VA Health Care: Preliminary Observations on the Purchasing and Tracking of Supplies and Medical Equipment and the Potential Impact on Veterans' Safety
Published: 2010-09-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: VA clinicians use expendable medical supplies--disposable items that are generally used one time--and reusable medical equipment (RME), which is designed to be reused for multiple patients. VA has policies that VA medical centers (VAMC) must follow when purchasing such supplies and equipment and tracking--that is, accounting for--these items at VAMCs. GAO was asked to evaluate VA's purchasing and tracking of expendable medical supplies and RME and their potential impact on veterans' safety. This testimony is based on GAO's ongoing work and provides preliminary observations on (1) the extent of compliance with VA's requirements for purchasing and tracking of expendable medical supplies and RME and (2) steps VA plans to take to improve its oversight of VAMCs' purchasing and tracking of expendable medical supplies and RME. GAO reviewed VA policies and selected three requirements that GAO determined to be relevant to patient safety. At each of the five VAMCs GAO visited, GAO reviewed documents used to identify issues related to the three requirements and interviewed officials to gather further information on these issues. The VAMCs GAO visited represent different surgical complexity groups, sizes of veteran populations served, and geographic regions. GAO also interviewed VA headquarters officials and obtained and reviewed documents regarding VA headquarters' oversight. GAO shared the information in this statement with VA officials.
section_title: What GAO Found
paragraphs: During its preliminary work at the five selected VAMCs, GAO found inconsistent compliance with the three VA purchasing and tracking requirements selected for review. Noncompliance with these requirements created potential risks to veterans' safety. (1) Requirement for VAMC committee review and approval. At two of the VAMCs, officials stated that the required designated committee review and approval occurred for all of the expendable medical supplies and RME that the VAMCs had not previously purchased. These reviews are designed to evaluate the cost of the purchase as well as its likely impact on veterans' care. However, at the remaining three VAMCs, officials stated that the required committee review and approval of the expendable medical supplies, such as those used in conjunction with dialysis machines, did not always occur. As a result, these purchases were made without evaluating the likely impact on veterans' care. (2) Requirement for signatures of purchasing and approving officials. At one of the VAMCs, VAMC officials discovered that a staff member in a dialysis department ordered an expendable medical supply item for use in dialysis machines, without obtaining the required signature of an approving official. That staff member ordered an incorrect item, the use of which presented a risk of exposing veterans to infectious diseases, such as Human Immunodeficiency Virus. (3) Requirement for entering information in VA's inventory management systems. Officials from one of the five VAMCs told GAO that information about expendable medical supplies that were ordered on a recurring basis was entered into the appropriate inventory management system, as required. At the remaining four VAMCs, officials told GAO that information about certain expendable medical supplies--those used in a limited number of clinical departments such as dialysis departments--was not always entered into the system. This lack of information can pose a potential risk to veterans' safety; in the event of a recall of these items, these VAMCs may have difficulty determining whether they possess the targeted item. VA reports that it plans to improve its oversight of VAMCs' purchasing and tracking of expendable medical supplies and RME. For example, VA headquarters officials stated that, effective October 1, 2010, VA plans to shift greater responsibility for reviews of purchase card transactions from the VAMCs to the Veterans Integrated Service Networks, which are responsible for overseeing VAMCs. VA headquarters officials also told GAO that VA is developing a new inventory management system, which it expects will help improve VA's ability to track information about expendable medical supplies and RME across VAMCs. VA expects this new system to be operational in March 2011.

section_title: Letter
paragraphs: I am pleased to be here today as you discuss the Department of Veterans  Affairs’ (VA) contracting and procurement practices. VA operates one of  the largest integrated health care delivery systems in the United States,  providing care to over 5.5 million veterans annually. Organized into 21  Veterans Integrated Service Networks (VISN), VA’s health care system  includes 153 VA medical centers (VAMC) nationwide that offer a variety of  outpatient, residential, and inpatient services. These services range from  primary care to complex specialty care, such as cardiac and spinal cord  injury care. In providing these health care services to veterans, VA  clinicians at VAMCs use supplies and equipment that must be purchased  by VA. These include expendable medical supplies, such as needles and  scalpel blades, which are generally used once, and reusable medical  equipment (RME), which is designed to be reused for multiple patients  and includes such equipment as endoscopes and some surgical  instruments.
