The Medical Group Management Association says that practice embezzlement has been on the rise the last couple of years and is continuing to rise. Three out of four physicians will suffer some financial loss from employee dishonestly during their career. “Over a five year period, over three quarters of practices will experience some type of embezzlement or theft. And the sad thing is that seventy percent have done this in previous practices in which they have worked,” said Libby Wren, CMPE, Practice Administrator, Ear, Nose and Throat Group. 

 

The current economic environment, the increase in deductibles and higher co-pays are just a few of the reasons we are seeing this increase in theft.

 

This type of theft usually starts when an employee needs a little cash and just “borrows” the money with the intent to replace it. This seldom happens. In fact it becomes easy. One business manager started out with a small amount of money being taken which grew into thousands of dollars due to a gambling addiction. In another example, an employee who had control over a group of physicians’ retirement accounts was siphoning off dollars over the years, and it was not until a physician retired from the group that it was discovered. 

 

Policies, procedures, and other financial controls are either lax or non-existent in many medical practices. When queried, the majority of physicians have admitted they really do not know what types of controls are currently in place. Most have not made any type of changes in a number of years, even before the above mentioned risks were identified. “We have always done it that way” was the most common answer why.

 

Lack of control mixed with daily flow of cash and checks (co-pays, deductibles) and lack of supervision are key areas that leave a group at risk for theft. A practice assessment review can help eliminate the risk for theft. It can also put employees on notice that controls are in place, and also assist in reducing the temptation by employees. The intent of most assessment reviews is not to determine if there is theft, but to put controls into place to prevent it.

 

 Most thefts by employees are spent on improving their lifestyle. Many employees continue in their theft because it becomes so easy and the lack of controls gives them more confidence in successfully stealing from their employer.

 

Practices, like many small businesses, are susceptible because small business owners and their employees have been a close knit group; this familiarity is one of the reasons that controls have not been put into place. 

 

A simple Practice Enhancement Review (again not a practice audit), is an inexpensive approach to assist in keeping a practice from losing thousands of dollars.