It’s a difficult and sad truth, but no business is immune to the threat of embezzlement or fraud. Embezzlement is the theft or misappropriation of funds from a business by an employee (or someone otherwise placed in a position of trust). You may think that it will never happen to you, but private medical practice is just as vulnerable as any other business - in fact, some believe that smaller businesses are at higher risk because they don’t necessarily have the resources or processes in place to double check or prevent fraudulent behavior in the first place. With that in mind, Ike Devji (JD) has compiled some red flags to watch for that may indicate fraud or embezzlement is happening. Here is what he shared with Physician’s Practice:
- Specific behavioral issues practices should look out for with partners and employees:
- Unusual interest in practice finances unrelated to an employee's job or compensation
- Personal financial problems (including divorce, bankruptcy, signs of substance abuse, debt issues, etc.)
- Inappropriate social relationships with customers or suppliers
- Changes in lifestyle and spending (up or down)
- Specific accounting and record keeping issues practices should look out for with partners and employees:
- Unusual inventory changes; issues and expenses
- Sudden or unseasonal drops in profits
- Unreasonable travel expenses
- Sudden slow down in receivables
- Multiple white-out corrections and changes to sales slips, accounts payable, accounts receivable, inventory figures, etc.
- Lost, damaged, or missing documents
- Unusual credits to patients on a recurring basis
- Discrepancies between daily receipts and daily bank deposits
- Increased purchases in disposable supplies
- Identical account or invoice numbers used in duplicate billings and/or invoices (or numbers that follow an unusual pattern)
As you peruse this list, note that many of these indicators could be simple mistakes...or something more. Be sure to consider the frequency or amount of indicators you notice in your practice, as that can help distinguish between faulty processes, or actual embezzlement. As an added protection, consider outsourcing medical billing, especially to a company that provides full transparency in the billing process. While there is no surefire way to prevent embezzlement completely (short of doing everything yourself...which is virtually impossible), watching out for the red flags above is a positive step towards prevention.
While it may be difficult to admit, the possibility of being stolen from is real. Even executives and business partners steal from each other! But with a watchful eye and thorough processes, you can find out about it before too much damage is done. To learn other helpful tips for succeeding at private medical practice, please visit our blog or contact us to see if Keystone Health Partners is a good fit for your business!