VA has established policies that VAMCs are required to follow when  purchasing items such as expendable medical supplies or RME and  tracking—that is, accounting for—these items at their facilities. For  example, VA requires that a designated VAMC committee review and  approve purchases of any expendable medical supplies or RME that the  VAMC has not previously purchased. VA also requires that VAMCs enter  information about certain expendable medical supplies and certain RME  at their facilities into the appropriate inventory management system. VA’s  purchasing and tracking policies help ensure that VAMCs make effective  use of available resources and that they know which supplies and  equipment are being used at their facilities.
VA’s purchasing and tracking policies are also designed, in part, to help  ensure the safety of veterans who receive care at VAMCs. For example,  VAMCs need information on the RME in use at their facilities in order to  ensure that they have procedures for properly reprocessing these items.
VAMCs also need information on the supplies and equipment in use in  their facilities in order to determine when they have expendable medical  supplies or RME that are the subject of a manufacturer or U.S. Food and  Drug Administration (FDA) recall or a patient safety alert.
Congressional committees and certain members of Congress have raised  questions about VAMCs’ purchasing and tracking of expendable medical  supplies and RME and their potential impact on veterans’ safety. My  testimony today consists of preliminary observations as part of our  ongoing work on VA’s oversight of compliance with its policies for  purchasing and tracking expendable medical supplies and RME. These  observations, based on site visits to five selected VAMCs, raise concerns  about the safety of veterans receiving care at these facilities. We cannot  determine the extent to which the purchasing and tracking problems in the  five selected VAMCs reflect the broader VA health care system.
In my remarks today I will provide preliminary observations on (1) the  extent of compliance with VA’s requirements for purchasing and tracking  of expendable medical supplies and RME and (2) steps VA headquarters  plans to take to improve its oversight of VAMCs’ purchasing and tracking  of expendable medical supplies and RME.
To identify the extent of VAMCs’ compliance with VA’s requirements for  purchasing and tracking of expendable medical supplies and RME, we  reviewed VA policies and selected three purchasing and tracking  requirements that we determined were relevant to veterans’ safety issues.  The requirements we selected are (1) having a designated VAMC  committee review and approve purchases of any expendable medical  supplies and RME that the VAMC has not previously purchased, (2)  obtaining signatures of purchasing and approving officials, and (3)  entering information about expendable medical supplies and RME at  VAMCs into VA’s inventory management systems. We selected these  requirements to inform our discussions with VAMC officials about patient  safety incidents related to the purchase and tracking of expendable  medical supplies and RME that were identified at certain VAMCs in 2009.  We judgmentally selected five VAMCs to visit: the VAMCs in Albany, New  York; Cheyenne, Wyoming; Detroit, Michigan; Miami, Florida; and Palo  Alto, California. These VAMCs represent different surgical complexity  groups, sizes of veteran populations served, and geographic regions. At  the five VAMCs, we reviewed applicable VAMC committee meeting  minutes and other documentation used to identify problems related to the  three purchasing and tracking requirements we selected for our review.  We also interviewed VAMC officials to gather additional information on  these problems. To obtain information on steps VA headquarters plans to  take to improve its oversight of VAMCs’ purchasing and tracking of  expendable medical supplies and RME, we interviewed VA headquarters  officials responsible for overseeing VAMCs’ purchasing of expendable  medical supplies and RME. In addition, we obtained and reviewed relevant  documents regarding VA headquarters’ oversight, including internal  reports and policy memorandums. We shared the information provided in  this statement with VA headquarters officials.
We are conducting this performance audit in accordance with generally  accepted government auditing standards. We conducted the work for this  statement from March 2010 to September 2010. The audit 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: VA policy specifies how VAMCs can purchase expendable medical  supplies and RME. VAMCs can purchase expendable medical supplies and  RME through their acquisition departments or through purchase card  holders, who have been granted the authority to make such purchases.
Purchase cards are issued to certain VAMC staff, including staff from  clinical departments, to acquire a range of goods and services, including  those used to provide care to veterans. According to VA, as of the third  quarter of 2010, there were about 27,000 purchase cards in use across VA’s  health care system.
