Internal audit is an essential function for any organization, including those in the healthcare industry. An internal audit is a process by which an organization evaluates its operations and systems to ensure that they are operating effectively, efficiently, and in compliance with all applicable laws and regulations. Internal auditing for Hospitals and Health Industry are critical to ensuring patient safety, maintaining regulatory compliance, and identifying areas for improvement.

It is impossible to undermine the value of an internal auditing team in the healthcare industry. Internal auditing is a crucial tool to recognize potential hazards, weaknesses, and areas for improvement in hospitals because they are complex organizations with many interconnected systems and operations.

By cutting waste and boosting efficiency, a strong internal auditing team can assist hospitals in maintaining high standards of safety and quality, ensuring regulatory compliance, and maximizing financial performance.

Furthermore, an internal auditing team can be extremely helpful in fostering innovation and accelerating positive change in healthcare procedures, which will ultimately improve patient outcomes. A hospital's internal auditing team is crucial to achieving its goal of offering patients high-quality, safe, and effective care in light of the constantly changing healthcare landscape and escalating regulatory scrutiny.


Why Internal Audit is necessary for Healthcare sector?

Like any industry, the Hospitals and healthcare sector faces a range of risks that can impact patient care, financial stability, and reputation. These risks can arise from a variety of sources, including regulatory noncompliance, data breaches, and supply chain disruptions.

According to the Association of Certified Fraud Examiners' ("ACFE") 2022 Report to the Nations, the average organisation loses 5% of its annual income to fraud each year, resulting in a median loss of $117,000 before detection.

According to the 2022 report, the average loss for health care was $100,000. Billing, cash, payments, skimming, costs & disbursements, payroll, corruption, and financial statement manipulations were the most typical fraud schemes.

Infographic displaying Types of fraud risks in hospital and medical industry that needs to be solved through internal audit

To manage these risks, internal audits become a compelling one. By conducting regular audits, healthcare organizations can proactively identify and address potential issues before they become major problems. Relying on a Internal Audit Service providers can solve up the realtime conflicts. Anyways, here's how to conduct internal audit for Hospitals and Healthcare industry.


7 Steps to Conduct Internal Audit in the Healthcare Industry

To conduct internal audit for Hospitals and Healthcare industry, you should assess their operations and try to identify areas of risk and inefficiency. Internal audits in the healthcare industry can cover a wide range of areas, including financial operations, clinical operations, and regulatory compliance. Here are 7 steps for conducting an effective internal audit in the healthcare industry:


1. Determine the Audit's scope

The first stage in performing an internal audit is determining the audit's scope. This involves identifying the areas of the organization that will be audited, as well as the specific processes or systems that will be evaluated. In the healthcare industry, this may include financial operations, clinical operations, regulatory compliance, information technology, and human resources.

It is important to have a clear understanding of the scope of the audit before beginning the process to ensure that all relevant areas are evaluated and that the audit is focused on areas of highest risk or greatest importance.


2. Develop an Audit Plan

Once the scope of the audit has been determined, the next step is to develop an audit plan. The audit plan should outline the objectives of the audit, the methods that will be used to gather information, and the criteria that will be used to evaluate the organization's operations and systems.

The audit plan should also identify the individuals who will be responsible for conducting the audit, as well as any resources that will be needed to complete the audit, such as software tools or additional personnel.


3. Form an Internal Auditing Team

The complicated and massive processes and procedures of hospitals call for the formation of a carefully chosen, efficient internal auditing team in order to successfully complete an internal audit. Individuals with the necessary knowledge of the subject, such as the compliance officer, billing manager, chief information officer, and system manager, should be incorporated into the team of internal auditors.

It is advised that the hospital's internal audits be handled consistently by the same team of people. The risk of some team members performing below expectations or having a conflicted interest in the audit processes must be taken into account by the hospital's administrators and legal counsel.


4. Assemble Relevant Information

The next step in the audit process is to gather information. This may involve reviewing documents, interviewing staff, or observing processes in action. In the healthcare industry, it is important to gather information from a variety of sources, including clinical staff, administrative staff, and patients.

During this stage, it is also important to assess the adequacy of the organization's internal controls. Internal controls are policies and procedures that are designed to prevent or detect errors, fraud, or other irregularities. In the healthcare industry, internal controls may include policies and procedures related to patient safety, data privacy, and regulatory compliance.


5. Inspect the Information

After gathering the data, the following stage is to analyze it. This involves reviewing the data and identifying any patterns or trends that may indicate areas of concern or opportunities for improvement.

In the healthcare industry, it is important to analyze the data in the context of regulatory compliance and patient safety. For example, if an internal audit reveals that there are frequent medication errors, this may indicate a need to improve training or implement new policies and procedures to ensure patient safety.


6. Report the Findings

The final step in the internal audit process is to report the findings. This involves preparing a written report that outlines the results of the audit and any recommendations for improvement.

In the healthcare industry, it is important to ensure that the report is written in a way that is easily understood by both clinical and administrative staff. The report should also include a clear action plan that outlines the steps that will be taken to address any areas of concern or implement recommendations for improvement.


7. Compliance Assessment and Risk Management

Hospitals should conduct a thorough assessment to ensure compliance and efficient risk management. A thorough compliance assessment will be carried out by the hospital's outside compliance counsel after they have reviewed the pertinent data. This evaluation's main goals are to confirm the hospital's compliance program and to make sure the hospital complies with all applicable legal and regulatory requirements.

Healthcare organizations must collaborate with outside attorneys who have extensive experience and only focus on healthcare compliance due to the complexity of healthcare laws and regulations. This knowledge is essential to ensuring the effectiveness of the hospital's compliance program and the fulfillment of all legal and regulatory requirements, thereby lowering the risk of potential financial and legal repercussions.



Internal audits are an important part of ensuring that healthcare organizations operate effectively, efficiently, and in compliance with all applicable laws and regulations. Dr. Sarah Johnson, Vice President of Medical Affairs says, "In the healthcare industry, where patient safety is of utmost importance, an internal auditing team plays a critical role in identifying and addressing potential risks and vulnerabilities in hospital operations."

Hence, a combination of internal audit and external audit can provide a comprehensive and effective approach to managing risks and improving operations in the hospitals and medical industry. By following the steps outlined above, healthcare organizations can conduct effective internal audits that help to identify areas for improvement and promote patient safety and regulatory compliance.


Internal Audit Services for Health Care Industries and Hospitals

BMS Auditing provides valuable internal audit services to hospitals and medical sectors to help them meet their compliance requirements and improve their overall operational efficiency. With their expertise and knowledge, We can help healthcare organizations identify areas of risk and inefficiency in their operations, such as regulatory noncompliance, data security, and supply chain management.

Through their internal audit services, BMS auditing helps healthcare organizations to proactively manage risks and improve their processes, ultimately leading to better patient care and financial stability. By conducting regular audits, BMS auditing can also help healthcare organizations identify potential issues and take corrective action before they become major problems.

BMS Auditing Telegram BMS Auditing WhatsApp