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Counting the cost of fraud within the NHS

We look at two recent cases which illustrate the scale of fraud and error facing the NHS, and we share some key figures from a report by the ex-director of NHS Counter Fraud services.

It has recently been reported that a Foundation Trust manager was part of a group arrested following allegations of fraud and money laundering at a Yorkshire hospital. This is only the latest publicly raised concern about the extent of fraud that is occurring within the NHS.

Reports suggest that the sum involved is estimated to be £3m. The victim to this fraud is a Foundation Trust (FT) which provides specialist mental health and learning disability services to people in Leeds and North Yorkshire.

This latest episode follows the nine year jailing of four medics who were convicted of fraud to the excess of £1m at Basildon Hospital. The medics were also charged for claiming up to 14,000 hours of worked when, in fact, they were working as private contractors at other London NHS trusts. This Group’s audacity was such that they nicknamed the scheme “Bas Vegas” and awarded themselves “bonus points” for their efforts.

Counting the cost of fraud within the NHS

These two incidents illustrate the potential scale of fraud and error facing the NHS. In March 2014 Jim Gee, ex-director of NHS Counter Fraud services, reported that research undertaken by the University of Portsmouth led him to believe that the cost of fraud was £5bn annually, with a further £2bn lost to financial errors.

The Department of Health “did not recognise” this figure but in effect have stopped measuring losses beyond dental and pharmaceutical services. The National Fraud Authority’s Annual Fraud Indicator report published in June 2013, estimated patient charges fraud at £156m and NHS dental charges fraud at £73m. Jim Gee claims he has extrapolated his figures based on global figures which suggest average losses to fraud and error were just under 7% of total healthcare budgets.

The Yorkshire and Basildon cases provide examples of the type of fraud most commonly being committed in both the public and private healthcare sectors: Medics charging for work they have not done, overcharging by contractors and patients falsely claiming prescription charge exemptions. Sadly it is to be expected that the frauds detected in the NHS are the tip of a very large, undetected, iceberg.

DWF recognises the scale of the problem and is working with clients in both the public and private sectors, as well as in partnership with global counter-fraud service providers, to assist organisations in detecting and investigating episodes of fraud and error.

Kate Archer, a Director in DWF’s Counter Fraud Team, said “We take the financial stability and reputation of our healthcare clients extremely seriously and are developing innovative solutions to assist them, in straightened economic times, to detect fraud being committed against them”.

For more details of DWF’s healthcare counter-fraud programme, please contact Kate Archer.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Kate Archer

Director

I am a Director at DWF specialising in catastrophic injury and large claims.