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A Crime of Opportunity – Theft In Medical Practices

Medical Theft Reports of employees stealing from a medical practice are nothing new.

What’s interesting is that physicians are invariably shocked by these events. One reason is that staffers and clinicians work side by side, so practices feel more like a family than a formal workplace. Another reason is that many thefts are unplanned. “They are rather unnoticed mistakes” mentions Mark Crane in a blog post on practice embezzlement. 

Physicians often make the crucial error of putting one person in charge of all medical billing and financial tasks.

Imagine the temptation for that staffer, who invariably makes considerably less money than the physician.

  •  It’s nearly impossible to catch errors in a timely manner, since there are no reviews or verification procedures.
  • An employee sees a mistake that goes unnoticed and realizes how easy it would be to pull money into his own pocket.
  • In fact, medical practice thefts range from office workers pilfering a $25 co-pay to significant as an office manager diverting thousands of dollars.
  • Experts note that embezzlement invariably starts small—for example, a staffer in financial trouble “borrows” money with the intention of paying it back.

Crane mentions the findings from a 2009 study on theft and embezzlement from the MGMA that found that:

  • 45% of thefts involved stealing cash before or after it is recorded on the practice book
  • 18% involved disbursements such as forging or altering a check, submitting invoices for fictitious goods, or submitting invoices for personal expenses
  • 10% involved stealing petty cash
  • 6% involved payroll, including creating a fictitious employee, giving unauthorized bonuses, or inflating pay rates or hours
  • 4% involved submitting fictitious or inflated business expenses

Crane’s article includes many good suggestions on how to implement systems to discourage thieves. We covered this in an earlier post as well. There are two main things to keep in mind.

  1. Be aware of behavior such as a lifestyle that would be difficult to support on their salary or an unwillingness to let someone else look at the books.
  2. Put systems in place that divide financial tasks between several individuals and putting another staffer into an oversight role.

To understand how employees commit theft, take a closer look at this incident.

An office manager in a New Jersey medical practice pled guilty to counts of wire fraud after stealing $842,000 dollars from his practice over a period of 4 years.

The guilty office manager started by stealing reimbursement checks received from benefits programs back in April 2012. He would then transfer them to his name and deposit them into his personal bank account.

A number that high just goes to prove how practices should take great care in ensuring that financial tasks and obligations are properly divvied up. We’ve talked about this before in a previous article listed with tips on how to mitigate fraud schemes.

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