VA has two inventory management systems, which VAMCs use to track the  type and quantity of supplies and equipment in the facilities. Each VAMC is  responsible for maintaining its own systems and for entering information  about certain expendable medical supplies and certain RME in the  facilities into the appropriate system. Specifically, the Generic Inventory  Package (GIP) is used to track information about expendable medical  supplies that are ordered on a recurring basis. The Automated  Engineering Management System/Medical Equipment Reporting System  (AEMS/MERS) is used to track information about RME that is valued at  $5,000 or more and has a useful life of 2 years or more. VAMC officials  told us they use information about the items in their facilities for a variety  of purposes, for example, to readily determine whether they have  expendable medical supplies or RME that are the subject of a  manufacturer or FDA recall or a patient safety alert.
VA’s purchasing and tracking policies include the following three  requirements for VAMCs:  1.  A designated VAMC committee must review and approve proposed  purchases of any expendable medical supplies or RME that have not  been previously purchased by the VAMC. The committee, which  typically includes administrative staff and clinicians from various  departments, reviews the proposed purchases to evaluate the cost of  the purchase as well as its likely impact on veterans’ care. For  example, the committee that reviews and approves proposed RME  purchases often includes a representative from the department  responsible for reprocessing RME, in order to determine whether the  VAMC has the capability to reprocess—clean and disinfect or  sterilize—the item correctly and that staff are appropriately trained to  do so. Proper reprocessing of RME is important to ensure that RME is  safe to use and that veterans are not exposed to infectious diseases,  such as Human Immunodeficiency Virus (HIV), during treatment. 2.  All approvals for purchases of expendable medical supplies or RME  must be signed by two officials, the official placing the order and the  official responsible for approving the purchase. 3.  VAMCs must enter information on all expendable medical supplies that  are ordered on a recurring basis and all RME that is valued at $5,000 or  more and has a useful life of 2 years or more into the appropriate  inventory management system, either GIP or AEMS/MERS. VA does  not require information about RME that is valued at less than $5,000 to  be entered into AEMS/MERS.
section_title: GAO’s Preliminary Work Identified Examples of Inconsistent Compliance with VA’s Purchasing and Tracking Requirements at Five Selected VAMCs
paragraphs: At the five VAMCs we visited, our preliminary work identified examples of  inconsistent compliance with the three purchasing and tracking  requirements we selected for our review. In some cases, noncompliance  with these requirements created potential risks to veterans’ safety. We are  continuing to conduct this work.
VAMC committee review and approval.
Officials at two of the five VAMCs we visited stated that VAMC committees  reviewed and approved all of the expendable medical supplies the VAMCs  purchased for the first time. However, at the remaining three VAMCs,  officials told us that VAMC committees did not conduct these reviews in  all cases. Officials from these three VAMCs told us that certain expendable  medical supplies—for example, new specialty supplies—were purchased  without VAMC committee review and approval. Specialty supplies, such as  those used in conjunction with dialysis machines, are expendable medical  supplies that are only used in a limited number of clinical departments.
Without obtaining that review and approval, however, the VAMCs  purchased these supplies without evaluating their cost effectiveness or  likely impact on veterans’ care.
At one VAMC we visited, officials told us that clinical department staff  were permitted to purchase certain RME—surgical and dental  instruments—using purchase cards and that these purchases were not  reviewed and approved by a committee. Therefore, the VAMC had no  assurance that RME purchased by clinical department staff using purchase  cards had been reviewed and approved by a committee before it was  purchased for the first time. As a result, these purchases may have been  made without assurance that they were cost effective and safe for use on  veterans and that the VAMC had the capability and trained staff to  reprocess these items correctly.
Signatures of purchasing and approving officials.
At one of the five VAMCs we visited, VAMC officials discovered that one  staff member working in a dialysis department purchased specialty  supplies without obtaining the required signature of an appropriate  approving official. That staff member was responsible for ordering an item  for use in 17 dialysis machines that was impermeable to blood and would  thus prevent blood from entering the dialysis machine. However, the staff  member ordered an incorrect item, which was permeable to blood,  allowing blood to pass into the machine. After the item was purchased, the  incorrect item was used for 83 veterans, resulting in potential cross- contamination of these veterans’ blood, which may have exposed them to  infectious diseases, such as HIV, Hepatitis B, and Hepatitis C.
Entry of information about items into VA’s inventory management  systems.
