Employee Embezzlement in Private Practice Runs High

LAS VEGAS – More medical practices will be victims of embezzlement than not, so physicians must be on top of all financial affairs in their practice, said Dr. David A. Laub.

In a 2009 survey of members of the Medical Group Management Association, 83% of 945 respondents reported being affiliated with a medical practice that had been the victim of employee theft or embezzlement.

Given that figure, it’s important to have an accountant that can be trusted, ideally one who specializes in medical practices, and to monitor the accountant’s reports at least quarterly, Dr. David A. Laub said at the annual meeting of the American Society of Cosmetic Dermatology and Aesthetic Surgery.

If someone is embezzling, most often it’s the office manager, usually by taking copays and petty cash, said Dr. Laub. Secret bank accounts hurt the most, so be wary if someone from the office staff interrupts a busy day to have a form quickly signed with a brief rationale for opening another account.

"You need to be the one signing every check and the one reviewing the credit card statements. It’s a lot of work, but unfortunately you have to monitor this" as part of financial discipline, said Dr. Laub, who practices dermatology in Mill Valley, Calif.

He suggested watching for signs of embezzlement, such as disparities between billing and collections, or an increasing number of accounts written off as unpaid. If there are increasing overhead costs but not increasing revenues related to products, the embezzler may be taking the products. On the more blatant side, if your office manager shows up at work one day in a Jaguar or makes some other lavish lifestyle change – well, you have to wonder.

Other potential signs include disorganized books or computer entries, or an office manager who suggests changing accountants or who declines vacation time, perhaps hoping to stay in control and not get caught, he said. Be alert also for duplicate payables – checks already signed but the manager asks for another one to be signed, which gets altered later for the embezzler’s gain.

Another tip for preventing theft is to separate duties. The person who takes checks from the mail should not be the same one who enters the data into the computer, he said. Get an electronic time clock to stamp the date and time on everything. Design a system for inventory and review it monthly, either through electronic medical records or a ledger in the back office. Insist on signing all checks.

"As long as you show you’re interested and are following what’s going on, it will stop a lot of problems," Dr. Laub said.

From his experience running his solo practice with two* physician assistants, three medical assistants,* three staff members answering phones, a billing administrator, and an office manager, Dr. Laub offered another tip for running a successful practice: positive leadership.

"If I’m not in a good mood, it brings the staff down, and all of a sudden everybody is inefficient," he said. Enter the office with a smile and ask staff members how their morning or weekend went.

©Don Bayley/iStockphoto.com

To maintain his positive energy, Dr. Laub decided in his 40s to start taking a half-day off per week for each subsequent 5 years of practice. Now in his mid-50s, Dr. Laub is about to change from 4.5 to 4 days of work per week.

Dr. Laub said that when he first started a practice, all of his staff members were full-time employees, but he said that he has found a part-time staff is more efficient. Now his staff is composed of 80% part-time employees and 20% full-time employees, and they stay with him for 7 years on average. "These staffers are much happier," he said.

Offer complimentary staff treatments if possible, perhaps one treatment per quarter for each employee so they are exposed to services offered, he suggested.

Also, identify what’s important to individual staff members – professional growth, or getting home to the family each day – to help inform scheduling and goal setting. Praise staff publicly but critique them in private, always sandwiching criticisms between positive statements.

Dr. Laub did not disclose any conflicts of interest.

^{*03/26/2012 Information updated to reflect correct staff numbers and titles.}

LAS VEGAS – More medical practices will be victims of embezzlement than not, so physicians must be on top of all financial affairs in their practice, said Dr. David A. Laub.

In a 2009 survey of members of the Medical Group Management Association, 83% of 945 respondents reported being affiliated with a medical practice that had been the victim of employee theft or embezzlement.

Given that figure, it’s important to have an accountant that can be trusted, ideally one who specializes in medical practices, and to monitor the accountant’s reports at least quarterly, Dr. David A. Laub said at the annual meeting of the American Society of Cosmetic Dermatology and Aesthetic Surgery.

If someone is embezzling, most often it’s the office manager, usually by taking copays and petty cash, said Dr. Laub. Secret bank accounts hurt the most, so be wary if someone from the office staff interrupts a busy day to have a form quickly signed with a brief rationale for opening another account.

"You need to be the one signing every check and the one reviewing the credit card statements. It’s a lot of work, but unfortunately you have to monitor this" as part of financial discipline, said Dr. Laub, who practices dermatology in Mill Valley, Calif.

He suggested watching for signs of embezzlement, such as disparities between billing and collections, or an increasing number of accounts written off as unpaid. If there are increasing overhead costs but not increasing revenues related to products, the embezzler may be taking the products. On the more blatant side, if your office manager shows up at work one day in a Jaguar or makes some other lavish lifestyle change – well, you have to wonder.

Other potential signs include disorganized books or computer entries, or an office manager who suggests changing accountants or who declines vacation time, perhaps hoping to stay in control and not get caught, he said. Be alert also for duplicate payables – checks already signed but the manager asks for another one to be signed, which gets altered later for the embezzler’s gain.

