Healthcare practices are one of the most common sites of embezzlement
As an owner or manager of a medical practice today there are so many areas needing your attention, which can draw focus away from properly dealing with elements at risk for financial loss. After reviewing the revenue cycle of many medical practices over the past ten years I recognize that the overlooking of these “at risk” areas have been growing. One of the primary growing areas of risk for financial loss is employee theft (embezzlement).
Your staff members are essential to the smooth functioning of your practice, and you rely on them to keep things going. But according to a 2014 report by the Association of Certified Fraud Examiners (ACFE), healthcare businesses are likely to be victims of fraud, with yearly losses averaging $175,000 per practice. The same study also found that small businesses are disproportionately affected — and under protected — from fraud and employee theft.
Three major types of employee theft plague healthcare practices, according to the Medical Group Management Association.
Here are the top three ways employees steal, along with tips for preventing them:
- Removing cash from the daily deposit.
If your practice accepts cash for copayments and other charges, an employee could take some of this cash and hope not to be detected. Warning signs that this might be happening generally come in the form of patient complaints when they’re being billed for something they’ve already paid for. You can help prevent this type of theft by blocking staff access to any means that could allow them to delete accounts, appointment records or payments. It may also help if the person accepting the cash payments isn’t the same person who fields patient complaints. Consider using software that records and reconciles payments, as well as video surveillance.
- Paying personal bills from company funds.
Giving your employees access to checks and/or credit cards from your practice puts you at risk for internal theft. To help prevent this, you or a third-party firm should regularly examine outgoing funds, including credit card statements, bank statements and check records.
- Falsifying payroll records.
The person in charge of your payroll can adjust hours and/or pay rates beyond what you’ve authorized. Per the ACFE, this is generally the longest-lasting form of fraud, which means it has the potential to do great harm to your practice. It also occurs almost twice as often in small businesses as large ones.
Your best protection is keeping a close eye on things. Personally review payroll payments regularly — and let your workers know this is part of your practice. The best way to combat fraud and employee theft is to prevent it before it happens.
Finally, think about who are your key partners (internally and externally) that you depend on each day to protect the interests of the practice in this area, and how accountable and dependable they are in doing so. Those partners are essential to help with reducing risks associated with embezzlement.
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By Jeff Holt, CMPE, VP, Senior Healthcare Business Banker with PNC Bank
Jeff Holt is a Senior Healthcare Business Banker and V.P. with PNC Bank’s Healthcare Business Banking and is a Certified Medical Practice Executive. He can be reached at (352) 385-3800 or Jeffrey.Holt@pnc.com.