Financial Efficiency Inspection of the VA Philadelphia Healthcare System

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.