Practical approaches to protecting against embezzlement


Sometimes we say, “Some dentists do a good job of monitoring their finances, and then there’s the other 80%. It is well established that dentists who are oblivious to the financial workings of their practice are more prone to embezzlement, so why is respect for this basic element of ownership so low?

When dentists with embezzlement issues call us, we explore the monitoring performed, as this often provides clues to the methodology used to embezzle. As we explore, two central themes emerge. Some dentists claim that the clinical performance they are asked to perform and their otherwise busy lives do not leave them enough time to devote to the exercise numbers. Others (sometimes timidly) tell us that they simply didn’t learn how to manage their practice’s finances in dental school or anywhere else. There is probably a third cohort that just has no interest in this topic, but is unlikely to derive much benefit from this discussion.

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The good news is that it’s relatively easy to build a financial monitoring model that isn’t complicated or time-consuming. In this article, we’ll explain the basics and discuss how to accomplish them effectively.

Financial monitoring

There are three basic elements to monitoring your finances:

  1. Ensure transactions are recorded accurately in practice management software.
  2. Check that the correct amounts are deposited.
  3. Articulate daily to monthly information.

Building block no. 1: Accurate recording

Your practice management software maintains clinical and financial records for your practice. Inaccuracies, whether caused by negligence or deliberate action to conceal theft, will invalidate all subsequent monitoring steps. It is therefore essential to confirm the accuracy of the information entered into the practice management software.

There are two places where information is entered into your software. Invariably, payment information is entered by reception staff. In many practices, clinicians enter treatment codes along with the treatment. However, in some practices, clinicians record the treatment on paper for reception staff to view, perhaps as a throwback to the days when operating rooms did not have computers. Obviously, the likelihood of inaccuracy (deliberate or due to an inability to read a doctor’s handwriting) is much higher when front desk staff enter clinical codes.

If your practice is one of those legacy offices where paper records or routing slips communicate treatment being performed, the way to increase rendering accuracy is to have every physician, assistant, and hygienist enter treatment from their operating room. Even if you’re not ready to embrace electronic records, this simple step expands the division of duties in your practice and goes a long way to ensuring the accuracy of your records.

The most important tracking document is your practice management software’s end-of-day report. This report summarizes the fees charged, the amounts collected, and the adjustments applied. There is no substitute for properly reviewing this information; simply glancing at the report for 30 seconds and throwing it on the pile of papers on your desk is inadequate. To be significant, this examination must be immediate; looking at Monday’s report on Wednesday is not enough.

The burden of this review can be shared by having each clinician check their own work. Each dentist, hygienist and assistant must receive a report of the work carried out by himself or his dentist and sign to attest to its accuracy. Reviews by assistants act as a double check of their dentists’ work. Remember that the examination of a hygienist or assistant is limited to procedures; they cannot assess the amounts paid or the appropriateness of the adjustments.

Practice owners need a comprehensive practice report to review both their own productivity and adjustments, as well as payment information for those unable to review these items for their work. The practice owner should sign the report to establish that it is the one they reviewed, and then put it in a safe place.

Building block no. 2: Verification of deposits

Once you have confirmed the integrity of the information in your practice management software, you can ensure that the repositories match the collections. This task is complicated by the variety of payment types and time differences that cause items to be posted to the software on different days than the payments are deposited at your bank. One source of timing differences occurs when patients pay by credit card. These payments are entered into your practice management software immediately, but normally take several days to reach your bank. Automated deposits also create time lags but in the opposite direction; these funds arrive in your bank before being recognized by your practice management software.

Your administrative staff performs an activity called daily balancing, where the deposit is confirmed at equal collections according to the practice management software. In the old “perforated” system prior to computerization, monitoring involved the doctor reproducing the work of the office manager by verifying daily that the deposit was equivalent to the registered collections. With computerization, the concept of daily monitoring of doctors has generally continued. Although daily monitoring can detect dishonest acts at the first opportunity, it is not time efficient and the increasing proportion of deposits with time shifts complicates the calculation and prevents real-time verification. A proper review cannot be done at the end of the day; it should be deferred until the overdue amounts have been deposited.

The simplification adopted by some practice owners is to only validate the physical deposit of cash and checks and ignore the electronic components, such as credit card payments and direct deposits. This partial monitoring will be not work.

A better approach is to shift the monitoring from a daily comparison to a monthly correlation between cash inflows and deposits. To be clear, we are not suggesting a change in the daily staff balancing activity, only in how the practice owner oversees the activity.

The monthly approach offers several advantages. First of all, doing it once a month is much less difficult, even with more data, than doing it 15-20 times a month. Second, looking at an entire month at a time allows most time differences to self-correct, meaning the only time issues requiring individual review are those that go beyond the first or last day of the month. The third benefit of performing this review monthly is that it is much more likely to be outsourced. Having an outside accountant or other person to perform daily reviews is expensive and cumbersome; monthly outsourcing is more convenient.

The downside of switching from daily to monthly monitoring is that deposit shortages could linger for a month before coming to your attention, but this concern is purely theoretical. If a potential thief realizes that deposits are being matched against the practice management software, rather than creating a visible shortfall in the amounts deposited, they will adjust, which often takes the form of misleading entries into the software so that the software underestimates the amount of collections. One of the primary purposes of the end-of-day review described earlier is to look for entries intended to cause the software to underestimate collections.

Building block no. 3: Joints

A thief who realizes that you’re looking at reports daily will quickly decide that trading after hours or on weekends is a way to avoid your scrutiny. Protecting you from after-hours posts is the role of the third pillar of our watch triangle: articulation.

Dentists understand the joint where the mandible and maxilla should benefit from a certain relationship. Financially, articulation means that, if your office was open 18 days last month, the addition of the totals for production, collections, and adjustments for these 18 reports should exactly equal the totals for an end summary report. of months. If they don’t, something has been posted about your software that is not contained in the 18 reports you reviewed, and the implication should be obvious.

Although confirming articulation may seem like a tedious process, there is some good news. First, we have developed a spreadsheet that automates the addition of daily totals, which we can provide to you upon request. Second, it’s a purely mechanical process requiring little judgment and ideal for outsourcing to an outside accountant (or your son or daughter looking to earn money for tuition).

Embezzlement protection doesn’t have to be intimidating

When you break down financial monitoring into its component parts, move deposit verification from daily to monthly, and consider outsourcing, it doesn’t seem so daunting, does it? Victims of embezzlement learn the hard way that employee theft is facilitated and perpetuated by lack of oversight, but now you have a practical framework you can use to protect yourself. Go do it!

Editor’s note: This article originally appeared in the June 2022 print edition of Dental economy magazine. Dentists in North America can take advantage of a free print subscription. Register here.


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