Credit Balances – Low Hanging Fruit Opportunities

The following is Part II in our series – Credit Balances – Management, Opportunity & Challenges. Over the last 20 years, we have found that doctors and the front desk team consistently consider patient credits as “Oh, my gosh, there they are.  If patients want them, they will ask!”  End of story.  What is not considered is the missed “opportunity” of production and revenue for the practice.  Remember, patient credits are money in the bank that is just waiting for the practice to present a treatment plan recommendation that will invest those patient dollars in a healthy, beautiful patient smile.

Let’s consider the true nature and financial impact of patient credits when they are not managed as opportunity, but instead considered, at best, a challenge. When patient credits are sitting on the books, they are generally overstating Accounts Receivable (A/R). Consider the following:

  • Ninety-nine percent of dental practice management software include patient credits in the “current” column of their A/R report.
  • Doing so produces a bogus A/R report! Why? Credits are money owed to patients.  When credits appear on the same report as money owed to the practice by patients, it produces a net reduction in the money due from patients and insurance payers.  This makes the front desk look like they are doing a better collecting job than they are!
  • weaselAs I outlined in Part 1 of this series Credit Balances – Management, Opportunity & Challenges! Part I unattended credit balances can be problematic due to state statues governing patient “Unclaimed Property”.
  • Unattended credit balances can illustrate a need for front desk training on either 1) proper handling of the credits, OR 2) making them work for the practice and patients. Additionally, this may illustrate a lack of oversight by the doctor(s), front desk manager, and/or team.
  • Improper management of credit balances can leave a gap in proper policies and internal controls that could lead to inappropriate activity by a dental weasel thereby causing harm to the practice.

When credit balances are properly managed, the practice produces a win/win situation for the practice and the patient. Here’s how to master the opportunity presented by credit balances:

  • Determine how to run the A/R report excluding patient credits so you know the exact money due the practice every day from patients and insurance payers. This is easy for some software, i.e. Dentrix; however, for others it may take a call to the software vendor support. For example, EagleSoft can be accomplished via an Excel download.  Using Excel you can sort the report so you will know by patient who has the largest credit balance, as well as the total amount of money you “owe” your patients at any point in time.  This can be very critical information when a practice is being sold, etc.
  • Consider a new associate joining the practice with the pressing issue of scheduling production. What sources can these patients come from?  The obvious answers are: new patients, procedure(s) from other doctor(s), referrals, marketing, etc.  Credit balances is another potential source that most practices don’t even consider. Everyone knows the best patients and lowest cost marketing come from current patients.
  • Other reasons to consider patients with credit balances: you need to fill available chair time, you just returned from the greatest CE course, or the practice needs more patients for any other reason. The list of opportunities and long-term positives are limited by the imagination of the doctor(s) and team.  Working your list of patients with credit balances provides you with a deep pool of potential patients and several ways to craft a marketing message that will get those active in your practice again.

For more information about how to produce a win/win situation utilizing your patients with credit balances, give us a call for a free, no obligation 30 minute consultation at 210.241.6329.

 

Educating dentists on identifying embezzlers or fraudsters hiding out in their practices is our expertise. Contact us to speak at your next dental meeting or study club by sending an email to bryant@brytanassociates.com or calling us at 210.241.6329.

Hiring an Accountant to Keep All Your Worth

By Michael L. DeVries, CFP®, CHBC, EA

I received a call from a client for whom I was doing monthly accounting.  At that time, our services for the client consisted of compiling monthly financial statements, filing quarterly payroll tax returns, annual company returns, and assisting him with various practice management projects. The call I received from the doctor went like this.

“Mike, I’m calling to tell you that I am not going to need your professional services any longer.  My office manager has been doing a great job for me.  Together, we have decided that she could do my monthly accounting using Quickbooks.   We are going to be working with a CPA firm who will use this information to prepare the annual tax returns.  I really appreciate all the work that you have done for me in the past; you have helped me from the start of my practice, but going forward I have decided to use a different approach to my financial management.  I know you don’t agree with this process based upon previous conversations you have had with my office manager when she first approached you about this matter.  I respect your opinion, but I have decided to make this move and I request that you help make this an easy transition.”

I dislike these phone calls. I have had a few in the 30+ years of specializing in helping doctors with their business.  No matter what I try to say to keep the process the same in an attempt to help the doctor, my words fall on deaf ears.  His trusted office manager, who works with him daily, has convinced him that adding this duty to her responsibilities is best for him and will result in a cost savings.  Well … that is until things are assessed again about two years later.  That is when I received another from the doctor.

weasel“Mike, remember when we talked a couple of years ago, and you gave me all the reasons that I should consider keeping  your services rather than having my office manager do that work for me?  Well, I’m sure you do.  I’m calling because I know you would never say, ‘I told you so’ – so, I’m going to do it for you.  Mike, you told me so, and it cost me more money than I care to admit.  We are having an audit done in our office right now, and they figure that my office manager stole hundreds of thousands of dollars since I terminated my services with you.  I’m making this call, not for your benefit, but for the doctors for whom you work.  If any of them think so highly of their office manager that they think that they can replace you and your services, you can tell them my story.”

