The Danger Of References

David Harris

A client of ours recently asked us this question:


“I have an interviewee and I would like to talk to her past employers. She’s been at a local restaurant for the last 4 years, but it closed in April.

What would you recommend to do to check employment?

She listed 3 references from the restaurant with their contact info. Would you recommend to contact them?”


Our client is someone who makes every effort to run his practice properly, and his dilemma forces us to deal with a seminal issue in background checking – who should we be speaking with?

I often have dentists tell me that they ask for “references” or that they check “references.” Normally they are doing this to show me that they are careful about who they hire. Typically, what they are doing is asking the applicant for a list of people who the dentist can contact to gain some level of comfort about the character of the applicant.

One of my concerns with the hiring practices of many dentists is that they know far too little about people who they hire, so I am glad to see a desire on the part of these dentists to close this knowledge gap. However, I think that by checking references, their efforts are misdirected.

The first problem with applicant-supplied references is that they have been “cherry picked” by the applicant. This means that the information they give you lacks objectivity. Everyone has at least a few people in their life who are raving fans, and when you call applicant-supplied references, that is exactly who you are speaking with. So you are unlikely to hear anything remotely negative from these people. I’m pretty sure that if my dog could talk, he would say wonderful things about me. But because I feed him, and rub his belly on demand, he isn’t exactly objective.

To make the problem worse, often the references that are supplied (and checked) are really in the nature of “character references,” by which I mean that their knowledge of the applicant does not come from a work setting (e.g. the high school volleyball coach or parish priest). So in addition to an objectivity issue, there are often other problems; the information you receive may suffer from a lack of relevance.

The people who can give you information that is both relevant and objective are former employers, and that is exactly with whom you should speak.

To circle back to the question that my client asked, what is behind his question is that the thing that the (correctly) wants to do has been frustrated by the closure of the restaurant.

In this case, because the applicant has nominated co-workers, the relevance issue is less important (because these people have observed the applicant at work and have done so recently) and the true concern is objectivity.

I will also reiterate something that I frequently mention about calling people when doing a background check; verify all phone numbers independently and do not rely on any phone number provided by an applicant. You may end up speaking with someone other than who you think you are.

My suggestion to the client was to call the references to ask them if they supervised or managed the applicant. If the answer to this question was no, then who was her supervisor and manager? I would then call these people to ask about the applicant. We refer to this concept as obtaining “derivative references”.

Particularly if they were not on the supplied list of references, now I would have access to information that is more likely to be objective. So in cases where it is difficult to access former employers directly, keep the concept of derivative references in your toolbox.

Embezzlement News #94 – June 2020

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Dental Embezzlement News from Prosperident
Issue #94 — May 2020
Prosperident Power Hour Webinar Series Will Return
One of our team suggested that we should do a webinar. That webinar evolved into a series of six episodes that ran in April and May.
Our objective was to take advantage of enforced downtime to give dentists vital knowledge for running their practices. We also gave away plenty of toolbox items.
The series was a smashing success, with an audience exceeding 3,000 people.
It also became a true team effort. In addition to our on-camera hosts, Amber Weber, Wendy Askins and David Harris, 15 other team members at Prosperident were involved at some level.
We covered some great topics and were able to bring the unique perspective of Dentistry’s Embezzlement Experts.
If you missed a webinar, recordings of all of them are available on our website. Click on the links below to get there.
If you were part of our audience, we would like to thank you for being part of a great experience.
If you missed out on any of the toolbox items that were mentioned in a webinar, ask us nicely HERE, and we will probably feel sorry for you and help you out.
As dentists everywhere focus on getting their practices reopened and adjusting to the new normal, we have taken a hiatus from webinars, but we are planning a return in July.
Stay tuned — we will have more details in the coming weeks.
Reconcile or Reckless?

Amber Weber, David Harris and Wendy Askins

When someone wants to embezzle from you, their approach is predictable. They begin by asking themselves whether the reconciliation process used in your practice is thorough and complete.
By “reconciliation” we are referring to the oversight by practice owners of the daily and monthly balancing done by staff. In its simplest form, reconciliation is the process of ensuring that the money that your practice management software says you received actually got deposited to your bank.
If a thief realizes that your reconciliation process is flawed (which is probably the case in 75% of practices), this realization bestows a particular blessing on that thief. He or she can steal by simply “shorting” the deposit; in other words, they can steal without needing to tamper with individual patient accounts to conceal it. Stealing in this way does not require high intellect or any in-depth understanding of your practice management software.
On the other hand, if a would-be thief believes that a deficient deposit would be noticed (in other words that the reconciliation process has integrity), in order to steal, he or she is faced with a much greater challenge.
Something to Talk About…
Over the past few weeks, I have increasingly been hearing some wonderful words.
Those words are often said almost apologetically and are along the lines of “I need to postpone our meeting because right now, I am really busy reopening my practice.”
If this is your situation, there is no need for contrition. Each dentist returning to practice represents a milestone in our society awakening from its hibernation, and hearing a dentist declare that they are back in business is a sweet sound indeed.
While the “new normal” has its share of complications like PPE, facility modifications for many, and patients waiting in their cars for appointments, we are thrilled to see you regaining your ability to do what you trained to do, and once again begin earning a living.
We at Prosperident are rejoicing in this hard-won victory against Covid-19, and we are here for you when you need us.
As our way of giving back to the dental community, until June 30, we are waiving our normal $139 fee for our Embezzlement Risk Assessment Questionnaire — please email us at requests@prosperident.com to take us up on this offer.
Sincerely,
David Harris
Did you miss a previous newsletter? We archive them HERE.
We are Prosperident, Dentistry’s Embezzlement Experts

Reconcile Or Reckless? You Choose!

