Department of Veterans Affairs 

Office of Inspector General 

Healthcare Inspection 

Alleged Quality Control Issues in 

Supply Processing and Distribution 

Carl T. Hayden VA Medical Center 

Phoenix, Arizona 

Report No. 07-02121-168 July 13, 2007

VA Office of Inspector General 

Washington, DC 20420 
To Report Suspected Wrongdoing in VA Programs and Operations 

Call the OIG Hotline – (800) 488-8244 
Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

VA Office of Inspector General i 

Executive Summary 

The purpose of this review was to determine the validity of the allegations that the 

Supply Processing and Distribution (SPD) department at the Carl T. Hayden VA Medical 

Center delivered contaminated instruments to the Operating Room (OR), and 

management threatened retaliation if staff cancelled OR cases. 

We substantiated the allegation that SPD had ongoing problems including contaminated 

instruments, damp wrappers, and torn or discolored instrument wrappers from August 11, 

2006 through April 30, 2007. However, infection control data did not show any increase 

in surgical infections during this time period, nor were contaminated instruments used in 

surgery. Medical center managers aggressively identified and corrected SPD issues, 

including completion of the SPD construction project, weekly meetings, consultative 

services by two established VA experts, hiring additional SPD staff, staff education and 

training, increased sterilizer maintenance checks, and ongoing Quality Management 

monitoring. Despite all efforts to improve SPD processes and procedures, orthopedic 

surgeons, some anesthesia staff, and some OR nurses remained reluctant to trust that SPD 

could consistently deliver instruments that are properly cleaned and sterilized. 

We did not substantiate the allegation that staff were fearful of management reprisal if 

they cancelled surgery. Because the complainant was anonymous, we were unable to 

clarify this issue further. However, we interviewed numerous clinicians including 

orthopedic and general surgeons, anesthesiology clinicians, OR nurses, and SPD staff. 

Every clinician we interviewed told us that they felt comfortable with reporting SPD 

issues or cancelling surgery if necessary. 

We recommended that management suspend scheduled total joint surgeries, seek 

consultative services from an external SPD expert, and follow the recommendations. We 

also recommended that they provide a copy of the external consultant report to us. 

Management concurred with our recommendations and suspended all total joint surgeries 

on May 4, 2007. An external SPD consultation was completed on May 18, 2007. The 

consultant noted that she “would have no reservations about having Orthopedic or any 

other type of surgery at this facility.” Total joint surgeries resumed on May 25, 2007. A 

copy of the SPD consultant’s report was sent to our office. Based on actions taken, we 

consider all recommendations closed. 
DEPARTMENT OF VETERANS AFFAIRS

Office of Inspector General 

Washington, DC 20420 

TO: Director, Veterans Integrated Service Network (10N18) 

SUBJECT: Healthcare Inspection ─ Alleged Quality Control Issues in Supply 

Processing and Distribution, Carl T. Hayden VA Medical Center, 

Phoenix, Arizona 

Purpose 

The Department of Veterans Affairs, Office of Inspector General (OIG), Office of 

Healthcare Inspections (OHI), was requested by the Chairman of the United States Senate 

Committee on Veterans’ Affairs, to conduct an inspection at the Carl T. Hayden VA 

Medical Center (medical center), Phoenix, Arizona. OHI was asked to determine the 

validity of allegations regarding the Supply Processing and Distribution (SPD) 

department delivering contaminated instruments to the Operating Room (OR) and 

management retaliation if staff cancelled OR cases. 

Background 

An anonymous complainant submitted the following allegations to the Chairman of the 

United States Senate Committee on Veterans’ Affairs: 

• SPD department delivered contaminated instruments to the OR for the past 

8 months with no improvement. 

• Staff was fearful of management retaliation if they cancelled surgery because 

managers threatened to fire them. 

The medical center is a teaching hospital providing a full range of patient care services, 

as well as education and research. The facility has 132 hospital beds, 102 nursing home 

care unit beds and 48 mental health beds and treats patients residing in Veterans 

Integrated Service Network (VISN) 18. 

Scope and Methodology 

We conducted a site visit at the medical center on May 2–3, 2007. We reviewed policies, 

Quality Management (QM) data, sterilization logs, committee minutes, and consultation

VA Office of Inspector General 1 

 
Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

reports. We inspected the OR and SPD for cleanliness and compliance with regulations. 

