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United States Government Accountability Office: 
GAO: 

Report to the Chairman, Committee on Veterans' Affairs, House of 
Representatives: 

April 2013: 

Veterans Health Care: 

VHA Has Taken Steps to Address Deficiencies in Its Logistics Program, 
but Significant Concerns Remain: 

GAO-13-336: 

GAO Highlights: 

Highlights of GAO-13-336, a report to the Chairman, Committee on 
Veterans’ Affairs, House of Representatives. 

Why GAO Did This Study: 

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. 

What GAO Found: 

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. 

What GAO Recommends: 

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. 

View [hyperlink, http://www.gao.gov/products/GAO-13-336]. For more 
information, contact Randall B. Williamson at 
(202) 512-7114 or williamsonr@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

VAMCs and Networks We Visited Have Partially Complied with New VHA 
Requirements to Address Deficiencies in Its Logistics Program: 

VHA Has Additional Efforts Underway to Further Improve Its Logistics 
Program, but They Face Uncertainty about Implementation: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Comments from the Department of Veterans Affairs: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Selected Veterans Affairs Medical Centers' (VAMC) Compliance 
with New Veterans Health Administration (VHA) Requirements for 
Managing Inventories: 

Table 2: Selected Veterans Affairs Medical Centers' (VAMC) Compliance 
with New Veterans Health Administration (VHA) Standardization 
Requirements: 

Table 3: Selected Veterans Integrated Service Networks' (Network) 
Compliance with New Veterans Health Administration (VHA) 
Standardization Requirements: 

Abbreviations: 

AEMS/MERS: Automated Engineering Management System/Medical Equipment 
Reporting System: 

GIP: Generic Inventory Package: 

network: Veterans Integrated Service Network: 

RME: Reusable medical equipment: 

RTLS: Real Time Location System: 

SOARD: Service Oriented Architecture Research and Development: 

VA: Department of Veterans Affairs: 

VAMC: Veterans Affairs medical center: 

VHA: Veterans Health Administration: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

April 17, 2013: 

The Honorable Jeff Miller: 
Chairman: 
Committee on Veterans' Affairs: 
House of Representatives: 

Dear Mr. Chairman: 

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.[Footnote 1] 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. 

Recently, both GAO[Footnote 2] and VHA internal reports have 
identified deficiencies with VHA's logistics program related to the 
management of medical supplies and equipment and the standardization 
of these items. 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)[Footnote 3] 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. 

To describe the extent to which VAMCs and networks have complied with 
new VHA requirements to remedy known deficiencies in its logistics 
program, we reviewed relevant VA and VHA handbooks, directives, and 
policy memorandums and interviewed VA and VHA officials to identify 
new requirements affecting VHA's logistics program. We then visited a 
nongeneralizable sample of 5 of the 152 VAMCs (Sacramento, California; 
Bronx, New York; Cincinnati, Ohio; Portland, Oregon; and Madison, 
Wisconsin). These VAMCs are classified by VHA as surgically complex 
facilities[Footnote 4] and are located in different networks. In 
addition, two of these VAMCs are serving as pilot or demonstration 
sites for VHA efforts to enhance its logistics program. At these five 
VAMCs and the corresponding networks, we verified, through document 
reviews and interviews with VAMC and network officials, the extent to 
which the 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.[Footnote 5] 

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. 

Background: 

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. 

Logistics Program Organizational Structure: 

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[Footnote 6] 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. 

Logistics Program Deficiencies in Previous Reports: 

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.[Footnote 7] 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.[Footnote 8] 

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.[Footnote 9] 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.[Footnote 10] This, in turn, would cut down on 
the 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. 

VAMCs and Networks We Visited Have Partially Complied with New VHA 
Requirements to Address Deficiencies in Its Logistics Program: 

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.[Footnote 
11] 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. 

None of the VAMCs We Visited Fully Complied with Requirements for 
Managing Inventories: 

None of the VAMCs we visited fully complied with all of VHA's new 
requirements for managing inventories.[Footnote 12] These new 
requirements include three components: (1) having logistics staff 
manage all medical supplies,[Footnote 13] (2) establishing and 
maintaining a list of all medical supplies and RME approved for use at 
the facility,[Footnote 14] and (3) entering all stock surgical and 
dental instruments--a type of RME--into GIP.[Footnote 15] (Table 1 
lists each of the new requirements for managing inventories and each 
VAMC's compliance with these requirements.) 

