Healthcare has always been extremely complex with a wide variety of risks not seen in most other industries. But the new Healthcare Internal Audit Plan Priorities Survey conducted by Protiviti and the Association of Healthcare Internal Auditors (AHIA) finds that healthcare organizations and their internal audit teams are facing an environment like nothing they have experienced before. That is not just due to the COVID-19 pandemic, although it is the greatest accelerator of change right now.
Even before the public health emergency, healthcare organizations were challenged in their mission to deliver high-quality patient care due to provider and staff shortages. The rising number of retirements, the growth of nontraditional roles for clinicians and intense competition for highly skilled workers are all contributors to this shortage, which is driving the need for healthcare organizations to offer higher salaries and increased benefits to attract and keep top talent.
Whether healthcare organizations can align an ample supply of skilled staff to deliver and support these services is questionable given the mass shortages of physicians, nurses and staff that already exist. To protect their bottom line, many healthcare organizations had to make severe cost reductions during the pandemic — like instituting furloughs and layoffs and cutting executive pay. On top of it all, these organizations are also dealing with significant supply constraints as they work through the pandemic-induced backlog of elective procedures and deferred care for their patients.
What is clear from our research is that internal audit functions at healthcare provider organizations are under intense pressure to audit new and unfamiliar areas and help their organizations contend with an array of complex risks.
Top provider internal audit priorities for 2021
According to our survey, the top audit priority for most provider internal audit functions is contending with multiple reporting requirements for sources of COVID-19 government funding, such as the Coronavirus Aid, Relief and Economic Security (CARES) Act Provider Relief Funds (PRFs). The compliant use of all government funding sources by healthcare organizations involves various accounting and financial reporting preservation efforts that must be well-coordinated. And some funds, like the CARES Act PRFs, require new government reporting forms and are subject to government Single Audit requirements.
Government funding, privacy, security and IT system changes are just some of the top priorities for internal audit functions at healthcare provider organizations. And as internal audit teams work to address all of these diverse priorities, our research shows that many — not unlike the healthcare organizations they support — are hindered by skill and staff shortages.
The next-gen journey for many internal audit functions
In our Healthcare Internal Audit Plan Priorities Survey report, we emphasize that one of the most constructive measures healthcare organizations can pursue now, even as the COVID-19 pandemic persists, is to amplify the capabilities of their internal audit function.
Based on findings from our survey, it appears that internal audit functions need to continue to invest in next-generation auditing concepts. Before the pandemic began, healthcare internal audit functions had just started to modernize their operations, recruit for leading-edge skills and become more agile. However, the pandemic definitely changed most internal audit functions plans and altered the needed skill sets.
The lack of specific skill sets and competencies within many internal audit functions has hampered some organizations from including specific audits in their current audit plans, such as hospital and physician clinical coding and documentation audits, digital and innovation initiatives, and audits over the changing delivery models across the continuum of care. That could mean serious risks to the business being overlooked and undesirable conditions being allowed to worsen.
This is not to say that internal audit functions in the healthcare industry are not trying to evolve. In fact, our survey findings suggest that more organizations are currently undertaking transformation or innovation initiatives to support internal audit, and many have increased some of their competencies to evolve into a next-generation function.
Co-sourcing offers a strong path to replacing missing skills or to upskill
The COVID-19 pandemic, for all of its disruption, has given many healthcare organizations a new sense of confidence about working remotely. However, the rapid expansion of remote work during the pandemic has added a new wrinkle to the healthcare industry’s ongoing struggle to hire and retain top talent. But as healthcare organizations try to determine how best to support remote work into the future, leading healthcare organizations also see the advantage of using remote capabilities to keep vital departments like internal audit connected and running optimally.
Even so, finding internal auditors who possess next-gen skills and other specialized expertise — like analytics, hospital and clinical coding, and other emerging technologies — remains a challenge to recruit and retain. There is a bright spot for internal audit teams that need to overcome gaps in skills and competencies. Co-sourcing provides a great way to replace missing skill sets within an organization or to upskill certain areas, including within the internal audit function, and especially in more technical areas like machine learning, artificial intelligence and process mining.
New hiring, targeted training, co-sourcing arrangements and strategic investments in technology can all help internal audit organizations to begin or advance their next-generation journey — a necessary evolution they must undertake to become a true strategic partner to the business.
Next-generation internal audit groups need to ensure that robust strategies and processes are in place so they can not only transform the business, but also help it meet current challenges and prepare for whatever crisis — or opportunity — might come next.
For more findings and analysis from Protiviti’s and AHIA’s 2021 Healthcare Internal Audit Plan Priorities Survey, download our free survey report.