There are many ways money can be stolen from a medical practice, some more complex than others but after years with a trusted employee, things become easier. “By definition, embezzlement is the act of dishonestly appropriating assets by one or more individuals to whom such assets have been entrusted”. One way is just taking money from the cash co-pays of patients, by charging the patient but not processing the payment. “According to the 2011 Marquet Report on Embezzlement, physician practices suffer from some of the highest money mishandling amongst service industries; this is more so true for smaller and busier operations”. This can be avoided by verifying the number of patients seen daily with the amount of co-pay received or another way to discourage this is by the putting up signs so that every patient makes sure they get a receipt. Money can also be taken by writing checks on behalf of the practice for invoices that are never submitted or for an invoice that is submitted, but the check is discarded and another check is made for the same amount but for something or someone else. The handling of the payroll is another way to steal money from a practice, by giving themselves a raise, bonuses, or just overstating hours worked. Ways to avoid this is by simply have al bonuses given out at a specific time of the year and by setting up a biometric employee attendance record system which clocks in the specific hours everyone works. Company credit card and credit card machine are another way to embezzle by using them for personal expenses and not for the practice or by processing refunds on the credit card machine. This can be avoided by verifying all credit card statements with actually receipts of purchases and by only allowing refunds by a practice manager on the credit card terminal. Another way money is embezzled is by the creation of fake companies or vendors. The employee can either create a fake vendor and send the money to that company or collude with an employee of an actual vendor to siphon the funds from the company. To avoid the creation of fake companies the practice should implement a dual review and authorization process of new vendors and conduct random audits of vendor files.
The Cullom Eye and Laser Center fell victim of theft by their office manager Sherea Darnell, who worked for them from 2012 to 2016, in this time she took $514.000 from the practice. “Darnell used three of Dr. Cullom’s credit cards to conduct personal transactions for her own benefit”. She would use the credit cards to pay for her son’s preschool tuition, cash advances and to purchase airline tickets for her and her family. Darnell also obtained access to Dr. Cullom’s accounts to pay off the balances of the credit cards without any authority. In this case what I would do to try to minimize this from happening again, is not to give any employee of the practice a credit card, but if I have to for some reason then I would setup spending limits on the cards and audit the card statements every month. Also, if in fact I must give someone a card I would make sure that the person who uses the card is not the same person that checks the statement and pays the bill.
Penn Cardiology was also a victim of theft by their bookkeeper Lovette M. Brown, who was charged of stealing at least $200,000 from the practice. “Brown, who worked at the practice for about 13 years, allegedly made fraudulent credit card purchases and forged company checks over several years”. To avoid this from occurring in the future, I would setup checks that require two signature and setup positive pay with the bank so only checks that have been put on the list for the bank as issued will be paid.
Melissa Dyan Zediker employed as an office manager for OrthoGeorgia and later Urology Specialists of Georgia stole from these practices a total of $711,881. She did this by manipulating the payroll and adding her brother to it, so he would get a direct deposit every payroll even though he never worked for the practice. She also setup a company with her husband, Georgia Data Partners to fraudfully charge the practice. False invoices were made for work that was never done but checks where made out to Georgia Data Partners. “Under the fake agreement, Urology Specialists would pay Georgia Data Partners for money it collected for the medical office. There is no evidence Georgia Data Partners performed collections work or brought in money for the medical office, but checks were written to Georgia Data Partners for the invoices”.
I would try to avoid this from happening again by having periodic audits of employee’s pay and reconciliation of payroll records with timecard reports. To prevent the vendor fraud, I would conduct random audits of vendor files and implement a dual review process for both the management of vendors and the actual payments to the vendors so the person receiving the bill and posting it is not the same as the one writing the checks.