Veterans Health Care: VHA Has Taken Steps to Address Deficiencies in Its Logistics Program, but Significant Concerns Remain
Published: 2013-04-17T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: VHAs logistics program is responsible for the management of medical supplies and equipment in VAMCs inventories and the standardization of such items throughout VHA. Previous reports have pointed to deficiencies in VHAs logistics program.
GAO assessed (1) the extent to which VAMCs and networks have complied with new VHA requirements to remedy known deficiencies in its logistics program and (2) VHAs progress in enhancing its logistics program. GAO reviewed documents and interviewed officials to identify new requirements affecting VHAs logistics program. GAO then visited a nongeneralizable sample of five VAMCs and verified the extent to which the VAMCs and corresponding networks, which oversee VAMCs, were complying with VHAs new requirements. GAO also reviewed documentation of VHAs plans for funding, implementing, and evaluating efforts it is undertaking to enhance its logistics program, examined the extent to which VHA was on track to execute those plans, and assessed VHAs efforts against criteria in GAOs standards for internal control in the federal government.
section_title: What GAO Found
paragraphs: To address deficiencies in its logistics program, the Veterans Health Administration (VHA) issued new requirements in 2011 regarding the management of medical supplies and equipment in Veterans Affairs medical centers (VAMC) inventories, the standardization of these items, and the monitoring of VAMCs logistics programs. These requirements, some of which apply to VAMCs and some of which apply to networks, are designed to improve veterans safety and the cost-effective use of resources. GAO found that the five VAMCs GAO visited and their corresponding networks have partially complied with VHAs new requirements. Specifically, as of December 2012,
none of the VAMCs GAO visited fully complied with all of VHAs new requirements for managing inventories;
one VAMC GAO visited and two networks fully complied with VHAs new standardization requirements, and the remaining four VAMCs and three networks partially complied; and
four of the five VAMCs GAO visited and three of the five corresponding networks fully complied with the new monitoring requirements.
Because VAMCs GAO visited and the associated networks have only partially complied with these requirements, potential risks to patient safety and the inefficient use of resources remain.
In addition to the new VAMC and network requirements, VHA has other efforts underway thataccording to officialswill further improve the management and tracking of medical supplies and equipment in VAMC inventories and the standardization of such items across VHA. However, there are substantive uncertainties relating to implementation, funding, and operational issues that may impede their success, if not appropriately addressed. Specifically:
VHA is piloting a new inventory management system that is intended to replace VHAs existing systems for managing medical supply and equipment inventories. However, VHA has not fully funded the pilot, staffing resources to implement it at VAMCs are limited, and VHA has yet to resolve technical issues to ensure that this new system can interface with legacy systems. Furthermore, VHA has yet to develop criteria and collect corresponding data to evaluate the performance of the pilot.
VHA is also implementing a system for electronically tracking the location of certain medical supplies and equipment in VAMCs. However, there are uncertainties with respect to interoperability issues with other inventory management systems and resources to implement the system.
Lastly, VHA is establishing a program executive office that will provide logistics support and manage the standardization of medical supplies and equipment VHA-wide. However, the office has not been fully staffed and uncertainty exists about its continued implementation, because VHA's efforts to hire additional staff are on hold pending its evaluation of the effectiveness of this office.
section_title: What GAO Recommends
paragraphs: GAO recommends that VHA take steps to assist VAMCs and networks in complying with VHAs new logistics requirements and develop plans for implementing and evaluating the performance of its efforts to improve its logistics program, which address the concernssuch as system interoperability issuesGAO identified. VA concurred with GAOs recommendations and provided an action plan to address them.

section_title: Letter
paragraphs: The Department of Veterans Affairs (VA) provides health care services to  approximately 6 million eligible veterans, making it one of the largest  health care delivery systems in the nation. To ensure that veterans  receive safe and appropriate care and that financial resources are used  effectively, the Veterans Health Administration’s (VHA) logistics program  is responsible for coordinating the management of medical supplies and  equipment at VA medical centers (VAMC) and the standardization of such  items. Effective management of medical supplies and equipment  enables VAMCs to purchase and track such items so clinicians at VAMCs  have access to the items when needed and can identify medical supplies  and equipment if an item is recalled. Likewise, the standardization of  medical supplies and equipment helps VHA deliver a consistent standard  of care across its system and leverage its purchasing power through bulk  purchasing.
GAO, VA Health Care: Weaknesses in Policies and Oversight Governing Medical  Supplies and Equipment Pose Risks to Veterans' Safety, GAO-11-391 (Washington, D.C.:  May 3, 2011); VA Health Care: Preliminary Observations on the Purchasing and Tracking  of Supplies and Medical Equipment and the Potential Impact on Veterans’ Safety,   GAO-10-1038T (Washington, D.C.: Sept. 23, 2010).
These deficiencies may pose risks to veterans’ safety and limit the cost- effective use of resources. Furthermore, by VA’s own account, VHA has  failed in recent attempts to update its inventory management systems  because of a lack of VA leadership and other factors. In response, VHA  began making changes in 2011 to address inventory management and  standardization deficiencies. These changes include new logistics  program requirements that VAMCs and veterans integrated service  networks (network) must implement and other efforts aimed at  enhancing VHA’s logistics program. Members of Congress have raised  questions about both the extent to which VAMCs and networks are  complying with these requirements and VHA’s progress in enhancing its  logistics program. This report addresses (1) the extent to which VAMCs  and networks have complied with new VHA requirements to remedy  known deficiencies in its logistics program and (2) VHA’s progress in  enhancing its logistics program.