Table 1: Selected Veterans Affairs Medical Centers' (VAMC) Compliance 
with New Veterans Health Administration (VHA) Requirements for 
Managing Inventories: 

Requirement: VAMC logistics staff manage all medical supplies[A]; 
Compliance by VAMC: 
VAMC A: partial compliance; 
VAMC B: full compliance; 
VAMC C: partial compliance; 
VAMC D: full compliance; 
VAMC E: full compliance. 

Requirement: VAMC logistics staff establish and maintain a list of all 
medical supplies and reusable medical equipment (RME) approved for use 
at the facility[B]; 
Compliance by VAMC: 
VAMC A: partial compliance; 
VAMC B: partial compliance; 
VAMC C: partial compliance; 
VAMC D: partial compliance; 
VAMC E: partial compliance. 

Requirement: VAMC staff enter all stock surgical and dental 
instruments into the Generic Inventory Package (GIP)[C]; 
Compliance by VAMC: 
VAMC A: full compliance; 
VAMC B: partial compliance; 
VAMC C: partial compliance; 
VAMC D: partial compliance; 
VAMC E: partial compliance. 

Source: GAO analysis of information from the five selected VAMCs. 

[A] The management of medical supplies includes the following three 
responsibilities: (1) the management of medical supply inventories, 
(2) the purchase of medical supplies, and (3) the management of funds 
allocated to medical supply purchasing. Collectively, these 
responsibilities are referred to as total supply support. This 
requirement also prohibits clinical department staff from using 
purchase cards to purchase medical supplies. 

[B] Medical supplies and RME approved for use at the VAMC are required 
to be recorded in the facility's item master file, an electronic 
database that contains certain information on each item, such as the 
manufacturer and cost. 

[C] Stock surgical and dental instruments include those instruments 
that are not currently in use, such as spare instruments. 

[End of table] 

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.[Footnote 16] 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.[Footnote 17] 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.[Footnote 18] 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.[Footnote 19] 

One VAMC We Visited and Two Networks Have Fully Complied with VHA's 
Standardization Requirements: 

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;[Footnote 20] (2) reviewing and approving medical supplies 
and RME that have not previously been used at the VAMC, including 
emergency purchases of these items;[Footnote 21] 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;[Footnote 
22] (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.) 

Table 2: Selected Veterans Affairs Medical Centers' (VAMC) Compliance 
with New Veterans Health Administration (VHA) Standardization 
Requirements: 

Requirement: VAMC established and maintains a clinical product review 
committee; 
Compliance by VAMC: 
VAMC A: full compliance; 
VAMC B: full compliance; 
VAMC C: full compliance; 
VAMC D: partial compliance; 
VAMC E: partial compliance. 

Requirement: Committee has a process for reviewing and approving 
medical supplies and reusable medical equipment (RME) that have not 
previously been used at the VAMC, including emergency purchases[A]; 
Compliance by VAMC: 
VAMC A: full compliance; 
VAMC B: partial compliance; 
VAMC C: partial compliance; 
VAMC D: full compliance; 
VAMC E: partial compliance. 

Requirement: Committee performs standardization activities, including 
identifying opportunities for standardization and ensuring compliance 
with nationally standardized contracts and blanket purchasing 
agreements; 
Compliance by VAMC: 
VAMC A: full compliance; 
VAMC B: partial compliance; 
VAMC C: partial compliance; 
VAMC D: partial compliance; 
VAMC E: full compliance. 

Source: GAO analysis of information from the five selected VAMCs. 

[A] Medical supplies and RME that have not previously been used at the 
VAMC also include items on national contracts or blanket purchase 
agreements and evaluations, trials, or loans of these items. 

[End of table] 

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.[Footnote 23] 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.) 

Table 3: Selected Veterans Integrated Service Networks' (Network) 
Compliance with New Veterans Health Administration (VHA) 
Standardization Requirements: 

Requirement: Network established and maintains a commodity 
standardization committee and four subcommittees--(1) medical/ 
surgical, (2) laboratory, (3) radiology, and (4) sterile processing 
department/reusable medical equipment (RME); 
Compliance by network: 
Network A: full compliance; 
Network B: partial compliance; 
Network C: partial compliance; 
Network D: full compliance; 
Network E: partial compliance. 

