Lucrative embezzlement schemes perpetrated by individuals trained in the management of your books are very real threats. This is not just the stuff of crime novels. The term white-collar crime makes it sound so clean and victimless. The opposite is true. This is a crime that can ruin practices and lives. As you work harder to dig out from the hole, the stress associated with a failing business destroys your health. Bankruptcy is a real threat. In other cases, there is even criminal liability (for you and not just the criminal). Other posts cover the simpler Preventing Embezzlement by Minding Big Ticket Items and the Smaller Dollars and Sense of Preventing Embezzlement, both of which are potentially crippling to a practice and can also be difficult to identify.
Complex Crimes With Big Costs
Identity theft with use of existing credit cards or creation of new accounts is common. Most offices have corporate credit cards. Simply reviewing the credit card statement quickly reveals any inappropriate charges. Much more problematic is the new account in your name managed by someone else in the office. Ensuring no one person consistently opens and distributes all mail decreases the risk of this scheme being successful, but even good internal protocols can’t stop a thief from playing this scam. Aggressive credit monitoring with identity protection helps protect yourself from these crimes. The next, and potentially most frightening, level of this crime is personal use of patient credit card numbers or using patient’s information to create fraudulent accounts. There are protective countermeasures for these risks that we’ll address in future posts.
An administrator or administrative assistant can create shell companies that submit fraudulent bills to the practice for services not provided. These same individuals often have access to multiple aspects of the electronic health and practice management systems. Therefore, they can perpetrate many of the forms of embezzlement described in the blog describing front office embezzlement, Dollars and Sense of Preventing Embezzlement.
Prevention
There are a host of other schemes including artificial raises, fictitious employees, payroll deduction schemes, and even tax diversion scams. Avoiding the pain associated with these crimes requires oversight but can certainly benefit from the use of sophisticated monitoring systems.
Just as with the less glamorous forms of embezzlement, developing and following financial controls and protocols that are documented in your Employee Handbook helps avert even well-crafted plans. Combining the controls with advanced accounting procedures and enhanced computer-assisted supervision can make the crime too risky to perpetrate (see our article Bugs in the Spreadsheets?). The would-be thief will move on to an easier target. Guard against complacency. Remember, only those in a trusted position can take advantage of you and your practice.
At Smart Business Great Medicine, our motto is Trust, and Verify!
You can’t care for your patients if you are bankrupt.
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