We interviewed OR, anesthesia, and surgical clinicians, and SPD staff. We interviewed 

senior managers, including the Quality Manager, SPD Chief, OR Nurse Manager, the 

Nurse Executive, the Chief of Staff (COS), the Associate Director, and the Director. We 

also conducted telephone interviews with the two Veterans Health Administration (VHA) 

SPD expert consultants who have been involved with SPD/OR issues at the medical 

center since September 2006. 

 

The inspection was conducted in accordance with the Quality Standards for Inspections

published by the President’s Council on Integrity and Efficiency. 

Inspection Results 

Case Review 

The medical center’s SPD department was under construction for renovation from 

January 2006 through February 2007. SPD provides sterile instruments and supplies, and 

disposable clinical items to all medical departments including the OR. 

In August 2006, the OR cancelled nine orthopedic surgery cases due to damp wrappers 

and holes in the external instrument wrappers. 

In response to the surgery cancellations, medical center managers organized a 

multidisciplinary team including staff from SPD, OR, biomedical engineering, COS 

office, QM, Infection Control, and orthopedic surgeons to address the issues. The group 

implemented the following actions: 

• Discontinued use of foam inserts used to provide extra support of instrument 

trays. 

• SPD would process orthopedic instrument trays as the last loads of the day. 

• SPD staff received additional education and training on sterilization procedures. 

• Sterilizer drying times extended from 30 to 45 minutes. 

• Decreased weight of instrument trays. 

• Steam pressure in sterilizers checked by the Biomedical Engineering 

department and the manufacturer’s representative. Results were within the 

normal limits. 

• Chief of SPD developed a checklist to monitor the times of sterilization and the 

humidity levels in the work environment. 

• Chief of SPD monitored staff performance more closely. 

• A Surgeon and the Chief of SPD met with sales representatives requesting the 

delivery of orthopedic total joint instrument trays 48 hours before the scheduled 

procedure. 

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Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

In early September 2006, the OR again cancelled five total joint cases because of damp 

wrappers. The medical center suspended total joint cases and fee based urgent patients to 

community hospitals from September 11 through October 16, 2006. The committee 

recommended increasing the sterilizer drying times and running test packs of instruments. 

They also converted sterilizers in OR to pre-vacuum cycles to test total joint instrument 

trays but the wrappers remained damp. Medical center mangers contacted the VHA 

(headquarters) Chief of SPD and the Chief of SPD from the VA Health Care System, 

Amarillo, Texas (Amarillo VAHCS) to provide consultative services. 

On September 26–27, it was again noted that there were holes in instrument wrappers, 

lint particles on towels, and the loaner instrument trays were in poor condition. The 

Chief of Orthopedic Surgery met with sales representatives to discuss the weight and 

condition of their company orthopedic instrument trays. The sales representatives 

assured that the instrument trays would be intact and that each tray would weigh less than 

16 pounds. The Chief of SPD began monitoring holes in wrappers and ongoing 

problems. On September 27, managers met with the Chair of the Surgical Department, 

the Chief of Orthopedics, all of the orthopedic surgeons, the Chief of Acquisition and 

Material Management, Quality Management staff, Infection Control staff, SPD staff, and 

Pathology staff to discuss concerns. 

On October 3–4 and October 11–13, the VHA Chief of SPD conducted two on-site visits 

to complete a review of decontamination, cleaning, and sterilization processes in SPD. 

There were no infection control concerns. However, he found several new instrument 

wrappers with visible holes and determined that the wrappers were defective. He 

authorized the purchase of a comparable wrapper from a different vendor. Facilities 

Services installed appropriate barriers to help contain the construction activities and 

agreed to alter the current renovation plan. The construction project was divided into 

four phases to minimize the impact on SPD. The VHA Chief of SPD recommended that 

all SPD staff be retrained on SPD processes. 

