Avoiding Embezzlement in Your Medical Practice
My first year in practice $120,000 was embezzled from the group I joined. The employee behind the embezzlement had been with the group for 12 years and personally was a very sweet individual. Most physicians are never taught about the nuances of medical billing and what to look out for as safeguards to prevent the occurrence. Soon we were having meetings about how to deal with the matter legally and to try and prevent its occurrence again. Not fun.
Physicians learn patient care for years and their time in the office or hospital is maximized to do just that. For most, the financial side of the practice is not only uneducated territory, it is boring. That is, unless it involves the end result of reimbursement. The handling of accounts receivables and medical billing monitoring along with medical claim issues are handled by the practice’s medical billing, whether that’s in-house or out-sourced.
Over 80% of medical practices will be the victims of embezzlement by one or more employees at some point. What is really sad is that 70% of the time those employees have done it before. Typically the person needs a little extra money and decides to just borrow a bit with an intent to put it back. The scheme is devised and then it’s tested. If it works with small amounts, then the employee decides to increase the stakes and fairly soon the amount can be staggering.
Here are some examples of embezzlement:
Checks made out to the medical practice that are then deposited into bank accounts not in the medical practice’s name. This check may be written off the patient account balance.
A refund being administered to a patient that does not exist.
Employee submitting hours for payroll when those hours were never actually worked.
Accounts payables for bills that are not true expenses of the practice.
So how does one prevent embezzlement? Here are 5 methods of prevention:
Switch to a bank lock box rather than having checks to come to your office. The less hands on the checks the better.
Sign up for ACH deposit (electronic remission) from insurance companies directly into the practice accounts whenever possible. Once again less hands on the checks – in this case no hands!
Engage someone for independent audits periodically.
Put into place strong internal controls for revenue protection – this includes documenting accounts payables, refunds, co-payments, accounts receivables, and adjustments.
Work with a transparent billing system where transactions can be easily followed by all practice owners and administrators.
Putting one’s head in the sand and hoping embezzlement will not happen in his or her medical practice is a poor decision. Applying appropriate safeguards to minimize the risk of theft is smart and will pay off in the practice’s bottom line.
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