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Healthcare Company – Continuous Monitoring

Challenge

A growing and successful healthcare company with over 10,000 employees caring for patients across more than 100 communities needed a continuous controls monitoring solution after being unsuccessful in identifying the root cause of control failures that were leading to a significant amount of revenue leakage.

While it couldn’t pinpoint the reason for the revenue loss, the company did know that it had made a number of incorrect payments and had even hired a recovery audit firm to try to recoup the revenue. This audit service alone was costing the business $500,000 a year plus a 30% commission of any revenue that was recovered.

Solution

The company needed an effective solution that could analyze and monitor 100% of their transaction data around the clock so they could get to the bottom of the revenue leakage.

For this reason the healthcare company chose CaseWare Monitor (now Alessa) for their continuous controls monitoring solution. After CaseWare Analytics’ Professional Services team conducted a thorough review into the risks and controls in the client’s business processes, it was determined that control failures were occurring in two departments: accounts payable and vendor management.

The team identified the areas of highest risk in these departments, and configured a variety of data analytics tests designed specifically to detect issues in these risky areas. These tests revealed the following in accounts payable:

  • Duplicate payments of over USD $2 million
  • Non-employees or employees not identified in the company’s internal systems were paid almost $650,000 in reimbursements
  • Inactive employees had been paid more than $150,000 after being terminated
  • Purchase order (PO) price increases of more than $80 million

For vendor management across the same time period, the following was detected:

  • More than $15 million paid to blocked or inactive vendors
  • Over 150 employees share the same address as a current non-employee vendor
  • Employees are listed as active vendors as per a deprecated process
  • A number of duplicate vendors were found in the Vendor Dictionary

By analyzing just two years’ worth of data, CaseWare Monitor identified an estimated $2.5 million a year in potential anomalies. Root cause of the failures varied from vendor fraud and incorrect PO creation to incorrect name used on payments and incorrect reimbursement policies.

The team offered a variety of recommendations based on this analysis to remediate the issues to prevent them from recurring. For example: instituting proper controls and segregation of duties; noting recurring payments on original PO balances; and having vendors created or edited only by someone who does not pay the vendors.

Results

With their continued use of CaseWare Monitor, our client has since implemented new controls and policies to remediate the challenges that were costing them a significant amount of revenue each year. They have also been able to eliminate the need for the services of the recovery audit firm, putting hundreds of thousands of dollars each year back into their revenue streams.