Embezzlement: Yes, it can happen to you!

The potential for embezzlement is a problem no business is immune to!  The American Dental Association has done studies that suggest the probability of a dentist being a victim of embezzlement or theft in their career is 50-60%.  This statistic tends to be low because there is a large amount of embezzlement that never is detected, or if detected, action is not taken.
 
Why is this happening so frequently in dental practices? According to an article in The Dental Tribune, the main reason is "the clinical responsibilities carried by dentists effectively reduce them to being absentee owners in their own business".
 
According to a survey performed by Susan Gunn of Susan Gunn Solutions, the embezzlers ranged from dental assistants taking cash payments chair-side, front office managers taking patient checks, CPAs diverting funds... even the dentist taking money!  How much money was taken? Anywhere from $35 to $900,000, with the average loss being $104,585.  Over how long a period of time did the embezzlement go on? It ranged from 1 week to 9 years, with an average of 23 months!  Believe it or not, only 21% reported prosecuting the embezzlers.
 
So, as you can see, this is no joke! How can you prevent this from happening to you?
 
  1. The dentist needs to be knowledgeable regarding your practice management software.  Review the day sheet, collections and adjustments regularly.
  2. Implement tight controls on passwords.
  3. Implement accountability between the practice management software and accounting software (verify that the information matches).
  4. Have different people responsible for receivables and payables.
  5. Insist deposits are made daily.
  6. Be the boss!
  7. Perform background checks when hiring (especially for employees handling money).
  8. Do not allow a signature stamp in your office.
  9. Have a reliable backup system.
  10. Accept responsibility.
 
DO NOT ignore these warning signs:
 
  • Team members that are in financial difficulty.
  • Addictions or other compulsive behavior.
  • Team members that are "super dedicated", never taking vacation or using sick time.
  • "Control freaks"-- want to control communication between patients and practice.
  • Resisting practice management software upgrades.
  • Resisting increased involvement of consultants and/or accountants.
  • Team member's BMW is newer than yours-- Not kidding!
  • Team member asking for cash advances.
What should you do if you suspect embezzlement in your practice?
 
First off, you should get legal advice and look into hiring an outside auditor, forensic accountant or dental  practice management consultant.  Make sure you have documented proof and legal advice before confronting anyone.  You should absolutely, terminate the embezzler's employment and file a police report and PROSECUTE! If you choose not to prosecute, you are enabling the person to continue doing this to other dentists.
 
It is unfortunate that embezzlement in dental offices occurs as frequently as it does.  Awareness and attentiveness on the part of the dentist can allow for early detection of fraudulent activity.  If embezzlement is taking place, good advice can make the recovery process go more smoothly and can minimize the financial and emotional cost to the dentist.
 
If you have any questions, please do not hesitate to contact Amy or Michelle at 508-697-7318 or office@amysmith.biz.