BDO Knows Healthcare Newsletter - Winter 2017

February 2017


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In the winter 2017 edition of the BDO Knows Healthcare Newsletter, we explore three industry developments that, under a value-based system, present a higher risk for fraud in the industry as policies race to catch up to changing business models. The rise of connected devices, or the Internet of Things (IoT), while it presents a wealth of opportunity to make care more effective and efficient, requires tighter internal controls related to cybersecurity and the False Claims Act. The use of non-GAAP metrics in financial reporting, if done in a misleading way, could attract shareholder litigation and even enforcement actions under anti-fraud provisions of securities laws. The 21st Century Cures Act, recently signed into law by President Obama, provides a springboard for bolstered innovation in healthcare, but it also requires providers to update internal controls and due diligence processes around third-party vendors.

Cures Act Provides World of Opportunity for Healthcare Innovation but Requires Providers to Read the Fine Print to Mitigate Compliance Risk

Just before leaving office, President Obama signed the bipartisan 21st Century Cures Act into law, underlining the government’s focus on streamlining the development of cures for serious diseases that are not only devastating to patients, but also add up to significant healthcare costs. Organizations should review the details of the law sooner rather than later, ensuring policies, procedures and internal controls to mitigate fraud are up-to-date, while also updating due diligence procedures around third-party drug and medical device vendors. 

IoT in Healthcare Presents Opportunity but Also Prompts Higher Guardrails Around Cybersecurity, False Claims Act

The market for the Internet of Things (IoT) is booming, and healthcare is no exception. Healthcare IoT is poised to reach $117 billion by 2020. But with the greater opportunity to improve the quality and efficiency of care for patients comes increased regulatory scrutiny in the areas of cybersecurity and the False Claims Act. This increased scrutiny calls for greater internal compliance controls around the cybersecurity of connected medical devices. 

As Healthcare Focuses on False Claims Liability, Industry Should Mind the GAAP 

The transition to value-based reimbursement has unleashed a revolution in healthcare, changing the way providers work together across the care continuum and increasing the risk for fraud (whether intentional or not). Organizations would do well, though, to also pay attention to a risk increasingly on the minds of regulators: the use of non-GAAP reporting measures in financial reports.
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PErspective in Healthcare: The Surge of the Global Home Healthcare Market 

Value-based reimbursement in healthcare has removed the silos from across the healthcare continuum, making providers accountable for the care administered not just within their four walls, but far beyond. This shift has provided an opening for home healthcare providers to eclipse more traditional ones under certain circumstances. But just how big is that opening? On a global scale, the home healthcare market is forecast to reach almost $350 billion by 2020, with several other factors driving that growth. 

For more information on BDO USA’s service offerings to this industry, please contact one of the following practice leaders: 
Steven Shill
Partner - Healthcare, National Leader
Orange County, Calif.

Patrick Pilch
Managing Director - Healthcare, National Leader 
New York, N.Y.