Financial vulnerability exposure or FVE is designed to give an indication of the exposure of the NHS to potential fraud. It should not be used as a financial instrument or to categorically define losses to fraud. FVE has been introduced to NHSCFA’s Strategic Intelligence Assessments and more accurately reflects the nature of intelligence and the confidence the NHSCFA can attribute. For example, we may not be able to say that something is exposed to fraud exclusively, but we can have more confidence in stating that something is exposed to fraud or wastage or error. This provides stakeholders more clarity and context around fraud risks.
To assess whether fraud prevention activity influenced a reduction in FVE, NHSCFA could only achieve this by looking at those organisations that participated in both data collection exercises. Whilst the sample sizes are larger, the FVE was assessed across 79 organisations.
Our analysis outlined below, identifies that NHSCFA-led fraud prevention activity at a national level and implementation at a local level, has influenced a behavioural change at NHS organisation-level and effected reductions in FVE in procurement fraud.
Analysis
The datasets were collected to analyse the level of non-PO spend present in each NHS organisation. We requested data to be broken down by the NHS-eClass system so that comparison could be drawn between different spend types.
In our analysis we considered instances of non-PO spend of 90% or above and in categories of 30% or above and attributed monetary value. This helped to identify the most pertinent categories of non-PO spend. This methodology is discussed in more detail in the Methodology section of the report.
This methodology identified seven main vulnerable (eClass) categories of spend across the two data collections:
- D: Pharmaceuticals Blood Products & Medical Gases
- L: Fuel, Light, Power, Water
- M: Hotel Services Equipment Materials & Services
- P: Building & Engineering Products & Services
- R: Purchased Healthcare
- X: Transportation
- Z: Staff & Patient Consulting Services & Expenses.
Two of the seven categories (Category L: Fuel, Light, Power, Water and Category R: Purchased Healthcare) were excluded from the FVE calculation. Engagement with the sector has confirmed that spend in these two areas are never fixed costs in comparison to other types of spend and are usually processed without a PO number. Therefore, they could never have realistically been impacted by any prevention measures the NHSCFA or local NHS organisation put in place.
To pinpoint the most vulnerable areas of non-PO spend within the five categories, a recalculation was undertaken to ensure spend that did not meet the 30% threshold in some quarters was also included. This would ensure a more accurate picture of FVE.
When applying our methodology to identify FVE, there is a discernible change between 2018 – 2019 compared with 2019 – 2020. The graph in Figure 1 illustrates these changes.
NHSCFA fraud prevention initiatives were effective from quarter one of the 2019 – 2020 financial year, with the fraud prevention campaign coming into effect in quarter two of the same year. Targeted fraud prevention activity undertaken during this period is explored in more detail in the ‘Influencing behavioural change’ section of this report. The decreases shown in the most vulnerable non-PO spend of 90% or above during this period are likely to be a result of this initiative. The graph in Figure 1 illustrates the interventions and decreases in non-PO spend of 90% or above between quarters.
Figure 1: Instances of non-PO spend above 90% in categories above 30% 2018-2020 (79 organisations)
When undertaking comparative analysis, it is significant that behaviour between quarters one and two versus three and four in 2018 – 2019 is fairly aligned. After quarter three and four, however, behaviour significantly changes in the first half of 2019 – 2020 with a decrease in non-PO spend, and this decline continues in the second half of the year. Table 1 and Table 2 demonstrates this decrease by detailing the value and number of instances vulnerable non-PO spend.
