Closed-Not Implemented
No. 1
Open Recommendation Image, Square
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
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Ensure cardholders comply with VA financial policy record retention requirements.

No. 3
Open Recommendation Image, Square
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
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Establish local processes and procedures to ensure the routine scanning of inventory items, as well as monitoring of all inventory data, so that performance measures are maintained.

No. 5
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Ensure supply chain managers implement a plan to train staff to promote the standardization of supply chain duties and to correct data validity issues within inventory systems.

No. 6
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Ensure the chief of supply chain services conducts and documents quarterly physical inventory memoranda of “A” classified items in accordance with Veterans Health Administration’s Directive 1761, Supply Chain Management Operations.

No. 7
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Ensure the chief supply chain officer reviews the edit access list for the facility item master file, and a process is put in place to document this review, as required in the Veterans Health Administration’s Directive 1761, Supply Chain Management Operations.

No. 8
Open Recommendation Image, Square
to Veterans Health Administration (VHA)

Develop a plan to align inventory management practices, such as ABC inventory analysis methodology, with Veterans Health Administration policy.

No. 9
Open Recommendation Image, Square
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: $ 20,071,200.00
Closed: $ 0.00