Traditionally, I’m not a negative person, nor do I like to focus on negative subjects. However, periodically, it’s necessary to get in touch with reality. And reality is: your dental practice is NOT immune from the ugly possibility of embezzlement! So, a little advice: believe in preventative management like you believe in preventative dentistry and save yourself the heartache!
In fact, if you think you’re immune from embezzlement, this is how wrong you are:
Source: Association of Certified Fraud Examiners, Dental Economics, DentistryIQ
Conclusion: Your business is susceptible and needs to be protected from embezzlement!
As a practice management consultant since 1974, I’m sad to say that I’ve witnessed an alarming increase in dental practice embezzlement.
In preparing for this article, I personally interviewed 15 individuals that have been caught and prosecuted for embezzling funds in a dental office. Their remorse, justification, and personal stories are all different. When asked to qualify their thinking and behaviors, they shared the following quotes:
“It was just easy to take a little bit at a time.”
“Dr. always took money from the petty cash and never paid it back. I guess I felt like the practice was just as much mine as his.”
“Dr. wastes more money than I ever took.”
“I figured Dr. gave so much dentistry away, that he surely isn’t going to miss a few dollars here and there.”
“He never appreciated what I did, nor would he consider a raise without my begging—so I guess I just gave myself a raise. To hell with him!”
“Actually, I would have never been caught had I not taken a lunch hour.”
Let’s talk about that last quote for a second, shall we? It’s quite an insightful and true case history.
So, this particular receptionist had been working in the office for approximately 15 months. As the only full-time receptionist, with a helper every once in awhile, she ran the front desk and compiled all practice reports. Sound familiar?
One day, when she was away at lunch, the telephone rang and the dentist happened to answer (fortunately for him). It was a patient requesting an itemized statement to verify receipt of personal payments to the office and to confirm that his son had given the receptionist $100 cash during his last visit.
When the receptionist returned from lunch, the doctor shared this parent request. Immediately, she responded, “I will take care of it. . .”
The next day, the dentist asked the receptionist, “How do we keep track of cash payments?” She explained and proceeded to show the doctor in the computer. The entry indicated a $100 adjustment, but not a payment. Funny thing—there was also no entry in the cash receipt book.
Of course, she gave all sorts of excuses for this and again assured the doctor she’d take care of it. He smiled, thanked her, and proceeded to his office where he called his accountant and said, “we need to talk.”
For the next week, a team of 3 people examined and evaluated all transactions for a 6-month period. The evidence was conclusive—there was a thief in the front office.
When the receptionist was confronted, she couldn’t argue the documented evidence. Once they finished auditing all the records since her first day of employment, the end result was alarming. Over a 15-month period, she had personally taken more than $50,000 from the practice (what was documented, anyway).
Wow, can you imagine losing over $3,000 a month from embezzling?! Click to Tweet
From this case history and unfortunately, many others, may I offer some sound advice and warnings. Below are a few management tips that will further develop you as a business owner and help prevent embezzlement!
Participate and understand the business systems that are utilized in your office, especially ALL policies and practices pertaining to handling money. Get to know QuickBooks, your PMS, and the day-to-day business.
Discipline yourself and calendar a routine review of your financial statements and practice statistics. Learn how to retrieve and track practice data. Interpret your numbers and confirm their workability and feasibility. Periodically, unannounced, reconstruct a day—track all patients that were seen and how the monies or postings were recorded.
Open your bank statements, review them, and then have a third party balance and account for the practice checkbook. DO NOT use your receptionist for practice payables/checking.
Establish a set time with your receptionist to review and discuss all aged accounts and payment history (weekly or monthly). At least once a month, review an alphabetical list of all write-offs, adjustments, allowances, and bad debt. The person working the Accounts Receivables needs to participate in this review.
Employees that are individually involved with handling practice monies should be bonded. Prior to hiring a person to handle your money and practice accounting, please check out references carefully. Also, make certain that your practice insurance addresses the possibility of embezzlement coverage.
Above are but a few precautionary measures you can take to help prevent embezzlement. The key is: be involved with the business! Stress the importance of accountability and responsibility with yourself and your team. Most importantly, be aware and accept that embezzlement CAN happen to you!
Subscribe Below! We’ll provide more preventative management tips in the upcoming weeks.
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