I dislike these phone calls too. It saddens me to hear of doctors who work so hard to get to this point of their career in medicine or dentistry only to become victims of embezzlement, fraud, waste or abuse from a trusted employee.   The work we do doesn’t guarantee that theft in the practice will not occur.  However, the monthly process that we recommend does make it increasingly more difficult and less likely to occur.

Several years ago I called a good friend who works for a software company that we use to benchmark dental offices.  I had a situation that called for a more detailed review of the possibility of fraud, and I needed someone who could work with me when we suspected fraud within a doctor’s office.  He introduced me to Bryant Truitt, whose passion for helping the client really struck a chord with me.  Bryant and I now partner together when the circumstances call for each other’s expertise.  In my discussions with Bryant, he and I both realized that not all accountants who say they specialize in working with dentists follow a good process for avoiding “fraudster weasels” from sneaking through the back doors of your office.  It is for this reason that I’m offering you my top five standards that doctors should consider when hiring an Accountant:

  1. Give consideration to the phone call I received from my doctor client. It’s a true story and unfortunately I have a few of them.  You need an accounting professional that specializes in serving your business.  Preferably, a person or a firm where working with healthcare professionals is the major part or the only part of their business.  A source for finding such professionals around the country is at the National Society of Healthcare Business Consultants (www.NSCBC.org).
  2. Create a written understanding with the professional you hire that he or she is working for you. The professional you hire will need to have communications with your staff – especially, your office manager.  It’s paramount to keep good relations with your advisors and your team, but ultimately the professional needs to be looking out for your best interest.  This should be done with a service engagement letter.  It troubles me when I receive a call from the office manager inquiring about the services we offer.  I realize doctors are busy – just don’t be too busy to care about this important aspect of your business.
  3. Whether your office is large or small, ask your accounting professional to provide you with an outline of accounting procedures to implement in your office. This would include:
    • Recommended client bookkeeping solutions.
    • Segregation of duties where the accounting professional and you are involved.
    • A process for the daily depositing of receipts and reconciliation of such to your practice management system.
    • Effective procedures for handling money in your practice including Petty Cash.
    • A listing of what information the accountant requires at the end of each month – if it is just your Quickbooks file and the bank statement, you know you don’t have the right professional.  They should also be looking at and spot checking other practice management reports and business records, such as charge and adjustment reports, the accounts receivable aging report, credit card statements, capital equipment purchases, and loan documents.
    • Ability to integrate your practice management system into the financial statements that are compiled on a monthly basis – don’t short-change yourself and business by doing this just quarterly or annually.
    • Options for regular communications regarding your business and the financial management of such.
  4. Look for a professional that provides business advice and not just financial statements and tax compliance. The person with whom you work should have the resources to be able to benchmark your practice to your peers in your specialty and be able to assist you solve a problem when a benchmark is out of line.  The person you hire should be experienced in running a business.
  5. Make sure that the professional with whom you work is well versed in Healthcare Compliance. If the professional you hire isn’t proactive in establishing a Business Associate Agreement with your office, chances are you may have the wrong professional.  HIPAA Privacy, HIPAA Security, OSHA, and Corporate Compliance regarding Fraud, Waste and Abuse can have a major impact on your business.

I started this with a story of a doctor who put a lot of trust in his office manager.  Let me say in ending, that it is good to trust your team – but, it is also good to verify that trust.  Give consideration to these standards when hiring an accounting professional and you will gain an objective trusted business advisor.  An advisor who will work at keeping the “fraud weasels” from making an easy transition – from working for you to working you for all your worth.

We have developed a 5 Minute Fraud Buster checklist to help you identify the simple financial and accounting activities that will make a different in your practice.  Learn more and get your free copy at www.mikeldevries.com/fraudbuster.

 

Mike DeVries is a CERTIFIED FINANCIAL PLANNER ™, Enrolled Agent,  and a Certified Healthcare Business Consultant focusing on helping healthcare professionals. If you would like to learn more about becoming a client, contact Mike at www.vmde.com

 

 

 

Protect Your Practice from Team Member Embezzlement and Abuse with a Fidelity Bond

Protect your practice from dental weasels with a Fidelity BondFacts prove that 80% of business embezzlement, fraud and abuse happens internally by team members!

The Association of Certified Fraud Examiners states that team member dishonesty can range from tens of thousands to millions of dollars.  Our 20 years of investigating dental and medical practices and nonprofits across Canada and the United States have proven losses ranging from $3,000 to $2.1 million!  In 2016, losses of over $1 million was proven by Brytan & Associates professionals.

Is there protection against such losses – YES!  Fidelity Bonds, also called team member dishonesty coverage or crime coverage, are very available to dental and medical entities. It is customizable, inexpensive, and provides protection from $10,000 to $100,000.