VA assigns each VAMC a complexity level—complex, intermediate, or standard—that  determines what level of inpatient surgeries may be performed in each of its surgery  programs. That model uses multiple variables to measure facility complexity arrayed along  four categories: facilities, equipment, workload, and staffing load. VAMCs assigned a  complex rating require special facilities, equipment, and staff for difficult operations, such  as cardiac surgery, whereas VAMCs assigned an intermediate or standard rating may  perform less-complex surgeries. VAMCs that are classified as surgically complex  generally have larger inventories of medical supplies and equipment than less-surgically  complex facilities and may therefore encounter greater challenges with managing and  standardizing these inventories.
VAMCs and networks were complying with VHA’s new requirements.  Given the small number of VAMCs that we visited and our process for  selecting them, the results of our review are not generalizable to all  VAMCs.
To assess VHA’s progress in enhancing its logistics program, we  reviewed documents describing efforts VHA is undertaking or plans to  undertake to enhance its logistics program and interviewed officials from  VA’s Office of Acquisition and Logistics; VHA’s Procurement and  Logistics Office; and five VAMCs we visited and their corresponding  networks. We reviewed documentation of VHA’s plans for funding,  implementing, and evaluating these efforts, and examined the extent to  which VHA was on track to execute those plans. We also assessed  progress against criteria in GAO’s standards for internal control in the  federal government.
We conducted this performance audit from May 2012 to April 2013 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: VHA provides health care services to various veteran populations— including an aging veteran population and a growing number of younger  veterans returning from military operations in Afghanistan and Iraq. VHA’s  152 VAMCs offer outpatient, residential, and inpatient services, ranging  from primary care to complex specialty care, such as cardiac surgery and  spinal cord injury care. In providing these health care services to  veterans, clinicians at VAMCs use a variety of medical supplies and  equipment, which must be appropriately managed and standardized in  order to help ensure safe and cost-effective care.
subsections: section_title: Logistics Program Organizational Structure
paragraphs: The functions carried out by VHA’s logistics program include the  management of medical supplies and equipment in VAMCs’ inventories  and the standardization of these items.
At the VA headquarters level, several offices are involved in the logistics  program. VA’s Office of Acquisition, Logistics, and Construction develops  policies related to department-wide inventory management and  standardization of medical supplies and equipment. VHA’s Procurement  and Logistics Office develops requirements, based on VA’s policies,  some of which are applicable to networks and some of which are  applicable to VAMCs. VA’s Management Quality Assurance Service  assesses each VAMC for compliance with logistics requirements every 7  to 8 years using a standardized check list, which is updated annually.
Each of the 21 networks is responsible for complying with applicable VHA  requirements and ensuring compliance with VHA’s requirements by the  VAMCs within its network. In turn, the logistics department at each of the  152 VAMCs is responsible for inventory management and  standardization, and must comply with applicable VHA requirements.
section_title: Logistics Program Deficiencies in Previous Reports
paragraphs: In past reports, GAO and VHA identified major deficiencies related to  VHA’s management of medical supply and equipment inventories and the  standardization of such items. These deficiencies included the following:  Limitations with inventory management systems. A 2011 GAO report and  VHA internal reports from 2008 and 2011 identified that the two inventory  management systems that VHA currently requires VAMCs to use to track  the type and quantity of medical supplies and equipment at their facilities  rely on antiquated technology and therefore have limited functionality.Specifically, the Generic Inventory Package (GIP)—used to track medical  supplies, such as needles and scalpel blades—and the Automated  Engineering Management System/Medical Equipment Reporting System  (AEMS/MERS)—used to track medical equipment, such as  endoscopes—cannot provide VHA or VAMCs with system-wide data on  the types and quantities of medical supplies and equipment in use at  VAMCs. This occurs because each VAMC maintains its own inventory  management systems, and data have not been entered consistently  across VAMCs. Without system-wide information, VHA’s ability to identify  VAMCs’ noncompliance with certain inventory management requirements  is limited, which in turn may pose risks to veterans’ safety and limit VHA’s  cost effectiveness. In addition, because of the antiquated technology on  which GIP and AEMS/MERS are based, these systems can only be  updated to a limited extent, meaning that VHA is largely unable to expand  the capabilities of these systems.
Gaps in requirements for managing inventories. In 2011, we reported that  VHA’s requirements for managing medical supply and equipment  inventories had gaps concerning the types of medical supplies and  equipment VAMCs must track in their inventories, and that, as a result,  VAMCs did not track all the items being used in their facilities. In that  report, we also found that items clinical department staff had purchased  were sometimes not captured in the medical supply and equipment  inventories. Because VAMCs did not track all the items being used in  their facilities, they had difficulty ensuring that they maintained  appropriate quantities of items to stock, resulting in unavailable or expired  medical supplies. VAMCs with incomplete inventories may also have  been unable to quickly identify and remove medical supplies and  equipment that are the subject of a manufacturer or U.S. Food and Drug  Administration recall or patient safety alert so that they would not be used  when providing care to veterans.
