Monday, October 14, 2013

Reminder: Pay Attention to Details to Theft-Proof Your Practice

prevent theft in the medical practice
Smart business ownership dictates that you put good cash controls in place and monitor those controls diligently—or prepare to pay dearly. We hear stories monthly of embezzlement and theft in medical practices.

The key to theft-proofing your practice lies in setting (and abiding by) commonsense rules covering issues like hiring practices and day-to-day cash-handling procedures. Properly structured and consistently followed, procedures like these won’t spoil your relationship with employees. In fact, they might preserve it.
Take five major steps toward protecting your practice by putting in place these basic principles:
  1. Note the “red flags.” A staffer who likes to handle everything herself or himself rather than delegate to others might indicate a problem. A person who wants to control every aspect of the revenue and expense cycles has too much control and too many opportunities to help herself and cover her tracks.
  2. Do background checks. Besides employment verification and regular reference checking, a complete background check includes three components: criminal history, Medicare/Medicaid sanctions, and credit report. Don’t place an applicant with a really bad credit history in a position that includes handling money.
  3. Cross-train employees. When a staffer refuses to take time off because “no one else can do [his] job,” it might indicate he fears a substitute will discover his cheating. It’s especially challenging in a small practice where the “most responsible” person oversees every aspect of billing. Temptation and opportunity surround any individual who opens the mail, makes the bank deposits, and posts the payments in the billing system. Splitting these tasks up helps avoid trouble. A second pair of eyes can help staff members resist temptation.
  4. Record all transactions. Allow your billing system to pre-number charge slips, then account for each one at the end of every day; otherwise, a thief can simply throw away a charge slip and pocket a patient’s cash copay. In accounts payable, make sure that the checks going out match up with the invoices you’ve received.
  5. Investigate purchasing an employee dishonesty bond. Check with your business insurance agent about securing a bond to cover you in case of loss. It comes down to staying involved in what goes on around your practice.
In addition to the broad policies outlined already, here are five practical procedures that keep you in touch with your operations:
  1. Sign all checks yourself. Look at the invoices as you sign the checks. Ask questions. Do the expenditures make sense? Do you see an unfamiliar name or supplier? 
  2. Buy a safe and use it. Lock up the checkbook, blank check supply, undeposited checks, petty cash, and your cash drawer. Restrict access to the safe. 
  3. Open bank statements yourself. Look over your bank statement. Even if you don’t have time to reconcile it yourself, scan it to see if the “ins and outs” look right to you. Flip through canceled check images to verify your signature. Watch for payees you don’t remember. 
  4. Require your approval for all payroll changes. In larger practices, managers may need to initiate payroll changes (new hires, terminations, pay-raises), but insist on a payroll-change report from your system, your payroll service, or your accountant. 
  5. Require annual written competitive bids from your vendors. Not only does this help prevent overpaying for supplies, it discourages a staff member from entering into a fraudulent relationship with a dishonest vendor. 
Don’t worry: you don’t have to forfeit the warm family-like atmosphere you’ve worked hard to create and nurture among your staff. The healthiest families have clear rules and boundaries. And a little discomfort associated with implementing good business practices hardly compares to the chaotic disruption caused by even one instance of dishonesty.


If you enjoy reading the blog entries in "Solving Problems in the Medical Practice" you may want to check out all the great products at Greenbranch Publishing.


photo credit: stephen.butler via photopin cc