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Internal Audit and Healthcare: Top Priorities for 2013

Posted by Sharise Cruz on Tue, Jul 23, 2013 @ 11:07 AM

ahiacaptureIn January 2013, healthcare provider organizations bid farewell to an era defined by uncertainty, at least with regard to healthcare reform, and ushered in an era that may very well be defined by volatility, at least in terms of internal systems, processes and procedures. If this assessment is an exaggeration, it is only a slight one. After all, one of the primary sources of uncertainty whether the Patient Protection and Affordable Care Act (PPACA) would be implemented  was resolved in 2012, following the Supreme Court's monumental decision regarding the law's constitutionality. 

Historic healthcare reform is a reality, and the new law's comprehensive implementation is now a matter of when rather than ifThis situation kindles varying degrees of compliance volatility throughout the healthcare industry. The facets of compliance that previously consumed organizations and internal auditors (e.g., Meaningful Use compliance) are quickly being replaced by other facets of the law (e.g., health information exchanges, value-based purchasing and accountable care organizations). As a result, most internal audit functions are being pushed to their limits thanks to high-level challenges bearing down on healthcare provider organizations and, by extension, chief audit executives (CAEs) and their teams. These include:

  • Pressure to reduce organizational costs in response to shrinking profit margins and growing demands to curtail rapidly rising costs of care

  • Major changes to existing IT platforms and applications due to the rapid adoption of new technology (e.g., cloud computing, social media and electronic health records applications) as well as an ever-increasing reliance on big data

  • Increasing mergers and acquisitions (M&A) activity and other growth initiatives

  • The industry’s ongoing evolution toward a more customer-focused mindset

These changes not only create new risks, but also alter – usually by intensifying – existing risks. A strong internal auditing function vigilantly maintains a state of effective internal control and adds measureable value while helping management understand the organization’s risks on a strategic level. As a result, the internal audit function qualifies as a crucial contributor to success in the industry’s new era of intense regulatory and risk management volatility.

According to the healthcare internal audit executives and professionals who participated in the AHIA/Protiviti 2013 Internal Audit Capabilities and Needs Survey, internal audit functions within healthcare providers recognize a number of critical needs, each or which is discussed further in the corresponding survey report (available for download further below).

  1. Keeping pace with changing compliance demands: Internal auditors are striving to keep pace with a steady procession of new PPACA-related compliance demands while also juggling non-PPACA compliance needs and regulatory risks (e.g., ICD-10 readiness).

  2. Understanding and addressing cutting-edge risks: Internal audit functions have always helped their organizations fortify risk management programs by ensuring these capabilities sufficiently address longstanding risks (e.g., fraud) and newer risks (e.g., cloud computing and social media applications). This is continuing as CAEs and their teams help organizations adapt to the increasingly data-driven and technological nature of fraud and other prominent risks.

  3. Improving effectiveness, efficiency and quality: In response to the growing reliance on data in the healthcare industry, internal auditors are increasing their use of data analysis tools and incorporating more automation into their activities. And, to address revisions to The Institute of Internal Auditors’ (The IIA’s) International Standards for the Professional Practice of Internal Auditing, internal audit functions are beginning to bolster their quality assurance and improvement programs.

  4. Becoming a trusted partner and adviser: Given the magnitude of the changes that healthcare provider organizations confront, the need for internal audit functions to strengthen their collaboration and partnerships throughout the enterprise has never been greater. Internal auditors are looking to become trusted advocates of risk management and process improvement in their relationships with executive management and business owners. 



Download the entire report:

Topics: Protiviti, internal audit, survey reports, IT audit, social media risk, compliance, quality assessment review, regulatory updates, healthcare, AHIA

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