Small and midsize organizations face the daunting challenge of meeting the standards of an effective compliance program while also trying to maintain focus on core business activities. Having a full-time compliance officer may be cost prohibitive, but placing compliance as a secondary duty for an employee can invite exposure to liability. It is virtually impossible for an effective compliance program to be managed as a secondary duty. Anyone who has tried this approach can confirm the proposition. Given the challenge of managing the priorities of both compliance and core business, not to mention finding adequate resources to manage an effective program, it is not surprising to know organizations are commonly passing the burden to outside experts.
Organizations are looking to outside experts to serve as Designated Compliance Officers or Designated Compliance Officials (DCOs) to provide back office support for compliance programs. Using experts with a proven track record can lower fixed costs, reduce staff loads, and avoid potential risks created by using under qualified personnel. Reliance on outside experts also reduces the cost of recruiting and supporting full-time compliance staff, including the cost of benefits for such staff. The Department of Health and Human Services Office of Inspector General (OIG) has long recognized that smaller health care organizations may reasonably decide to outsource compliance duties and activities. The OIG notes: “For those companies that have limited resources, the compliance function could be outsourced to an expert in compliance.” Further, the OIG has offered an additional solution to ensuring compliance in small organizations by recommending that organizations designate an internal staff member to serve as a liaison with the outsourced compliance officer.
Benefits of Using an Outsourced Compliance Expert
Organizations can accomplish more by using a part-time outside expert than they can accomplish by using a lesser experienced full-time employee. Compliance experts know what it takes to operate an effective program and require no on-the-job training. Outside experts stay current with compliance standards as well as regulatory and legal requirements, amortized over numerous clients, therefore proving more affordable than trying to do this in-house.
There are also benefits of gaining access to compliance “best practices” by virtue of an independent expert’s broader exposure to the compliance discipline, ongoing verification of internal compliance processes, and the ability to supplement limited internal resources. Furthermore, experts generally have greater credibility with management than someone internal to the organization. However, it is extremely important that the outside party engaged is properly qualified and truly an expert with multiple levels of experience, not just having served as a compliance officer in another organization that may or may not have been a model program.
Comparing Costs: In-House vs. Outside Expert
For many organizations, managing a compliance program may only require 40-100 hours per month. Compare the cost of using an expert part-time to what it would cost to hire a full-time Compliance Officer. Thompson Reuters reported the range of Compliance Officer base salaries start at around $106,000 per year for small organizations; the Health Care Compliance Association (HCCA) reported, in its “Healthcare Compliance Staff Survey,” the average salary at around $125,000 with benefits and overhead costs bringing the total to roughly $135,000 per year, or $10,000-$12,000 per month. Keep in mind that these estimates are for candidates who are not likely to possess top credentials, expertise, or in-depth industry knowledge.Subscribe to blog