This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our privacy policy for more information on the cookies we use and how to delete or block them.

The Financial Cost of Healthcare Fraud 2014

25 March 2014

Fraud And Error Costs Global Healthcare Sector $487 Billion (£313 Billion) Per Year

  • Since 2008 global average fraud and error losses in healthcare have risen 25% from 5.59% of expenditure to 6.99%
  • Reduction in fraud and error losses of up to 40% possible within one year - freeing up to $195bn (£125bn) globally
  • Global average loss rates suggest loss within UK National Health Service to be £7bn

The world is losing some $487bn to fraud and error annually according to a new report "The Financial Cost of Healthcare Fraud 2014" from BDO LLP, the accountancy and business advisory firm in partnership with The Centre for Counter Fraud Studies at the University of Portsmouth.

The findings show that global average losses within the healthcare sector have, since 2008, risen 25% to 6.99%. When taken as a proportion of global healthcare expenditure of $6.97 trillion (£4.48 trillion) this equates to $487 billion (£313 billion) lost in a year equivalent to:

  • More than three times the UK NHS budget for 2011/12;
  • Two and a half times the total healthcare expenditure of Canada  for 2011;
  • Almost one fifth of the United States total healthcare expenditure for 2011 and more than 27% of European Union Countries total healthcare expenditure for the same period

Fortunately counter fraud exercises have shown that it is possible to significantly reduce the losses with a reduction of 40% within 12 months being considered a very reasonable expectation. This in itself would see global healthcare resources increased by as much as $195bn (£125bn).

Case Study

In the UK's National Health Service (the second largest organisation in the world) between 1998 and 2006 losses were reduced by up to 60%. Statistics from the UK's National Fraud Authority Indicator 2013 suggest that fraud within the NHS was £229m in 2013 however, applying the global average percentage loss rate suggests, that if the NHS was in line with the rest of the world, a figure nearer £7bn would be more likely. To accept the figure of £229m would be to accept that the NHS is doing more than 30 times better than the rest of the world in preventing and detecting fraud and error.

Dr David Evans, the Director of Health Systems Financing for the World Health Organisation (WHO) describes the report's conclusions as "convincing" in his Foreword, while Dr Simon Peck, a Founder of the Health Insurance Counter Fraud Group (HICFG), a UK industry group of 29 leading healthcare insurance companies, writes in his preface that those "who have the power to make a difference" should read the report.

Jim Gee, Director of Counter Fraud Services at BDO LLP added:

"The global financial crisis has had a significant impact on governments, corporates and individuals ability to meet the rising cost of their healthcare requirements. These budgetary constraints could, however, be vastly improved with a concerted effort to measure, manage and minimise the cost of fraud and error within the relevant organisations, particularly if this was supported by legislative requirement. Our conservative estimate is that, by tackling this problem seriously, healthcare organisations could free up $195bn which is currently lost. This would make a material difference to the lives of millions of people around the world."

The full BDO and University of Portsmouth Financial Cost of Healthcare Fraud Report 2014 can be downloaded here

- Ends –

About the report

The Financial Cost of Healthcare Fraud 2014 Report renews research first undertaken in 2009 and repeated in 2011, collating the latest accurate, statistically valid information from around the world about the real financial cost of healthcare fraud and error (as opposed to the cost of detected or reported fraud). In all, the report evaluates 92 separate loss measurement exercises covering 14 different types of healthcare expenditure totalling over $2.99 trillion (£1.93 trillion) in 33 organisations from 6 countries. The data which forms its conclusions is held in the largest fraud loss measurement database in the world with data collated over 15 years. The data is derived from accurate, statistically valid loss measurement exercises and relates to total losses, not just what has been detected or reported, which is only a small proportion of the total cost.

The report represents another output of the fruitful collaboration between BDO LLP, the leading accountancy and business advisory services firm, and the Centre for Counter Fraud Studies at the University of Portsmouth (CCFS), Europe's leading fraud research centre.