Fidelity Bond Defined –

  • Great for dental and medical practices and nonprofits.
  • Fidelity bond is a straight forward insurance policy and does not accrue interest.
  • Can be a part of the practice property or malpractice insurance.
  • Can be purchased as a stand-alone policy or as an add-on or endorsement to another business policy. Ask your agent.
  • Can be issued for specific position(s) or individual(s). Where available, obtain coverage for the entire team as a group.
  • The coverage is for direct physical loss to practice personal property, including money and securities, which results from the dishonest acts committed by the team member(s).
  • Can cover fraud, theft, forgery, disappearance, destruction, alteration of practice documents, unauthorized electronic funds transfers, credit card fraud, computer fraud, money order fraud, counterfeit fraud, etc. It’s critical that you have a clear understanding of what is and is not covered.  Do not be shy about requesting a clear listing before signing on the dotted line!
  • Identity Theft and HIPAA breach coverage is now available from some carriers. Ask about them!
  • Typically, fidelity bonds do not cover accounting or math errors or omissions, government seizure (IRS taxes), vandalism, loss of income as a result of team member crime, fraud involving restatement of any type of profit and loss documents, or policyholder theft.
  • A fidelity bond can be purchased as additional coverage on most business policies.  Amounts will vary, some policies include $10,000 of coverage automatically with the option to increase to $25,000 and provide increases up to $100,000.
  • If unable to add this coverage to an existing business policy, it is possible to purchase a stand-alone fidelity bond.  Prices for this type of coverage vary by number of team members, amount of coverage, and type of dental/medical practice.  An application is usually needed to obtain a premium quote.
  • The cost for the coverage is minimal, usually less than $100/year depending on your business (dental/medical) location. Recently, a client obtained coverage of $25,000 for $92.00 yearly.

Notes on Filing a Claim –

  • If a claim is required, contact the issuing agent and request a claim form. The length is generally two pages and every carrier is different as to the amount of detail.
  • When asked by your agent and carrier as to the amount of loss, it is suggested a general answer be provided such as “the investigation is ongoing and I do not know the amount at this time.”
  • Filing of an initial law enforcement report is required to obtain a case number.  This is needed in most jurisdictions but the execution and handling can vary widely.  Another good reason to consider legal counsel guidance.  The case number establishes that the matter is “real and serious” with the insurance carrier and others.
  • A copy of the law enforcement report must be attached to the claim form.
  • The policyholder will be asked to provide documentation supporting the details of the loss and amount. It is suggested that the details and amount of loss are provided at the end of the investigation and carefully worded.  Clients have found it best to seek legal representative guidance.   Insurance carries do not make any money paying claims.  A copy of the investigation report should accompany the claim form along with the law enforcement report.
  • Make sure to copy everything submitted to the carrier for your records! Send only by “return receipt requested” and track delivery.  Ask your agent the very best way to handle submission to insure proper and timely processing.  Remember, it’s to your total benefit not theirs.

Next Steps – No Debate:

  • Schedule a required team meeting when you receive the policy!
  • Objective is for every team member to know that a fidelity bond is in place.
  • Ask your agent to come and explain to the team what a fidelity bond is, coverage, etc.
  • Do not tell the coverage amount – very important and there is no need to know.
  • Do not go into a detailed explanation about coverage types, e.g., fraud, embezzlement, abuse, etc.
  • Stress positives like document protection, ID theft, HIPAA breach, and others your agent should be able to provide.
  • Mention that law enforcement and the insurance carrier will investigate and determine claim handling. The stated objective:  you, as the policyholder, are really looking out for the team, patients, etc.
  • The principle that should be clearly stated is that others are now part of our team to help protect the practice, patients, team members and our future.
  • Anyone wishing to do the practice harm will very likely already know about fidelity bonds and guided accordingly.

Congratulations, you are the proud owner of great benefits and the lowest cost insurance per thousand you can purchase that I know of.  Just think, it provides the very best for everyone:  reduces stress, provides greater peace of mind, and quietly helps you retire in the manner earned.

 

 

Spotting a Weasel: The Personality of a Dental Embezzler – Part VI

This is the final installment of our six-part series on Spotting a Weasel – the Personality of a Dental Embezzler.  For purposes of this series we’ve described each RED FLAG individually, but in reality they are all inter-related. When embezzlement is happening typically more than one RED FLAG is present. This is especially true of the last three we’ll look at in this article. These three are all-inclusive and really tie all of the 18 RED FLAGS together.

Look for additional RED FLAGS in 2017. In the meantime, be on guard at all times. We recommend that you “Trust but Verify.” And, contact us with any questionable situations that you would like outside eyes to help you evaluate.

weaselEagerly Takes Authority and Responsibility

Dental embezzlers endear themselves to the doctor by making themselves seem indispensable. They do this by taking on more and more authority and responsibility to relieve the doctor or other staff members of perceived drama and stress. They accomplish this in a narrative and stealthy way based on their ability to know the personality of the team and doctor.

As they provide more and more insulation for the doctor, they then have the ability to influence the doctor’s decision-making on almost, if not all, levels in the practice. The doctor is left with the feeling that he/she could not run the practice without the dental weasel, leaving the weasel free to run his/her embezzlement schemes.

As the doctor’s confidence in the dental weasel grows, he stops checking in regularly assuming that things are being done properly. He abdicates his responsibility for reviewing reports and practice metrics to the dental weasel handing over more authority and responsibility in the process.

The dental weasel will do everything possible not to surrender areas of responsibility to other team members or the doctor.

As a case in point, we worked with a practice where the doctor hadn’t been looking at practice reports or bank statements for over 5 years.  These reports, along with the practice policies and procedures, were being controlled by the office manager. As the dental weasel’s areas of responsibility and authority grew, they moved in a direction that wasn’t complimentary with the doctor’s financial goals or standard and patient care goals.