Requirement: Network reviews the activities of the Veterans Affairs 
medical centers' (VAMC) clinical product review committees; 
Compliance by network: 
Network A: full compliance; 
Network B: partial compliance; 
Network C: partial compliance; 
Network D: full compliance; 
Network E: noncompliance. 

Requirement: Network commodity standardization committee, including 
the four subcommittees, performs 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; 
Compliance by network: 
Network A: full compliance; 
Network B: partial compliance; 
Network C: partial compliance; 
Network D: full compliance; 
Network E: noncompliance. 

Source: GAO analysis of information from the five selected networks. 

[End of table] 

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. 

Four VAMCs We Visited and Three Networks Have Fully Complied with 
VHA's Monitoring Requirements: 

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.[Footnote 24] 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. 

For networks, these requirements include conducting a network external 
review at least 90 days and no more than 9 months after the VAMC's 
internal review to validate the VAMCs' internal findings. Also, 
networks must ensure that all identified deficiencies from the 
external review are corrected by the VAMCs within 90 days after they 
were identified.[Footnote 25] At one network that did not fully 
comply, we found that the network did not use the entire checklist, as 
required by VHA, when conducting this review. Rather than completing 
the entire checklist, this network only assessed those items on the 
checklist for which the VAMCs noted deficiencies during their facility 
internal reviews. Officials at this network were not aware that they 
had to complete the entire checklist. Because this network did not 
complete the entire checklist, it may have failed to identify 
deficiencies that the VAMCs did not identify during their internal 
reviews. The other network that did not fully comply completed the 
review outside of the required time frame. Full compliance with 
monitoring 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. 

VHA Has Additional Efforts Underway to Further Improve Its Logistics 
Program, but They Face Uncertainty about Implementation: 

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. 

VHA Is Piloting a New Inventory Management System, but Must Overcome 
Major Hurdles before It Can Be Fully Implemented VHA-Wide: 

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. 
[Footnote 26] VHA is developing SOARD to eventually replace VHA's 
antiquated inventory management systems--GIP and AEMS/MERS.[Footnote 
27] VHA established a project team that is responsible for planning 
and implementing the SOARD pilot at selected VAMCs.[Footnote 28] 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.[Footnote 29] 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.[Footnote 
30] 

The SOARD project team is rolling out SOARD through a multiple-stage 
pilot and, at the time of our report, it had implemented a limited 
number of SOARD's capabilities at three VAMCs. Throughout fiscal year 
2013, the SOARD project team plans to pilot SOARD at an additional 
seven VAMCs. VHA plans to roll out SOARD's equipment management 
capabilities nationwide over the next 3 years (by the end of fiscal 
year 2015), thereby allowing AEMS/MERS to be replaced early in fiscal 
year 2016. Three factors could potentially interrupt or derail these 
plans: (1) VHA has not committed to fully funding SOARD, (2) staffing 
resources to implement it at VAMCs are limited, and (3) the project 
team has yet to resolve technical issues such that it can interface 
with legacy systems.[Footnote 31] These uncertainties, along with 
VHA's somewhat aggressive timeline to develop and implement SOARD at 
VAMCs, raise questions about the project team's ability to effectively 
implement SOARD. 

* Funding needed to complete project. Because of previous failures to 
replace VHA's inventory management systems, VA's Office of Information 
Technology is not funding SOARD, which is currently projected to cost 
about $38 million through fiscal year 2015; therefore, the SOARD 
project team had to identify alternative funding sources.[Footnote 32] 
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.[Footnote 33] 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. 

VHA Is Implementing a New System for Electronically Tracking Medical 
Supplies and Equipment, but Concerns Exist about System 
Interoperability and Resources: 

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).[Footnote 34] 
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 two networks as demonstration sites.[Footnote 35] These networks 
began rolling out 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.[Footnote 36] 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.[Footnote 37] However, a 
more precise timeline will not be known until VHA's contractor begins 
to develop these interfaces. 

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.[Footnote 38] 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. 

VHA's New Program Executive Office for Providing Logistics Support and 
Managing Standardization Nationwide Faces Uncertainty about Its 
Continued Implementation: 

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.[Footnote 39] 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. 

Conclusions: 

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. 

Recommendations for Executive Action: 

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 
inventory management system, 

* 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. 

Agency Comments and Our Evaluation: 

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 [hyperlink, 
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. 

