The cost of fraud in the NHS

Fraud in the NHS has once again hit the headlines following the publication of a report co-authored by Jim Gee of PKF Littlejohn LLP (former CEO of the NHS Counter Fraud Service) and the University of Portsmouth.

'The financial cost of healthcare fraud 2015' analyses worldwide healthcare expenditure and concludes that 6.19% of total health expenditure is lost to fraud and error.

The report was featured on the BBC News, suggesting that the NHS could be losing up to £5.7bn a year from its £100bn budget to fraud and error.

The report highlighted NHS procurement as an area of concern. Despite NHS procurement expenditure reported to be £21.9 billion for 2013/2014 there has never been a successful NHS loss measurement exercise undertaken to look at procurement expenditure losses.

The report cites the procurement fraud perpetrated by two NHS Managers, John Leigh and Deborah Hancox. They masterminded a 5-year procurement fraud worth £229,000 against a health authority in the North West and were jailed for five years in total in November 2014.

The report notes that applying the global rate of 4.57% for fraud loss alone (i.e. excluding loss through error) the NHS could be losing £1bn per year to procurement fraud.

The report states that fraud is mostly found to be where goods and services are under-provided in terms of quality, or quantity, or overcharged. It also refers to instances of goods and services not being provided at all and cites the key weakness in procuring generally as being a lack of consistent data and communications between those procuring goods or services, those receiving or benefiting from them, and those paying for them. No comments are made in the report regarding actions intended to reduce competition, supplier bias, cartels, corruption, kickbacks or collusion in the procurement process.

The report has been dismissed by a Department of Health spokesperson stating, 'We do not recognise the figures in this highly speculative report which is full of inconsistencies.'

In any event, procurement fraud (and indeed all fraud) reduces the budget available for front line services. Whilst NHS Protect has achieved some high profile successes securing a criminal conviction can take many years with the standard of proof in criminal cases being 'beyond reasonable doubt'.

Fraudsters can however be pursued in the civil courts. Whilst cogent proof is required in a civil fraud claim, the standard of proof is lower, being 'the balance of probabilities'. Therefore criminal and civil options should be carefully considered at the outset of any fraud investigation and NHS bodies may increasingly focus their efforts on fraud prevention and look to the civil courts for a positive outcome.


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