Global healthcare fraud costs put at $260 billion

LONDON (Reuters) - Some 180 billion euros ($260 bln) is lost globally every year to fraud and error in healthcare -- enough to quadruple the World Health Organisation’s and UNICEF’s budgets and control malaria in Africa, experts said on Monday.

An empty operating theater is seen at a hospital in a file photo. REUTERS/Ina Fassbender

A study by the European Healthcare Fraud and Corruption Network (EHFCN) and the Center for Counter Fraud Services (CCFS) at Britain’s Portsmouth University found that 5.59 percent of annual global health spending is lost to mistakes or corruption.

“Every euro lost to fraud or corruption means that someone, somewhere is not getting the treatment that they need,” said Paul Vincke, EHFCN’s president and one of the report’s authors.

“They are ill for longer, and in some cases they simply die unnecessarily. Make no mistake -- healthcare fraud is a killer.”

The report reviewed 69 exercises in 33 organizations in six countries to measure healthcare fraud and error losses.

The combined expenditure assessed was more than 300 billion pounds ($490 bln) and the experts extrapolated their findings from Britain, the United States, New Zealand, France, Belgium and the Netherlands to get a global picture.

Data from developing nations would not have changed the global figure, the authors said, but were hard to come by, since the study included only exercises based on statistically valid samples with measurable levels of accuracy.

The report found evidence for many different types of fraud, from pharmacists dividing prescriptions into small packages to claim extra fees, to drug companies organizing price cartels, to doctors over claiming travel costs and abusing government grants, to patients making fraudulent insurance claims.

Two doctors were found to have claimed a government improvement grant for their clinic which they then spent on setting up a car import-export business.

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A Thomson Reuters report published last October found that the U.S. healthcare system wastes between $505 billion and $850 billion every year, with around 22 percent of that going on fraudulent insurance, kickbacks for referrals for unnecessary services and other scams.

The World Health Organization’s latest estimate of global healthcare expenditure was $4.7 trillion (3.3 trillion euros). The fraud report’s 260 billion loss figure is based on an average of 5.59 percent of spending being lost to fraud.

Jim Gee, chair of the CCFS, said Monday’s report proved it was possible to measure the nature and extent of losses to fraud and error, and this was vital to tackling the issue.

“It may be embarrassing for some organizations to find out just how much they are losing,” he said in the report.

“Because of the direct, negative impact on human life of losses to fraud, it is never easy to admit they take place.”

But Gee said the first step to combating fraud was for governments and institutions to stop “being in denial” about it.

“If an organization is not aware of the extent or nature of its problem, then how can it apply the right solution?”

The European Healthcare Fraud and Corruption Network (EHFCN) was set up to help the region’s healthcare organizations find and cut losses on fraud and error so that more money could be better spent on patient care.

Similar networks exist in the United States and Canada.

Editing by Charles Dick