Blind Spots in Dentistry™: How likely is it that your practice will become the victim of embezzlement?

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. We’re talking, of course, about embezzlement.

In the past 25-plus years as a software trainer and practice management consultant, I’ve seen at least one office a year that has been the victim of 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.

Over the past 20 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 use a signature stamp. (At least in this case, the office prosecuted after their accountant pointed out discrepancies between 1099s received and bank deposits made.)

Sadly, doctors often decline to pursue prosecution against their embezzlers for a variety of reasons:

• They ‘feel sorry’ for the person.
• They are embarrassed the theft happened in the first place, or that it took them so long to catch it.
• The embezzlement was perpetrated by a family member.

What would you do? 

Do you have checks and balances in place?

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.”