Literature review fraud and corruption prevention strategies

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Literature review fraud and corruption prevention strategies

Literature review: fraud and corruption prevention strategies

According to the available literature, the following processes have inherent risk of fraud and corruption: provision of medical by medical personnel, human resource management, procurement of drugs and supplies, distribution and prescription of medicine, budgeting and pricing and regulatory parameters. The available literature concur that fraud and corruption negatively impact the economy. Besides limiting economic growth, fraud and corruption affects access of patient care. The negative of fraud and corruption in a healthcare system are well described by Sparrow (2008) who observes that such unethical practices could even lead to reduced utilization of public facilities. According to Rothstein (2011) this is already a reality in the developing countries where patients visiting private clinics rather than government-run hospitals. In such countries, fraud and corruption has also affected the government choices on how to invest revenue, with corrupt government opting to invest in construction in healthcare facilities in order to extract bribes from the contractors.

There is also a feeling that among the researchers that fraud and corruption impairs trade, deters and diverts government spending away from public goods such as education and health. According to Miller, Roberts and Spence (2005) a lot resources are channeled towards personal uses and in the end the health care system could be collapse. The available literature has investigated the factors that encourage fraud and corruption in a work place. According to Johnston (2005) one of the common causes of fraud and corruption is poor working environment. Johnston (2005) further observes that workers need to be motivated to accomplish their assigned responsibilities. Menzel (2005) further suggests that fraud and corruption are encouraged by workplace pressures, dissatisfaction, perceived workplace unfairness and cultural tolerance of corruption. On his part Graaf (2007) believes that fraud and corruption are supported by lack of effective organizational structures and systems. Consequently, there is need to ensure, appropriate policies, procedures and systems are put into place.

A number of solutions have been suggested to fight fraud and corruption in the healthcare sector, including the use of detection systems. In the health-care context, three types of fraud exist: provider fraud, consumer fraud and payer fraud. Maureen (2007) observes that the health sector is prone to fraud and corruption due to a number of reasons. Firstly, there exist imbalances of information and an inelastic demand for services. For this reason you find that the medical practitioners take advantage of the ignorant patients by recommending unnecessary treatments which they then claim reimbursements for. Secondly, public sector is prone to low-productivity and efficiency due to lack of competition and external accountability. This is a serious problem at NHS where organizational processes have not kept up with its structural changes. As a result, the employees are not responsive to the patients’ needs. Most importantly, in the public sector its becomes difficult to embrace the modern management practices such increased managerial discretion and local decision making and as such the employees may feel de-motivated. The sections below examine strategies that can discourage fraud and corruption and suggests ways in which they can be adopted at the NHS.

5.1 Promoting an anti-fraud culture

Two approaches are used in strengthening the anti-fraud culture: changing the beliefs, attitudes and the norms of the employees and improving the internal control and developing compliance systems. Compliance systems encourage the employees to comply with the applicable laws, regulations and standards. However, to encourage an anti-fraud culture in the organization will require deep commitment of both the management and the employees. The available literature concur that implementing a change initiative in an organization is not only resource-intensive but could be jeopardized by resistance from the employees. In this regard, the NHS should initiate an ambitious training program on how to detect fraud and its effects in the society. For successful implementation of such a program, the government should allocate enough funds. The management should consider restructuring the reward system and recognize the efforts of the whistle blowers.

5.2 Strengthening the legal framework

Some of the countries have developed anti-bribery laws to prevent and a perfect example is the USA Foreign Corrupt Practices Act and the UK Anti-Bribery Act. According to these laws have in health sector prosecutions and as such should continue to be used. According to Gorsky (2008) having an appropriate legal framework plays an important role in raising awareness and deterring fraud and corruption by prosecuting and imposing penalties. The 1998 Public Interest Disclosure Act does not incentivize third parties to volunteer fraud-related information to the fraud investigators. Consequently, an appropriate legal framework should be established, and the government should increase the punitive measures taken against false claimants. The UK government should emulate the American legal framework which has an effective law- the False Claims Act- and adequately resourced teams to negotiate with the offenders. Under the Deferred Prosecution Agreements, the teams can recommend additional monitoring, introduction of reforms or accept pay compensation in return for non-prosecution.

