California wasted nearly $28M on ineffective medical system for veterans, auditor says

The state's auditor has released a scathing new report detailing the failings of California's Department of Veterans Affairs.

California’s Department of Veterans Affairs poured nearly $28 million into a new electronic medical record system for its treatment centers, yet managed to construct only a faulty system that endangers its patients, according to a new report by the state auditor.

Auditor Elaine Howle and her staff released the report at the request of state lawmakers last week, charging that the department, also known as CalVet, failed to manage the project correctly from its inception in 2007. The auditors claim the IT system the department built has made basic recordkeeping tasks more difficult for staffers at its eight medical facilities, making crucial patient information hard to find and leaving vital prescriptions unfilled.

Though CalVet ultimately cancelled its contract with a vendor to build the system in 2015, the analysts believe leaders knew about some of its problems as early as mid-2012 and took too long to address them. Similarly, they wrote that the state’s Department of Technology also failed to provide enough oversight of the project, and they recommend a reforms for how both departments should manage major IT efforts going forward.

“CalVet’s project management failed to promptly identify and address the system’s functionality issues,” Howle wrote in a letter to Gov. Jerry Brown and state legislators attached to the report. “CalVet did not exercise adequate oversight of its system project.”


The heads of both departments penned letters saying they agreed with the auditors’ recommendations, with CalVet Secretary Vito Imbasciani pledging that his department will have a replacement system ready by 2017.

“In retrospect, we could have moved more quickly or acted with greater urgency,” Imbasciani wrote. “I believe CalVet has already made great strides towards implementing the resolutions.”

But the auditors noted that CalVet will have to continue using the outdated system in the meantime, leaving the facilities without a functional system for sharing and recording patient information.

Howle and her staff believe that problems with the system’s development popped up soon after CalVet kicked off the project in January 2007. Specifically, the auditors believe the department didn’t follow state guidelines for putting a targeted plan in place and setting appropriate limits for the project’s contractor before they started work, leading to a series of missteps over the next few years.

“Because CalVet did not develop this plan, it did not have a process to ensure that proposed changes to the project included only the work required to complete the project successfully and to remain within the boundaries of the defined scope,” the auditors wrote.


[Read more: California lays out new updates to how it approves IT projects]

Accordingly, the analysts believe CalVet “limited its ability to detect deficiencies earlier in the development of the system.” But when some members of the team overseeing the project first reported noticing some problems with the component of the system letting facilities order and track prescription drugs in June 2012, the auditors found that department leaders didn’t put that part of the project on hold to resolve those issues until December 2013, “having spent nearly $6 million from the time staff began reporting problems.”

Once CalVet paused construction, the Department of Technology stepped in to help mediate negotiations between the contractor and CalVet to find appropriate steps to move forward. However, the auditors believe the technology department wasn’t particularly effective in overseeing this process.

When CalVet decided to pay the project’s vendor $350,000 to terminate their contract ahead of schedule by late 2014, the analysts believe the IT department didn’t appropriately evaluate whether that deal was in the state’s best interest and failed to provide adequate documentation for these deliberations. Auditors also feel IT staffers dropped the ball when it came to reviewing the work of the independent oversight firm CalVet hired for help on the project.

Overall, the auditors feel both departments failed to keep accurate records about many stages of the process, leading to some of the project’s issues over the years.


Accordingly, the analysts recommend that both agencies overhaul their records retention processes before the year is up. They also want CalVet to more clearly define the responsibilities of project managers overseeing the construction of these sorts of systems, and ensure that leaders put a “formal process” in place to make sure these projects are being reviewed regularly.

Imbasciani wrote that his department would comply in full with all those recommendations, noting that CalVet’s “new leadership” at the top will help shepherd the successful construction of the new system by next year.

But until that work is finished, the auditors warn that the state is in danger of putting the costs of its failures squarely on the very veterans the department is trying to help.

“We believe the overall quality of care provided to the veterans is negatively affected by these inefficiencies,” the auditors wrote. “Without a fully integrated system that is used in a standardized way, the homes cannot operate seamlessly with other homes and electronically share care information.”

Contact the reporter at, and follow him on Twitter @AlexKomaSNG.

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