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Embezzlement Cases: Who is Responsible?

While browsing the Web under “embezzlement cases in dentistry,” I came across the following:

  • A Lawrenceville, Ga, family was charged with embez­zling more than $2 million from a practice in Sandy Springs.
  • An office manager for a pediatric dentist in Chicago was found guilty of embezzling $135,000 in cash payments from patients during a 5-year period.
  • In a huge case of embezzlement from a north Spokane dental office, a former employee confessed to taking $250,000 throughout the course of her nearly 11-year employment.
  • A former dental office manager in San Antonio has been sentenced to 15 years in prison for embezzling $353,000.
  • A dentist in Denver was embezzled for at least $65,000 by his office manager.
  • A criminal with a history of embezzling was arrested again and charged with embezzling more than $150,000 from 2 dentists.
Figure 1. DentiMax Practice Management software offers easy-to-use security levels that can then be tracked in the audit report.

Why is it that during all the years of education, dentists are not taught anything about running a business? They are taught the clinical side of the practice and patient care. What is missing in the curriculum provided to these professionals as they go through their dental school years? Why is em-bezzlement rampant in the dental profession?

“MOR” MUST BE IN PLACE

I will begin with the philosophy behind the Fraud Triangle, identified by sociologist Donald Cressey back in the 1950s. He believed these 3 things needed to be in place in order for fraud to occur:

  • M for motive, which can be anything from ill health, drug abuse, loss of income, divorce, and others;
  • O for opportunity, which we see quite often with the employee who has the doctor’s complete trust and runs the business side of the practice; and
  • R for rationalization, which is, in many cases, that the embezzler sees how the dentist lives and wants that life too. The embezzler also rationalizes that the doctor is making so much money he or she won’t ever miss it.

Frank Abagnale (memorialized in the true life movie entitled Catch Me if You Can), one of the world’s most famous confidence men who was caught after cashing more than $2.5 million dollars in fraudulent checks, states, “I believe that punishment for fraud and recovery of stolen funds is so rare, prevention is the only course of action.”

The frightening part of embezzlement is that it can be happening right now in your office without your knowledge. When was the last time you reviewed a daily report, opened your own mail, or took the deposit to the bank yourself? Can you run an audit report in your software to see who is doing what in your office? If you know how to run the report, do you know what to look for? Were you present during the training of your practice management software? DentiMax Dental Practice Man­agement software allows you to track all of this information in an easy-to-use, low-cost option, and training is even included with the purchase.

WHO'S TO BLAME?
I believe it goes back to the dental schools. It isn’t the dentist’s fault that business classes are not part of the curriculum. Many dentists don’t know what they don’t know until it is too late and they find paying bills is either difficult or impossible because collections have dropped off. Money could be collected but siphoned out in a meticulous fashion, prompting no suspicion. The embezzler is usually someone who is very bright and is able to gain your trust. That gives them the opportunity to steal from you. So if we take the approach that embezzlement is more than likely going to occur in your dental office, let’s hit it head-on from a proactive stance and be prepared.

Tools and Tips to Prevent Embezzlement
First, you need to take a basic accounting course offered at any college. This should be the foundation for building your business. Learn how to use Quick­Books. It is an easy-to-use, basic accounting program that can handle accounts receivable (money owed to you) and accounts payable (money you owe to others), and it can even do the payroll. You need a separation of duties within your practice (business). I highly recommend that someone, other than your front desk or office manager, be in charge of this; or, have an outside party (such as your accountant) take care of balancing your bank statement each month. This will take away the opportunity for someone to manipulate your books.

Also, take a proactive stance and go up to the front desk every now and then throughout the day (never at a set time each day), keeping everyone on their toes. Keep your eyes and your ears open and you just may be surprised at what you discover. Talk to your employees and find out how they are doing. See if any are having personal issues, such as an illness in the family, a spouse who may be out of work, or a possible drug or alcohol issue. You may also hear from patients about high-power collection tactics. These are all red flags that something might not be quite right.

