In my experience, there are four conditions in the workplace that provide the opportunities for fraud:
Practice management consultant Jan Keller.
- Poor internal controls
- Too much control limited to specific employees
- Lack of supervision by management
- Failure to prescreen employees adequately
In the past 25-plus 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 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 who had been with the practice more than 20 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 staff. After lunch, I asked the office manager if she was 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 more than 20 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.
Let me emphasize again at this point the absolute necessity of performing background checks.
I have seen embezzlement on every scale over the past 25 years, including the following:
- Team members abusing prescriptions
- Family members embezzling from other family members (a particularly gut-wrenching but all too common scenario)
- 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 its accountant pointed out discrepancies between tax form 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." Actually, you can't embezzlement-proof your practice, but you can have systems and protocols in place that can help you discover it and take the necessary steps.
Jan Keller has more than 25 years of experience in dentistry as an office manager and a software trainer. She is a member of the Speaking Consulting Network and the Academy of Dental Management Consultants. Contact her at firstname.lastname@example.org.
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