Money Transfusion Fraud: How healthy is the health system?

It’s hard to believe but almost $17 million was siphoned off from the Otago District Health Board between 2000 and 2006 into the coffers of a company which no Board officials even knew existed (see NBR).

This was the financial equivalent of having a patient hooked up to a blood transfusion system in a public hospital ward for six years without a doctor or a nurse stopping even once to check on progress.

Michael Swan, the leading fraudster, pulled a six figure annual salary from the ODHB as IT supremo and much more from the fraud. No one in authority appeared to raise an eyebrow when he swanned in and parked his late-model Lamborghini, one of his 30 cars, next to the Board’s rather more modest Toyota Corollas.

The fact that he and his partner in crime Kerry Harford could keep the drip feed money transfusion going so long raises questions not just about the board in question but the whole health system, with its 23 district health boards in a country with the population of Melbourne.

It also raises the question of money spent on IT general. Public sector IT in-house projects, from the failed Police INCIS project in the 1990s to other more recent botch ups, do not fall in the fraud category. They are instead financial large black holes into which taxpayers money is unaccountably bulldozed with the best of intentions and often the worst of outcomes because of poor conceptualisation or weak implementation.

There are huge governance and management issues to do with public sector IT projects, especially the greenfields variety. These are exacerbated by the increasing rate of change and the lack of digital literacy displayed by many board members whether elected or appointed. This is a far from healthy state of affairs in the health system and elsewhere in the public service.

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