Embezzlement in Dental Support Organizations (DSOs)

[0:00] You are listening to the Dental Practice Owner's Podcast brought to you by Prosperident. From our unique perspective as dentistry's embezzlement experts, Prosperident's team can bring you the information that is important to practice owners. The Dental Practice Owner's Podcast brings you strategies, tools, and tips that you can use and dentistry's thought leaders as guests. So sit back, relax, and listen to Prosperident's Amber Weber.

[0:29] Wendy Askins and David Harris talk about the issues that matter to you.

[0:39] Hi there. This is David Harris from Prosperident. In this edition of our podcast, Wendy Amber and I are interviewed by our friend Ken Kaufman, who's the Chief Financial Officer of Community Dental Partners, about what is unique to embezzlement with dental service organizations. Please enjoy.

[0:58] Hello and welcome to another episode of DSO Secrets. I am your guest host today, Ken Kaufman, filling in for the ever illustrious Emmett Scott. I'm really excited for the three guests that we have today. One of them is returning as he and I did an interview several months ago. Actually, it was almost a year ago since the last time we spoke.

[1:19] Since then, we've been having more and more conversations and we just we knew it was time to bring him back with two of his colleagues. So David Harris is this person. David, it's so great to have you back on the show. Thanks for being here. I'm honored to be a repeat guest, Ken.

[1:34] That's indeed a privilege. Well, we're thrilled to have you and love all the insights that you bring. Now, just to reset, David is the author of a book called Dental Embezzlement and he's been in and around dental for a long time. Those who have not read the book, I highly recommend it. I've had several of my team members read it and the principles are

[1:52] something that we talk about and we engage with on a regular basis. And we train on inside of our organization. David, I want to turn the time over to you. Why don't you give a quick reminder, overview of kind of who you are and what your firm does and then introduce us to the two colleagues that you brought with you today?

[2:06] I'd love to. I'm the CEO of a company called Prosperident and Prosperident really has a very narrow mission. It investigates when embezzlement is suspected or confirmed in a dental practice or an entity and it helps entities set themselves up in a way that they're as protected as they can be from embezzlement.

[2:28] So we have a proactive side, I guess, and a reactive or investigative side. We work with a fair number of DSOs and we see some differences between what happens in DSOs and what happens in solo practices. So we'll get to that. I'd like to introduce my two terrific colleagues. I'll start with Amber Weber.

[2:49] Amber lives in Texas. She is one of our senior examiners and has a very long background in dentistry. She started as a dental hygienist, became an office manager and then moved into consulting and ultimately has worked with us for about three years.

[3:07] So Amber does some of our investigations and she also works on helping entities set up their protective structures. And my second colleague is Wendy Askins. And Wendy has been with us for almost a decade. She does a lot of things for us. The most notable is that she heads our orthodontic investigation department.

[3:31] And when complex, ugly embezzlement files and ortho practices come to us, Wendy is right where they go. Wendy holds the job title of supervising examiners. So she's one of our three top examiners and she's responsible for, among other things, training examiners when they start working with us.

[3:55] And Wendy, I'll say one slightly embarrassing thing. She has more letters of praise from clients than any other investigator of ours. So that's pretty noteworthy. We have 15 investigators in total and two of them are with us today. We've got a lot of great people.

[4:16] Including those who are here. Outstanding to both of you, Amber and Wendy. Super excited to have you. So, David and Wendy, Amber, I really want to jump right into this topic. And it's something that we've been having some conversations on here over the last year. Really, we've known each other for several years.

[4:35] But your book is really written and targeted toward the solo practice owner and the vulnerabilities that they have for employees to embezzle or to engage in any type of fraud. And we've been talking back and forth about how DSO structures or larger group practices, when you get to where you're supporting five or 10 or 15 or 20 practices, that some of the vulnerabilities

[4:59] that that solo practice was exposed to, some of those go away. I mean, in the DSO may actually help erode some of that. But there are new frauds that can show up in place or even broaden the ones that already existed. And so I know we want to hone in on probably the three or four of them today. But could you and your team just make a sort of a quick overarching statement

[5:20] about what are some of these main differences where the more practices that you're trying to support from a DSO perspective? What are some of these things that start to pop up and can really become massive opportunities for fraud or embezzlement? Absolutely. And I'll start by saying that DSOs and solo practices

[5:38] both suffer from the same problem. And that problem is absentee ownership. In other words, the people who own the practice in the case of a DSO typically aren't on site and the management is for the most part off site. In a solo practice, it's a little bit different. The person is on site, but they're an absentee owner

[5:57] in a mental sense as opposed to in a in a geographic sense. You know, many solo dental practices are owned by people who would be much happier just doing clinical dentistry and never having to deal with management issues, which I guess can is why you exist and thrive. But the probably the biggest difference

[6:17] when we're talking about embezzlement by staff and there are other kinds of embezzlement, but let's start there. And just so everybody's clear by embezzlement, we really mean somebody in a position of trust using that trust to seal. So when you look at solo practices, they kind of divide 80, 20.

