The Real and Scary Costs of Non-Compliance in Healthcare

Healthcare organizations face the complex challenge of balancing the needs of their patients, and the organization’s internal operations including legal, compliance, and finance requirements. This balancing act is facing the spotlight more and more as healthcare institutions face budgetary and human resource constraints to meet the demands of patients, especially a population that continues to age. The significant costs of non-compliance further complicates this delicate balance, as organizations strive to adhere to regulations and avoid potential financial and reputational risks associated with non-compliance incidents.

Thus, it places more burdens on becoming more lean and efficient in delivering care. To complicate matters, there is also a growing level of scrutiny placed on the compliance monitoring of healthcare professionals with new regulations and kickbacks at all levels of government. 

Challenges with Contracted Healthcare Professionals

Hospitals and healthcare systems routinely use contracted physicians and nurses to bring in additional human resources to deliver patient care. In fact, some states like Texas and California generally prohibit physicians from being employed by hospitals. Unfortunately, certain loopholes and human errors result in gaps within the system, leading to large compliance issues with contracts, timesheets invoices, and service delivery. 

Take Molina Healthcare as an example; in 2022, the organization paid $4.6 million in fines for overpayments and services that did not comply with licensing and other requirements. In 2010, the Detroit Medical Centre paid $30 million in penalties for not having some contracts in writing, unsigned contracts, and issues with the fair market value assessments of the service provided. These occurrences are far too common in the healthcare system; in 2022 alone, $2 billion worth of fines were levied across various organizations under the False Claims Act.    

Challenges of Budgeting for Non-Compliance Events

Organizations continually update policies, procedures, mitigation strategies, best practices, and technology to defend against non-compliance contracts, timesheets, and services delivered. Budgeting non-compliance events into an organization’s budget, along with internal policies to catch these errors early, is standard practice. It also helps build a positive culture around trust. 

This may not be enough as there are significant hidden costs of non-compliance, making it difficult to budget for when missed. When something goes awry, many hours are spent on inspections, audits, and other legal matters. These cost, both in time and finances, can be unpredictable and can divert crucial resources from regular compliance tasks.

Costs of Non-Compliance: Risks, Litigation, and Ripple Effects

Such a shift in focus can lead to further oversights, heightening the risk of additional litigation and non-compliance. This means that a single non-compliance incident can lead to many more i.e. a ripple effect. There are also variable costs of non-compliance beyond the organization’s control, such as the unpredictability and timeline of the legal system, that can result in a significant loss of time and capital. 

The US has a long history of non-compliance incidents across every facet of the healthcare system. Oftentimes, organizations can mitigate billing and contract issues with the right systems and safeguards, making compliance easy and seamless for everyone involved. Human error, intentional or not, is the number one culprit for errors when handling the reconciliation of digital and paper-based documentation. 

Fortunately, there are advanced healthcare compliance management solutions (like TimeSmart.AI) designed and developed to help reduce the chance of human error and the costs of non-compliance. This is achieved by automating processes when dealing with clinician contracts, compliance checks, and accurate service delivery documentation such as physician timesheets and invoice management. Reconciling and auditing data is now more accessible than ever owing to the latest interoperability technology, giving clinicians the much-needed time to focus on delivering high-quality care and positive patient outcomes.

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