Embezzlement: Could it happen to your Practice?

By: Natalie Lucken, Account Manager

When a new dentist graduates from the University, he/she has a lot of hopes for the new adventure that lies ahead, getting started with their own practice. One of the biggest storms on the horizon is the one that no one can adequately prepare for: embezzlement. All of the research shows that it is next to impossible to prevent, so you must be prepared to handle the aftermath with swift, decisive action.

Dental offices are especially prone to embezzlement because dentists are highly skilled clinicians, but few have a degree in business management. Once a dentist’s schedule is full and their newly launched practice is well off the ground, they are left to trust the health and stability of the practice to the front desk person. The average amount of time it takes to discover embezzlement is around 23 months, with an average amount loss of $140,000. That is no small amount, and the loss of patient trust (and their continued business) can hinder growth for years to come.

How can a practice know if it is at risk?

Simply put, every practice is at risk. Some experts have even used the word “rampant” to describe the frequency of it, with the statistics saying 3 out of 5 will be victims at some point in their career. One office I worked in didn’t have a full-time front desk person, so procedures, fees, and claims were not entered every day, more like once or twice per week. Incoming cash payments were often tucked in a drawer with no name or receipt attached, and the drawer was not locked, or even in a room that patients couldn’t access. Money went missing all the time, and the doctor was endlessly frustrated with trying to treat his patients and feeling like no one appreciated his kind manner enough to be trustworthy.

What kind of person steals from an employer?  

In a word, someone who is desperate. Whether the threat is real or imagined, this person feels that taking money would “level the playing field”. We all know of someone who struggles financially, but do we notice if there are signs of compulsive/addictive  behavior such as gambling? Is there someone who never takes vacation, complains about others’ incompetence, or gets really upset about others looking over their shoulder or questioning a financial report? Typically, people assume that a thief is likely a new employee who is not well known by the staff, but this is a myth that diverts attention from the long-term employee who knows the dentist’s habits, has access to the bank account(s), and has earned enough trust to be in the office on days when no other staff is present.

Psychologically, there are opposing assumptions and thoughts that can cause an honest person to turn to stealing. In some cases, there is a perception that the dentist’s income is so much higher that he/she “won’t even notice” as long as the bank deposit sheet matches the end-of-day sheet. If a person feels they are being underpaid compared to others, this may also trigger them to steal. Dentists are notoriously kind-hearted and often do not act when they suspect theft or fraud, and only 20% actually go through with prosecuting the offender.

What steps can be taken if it happens to my practice?

David Harris, the CEO of dental fraud investigation company Prosperident, has this advice to say on the delicacy of handling the situation at this point:

Once fraud is suspected, it is both difficult and essential for the dentist not to let his or her suspicions show. Many dentists have worsened their positions by suddenly asking for additional reports, unpreparedly confronting staff members or engaging their accountants to “have a look”. These ham-handed attempts to uncover the fraud have often resulted in the destruction of evidence or worse. We have seen a few instances where a do-it-yourself investigation tipped off the thief, who promptly erased both the computer’s hard drive and the backup medium. In at least once case, a concerned embezzler covered their tracks by burning down the dental office.

How can we be prepared for such a devastating event? It’s important to get your legal advice from a lawyer, and not take the word of your accountant, or a well-meaning associate dentist. Personally, I know eAssist Dental Solutions can offer their own practical protection from embezzlement and insurance fraud. The very fact that a highly trained expert is reviewing a practice’s claims entry, posting payments, and double checking the daily work of the front desk staff can catch the honest mistakes and nip larger problems in the bud.

Reference:

http://documents.jdsupra.com/bbafa482-fda5-42c2-93ed-730c7c716b8a.pdf

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