Understanding the Three Lines of Defense in Healthcare Compliance

Why Structure Matters

One of the challenges in healthcare compliance is ensuring that roles and responsibilities are clearly defined—especially when multiple departments touch the same risks. Who is responsible for identifying a problem? Who monitors for it? Who responds when it surfaces?

The "Three Lines of Defense" model answers those questions. It’s not new, but it remains a foundational concept for building a strong, accountable compliance program—especially in complex, regulated environments like healthcare.

What Are the Three Lines of Defense?

Originally developed for financial and operational risk management, the Three Lines of Defense model has been widely adopted in corporate governance, including healthcare. The model defines three distinct roles within an organization’s risk and control framework:

1. First Line: Operational Management

   This is the business unit or department—nursing, billing, IT, pharmacy, scheduling—performing day-to-day activities. These teams:

   
   

   • Own the processes

   • Manage the associated risks

   • Are responsible for compliance in practice

     
     

   They are expected to follow policies, complete required training, and build controls into their workflows (e.g., dual sign-offs, system alerts, documentation checks).

   
   

2. Second Line: Compliance and Risk Functions

   This is where most compliance professionals live. The second line exists to:

   
   

   • Develop policies and procedures

   • Educate and train the first line

   • Monitor activities and conduct audits

   • Provide oversight and guidance

   • Report risk and compliance issues to leadership

   
   

   This layer supports and reinforces the first line—but does not own the day-to-day operations.

   
   

3. Third Line: Internal Audit

   The third line provides independent assurance that both the first and second lines are working as intended. Internal audit:

   
   

   • Assesses the effectiveness of risk management and control systems

   • Reviews the performance of compliance programs

   • Reports directly to the board or audit committee

     
     

They operate independently from the business and the compliance department to ensure objectivity.

Why It Matters in Healthcare

Healthcare is one of the most regulated sectors in the U.S., with overlapping state and federal laws, accrediting body standards, and payer-specific requirements. In this environment, compliance can’t be “owned” by one department.

The Three Lines of Defense model helps ensure that:

• Frontline staff know their role in compliance

• Compliance teams are focused on oversight, not ownership

• Audit functions remain independent and strategic

• The board understands how information flows and how risk is managed

Without these distinctions, compliance programs can become confused, reactive, or overly centralized—leading to gaps in accountability or operational silos.

Practical Application

Clarify Responsibilities

Use the model to define who does what. For example:

• A nurse completes fall risk assessments (first line)

• Compliance reviews whether assessments are documented correctly (second line)

• Internal audit evaluates whether the fall risk program is functioning as a whole (third line)

Structure Reporting Lines

Ensure that your compliance function has visibility across the organization—and direct reporting access to the board or a compliance committee. The second line can’t function if it’s buried too deep in operations.

Support the First Line with Tools and Training

The first line carries the biggest burden. Compliance can help by:

• Developing accessible policies

• Creating workflows that make compliance easier

• Using audits to educate, not just penalize

Coordinate with Internal Audit

While internal audit may have separate reporting lines, collaboration is key. Shared risk assessments, audit plans, and findings help avoid duplication and close gaps.

Benefits of Using the Model

• Improved role clarity

• Fewer gaps in oversight

• More effective risk mitigation

• Stronger board and leadership engagement

• Better integration with enterprise risk management (ERM) efforts

When implemented well, the Three Lines of Defense framework becomes a foundation for accountability and continuous improvement—not just a theory.

Final Thoughts

The best compliance programs don’t just detect problems—they embed prevention into every layer of the organization. The Three Lines of Defense model helps make that possible.

Want help evaluating or strengthening your compliance structure? Let’s talk.Simply Compliance specializes in building and supporting healthcare compliance programs that align with the Three Lines of Defense framework. Whether you’re defining roles, building training, or integrating internal audit functions, we can help ensure your program is built to last.

Get in touch with Jessica Zeff @ Simply Compliance.