At the time of our site visits, officials from one of the five VAMCs we  visited told us that information about expendable medical supplies that  were ordered on a recurring basis was entered into GIP, as required. In  contrast, officials at the remaining four VAMCs told us that information  about certain expendable supplies that were ordered on a recurring basis,  such as specialty supplies, was not always entered into GIP. Since our  visit, one of the four VAMCs has reported that it has begun to enter all  expendable medical supplies that are ordered on a recurring basis,  including specialty supplies, into GIP. By not following VA’s policy  governing GIP, VAMCs have an incomplete record of the expendable  medical supplies in use at their facilities. This lack of information can pose  a potential risk to veterans’ safety. For example, VAMCs may have  difficulty ensuring that expired supplies are removed from patient care  areas. In addition, in the event of a manufacturer or FDA recall or patient  safety alert related to a specialty supply, VAMCs may have difficulty  determining whether they possess the targeted expendable medical  supply.
Officials at one VAMC we visited told us about an issue related to tracking  RME in AEMS/MERS that contributed to a patient safety incident, even  though the VAMC was not out of compliance with VA’s requirement for  entering information on RME into AEMS/MERS. Specifically, because VA  policy does not require RME valued under $5,000 to be entered into  AEMS/MERS, an auxiliary water tube, a type of RME valued under $5,000  that is used with a colonoscope, was not listed in AEMS/MERS.  According to VAMC officials and the VA Office of the Inspector General, in  response to a patient safety alert that was issued on the auxiliary water  tube in December 2008, officials from the VAMC checked their inventory  management systems and concluded—incorrectly—that the tube was not  used at the facility. However, in March 2009, the VAMC discovered that  the tube was in use and was not being reprocessed correctly, potentially  exposing 2,526 veterans to infectious diseases, such as HIV, Hepatitis B,  and Hepatitis C.
In addition, officials from VA headquarters told us that when information  about certain RME is entered into AEMS/MERS, it is sometimes done  inconsistently. The officials explained that this is because AEMS/MERS  allows users to enter different names for the same type of RME. As a  result, in the case of a manufacturer or FDA recall or patient safety alert  related to a specific type of RME, VAMCs may have difficulty determining  whether they have that specific type of RME.
section_title: VA Reports It Plans to Change Its Oversight of Purchasing and Tracking
paragraphs: During our preliminary work, we discussed with VA headquarters officials  examples of steps VA plans to take to improve its oversight of VAMCs’  purchasing and tracking of expendable medical supplies and RME. For  example, VA plans to change its oversight of the use of purchase cards.  Specifically, VA headquarters officials told us that designated VAMC staff  are currently responsible for reviewing purchase card transactions to  ensure that purchases are appropriate. However, one VA headquarters  official stated that these reviews are currently conducted inconsistently,  with some being more rigorous than others. VA headquarters officials  stated that VA plans to shift greater responsibility for these reviews from  the VAMCs to the VISNs, effective October 1, 2010. In addition, VA plans to  standardize the reviews by, for example, adding a checklist for reviewers.  Because this change has not yet been implemented across VA, we can not  evaluate the extent to which it will address the appropriateness of  purchases using purchase cards.
Our preliminary work also shows that VA plans to create a new inventory  management system. VA headquarters officials told us that they are  developing a new inventory management system—Strategic Asset  Management (SAM)—which will replace GIP and AEMS/MERS and will  include standardized names for expendable medical supplies and RME.  According to these officials, SAM will help address inconsistencies in how  information about these items is entered into the inventory management  systems. VA headquarters officials stated that SAM will help improve VA’s  ability to monitor information about expendable medical supplies and  RME across VAMCs. VA provided us with an implementation plan for  SAM, which stated that this new system would be operational in March  2011. At this time, we have not done work to determine whether this date  is realistic or what challenges VA will face in implementing it.
Mr. Chairman, this concludes my statement. I would be pleased to respond  to any questions you or other members of the committee may have.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For further information about this statement, please contact Debra A.  Draper at (202) 512-7114 or draperd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on the  last page of this testimony. Key contributors to this statement were  Randall B. Williamson, Director; Mary Ann Curran, Assistant Director;  David Barish; Alana Burke; Krister Friday; Melanie Krause; Lisa Motley;  and Michael Zose.
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