The Chief of SPD from Amarillo VAHCS was on site from October 4–6, 2006, and 

provided education and training to the medical center’s SPD staff. She recommended the 

installation of magnification lights, maintenance checks for sterilizers to ensure proper 

functioning for instrument drying, and the installation of a dedicated internal phone line 

between the decontamination and preparation areas. She also recommended that SPD 

staff discontinue the use of color-coded tape applied on instruments and that terry cloth 

towels be removed from preparation areas. Additionally, access to all SPD areas was 

limited to authorized staff wearing appropriate attire. Medical center managers 

implemented all recommendations. 

The VHA Chief of SPD noted that even though SPD experienced an atmospheric 

humidity increase, the level was not elevated enough to cause damp packs. He 

recommended that the SPD Chief monitor processes to ensure that staff was allowing 

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Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

adequate cooling time for instruments in sterilizers before bringing them out into room 

temperature. This precaution prevented condensation. He recommended that the 

biomedical engineering department and the manufacturer check the steam lines. He also 

recommended increasing the staffing levels through initiation of immediate and ongoing 

recruitment. Medical center managers implemented all recommendations and reported 

by May 14, 2007, that an additional seven SPD staff were hired and oriented. In addition, 

mangers have identified five candidates for the other vacancies. 

On October 7–9, based on consultant recommendations, all OR operations were stopped 

to allow SPD staff to reprocess and re-sterilize all instruments and to clean all sterilizers 

and instrument carriers. On October 18, there was only one operational sterilizer in SPD 

because of the construction. Consequently, the COS limited the total number of all 

surgeries to 15 per day, including one orthopedic case twice per week on nonconsecutive 

days. There was one total knee arthroscopy cancellation because of a hole in the wrapper 

in October 2006. 

On November 3, there was one total joint surgery cancellation because OR staff found 

rust colored stains on cloth towels and wrappers. From November 7 through December 

15, medical center managers cancelled all total joint surgeries until both sterilizers were 

operational. SPD continued to function with one sterilizer. During the week of 

November 13, OR staff continued to note rust colored stains on cloth towels and 

wrappers. The biomedical engineering department found no problems with water lines. 

They installed new filters in sterilizers; however, staff continued to observe stains. They 

collected water samples and sent them to an independent laboratory for analysis. The 

laboratory results indicated that the source material was carbon, and that the staining was 

not related to the trays or instruments. 

In December, there were no reported incidents involving contaminated instruments. 

Medical center managers authorized the installation of a dedicated air conditioning unit in 

SPD and resumed three total joint replacement surgeries per week. On December 26, 

administrative oversight of SPD was transferred to the Nurse Executive. 

In January 2007, one orthopedic joint surgery was cancelled because of instrumentation 

problems. Staff did not report any sterilization issues. Both sterilizers and all washers in 

SPD were operational. All SPD staff education and retraining was completed. An 

evening SPD supervisor was hired. 

In February, there were no reported incidents involving contaminated surgical 

instruments. Medical center managers authorized two total joint surgeries per day on 

nonconsecutive days. 

In March, there were three orthopedic joint surgery cancellations because of debris on 

instruments and holes in wrappers. The orthopedic sales representatives did not supply 

VA Office of Inspector General 4 
Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

backup sets of instruments as required by contract. Medical center managers again met 

with them to discuss expectations and consequences for noncompliance. 

In April, there was one orthopedic joint surgery cancellation because of sterilization 

issues. The Chief, SPD continued to educate staff on sterilization processes. 

On April 27, the Amarillo VAHCS Chief of SPD conducted an onsite follow-up visit. 

Her report indicated that the renovated SPD environment was adequate for 

decontamination, preparation, and sterilization of instruments. She noted that there were 

still staffing vacancies; however, active recruiting continued. Overall, she noted that the 

majority of the SPD staff was very qualified to produce the expected results. She 

commented that OR staff cancelled total joint cases as a first option instead of the last 

option, and recommended that SPD, OR, and surgery staff work as a team. She reported 

that based on staff discussions, about 75 percent of the staff felt that SPD was performing 

at an adequate or better level. She recommended that SPD create an SPD/OR liaison to 

help with communication and relationships and that both departments need to put the past 

behind them and move forward. 

On May 3, the infection control staff reported that overall there had been no spike in 

surgical or orthopedic infection rates. 

On May 4, medical center managers suspended all total joint surgeries until completion 

of the external consultation visit. 

