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The Cost of Non-Compliance in Healthcare

August 5, 2024
August 5, 2024

The healthcare industry is highly regulated and compliance is a legal necessity. The repercussions of non-compliance can be devastating with far-ranging implications including patient safety, organizational reputation, recruiting and retention, and financial stability.

Compliance in healthcare involves adhering to a myriad of regulations and standards, such as the Health Insurance Portability and Accountability Act (HIPAA), the Occupational Safety and Health Administration (OSHA) standards, and many others. In fact, according to the AHA Regulatory Overload Report, healthcare organizations must comply with more than 625 regulatory requirements across nine domains. The majority of these regulations come from four agencies - the Centers for Medicare & Medicaid Services (CMS), the Office of Inspector General (OIG), the Office for Civil Rights (OCR) and the Office of the National Coordinator for Health Information Technology (ONC). In addition, providers are subject to other federal and state regulations.

Ensuring compliance means maintaining patient safety and confidentiality, providing data security, and addressing workplace safety, which are all crucial for patient trust and quality of care. Staff need compliance education so that they can better understand how to behave ethically and follow rules that are complex and evolving.

The Financial Cost of Non-Compliance

Non-compliance can result in severe financial penalties. According to a report by the Ponemon Institute, the average cost of a data breach in the healthcare sector is $9.23 million, the highest of any industry. HIPAA violations alone can lead to fines ranging from $100 to $50,000 per violation. The average cost of $80,000 for a medium to large-sized healthcare organization to implement compliance measures seem like a reasonable investment to preserve patient safety and privacy as well as the organization’s reputation.

The Indirect Costs of Non-Compliance

Beyond direct financial penalties, non-compliance can lead to other significant costs:

  • Reputational Damage: Trust is a cornerstone of the healthcare industry. A single breach or compliance failure can erode patient trust, leading to loss of business.
  • Operational Disruption: Investigations and remediation efforts can disrupt operations, diverting resources from patient care.
  • Legal Costs: Non-compliance often leads to lawsuits, which can be lengthy and costly.
  • Employee Morale: Frequent compliance failures can create a stressful work environment, affecting staff morale and productivity. It may also affect the organization’s ability to attract and retain talent.

Healthcare’s regulatory burden is overwhelming today’s providers and diverting them from the work of patient care. A recent American Hospital Association Study estimates that 39 billion dollars is being spent by providers attempting to meet just the non-clinical regulatory requirements.  

The Investment in Compliance

While compliance requires a substantial investment, it is significantly less than the potential cost of non-compliance. This investment includes:

  • Training and Education: Regular training programs ensure staff are up-to-date with the latest regulations.
  • Technology and Infrastructure: Technology is the clear solution when implementing robust cybersecurity measures to protect patient data. It can also ensure that regulatory training is up-to-date and has been implemented throughout the organization.
  • Policy Development: It is fundamental to creating comprehensive policies and procedures that align with regulatory requirements.
  • Monitoring and Auditing: Regular audits to identify and rectify compliance gaps

The Pitfalls of Creating Your Own Compliance Training Content

Developing in-house compliance training might seem like a cost-effective solution, but the cost extends to the loss of productivity when large numbers of staff are taken away from their jobs to attend courses and/or manage manual processes. There are also several risks associated with developing in-house training:

  1. Lack of Expertise: Compliance regulations are complex and constantly evolving. Without specialized knowledge, it is challenging to create accurate and comprehensive training materials.
  2. Resource Intensive: Creating and maintaining training content requires significant time and resources, diverting focus from core activities.
  3. Inconsistent Quality: Without standardized content, training quality can vary, leading to inconsistent understanding and implementation of compliance measures.
  4. Limited Scope: In-house training might not cover all aspects of compliance, leaving gaps that can lead to violations.
  5. Updates and Revisions: Keeping training content up-to-date with the latest regulations is a continuous process that can be overwhelming for in-house teams.

The Value of Professional Compliance Training Solutions

Compliance training needs to engage the adult learner in order to truly change staff behavior. Professional compliance training solutions offer several advantages:

  • Expertise and Accuracy: Professional training providers specialize in compliance and keep their content updated with the latest regulations.
  • Consistency: Standardized training ensures all employees receive the same information, fostering a uniform understanding of compliance requirements and resulting in improved implementation of those requirements.
  • Efficiency: Outsourcing training allows healthcare organizations to keep productivity up and focus on their primary mission of patient care while providing the latest in compliance education to their staff.
  • Comprehensive Coverage: Professional solutions often provide a broader range of topics and deeper insights into compliance issues.

The cost of compliance in the healthcare industry is a necessary investment to avoid the far-reaching consequences of non-compliance. While it might be tempting to create in-house training content to save costs, the risks often outweigh the benefits. 

Professional compliance training solutions offer the expertise, consistency, and efficiency needed to ensure comprehensive and up-to-date compliance education. In the end, a proactive approach to compliance not only safeguards the organization from financial penalties but also upholds the trust and safety of the patients they serve. 

HealthStream’s ComplyQ and SafetyQ solutions offer the best of both worlds for compliance training and patient safety education, helping organizations reach competence and reduce risk. 

 

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