Wants Control of Adjustments, Discounts, Write-offs, and Refunds

The single largest way doctors can go bankrupt and/or are unable to retire is through unauthorized discounts, adjustments, write-offs and refunds! Through a series of complex manipulations, embezzlers can use these unauthorized transactions to take money out of the practice and put it in their pocket.

They can also use this practice to endear themselves to patients by giving them discounts, adjusting account balances and write-off fees that are not approved by the doctor. They may even suspend payments for a patient altogether and /or make special payment arrangements.

If the embezzler is in a clinical position they spend an inordinate amount of time with patients discussing the patients’ personal problems. They may affect payment obligations by walking the patient past the busy front desk, or insisting on checking the patient out themselves to “help” the overworked front desk team members. Clinical team members may even intentionally give away services to certain patients in order to further ingratiate themselves.

Discontinues Internal Controls and Policies & Procedures

The very first thing the embezzler will try to do is discontinue Internal Controls and Policies & Procedures as these are a major threat to the dental weasel’s ability to work schemes in the practice. The #1 Internal Control they want to eliminate is a patient sign-in sheet or electronic equivalent.

The dental weasel will also control the reports from the practice management and accounting software by altering the information the doctor(s) receives on a regular basis. The weasel delays and/or eliminates critical reports, including Day Sheets; Adjustments, Discount and Write-off reports; Bank Reports including statements, A/R; Insurance Aging; Credit Balances; etc.

More than 20 years of investigating fraud, embezzlement, waste and abuse in dentistry and non-profits has clearly established “Trust but Verify” techniques. Internal Controls and Policies & Procedures matter – No Debate!  The case outlined above, along with every investigation this year, reinforces the fact they save money, time, stress, and provide better standard and patient care.  The total amount our clients lost this year approaches one million dollars. Over the 20-year period, annual loss per engagement is growing due to the increase in the number and complexity of schemes being worked by dental weasels.

If you’re concerned you may have a weasel in your practice, we encourage you to call us for a free, no obligation 30 minute consultation at 210.241.6329.

Educating dentists on identifying embezzlers or fraudsters hiding out in their practices is our expertise. Contact us to speak at your next dental meeting or study club by sending an email to bryant@brytanassociates.com or calling us at 210.241.6329.

 

We want to thank Karol Peters and Ron Siemering, associates at Brytan & Associates, for their input on today’s article.

Spotting a Weasel: The Personality of a Dental Embezzler – Part V

By Bryant Truitt, MBA, CCS, CFE and Karol Peters, CDC, RDH of Brytan & Associates

This is the fifth installment of our six-part series on Spotting a Weasel – the Personality of a Dental Embezzler. So far, we’ve covered 12 out of 18 of the most prominent RED FLAGS indicating you may have a dental embezzler in your practice. The three RED FLAGS we’re covering today are further ways dental weasels ingratiate themselves with the doctors, other team members and patients to divert attention from the harm they are doing in the practice.

dental embezzlerSecretive – wants private office with door lock

Dental embezzlers truly resemble weasels in their efforts to be secretive about their activities. The dental weasel will want to have a private office with a door that locks for two main reasons:

  1. He/she can create embezzlement schemes in private
  2. It’s a sign of prestige putting the dental weasel in a power position in the practice

Often the dental weasel will gain more authority along with the acquisition of the private office by taking on responsibilities for managing personnel including handling disciplinary write-ups and reviews and managing the ‘locking’ file cabinet of personnel files. In these instances, the dental weasel acquires the role of office manager and insulates the doctor from the stress of managing the practice.

There are many excuses the dental weasel gives for wanting the private office:

  • They can get more work done without interruptions (e.g., general office noise; patient traffic, phone calls, office drama – see below, etc.)
  • They can handle difficult conversations with other team members – these are conversations doctors dread having. However, they are usually ones that the doctor should initiate instead of abdicating the role of leader in the practice. Once this occurs, the office manager is seen as the leader instead of the doctor.
  • It makes it easier for the weasel to do the doctor’s personal business without worrying about other team members being privy to that private information.

For an office manager a closed door is counter-productive to their main role of effectively managing the day-to-day operation of the practice. It removes them from providing timely oversight of the front desk and clinical areas. They are unable to hear things going on with patients that require their input.

No Vacations and/or Days Off and/or Eager to work overtime hours

Team members who want to do the practice harm cannot afford to take a vacation since they run the risk of someone discovering one or more of their schemes when they are not there to handle the cover-up. Additionally, by not taking vacation or time off, it furthers their goal of being indispensable to the practice. The only time the dental weasel takes time off is when the office is completely closed.

Dental weasels will:

  • Come to work even when they’re sick
  • Refuse to cross-train anyone to handle their responsibilities
  • Not take CE courses outside of the practice

The dental weasel looks for opportunities to work overtime. Overtime keeps them in the office by themselves and unobserved. Or, another ploy they use is to request remote access so they can get their after hours work done from home.