[6:35] And in 80 percent of solo practices that I encounter, the doctor has no idea whatsoever how much money is going into the bank today. And, you know, they don't have any kind of reconciliation or internal audit process where they will look at reports from practice management software and see if, you know,

[6:54] the collections in accordance with the software line up with the collections at the bank. So because 80 percent of them don't do that, they make themselves vulnerable to even the stupidest, laziest thief on the planet who can simply divert some of the deposit. And in most cases, they won't catch it.

[7:12] And I expect that Wendy and Amber could if we had more time tell you lots of stories about the egregious stuff that we see happening in this area. When you go to DFOs, that's the part they do well. You without exception in any that I've seen, you're very obsessive about ensuring that the amount of money

[7:34] that the practice management software records as being received is what goes to the bank. So what I call reconciliation theft doesn't happen. Every thief can, when they when they start stealing, the first thing they do is they look around and they say, All right, what opportunities are there for me?

[7:53] And I think in certainly in your organization, I know this to be a case and I suspected in most others, it's also the case that, you know, just diverting some of the deposit isn't a possibility. So they go to the next stage and the next stage is can we make the software lie about how much money comes in?

[8:13] Right. Can we make some kind of deceptive entry that will cause the practice management software to understate the amount of the deposit? And I'm not going to go into specifics here for reasons that I hope your audience will appreciate.

[8:30] But I think the consensus among your three guests today is that that's not very hard. And that's something we see all the time in. In DSO embezzlement. Interesting. So, you know, Wendy and Amber, tell me about

[8:48] it's really interesting. Why don't you break down what David just talked about there? What do you guys see in the day to day of going in and trying to help dental practices and DSOs get a handle on this? Just just before the answer, Wendy, you might want to talk about the case that you and Amber worked on

[9:05] and what happened there. That would be a great example. Oh, OK. Well, you know, I'll start generally in saying that one thing that I think is similar is we talk about behavior and motivation. And that's one thing that is consistent across all human beings.

[9:25] So once someone has established a need and they've also established the rationalization for it, then they come to look for an opportunity to begin working around systems. No matter how many of your systems are integrated or the integrity of those systems, someone can always do a workaround for that.

[9:51] So I think that a solo practice in a DSO is the same in that particular manner. But also I think it might be in DSOs, there's an opportunity, more of an opportunity to engage in malfeasance because you have that office level, I hate to call it street level, but, you know, you have the everyday employee who's working in the office

[10:19] and they certainly have their opportunities. But above that, you also have a corporate structure in which you have to monitor as well, which there may be some risk in that particular area. But particularly what Dave is speaking of is we worked with a large DSO and what we found

[10:39] was that one of the associates had delayed recording contract revenue because it increased his bonus. And it was it was interesting and I kind of realized where the vulnerability with some DSOs can lie in their systems in that there was no point in which they were going back

[11:04] and confirming that the information that they were given was true. You know, and in the end, it ended up being over. I think it was over half a million dollars in delayed contract revenue. So obviously that would have impacted their operating partners negatively. And we were lucky to be able to find that and help them get that straightened out. So they could pass that on to their attorneys.

[11:32] Yeah, Wendy, it's a really powerful example for a couple of reasons. One of them is if we go back when Emmett first started the DSO Secrets podcast, he defined what a DSO was because there's a lot of people out there. Well, I'm I'm a group practice or I'm a dental leadership organization or I'm this and this. He said, look, the minute you hire an associate

[11:54] is the minute you're on the road to being a DSO, whether you've created the legal structure that officially makes you one or not or you call yourself one or not. And so what what's really interesting about what you just said there is is as soon as you hire an associate, there's now another set of hands in the process that can potentially, you know, create a fraud opportunity.