Sincerely yours, 

Signed by: 

Randall B. Williamson: 
Director, Health Care: 

[End of section] 

Appendix I: Comments from the Department of Veterans Affairs: 

Department of Veterans Affairs: 
Washington, DC 20420: 

April 5, 2013: 

Randall B. Williamson: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Williamson: 

The Department of Veterans Affairs (VA) has reviewed the Government 
Accountability Office's (GAO) draft report, "Veterans Health Care: VHA 
Has Taken Steps to Address Deficiencies in Its Logistics Program, But 
Significant Concerns Remain" (GA0-13-336) and generally agrees with 
GAO's conclusions and concurs with GAO's seven recommendations to the 
Department. 

The enclosure specifically addresses GAO's seven recommendations, 
provides an action plan for each, and includes two general comments. 
VA appreciates the opportunity to comment on your draft report. 

Sincerely, 

Signed by: 

Jose D. Riojas: 
Interim Chief of Staff: 

Enclosure: 

Department of Veterans Affairs (VA) Comments to Government 
Accountability Office (GAO) Draft Report "Veterans Health Care: VHA 
Has Taken Steps to Address Deficiencies In its Logistics Program, But 
Significant Concerns Remain" (GAO-13-336): 

Recommendation 1: 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; enter all stock surgical and dental instruments Into 
the appropriate inventory management system. 

VA Response: Concur. The Veterans Health Administration (VHA) 
Procurement and Logistics Office (P&LO) will facilitate determination 
of appropriate resource levels for Veterans Affairs Medical Center 
(VAMC) logistic programs by: 

* Conducting a survey to determine numbers of Full-time Employee 
Equivalent (FTEE) per facility, competency levels of FTEE, and 
workload to establish our baseline staff supply and demand. 

* Assessing quality data received from Veterans Integrated Service 
Network (VISN) Chief Logistics Officers (CLO) for evidence that a 
facility is not performing at the standards expected. 

* Using information from the first and second bullets, P&LO will 
assess functioning of facilities logistics operations and make 
recommendations regarding whether facilities have adequate staff, 
processes, and/or staff development. 

* This action will be complete upon final approval of the plan. 
Anticipated completion date is January 31, 2014. 

P&LO will provide training and best practice guidance to staff in VAMC 
logistics programs by: 

* Publishing logistics information fact sheets quarterly. The fact 
sheets provide guidance on training and best practices and are 
accessible on VHA's Logistics SharePoint site. Fact sheets are 
currently available and will continue to be published quarterly. Upon 
publication, the information is sent out to the field via e-mail and 
announced on the national VISN CLO calls. 

* PRO will develop tailored training courses for logisticians on 
process improvements. These courses will be developed and made 
available to VHA field staff by December 31, 2013. 

VHA and the P&LO will monitor and verify that logistics staff manage 
all medical supplies by: 

* Issuing a memorandum from the Deputy Under Secretary for Health for 
Operations and Management directing all facility directors to assign 
logistics staff to the management of medical supplies. 

* Requiring all facilities to submit a report, through the VISN CLO 
and Network Director, to P&LO that staff have been appropriately 
assigned, re-assigned or that an implementation plan is in place to do 
so by September 31, 2013. 

P&LO developed and deployed a National Clinical Formulary Web site 
(NCFW) for use by VHA field logistics personnel. P&LO completed field 
staff training on how to list purchases and will continue to monitor 
usage with the Network Directors and staff. In addition, P&LO has 
established a 24-hour help desk for the NCFW. 

P&LO will monitor and verify that all stock surgical and dental 
instruments are entered into the appropriate inventory management 
system by: 

* Re-issuing an updated memorandum from the Deputy Under Secretary for 
Health for Operations and Management directing all facility directors 
to verify that all of the stock surgical and dental instruments at 
their facility have been entered into the appropriate inventory 
management system. The memorandum will be updated and re-issued by 
June 30, 2013. 

* Collaborating with the Real Time Location System (RTLS) program 
management office to assist them in developing a plan for 
implementation of an instrument tracking system. This system will 
track all surgical instruments. The implementation plan is under 
development and will be finalized by September 30, 2013. This action 
will be complete upon final approval of the plan. 

Recommendation 2: Reinforce through communication the requirement that 
VAMCs develop a formal process for reviewing and approving emergency 
purchases of medical supplies and RME. 

VA Response: Concur. P&LO will reinforce through communication the 
requirement that VAMCs develop a formal process for reviewing and 
approving emergency purchases of medical supplies and RME by September 
30, 2013. 

