Procurement fraud costing NHS £1 billion a year, report says

Will Green is news editor of Supply Management
24 September 2015

Losses as a result of procurement fraud in the NHS have been calculated at £1 billion annually, according to a study.

A report, The Financial Cost of Healthcare Fraud 2015, used loss measurement data from 1997 to 2013 across seven countries, including the US and UK, to arrive at the figure.

The report, published by accountants PKF Littlejohn and produced by the Centre for Counter Fraud Studies at the University of Portsmouth, calculated the global average loss from all types of health sector fraud and error in 2013 was £299 billion. There is a running global average fraud and error loss rate of 6.19 per cent of healthcare expenditure and an average fraud loss rate of 4.57 per cent.

The report calculated annual fraud losses to the NHS are between £3.73 billion and £5.74 billion, based on an analysis of areas including procurement, general practice, payroll expenditure and prescriptions.

“The nature of procurement fraud has mostly been found to be where goods or services are under-provided in terms of quality or quantity or over-charged,” said the report.

“Sometimes the goods or services are not provided at all. Where procurement fraud losses have been measured in other organisations, a key weakness has been found to be the lack of consistent data and communication between those procuring goods or services, those receiving or benefitting from them and those paying for them.”

The report said “there has never been a successful NHS loss measurement exercise looking at procurement expenditure” but looking at such exercises in other sectors the lowest fraud loss rate was 5.8 per cent, which would equate to NHS fraud losses of £1.27 billion in 2013.

“If we apply the healthcare global average fraud loss rate then the figure would be £1 billion,” said the report.

The report recommends the NHS “re-adopt an approach which is focused on reducing the cost of fraud, not just investigating and prosecuting individual examples”, recommence loss measurement exercises and establish a “powerful, well-resourced organisation to lead this work”.

A Department of Health spokesperson said: “We do not recognise the figures in this highly speculative report which is full of inconsistencies. We are determined to stamp out fraud in the NHS through better information sharing to prevent and deter fraud and we are working with NHS Protect on crime risks and trends to do even more in the future.”

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