Fraud costs private healthcare R22bn - SIU

Cape Town – At least 7% of all medical claims in South Africa are fraudulent, costing their members annually between R2 500 and R2 800 to cover fraudulent expenditure, said Andy Mothibi, CEO of the Special Investigating Unit (SIU).

Addressing delegates on the second day of the Board of Healthcare Funder’s (BHF) annual conference in Cape Town, Mothibi shed some light on the incidence of fraud in the private and public healthcare sector in South Africa.

The total fraud costs in the South African private healthcare system, Mothibi said, is estimated at approximately R22bn each year.

READ: Medical scheme lifts lid on fraud amounting to millions 

Estimates by the Healthcare Forensic Management Unit (HFMU) of the BHF find that at least 7% of all medical aid claims in South Africa are fraudulent and the figure could be as high as 15%.

Fraud in public healthcare sector is also rife, he said, citing the following statistics:

  • R24bn of provincial health departments’ expenditure between 2009 and 2013 was irregular.
  • A third of the Northern Cape’s provincial healthcare spending – R1bn – was irregular.
  • In Gauteng, irregular expenditure amounted to R5.3 billion between 2009 and 2012.
  • Although there was an improvement in irregular expenditure as a proportion of the total health expenditure from 11% in 2010-11 to 4.8% in 2011-12, the figure increased again to 6.1% in 2012/2013.

In a separate presentation on fraud in the healthcare industry, Gregory Pratt, senior clinical advisor at Medscheme’s forensic unit cautioned that South Africa’s proposed National Health Insurance scheme stand to be plundered with billions of rand unless there is substantial investment in protective anti-fraud technology.

“Our healthcare system is targeted by syndicates and devious practitioners, as it easier than committing other financial crimes,” Pratt said.

READ: No clear financial plan on NHI scheme 

“This should serve as a grave warning for the NHI initiatives. Unless there is substantial investment in protective technology we stand to lose billions of rand due to the plundering of NHI funds.”

Pratt said there are a few 100 medical practitioners across various medical disciplines that are perpetrating fraud in the healthcare industry, who are targeting specific benefit structures within medical schemes.

These fraudsters will simply continue their devious practices in the NHI sphere once implemented, unless their practice numbers are revoked.

Pratt said there should be harsher sanctions for perpetrators, as they currently only get “limp fines” or suspended sentences when found guilty.

Pratt cited a number of examples of how syndicates are defrauding the healthcare system. In one instance a psychologist claimed for 173 patients in one day, while a pharmacy syndicate in Soweto defrauded medical schemes of R100m in a three-year period.

“Fraud and abuse pose a material risk to the affordability of our medical schemes and any NHI initiative that we try to put through in this country,” Pratt said. 

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders