Audit finds serious weaknesses in hospital's ability to secure and account for noncontrolled drugs and medical and surgical supplies

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Kings County Hospital in Brooklyn, one of the Health and Hospitals Corporation (HHC) acute-care hospitals, has inadequate controls over its inventory of noncontrolled drugs, including insulin, hepatitis vaccines, penicillin, and birth control pills, and medical and surgical supplies, according to an audit by New York City Comptroller William C. Thompson, Jr.

The audit noted that an inventory count of sampled, noncontrolled drugs revealed a "gross discrepancy" of 71 percent between the amounts on hand at Kings County and those recorded in the Health and Hospitals Corporation's computerized inventory system.

Additionally, the Comptroller's inventory count of sampled medical and surgical supplies at Kings County found a "gross" discrepancy of 91 percent between the amounts on hand and those recorded in HHC's computerized inventory system.

Even more startling, auditors discovered that Kings County officials made adjustments totaling $8.6 million to its Fiscal Year 2002 year-end inventory count of noncontrolled drugs and medical and surgical supplies - without ever investigating the cause of the discrepancies.

"These inventory discrepancies may result from the extensive record-keeping and security weaknesses that we found," Thompson said in the audit. "Because of those weaknesses, Kings County Hospital inventory records for noncontrolled drugs and medical and surgical supplies cannot be relied on to ensure that adequate stock levels are maintained and that loss from thefts and misappropriation would be detected."

Thompson's auditors observed that there was unrestricted access to Kings County's Pharmacy stockroom, and that noncontrolled drugs were issued from the stockroom without proper authorization. Auditors also noted that there were inadequate controls over expired drugs and inadequacies in the related checks and credits that can be received for expired drugs that are returnable.

Additionally, the audit revealed that Kings County's Materials Management Department took up to two months to record in HHC's computerized inventory system the medical and surgical supplies that were issued from the stockroom. Besides delays in entering information, auditors found discrepancies between the data in HHC's inventory system and in a Scan Module system - the computer system used to gauge how much medical and surgical supplies are needed in supply rooms in patient units. In many cases, both systems cataloged the same item differently.

"Unrestricted access to the Pharmacy stockroom is unacceptable," Comptroller Thompson said. "This oversight could allow thefts and misappropriations to go undetected. It is the hospital's responsibility to immediately institute controls to ensure that only authorized personnel have access to the stock area."

Thompson made 20 recommendations, including that Kings County:

1) Require periodic physical counts of the inventory to verify the accuracy of its inventory records, and investigate all variances to determine their cause.
2) Ensure that appropriate adjustments are made to the OTPS system to accurately reflect the inventory of noncontrolled drugs and of medical and surgical supplies. Officials should review, approve, and document all adjustments.
3) Ensure that a written authorized requisition is obtained for all noncontrolled drugs issued from the Pharmacy stockroom. The requisition should include the names and quantities of drugs requested the names of subdivision personnel requesting the drug, and the authorizing signature.
4) Restrict access to the Pharmacy stockroom to authorized stockroom personnel.
5) Adequately safeguard expired drugs before they are removed from the hospital.
6) Ensure that all checks and credits for returnable drugs are received by the hospital and, if applicable, applied to vendor payments.
7) Ensure that all issues from the Materials Management stockroom are immediately entered in the OTPS inventory system.

HHC officials agreed with the findings in the audit and either have implemented or are in the process of implementing all of the recommendations.

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