Issue 1: SPD Issues 

We substantiated that SPD had ongoing problems including contaminated instruments, 

damp wrappers, and torn or discolored instrument wrappers, resulting in 20 orthopedic 

surgery cancellations from August 11, 2006, through April 30, 2007. Because OR nurses 

were vigilant in checking instrument wrappers during the SPD construction project, 

surgeries were cancelled when problems were identified. Staff never used contaminated 

instruments during any surgical procedure. Infection control data did not show any 

increase in surgical infections from August 2006 through April 2007. 

Medical center managers organized a multidisciplinary team to address the ongoing SPD 

issues beginning August 29, 2006. They suspended scheduled total joint cases at the 

medical center on September 11 through October 16 and again on November 7 through 

December 15. Urgent cases were fee based to community hospitals. 

Medical center managers continued ongoing aggressive action plans to identify and 

correct SPD issues, including completion of the SPD construction project, weekly 

meetings, consultative services by two established VA experts, hiring additional SPD 

staff, staff education and retraining, increased sterilizer maintenance checks, and ongoing 

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Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

QM monitoring. Despite these efforts to improve SPD processes and procedures, 

orthopedic surgeons, some anesthesia staff, and some OR nurses remain reluctant to trust 

that SPD can consistently deliver instruments that are properly cleaned and sterilized. 

Issue 2: Management Reprisal 

We did not substantiate the allegation that staff were fearful of management reprisal if 

they cancelled surgery because of increased timeliness performance measures. Because 

the complainant was anonymous, we were unable to clarify this issue further. However, 

we interviewed numerous clinicians including orthopedic surgeons, general surgeons, 

anesthesiology clinicians, OR nurses, and SPD staff. They told us that medical center 

managers had never threatened them with firing or other personnel action for cancelling 

surgery. Every clinician we interviewed told us that they felt comfortable with reporting 

SPD issues or cancelling surgery if necessary. 

Conclusion 

Medical center managers and staff confirm that they identified, monitored, and evaluated 

numerous SPD issues. Despite implementing recommendations by consultants and 

internal experts, SPD issues continued to arise. Consequently, some anesthesia, 

orthopedic and OR clinicians do not have confidence that SPD problems have been 

substantively corrected. We discussed the clinician concerns with the medical center 

managers, and they agreed to suspend total joint replacement surgery effective 

immediately on May 4, 2007, until an outside consultant confirms that SPD can deliver 

safe and sterile equipment to the OR. 

Recommendations

Recommendation 1. We recommended that the VISN Director insure that the Medical 

Center Director suspend scheduled total joint surgeries effective May 4, 2007. 

Recommendation 2. We recommended that the VISN Director insure that the Medical 

Center Director seek consultative services from an external SPD expert and follow all 

recommendations. 

Recommendation 3. We recommended that the VISN Director insure that the Medical 

Center Director provide a copy of the external consultant report to OHI. 

Comments 

The VISN and Medical Center Directors concurred with the findings and 

recommendations of this inspection and provided acceptable improvement plans. The 

director suspended all total joint surgeries on May 4. An external SPD consultation was 

completed on May 18, 2007. The consultant noted that she “would have no reservations 

VA Office of Inspector General 6 
Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

about having Orthopedic or any other type of surgery at this facility.” Total joint 

surgeries resumed on May 25, 2007. A copy of the SPD consultant’s report was sent to 

our office on May 31, 2007. Based on actions taken, we consider all three 

recommendations closed (see Appendixes A and B, pages 8─11, for the full text of the 

Directors’ comments). 

 (original signed by:)

JOHN D. DAIGH, JR., M.D. 

Assistant Inspector General for 

Healthcare Inspections 

VA Office of Inspector General 7 
Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

Appendix A 

VISN Director Comments 

Department of 

Veterans Affairs Memorandum

Date: June 1, 2007 

From: Director, Veterans Integrated Service Network (10N18) 

Subject: Healthcare Inspection, Alleged Quality Control Issues in 

Supply Processing and Distribution, Carl T. Hayden VA 

Medical Center, Phoenix, Arizona 

To: Director, Kansas City Office of Healthcare Inspections 

(54KC) 

Director, Management Review Office (10B5) 

I concur with the facility response. See Medical Center 

Director Comments for specific actions. Please contact 

Joan Funckes, Executive Assistant to the Network Director, 

VISN 18 at (602) 222-2692, for any questions. 

