Financial Efficiency Inspection of the VA Northeast Ohio Healthcare System

Report Information

Issue Date
Closure Date
Report Number
24-00153-248
VISN
10
State
Ohio
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
Healthcare Services
Stewardship of Taxpayer Dollars
Recommendations
10
Questioned Costs
$10,400,000
Better Use of Funds
$5,500,000
Congressionally Mandated
No

Summary

Summary

The VA Office of Inspector General (OIG) assessed the oversight and stewardship of funds by the VA Northeast Ohio Healthcare System and sought to identify potential cost efficiencies. This inspection examined four financial activities and administrative processes to determine whether appropriate controls and oversight were in place: use of managerial cost accounting information, open obligations oversight, purchase card use, and supply chain management operations.

The inspection team found that the healthcare system’s use of managerial cost accounting information did not fully align with federal financial accounting standard practices regarding performance measurement, budgeting, cost control, and making economic decisions. The healthcare system also did not always comply with policy to review open obligations and deobligate funds no longer needed. As a result of the healthcare system’s lack of follow up and reconciliations, the team estimated at least $5.5 million in open obligations were invalid, should have been deobligated, and could have been put to better use.

Further, the OIG found that 18 of 52 sampled purchase card transactions did not comply with VA policy. Violations included lack of supporting documentation and untimely approvals of reconciliations. The team estimated 100 transactions totaling about $561,000 were modified into smaller parts. And, the healthcare system could benefit from improving the efficiency of inventory oversight by ensuring inventory values are recorded correctly in the Generic Inventory Package. Establishing local processes and procedures for the timely review of data to detect and correct errors would increase the reliability of inventory data and could help ensure metrics are met.

The OIG made 10 recommendations for improvement. The recommendations address issues that, if left unattended, may eventually interfere with 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)
Closure Date: 2/14/2025

Establish a plan to use VA’s cost accounting system information to identify alternative ways to reduce costs, enhance efficiency, and inform business decisions as identified by VA financial policy. This could include implementing federal financial accounting standard practices to use cost information for performance measurement, budgeting, cost control, and making economic choices.

No. 2
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 2/14/2025

Consider requiring that the managerial cost accounting team review the Intermediate Product Cost Outlier report to identify cost outliers that may occur at the healthcare system.

No. 3
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 2/14/2025

Ensure healthcare services are completing monthly data validation memos for their managerial cost accounting data.

No. 4
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 5/7/2025

Ensure that healthcare system staff follow policy requirements; and that fiscal staff conduct reviews on all open obligations as required by VA Financial Policy, vol. 2, chap. 5, “Obligations” (2020), updated May 2023.

No. 5
Closed and Implemented Recommendation Image, Checkmark
to Acquisitions, Logistics, and Construction (OALC)
Closure Date: 5/7/2025

Ensure that healthcare contracting staff follow federal acquisition regulations when terminating contracts for convenience to the government.

No. 6
Closed and Implemented Recommendation Image, Checkmark
to Acquisitions, Logistics, and Construction (OALC)
Closure Date: 5/7/2025

Establish controls to ensure cardholders comply with record retention requirements, confirm approving officials and cardholders review purchases for VA policy compliance, and ensure contracting is used when it is in the best interest of the government.

No. 7
Closed and Implemented Recommendation Image, Checkmark
to Acquisitions, Logistics, and Construction (OALC)
Closure Date: 5/7/2025

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

No. 8
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 5/7/2025

Develop and implement a plan to ensure data accuracy and reliability in the Generic Inventory Package.

No. 9
Closed and Implemented Recommendation Image, Checkmark
to Veterans Health Administration (VHA)
Closure Date: 5/7/2025

Develop and maintain a standardized training program for logistics and clinical staff on the proper recording of items as they are removed from primary and secondary inventory points.

No. 10
Closed and Implemented Recommendation Image, Checkmark
to Acquisitions, Logistics, and Construction (OALC),Veterans Health Administration (VHA)
Closure Date: 5/7/2025

Ensure that MSPV facility-level contracting officer’s representatives are appointed and designated properly and perform all required duties according to the scope and limitation of the designee’s authority.

Total Monetary Impact of All Recommendations
Open: $ 0.00
Closed: $ 15,868,000.00