[12:13] It didn't exist if it's that owner dentist who's there, you know, doing the work because clearly, you know, if they steal money, they're stealing it from them from themselves. So just the introduction of an associate increases the level of complexity and increases the need to look around and see what controls exist. Is that fair way for me to to restate that? Correct. Yeah, very, very well put.

[12:34] And and let's go one step further as well, Ken. You know, the case that Wendy was talking about was a situation where DSO affiliated with a practice owner and part of part of the terms of the affiliation was in earnest. And what the what the affiliate dentist was really doing was maximizing his payout under the earn out by playing timing games.

[12:59] So when you when you talk about adding layers, you know, there's another layer. And, you know, I think the the earn out formula in my mind wasn't terribly well thought out. And it it left the door open to playing timing games. And that's exactly what this guy did. And as Wendy said, he he took roughly half a million dollars

[13:21] and shifted it between periods because that increased how much he took away. Interesting. So yeah, earn outs, associates, all these things that every layer of complexity creates a new layer of potential for for theft or for somebody to try to take advantage of the situation or at least, you know, spin it spin it to their side if there's some opportunity to let me add another one.

[13:47] You know, a lot of DSOs are made up now of of multiple practices of different types of specialty. In other words, you may have a DSO that, you know, has 40 general practices and three pedo practices and two pedo ortho practices and, you know, and an apparel practice and that complicates the management, at least in terms of looking at software and understanding what reports

[14:12] and things mean a whole lot. And, you know, as as Wendy will tell you, the whole mentality that you have to have when you're looking at ortho is very different from from a general practice because, you know, instead of a sort of a one time fee for a one time service, you have this long term fee for a long term service.

[14:33] And that's that's very different. So I think the, you know, the management expertise can get taxed when you start to get into a multi specialty, multi office configuration and multi software. That's right, because you really have to think about each of those specialties as a different business model.

[14:51] And when you go to a different business model, there are going to be new risks, new potential risks or threats associated with that. And I like the fact that you call out ortho because from a business model perspective, it is so different than any other dental modality that exists. We we joked, have joked into inside of community dental partners about this from time to time saying,

[15:13] OK, we have all these amazing dental practices and specialties. And then we're over here selling used cars. And I'm not trying to say that, you know, I'm not trying to put down the ortho specialty, it's an amazing specialty and creates amazing outcomes for patients. But the business model of it is so different in the structure. And you have this recurring patient visit every month rather

[15:34] or every week, as opposed to every six months. And you have metal things on their teeth and you have a payment plan on going and there's a lot in the metal things have to be adjusted over time. And all of those things create it's such a different business model, but it's so critical to understand that when you introduce new business models, new threats and new risks exist or you're creating risks potentially.

[15:55] Go ahead. And let's let's take it in the opposite direction, Ken. Let's let's think about other specialties that are sort of the antithesis of ortho, you know, and I'm thinking of oral surgery, for example, or periodontics where the whole role of the clinician is to work themselves out of the job. In other words, you have a big pool of patients in any of those practices

[16:15] who are going to be there for a short time and they are never coming back. And that creates a whole other set of opportunities, as opposed to say a general dentist where, you know, if, for example, I'm stealing and I let patient account balances get out of whack, you know, one of the risks I run is that a patient complains to somebody about their balance.

[16:37] On the other hand, you have an oral surgery practice where, you know, and let's let's assume that it's it's mostly, you know, what I would call exodontia, you know, it's it's mostly extractions and stuff and people leave, they don't come back. And if if somebody has a phantom balance in that case, that they probably won't, you know, the future encounter that would cause

[16:57] that balance to become an issue isn't likely to happen. So again, it's a it's a different set of opportunities. And it just goes back to exactly what you said. Yeah, that's great. That's a great point. So. Associate compensation is this interesting potential threat, you know,

[17:15] as soon as you start to have associates that a solo practice doesn't have. Another one is earnouts or any type of profit based compensation, because now you've got another set of hands in potentially trying or could try to manipulate things. And then and then we just talked about as you expand into different specialties or I'll just call them different business models, because that's really what they are.

[17:35] There's there's different way ins and outs to understanding that. One of them that you mentioned to me that I'm interested to get a little bit of a few of your thoughts on is around what you call acquisition fraud. Can you explain take a minute, explain to the listeners what that is? And then we can just unpack that a little bit. I think it would be helpful.