P&LO will update and re-distribute the memorandum from the Deputy 
Under Secretary for Health for Operations and Management that provides 
guidance on the above mentioned issues. This memorandum was originally 
issued on October 12, 2011, titled DUSHOM Memorandum (VAIQ #7141798) 
Correction of Deficiencies Noted in GAO Report 11-39, Weaknesses in 
Policies and Oversight Governing Medical Supplies and Equipment Pose 
Risks to Veterans' Safety. Anticipated completion date is June 30, 
2013. 

P&LO will publish a series of four or more informational bulletins on 
their SharePoint site and during monthly national calls; P&LO will 
communicate that logistics staff need to review the bulletins. These 
bulletins will reinforce the requirements that VAMCs develop a formal 
process of reviewing and approving emergency purchases of medical 
supplies and RME. Input will be solicited during these calls. At least 
four bulletins will be communicated by June 30, 2014. 

Recommendation 3: Develop a systematic method using available VHA data 
to assist VAMCs in tracking compliance with national contracts and 
blanket purchase agreements. 

VA Response: Concur. P&LO will develop a method to track compliance 
with national contracts and blanket purchase agreements using 
available VHA data. The Program Executive Office will establish a 
strategic planning team to evaluate the current system for compliance 
reporting and provide necessary further revisions. Anticipated 
completion date is June 30, 2013. 

The team will solicit and evaluate input from chief logistics officers 
and field chief logistics officers, and then draft a strategic plan 
and performance metric that will be used by VAMCs in tracking 
compliance with national contracts and blanket purchase agreements. 
Anticipated completion date is December 31, 2013. 

Recommendation 4: 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 timeframe. 

VA Response: Concur. P&LO's guidance clarifying the Management Quality 
Assurance Service checklist described in the GAO audit findings is in 
development and will be distributed by September 30, 2013. 

P&LO will issue guidance to Network Directors to ensure: (1) 
facilities have corrected deficiencies within 90 days or requested an 
extension; (2) that networks use the entire checklist when conducting 
their reviews of VAMC logistics programs; and (3) that VISNs complete 
their reviews within the timeframe established by P&LO. Guidance will 
be distributed by September 30, 2013. 

Recommendation 5: 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. The 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 for SOARD; staffing resources needed for SOARD implementation 
at VAMCs; establishing interoperability between SOARD and legacy 
systems. 

VA Response: Concur. P&LO is developing 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 will address 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 for SOARD; staffing resources needed for SOARD 
implementation at VAMCs; establishing interoperability between SOARD 
and legacy systems. P&LO will complete the written plan by July 31, 
2013. 

Recommendation 6: Develop an updated implementation plan for RTLS 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. 

VA Response: Concur. VHA's Health Technology Management Program Office 
will provide updated implementation plans that will address timelines 
for establishing interoperability between RTLS and VHA's current and 
future inventory management system (AEMS/MERS) and SOARD (Maximo), and 
installing wireless capabilities at VAMCs. Data cleansing activities 
will be performed at individual facilities before implementation. 
Anticipated completion date is September 30, 2013. 

Recommendation 7: Develop a plan for measuring the success of the 
program executive office. 

VA Response: Concur. P&LO will develop a plan for measuring the 
success of the Program Executive Office. The plan will be submitted 
for final approval by September 30, 2013. This action is complete upon 
final approval of the plan. 

General Comments: 

GAO Highlight Section, last bullet: 

The GAO Draft Report states at the bottom of the first unnumbered page 
that VHA's planned program executive office has not been fully staffed 
and uncertainty exists about the continued implementation of this 
office, While it is true that the Program Executive Office (PEO) has 
not yet been fully staffed, it is not true that uncertainly exists 
about implementation of the PEO. In fact, VHA informed GAO that 
planning for the PEO called for 3 phases of hiring, the first of which 
is 86 percent complete with a planned completion date still months 
away. 

To more accurately reflect VA's PEO staffing and implementation 
progress, VA requests that the last sentence in the summary of the 
report be revised to state that although VHA's planned program 
executive office has not yet been fully staffed, plans for 
implementation, staffing and evaluation of hiring needs are underway 
with the first of 3 hiring phases at 86 percent completion. It is also 
important to note that future staffing assessments and evaluations may 
have an impact on the 3 planned hiring phases and the number of hires 
needed for the office." 

Page 24, lines 3 and 4: 

The GAO Draft Report states, "At the time of our report, VHA had not 
yet developed a plan for conducting this evaluation." 

