Financial Efficiency Inspection of the VA New York Harbor Healthcare System

Report Information

Issue Date
Closure Date
Report Number
22-02989-103
VISN
2
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
14
Questioned Costs
$0
Better Use of Funds
$0
Congressionally Mandated
No

Summary

Summary
The VA Office of Inspector General (OIG) conducted this inspection to assess the stewardship and oversight of funds by the VA New York Harbor Healthcare System. 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. The inspection team could not verify that anyone reviewed 10 of 19 selected inactive obligations, and from a separate sample of 10 open obligations more than three months, four had amount discrepancies totaling more than $15,000, which the fiscal staff corrected after the team’s visit. When assessing purchase card use, the team determined the healthcare system had deficiencies in supporting documentation for sampled transactions. Cardholders did not always obtain prior approval for purchases and perform required reconciliations. The team also estimated about $44.1 million in questioned costs due to noncompliance errors in approximately 90 percent of 46,900 transactions. The team found that inventory management could improve by updating monthly usage data so the prime vendor can keep necessary items in stock and by consistently using contract waivers when purchasing items from a nonprime vendor. The team found that pharmacy efficiency could improve by narrowing the gap between observed and expected costs, bringing turnover rates closer to the recommended level, using the inventory process required by VA, and meeting reconciliation reporting requirements. The OIG made 14 recommendations to the healthcare system director, such as implementing plans to ensure staff review open obligations and pharmacy reconciliations, cardholders receive prior approval for and properly document purchases, inventory staff update usage and use the prime vendor, and the pharmacy increases inventory turnover and audits inventory.

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)
Closure Date: 11/9/2023

The VA New York Harbor Healthcare System director to ensure that healthcare system finance office staff and initiating services are aware of policy requirements to conduct reviews on all inactive open obligations and deobligate any identified excess funds as required by VA Financial Policy, vol. 2, chap. 5, “Obligations Policy.”

No. 2
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 2/15/2024

The VA New York Harbor Healthcare System director to ensure that healthcare system finance office staff and initiating services that healthcare system staff are conducting finance quality assurance reviews of obligations that were inactive for more than 90 days, as required by Veterans Health Administration Directive 1733, “VHA Finance Quality Assurance Reviews.”

No. 3
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 4/30/2024

The VA New York Harbor Healthcare System director to ensure cardholders comply with record retention, prior approval, and purchase card reconciliation requirements as required by VA Financial Policy, vol. 16, chap. 1B, “Government Purchase Card for Micro-Purchases.”

No. 4
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 4/30/2024

The VA New York Harbor Healthcare System director to ensure cardholders verify that vendors have removed all state and local sales taxes from orders, if applicable.

No. 5
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 4/30/2024

The VA New York Harbor Healthcare System director to ensure authorizing officials implement internal controls over government purchase card activities to ensure compliance with the Government Purchase Card Program.

No. 6
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 9/20/2024

The VA New York Harbor Healthcare System director to establish internal controls to help ensure the healthcare system monitors the Medical/Surgical Prime Vendor formulary for updates, converts supplies to the prime vendor in the item master file, identifies the prime vendor as the mandatory source for these items in the Generic Inventory Package, and properly sets up Medical/Surgical Prime Vendor supply items in VA’s ordering system.

No. 7
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 3/30/2024

The VA New York Harbor Healthcare System director to develop a plan to improve collaboration with the prime vendor and its on-site representative to ensure adequate stock is available to meet orders, reduce the need for the healthcare system to use nonprime vendors, and communicate the healthcare system’s usage and in-stock timing needs.

No. 8
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 10/1/2024

The VA New York Harbor Healthcare System director to ensure a qualified Medical/Surgical Prime Vendor contracting officer’s representative is appointed and performs the required delegated duties.

No. 9
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 2/15/2024

The VA New York Harbor Healthcare System director to establish internal controls to help ensure the healthcare system submits national contract waivers and justifications prior to purchasing available formulary items from nonprime vendor sources.

No. 10
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 11/9/2023

The VA New York Harbor Healthcare System director to ensure that prime vendor contract performance issues are routinely reported to the Medical Supplies Program Office and Strategic Acquisition Center using established Veterans Health Administration reporting tools.

No. 11
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 11/9/2023

The VA New York Harbor Healthcare System director to develop formalized processes for monitoring and achieving identified efficiency targets and use available pharmacy data to make business decisions.

No. 12
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 8/16/2024

The VA New York Harbor Healthcare System director to develop and implement a plan to achieve an inventory turnover rate closer to the Veterans Health Administration’s recommended level.

No. 13
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 11/9/2023

The VA New York Harbor Healthcare System director to develop and implement a plan to report the results of facility-based inventory audits of noncontrolled drug line items, and any follow-up actions taken, as required by Veterans Health Administration policy.

No. 14
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 8/16/2024

The VA New York Harbor Healthcare System director establish processes to ensure compliance with the Veterans Health Administration directive which requires that B09 reconciliations are signed by the lead pharmacy technician and include appropriate supporting documentation.

Total Monetary Impact of All Recommendations
Open: $ 0.00
Closed: $ 44,170,312.00