The world is losing $487 bln a year to fraud and error, with a study showing that global average losses within the healthcare sector have, since 2008, risen by a quarter to 6.99%.
When taken as a proportion of the global healthcare expenditure of $6.97 trln this equates to $487 bln lost in a year, according to a new report "The Financial Cost of Healthcare Fraud 2014" from BDO LLP, the accountancy and business advisory firm and The Centre for Counter Fraud Studies at the University of Portsmouth.
The loss is equivalent to more than three times the UK NHS budget for 2011/12, wo and a half times the total healthcare expenditure of Canada for 2011, a fifth of the United States' total healthcare expenditure for 2011, and more than 27% of European Union healthcare expenditure for the same period.
Fortunately counter fraud exercises have shown that it is possible to significantly reduce the losses with a reduction of 40% within 12 months being considered a very reasonable expectation. This in itself would see global healthcare resources increased by as much as $195 bln.
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 leading healthcare insurance companies, writes in his preface that those "who have the power to make a difference" should read the report.
"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," said Jim Gee, Director of Counter Fraud Services at BDO LLP.
The full BDO Financial Cost of Healthcare 2014 report can be found at http://www.bdo.co.uk/services/forensic-accounting/fraud-and-financial-investigations/counter-fraud-services
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