Is There a Thief in Your Practice?

Mark Crane


January 24, 2013

In This Article

Embezzlement Schemes That Worked

The ways to steal from a medical practice are as varied as human imagination and the larceny in some hearts, fraud prevention experts say.

Stealing cash receipts is common, said Denise McClure. Taking cash from the daily deposit is likely to be discovered, though, because patients complain if they are billed for an amount they already paid. This happens only if the person taking the cash cannot write off an account, delete a payment, or delete a record of a "no-show" for a patient who was seen.

In an obstetrics and gynecology practice, the practice manager saw a patient hand over cash to the billing manager. But there was no cash in the deposit that day. The billing manager had written off the accounts, so patients never received a bill. She stole $90,000 before being caught, McClure said.

The MGMA survey found that 18% of practice managers had worked with practices where an employee forged checks or submitted invoices from fake companies or for goods and services that were never received. "Embezzlers stop paying legitimate vendors. Physicians first learn of this when the vendor threatens to cut them off for nonpayment," she said.

In one case, an accounts payable clerk stole $240,000 from a group of 8 doctors in 1 year. He altered checks to legitimate vendors to make them payable to himself, said McClure. It was discovered by accident while someone was looking for supporting documentation for a fixed-asset purchase.

"Check ambush" is another common scheme. "The employee knows the doctor needs to leave at 4 PM to get to his son's soccer game," said Michael Lewis. "She'll hand him multiple checks and ask if he can do them right away. The doctor often signs the checks without looking at them. He may sign one for a phony company that the employee set up."

A payroll clerk may add hours to her paycheck or adjust her pay rate or those of family and friends. Keith Borglum cites 2 examples he's run across. In one case, a doctor noticed shortages in the petty cash drawer. He put in a "nanny-cam" and videotaped his nurse stealing the money. In the other instance, a patient asked the doctor why he had reduced his fees. It turned out that a staff person who recently quit had raised the fees without telling the doctor. She was pocketing the "upcharge." After she left, the fees of course reverted to their normal level, and the patients wondered why.

How to Spot Warning Signs

"An employee's manner of dress, new spending habits, living a lifestyle that seems beyond their salary, tardy financial reports, anxiety, and refusal to take vacation are all signs that something is amiss," says Keith Borglum.

"Most people spend what they steal," said Denise McClure. "So a change in lifestyle is a definite warning sign. So is the employee who becomes defensive and refuses to let anyone help her. She takes the books home with her."

The Association of Certified Fraud Examiners cites some other common red flags. Taken individually, no one sign indicates a criminal. But the suspicions can add up:

  • Coworkers may attribute an employee's new signs of wealth to an inheritance or spouse's job bonus.

  • An employee may show unwillingness to cross-train or share tasks.

  • Difficult family issues, such as divorce, create stress that can drive honest people to act out of character.

  • Embezzlers may have a close association with a third-party vendor that would allow them to carry out fraud more easily.

  • Employees who complain about inadequate pay or feel they've been treated unfairly can rationalize stealing.

  • Hiring friends and family members, especially for key tasks, may be a warning sign.