About the authors


Jim Gee is Director of Counter Fraud Services at BDO LLP, the accountancy and business advisory firm, and Visiting Professor and Chair of the Centre for Counter Fraud Studies at the University of Portsmouth. During more than 25 years as a counter fraud specialist, he led the team which cleaned up one of the then most corrupt local authorities in the UK – London Borough of Lambeth – in the late 1990s; he advised the House of Commons Social Security Select Committee on fraud and Rt. Hon. Frank Field MP during his time as Minister of State for Welfare Reform; between 1998 and 2006 he was Director of Counter Fraud Services for the Department of Health and CEO of the NHS Counter Fraud Service, achieving reductions in losses of up to 60% and financial benefits equivalent to a 12:1 return on the costs of the work. Between 2004 and 2006 he was the founding Director-General of the European Healthcare Fraud and Corruption Network; and he has since worked as a senior advisor to the UK Attorney-General on the UK Government's Fraud Review. He has also worked with a range of healthcare organisations, companies and charities as well as delivering counter fraud and regulatory services to companies both in this country and internationally. His work has taken him to more than 35 countries to counter fraud and, as well as his work in the UK he has advised the Chinese and New Zealand Governments about how to measure, pre-empt and reduce the financial cost of fraud.


Mark Button is Director of the Centre for Counter Fraud Studies. He has written extensively on counter fraud and private policing issues, publishing many articles, chapters and completing four books with one forthcoming: Private Security (published by Perpetuity Press and co-authored with the Rt. Hon. Bruce George MP), Private Policing (published by Willan), Security Officers and Policing (Published by Ashgate), Doing Security (Published by Palgrave), and Understanding Fraud: Issues in White Collar Crime (to be published by Palgrave in early 2010 and co-authored). With Jim Gee he has recently written a book (published globally by Wiley) called 'Countering Fraud for Competitive Advantage'. This highlights the financial benefits to be obtained from countering fraud effectively. He is also a Director of the Security Institute, and Chairs its Academic Board, and a member of the editorial advisory board of 'Security Journal'. Mark founded the BSc (Hons) in Risk and Security Management, the BSc (Hons) in Counter Fraud and Criminal Justice Studies and the MSc in Counter Fraud and Counter Corruption Studies at Portsmouth University and is Head of Secretariat of the Counter Fraud Professional Accreditation Board (CFPAB). Before joining the University of Portsmouth he worked as a Research Assistant to the Rt. Hon. Bruce George MP specialising in policing, security and home affairs issues. He completed his undergraduate studies at the University of Exeter, his Masters at the University of Warwick and his Doctorate at the London School of Economics. Mark has also worked on a research project funded by the National Fraud Authority and ACPO looking at victims of fraud.

Note to editors

Accountancy and business advisory firm, BDO LLP, is the UK member firm of the BDO International network. In April 2013, BDO LLP merged with PKF (UK) LLP to form a new force in the mid-market, employing 3,500 people across the UK.

BDO LLP has a clear ambition to be the firm known in the market for exceptional service delivered by empowered people. The 2013 Mid Market Monitor analysis shows that BDO is the market leader for client satisfaction for the second year running – outperforming all its major competitors and the only organisation to see an improvement over the past four years.

BDO LLP, a UK limited liability partnership registered in England and Wales under number OC305127, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A list of members' names is open to inspection at our registered office, 55 Baker Street, London W1U 7EU. 

BDO LLP is authorised and regulated by the Financial Conduct Authority to conduct investment business. BDO is the brand name for the BDO International network and for each of the BDO Member Firms. BDO Northern Ireland, a partnership formed in and under the laws of Northern Ireland, and BDO (Isle of Man) LLC are associate firms and licensed to operate within the international BDO network of independent member firms.

The combined fee income of all the BDO Member Firms, including the members of their exclusive alliances, was $6.45 billion in 2013. The global network provides business advisory services in 144 countries, with more than 56,000 people working out of 1,264 offices worldwide.


Peter Otero

Senior PR Manager


Tel: +44 (0)20 7893 2677

Email: [email protected]