Some basic things to watch for are an increase in accounts receivable (which is your production number) with a decrease in collections. Maybe instead of posting a payment code, it is posted as an adjustment while the money is put in the embezzler’s pocket. Look through your daily reports to see how much you did in production, collections, and adjustments each day. If nothing else, this gives you a day-by-day tracking of what is going on in your business.

Business classes can also help with the daily activities. Understanding accounting basics, as well as how to manage your employees, is crucial to running a successful practice. Another red flag to watch for is the employee who is very protective of his or her duties. If this employee never takes a lunch, comes in early, leaves late, or even works on the weekend, it is another area of concern.

Keep a close watch on petty cash if you have an account. Be sure that none of the employees are borrowing from it, and if something requires reimbursement, be sure there is a receipt before dispensing from this fund. Also practice what you preach—if you need to be reimbursed for something, you are also required to provide a receipt. It is very important that there is always a paper trail for everything you do.

Do a quick review of your audit report each day. Each employee should have his or her own login and password. Passwords should never be shared. Each employee needs to know that he or she will be held accountable for everything done in the software under his or her login. DentiMax Practice Manage­ment software offers easy-to-use security levels that can then be tracked in the audit report (Figure 1 and Table).

Set up internal controls and separate duties. The person who opens the mail is not the person posting it in the computer, and is not the person who is taking the deposit to the bank each day. If you don’t have enough team members, then you may want to consider taking on some of the responsibility yourself. Open your own mail and stamp it with your account number and “for deposit only.” This will keep anyone else from cashing the check and gives you a heads-up as to what to expect on the deposit for the day. If you take the deposit to the bank yourself each day, it is another opportunity taken away from the staff.

SOME DENTAL SCHOOLS OFFER BUSINESS TRAINING
I would like to stress the importance of business training as well as training on your practice management software, so that you understand how the overall system works. Also be sure to receive training on the accounting software that you use.

Some good news is that a few dental schools are currently offering business courses for dentists. For example, the College of Dentistry/University of Flori­da now offers an executive practice management certificate program for dentists (one weekend per month with completion possible in 13 months) as a part of its continuing education program focusing on the critical components of business ownership. Some of the modules include business plans, practice financials, QuickBooks, and planning. Also recognizing the need for business education for dentists, the University of Alberta, School of Business now offers a “Business in Dentistry” certificate program.

The following dental schools now offer a business degree (MBA) along with a dental degree (DDS):

  • University of California (USC) San Francisco School of Dentistry
  • Columbia University College of Dental Medicine
  • Ostrow School of Dentistry of USC
  • University of Buffalo School of Dental Medicine

In addition, Harvard School of Dental Medicine offers an MBA/DMD program, which was started in 2009.

While it is reassuring to see that the schools have realized the need, there are still many dentists out there who do not have this kind of training.

From a software standpoint, it is critical that dentists attend training classes on their practice management program so they can read and understand reports, especially audit logs. Setting up the software is critical for tracking what each employee is doing. All practice management programs should offer different levels of security so you can allow or prohibit employees from performing particular tasks within the software.

CLOSING COMMENTS
It is very important that you, as a clinician, are also responsible for developing and running a business. You need to handle your practice as any other business does. Don’t become another statistic! You need to stay at least one step ahead of the embezzler. In short, you are in charge of your own destiny, so protect yourself and your business.


Ms. Salzman has a degree in finance from Simmons College in Boston and a teaching certificate in business education from Salem State College. She is a certified fraud examiner with 25 years of accounting experience and more than 20 years as a trainer in the dental and medical professions. Her specialty is in the detection and prevention of embezzlement in dental and medical practices; and teaching the implementation and proper use of DentiMax, Total MD, Advanced MD, Medformix, Medinformatix, Softdent, PracticeWorks, and QuickBooks Pro software. She can be reached via e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. .

Disclosure: Ms. Salzman is a paid consultant for DentiMax practice management software.



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