Patricia A. McKlem 

VA Office of Inspector General 8 
Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

Appendix B 

Medical Center Director Comments 

Department of 

Veterans Affairs Memorandum

Date: May 31, 2007 

From: Director, Carl T. Hayden VA Medical Center (644/00) 

Subject: Healthcare Inspection, Alleged Quality Control Issues in 

Supply Processing and Distribution, Carl T. Hayden VA 

Medical Center, Phoenix, Arizona 

To: Director, Veterans Integrated Service Network (10N18) 

1. The draft report of the Healthcare Inspection, Alleged 

Quality Control Issues in Supply Processing and Distribution, 

was reviewed. The facility's comments and implementation 

plan to address the recommendations are noted on the next 

page. 

2. If you have any questions regarding this report, please 

contact Ms. Sally Compton, QM Program Manager, Quality 

Management Department at 602.277.5551, ext. 6777. 

 

DONALD F. MOORE, R.Ph., M.B.A. 

VA Office of Inspector General 9 
Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

Director’s Comments 

to Office of Inspector General’s Report 

The following Director’s comments are submitted in response 

to the recommendation(s) in the Office of Inspector General’s 

Report: 

OIG Recommendation(s)

Recommended Improvement Action 1. Suspend scheduled 

total joint surgeries effective May 4, 2007. 

Concur Target Completion Date: Complete 

Scheduled total joint surgeries were suspended effective May 

4, 2007 in response to the discussion with the OIG inspectors, 

facility clinical staff, and medical center management until 

such time as an outside consultant review was done of SPD 

delivering safe and sterile equipment to the OR. 

External consultation was completed on May 18, 2007. The 

consultant noted that she "would have no reservations about 

having Orthopedic or any other type of surgery at this 

facility." Total joint surgeries resumed on May 25, 2007. 

Recommended Improvement Action 2. Seek consultative 

services from an external SPD expert and follow all 

recommendations. 

Concur Target Completion Date: July 31, 2007 

Nancy Chobin, RN, CSPDM, Director, Medical Center 

Education Services, a recognized national SPD expert, 

performed a sterilization consultation at this facility on May 

18, 2007. We are in the process of implementing the 

consultant's recommendations. Some involve work that will 

be done when the OR is closed for annual maintenance which 

is scheduled for late June/early July. 

VA Office of Inspector General 10 
Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

Recommended Improvement Action 3. Provide a copy of 

the external consultant report to OHI. 

Concur Target Completion Date: Complete 

The external consultant report was provided to the Office of 

Healthcare Inspections on May 31, 2007. 

VA Office of Inspector General 11 
Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ 

Appendix C 

OIG Contact and Staff Acknowledgments 

OIG Contact Virginia L. Solana, Director 

Kansas City Regional Office of Healthcare Inspections 

(816) 426-2023 

Acknowledgments Reba B. Ransom 

Marilyn Stones 

George Wesley, M.D. 

VA Office of Inspector General 12 
Alleged Quality Control Issues in Supply Processing and Distribution, Carl T. Hayden VAMC, Phoenix, AZ

Appendix D 

Report Distribution 

VA Distribution

Office of the Secretary 

Veterans Health Administration 

Assistant Secretaries 

General Counsel 

Director, Veterans Integrated Service Network 18 (10N18) 

Director, Carl T. Hayden VA Medical Center (644/00) 

Non-VA Distribution

House Committee on Veterans’ Affairs 

House Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

House Committee on Oversight and Government Reform 

Senate Committee on Veterans’ Affairs 

Senate Appropriations Subcommittee on Military Construction, Veterans Affairs, and 

Related Agencies 

Senate Committee on Homeland Security and Governmental Affairs 

National Veterans Service Organizations 

Government Accountability Office 

Office of Management and Budget 

U.S. Senate: 

 Jon Kyl 

 John McCain 

U.S. House of Representatives: 

 Rick Renzi 

 Trent Franks 

 John Shadegg 

 Ed Pastor 

 Harry Mitchell 

 Jeff Flake 

 Raủl M. Grijalva 

 Gabrielle Giffords 

This report is available at http://www.va.gov/oig/publications/reports-list.asp 

VA Office of Inspector General 13