More than a third of healthcare executives have identified fraud or abuse during the supply chain management process.

Despite a growing reliance on monitoring technologies to prevent fraud, healthcare organizations are still struggling to combat theft and abuse when it comes to supply chain management.

According to a new survey from Deloitte Financial Advisory Services, 36 percent of healthcare organizations have experienced supply chain fraud, waste, or abuse during last year, a five percent increase from 2014 levels.

  • 4 Revenue Cycle Management, Claims Reimbursement Strategies
  • 4 Healthcare Supply Chain Management Tips for Revenue Success
  • Why Executives are Demanding Supply Chain Management Value
  • Various Forms of Fraud Hurting Hospital Revenue
  • Physician Practices Struggling with New Payment Models

While organizations prefer to trust their employees to use and manage resources appropriately, this trust is often misplaced, leading to financial losses that can significantly impact revenue cycle management.

Many organizations are trapped in a pay-and-chase model for fighting supply chain fraud, said Mark Pearson, Deloitte Advisory principal, Deloitte Financial Advisory Services LLP. Invoices are paid first, then retribution is sought much later when fraud is found, if its found at all.

Participants believed that certain types of employees are more likely to commit supply chain fraud than others. They named project managers, invoice approvers and procurement professionals as those who present the largest risk of supply chain fraud, waste, and abuse in their organizations.

Pearson believes that organizations need to closely examine their supply chain management procedures to ensure that they are not leaving openings for fraud and abuse. Supply chain management is already a providers second largest expense, which makes it critical to keep unnecessary waste out of the system.

However, healthcare providers are not implementing appropriate supply chain management strategies. The industry continues to struggle with streamlining its supply chain management strategies because so many different people and organizations are involved in the entire healthcare process.

Outdated health IT systems, poor inventory control, and inadequate distribution management are some of the weak points in the supply chain.

One way the industry could dodge fraud and increase automation is by leveraging analytics to track important data. According to a study by Cardinal Health and SERMO Intelligence, data and analytics can transform supply chains in the healthcare industry into strategic business assets.

If organizations use technology more effectively to better manage supply chains, they will most likely experience fewer cases of inflated bills or falsified labor.

More than nineteen percent of participants in the Deloitte poll do not use analytics to examine financial risks in supply chain management.

An additional 13.7 percent of participants said they have purchased analytics software, but are not actually using it. More than 20 percent of participants only use analytics to manage their third party relationships, such as suppliers and shippers.

Analytics is only one part of resolving issues of fraud and waste. Both providers and payers need to monitor the validity of their vendors and the accuracy of their transactions. One way to monitor the validity of a transaction is by reviewing unpaid invoices before making a payment.

Participants also revealed that many of their organizations were not taking the time to examine unpaid invoices for evidence of fraud.

Only 27 percent said their organizations reviewed unpaid invoices for evidence of fraud, waste or abuse before making a payment. Almost half of the poll takers reported that they were not sure if their organization analyzed unpaid invoices for fraud prevention.

Healthcare fraud, waste and abuse running through supply chains continues to be a huge problem for the industry. If purchasers, providers and producers used more data analytics and automation tools and analyzed invoices before making payments, perhaps more fraud could be prevented, leading to fewer dollars lost. Although this expensive problem may never be truly be erased, it can be reduced significantly.

FINANCIAL Advisory and Intermediary Services ombud Noluntu Bam recently imposed R800,000 fines on two parties for giving dodgy financial advice that resulted in losses for a customer who invested in a suspected Ponzi scheme.

Such cases comprise less than 14% of Ms Bam's case load.

This office received, on average, 9,000 complaints during any specific period, with a total of 3,699 being complaints that fall within our ambit, and which are justifiable matters to be investigated by our case-management department, said Ms Bam.

Ms Bam, who levied the R800,000 fine against financial services provider Mark Alexander Investments and Mark Eiserman in February, says her office does not keep track of the cases it handles, other than the information obtained in her organisation's annual report.

We do have similar complaints currently being investigated by the office, said Ms Bam, adding, however, they do not in any way represent a significant portion of the matters under investigation.