Lack of standardization of medical supplies and equipment. While VHA  has had efforts in place to standardize medical supplies and equipment, a  2011 VHA internal report found that VHA did not have a systematic  process for identifying the medical supplies and equipment that could be  standardized. In addition, VHA did not have a systematic process to  determine the potential financial and clinical effects of standardizing a  particular item throughout VAMCs, and VHA lacked appropriate  involvement of clinical staff in the standardization process. Clinical staff  must be involved in this process, because—as the users of medical  supplies and equipment—they have a unique understanding of the  features offered by each item. Greater standardization could allow VHA to  better leverage its purchasing power by establishing national contracts  and blanket purchase agreements and to increase veterans’ safety. For  example, if a VAMC standardized certain types of reusable medical  equipment (RME), it could reduce the number of different types of RME  available for use in the facility.different reprocessing methods that VAMC staff would need to be familiar  with in order to clean, disinfect, and sterilize each piece of RME properly,  which might reduce instances of inadequate or improper reprocessing of  these items.
section_title: VAMCs and Networks We Visited Have Partially Complied with New VHA Requirements to Address Deficiencies in Its Logistics Program
paragraphs: To address deficiencies in its logistics program, VHA issued new  requirements in 2011 mainly in three areas—management of medical  supplies and equipment in VAMCs’ inventories, the standardization of  these items, and the monitoring of VAMCs’ logistics programs. These  requirements, some of which apply to VAMCs and some of which apply to  networks, are designed to improve veterans’ safety and the cost-effective  use of resources. We found that the five VAMCs we visited and their  corresponding networks have partially complied with VHA’s new  requirements, as of December 2012.
subsections: section_title: None of the VAMCs We Visited Fully Complied with Requirements for Managing Inventories
paragraphs: None of the VAMCs we visited fully complied with all of VHA’s new  requirements for managing inventories. These new requirements  include three components: (1) having logistics staff manage all medical  supplies, (2) establishing and maintaining a list of all medical supplies  and RME approved for use at the facility, and (3) entering all stock  surgical and dental instruments—a type of RME—into GIP. (Table 1  lists each of the new requirements for managing inventories and each  VAMC’s compliance with these requirements.)
Specifically, compliance with these requirements was as follows:
At two of the five VAMCs, some medical supplies were still being  managed by staff from clinical departments instead of logistics staff as  required. Staff at these two facilities cited a lack of staffing  resources in light of the additional responsibilities that logistics  department staff had to take on as the reason for not fully meeting the  VHA requirement. One of these VAMCs only allows staff from two  clinical departments to manage medical supplies and requires these  staff to comply with VHA’s review, approval, and tracking processes.  Since our visit, the other VAMC with partial compliance was able to  secure additional staffing resources and expects to achieve  compliance with this requirement in the near future. The purchase of  medical supplies by clinical department staff may circumvent the  required review, approval, and tracking processes and thereby poses  risks to veterans’ safety and limits the cost-effective use of resources.
Although all five VAMCs had established a list of medical supplies and  RME approved for use at the facility, these lists were incomplete at  each of the five VAMCs. Specifically, at the five VAMCs, based on  VHA data, between 1 percent and 14 percent of medical supplies and  RME that had been purchased in October 2012 were not captured on  the list, although the percentage of items not captured has decreased  at three of these VAMCs since September 2012. VAMC and  network officials mainly attributed the incomplete lists of approved  medical supplies and RME to two factors. First, a lack of training for  logistics program staff has led to inaccuracies in entering medical  supplies and RME on this list. Second, such items may not be  consistently entered on the list when they are managed by clinical  department staff rather than logistics staff. VAMCs with an incomplete  record of medical supplies and RME in use at the facility may have  difficulty determining whether they possess an item targeted by a  manufacturer or Food and Drug Administration recall, or patient safety  alert. Moreover, VHA’s Procurement and Logistics Office is in the  process of establishing an electronic database that will contain all  medical supplies and RME approved for use across VHA, which will  eventually allow VHA to determine which items each VAMC has  approved for use. Because data are extracted from each VAMC’s  list of approved medical supplies and RME to populate VHA’s  database, each VAMC needs to achieve full compliance with this  requirement in order for the database to be complete.
Officials from four of the five VAMCs said that they had not entered all  stock surgical and dental instruments into GIP because they lack the  staffing resources necessary to do this. A VAMC official said given the  high volume of existing surgical and dental instruments that have not  been entered into GIP at each VAMC, this requirement would likely  take months to complete. VAMC officials stated that in light of limited  resources available to comply with this requirement, they would  benefit from guidance from VHA such as how to prioritize the entry of  instruments into GIP. At the one VAMC that reported achieving full  compliance with this requirement, an official told us that the process of  entering these instruments into GIP was cumbersome and resource- intensive and that achieving compliance required extensive  collaboration between logistics staff and sterile processing staff within  the VAMC.
section_title: One VAMC We Visited and Two Networks Have Fully Complied with VHA’s Standardization Requirements
paragraphs: One VAMC we visited and two networks fully complied with VHA’s new  standardization requirements, and the remaining four VAMCs and three  networks have partially complied. For VAMCs, these new requirements  include: (1) establishing and maintaining a clinical product review  committee; (2) reviewing and approving medical supplies and RME that  have not previously been used at the VAMC, including emergency  purchases of these items; and (3) performing standardization  activities—including identifying opportunities for standardizing medical  supplies and RME within the facility and ensuring facility compliance with  national contracts and blanket purchase agreements for medical supplies  and RME. For networks, these new requirements include: (1) establishing  and maintaining a network commodity standardization committee and four  subcommittees; (2) reviewing the activities of the VAMC clinical product  review committees; and (3) performing standardization activities— including identifying opportunities for standardization, facilitating the  standardization of medical supplies and RME, and tracking and reporting  the benefits resulting from the implementation of standardization  initiatives.
