Is There a Thief in Your Practice?

Mark Crane


January 24, 2013

In This Article

How to Trip Up Would-be Embezzlers

The best way for physicians to minimize risk is to have different staff members perform different duties, and then provide oversight.

"In small practices, one person often takes the payments, prepares the deposits, and balances the books," said McClure. "No one person should be doing all that. Let the receptionist make out the deposit slips, separating the business manager from doing that."

Michael Lewis agrees. "The person who makes up the bank deposit shouldn't be the one posting it into the billing system. It's too easy to change the numbers you're posting. Each practice should make sure that the amount of money deposited in the bank matches what's posted in the billing system. It's shocking why so many practices don't do this."

Oversight is essential. "Have your accountant come in to review things," said McClure. Ask questions, and let the staff know that you're reviewing the books and the bank statements. When there's apparent oversight, embezzlers will think twice. Random audits are also a good idea to catch things early. A lot of fraud is committed because it's easy; if you make it harder, that takes away the temptation."

McClure recommends that practices hire accountants every few years to do an internal control analysis. Depending on the size of the practice, the cost can range from $3000 to $7000.

"The biggest deterrent to theft is the knowledge that someone is watching," says Michael Lewis. "You can have bank statements sent to the doctor's home instead of the office to prevent the embezzling employee from getting to them first."

Fraud prevention experts strongly recommend conducting criminal and credit checks on all employees. "Some people with criminal records will just opt out if they know they're going to be checked," said McClure. Criminal checks are important, but most perpetrators are first-time offenders: 93% had no previous convictions for a fraud-related offense, according to the Association of Certified Fraud Examiners.

Credit checks might tell you more. "Financial difficulties are why people steal," said McClure. "A credit check lets you monitor their spending habits and learn whether their cards are maxed out. The cost to do this is nominal, less than $75."

Should You Prosecute Embezzlers?

Never accuse an employee of a crime before you have proof, or you could damage office morale and leave yourself open to a defamation lawsuit, consultants said. Expressing your suspicions too early could provide an opportunity for an embezzler to destroy evidence.

If you suspect theft, contact your attorney and accountant. Back up any electronic data, and make photocopies of key paperwork.

About 29% of embezzlers at practices were prosecuted, according to the MGMA survey. About 82% were terminated from their jobs.

Some practices won't prosecute to avoid embarrassment if the embezzlement is made public. Others don't want to take the time involved to see it through. Or they may feel sorry for their employee and decide to let her slide if she makes restitution.

"I uncovered an office manager who was embezzling from a group of psychiatrists," says Michael Lewis. "We had the proof. They didn't want to prosecute because they thought it would cause her too much emotional upset."

However, Lewis and McClure urge physicians to prosecute. "It sends a strong message to others," says McClure. "People who start embezzling tell themselves that they'll do it just once more and then pay it back. Stealing becomes an addiction. If they just get fired, they can go to another doctor and do the same thing."

Although embezzlement cannot be eliminated, physicians can do a lot more to deter it by implementing safeguards and being rigorous about oversight. Just as in nuclear arms talks, the motto is "Trust, but verify."