Drama – keeps pot stirred

Drama serves the dental weasel in many ways:

  • Drama is a way of distracting the doctor and other team members from the harm the dental weasel is creating in the practice. It keeps the doctor and team members focused on personnel issues, patient drama and/or the practice policies. These are often things that are manufactured by dental weasels to camouflage their schemes.
  • The dental weasel uses drama to gain additional authority, especially hiring, firing and disciplinary actions. Knowing the personality of the doctor and his/her desire to avoid conflict, the dental weasel is only too happy to become more indispensable to the practice by taking on this role. Furthermore, authority in the practice helps the dental weasel get rid of team members and/or vendors who are a threat to him/her.
  • Drama is an often used excuse to gain a private work area because he/she just can’t get his/her work done due to all of the distractions in the practice.
  • The dental weasel’s own personal drama is a way to draw the doctor into his/her crises in turn causing the doctor to empathize with the weasel’s problems.

A Real Weasel from our Files

A classic case from our files involves a weasel who joined a large successful; multi-specialty practice as an officer of the corporation. The weasel started out giving the doctors reports on production, collections and A/R, collectively and by provider. In the months following the hiring of the weasel, things moved along very smoothly. Reports were made available on a regular basis to the doctors, and they were pleased with the performance. As a result of this initial success, the weasel secured a private office in the practice and gained additional authority by controlling hiring, firing and management of all team members both front office and clinical.

Over time, the weasel began discontinuing practice management software reports to the doctors to the point where they were eventually receiving no reports. The doctors didn’t ask any questions about what happened to the reporting. Eventually the weasel discontinued entering invoices, data and other obligations into the accounting software. When asked by the bookkeeper about reports needed to complete quarterly financial statements and tax payments, the weasel would put her off.

During our popular boots on the ground investigation of the practice, we discovered the weasel had successfully blocked all reports going to the doctors, found a way to get credit cards issued in the weasel’s name and became a signatory on the corporate practice account. By obtaining a private office in the practice, the weasel was able to shelter activities to the point that the team and the doctors had no idea what the weasel was doing. This resulted in the weasel being undiscovered for several years during which time over $300,000 went missing.

If you’re concerned you may have a weasel in your practice, we encourage you to call us for a free, no obligation 30 minute consultation at 210.241.6329.

Educating dentists on identifying embezzlers or fraudsters hiding out in their practices is our expertise. Contact us to speak at your next dental meeting or study club by sending an email to bryant@brytanassociates.com or calling us at 210.241.6329.

 

We want to thank Karol Peters, an associate of Brytan & Associates, for her input on today’s article.

 

 

Spotting a Weasel: The Personality of a Dental Embezzler – Part IV

By Bryant Truitt, MBA, CCS, CFE and Barbara Freet, PHR, of Human Resource Advisors
This is the fourth installment of our six-part series on Spotting a Weasel – the Personality of a Dental Embezzler. In today’s article we focus on ways that the dental weasel infiltrates the practice to become an indispensable team member, including handling much of the dentist’s personal business, in an effort to set the groundwork for embezzlement schemes.

Dental EmbezzlerKnows the Personality of the Doctor(s) – Big Time!

There is no doubt that the dental weasel is smart. He/she is excellent at observation, carefully absorbing the personality traits of the dentist to become an expert in how to manipulate the dentist to give him/her more and more autonomy and authority to handle the business aspects of the practice. Dental weasels learn the strengths, weaknesses, idiosyncrasies and, oftentimes, secrets that allow them to control the dentist.

The weasel knows the three most important drivers of the dentist:

  1. Their first love is family – and they consider their dental team part of their family.
  2. They emphasize a high level of patient care – Dentists are highly sensitive to patient issues, especially relieving them of discomfort and providing them with a higher degree of self-confidence through a beautiful, healthy smile.
  3. Love of dentistry – Dentists prefer to stay in the operatory taking care of patients and practicing their expertise

The majority of dentists either 1) have limited knowledge of the front desk, or 2) are relieved to find an office administrator who is expert in the front office to relinquish that part of the business to. As the dental weasel earns more and more of the dentist’s trust, he/she will begin to manipulate the dentist to transition the monitoring of financial reports and practice management software to him/her.

Under the guise of relieving the dentist of stress so he can focus on what he loves to do, the dental weasel:

  • Eliminates the dentist’s ‘need’ to attend software training
  • Eliminates the number and types of reports that the doctor ‘has to’ review
  • Eliminates internal controls in the practice management and accounting software

By the time this happens, one or more scams are already in place.

Does all Hiring and Firing and Wage Increases

Dental weasels will never hire anyone who they perceive is stronger and more knowledgeable than they are, nor will they hire someone they can’t control. They look for team members who

can be molded to be totally dependent on the dental weasel and cover their improprieties. As the hiring ‘manager’ in the practice, a level of authority is conveyed to the office administrator further setting him/her up as the go-to person in the practice.

The dental weasel will often bring family members and friends into the practice to help establish or cover up scams. All hiring of family members, including extended family and friends, must be done with extreme caution.  Frequently the dental weasel will inflate the qualifications of family or friends to make them appear to be the most qualified of the applicants. It is imperative that the dentist, not the office manager or practice administrator, check references on all applicants to confirm their qualifications.  That means calling the doctor in previous practices even if the doctor is not on the list of references provided by the applicant. There are no laws requiring permission to call past employers. I would not call current employers without permission, however.