Extent of VAMCs’ compliance. Four of the five VAMCs we visited had   not fully complied with all of VHA’s new standardization requirements.  (Table 2 lists each of the new standardization requirements and each  VAMC’s compliance with these requirements.)
Specifically, compliance with these requirements among the five VAMCs  we visited was as follows:
Each of the five VAMCs had established a clinical product review  committee; however, at one of these VAMCs, the committee was not  meeting on a regular basis. An official at this VAMC stated that the  committee had only been meeting sporadically because clinical staff— who are required to be represented on the committee—were not  available to attend the meetings. In addition, at another VAMC, the  committee was not established until recently—9 months after the  deadline for establishing it. However, prior to the establishment of the  clinical product review committee, some of its required functions, such  as the review and approval of items that had not previously been  purchased, were being performed by another VAMC committee.  Regular clinical product review committee meetings, which include  appropriate representation of clinical and nonclinical staff, are key to  ensuring that new medical supplies and RME are reviewed and  approved prior to their use and to identify opportunities for  standardization.
Three of the five VAMCs lacked a documented process for reviewing  emergency purchases. Specifically, at one VAMC, emergency  purchases were made without any approval, while at the other two  VAMCs, the process for reviewing and approving these purchases  was not documented; however, officials told us that an informal review  is conducted. Without a documented process for review and approval  of emergency purchases, the VAMCs may purchase these items  without evaluating their cost effectiveness or likely effect on veterans’  care.
Three VAMCs did not perform all of the required standardization  activities. Specifically, one VAMC did not identify opportunities for  standardization within its clinical product review committee. Officials at  this VAMC told us that this was because the committee had not been  meeting regularly because of a lack of clinical department staff  availability. Identifying opportunities for standardization is an important  first step to standardizing medical supplies and RME, which may  ultimately result in cost savings and greater continuity of care.  Furthermore, officials at this VAMC and two others did not have  measures in place to fully ensure compliance with national contracts  and blanket purchase agreements for medical supplies and RME.  Officials at one of these VAMCs were only assessing compliance with  newly issued national contracts and blanket purchasing agreements.  Officials at the other two VAMCs used an electronic tool—made  available by VHA—to ascertain whether items they were purchasing  were available at lower prices through a national contract or blanket  purchasing agreement. However, VHA officials told us that this tool  was insufficient to assess compliance because it does not provide  enough information to determine whether VAMCs are purchasing all  of the standardized medical supplies and RME available on these  contracts and blanket purchasing agreements. At the two VAMCs  that were in full compliance with this requirement, the corresponding  networks had developed a spreadsheet that enabled the VAMCs to  assess whether they were purchasing standardized items on national  contracts and blanket purchasing agreements by manually reviewing  their purchase histories. Both of these networks required the VAMCs  to assess their compliance with a certain number of national contracts  and blanket purchasing agreements each month and report their  findings to the network. Assessing compliance with national contracts  and blanket purchasing agreements is important because VAMCs that  are not in compliance may not be taking advantage of cost-effective  options for purchasing medical supplies and RME that have been  standardized.
Extent of network compliance. Two of the five networks we visited fully  complied with all of VHA’s new standardization requirements, and the  remaining three only partially complied. (Table 3 lists the requirements for  standardization and each network’s compliance with the requirements.)
Specifically, compliance with these requirements was as follows:
While each of the five networks had established a commodity  standardization committee and the four required subcommittees, at  three of the networks the committee and its subcommittees were not  meeting on a regular basis, as required. Officials at these networks  stated that the committee had only been meeting sporadically  because clinical or logistics program staff from the VAMCs within the  networks—who are required to be represented on the committee and  its subcommittees—were not available to attend the meetings.  Officials at two networks told us that clinical staff serve on this  committee as a collateral duty and often lack the time to participate in  committee meetings. Similarly, officials at another network told us that  VAMC logistics staff were not always available to participate in  committee meetings in light of additional responsibilities they had to  take on. Regular network commodity standardization committee  meetings, which include appropriate representation of clinical and  nonclinical staff, are key to identifying and pursuing opportunities for  standardization.
One of the five networks did not review the activities of the VAMC  clinical product review committee. Network officials told us that they  were not receiving committee minutes from the VAMCs but that they  would begin requesting these minutes in the future, which would allow  the network to review the committees’ activities. Review of the  VAMCs’ clinical product review committees’ activities is important to  ensure that the committees are functioning effectively and to help  identify standardization opportunities, which can lead to financial  savings. Officials at one of the two networks that was partially  complying with this requirement told us that instead of reviewing the  activities of the VAMCs’ clinical product review committee, network  officials extract data on the VAMCs’ purchases to identify items that  are frequently used or costly—in an effort to standardize them across  the network. Officials at the other network that was partially complying  told us that they review the activities of the VAMCs’ clinical product  review committee only once annually, as part of a network external  review of VAMCs’ logistics programs. Because these networks did not  regularly review the activities of the VAMC committees, they may not  have been aware of new supply and RME purchases the VAMCs are  considering. If other VAMCs within the networks are considering  similar purchases, the networks may be able to consolidate these  purchases across multiple VAMCs and thereby achieve financial  savings.