Amber Weber, David Harris, and Wendy Askins

(Editor’s note — the concepts for this article were first presented in a webinar presented by the authors in May 2020. To view a recording of the webinar, please click HERE)

When someone wants to embezzle from you, their approach is predictable.  They begin by asking themselves whether the reconciliation process used in your practice is thorough and complete. 
By “reconciliation” we are referring to the oversight by practice owners of the daily and monthly balancing done by staff.  In its simplest form, reconciliation is the process of ensuring that the money that your practice management software says you received actually got deposited to your bank.

If a thief realizes that your reconciliation process is flawed (which is probably the case in 75% of practices) this bestows a particular blessing on that thief. He or she can steal by simply “shorting” the deposit; in other words they can steal without needing to tamper with individual patient accounts to conceal it. Stealing in this way does not require high intellect or any -n-depth understanding of your practice management software.

On the other hand, if a would-be thief believes that a deficient deposit would be noticed (in other words that the reconciliation process has integrity), now in order to steal, he or she is faced with a much greater challenge. While it is possible to pocket payments from patients and insurance companies and conceal the theft by not recording the payments in practice management software, doing this will result in “phantom” patient receivable balances. For this reason, this approach tends to be a self-limiting method of stealing. If this “snatch and grab” approach is employed, sooner or later patients may realize that amounts that they owe to the practice are overstated, and the act of these patients complaining may get the thief caught.

Therefore, a “tight” reconciliation process usually forces a would-be embezzler into a riskier, and far more complicated embezzlement scheme where it is necessary to tamper with individual patient accounts in order to keep the amounts owing pristine while still stealing. This is certainly possible, but success requires a much smarter embezzler with a good knowledge of your software.

So what does this elusive reconciliation process entail?

First, we will mention that it consists of some daily activities and some month-end ones. Performing only one of these and omitting the other is problematic. Looking at day-end information and ignoring month-end reporting leaves the practice owner vulnerable to “day-off” transactions performed on days when the practice is closed, and creates challenges with credit card payments and bulk receipts, when there is often a timing difference between when these funds are deposited and when receipt is recognized by practice management software.

On the other hand, ignoring daily reports and focusing on a month-end review degrades your ability to spot entries in your software that are inconsistent with what actually took place. There is no substitute for a timely day-end review for this.

There are a few basic rules for reconciliation:

  1. Print your own reports. Delegating this function means that you abdicate control over the choice of information for the reports. This leaves you vulnerable to selective reporting.
  2. Timeliness is important. Review the day-end report from your practice management software before you go home for the day. Postponing that review, even by a single day, diminishes your ability to spot inaccuracies
  3. Articulation is mandatory. If you have 18 working days in a month, the month-end report should equal the sum of the 18 day-end reports that you have. Prosperident has developed a spreadsheet that does the math for you (if you want it, please ask for it at requests@prosperident.com and we will be happy to oblige).
  4. Your receivables at the end of a period (whether a day, month, or year) should always equal the following calculation: Starting receivables + fees – payments – adjustments. If you can’t “prove” receivables using this formula, something improper happened.

What should a practice owner look at?

On a daily basis, the most important report is the practice summary from your practice management software. This report has various names depending on the software you are using, but will summarize the fees charged today, the adjustments applied and the payments received.

Your review should include the following:

  • Review of the procedures billed for accuracy (and if you have other providers in your practice such as hygienists, partners or associate dentists, each of them should review their own summary and sign it to attest to accuracy).
  • Review the payments received. In particular, you are looking at whether your policies on the collection of co-payments at the time of the patient’s visit are being followed.
  • Review every adjustment made. Ensure that the amount, timing and categorization all make sense. Force staff members making adjustments to be specific — there should be a separate category in your practice management software for each different PPO in which you participate, and separate codes for each type of marketing discount that you offer (senior discount, coupon discount etc). Anything categorized as a “miscellaneous adjustment” needs a detailed explanation attached.
  • Review the deposit amount, and compare against the report. Rather than checking the amount leaving the practice, it is far better to use online banking to verify the amount actually deposited, and to “lag” this part of your review by a few days to allow payments with a timing difference, like when patients pay by credit card, to catch up.

On a monthly basis, the good news is that the more tedious part of this review can be outsourced. Reconciling your bank account, merchant account (this is the account attached to the credit card terminal in your practice) and any third-party patient financing, payment-management or collection agency that you use is important but mundane. For this reason, it is completely understandable if you choose to outsource these tasks. A dental bookkeeper or your CPA firm are good candidates for this work.

However, there are some things that need your personal attention. Here are the things for you to look at:

  • This is the time to ensure that the daily practice summaries that you have reviewed total to the same numbers as the month-end practice summary.
  • Review your receivables report. Focus on the overdue amounts, and on the collection efforts being taken by your practice to collect them.
  • Practice management software normally has an “outstanding insurance claims” report. Review this and check on the actions taken to finalize outstanding claims (is a resubmission needed, or has the insurance company asked for additional information that has not been provided?)
  • Review the following reports:
    • Adjustments report
    • Deleted transactions report
    • Modified transactions report
  • Review the “entry log” from your alarm company to see if a staff member is visiting the practice at unexpected times. This is almost always a symptom of embezzlement.
  • Ensure that the month that you are reviewing has been “closed” in your practice management software. Do this by checking the software directly; don’t complete this task by asking a staff member. If you aren’t sure how to do this, your software has trainers and a help desk to teach you how to check.

Performing day-end and month-end reconciliation properly will not catch all embezzlement. However, it will eliminate the easiest ways to steal and the wanna-be thieves without the software knowledge and intellect needed to progress to more advanced stealing.

Do you have questions about this article or want to speak with us about your practice? You can contact us using THIS LINK.