Hiring, termination and other HR decisions MUST be the sole responsibility of the owner doctor with appropriate advice from HR & legal professionals.  They should follow a well-defined process including starting with written interview questions, utilizing a complete job description, having the applicant fill out an application and then making the offer using a written offer letter.  After hire, all paperwork such as tax forms, an I-9, your employee handbook, and other state-specific required forms should be routinely given and documented, etc. This will show the dental weasel that you are organized and know and will follow legal hiring requirements.

Wants to Do the Personal Business of the Doctor

To further their total control over the dentist, dental weasels take on personal errands for the doctor gradually becoming as indispensable personally as they are in the practice. There are a number of very lucrative reasons for this.

  1. They want to know where the dentist’s personal accounts (banking, estate planning, credit cards, etc.) are to gain access to additional avenues to work their scams.
  2. Knowledge of the doctor’s personal business can give the dental weasel leverage in case he/she is caught in a compromising position.
  3. Our case files include dental weasels who have exploited a variety of improprieties to cover up his/her schemes including personal secrets of the dentist (e.g., mistresses, substance abuse, gambling, misappropriation of funds, etc.)
  4. Eventually the weasel convinces the doctor that he/she needs remote access to do personal business from home so the other team members are shielded from this knowledge. As we pointed out in Part III of this series, remote access is another way a dental weasel gains access to the practice to embezzle and/or do other weasel “business”!

A Real Weasel from our Files

We had a case in California where the doctor’s wife passed away and the trust fund she established was to educate their daughter.  The doctor had no business expertise. The tenured/trusted office manager was given check signing authority to pay the daughter’s education and certain personal expenses.  The OM paid the education expenses as directed but consistently included her personal credit card statements and wrote checks to herself.  We were engaged to complete our popular “boots on the ground” practice review, discovered the six-figure loss, and other schemes.

If you’re concerned you may have a weasel in your practice, we encourage you to call us for a free, no obligation 30 minute consultation at 210.241.6329.

Educating dentists on identifying embezzlers or fraudsters hiding out in their practices is our expertise. Contact us to speak at your next dental meeting or study club by sending an email to bryant@brytanassociates.com or calling us at 210.241.6329.

 

We want to thank Barbara Freet, PHR, President of Human Resource Advisors for her wise counsel on the Human Resources aspects of today’s blog post. 

Spotting a Weasel: The Personality of a Dental Embezzler – Part III

by Bryant Truitt, MBA, CCS, CFE and Ron Siemering, IT Director, Brytan & Associates

weaselThis third installment of our six-part series on Spotting a Weasel – the Personality of a Dental Embezzler outlines the RED FLAGS that arise from the computers and software systems in a dental practice. By recognizing the direct line into the financial systems of the practice that these software programs provide, dental practice owners can better protect themselves from dental weasels who make it their business to become experts in these systems.

Knows computers & software

In the dental practice, accounting software combined with practice management software controls all of the financial systems in the office. The dental weasel knows this and makes it his/her business to know the dental systems inside and out. This expertise allows the weasel to hide his/her schemes behind overcomplicated explanations and so-called ‘system glitches’ that explain away any anomalies.

Knowing that their dentist(s) are not proficient in these software programs, the weasel sets himself/herself up as the go-to person to explain day-to-day transactions and incongruities found in the programs and/or work product.  He/she is the office expert for all of the team members’ questions and issues allowing him/her to maintain oversight and control how his/her scams are being handled in the software. And, although QuickBooks, the predominant accounting software used by dental practices, has an audit trail, many dentists/owners don’t know how to find and protect it.

Furthermore, the dental weasel makes a point of getting to know software and supplies vendors   calling on the practice so he/she can learn new features and more intricate ins and outs of the programs. If his/her scheme begins to unravel, he/she quickly networks with vendors to find other practices using the same programs so he/she can move on to a new target.

A note on protecting yourself:

No one in the practice should have administrator rights over the computer systems or server except the owner doctor(s). Giving the office manager or another team member administrator rights is giving them the ability to control passwords for all team members and delete and/or alter the audit trail to cover her tracks – this is tantamount to a fox in the hen house with no doors – big time!                                              

Wants remote access – Big Time!

As part of the scheme of overall control over financial systems, the weasel is determined to get 24/7 remote access to the computer server to run her scams. There is NO good business reason why any salary or hourly team member should have remote access – no debate. The only person who should have remote access and administrator rights is the owning doctor. Your IT person should also have remote access but with different passwords than the doctor so an audit trail can be maintained.

A note on handling remote employees:

The population of work-from-home employees is growing in the US. We are aware of insurance billing companies who employ retired workers to process insurance claims or handle collections from their residences. There is a safe way to structure their access to practice systems that restrict security levels to only the information necessary to do the job.  

Beware of the team member who wants to work from home on a maternity, vacation, sick leave, claims they can’t get everything done, etc.  We have real dental weasels in our files who gained remote access for this purpose only to steal from the practice.  

Dislikes change – wants 100% control

The biggest threat to the dental weasel is a change in the dental software via upgrade and/or vendor. Learning a new system puts him/her on an even playing field with the rest of the dental team and takes away his/her perceived authority breaking his/her cycle of control. The dental weasel will fight all efforts to change practice management software or accounting practices. This is a definite RED FLAG that a scheme may be present in the practice.

