Fraud in SA healthcare system

19 March 2013

Fraud in SA healthcare system

Medical fraud costs in SA are estimated to be between R3 billion and R15 billion.

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The majority of healthcare professionals are skilled, honest and work hard to provide high quality healthcare for their patients. Only a small percentage of providers, members and other parties commit fraud and other abuses which impact negatively on our healthcare system.

Discovery Health has a zero tolerance approach to fraud and uses sophisticated data analytics and the latest technology to identify fraudulent behaviour.

Collaboration is key
Statistics shared at the recent Board of Healthcare Funders conference on fraud estimated total fraud costs in the South African healthcare system at approximately R22 billion each year. There are no accurate statistics for the South African private healthcare system.

International data suggests that losses to healthcare fraud and abuse may account for between 3% and 15.4% of claims paid - with an average of approximately 7%. Applying these estimates to South Africa is likely to give a more realistic picture, suggesting that fraud costs may vary between R3 billion and R15 billion each year.

In our view, the actual costs of fraud in South Africa’s private healthcare system are probably closer to the lower end of this range, says Dr Jonathan Broomberg, CEO of Discovery Health, and the estimate of R22bn seems extremely high and is unlikely to be accurate.

“These costs are clearly disturbing and alarming, particularly if we understand that the true cost of healthcare fraud is in the lost opportunity for investment in members’ genuine healthcare needs, and in rewarding skilled health professionals adequately for their scarce and valued skills, and for their care of patients”.

“The increasing incidence of fraud undoubtedly contributes to the cost pressures in our healthcare system, and ultimately affects all medical scheme members, health professionals and the economy at large.

Zero tolerance approach
For this reason, all stakeholders, including members, health professionals, and funders should take a zero tolerance approach to fraud, and should also work closely together to fight these trends. Discovery Health commits substantial resources to fighting fraud, and uses the latest big data analytics, as well as its own proprietary forensic software algorithms, to identify and prevent incidents of fraud.

Broomberg said, “Discovery Health views fraud as a serious criminal offence and we work hard every day to curb this trend. We intervene wherever we identify fraud, and act both to recover monies owed to the medical schemes we are responsible for, as well as to report perpetrators to the relevant authorities. In 2012, we recovered over R250m in fraudulent claims for the schemes under our management.

Broomberg said, “It is also very important to emphasise that the vast majority of healthcare professionals are skilled, honest and ethical, and work hard every day to provide high quality healthcare for their patients. Only a small percentage of providers commit fraud and other abuses, and in many cases, fraud is committed by criminal syndicates or individuals other than health professionals. The media reports on the BHF conference created the impression that corruption and fraud are widespread amongst healthcare professionals. This is inaccurate and unfair, and this impression must be corrected”.

Discovery Press Release