High number of healthcare companies affected by fraud


More than two thirds (69 percent) of healthcare, pharmaceuticals and biotechnology companies experienced a fraud incident in the past year, according to the 2015 Kroll Global Fraud Report.

The findings reveal the most common type of fraud experienced in the sector was due to management conflict of interest, experienced by 17 percent of healthcare companies, which is the second highest number of companies across all the sectors surveyed.

This was followed by theft of physical assets or stock (14 percent) and regulatory or compliance breach (14 percent). More than one in 10 (13 percent) of companies across this sector suffered from intellectual property theft, which is the highest number across all industries.

Almost four out of five (78 percent) respondents in the healthcare, pharmaceuticals and biotechnology industry say their exposure to fraud has increased. The biggest drivers of this are high staff turnover (28 percent) and an increase in outsourcing and offshoring (19 percent), which is a common route for IP loss.

Although 19 percent of respondents reported that the increased outsourcing and offshoring have driven greater risk exposure, only 18 percent will be enhancing IP protection in the coming year.

The report shows that healthcare companies are not taking active measures to address the industry’s exposure to fraud risks, with only 36 percent of businesses reporting that their firm will be investing in management controls in the coming year.

“One of the most telling results from this year’s report is how vulnerable to fraud companies are feeling,” said Daniel Karson, chairman of Kroll.

“In one form or another, the specter of fraud arises in virtually every business relationship. What our report drives home is that fraud is often an ‘inside job’ and that companies must address both internal and external relationships if they are to most effectively protect their money, property and private data.”

He added that while technology has enabled new ways to perpetrate fraud, Kroll’s daily work with clients confirms what the report also reveals: that old fashioned theft, bribery and kickbacks are still amazingly effective and pervasive.

“Human nature being what it is, fraud will always be with us, whether it occurs in a company’s corner office or a world away in its supply chain,” he said. “However, there are numerous strategies, resources and best practices available to companies that can go a long way toward helping them protect themselves and their investments.”

Kroll, Daniel Karson, US