At one network, the commodity standardization committee had not  performed any standardization activities because clinical staff from the  VAMCs within the network were not available to attend the committee  meetings and identify medical supplies and RME for standardization.  At another network that achieved partial compliance, the commodity  standardization committee and its subcommittees had not met  regularly because VAMC logistics staff were not available to attend  committee meetings. Instead, network officials performed some  standardization activities outside of the committee. At another  network, the committee had just begun the process of reviewing  VAMCs’ purchase histories to identify opportunities for standardization  but had not developed specific plans to standardize medical supplies  or RME because of a lack of clinical staff involvement. In contrast, the  two networks that fully complied with this requirement were able to  identify items for standardization, facilitate the standardization  process, and implement the standardized items at the VAMCs within  the network. For example, at one of these networks, a medical supply  used in certain imaging procedures was standardized across the  network, resulting in an estimated cost savings of $1.7 million over   5 years, according to network officials.
section_title: Four VAMCs We Visited and Three Networks Have Fully Complied with VHA’s Monitoring Requirements
paragraphs: Four of the five VAMCs we visited and three of the five corresponding  networks had fully complied with the new monitoring requirements at the  time of our visit. One VAMC and two networks partially complied. For  VAMCs, these requirements include conducting an annual facility internal  review using VA’s Management Quality Assurance Service checklist,  developing an action plan for correcting deficiencies identified during the  review to submit to the network, and ensuring that all identified  deficiencies from the internal review are corrected within 90 days after  they were identified. The VAMC that only partially complied with these  new monitoring requirements failed to correct identified deficiencies within  90 days after they were identified or request an extension. While each of  the VAMCs either fully or partially complied, VAMC officials stated that  they were unclear about some of the items on the checklist. For example,  these officials pointed out that several of the checklist items referred to  VHA requirements that appeared to be conflicting, and thus they were  unsure how to interpret those items. Officials from VHA’s Procurement  and Logistics office told us that they were in the process of issuing  guidance to VAMCs and networks on how to interpret each checklist item;  however, at the time of our report, this guidance had not yet been issued.
VHA requires that an extension be requested for deficiencies that cannot be addressed  within 90 days of the date of the network external review. requirements helps ensure the cost-effective use of resources and patient  safety by enabling VAMCs and networks to identify and correct  deficiencies in the management of medical supplies and equipment.
section_title: VHA Has Additional Efforts Underway to Further Improve Its Logistics Program, but They Face Uncertainty about Implementation
paragraphs: In addition to the new VAMC and network requirements, VHA has other  efforts underway that—according to officials—will further improve the  management and tracking of medical supplies and equipment in VAMC  inventories and the standardization of such items across VHA.  Specifically, VHA is (1) developing a new inventory management system  that will replace VHA’s existing systems for managing medical supply and  equipment inventories, (2) developing a system for electronically tracking  the location of certain medical supplies and equipment in VAMCs, and   (3) establishing a program executive office that will provide logistics  support and manage the standardization of medical supplies and  equipment VHA-wide. However, there are uncertainties related to  implementation, funding, and operational issues that may impede their  success, if not appropriately addressed.
subsections: section_title: VHA Is Piloting a New Inventory Management System, but Must Overcome Major Hurdles before It Can Be Fully Implemented VHA-Wide
paragraphs: In early 2012, VHA began to pilot a new inventory management system,  called Service Oriented Architecture Research and Development  (SOARD) that relies on commercially available asset management  software. VHA is developing SOARD to eventually replace VHA’s  antiquated inventory management systems—GIP and AEMS/MERS.  VHA established a project team that is responsible for planning and  implementing the SOARD pilot at selected VAMCs. SOARD project  team officials told us that SOARD will provide VHA with enhanced  inventory management capabilities that are not available through GIP and  AEMS/MERS. For example, these planned capabilities include a link to  an electronic database of recall information for medical supplies and  equipment and a single Web-based system that contains systemwide  data on the types and quantities of medical supplies and equipment in  use at VAMCs that SOARD project team officials told us will enable VHA  to search, view, and report aggregate data from each VAMC.
VA has made two previous unsuccessful attempts to update the inventory  management systems in use at VAMCs. In a previous report, GAO  attributed these failures to the lack of a reliable program schedule and  cost estimate, as well as concerns about the capabilities of the new  inventory management systems, among other factors.
VHA is concurrently developing a new system—called Real Time Location System  (RTLS)—for electronically tracking certain medical supplies and equipment. the SOARD project team had to identify alternative funding sources.VHA’s Office of Emergency Management and Procurement and  Logistics Office provided some funding for SOARD for fiscal year  2012. However, according to officials, of the $16.4 million that the  SOARD project team requested for fiscal year 2013, it only received  $3.4 million, which has required the team to scale back its efforts and  may not allow it to remain on target with its implementation plan.  SOARD project team officials told us that it is unlikely that VHA will  allocate additional funding for SOARD in fiscal year 2013. Given the  budgetary uncertainties facing the federal government, as well the fact  that VA has not committed to funding SOARD, the extent to which  funding will be available for SOARD in future years is unclear.
Resources needed for implementation. A VAMC official at the initial  SOARD pilot site told us that the preparations for the implementation  of SOARD, which consist of updating existing inventory databases  and training staff to use SOARD, are highly resource and labor  intensive, often requiring highly trained and experienced staff to  complete. For example, at this VAMC, two engineering staff members  spent 3 months updating the inventory databases. The official stated  that other facilities with relatively fewer resources and less experience  would likely face major challenges completing the necessary steps to  implement SOARD. On the basis of feedback from this pilot site,  SOARD project team officials have decided to provide additional  training as well as greater on-site assistance with preparations for the  implementation of SOARD at future pilot sites. However, SOARD  project team officials acknowledged that it is a challenge to support  several pilot sites with their current resources and nearly impossible to  support simultaneous deployment at additional sites. As a result,  officials told us that the expansion of SOARD to additional pilot sites is  dependent on the SOARD project team being able to hire additional  staff members, who will provide support to pilot sites.
System interoperability issues. It is currently unclear whether SOARD  will be able to provide certain capabilities that are supported by the  existing inventory management systems. For example, SOARD  currently does not have the capability to interface with VHA’s financial  management system. If this capability is not established, VAMC staff  would have to manually enter information on medical supply and  equipment purchases in two separate systems, which would increase  their workload. SOARD project team officials told us that they are  working on solving this interoperability issue but have not estimated a  time frame for doing so.
Furthermore, SOARD project team officials told us that the Web- based product on which SOARD relies was designed to be used for  equipment management and that—to their knowledge—only a small  number of health care entities use this product to manage medical  supply inventories. SOARD project team officials told us that they are  working with officials at several entities that use the product for this  purpose in order to develop this capability for VHA; however, they  have no timeline for when they expect to achieve this capability.
SOARD project team officials told us that—over the course of the pilot— officials are monitoring the development and implementation of SOARD,  including whether each phase of the pilot remains on-time and within its  budget, and making changes to the system based on feedback that they  receive from users at the pilot sites and other stakeholders. However, we  found that they had not yet developed formal criteria that rely on data  collected from the pilot sites for measuring the overall performance of the  pilot, including whether anticipated benefits are being achieved.  According to GAO internal control standards, performance measures  need to be established and monitored, so that analyses can be made and  appropriate actions can be taken. Measuring performance would allow  VHA to track the progress it is making towards achieving its anticipated  benefits from SOARD implementation and would give officials crucial  information on which to base their decisions regarding the necessary  modifications and successful implementation of SOARD. Furthermore,  VHA’s implementation plan for SOARD is ambitious—with nationwide  implementation of SOARD’s equipment management capabilities  expected by September 2015—which may not allow adequate time to  address the uncertainties associated with the program, evaluate the  performance of the pilot, and address identified concerns. Given the  uncertainties that surround the SOARD pilot and the fact that VA has  made two previous unsuccessful attempts at updating the inventory  management systems in use at VAMCs, it is important that VHA have a  realistic implementation plan—vetted thoroughly in VHA—and assess the  SOARD pilot using formal evaluation criteria to increase the probability of  success.
section_title: VHA Is Implementing a New System for Electronically Tracking Medical Supplies and Equipment, but Concerns Exist about System Interoperability and Resources
paragraphs: At the same time SOARD is being piloted at several VAMCs, VHA is  preparing to roll out a system for physically tracking certain medical  supplies and equipment, using radio frequency identification and other  technologies, called Real Time Location System (RTLS). Officials  expect that physical tracking of medical supplies and equipment will  enable VAMCs to reduce expenses associated with lost or stolen supplies  and equipment and help improve patient safety by—for example—being  able to systematically track RME through reprocessing.
According to RTLS program officials, VHA has budgeted up to   $550 million through fiscal year 2014 to implement RTLS nationwide  through a contractor. However, VHA’s nationwide RTLS contract was  subjected to a bid protest in 2012, which was upheld and resulted in VHA  having to reopen the acquisition. In January 2013, VHA selected a new  RTLS contractor which, according to RTLS program officials, will allow for  the implementation of RTLS VHA-wide to begin in March 2013—6 months  later than anticipated. Because RTLS program officials expect VHA to  make funding for RTLS implementation available only through fiscal year  2014, VHA is attempting to implement RTLS VHA-wide by that time.
According to a VHA official, separately from VHA-wide RTLS  implementation, RTLS is currently being rolled out at all of the VAMCs in   These networks began rolling out  two networks as demonstration sites.
RTLS before VHA decided to establish a contract for nationwide RTLS  implementation and are using a different vendor than the one that will  eventually provide RTLS nationwide to all VAMCs. The demonstration  sites are providing VHA with lessons learned for future implementation of  RTLS at all VAMCs.
To prepare for VHA-wide RTLS implementation, VHA has begun to equip  VAMCs with wireless capabilities and, according to VHA officials, is  requiring VAMCs to update existing inventory databases to help ensure  that RTLS is populated with accurate data on medical supplies and  equipment. In addition, 6 months prior to RTLS implementation, each  network will dedicate one staff member to RTLS implementation activities.  However, like SOARD, there are uncertainties with respect to  interoperability issues and resources that may prevent RTLS from being  fully implemented by the end of fiscal year 2014:  System interoperability issues. Once it is operational, RTLS is meant to  interface with VHA’s current GIP and AEMS/MERS systems as well as  with SOARD. RTLS program officials told us that they believe it would  likely take 6 to 12 months for VHA’s contractor to develop separate  interfaces between RTLS and these various systems once the RTLS  contract has been finalized.be known until VHA’s contractor begins to develop these interfaces.