[17:54] Absolutely. And maybe I'll take that one because that's that's probably more in my area, a couple of risks to a DSO here. The first one is that you affiliate with somebody who's trying to put one over on you and, you know, you end up overpaying for a practice where you acquire something that if you do everything about it that you should, you wouldn't buy and that happens with some regularity.

[18:18] I unfortunately can. I think some of the bigger DSOs have gotten a little bit cavalier about their due diligence process when they acquire practices. And, you know, in some areas, they will they will be very careful. But, you know, to look kind of forensically or critically at the finances doesn't always happen.

[18:40] And I'm back to saying people tend to trust reports that come from practice management software, you know, and depending on your valuation model, you know, if I know, for example, that you are, you know, you're heavily reliant on on new patient flow, it's not all that hard for me to come up with a practice management software report that triples my actual new patient flow for you.

[19:05] You know, and the concept of kind of sitting there with all the numbers and saying, does this make sense? In other words, does the number of active patients make sense relative to the number of hygienists? And, you know, does the number of new patients line up with the number of new patient exams that have been charged?

[19:25] And, you know, kind of looking at things granularly a little bit to see if, you know, if there's something out of sorts. That's that's the first piece. The second risk always. OK, let me stop there just one second. I want to just make sure we're clear and break that down just a bit.

[19:41] So if I'm a DSO or I'm a practice owner and I want to purchase another practice or purchase another group of practices, I should not just trust a report that that potential acquisition target or affiliation target gives to me. I should not just ask for that, but I should be asking for other reports that will have the information on that would

[20:06] allow me to tie that back with some basic common sense metrics, if you will. So in essence, it's the it's the Ronald Reagan philosophy of trust that new potential partner, but verify, verify. OK, I think there are a couple of parts to it. You know, the first part is I don't trust any report. If somebody else hands me a report,

[20:27] I don't trust it because I can't control the assumptions under which that report was generated. So manipulation is easy there. And I'll give you a case in point. One of our investigators right now is dealing with a case where this this set of practices outsourced some things to a to a consulting company. And the receivables got absolutely out of control.

[20:54] You know, to the point where in the practice we're looking at, at one point, receivables were over 60 percent of one year's gross. The consulting company didn't want to come clean on this. So what they were doing was cooking the reports. And at a point in time when receivables were about 1.2 million, they were sending the owner reports that showed them at two hundred and fifty seven thousand.

[21:18] Along with a detailed plan about how they were going to get it down to one hundred and fifty. So, you know, there's a there's a there's a there's a baseline danger in trusting any report that somebody hands you. And if if if I wanted to do due diligence on a practice, I would likely say I need a remote connection to your software and I'll get the reports I want. Right. Rather than you hand them to me.

[21:41] Interesting. There's some really interesting tips here for those that are in the acquisition or affiliation process. And I I'm already sensing they were going to have some need to probably do some future episodes here where we can maybe do a deeper dive on some of these things. And I think maybe acquisition fraud would be a place that that would be really helpful

[22:02] to our listeners because a lot of a lot of DSOs are very active in the affiliation and acquisition space. Yeah. When you when you look at what a DSO's core business is, a big part of it is growing. You know, there are there are opportunities out there for us to acquire or affiliate, and we want to take advantage of them.

[22:19] And right now, you know, with all that COVID has done to solo practitioners is probably a a time when there's the potential for a bountiful harvest. We just can't lose sight of the fact that despite the 10 commandments, people will lie, cheat and steal when it when it gives them advantage. Got it. All right. So I want to I want to get Amber involved here on this next one.

[22:42] I want to ask about centralized services because this is a this is something that as a group practice or DSO starts to get scale. They start playing with this idea of should I centralize billing? Should I centralize the call center? Are there other things to centralize? And of course, the reason you want to do that is hopefully at some point,

[23:00] you could scale it better, which means the cost per unit that you're producing is less over time and also you can increase quality. For example, if you have one scheduler in 25 practices versus all 25 schedulers in the same location, sharing, scripting, sharing ideas, there's a there's a lot of synergies that can obviously exist, exist within that. But as our listeners are thinking about going to centralize services,

[23:25] what are some of the top things that they should be thinking about about how fraud could how fraud could exist or what fraud could potentially eliminate if they take it out of the practice and centralize it at some type of a corporate or support center type of a field? And I think we should definitely get Amber engaged on this one. OK, well, we're going to talk about one of the things that's my passion is insurance.