VA requests GAO add the following sentence to clarify VHA's current 
planning process: "However, VHA currently has a plan in development 
and expects it to be completed by the end of fiscal year 2013." 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Randall B. Williamson, (202) 512-7114 or williamsonr@gao.gov: 

Staff Acknowledgments: 

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. 

[End of section] 

Footnotes: 

[1] VHA attempts to standardize items by analyzing their purchase 
history and identifying similar items, such as endoscopes, that could 
be standardized by model type. After these items are identified, a 
team of clinicians determines whether the items are acceptable for use 
by all VAMCs. Once the items are determined to be acceptable, they can 
be standardized if VAMCs have the ability to service the items and 
have the capability to train staff, if needed, on how to use the 
items. VHA then negotiates national or regional contracts or blanket 
purchase agreements with vendors to obtain discounts for purchasing 
these items in volume and to provide more timely procurement of items 
needed on a recurring basis. 

[2] GAO, VA Health Care: Weaknesses in Policies and Oversight 
Governing Medical Supplies and Equipment Pose Risks to Veterans' 
Safety, [hyperlink, http://www.gao.gov/products/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, [hyperlink, 
http://www.gao.gov/products/GAO-10-1038T] (Washington, D.C.: Sept. 23, 
2010). 

[3] The management of VAMCs is primarily the responsibility of 21 
geographically based networks. 

[4] 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. 

[5] See GAO, Internal Control: Standards for Internal Control in the 
Federal Government, [hyperlink, 
http://www.gao.gov/products/GAO/AIMD-00-21.3.1] (Washington, D.C.: 
November 1999). 

[6] VA's Management Quality Assurance Service is under VA's Office of 
Business Oversight and is responsible for overseeing compliance with 
logistics policies and procedures throughout VA. 

[7] [hyperlink, http://www.gao.gov/products/GAO-11-391]. 

[8] A patient safety alert is a notification sent to VAMCs from VA's 
National Center for Patient Safety regarding veterans' safety. 

[9] National contracts and blanket purchase agreements are methods 
VAMCs' use to acquire supplies that are reordered on a regular basis. 
These methods allow VHA the opportunity to negotiate better pricing 
based on anticipated sales volume and to provide more timely 
procurement of products needed on a recurring basis. 

[10] RME is designed to be reused for multiple patients and includes 
such equipment as endoscopes and surgical and dental instruments. 
Reusable medical equipment must be reprocessed--that is, cleaned and 
disinfected or sterilized--between uses. 

[11] These requirements were mandated by the Deputy Under Secretary 
for Health for Operations and Management on January 11, 2011, February 
11, 2011, and October 12, 2011, respectively. 

[12] These new requirements for managing inventories apply only to 
VAMCs and not to networks, as networks are not responsible for 
managing inventories of medical supplies and equipment. 

[13] The management of medical supplies includes the following three 
responsibilities: (1) the management of medical supply inventories, 
(2) the purchase of medical supplies, and (3) the management of funds 
allocated to medical supply purchasing. Collectively, these 
responsibilities are referred to as total supply support. This 
requirement also prohibits clinical department staff from using 
purchase cards to purchase medical supplies. 

[14] Medical supplies and RME approved for use at the VAMC are 
required to be recorded in the facility's item master file, an 
electronic database that contains certain information on each item, 
such as the manufacturer and cost. 

[15] Stock surgical and dental instruments include those instruments 
that are not currently in use, such as spare instruments. 

[16] At two of the VAMCs we visited that complied with the requirement 
that logistics staff manage all medical supplies, such supplies had 
already been managed by logistics staff prior to the issuance of this 
requirement. 

[17] In September 2012, at the five VAMCs, between 7 percent and 19 
percent of medical supplies and RME that had been purchased were not 
captured on the list. VHA began collecting these data in fiscal year 
2012 and is using them, along with other data, to assess VAMCs' 
logistics programs. 

[18] As part of this process, VHA is standardizing the naming 
conventions for all medical supplies and RME in the database, so that 
each VAMC's data can be aggregated nationally. 

[19] Sterile processing staff are responsible for reprocessing RME. 

[20] The clinical product review committee is responsible for 
reviewing and approving all medical supplies and RME prior to use at 
each VAMC, maintaining the list of approved medical supplies and RME, 
and performing standardization activities. The committee is to 
comprise both clinical and nonclinical staff. 