However, a more precise timeline will not  Furthermore, some VAMCs are in the process of rolling out separate  systems for tracking the location of surgical and dental instruments, which  is a function that RTLS will provide. According to RTLS program officials,  once RTLS is implemented at the 44 VAMCs that already have a system  for instrument tracking, 14 VAMCs will have to replace these systems  because they are not compatible with the instrument tracking capability  provided by RTLS. In fiscal year 2012, after RTLS program officials  discovered that 24 additional VAMCs were planning to purchase their  own instrument tracking systems, these officials placed a moratorium on  VAMCs acquiring their own instrument tracking systems in order to  prevent this incompatibility issue from arising at additional VAMCs.
Resources needed for implementation. Currently, not all VAMCs have  wireless capabilities—which are necessary before RTLS can be  implemented—and at some facilities that have these capabilities, the  wireless signals do not cover the entire facility. RTLS program officials  told us that some VAMCs are difficult to equip with wireless capabilities  because of the age or configuration of the buildings, or both, and that this,  among other issues, has resulted in the installation of wireless capabilities  taking longer than initially anticipated. Furthermore, funding has not  been identified for the installation of wireless capabilities at the VAMCs in  several networks; however, RTLS program officials told us that they are  working with VA’s Office of Information Technology to secure funding for  this purpose. RTLS program officials plan to implement RTLS first at  VAMCs that have full wireless capabilities, but nationwide RTLS  deployment hinges on wireless capabilities being in place at each VAMC.
Furthermore, as with SOARD preparation activities for updating existing  inventory management systems, data in AEMS/MERS must be updated  in preparation for RTLS implementation, so that the data used to populate  RTLS is accurate. According to RTLS program officials, these activities  are resource intensive and have resulted in some VAMCs requesting that  RTLS be installed at their facilities during the later stages of RTLS  implementation. RTLS program officials told us that they have made  training available to VAMCs to help them conduct the necessary  preparations for RTLS. However, officials told us that ultimately these  preparation activities need to be completed by each VAMC prior to RTLS  installation.
section_title: VHA’s New Program Executive Office for Providing Logistics Support and Managing Standardization Nationwide Faces Uncertainty about Its Continued Implementation
paragraphs: In August 2011, VHA established a program executive office, within its  Procurement and Logistics Office, for providing logistics support and  managing standardization. This office consists of a logistics operations  office and six program-management offices—aligned along functional  areas—that are tasked with identifying medical supplies and equipment  for standardization and facilitating the process of standardizing them.  The logistics operations office is responsible for providing overall logistics  program support across VHA, which includes monitoring VAMCs’  compliance with national contracts and blanket purchase agreements and  other logistics metrics. According to VHA officials, each of the six program  management offices are expected to collaborate with teams of clinicians  and other stakeholders, who can provide insight on identifying certain  medical supplies and equipment for standardization and assessing the  feasibility of standardizing these items; coordinate with VA’s Office of  Acquisition and Logistics to develop business cases for standardizing  these items; and coordinate with VA’s contracting offices, which are  responsible for establishing nationwide contracts for standardized items.  After contracts have been established, the program-management offices  are responsible for helping VAMCs implement standardized items.  According to VHA officials, the program-management offices will also  collaborate with the network commodity standardization committees to  avoid duplication of efforts. At the time of our report, the program- management offices had identified 179 items as potential standardization  opportunities. VA’s contracting offices had awarded national contracts for  six of these items and a regional blanket purchasing agreement for one  item. However, VHA did not provide documentation for some of these  items to support that VAMCs have been instructed to implement them at  their facilities. We were unable to verify whether VAMCs were using the  standardized items, and Procurement and Logistics Office officials told us  that they were not systematically assessing VAMCs’ compliance.
VHA had originally planned to allocate about 140 staff members to the  entire program executive office; however, as of February 2013, according  to Procurement and Logistics Office officials, only 43 positions had been  filled. Officials told us that efforts to hire additional staff are currently on  hold because VHA intends to evaluate the effectiveness of the new  program executive office before committing additional resources to it. At  the time of our report, officials had not yet developed a plan for  conducting this evaluation.
section_title: Conclusions
paragraphs: To its credit, VHA has developed new requirements to address  deficiencies in its logistics program that it expects will help improve  patient safety and the cost-effective use of resources. However, because  VAMCs we visited and the associated networks have only partially  complied with these requirements, the potential risks to patient safety and  the inefficient use of resources remain.
