by Roger P. Levin, DDS

Embezzlement is a touchy subject. No dentist likes to think that a staff member could actually take money from the practice. Yet the problem is common enough to deserve your attention—and the implementation of preventive measures.

How common is it? Embezzlement is the sort of crime that often goes unreported, and also undetected, so some estimates are shockingly high. But even more conservative numbers are sobering. A survey conducted in 2007 by the ADA found that 17.5% of dentists were aware that their practice had been embezzled by an employee. That means that one out of every five or six dentists has been embezzled.

And we’re not talking petty cash here. In that same ADA survey, 23% estimated that they were taken for $20,000 or more.

Precautions you can and should take

Most embezzlement schemes can be stopped before they start — or  detected quickly — by implementing sound financial systems and regularly analyzing financial data.

Levin Group consultants always examine a practice’s financials and compare them with industry statistics. The process is not intended to uncover suspicious activities, but from time to time a consultant will see something that just doesn’t make sense. Upon further investigation, the practice’s accounting firm discovers evidence of embezzlement … and then the lawyers get involved.

There are many typical financial warning signs. Our consultants raise a red flag when they can see no legitimate reason for data indicating:

•    Disproportionately high overhead
•    Reduced cash flow
•    Profits lower than expected
•    Erratic doctor income

Unfortunately, few dentists have the financial training to notice discrepancies. For this reason, it’s a good idea to have external consultants or advisers help design safeguards for the practice’s financial systems and review the numbers regularly.

Eliminate temptations and rely on experts

Most embezzlers are either desperate for money or too weak to resist temptation. They look for opportunities to steal without getting caught. So eliminate those opportunities. Remove temptation from your practice by letting experts upgrade and implement financial tracking and accountability in your systems. This will not only minimize the possibility of embezzlement, but it will also give you a clearer picture of your practice’s financial health and how to improve it.

To learn how to run a more profitable, efficient, and satisfying practice, visit the Levin Group Resource Center at www.levingroupgp.com. It is a free online resource with tips, videos, and other valuable information. You can also connect with Levin Group on Facebook and Twitter (Levin_Group) for learning strategies and sharing ideas.