How to Prevent Embezzlement in Your Practice

Recently, I had to fire an employee who had stolen money
from our office. She wasn't caught in the act, and I
wouldn't have missed the money. I only found out because
she had a guilty conscience. She had overspent her bank
account during Christmas, and had some personal financial
problems. When I found out and offered to advance her a
small loan on her salary-a bad idea which I rarely do-she
broke down and admitted to the theft. I appreciated her
honesty, but had to fire her immediately.

According to an article in the American Academy of Family
Physicians newsletter, "a recent study of community health
clinics found that more than 40 percent had experienced
some type of financial crime during the previous five
years." Not only that, this was supposedly underestimating
the problem, as it is frequently an unreported crime.
Fortunately, the article had six clear steps to help
prevent embezzlement:

1. Check candidates' references and job histories –
Supposedly, many embezzlers are repeat offenders, so a
thorough vetting of all applicants is suggested; if you
haven't got the HR department, you can always outsource
this step.

2. Review individual expenses – It's smart to have one
person order supplies, another to verify receipt, and a
third to sign the checks for payment; also occasionally
spot-check expenses to be certain they are legitimate; for
a larger practice it even makes sense to have two people
required for check signatures.

3. Prohibit pre-signed checks and signature stamps – At the
very least, every time you write a check, know exactly what
you are paying for.

4. Enforce job rotation and vacation policies – It is
suggested that employees take at least five consecutive
days off for vacation; having someone else who can step in
to do their job is good in case of emergencies, and a fresh
pair of eyes can usually spot any wrongdoing during
someone's absence.

5. Bonding employees – Employee bonds are insurance
policies that reimburse you for your loss if the employee
commits fraud or embezzlement. Bonding also serves as a
deterrent to financial crime because bonding companies
prosecute perpetrators.

6. Issue receipts for cash collected – In this era of
frequent co-pays, cash can accumulate quickly at a
practice. Whether you use an automated receipt system or an
old fashioned booklet with carbon copies, make sure
receipts noting the date, amount received and the patient's
name are scrupulously kept.

I found these steps both easy to implement, and very
effective. Making each employee involved in the process
accountable for their co-workers, as well as for
themselves, left me feeling more confident that this
problem won't occur in the future.

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