Petty Theft Can Hurt Too
Embezzlement opportunities are certainly not limited to the theft of items, both large and small. The word embezzlement makes most of us think of money— where the bigger risks lie. Simple petty cash theft and complex financial schemes take their toll. Embezzlement robs your practice (you) of its (your) hard-earned profits. In the more egregious cases, it can drive you into bankruptcy. Depending on your degree of contingency and risk planning and the type of crime, the legal consequences can be both corporate and personal. This article addresses the smaller denomination crimes.
Individuals or Teams
Individually, relatively small cash embezzlement can occur in a number of different locations in a practice depending on each employee’s position and responsibilities. The physician-owner and practice administrator must assess every step of the process for each position. At a higher level, two employees in complementary positions can conspire to perpetrate crimes that can be more challenging to uncover.
Examples
A receptionist often has access to copays (see the Case of PR). There are several copay scams. The copay can simply be pocketed, and a note can be recorded that the patient did not have the copay at that time, or the copay could be taken but then written off if the appropriate protocols and cross checks to prevent that are not in place.
In collusion with a scheduler or other front office staff member, the code can be adjusted to manipulate copays based on percentage. This type of scam can be extremely difficult to identify. Fortunately, it requires a high degree of cooperation and coordination, which increases the risk of being caught. This scam robs the patient and the insurance company and places the practice at risk in audits. The fines and penalties can be crippling. Furthermore, this type of behavior leads to theft in other more financially rewarding forms.
Unfortunately, there are far more lucrative approaches to the billing sheet. With the wrong procedural controls in place, a staff member at checkout could alter the chart encounter for a no-show patient and, instead, file billing for a visit. This requires either one person with access to multiple steps in the process or the cooperation of front-office and billing personnel. With clever manipulation the incoming revenue can even be hidden before it reaches the books, making the crime virtually invisible. A single added visit isn’t worth that much, but five added patients per day would be a tidy income for someone with no overhead to pay.
Prevention
Carefully following the procedures in a detailed employee handbook is the most important line of defense. Making it very hard to succeed at embezzlement will keep most people from even trying. Eventually they will go somewhere else with lax security. Lock your doors at home, follow your security procedures at work.
At Smart Business Great Medicine, our motto is Trust, and Verify! This means having policies to verify that trust is well placed and reviewing possible signs that trust has been broken regularly.
We hope understanding the ways people can take your money and tarnish your reputation at the same time can help you avoid these traps.
Follow us on Twitter, Facebook, and LinkedIn to join the conversation about preventing embezzlement in your practice.
