The Missing Link – Forensic Responses in the Health Sector


The Missing Link – Forensic Responses in the Health Sector

Forensic Foresight: February 2017


The health sector has faced many challenges and opportunities in recent years as health systems struggle to control spending in ways that do not compromise patient care.  Major players – be they policy-makers, regulators, health networks, hospitals, pharmaceutical and device manufacturers or boutique providers – have responded, making substantial investments and seeking to improve their business processes and systems at all levels.  Hospitals are using lean processes to improve patient flow, workforce substitution models to improve access and design thinking to transform the patient experience. The implementation and leverage of digital and data through e-health solutions – a long-promised revolution in health-care – is becoming more ubiquitous and efficient through advances in machine learning and other forms of artificial intelligence.

The sweep of innovative digital, design and data solutions through the sector, however, can obscure age-old problems. Such solutions excel at improving an organisation’s operations – but what happens when incidents of waste, abuse, fraud or other misconduct threaten these operations? This is where the rigour and intensity of a forensic response – whether it is preventing funds leakage, detecting procurement fraud or responding to clinical misconduct – is an essential complement to traditional models of business improvement in enhancing the governance, provision and evaluation of care.

Addressing Conduct Risk

A forensic response can, for example, be essential in addressing conduct risk – that is, the risk of inappropriate, unethical or unlawful behaviour on the part of an organisation’s management or employees. Regulators in other sectors have focused on issues of conduct and culture for many years, though “misconduct” is still a loaded term in a sector where clinical care is often distributed across teams of health professionals exercising clinical judgment. In complementing proactive measures to identify deviations from agreed clinical pathways or models of care a forensic response can help organisations navigate complex challenges of procedure, evidence, privacy and confidentiality while supporting system and process reform.

Undertaking an independent forensic audit or investigation into allegations of misconduct, for instance, can assist organisations mitigate the risks of bias or conflicts of interest during the investigative process. These forensic responses pay particular attention to requirements of procedural fairness and natural justice – which can be critical as medical professionals are rightly ascribed a high degree of judgment in determining appropriate care. The ability to demonstrate that a rigorous internal investigation has been undertaken is also important for regulated entities such as hospitals, as allegations of misconduct relating to health professionals may also be investigated by the Australian Health Practitioner Regulation Agency and considered by national boards of practice or judicial bodies.

In addition to considerations of procedural fairness, the forensic identification, preservation and analysis of evidence can also safeguard the integrity of the investigative process and help ensure that appropriate privacy and confidentiality controls around the handling of sensitive medical information are followed. In the e-health era, the ability to extract, protect and analyse both structured and unstructured data is also essential to addressing conduct risk. By leveraging forensic tools and platforms to identify subtle patterns of over-prescription, texts or emails showing collusion in referrals, or procurement data demonstrating preferences for certain suppliers, conduct risk can be addressed both proactively and reactively from a robust evidence base.

Addressing Procurement Risk

Forensic models of fraud prevention and detection also provide powerful tools for addressing procurement risk. Procurement is typically the second largest cost in hospitals after salaries and wages, frequently accounting for more than 15% of organisational expenditure. Increases in costs for health care products are also outpacing labour cost increases in many countries – including Australia. Health care procurement improvement programs have become very popular over the past few years with a focus on decreasing procurement spend through opportunities such as consolidating suppliers, product reviews, collaborative contract negotiation and targeting off-patent products. Such programs may deliver substantial savings through program improvements; however they are not designed to address the underlying challenges of procurement risk and fraud which can present a far greater impact on financial sustainability. 

Forensic prevention and detection methodologies are especially important for addressing procurement risk in hospitals and other front-line health networks, as they are typically large organisations with varied and decentralised authority delegations that are highly tolerant of variation. The constant use of a particular surgical device; the bulk purchase of a particular drug; the engagement of a particular specialist – each may simply reflect a reasoned clinical preference… but could also involve undisclosed conflicts of interest, kick-backs or other forms of corruption. Applying forensic analytics to examine patterns of use, transaction frequencies, and even social networks between health professionals and suppliers can help interrogate procurement decision-making, and provide a robust evidence base for procurement reform.


Although digital, design and data solutions will always form the core basis of organisational reform in the health sector; the value of the forensic response should not be over-looked. Issues that can critically affect an organisation’s assets, reputation and viability can be easily obscured in an environment that supports emerging evidence, clinical judgement, and personal preferences and only come to light when it is too late to mitigate the damage. Addressing these issues through forensic methodologies will not just assist organisations to act quickly and confidently to diagnose the root cause of an incident and protect their assets and reputation, but also help prevent and detect these issues before they become systemic risks to the sector.

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