VHA’s efforts to enhance its logistics program—developing a new  inventory management system, known as SOARD, rolling out a new  system for electronically tracking certain medical supplies and equipment  at VAMCs, known as RTLS, and establishing a program executive office  that provides logistics support and manages standardization of medical  supplies and equipment VHA-wide—offer VHA potential benefits in terms  of patient safety and the cost-effective use of resources. However, these  efforts face major concerns and uncertainties regarding their  implementation. Unless appropriately addressed, VHA may not  successfully implement these efforts and could face unnecessary cost  increases and wasted resources. Specifically, without an evaluation plan  that includes specific criteria and appropriate solutions to address the  concerns and uncertainties we identified, VHA’s SOARD pilot runs the  risk of not meeting its objectives and—in the worst case—meeting a  similar fate as previous unsuccessful attempts to update VHA’s inventory  management systems. Furthermore, the implementation plan for RTLS  lacks updated timelines to take into account (1) establishing  interoperability between RTLS and VHA’s inventory management  systems and SOARD, (2) installing wireless capabilities at VAMCs, and  (3) data cleansing activities. An implementation plan with updated  timelines would help ensure that VHA remains on track for implementing  RTLS. Lastly, VHA does not currently have a plan for evaluating the  success of its new program executive office for providing logistics support  and managing standardization, which would help it determine whether  this office is meeting its intended goals of improving VHA’s logistics  program and increasing cost effectiveness.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of Veterans Affairs direct the Under  Secretary for Health to take the following actions:  To assist VAMCs and networks in complying with VHA’s new logistics  requirements, and thereby help ensure patient safety and the cost- effective use of resources, determine appropriate resource levels for VAMC logistics programs  and provide training and best practices to VAMCs to help them ensure that logistics staff, rather than clinical department staff,  manage all medical supplies; ensure that all items that VAMCs purchase are captured on their  lists of approved medical supplies and RME; and enter all stock surgical and dental instruments into the appropriate  reinforce through communication the requirement that VAMCs  develop a formal process for reviewing and approving emergency  purchases of medical supplies and RME, develop a systematic method using available VHA data to assist  VAMCs in tracking compliance with national contracts and blanket  purchase agreements, and  issue guidance to VAMCs and networks regarding interpretation of the  Management Quality Assurance Service checklist and reinforce  through communication the requirement that VAMCs correct  deficiencies within 90 days after they were identified or request an  extension and that networks use the entire checklist when conducting  their reviews of VAMC logistics programs and complete their review  within the required time frame.
To address concerns about VHA’s pilot of a new inventory management  system, known as SOARD, develop a written plan that outlines how the  SOARD pilot will be evaluated before the pilot is expanded to additional  VAMCs or preparations are made to implement SOARD nationally. This  plan should include formal criteria for evaluating the overall performance  of the pilot, which are based on consistent data collected from each pilot  site, as well as a strategy for addressing concerns about  funding needed for SOARD, staffing resources needed for SOARD implementation at VAMCs, and establishing interoperability between SOARD and legacy systems.
To address concerns about VHA’s implementation of a system for  electronically tracking medical supplies and equipment, known as RTLS,  develop an updated implementation plan that reflects timelines for establishing interoperability between RTLS and VHA’s inventory  management systems and SOARD,  installing wireless capabilities at VAMCs once funding is available for  this effort, and  completing data cleansing activities at VAMCs in preparation for  RTLS implementation.
To address concerns about VHA’s program executive office for providing  logistics support and managing the standardization of medical supplies  and equipment, develop a plan for measuring the success of the program  executive office.
section_title: Agency Comments and Our Evaluation
paragraphs: VA provided written comments on a draft of this report, which we have  reprinted in appendix I. In its comments, VA generally agreed with our  conclusions, concurred with our recommendations, and described the  department’s plans and time frames to implement each of our seven  recommendations. VA did not provide any technical comments.
With respect to its plans for addressing our recommendations, VA  described specific actions that VHA, networks, and VAMCs plan to take to  improve VAMCs’ and networks’ compliance with VHA’s logistics  requirements. VA also stated that it is developing a written plan that  outlines how the SOARD pilot will be evaluated before the pilot is  expanded and includes a strategy for addressing concerns we identified  about the pilot. Moreover, VA stated that it is updating its existing  implementation plan for RTLS and developing a plan for measuring the  success of its program executive office for providing logistics support and  managing standardization of medical supplies and equipment.
In its general comments, VA disagreed with our assessment that  uncertainty exists about the continued implementation of VHA’s program  executive office for providing logistics support and managing  standardization of medical supplies and equipment. Specifically, VA  stated that there is no uncertainty about the continued implementation of  this office. VA stated that this office is being stood up in three hiring  phases, the first of which is 86 percent complete, with a planned  completion date still months away. However, at the time of our audit work,  the implementation plan we received from VHA officials stated that the  first hiring phase was scheduled to be completed by September 2012, a  milestone target that VHA has exceeded by more than 6 months.  Moreover, VHA officials told us that VHA intended to evaluate the  effectiveness of the program executive office before deciding whether to  proceed to the second and third hiring phases, which further indicates  uncertainty as to whether or how VA will proceed with phases 2 and 3,  pending the outcome of its evaluation.  Therefore, we concluded that  uncertainty existed with regard to the continued implementation of this  office. VA also stated that VHA currently has a “plan in development” to  evaluate the success of its program executive office; however, VA has  provided us with neither a copy of this plan for review nor specifics on the  nature of the plan it is developing.
We are sending copies of this report to appropriate congressional  committees and the Secretary of Veterans Affairs. The report is also  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or williamsonr@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs are on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix II.
section_title: Appendix I: Comments from the Department of Veterans Affairs
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Mary Ann Curran, Assistant  Director; Kathryn Black; Elizabeth Conklin; and Michael Zose made key  contributions to this report. Elizabeth Morrison assisted in the message  and report development; and Sandra George provided legal support.