14 Steps to Safeguard Your Practice From Embezzlement

  1. Our research staff continues to find that embezzlement is an issue that is still prevalent in practices nationwide. 

  1. Minimize the Risk

    More than likely, you’ve heard the horror story about a colleague whose trusted employee embezzled money from his/her practice. To preclude this from happening to you, there are steps that you could take to minimize the risk of embezzlement.

    ­­­We recommend that the following procedures become a part of your normal routine, as they will help to safeguard you from embezzlement. 

    Handling Cash

    1. Make it your firm policy that you provide every patient/client with a receipt for cash payments.

    2. Cash handling and cash record keeping duties need to be segregated. Have one person collect patient/client portions over the counter and another person post balances. Have a third person make the bank deposits. As the owner, you must play an active role in monitoring sales and cash if you have too few employees to fully separate those three duties.

    3. Each month, compare the amount of cash deposited in the bank to the receipts and/or balances posted in your collections log. There could be some minor fluctuation, of course, but a significant difference for that month is a warning sign and should be investigated.

    4. Start a simple patient/client sign-in sheet listing patient names and the date signed in. Compare this on a daily basis to an over-the-counter-collections report (and day sheet or equivalent). Look for inconsistencies, such as patients/clients who are on the sign-in sheet but not listed on the day-sheet report. Spot-check by phone call to patients/clients who are reported to not have paid an amount due that day. This can be done as a “quality control” call to the patient/clients. Of the questions asked, one might be something like, “It’s our policy that all patients/clients who pay any cash on the day of service receive a receipt. Did you receive a receipt today for any cash you paid?” Put this policy in writing and IMPLEMENT IT. That will make it far more dangerous to attempt embezzlement.

    5. Make it a written policy that you conduct unannounced checks of petty cash and other cash accounts on a regular (bi-weekly or monthly) basis. Conduct those checks without fail.

    Accounts Receivable and Statements

    6. Review your accounts-receivable aging report monthly. Look for changes from the previous month’s report that don’t make sense. Scrutinize any balance that is older than sixty days, as its very existence usually indicates a problem. Minimally, it means that someone dropped the ball in doing collections; at worst, it means that there’s some hanky-panky going on.

    7. Have a written policy that no balance write-offs or account adjustments are permitted without written doctor approval. If possible, consider a ‘lockout’ (in your computer software) to allow ONLY the owner the ability to write off balances.

    8. Spot-check day sheets against patient/client charts, ledger cards (or patient/client account records) and the schedule book at least once per quarter, looking for any discrepancies. That you do this sporadically should be overtly promoted to the staff.

    9. Routinely check with visiting patients/clients who have balances more than thirty days old—and with past-due patients/clients you are calling—to ensure they’ve received a statement from you. The intent is to look for incidents of the collections person throwing statements out, rather than mailing them, in order to cover a payment embezzlement.

    10. Become suspicious if you find that, all of a sudden, you are paying a lot of refund checks to patients/clients.

    Accounts Payables and Purchasing

    11. Ensure all expenditures are authorized (via written request) and documented.

    Safeguarding Records and Miscellaneous

    12. If you’re using paper day sheets, then remove them from the office each quarter and store them at home or in a safe deposit box.

    13. Always change the locks immediately when an employee who had access to any office keys leaves employment.

    14. Always assume that if someone can rip you off, he/she will. So, take steps to prevent temptation and deny the opportunity. If you get that nagging feeling that something is not quite right, carefully and thoroughly check into it.

If you feel you would benefit from a one on one consultation on how to help you with practice management, please fill out the form on this page and we would be more than willing to assist you.

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