| Category | Q1 + Q2 Total (2018 – 2019) | Q3 + Q4 Total (2018 – 2019) | Q1 + Q2 Total (2019 – 2020) | Q3 + Q4 Total (2019 – 2020) | Difference between FY |
|---|---|---|---|---|---|
| D: Pharmaceuticals Blood Products & Medical Gases | £60,256,297.16 | £63,331,608.74 | £6,974,719.20 | £8,016,861.43 | -£108,596,325.27 |
| M: Hotel Services Equipment Materials & Services | £92,143,905.15 | £79,181,581.87 | £17,099,022.90 | £16,683,144.87 | -£137,543,319.25 |
| P: Building & Engineering Products & Services | £36,850,262.27 | £31,838,465.99 | £139,006,398.31 | £94,570,078.26 | £164,887,748.31 |
| X: Transportation | £10,899,626.63 | £13,404,106.53 | £9,900,235.59 | £10,646,273.40 | -£3,757,224.17 |
| Z: Staff & Patient Consulting Services & Expenses | £177,227,295.96 | £192,259,338.47 | £134,963,318.93 | £162,753,658.29 | -£71,769,657.21 |
| Total | £377,377,387.17 | £380,015,101.60 | £307,943,694.93 | £292,670,016.25 | -£156,778,777.59 |
| Increase/Decrease | £757.4 million | £600.6 million | -20.7% | ||
| Category | Q1 + Q2 Total (2018 – 2019) | Q3 + Q4 Total (2018 – 2019) | Q1 + Q2 Total (2019 – 2020) | Q3 + Q4 Total (2019 – 2020) | Difference between FY |
|---|---|---|---|---|---|
| D: Pharmaceuticals Blood Products & Medical Gases | 37 | 41 | 23 | 25 | -30 |
| M: Hotel Services Equipment Materials & Services | 18 | 21 | 17 | 13 | -9 |
| P: Building & Engineering Products & Services | 14 | 12 | 25 | 12 | 11 |
| X: Transportation | 41 | 41 | 35 | 34 | -13 |
| Z: Staff & Patient Consulting Services & Expenses | 26 | 31 | 18 | 21 | -18 |
| Total | 136 | 146 | 118 | 105 | -59 |
| Increase/Decrease | 282 | 223 | -20.9% | ||
In 2018 – 2019 we see a 7.4% increase in the second half of the year in the number of instances (136 increasing to 146), equating to a 0.7% increase in monetary value of approximately £2.6 million (£377.4 million increasing to £380 million). However, in the first half of 2019 – 2020, we see a significant 19.2% decrease in instances from the second half of 2018 – 2019 (146 to 118), equating to a 19% decrease in monetary value of approximately £72.1 million (£380 million decreasing to £307.9 million). We then see a further 11% decrease of instances (118 decreasing to 105) in the second half of 2019 – 2020, equating to a 5% decrease in monetary value of approximately £15.2 million (£307.9 million decreasing to £292.7 million).
Having established a tangible change of behaviour, a comparison of the potential reduced FVE in procurement fraud, is assessed by comparing the differences between 2018 – 2019 and 2019 – 2020 for the 79 organisations that provided data across both data collection exercises (baseline and comparable). This equates to a reduction of 59 instances (282 instances reducing to 223) and a reduced FVE of approximately £156.8 million (£757.4 million reducing to £600.6 million). This reduction takes place in four of the five categories, most notably the categories of Pharmaceuticals Blood Products & Medical Gases, and Hotel Services Equipment Materials & Services, with reductions of approximately £108.6 million and £137.5 million respectively. The only increase is seen in the category of Building & Engineering Products & Services equating to £164.9 million.
As depicted in Tables 1 and 2, the decreased FVE of approximately £156.8 million between years is attributable to a decrease of 59 instances in non-PO of 90% or above. This decrease is also proportionate to the decrease in attached monetary value, 20.9% and 20.7% respectively.
At this point, the analysis suggests that there has been a tangible change of behaviour in most vulnerable instances of non-PO spend from quarter one in 2019 – 2020.
By this point in the timeline (Quarter 1, 2019 – 2020, see Figure 1), NHSCFA had launched its campaign of fraud prevention activity. The release of the NHSCFA fraud prevention quick guides, alongside a wide range of engagement and promotional activity throughout the year, are indicating factors in influencing change in the most vulnerable instances of non-PO, if not overall non-PO spending. It is therefore conceivable that NHSCFA output, and activity at NHS organisational level has had a positive impact on behaviour, and as such, organisations made tangible efforts to curb the top end and most vulnerable non-PO spend.
Fraud prevention activity has influenced a reduction of £156.8 million in FVE across 79 organisations that provided data across both collection exercises (baseline and comparable).