[21] Medical supplies and RME that have not previously been used at 
the VAMC also include items on national contracts or blanket purchase 
agreements and evaluations, trials, or loans of these items. 

[22] The network commodity standardization committee is responsible 
for identifying standardization opportunities and facilitating the 
standardization process, which includes determining potential benefits 
of standardization, working with contracting staff to establish 
network-wide contracts for standardized items, tracking the benefits 
realized through standardization, and reporting those benefits. In 
addition, VHA requires the establishment of four subcommittees (at a 
minimum)--medical/surgical, laboratory, radiology, and sterile 
processing department/RME--which focus on standardizing items used 
within those communities. Other subcommittees may be established at 
the discretion of each network. Subcommittees are to comprise both 
clinical and nonclinical staff. 

[23] Procurement and Logistics Office officials told us that VHA is in 
the process of developing an electronic tool that will allow VAMCs to 
more easily assess their compliance with national contracts and 
blanket purchasing agreements. 

[24] VHA requires that an extension be requested for deficiencies that 
cannot be addressed within 90 days of the date of the facility 
internal review. 

[25] VHA requires that an extension be requested for deficiencies that 
cannot be addressed within 90 days of the date of the network external 
review. 

[26] SOARD relies on a Web-based asset management software used by 
some hospitals in the private sector to manage medical supplies and 
equipment inventories. This software provides additional capabilities 
beyond inventory management, such as the management of equipment 
maintenance requests and maintenance records. 

[27] SOARD is also intended to replace other systems outside the realm 
of logistics. 

[28] The SOARD project team selected pilot sites using the following 
criteria: strong biomedical engineering managers and staff at the 
VAMCs with enthusiasm for the project. 

[29] Previous unsuccessful attempts to update the inventory management 
systems include the Core Financial and Logistics System in 2004 and 
the Strategic Asset Management system in 2011. 

[30] GAO, Information Technology: Actions Needed to Fully Establish 
Program Management Capability for VA's Financial and Logistics 
Initiative, [hyperlink, http://www.gao.gov/products/GAO-10-40] 
(Washington, D.C.: Oct. 26, 2009). 

[31] VHA is concurrently developing a new system--called Real Time 
Location System (RTLS)--for electronically tracking certain medical 
supplies and equipment. 

[32] While VA's Office of Information Technology will not be providing 
funding directly for SOARD, in January 2013, it agreed to provide 
support services, including a project manager, to the SOARD project 
team. Furthermore, this office is paying for the license for the 
software on which SOARD relies. 

[33] At the time of our report, SOARD project team officials were 
developing a methodology to determine the level of resources required 
to assist the pilot sites with preparation activities and deliver long-
term support. 

[34] RTLS uses radio frequency identification and other technologies 
to provide wireless tracking and identification capabilities for 
certain medical equipment and supplies outfitted with an 
identification tag. At most VAMCs, wireless signals will be used to 
track both the identification and location of the tags. VHA estimates 
that each VAMC will have approximately 80,000 identification tags and 
that additional tags will be added over time. In addition, RTLS allows 
VAMCs to centrally monitor temperature and humidity levels throughout 
the facility and to track staff and patients at VAMCs. Lastly, all 
VAMC-level RTLS data will be consolidated into one national database 
from which information about any RTLS-equipped item at the VAMC may be 
obtained or aggregated from any combination of VAMCs, in order to get 
a network-level or national view of the data. 

[35] According to VHA officials, the VAMCs where RTLS is being 
implemented are considered demonstration sites and not pilot sites 
because they are using a different vendor than the one that will 
eventually provide RTLS nationwide to all VAMCs. 

[36] In addition, RTLS is meant to interface with other systems 
outside the realm of logistics. 

[37] According to RTLS program officials, the contract for nationwide 
RTLS implementation includes the requirement that RTLS interface with 
existing VA information systems, including VHA's two inventory 
management systems--GIP and AEMS/MERS--but does not specify the 
mechanism or timetable for achieving this. Similarly, the contract 
specifies that interfacing with other systems, such as SOARD, shall be 
completed by the contractor. 

[38] Officials originally estimated that the installation of wireless 
capabilities would take 6 months to complete at each VAMC; however, 
they have found that this process takes 9 months to complete. 

[39] The six program management offices are titled Surgery, Medical, 
Clinical Support, Ancillary, Advanced Systems, and Prosthetics. 

[End of section] 

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