SCCE Director Tells How to Have a Compliance and Ethics Program for $1 a Day

If you are a small health care provider or supplier and have been struggling with finding a way to effectively maintain compliance with the multitude of regulations in the health care industry and worry about the costs, Joe Murphy, CCEP, Director of Public Policy, Society of Corporate Compliance and Ethics (SCCE) is confident it can be done for a dollar a day. In a pamphlet titled “A Compliance & Ethics Program on a Dollar a Day: How Small Companies Can Have Effective Programs,” published by SCCE. Murphy provides effective and efficient strategies for small companies to develop and implement a compliance programs and larger companies to become more effective and cost-efficient, according to Roy Snell, Chief Executive Office, SCCE and the Health Care Compliance Association (HCCA) who wrote the introduction to the pamphlet.

Murphy explains that compliance and ethics programs that work are about two things: (1)  management’s commitment to do the right thing, and (2) effective management steps to make that happen. It is about making sure that all those who work for the company know what to do and believe the company is serious about acting legally and ethically. Murphy says the best reason to have a compliance program is to prevent a violation in the first place but a compelling reason is if a company self-reports, cooperates with the government, and has an effective compliance and ethics program, it can receive a steep reduction in fines.

The place to start building an effective compliance program is with the Federal Sentencing Guidelines. To be effective, the compliance program must be “diligent” and meet seven minimum standards, which Murphy says, are management oriented. Murphy also recommended the “Good Practice Guidance on Internal Controls, Ethics, and Compliance,” issued by the OECD (Organisation for Economic Co-Operation and Development).

Although Murphy stated that high-priced experts are not needed to develop the compliance program unless there may be a violation of the law or other significant events that may need legal counsel, he noted the substantial benefits of being part of a professional compliance and ethics organization such as SCCE or at the least take advantages of the resources available through these associations, such as the social network. In addition, he suggests networking with other companies, using groups where you are a member, and keeping a computer record of everything done as part of the program.

Murphy lists eleven “inexpensive or free steps” “to show that compliance and ethics is not about spending money, but about management’s commitment. He adds that a small business does not have to spend on the scale of a large one but must be willing to spend sufficient amounts to have an impact. He includes additional ideas and resources for small companies suggesting that pooling resources with comparable businesses if it makes sense.

Each of the eleven step has several substeps that companies should follow and includes the cost of the substep, which more often than not costs nothing at all or just a few dollars. 

  • Do a risk assessment. Companies should know the compliance and ethics risk their companies face and address them based on how dangerous they are.
  • Develop standards and procedures to prevent violations.
  • Ensure compliance and ethics program is managed by a senior compliance and ethics officer with oversight and support at the very top.
  • Use care in promotions and in hiring people for responsible positions.
  • Have systems to address the risk of dealing with third parties. 
  • Communicate code standards and the requirements of the law to those who work for the company.
  • Have methods to check whether violations are happening and whether the program is working.
  • Discipline violators. The discipline must be consistent and include those who should have, but did not detect the violations.
  • Test the compliance program’s effectiveness to determine whether the company’s system of incentives, objectives, and appraisals supports or undercuts the compliance and ethics program.  (The compliance and ethics program should be part of how the company incents and measures people and should be part of the appraisal system.)
  • Respond appropriately if the company detects weaknesses in the compliance and ethics program or violation occurs.
  • Ensure that the compliance program is at least up to industry practice.

Looking at the list, may lead you to realize that an effective compliance program is not about money, Murphy explained pointing out that based on the length of the list, you may question where you will get the time to tackle the steps. One suggestion he makes is to devise a plan, perhaps addressing one step per month until the project is successfully launched. A second suggestion is to assign ownership of one or two topics to different managers if your staff is large enough and hold them accountable.

Murphy reiterated that the most important factor for any size business is not resources but commitment stating that the costs of compliance and ethics can be minimal if the commitment is there. He concluded by saying that there is no excuse for any business to ignore the law and importance of ethical conduct. The costs of a compliance program is not expensive for small businesses but the costs of violations can be great if there is no program and if warning signs of trouble are ignored or mishandled.

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  1. [...] to do if you are in this predicament, Wolters Kluwer’s Susan Smith has a great post on “How to Have a Compliance and Ethics Program for $1 a Day.” As she notes in her article, an effective compliance program may not be about spending money, [...]