SPECIAL INQUIRY

ALLEGED MISMANAGEMENT AT THE RALPHH. JOHNSON VA MEDICAL CENTER,CHARLESTON, SOUTH CAROLINA

Date: January 10, 1997Report No.: 7PR-A19-029

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Office of Inspector GeneralWashington DC 20420

TO: Director, Veterans Integrated Service Network No. 7 (10N7)Director, VA Medical Center, Charleston SC (00/534)

SUBJECT: Special Inquiry, Alleged Mismanagement at the Ralph H. Johnson VA MedicalCenter, Charleston, South Carolina Report No. 7PR-A19-029

1. The Department of Veterans Affairs (VA), Office of Inspector General (OIG) conducted aspecial inquiry at the request of Congressman Mark Sanford and House Veterans AffairsCommittee staff. Congressional staff received allegations that the former Director and his staffmismanaged construction, renovations, contracts, personnel, and other activities at the MedicalCenter. We reviewed the complaints to determine the validity of allegations made by employees,former employees and others who wrote to congressional staff.

2. Several complainants believed that the former Director mismanaged the construction andrenovation of a Nursing Home Care Unit (NHCU) and the related activation funding for theNHCU. We found that about $2.1 million was spent for construction, renovation, and activationof the NHCU, but management never used the renovated space for a NHCU. Since its completionin February 1994, the NHCU had been used as swing space for specialty clinics undergoingrenovation. Meanwhile, VA staff placed veterans seeking nursing home care facilities nearCharleston in contract facilities or VA facilities elsewhere. Our discussions with the Director,Veterans Integrated Service Network (VISN) No. 7, helped prompt plans to open the NHCU inJuly 1997 for patients in the Charleston area. We understand the activation of the NHCU in July1997 will be accomplished using the equipment and staff funding previously provided to thefacility.

3. Many employees we interviewed believed that the former Director focused too much of hisefforts on construction projects such as the renovation of his office suite and the inclusion of anexpensive fish tank in a construction project, as well as the promotion of his friends andassociates during a time when the Medical Center faced a significant budget shortfall, furloughs,and possible reductions in force (RIF). With respect to the construction projects, the MedicalCenters facilities needed updating and the plans for these projects had been initiated long beforethe furloughs and funding shortages in Fiscal Year 1996. However, there is no question thatcompleting these projects at about the same time the furloughs, funding shortfall and plans for apossible RIF were happening gave rise to the employees impression that management hadmisplaced its priorities.

4. The former Director used a noncompetitive process to promote individuals within theDirectors Office and for certain service chief level positions. The former Director promoted

individuals that were his known friends and associates using this process. These actions led toallegations that the former Director promoted his staff more on the basis of friendship than merit.We found that these individuals were qualified and there was no indication that the selectionswould have been different, even if the former Director used a competitive process to fill thesepositions. However, by foregoing a competitive process, the former Director precluded anyoneelse at this Medical Center, or any other facility, from competing for the positions. As anexample, the former Director promoted two (b)(6) in his immediate office to (b)(6) grade levels at about the same time he announced to the rest of the Medical Center staff seriousfunding shortages and possible RIFs. The timing of these events contributed to increasing thetension between employees and top management.

5. VA employees also questioned the former Directors hiring of a management consultant towork with qualified VA program assistants and quality management staff. The former Directorpaid the management consultant over $90,000 and expenses in Fiscal Year 1996, to work 4 daysper month. We made recommendations to reevaluate the need for this contract, and the newDirector took action to discontinue the consultants services effective December 31, 1996. Thisshould permit the use of these funds for other health care priorities at the Medical Center.

6. Nursing staff expressed concern over the downsizing of programs, reduction of staff, andeffect the reduced funding would have on the quality of patient care provided to veterans in thearea. These conditions contributed to a recent vote by nursing staff to form their own union at themedical center. It also contributed to a concern by staff that management had misplaced itspriorities in renovating space without intending to use it, renovating executive offices,landscaping, and protecting associates and friends jobs, while he subjected core professionalstaff and programs to reductions and closures.

7. We brought these concerns to the attention of the VISN Director, and the new MedicalCenter Director, and we made several recommendations. The VISN Directors and newDirectors comments and implementation plans met the intent of the recommendations, and weconsider them resolved. We are continuing to followup with the Director and his staff inresolving other issues brought to our attention. The VISN Director informed us that he no longerhas line authority over the former Director. In our discussions with the VISN Director, he wasconfident that the new Director would make a significant effort to restore the confidence ofemployees in management at the Medical Center. We are issuing a copy of this report to theformer Directors new supervisor, the Chief Network Officer, and the Undersecretary for Healthto advise them of the conditions identified at the VA Medical Center in Charleston.

/s/JACK H. KROLLAssistant Inspector General for Departmental Reviews and Management Support

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CONTENTS

Page

Summary Memorandum ............................................................................ i

INTRODUCTION ...................................................................................... 1

Purpose.............................................................................................. 1

Background ....................................................................................... 1

Scope................................................................................................. 2

RESULTS AND RECOMMENDATIONS................................................ 6

Allegation 1: The former Director took action to renovate Ward 4Ainto a Nursing Home Care Unit (NHCU) and never used the spacefor this purpose.................................................................................. 6

Allegation 2: There was an unnecessary cost overrun of $489,000on the Ward 4A NHCU project.......................................................... 7

Allegation 3: Three grandfather clocks and a treadmill purchasedfor the Ward 4A NHCU were missing from the Medical Center ........ 8

Recommendation 1 ............................................................................ 8

Allegation 4: Management received activation funding for theWard 4A NHCU project even though the NHCUwas never opened............................................................................... 9

Allegation 5: The former Director renovated his suite withoutadvance approval from VA Central Office on the renovation costs .... 9

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Allegation 6: The former Directors suite unusually plush, withexpensive wallpaper, gold plated bathroom fixtures, unnecessaryaudio visual equipment, and expensive carpet. Also, thecarpet in the Directors suite was replaced twice in one week ............ 11

Allegation 7: The former Director inappropriately discarded a well-known local artists paintings as part of the renovation of theDirectors suite .................................................................................. 13

Allegation 8: The former Director unnecessarily purchased a$40,000 fish tank for the medical center lobby................................... 13

Recommendation 2 ............................................................................ 14

Allegation 9: Management authorized a rear entrance constructionproject, despite warnings from the contractor that the design was notsafe and would result in cracks in the structure .................................. 15

Allegation 10: Management poorly renovated the psychiatric wardand painted the walls a dismal blue, which depressed patients ........... 16

Allegation 11: The former Director hired a consultant andinappropriately paid the person $800 daily for program analystservices.............................................................................................. 16

Recommendation 3 ............................................................................ 19

Recommendation 4 ............................................................................ 19

Allegation 12: The former Director spent scarce funds on amaintenance contract for the fish tank while employees were facinglayoffs, and anesthesia machines were not backed by serviceagreements......................................................................................... 20

Recommendation 5 ............................................................................ 21

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Allegation 13: The former Director estimated a $2.9 millionshortfall in funding as an excuse to contract out services and RIFemployees.........