Doctor, is your practice embezzlement-proof?

By Jan Keller

Everyone thinks it won’t happen to them. Believe me, it happens more often than you think, and often from the person you trusted the most. That’s right – embezzlement!

In the past 17 years as a software trainer and practice management consultant, I have seen at least one office a year that has discovered embezzlement. Too often, doctors are shocked because they trusted their teams and did not feel it was necessary to have individual team members sign into their software with individual names and passwords.

• “We switch computers too often to change our login.”
• “We’re so busy that we can’t be bothered.”
• “They have been with me for years.”

These are just a few of the reasons I have heard over the years as to why the practice didn’t set up system security in their software.

Could this real-life scenario happen to you?

I was consulting with an office that was “going live” with entering transactions and payments into the computer. They had taken their ledger cards and entered the balances, outstanding insurance balances, and credits into the software. We walked through the process of entering checks and sending statements to accounts with balances, but the office manager of 20-plus years was having a difficult time adjusting to the changes. She liked her paper. Haven’t we all heard that before?

During the lunch break, the doctor and I discussed system security, reports, and checking audit trails. He had a hard time setting up the security system because his “girls” had been with him for such a long time. During our discussion of monitoring and using reports, he noticed that not much money had been entered in the computer, payroll was coming due, and he needed money to pay his “girls.” After lunch, I asked the office manager – was she sure she did not have any more mail for us to enter so we could continue to practice on the new system?

After a few moments, she went to a drawer and took out a few envelopes with insurance checks and personal payments to be entered. We sent billing statements to the accounts with balances. It was a great day! I left feeling good – I did a great job.

Patient receipts made out on napkins

A few months later, the doctor called, very upset. He found that his “girl” of 20-plus years had been embezzling money from him, although he had no clue how much.

How did he discover it? Patients began calling, upset when they received computerized billing statements showing balances when they had receipts written on paper napkins showing they had paid their bill.

The office manager would sit in the parking lot at lunch and have the patients meet her at her car to pay her because the “office was closed for lunch.” Computerizing saved this doctor from who knows how many more years of embezzlement, but unfortunately, he discovered someone he trusted for years had not only cheated him, but also the other team members and herself out of pension and profit sharing. We worked out a game plan for him to recover as much as possible and recoup unpaid insurance claims going back several years.

Did he prosecute? No, he did not. He felt sorry for her! She is still out there, possibly doing the same thing to another office. (Need I point out the necessity at this point of thoroughly checking references?)

Over the past 10 years, I have seen embezzlement on every scale.
• team members abusing prescriptions
• family members embezzling from other family members
• a relatively new employee who was given the ability to delete transactions, and a signature stamp (At least in this case, the office prosecuted after their accountant pointed out discrepancies between 1099s received and bank deposits made.)

Do you have checks and balances in place?

Does the same person who handles receivables also handle payables? Does everyone use the same password or know everyone else’s password? What systems do you have in place to check petty cash?

There are innumerable areas in the office where stealing and embezzlement can and does happen, from a few hundred to hundreds of thousands of dollars. Are you doing all that you can to protect yourself and your team? Using security systems in your practice management software is a good place to start, but it’s just one step in making your practice “embezzlement proof.”

My colleague and QuickBooks expert, Susan Gunn, offers a free consultation and expert advice to any office that thinks they may have an embezzlement issue. She can also help your practice set up a chart of accounts and security procedures that minimize, if not eliminate, your chances of being the victim of fraud or embezzlement. Susan can be reach via her website at www.susangunnsolutions.com.

Janice Keller has 25-plus years of experience in dentistry – clinically, and as an office manager and software trainer. Now, as a practice management consultant, she provides high-quality, customized practice development and education to clients and their teams. Jan’s clients praise her ability to recognize, understand, and adapt to their specific training requirements, and to provide the necessary tools and skills they need to meet their practice goals. Jan is certified by Bent Ericksen & Associates in employee law compliance, and is also certified by the Institute of Practice Management. She is a member of the prestigious Speaking/Consulting Network and the Academy of Dental Management Consultants. She is also an independent certified SoftDent trainer. Contact her at [email protected].