Common corruption risks in the health sector
| Understanding the interactions and relationships | |||||||||
| 1. Government Regulator – Drug & Equipment | The relationship between government regulator and the private sector (pharmaceutical and medical equipment industry) bears major risks for regulatory state capture. The regulation of the pharmaceutical market (licensing and approval of drugs) is a major issue. The decision on approval of a certain medication (be it the company’s own product or a competing product, potentially generic) has a major impact on revenues in the country. Therefore, pharmaceutical companies have a great incentive to influence decision making bodies in their favour, e. g. by bribing regulators to expedite or influence the licensing process. As this concerns issues of safety, anticorruption in this area is vital. Trading in influence, clientelism and conflicts of interest (revolving door) are key problems for the sector. See Kelton (2013)6 for some examples of big pharmaceutical companies involved in extensive corrupt activities. 6 Visit: http://www.forbes.com/fdc/welcome_mjx.shtml |
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| 2. Government Regulator – Payer | The public sector can act as a payer either through direct provision of care or as a public insurance agency. Payers can be defrauded by other actors, but they can also engage in corrupt practices themselves. In the private sector, payers include commercial insurance firms and non-profit insurance organisations. Individuals can also be considered ‘payers’ when they pay fees directly to providers. Depending on the arrangement, different corruption risks are to be considered. | ||||||||
| 3. Government Regulator – Provider | Health care providers and facilities may be tempted to pay a regulator to overlook lapses in licensing requirements. As in any sector, government inspectors can be tempted to abuse their position to extract bribes even when providers are in compliance. The allocation of funds to certain institutions or regions can be skewed according to private interests (bribes, nepotism, etc.), allocating budget or decision making power to certain providers or regions. |
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| 4. Drug & Equipment Supplier – Payer | Similar to the relationship with the government regulator, the private sector suppliers have a vested interest in the decisions made by payers, regardless of whether they are public or private institutions. Payers purchase the drugs to be used in hospitals (direct public provision) or approve the reimbursement of drugs received by their clients (separation of payer and provider). Being on the list of approved medicines is therefore of great value to the suppliers, which they can attempt to achieve through corruption means (bribery, etc.). | ||||||||
| 5. Drug & Equipment Supplier – Provider | The relationship between Suppliers and Providers is complex, as the providers can be a number of different actors. First, corruption in procurement is a major problem. According to the WHO, as much as 10–25% of public procurement spending in Health (medical devices and pharmaceuticals) is lost to corrupt practices (WHO 2009, cited from EC2013:71). Selecting the right product and the needed amount of drugs and equipment is a complicated process that can be flawed for many reasons which cannot be treated in detail here. The following table provides an overview of corruption related problems in the different stages of the Health care procurement process. See Additional information/Table 3.7 Subtypes of procurement corruption per phase |
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| 6. Payer – Provider | Similarly, the relationship between payer and provider is complex and source for a series of corruption risks: | First, providers may defraud payers in a number of ways: they can be dishonest about type or amount of services delivered (over-billing), claim payments for patients that have not been treated (phantom patients) or treat patients who are not entitled by using other patients’ accounts, prescribe drugs or treatment in exchange for kickbacks. In a system of direct provision, they can steal drugs, hold multiple positions or simply not work the amount of time specified in their contract (absenteeism), misuse their position by using public facilities to treat their private patients or refer them to their private practice. Second, payers may create negative incentives for providers to save costs (e.g. unnecessary hospitalization) that enable providers to receive larger reimbursements, part of which may be kicked back to the payer. First, providers may defraud payers in a number of ways: they can be dishonest about type or amount of services delivered (over-billing), claim payments for patients that have not been treated (phantom patients) or treat patients who are not entitled by using other patients’ accounts, prescribe drugs or treatment in exchange for kickbacks. In a system of direct provision, they can steal drugs, hold multiple positions or simply not work the amount of time specified in their contract (absenteeism), misuse their position by using public facilities to treat their private patients or refer them to their private practice. Second, payers may create negative incentives for providers to save costs (e.g. unnecessary hospitalization) that enable providers to receive larger reimbursements, part of which may be kicked back to the payer. |
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| 7. Provider – Patients | This issue includes many different practices, such as bribery to obtain access to healthcare (preferential treatment, better quality of healthcare, or treatment one is not entitled to, such as false sick leave statement), fraud in beneficiary ID (using someone else’s ID), understating income (in order to qualify for services provided free of charge to the poor), extraction of illegal fees (under-the-table payments), and unnecessary treatment and prescriptions. | ||||||||
| This overview is not exhaustive. Please refer to the literature (e.g. DFID 2010) for more types. For instance, there can be collusion between different providers, such as doctors and pharmacists. | |||||||||