What is fraud costing the NHS?

3 May, 2017

Following a recent BBC Radio 4 interview, Crowe’s Jim Gee discusses the crippling effect of fraud on the NHS.

BBC Radio 4’s You and Yours programme has revealed how much fraud is detected by the NHS which is £35 million over five years in England (£7 million a year). This figure highlights a serious problem where fraud is undermining the quality of patient care.

The latest research undertaken by the Centre for Counter Fraud Studies at University of Portsmouth (Europe’s premier research institute concerning fraud) shows the total cost of NHS fraud in England to be between £3.7 – £5.7 billion.

Estimated total cost of fraud:

Payroll expenditure £555 million – £1.49 billion
Procurement expenditure £1 billion – £1.27 billion
General Practice £348 million
General Dental Services £121 million – £137 million
Pharmaceutical Services £83 million – £96 million
General Optical Services £12.9 million – £23.9 million
Prescription charge fraud £237 million
Dental charge fraud £43.9 million
Optical charge fraud £22.9 million

Fraud detection rates are usually low as the cost of most fraud is high volume, low value and therefore difficult to spot. If spotted it is often imagined to be insignificant because the organisation concerned is unaware of the volume of similar cases. At best organisations only detect around 1/30 of the total cost of fraud impacting on them.

However, the NHS is doing significantly worse than this. It is detecting £7 million of fraud a year in England, but this pales into insignificance when compared to the total losses.

This reflects the reduction in the budget of the organisation that protects the NHS against fraud over the last 10 years. Between 1998 and 2007, the NHS cut the cost of fraud by up to 60% and delivered £811 million of financial benefits, 12 times the cost of the work.

What can be done?

The NHS now needs to do three things (and urgently, at £3.7 – £5.7 billion a year, the NHS is losing between £71 million – £110 million each week to fraud and related problems):

  1. Invest more money in countering fraud. This is an investment in a much greater return – the NHS used to save £12 for every £1 invested in counter fraud work
  2. Do more to pre-empt fraud rather than to have to detect it after it has happened and loses have been incurred
  3. Have better quality information about the real cost of fraud. In the decade up to 2008, the NHS undertook 21 loss measurement exercises. In the decade since then it has undertaken less than five.

The key point is a simple one. If you do not know the nature and scale of a problem you cannot apply the right solution.

Fraud undermines the extent to which the NHS can provide quality patient care. We all need to ensure that it is properly protected.

Listen to Jim Gee’s full interview on You and Yours

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