Posted: Dec 11, 2017
The Healthcare Financing Administration notes the annual health care expenditure in the United State has exceeded $ 3.1 trillion. 10% of these expenditures ($ 100 billion) are government and health insurance companies losses due to fraudulent healthcare transactions. Timely detections and prevention of these fraudulent transactions and abuses can help recover the huge amount of resources to medical institutions and patients thus improving the quality of care and decreasing the cost of healthcare for taxpayers. Inability to detect fraud can become an extremely costly, painful and damaging problem to the organization and thus the need for an effective fraud detection system (Mcmahon & Chopra, 2013). In 2012, Tenet health Corporation was ordered to pay the United States F$ 42.75 million to settle accusations of violating the False Claims Act by overbilling the federal Medicare Program (Department of Justice, 2012). This action research will discuss how healthcare billings happen in the United States and will give details of the fraudulent billing occurring in Tenet Healthcare Corporation. I will show the impact of this fraudulent billing to the stock prices and financial statements of Tenet, showing that they directly impact the shareholders finances having their stocks at Tenet
Tenet Health Corporation (Tenet) is an investor-owned health care services corporation. Tenet Health corporation operates 77 acute care hospitals, 173 outpatient centres, 5 health plans and 6 accountable care organizations. In addition, the corporation operates Conifer Health Solutions that provides health business process solutions in fifteen centres that serve clients in 43 states.
The study will help Tenet develop a fraud detection system that will sufficiently address it billing process to avoid future billing errors that will ruin the reputation of the company and destroy its financial base. In addition, the study will offer insight to other health care institutions on factors that precipitate fraudulent cases in institutions and the financial implications of the fraudulent case.
The study will be based on the Cressey Fraud Triangle. Three components of the triangle include pressure, opportunity and rationalization. Pressure relates to the financial difficulties such as a large amount of credit card debt, overwhelming financial burdens, and financial difficulties. Opportunity to fraud exists when an employee discovers a weakness in the organization’s ant-fraud controls. Rationalization is the psychological process whereby individuals who have committed fraud convince themselves either that the act is not wrong or that even though it may be wrong, it will be corrected because they will eventually return the money. In addition, employees may justify the fraud by taking the attitude that they deserve the stolen money (Goldman, 2009)
A comprehensive detection and prevention system should have the right combination of financial analysis, business/relationship analysis, medical insight and analysis, detection of changing behaviours and a feedback loop (Abbasi, Albrecht, Vance, & Hansen, 2012). Therefore, the study will primarily focus on evaluating the effectiveness of this component in Tenet. In addition, the study will focus on analyzing the effect of the fraudulent on the stock prices and financial performance of the Tenet. The study will focus on the financial statement fraud and the stock prices of the company during the time the fraud occurred. Financial statement fraud is mainly dedicated to the fact that financial statement audit ensures that the financial reports of the company are free from material misstatement and fraud. A firms’ propensity to commit a fraud depends on the expected benefits and cost of engaging in the fraudulent. The expected cost of the fraudulent has two components that include the probability of the fraud detection and the penalty upon detection.
The financial statements of Tenet will be evaluated to identify the misstatement and the impact of those misstatements, the investment trend of the company and the stock prices of the Company stock. The data will be obtained from the annual reports including Form 10 K and other strategic documents. The reports will be analyzed through various econometric models to evaluate how the fraud case affected their trend. A five year period analysis will be conducted. In addition to the financial econometric analysis of the financial reports, a detailed key informant interview will be conducted with stockholders of the company who will be selected randomly. The interviews will be conducted through open-ended questions to allow the respondents to disclose as much information as possible. The interviews will substantial the findings of the analysis. The findings of the study will be corresponded to Tenet Corporation in the form of a report. In addition, the result will be published and disseminated to online databases to benefit other scholars and organizations.
The research will be conducted with the authority and supervision of the University Committee. In addition, consent will sort with the Tenet Corporation. The current CEO and the chief finance officer will be contacted advance to approve the research. Some of the key ethical issues to be addressed in the research is the confidentially of any confidential information accessed during the research and limiting the finding of the study to academic use. The key limitations of the study are its reliance on the documented reports. The study will not allow the research to evaluate the raw financial data of the company but will rely on data from SEC listing and other stock sites such as NYSE.
Abbasi, Albrecht, Vance, & Hansen, J. (2012). metafraud: a meta-learning framework for detecting financial fraud. Mis quarterly, 36(4), 1293-a12.
Goldman Peter (2009). Financial services Anti-fraud risk and Control Workbook. Wiley Publishers.
Mcmahon Jr, L. F., & Chopra, V. (2013). Introducing Forensic Health Services Research. American Journal Of Managed Care, 19(2), e71-e73.
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