The ombud's 2014-15 annual report showed that most of its complaints, 2,491, were against short-term insurance products. These dwarfed complaints involving investment products, which numbered 1,266 last year.

But most of the fines Ms Bam and her staff have meted out have been to those peddling investment products.

To date, the fine against Mark Alexander Investments has been the highest this year. It is more than double the R317,500 dished out to short-term insurer Santam for failing to advise a customer that a tracking device was a requirement for an insurance contract and later rejecting a claim when it found out that the client did not have a tracking device fitted on a car.

The second-highest fine was the R500,000 imposed on Hermann Waschefort for careless advice to a pensioner, who lost an equal sum of capital after following his counsel.

Mr Waschefort, a financial adviser, had directed the pensioner to invest money in one of the funds he had registered, in an apparent conflict of interest.

Alesio Mogentale and Introvest 2000CC were slapped with a R455,000 fine by the ombud for a failed investment into a scam known as BondCare.

The cases raise the question whether the Financial Services Board, which oversees the ombudsman, took the watchdog's case load into account when drafting the Retail Distribution Review. The review, which is aimed at eliminating conflicts of interest and fostering fair financial advisory services, is being negotiated by the regulator and the industry. The ombud sets itself a nine-month target for resolving 85% of all complaints it gets.

Complaints received by this office differ in complexity, and it is therefore difficult to provide an average rate of closure, said Ms Bam. However, this office consistently meets its objective with regards to the number of matters resolved within nine months.

Ontario is seeking public feedback on recommendations to help consumers access quality, professional financial planning and advice.

The Expert Committee to consider Financial Advisory and Financial Planning Policy Alternatives has issued a report outlining preliminary recommendations, including:

  • Regulating individuals who serve as financial planners and advisors
  • Harmonizing industry education, credentialing, licensing and titling standards
  • Establishing clear rules to protect consumers and mitigate the risk of conflict of interest

Starting today, Ontarians can provide feedback on the expert committees recommendations by:

  • Submitting comments online to This email address is being protected from spambots. You need JavaScript enabled to view it. by June 17
  • Attending one of the public town hall meetings being held across the province

The committee will use the feedback to finalize its recommendations to government, which are expected this fall.

Protecting consumers and strengthening the financial services sector is part of the governments economic plan to build Ontario up and deliver on its number-one priority to grow the economy and create jobs. The four-part plan includes investing in talent and skills, including helping more people get and create the jobs of the future by expanding access to high-quality college and university education. The plan is making the largest investment in public infrastructure in Ontarios history and investing in a low-carbon economy driven by innovative, high-growth, export-oriented businesses. The plan is also helping working Ontarians achieve a more secure retirement.

Quick Facts
  • The financial services sector, including financial planning and advising, is critical to Ontario's economic prosperity. In 2015, the sector accounted for 390,000 jobs across the province, generating almost 10 per cent of Ontario's GDP.
  • The Expert Committee to Consider Financial Advisory and Financial Planning Policy Alternatives was established in 2015.
  • Ontario recently proposed changes that will help credit unions and caisses populaires remain competitive and better serve individuals, communities and businesses.
  • The final report by an expert advisory panel reviewing the mandates of the Financial Services Commission of Ontario, the Financial Services Tribunal and the Deposit Insurance Corporation of Ontario with the goal of modernizing the regulation of financial services and pension plans and increasing agency accountability, is due to be released this spring.
Additional Resources
  • Ontario Launches Consultation on Financial Planning and Financial Advice
  • Strengthening the Financial Services Sector
  • Ontario to Review Key Financial Regulatory Agencies

News this week has not been kind to Millennials looking to purchase their first home. After a report revealed that the nation'ssupply of starter homes has plummeted in the last four years, driving up prices,new research compiled byNerdWallet, a financial advisory site, shows that this demographic is postponing homebuying due to a host of real and perceived difficulties, especially financial issues, a stance that has profound implications for the real estate profession.

It's clear many Millennials are renting longer and delaying the decision to buy a home; first-time homeowners currently make up 32 percent of all buyers--the lowest since 1987--compared with a historical average of 40 percent.