Every year VA medical centers (VAMCs) process hundreds of millions of dollars worth of prosthetic supplies through inventories. From fiscal year (FY) 2007 through FY 2011, the Veterans Health Administration’s (VHA) prosthetic supply costs increased nearly 79 percent to about $1.8 billion. Owing to this, the Department of Veterans Affairs (VA) Office of Inspector General (OIG) Office of Audits and Evaluations (OAE) issued a report on March 30, 2012, that evaluated the effectiveness of VAMCs prosthetic inventory management.
According to an OAE audit, it was estimated that during April through October 2011, VHA’s VAMCs maintained inventories of approximately 93,000 specific prosthetic items worth about $70 million. Further, OAE estimated that VAMC inventories exceeded current needs for almost 43,500 items (47 percent) and were too low for nearly 10,000 items (11 percent). As a result, VAMCs spent about $35.5 million to buy prosthetic supplies in excess of current needs. Also, VAMCs increased the risks of supply expiration and disruptions to patient care due to supply shortages. VHA cannot accurately account for these inventories. Further, because inventory management practices are weak, inventory losses associated with diversion could go undetected at VAMCs.
OAE concluded that VHA needs to strengthen VAMC management of prosthetic supply inventories to avoid spending funds on excess supplies and to minimize risks related to supply shortages. The Under Secretary for Health concurred with OAE’s finding and recommendations and provided an action plan, the implementation of which OAE will review.