Dental practice embezzlement is a real issue. It is estimated that between 60% and 80% of dentists will know they were embezzled by the end of their career. Who knows how many never know!
Embezzlers create their own, ongoing inventive methods to steal from you. Unfortunately, if your employee is determined to embezzle from you, they will figure out ways to do it. The good news is there are ways you can discourage these activities:
- – The obvious one is to avoid hiring an embezzler (Learn more)
- – Close “open doors” in your systems
- – Make it obvious to them that you are watching
- – Catch them early in their game
Here are three common areas of your dental practice embezzlers frequently find “open doors” in your systems. I like to call these areas “Embezzler Playgrounds.”
Dental Patient Credit Balances
Patients showing a negative or credit balance implies you owe them money instead of them owing you money. Frequently, upon investigation, one finds this is not the case. Instead, errors in entering secondary insurance, insurance adjustments, payments, or services created a “false” credit balance.
A patient with a credit balance never receives a statement meaning the patient never see the transactions in their account. They can’t see if charges, payments, adjustments, or insurance transactions were correctly entered. This is important because it means you lose a valuable source of double-checking with your accounts.
This situation is a grand opportunity for your embezzler to be “creative.” I call this an “open door” in your system. The door is often opened wider because frequently credit balances have no operating system for proper resolution. This open door makes your credit balance accounts a virtual playground for an embezzler.
Recommendation: Implement a system to evaluate and resolve all credit balances every month. Make sure it is not your front desk who executes this system.
Dental Patient Account Adjustments
Patient account adjustments are necessary for many reasons: insurance write-offs, early pay courtesies, employee benefits, changes in procedures, etc. The important thing to remember about an account adjustment entry is that it does not affect or show up in your deposit or on your deposit slip. In other words, it affects the patient’s account but not your collections. This opens another door for your embezzler. Once again, if you are not reviewing your adjustments daily, the door is pushed wide open.
Recommendation: Request your Adjustments Report be a part of your End-of-the-Day Reconciliation System and review it. Never accept a generalized adjustment description such as “negative adjustment” “positive adjustment” or “misc. adjustment”. Require specific adjustment accounts with details such as “employee adjustment”, “early-pay adjustment”, “professional courtesy adjustment”, “CIGNA Contract Write-off”, etc.
Dental Practice Bank Deposits
Having an employee take your money to the bank is another open door for embezzlers. This has long been a favorite and can be capitalized by the embezzler in a number of creative ways.
Recommendation: Design a system involving either you, your spouse, or at least two alternating employees that don’t work at your front desk to take your deposit every day. Require the bank receipt be returned to you that day. You will then match and attach it to the deposit slip copy in your End-of-the-Day Reconciliation Packet assuring the balances jive.
As you know, these three open doors are only a few of the embezzler playgrounds in your dental practice. Obviously, it is critical that your accounting systems be correctly designed and properly executed to discourage embezzlement, errors, and alert you to possible foul play. These actions will help protect you, your family, your employees, and your dental practice from the loss and trauma of embezzlement.
Call today to discuss updating and refining your accounting systems to protect you from this expensive and painful possibility.Share