Effective 1/1/2016 Federal HIPAA law requires that ALL healthcare entities must have two structured levels of security in place and change passwords on a regular basis. Many of our clients have a process to ensure that these changes are made twice annually. The dental weasel will combat this process by attempting to maintain the log of passwords and be the person to control the dissemination of new passwords and security levels. No one, not even the doctor(s)/owner(s) should have a list of passwords for team members.  This is one of the schemes in the example below.

A real Weasel from our files:

In a Texas dental practice, the office manager was running scams using the accounting systems and dental practice management software. As the office expert on the systems, all problems, and issues were brought to her attention. Her response would be either ‘it’s a glitch in the software’ or a ‘fat finger error’. She immediately took control of fixing the ‘system problem’. But, rest assured, it wasn’t a glitch. Instead these issues were giving her guidance on adjustments that she needed to make to hide her crime.

She was finally discovered when several front desk team members met with the owning doctor to present how cash was being consistently misappropriated and adjustments applied to cover-up the scheme.  We found 13 schemes used over four years to embezzle over $402,000.

If you’re concerned you may have a weasel in your practice, we encourage you to call us for a free, no obligation 30 minute consultation at 210.241.6329.

Educating dentists on identifying embezzlers or fraudsters hiding out in their practices is our expertise. Contact us to speak at your next dental meeting or study club by sending an email to bryant@brytanassociates.com or calling us at 210.241.6329.

Spotting a Weasel: The Personality of a Dental Embezzler – Part II

By Bryant Truitt, MBA, CCS, CFE and Barbara Freet, PHR

The following is the second part of our six part series on Spotting a Weasel – the Personality of a Dental Embezzler. The common thread in this group of three RED FLAGS are the outside influences that may motivate a team member to steal from the dental practice.

weaselAny age, gender, nationality or relationship

This category of RED flags encompasses the demographics of the dental perpetrator. And, in fact, it demonstrates that there is no commonality among these weasels – they can be any age, either gender, any nationality or any relationship to the dentist and/or team.

Gender: Dental weasels are predominantly female, although not exclusively.

Age: Age has very little to do with who will become a dental perpetrator. Instead, their commonality has more to do with the outside pressures that lead them to make the decision to steal from the dental practice.

Nationality: Dental weasels come from all nationalities. Our experience is that nationality is regionalized to a particular area of the country. And, we often see one family member getting a job in a practice and then bringing in extended family members – sometimes undocumented family members. It’s best to have the guidance of a strong Human Resources entity to counsel you on all hiring, termination and benefits decisions. HR laws, regulations and rules are changing at an accelerated rate as a result of city, county, state and federal entities becoming highly politically motivated to control their current and future interest for the better good as they perceive it.

Relation: It is very common in the dental industry for small practices to employ family members. A dentist cannot feel safe just because a team member is handling delicate financial or patient care matters. Relationships range from children, to wives, to daughters- or sons-in-law – being a relative is not a guarantee that the team member will not steal from your practice.

We’d like to note here that it is critical your dental practice maintains complete personnel files. Those personnel files should be kept in a locked cabinet in the dentist’s office.  All hiring, termination and other HR decisions MUST be the sole responsibility of the owner doctor with appropriate advice from HR & legal professionals.  They should follow a well-defined process including starting with a complete job description, filling out an application and all paperwork such as tax forms, an I-9, etc.

Has family turmoil, crises, etc.

The number of reasons why weasels make their homes in dental practices is as diverse as the weasels themselves. External factors create the need to support a variety of personal circumstances ranging from:

  • In one of our cases, we had the daughter of the dentist stealing money from the practice to fund her boyfriend’s drug habit.
  • A case in Michigan involved an office manager whose husband was a medically retired postal worker. The office manager was stealing money to pay for her husband’s prescription drugs. She also stole to purchase two snowmobiles and a boat.
  • In Texas we found a dental weasel stealing money to help pay for the mortgage on a second home.
  • Another scheme we see on the rise involves illegal enterprises who are approaching dental employees to steal patient data. The team member is either blackmailed into complying or paid to provide the data.

Lifestyle – high maintenance, addictive

Similar to the family turmoil and crisis category, team members who have a high maintenance lifestyle and/or addictive personality are under the type of pressure that can result in a decision to steal from the practice to support their habits. There is cause for concern when you encounter a team member who:

  • Just bought a new house or car or other expensive item but the spouse is out of work
  • Has a gambling problem or drug / alcohol addiction
  • Seems to always have new and expensive toys from expensive jewelry or handbags to electronics like new iPhones or iPads

A real Weasel from our files:

The weasel was working full-time in a California practice with an annual salary of $40,000. She was on public assistance and had a housing allowance and food stamps. Yet, according to her Facebook page, she was taking trips to Hawaii and led a high maintenance lifestyle. Conversely, the doctor had to cash in his 401(k) and take a second mortgage on his house to keep the practice running. In all, this weasel stole $135,000 from the practice over four years.

If you’re concerned you may have a weasel in your practice, we encourage you to call us for a free, no obligation 30 minute consultation at 210.241.6329.