Another tip for preventing theft is to separate duties. The person who takes checks from the mail should not be the same one who enters the data into the computer, he said. Get an electronic time clock to stamp the date and time on everything. Design a system for inventory and review it monthly, either through electronic medical records or a ledger in the back office. Insist on signing all checks.

"As long as you show you’re interested and are following what’s going on, it will stop a lot of problems," Dr. Laub said.

From his experience running his solo practice with two* physician assistants, three medical assistants,* three staff members answering phones, a billing administrator, and an office manager, Dr. Laub offered another tip for running a successful practice: positive leadership.

"If I’m not in a good mood, it brings the staff down, and all of a sudden everybody is inefficient," he said. Enter the office with a smile and ask staff members how their morning or weekend went.

©Don Bayley/iStockphoto.com

To maintain his positive energy, Dr. Laub decided in his 40s to start taking a half-day off per week for each subsequent 5 years of practice. Now in his mid-50s, Dr. Laub is about to change from 4.5 to 4 days of work per week.

Dr. Laub said that when he first started a practice, all of his staff members were full-time employees, but he said that he has found a part-time staff is more efficient. Now his staff is composed of 80% part-time employees and 20% full-time employees, and they stay with him for 7 years on average. "These staffers are much happier," he said.

Offer complimentary staff treatments if possible, perhaps one treatment per quarter for each employee so they are exposed to services offered, he suggested.

Also, identify what’s important to individual staff members – professional growth, or getting home to the family each day – to help inform scheduling and goal setting. Praise staff publicly but critique them in private, always sandwiching criticisms between positive statements.

Dr. Laub did not disclose any conflicts of interest.

^{*03/26/2012 Information updated to reflect correct staff numbers and titles.}

LAS VEGAS – More medical practices will be victims of embezzlement than not, so physicians must be on top of all financial affairs in their practice, said Dr. David A. Laub.

In a 2009 survey of members of the Medical Group Management Association, 83% of 945 respondents reported being affiliated with a medical practice that had been the victim of employee theft or embezzlement.

Given that figure, it’s important to have an accountant that can be trusted, ideally one who specializes in medical practices, and to monitor the accountant’s reports at least quarterly, Dr. David A. Laub said at the annual meeting of the American Society of Cosmetic Dermatology and Aesthetic Surgery.

If someone is embezzling, most often it’s the office manager, usually by taking copays and petty cash, said Dr. Laub. Secret bank accounts hurt the most, so be wary if someone from the office staff interrupts a busy day to have a form quickly signed with a brief rationale for opening another account.

"You need to be the one signing every check and the one reviewing the credit card statements. It’s a lot of work, but unfortunately you have to monitor this" as part of financial discipline, said Dr. Laub, who practices dermatology in Mill Valley, Calif.

He suggested watching for signs of embezzlement, such as disparities between billing and collections, or an increasing number of accounts written off as unpaid. If there are increasing overhead costs but not increasing revenues related to products, the embezzler may be taking the products. On the more blatant side, if your office manager shows up at work one day in a Jaguar or makes some other lavish lifestyle change – well, you have to wonder.

Other potential signs include disorganized books or computer entries, or an office manager who suggests changing accountants or who declines vacation time, perhaps hoping to stay in control and not get caught, he said. Be alert also for duplicate payables – checks already signed but the manager asks for another one to be signed, which gets altered later for the embezzler’s gain.

Another tip for preventing theft is to separate duties. The person who takes checks from the mail should not be the same one who enters the data into the computer, he said. Get an electronic time clock to stamp the date and time on everything. Design a system for inventory and review it monthly, either through electronic medical records or a ledger in the back office. Insist on signing all checks.

"As long as you show you’re interested and are following what’s going on, it will stop a lot of problems," Dr. Laub said.

From his experience running his solo practice with two* physician assistants, three medical assistants,* three staff members answering phones, a billing administrator, and an office manager, Dr. Laub offered another tip for running a successful practice: positive leadership.

"If I’m not in a good mood, it brings the staff down, and all of a sudden everybody is inefficient," he said. Enter the office with a smile and ask staff members how their morning or weekend went.

©Don Bayley/iStockphoto.com

To maintain his positive energy, Dr. Laub decided in his 40s to start taking a half-day off per week for each subsequent 5 years of practice. Now in his mid-50s, Dr. Laub is about to change from 4.5 to 4 days of work per week.

Dr. Laub said that when he first started a practice, all of his staff members were full-time employees, but he said that he has found a part-time staff is more efficient. Now his staff is composed of 80% part-time employees and 20% full-time employees, and they stay with him for 7 years on average. "These staffers are much happier," he said.

Offer complimentary staff treatments if possible, perhaps one treatment per quarter for each employee so they are exposed to services offered, he suggested.

Also, identify what’s important to individual staff members – professional growth, or getting home to the family each day – to help inform scheduling and goal setting. Praise staff publicly but critique them in private, always sandwiching criticisms between positive statements.

Dr. Laub did not disclose any conflicts of interest.

^{*03/26/2012 Information updated to reflect correct staff numbers and titles.}