Medical Practice FraudIt’s human nature to assume the staff we hire and work closely with are honest and trustworthy. They’re almost like family members—they would never steal from us, right? Actually, some of them might.
As B.J. Hoffman points out in two thoughtful pieces fromMedCity News, medical practices and healthcare organizations are likely losing 5% of their annual revenues to fraud, waste and abuse. Hoffman is a CPA and certified fraud examiner with Citrin Cooperman in Philadelphia, and the statistic comes from a study conducted by the Association of Certified Fraud Examiners.
Hoffman has some great suggestions for practice managers and physicians on how to mitigate fraud schemes. His ideas are extremely practical, and while some involve spending money, many won’t cost you a dime.

  1. Conduct background searches on potential new hires.
  2. Draft an ethics policy and have every employee acknowledge it annually. Make it clear through your communications that fraud and abuse are unacceptable in your practice.
  3. Secure fidelity bond insurance coverage.
  4. Keep an eye out for red flags such as employees who work strange hours or appear to live beyond their means.
  5. Segregate employee duties: assign the authorization of business transactions, the physical custody over assets, and the accounting responsibilities for those assets to different individuals. For example, if employees responsible for accounting are provided with copies of checks received and daily cash collection reports, they serve as a control over those with physical access to incoming payments.
  6. Authorize new vendors before allowing disbursement of funds to prevent schemes involving payments to fictitious vendors.
  7. Create an annual budget and compare actual month-end results against it. Investigate the cause of any financial anomalies that crop up.
  8. Ask to receive unopened copies of bank statements and scan them for unusual items. Ask for timely bank reconciliations from your accounting staff and review the reconciliation in conjunction with both bank statements and the practice’s monthly financial statements.

Finally, Hoffman suggests requiring employees to take an offsite vacation every year. He points out that the extremely dedicated employee who never takes a vacation may be loathe to leave the office for fear of someone uncovering his/her embezzlement. Your must-take-a-vacation policy will yield more relaxed employees and the opportunity to cross train existing staff.
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Last Updated on December 2, 2013