The world is losing some $487 billion a year to fraud and error in healthcare, according to a new report. Global average losses within the healthcare sector have, since 2008, risen by a quarter to 6.99 per cent. That’s according to “The Financial Cost of Healthcare Fraud 2014” from BDO LLP, the accountancy firm, with the Centre for Counter Fraud Studies (CCFS) at the University of Portsmouth.
When taken as a proportion of global healthcare expenditure of $6.97 trillion (£4.48 trillion) this equates to $487 billion (£313 billion) lost in a year equivalent to more than three times the UK NHS budget for 2011/12.
The researchers say that fortunately counter fraud exercises have shown that it is possible to significantly reduce the losses with a reduction of 40pc within 12 months being considered a very reasonable expectation. This in itself would see global healthcare resources increased by as much as $195bn (£125bn).
In the UK’s National Health Service (the second largest such body in the world) between 1998 and 2006 losses were reduced by up to 60pc. Statistics from the UK’s National Fraud Authority Indicator 2013 suggest that fraud within the NHS was £229m in 2013; however, applying the global average percentage loss rate suggests, that if the NHS was in line with the rest of the world, a figure nearer £7bn would be more likely, it is claimed. To accept the figure of £229m would be to accept that the NHS is doing more than 30 times better than the rest of the world in preventing and detecting fraud and error.
Dr David Evans, the Director of Health Systems Financing for the World Health Organisation (WHO) describes the report’s conclusions as “convincing” in his foreword, while Dr Simon Peck, a founder of the Health Insurance Counter Fraud Group (HICFG), a UK industry group of 29 healthcare insurance companies, writes in his preface that those “who have the power to make a difference” should read the report.
Jim Gee, Director of Counter Fraud Services at BDO LLP, between 1998 and 2006 was Director of Counter Fraud Services for the Department of Health and CEO of the NHS Counter Fraud Service. He said: “The global financial crisis has had a significant impact on governments, corporates and individuals’ ability to meet the rising cost of their healthcare requirements. These budgetary constraints could, however, be vastly improved with a concerted effort to measure, manage and minimise the cost of fraud and error within the relevant organisations, particularly if this was supported by legislative requirement. Our conservative estimate is that, by tackling this problem seriously, healthcare organisations could free up $195bn which is currently lost. This would make a material difference to the lives of millions of people around the world.”