5.3 Human resource management

It is widely accepted that poor remuneration is one of the risk factors for fraud and corruption. It is also widely acknowledged that paying employees competitive salaries can act against fraud. While adhering to these practices, the NHS should as well emphasize on ethical training of all workers in the health system. It is also worth pointing out that the number of the in-house specialists in NHS bodies is very low; hence need to employ more of them to reduce incidences of fraud and corruption. The managers in the health care sector work with the suppliers, contractors and other private sector partners. Owing to this fact, it is increasingly vital to educate them about managing contractor relationships. It will be very important to re-train the health-care managers on contractual management and procurement.

A key component of fraud prevention is having good prosecutorial capabilities. Unfortunately, the current NHS counter-fraud infrastructure does not enough capability to deal with potential fraud by major corporations. More over, the major suppliers have vast resources to defend themselves against criminal and civil actions. Just to illustrate, a case brought against the Icelandic Bank collapsed due to lack of quality lawyers and inadequate resources. Consequently, the government should allocate more financial resources to the NHS for the improvement of investigative and prosecutorial capabilities.

5.4 Adoption of IT

Information and communications technologies are effective in promoting transparency and public accountability. At the time, ICT increases operational efficiency and improves internal governance. In this regard, adoption of the EMR can reduce opportunities for manipulation and cover-ups. The HNS should also consider investing more in:

Anomaly detection systems. Such systems are easier to implement, and have been found to be effective in detecting unknown patterns of fraud

Social networking analysis and multiple-entity fraud system (Barber, Bonnet & Bekedam, 2004). This system is effective in detecting large volumes of seemingly unrelated claims. However, installing such systems is effort and time-intensive.

Integrated case management systems and empirically based tools.

With the growing complexity in fraud-related crimes, it becomes necessary to acquire equally sophisticated fraud and abuse detection techniques.

5.5 Citizen engagement and stakeholder participation

According to Soeters and Griffiths (2003) citizens can play an important in the prevention of fraud and corruption in the heath sector. More so, the media and community groups can provide the necessary oversight to encourage ethical practices in the health sectors. The NHS also needs to actively engage the public to improve trust and reduce inaccurate perceptions of corruption. Most importantly, the NHS should invest more resources in educating the public about the negative effects of fraud and corruption. While NHS could use the mass media for its outreach, it could also consider adopting social media platforms and community-based organizations. That way, the organization can avoid the high costs of advertising, and ensure the funds are utilized in more profitable ventures.

Comparative analysis

The American health care system is highly contracted out and majority of the services are reimbursed on a fee-for-service basis. The medical practitioners have a high propensity to misuse the current system, and they have been given undue authority of determining the appropriate levels of care. Just like in the UK system, the providers and the medical practitioners are in a position to submit false or inflated bills. Falsification of claims is encouraged by the automation of the payment systems. Lack of human scrutiny, means a bulk of the payments is done electronically and on trust. The NHS can learn from the American experience by using a broader range of controls, and by the establishing whistleblower statutes. Under the American system, the whistleblowers receive a share of any eventual settlement and this has been a powerful tooling tackling healthcare fraud and corruption.


Owen, J. (2011). Fraud by staff and patients cost NHS £3bn a year. The independent, 12, 13

Pollock, A. (2004). NHS plc: the privatization of our healthcare. Verso

Rashidian, A., Joudaki, H., & Vian, T. (2012). No Evidence of the Effect of the Interventions to Combat Health Care Fraud and Abuse: A Systematic Review of Literature. PLoS ONE, 7(8), 41988.Rivett, G. (1998). From Cradle to Grave: 50 years of the NHS. Kings Fund

Rothstein, B. (2011). The Quality of Government: corruption, social trust and inequality in international perspective. University of Chicago Press Chicago

Soeters, R. & Griffiths, F. (2003). Improving government health services through contract

management: a case from Cambodia. Health Policy and Planning 18(1), 67-71

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