Page last updated at 11:26 GMT, Wednesday, 1 February 2006

Hitting back at healthcare graft

By Jeremy Scott-Joynt
BBC News business reporter

The bigger the budget and the more complex the organisation, the bigger the opportunity - as Transparency International's 2006 Global Corruption Report makes clear.

Pills being poured
Counterfeit medicines are big business for crooks and corrupt doctors

It is no surprise, then, that public health systems present a tempting target for fraudsters and the corrupt.

Huge sums, massive procurement budgets, complex webs of contractual relationships, large and small sums flying in all directions: the loopholes are endless.

Old tricks

According to the evidence collected in Transparency International's report, corruption and fraud are prevalent regardless of a country's state of economic development.

Even the scams are often similar: from patient fraud to fiddled payment claims by doctors, from procurement corruption to fake drugs.

So what can be done?

Different problems, and different states of economic development, can demand different solutions.

But Transparency International identifies a number of practical - and often successful - efforts to confront the problem, and get resources back to where they should be: patient care.

Open answers

Sometimes they can be surprisingly simple.

In Kenya, as in many countries, patients have to pay for prescriptions and drugs.

It's not just policing work that needs doing, but a drive to develop an anti-fraud culture and mobilise the 'honest majority'
Jim Gee, NHS Counter Fraud Service

But in one hospital, it was found that staff have frequently pocketed the fees - robbing the system of badly-needed resources.

The solution: electronic cash registers. An investment of $42,000 (23,650) produced a 50% boost to revenues in three months, and a 400% boost in three years - and the resulting audit trail brought to light several other fraud-related problems in the system.

Accountability in other forms is also a key part of most solutions.

In Mexico, for instance, new freedom of information legislation has led to non-governmental organisations being able to name and shame a contractor who won a deal through personal connections and then mis-spent millions.

With billions flooding into healthcare systems to deal with HIV/Aids, the opportunities for fraud are huge, so the Global Fund, the main vehicle for funding assistance, is trying to link payments to outcomes and improve the transparency of money going in.

Procurement fraud is one of the most common problems TI finds.

In Nigeria, for instance, counterfeit drugs have historically been a huge problem, with almost 70% of medication unregistered with the authorities and organised crime and corrupt officials rife.

Concerted action to improve public awareness, coupled with new laws and a crackdown, have helped, but anti-corruption leaders are on the receiving end of death threats and assassination attempts as a result.


Elsewhere, the problem is even more complex.

US emergency room
Big systems can present the biggest opportunities

In the US, a largely-privatised healthcare system means huge expenditure on automated payment systems to process the millions of transactions and control thousands of contracts.

But these systems are largely designed to smooth payment, not to detect fraud. Weak audit methods, which tend to focus on individual transactions rather than recognising patterns of behaviour, help loopholes persist.

And investment in anti-fraud measures, at less than 0.1% of overall healthcare spending, is "woefully lacking", Transparency International says.

Simply changing the systems without crushing the bad apples has not been found to work, but whistleblower laws to protect staff who want to bring corrupt colleagues to book have resulted in cases amounting to billions of dollars in savings.

Size matters

The UK has a slightly different problem.

Its National Health Service (NHS) is still largely public, although private sector healthcare is creeping in and outside contractors for non-health services are common.

But that still leaves an annual budget of 70bn and a workforce of 1.2 million - the second largest organisation in the world - to police.

In 1998, the NHS's fragmented efforts to fight what was feared to be rampant fraud were pulled together into a single organisation.

The new Counter Fraud Service ran into a slight hitch initially: no-one knew just how big the problem was, and without that kind of information it was difficult to demonstrate that anti-fraud work is actually worth the money.

So the process of mapping the extent of NHS fraud started - and is still going on.

The Counter Fraud and Security Management Service as it's now known, believes it has mapped out patient and medical professional fraud. But nearly eight years on, payroll fraud and problems with outside contractors are still to be satisfactorily measured.

Even so, the Service says it has saved about 170m since 1999 in direct savings from frauds it has detected, with another 500m or so saved for the NHS through a combination of reduced levels of fraud and the recovery of goods and money lost.

It claims a 54% cut in patient fraud losses to 78m between 1999 and 2004, with close to the same proportion of medical professionals' fraud being detected.

"It's not just policing work that needs doing, but a drive to develop an anti-fraud culture and mobilise the 'honest majority'," says Jim Gee, chief executive of the Service.

Gaps in the net

But the Counter Fraud and Security Management Service's budget of about 15m a year, and its complement of 250 people - with another 250 experts on the local NHS level - are still dwarfed by the organisation it polices.

Fraud by dentists has been cut in half, the NHS says

And the 675m saving the Service has achieved amounts to just 0.2% of the NHS's overall budget during the period in question.

Given that fraud is estimated at about 2% of the economy as a whole, it seems likely that a large amount has yet to be brought into the light of day, with outsourced contracts thought by some fraud experts to be the most likely target.

Mr Gee disagrees. He believes that there is no iceberg waiting to be discovered and argues that procurement fraud - though yet to be fully measured - is not a huge problem.

But he acknowledges that there are elements of anti-corruption work that need to go further - and provide lessons for elsewhere.

Healthcare fraud needs to be put side by side with better anti-corruption efforts across the rest of the public sector and the private sector too, he says.

And international issues are beyond the scope of a national body. Drugs are carried across borders, criminals work with ease in multiple jurisdictions, and money can often flow into other countries to muddy the paper trail.

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