Educating dentists on identifying embezzlers or fraudsters hiding out in their practices is our expertise. Contact us to speak at your next dental meeting or study club by sending an email to bryant@brytanassociates.com or calling us at 210.241.6329.

 

Contributing author, Barbara Freet, PHR, is the President of Human Resource Advisors, a Human Resource consulting firm in Lafayette, CA. For more information, contact Barbara by calling 925.310.4824 or barbara@hradvisors.net or visit her website at www.humanresourceadvisors.com.

Spotting a Weasel: The Personality of a Dental Embezzler – Part I

weaselWelcome to our requested six-part series on 18 RED Flags that can help raise your awareness of a potential fraudster or embezzler in your dental practice. In each of these articles, we will do a deep dive on three specific characteristics giving you knowledge to identify potential gaps in your practice where a perpetrator could be weakening the foundation of your business.

These perpetrators are very much like “weasels.” They are stealthy, smart and very good at hiding their schemes. It takes a seasoned fraud investigator specializing in dentistry to uncover damage they’re doing to your business. However, being armed with these and other red flags can help you build good procedures and systems to assist in preventing the embezzler from getting a new home in your practice.

Model Team Member – Tenured & Trusted

One of the hardest things for a practice owner to handle is when a tenured and trusted team member is embezzling from his/her practice. Yet, very often we find that the perpetrator is the most seasoned and trusted person in the practice. Many of these people come to the practice experienced on the front desk and, over time, take on more and more responsibility eventually moving into the role of office administrator.

The team member handles everything on the business side of the practice which frees the doctor to do what he or she loves most – treating patients. The doctor begins to rely more and more on the administrator as she shields the doctor from the day to day ups and downs of the front office. The weasel’s expertise and efficiency creates a false sense of security, loyalty, trust, and team camaraderie.

Oftentimes, these weasels are what we call ‘practice skippers’ who move from practice to practice perfecting their schemes.  When things start to get ‘hot’ at one practice, they’ll use their network of contacts to find another with a similar structure where they can continue their hidden tricks undermining your standard of patient care and, ultimately, the practice you love.

Empire Building & Indispensable

As this model team member takes on more and more responsibility, he becomes the “gatekeeper” for everyone and everything in the practice. The trust he has built with the doctor means he is counted on to take care of all of the front office business decisions. The weasel becomes indispensable – his goal is achieved – he is the dominant team member with the doctor(s) and the practice.

He creates an atmosphere where all information and team members must go through him to get to the doctor. He controls all of the information, reports and communication between the front office and the doctor. In fact, the weasel is building an empire where the control of the practice is ceded from the doctor to him.

Wants Total Authority & Responsibility

In fact, the weasel gains total authority and responsibility allowing her to control the rest of the team. She controls what they know and don’t know regardless of whether they are clinical or front desk. She has the authority to approve virtually everything and is the one to take all issues to the doctor, including end of day and monthly reports, practice numbers, etc.

She often writes her own job description and the description of other team members. If not the sole hiring and terminating authority, she is likely involved in all human resource decisions. In her eyes the practice will fail without her, and she has convinced the doctor of this as well.

From Our Files – A Real Dental Weasel

In a very recent case, the weasel is a 20-year team member who was completely respected and trusted by the doctors. They never saw any practice statistics or reports. She controlled all of the information they received. They felt completely safe and trusted her with all facets of their business.

Her downfall was the discovery by two other team members that she was manipulating the practice management software and bank deposit slips so that she could walk out with all of the cash payments. These team members became concerned that they would be accused of wrongdoing and raised the red flag.

We determined this weasel embezzled over $200,000 in just 3 years and 6 months before she was caught.  More importantly, this was only one of 13 different schemes she was working in the practice to feed her “hidden financial need”.  Please stay vigilant – make sure you are requesting, getting, reviewing, and asking questions about your daily, monthly and annual reports – YOUR retirement depends on it – don’t let a weasel feed on your retirement!

Before closing, it is critical that we clearly state that team members may or may not exhibit one or more of these characteristics and may or may not be a criminal. However, the information provided should make you beware of seemingly model team member(s) who exhibit several of these characteristics (and those we will talk about in upcoming articles in this series). What is indisputable is that, in most cases, a practice perpetrator is someone you or your team are least likely to suspect.

If you’re concerned you may have a weasel in your practice, we encourage you to call us for a free, no obligation 30 minute consultation at 210.241.6329.

Educating dentists on identifying embezzlers or fraudsters hiding out in their practices is our expertise. Contact us to speak at your next dental meeting or study club by sending an email to bryant@brytanassociates.com or calling us at 210.241.6329.

 

How CFO’s Can Protect Against Fraud & Embezzlement

CFO’s can minimize the risk to fraud, embezzlement, waste, and abuse in their organization. Total prevention of fraud and embezzlement is impossible because the crooks think and act smarter each time they are caught. They change venue and continue to take other people’s money. Many times they think they deserve the money or that it’s not their fault — the organization should have been more vigilant and diligent. They will continue until they are jailed but won’t necessarily stop when released. Success through criminal activity is a hard habit to break.The outcome can be devastating. Learn what to look for and what to do to keep your revenue out of the wrong hands.

This was part of an original presentation for clients of Abila MIP software, sponsored by TeamNFP Software Solutions.
Fraud Webinar Slides 2-18-2014