Challenges Faced by Healthcare Organizations in Establishing Robust Internal Controls: Exploring Solutions and Strategies

Internal controls are rules and processes that help healthcare organizations reach their goals. They make sure assets are safe and financial and operational information is accurate. Controls also help organizations follow laws and work better. In healthcare, these controls cover clinical documents, patient data security, billing, and following laws like HIPAA and the Sarbanes-Oxley Act (SOX) for public companies.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) created the Internal Control—Integrated Framework. This framework helps organizations design good internal controls. It has been adjusted for healthcare, considering the specific challenges in this field, like strict regulations and complicated clinical operations. Many U.S. healthcare groups use COSO’s guidance to improve management and reduce risks in documentation, coding, billing, and data access.

Primary Challenges in Establishing Robust Internal Controls

1. Regulatory Complexity and Compliance

Healthcare has many rules that must be followed. These include federal laws like HIPAA for protecting patient data and state laws that can be very different depending on the location. Public healthcare companies must also follow SOX rules that focus on financial and IT controls.

New laws like the European Union’s Artificial Intelligence Act affect healthcare providers using AI, which adds more rules for organizations working in both the U.S. and other countries.

Healthcare groups need to keep their policies updated, train staff regularly, and check that everyone follows the rules. Not following these laws can cause fines, money loss, and harm to the organization’s reputation. Problems with documentation and billing often lead to expensive mistakes and audits.

2. Operational Complexities and System Access Controls

Healthcare work involves many departments and software systems managing sensitive patient data and clinical tasks. It is hard to give the right people access while blocking those who should not have it. Poor control over system access can cause privacy problems and rule violations.

Good clinical records directly affect coding and billing. If records are incomplete or wrong, billing can be incorrect, leading to denied claims, lost revenue, or fraud accusations. Billing mistakes also increase the risk of government audits and fines.

The 2019 COSO Implementation Guide for Healthcare Provider Industry points out these operational issues and offers advice on controls for system access, documentation, coding, and billing.

3. Monitoring and Auditing Internal Controls

COSO says one part of strong internal control is continuous monitoring. Healthcare places must regularly check their control systems to find problems and fix them. Internal auditors usually do this by reviewing controls against laws and company policies.

Auditors in U.S. healthcare follow many rules, industry standards, and internal policies. Their work includes planning audits, testing controls, spotting gaps in compliance, and working with legal teams. This job needs time, skill, and care when dealing with sensitive results.

Keeping up regular monitoring is hard because rules change, staff change, and new technology is added. Not doing proper reviews raises the risk of not following laws and interruptions in operations.

Frameworks Supporting Internal Control Enhancement

The COSO Internal Control—Integrated Framework is a main tool for healthcare leaders and IT managers to build good controls. The framework breaks down internal control into five parts:

• Control Environment: The overall culture and attitude about controls.
• Risk Assessment: Finding and studying risks to goals.
• Control Activities: Rules and steps to lower risks.
• Information and Communication: Ways to share control duties.
• Monitoring Activities: Checking and improving controls over time.

Healthcare groups in the U.S. use this framework to organize their compliance work better. In 2023, COSO also added extra help for controls related to sustainability reporting. This grows more important as healthcare providers report on environmental, social, and governance (ESG) matters.

Technology companies that focus on audit management, like Wolters Kluwer’s TeamMate+ Audit, offer software to make internal audits easier. These tools help healthcare groups keep up with rules and testing controls.

Risk Mitigation Through Governance and Policies

Strong management systems are important for following healthcare rules. Having roles like Chief Compliance Officers (CCOs) makes sure someone is responsible for overseeing controls and compliance risks.

Healthcare providers must have complete and current policies that follow laws and good practices. These guides help employees understand their tasks and serve as the base for training about controls and compliance.

It is also important to watch third-party vendors handling patient data and clinical information. Outsourcing has risks, so controls must also cover these outside groups to avoid problems later.

Technology’s Role in Supporting Internal Controls

Healthcare organizations depend more on technology to improve internal controls. Automated compliance systems can track who accesses electronic health records (EHRs) and send alerts for unusual actions. This reduces human mistakes and helps spot problems sooner.

Data analytics tools can find strange billing patterns or errors in documents, helping stop fraud and billing mistakes. Audit management software assists auditors by keeping track of schedules, noting findings, and helping communication with compliance teams.

AI and Workflow Automation in Internal Control Management

Artificial intelligence and workflow automation can help reduce problems with controls in U.S. healthcare. AI can look at large amounts of data quickly and correctly, finding control problems or compliance risks right away.

For example, AI phone systems can manage front-office calls, lowering human mistakes and letting staff focus on important compliance tasks. Companies like Simbo AI use AI to handle phone answering, helping medical offices with patient communication without adding to front desk work.

In clinical work, AI tools help check clinical records to make sure they are full and consistent before coding and billing. Adding AI to EHR workflows can spot missing or conflicting info, cutting down errors that cause compliance issues during audits.

Workflow automation also makes repetitive tasks like data entry, scheduling, and billing more uniform. This helps apply internal control rules consistently and lowers mistakes from doing tasks by hand. As a result, organizations better manage risks connected to document accuracy and billing on time.

IT managers in healthcare need to make sure AI and automation fit with current control systems and follow privacy rules such as HIPAA. They also must watch these tools and their results carefully, since AI can bring new risks if its processes are not properly controlled.

Addressing Future Challenges

Healthcare organizations should expect internal control problems to change as technology and laws evolve. New federal and state laws and new rules for managing AI and data privacy will need flexible control systems.

Training for auditors and compliance staff on new technology and legal updates is important to keep controls working well. Using COSO’s full frameworks and guides gives a clear plan to meet control goals.

Summary

Medical practice administrators, healthcare owners, and IT managers in the U.S. face many challenges where strong internal controls are needed for following rules, operating efficiently, and lowering risks. The complex rules, operational needs like clinical record keeping, billing accuracy, and system access control, plus the need for constant monitoring, create major obstacles.

Using frameworks like COSO’s Integrated Framework, building strong governance, and adding technology such as AI and automation offer practical ways to improve internal controls. AI tools, like Simbo AI’s phone automation, show how automation can reduce work for staff and improve communication for compliance.

As healthcare groups deal with changing rules and work needs, making flexible control systems backed by technology, good management, and ongoing updates will be important for lasting success.