Is There a Thief in Your Practice?

Mark Crane

Disclosures

January 24, 2013

In This Article

How Extensive Is Embezzlement in Physician Practices?

The Medical Group Management Association (MGMA) conducted a survey of 946 practice administrators in late 2009 to determine how often employee theft and embezzlement occurred. The results were astounding.

• 83% of practice administrators had been associated with a practice where there was employee theft or embezzlement.

• MGMA members reported 782 cases of theft totaling almost $95 million in losses. Employees stole through theft of receipts, cash on hand, disbursements such as forging or altering a check, submitting fictitious invoices, paying personal expenses with company funds, payrolls, and expense reimbursement.

• The median loss was $5000, but 18% of these incidents involved the theft of $100,000 or more.

• The embezzlement typically continued for 8 months before being detected, while 17% of thefts went undiscovered for more than 2 years.

• Two of 3 thefts of $50,000 or more involved medical groups of 10 or fewer physicians.

• Top management perpetrated the theft in over half of the cases in which the loss was $50,000 or more.

• About 29% of embezzlers at practices were prosecuted, and about 82% were terminated from their jobs.

Schemes That Employees Use to Steal

Cash receipts: Stealing cash either before or after it is recorded on the practice book: 45%

Cash on hand: Stealing cash, such as petty cash, kept on hand at the practice's premises: 10%

Disbursements: Forging or altering a check, submitting invoices for fictitious goods or services or from a fictitious vendor, submitting or approving inflated invoices, submitting invoices for personal expenses: 18%

Expense reimbursements: Submitting fictitious or inflated business expenses: 4%

Payroll: Creating a fictitious employee, unauthorized bonuses, or inflated pay rates or hours: 6%

Non-cash: Stealing or misusing the practice's non-cash assets such as supplies, equipment, or patient financial information: 8%

Other: Respondents reported thefts involving multiple schemes, patient refunds, billing schemes, identity theft, related party transactions, prescription theft, and coworker theft: 10%

Source: Medical Group Management Association. 2009 Medical Practice Employee Theft & Embezzlement Study Findings

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