[23:50] I'm a big believer in making sure insurance is monitored really clearly in a practice. So the benefit of centralized services is because that is a centralized area, you have more of a system for that, making sure that insurance is being handled correctly. For instance, if you are filing primary and secondary insurance, that there's an oversight in how that's that's completed and that credits aren't being put on patients accounts when they shouldn't be and there's a better

[24:19] system for that. So that's one of the main things I see as a benefit to centralized services. As I was a hygienist, you know, I love that centralized services allows you to do scheduling and allow your schedule to be more efficient, but from an embezzlement standpoint or a fraud standpoint, one of my main concerns is how insurance is being handled. And as we're all aware, a lot of DSOs are in network with a lot of insurance

[24:42] companies, so that's the true benefit for me. Whereas if it's managed in the practice in a lot of different ways, there's there's a lot of different ways to manage it. I just finished up a case that there was some insurance issues. There was no actual theft, but just the way they were handling the insurance claims and entering the payments and doing write offs was was not correct.

[25:06] However, this practice did not know that that shouldn't be done that way. Interesting. Yeah, can I add to that as well? I love the idea of centralized services. I think that's awesome and have a specialist, if you will, in insurance or collections, I love that.

[25:26] But one question I always ponder is, is there a compliance officer? You know, is there anyone within the corporate office that is looking at the deleted payments reports? Is there anyone that is looking not just necessarily for embezzlement, but errors? How about over-discounting?

[25:51] I mean, you know, in orthodontics, we discount a ton. And that's a lot of money annually. You know, what if you have somebody who's who's just trying to be nice and trying to be a friend to all of the patients and, you know, you have approval for, say, a 5 percent discount, but they're giving a 20 percent discount. So that's like my one thing is that who is the individual that is assigned

[26:17] to make sure everything is correct or is auditing? Yeah, and that that auditing function becomes a control, if you will, right? Yeah, somebody and there there's never been in my experience, and David, you push back on me if I'm wrong here, but I've never found a control. That's perfect. In essence, you need a control for the control and then you need a control for

[26:40] that control control, right? And you could end up spending so much money, you drive your business into the ground just letting your controls. And so there's some obviously, you know, a management process that has to limit the amount of controls. Maybe you could take a second and talk about, you know, as you centralize functions,

[26:57] what are some of the key controls and what is the right amount? If I'm a DSO owner or if I'm a leader in one, what should I be thinking about the right layers of control should be versus if I'm overdoing it or underdoing it? That's a great question. And, you know, I'll I'll start by giving you a truism about

[27:15] DSOs, at least from my observation, and that is that systems tend to lag behind growth. So what I mean by that is let's let's say you're a you're a very successful solo practice owner, you know, and you build your solo practice up to four million dollars and somebody says to you, you know, you can clone that formula like you really need to open another location.

[27:36] So you do and, you know, it becomes in some sense is kind of a poor carbon copy of your first location. But, you know, it does reasonably well and you keep repeating that. Now you have five practices or eight practices. And you're still running them on the system that worked really well for you when you had that solo practice.

[27:58] And there are vulnerabilities there. And it's, you know, it's the layers of complexity that we're talking about. You have a bunch of associates, you have a bunch of staff, you don't know all their names anymore, you know, and you have become that absentee owner. And then you say, OK, let's centralize, let's take receivables out of the individual practices and we'll put it together.

[28:17] And what you're trying to do is you're trying to do what you said. You're trying to lower your unitized cost. So you don't think about, well, what could go wrong? You know, what oversight do I need? It's just that we'll, you know, we have eight people doing this in practices now and if we centralize, we can get by with five.

[28:34] So you do it. And there's no concept of trust by verifying. And, you know, when you when you create centralized departments, now you're moving from kind of a bunch of self-contained dental practice entities that you need to keep an eye on to the bunch of self-contained entities that you still need to keep an eye on.

[28:55] And you have these head office departments, you know, and you're starting to look less like a dental entity and more like Home Depot at that point. And, you know, most, most DSOs don't really say, all right, we're now, you know, we're now a fairly big head office. You know, we deal with a couple of DSOs where the head office is, you know, two or three hundred people.

[29:19] And, you know, we need we need we need an internal audit department. We need a department whose sole mandate is to make sure that the other head office groups are doing their job. That's right. Yeah. And Wendy brought up a really great point because, you know, having a compliance officer is something in dentistry that happens pretty early

[29:38] on in the growth stage. Certainly, I think most entities, most DSOs have a compliance officer before they have an internal audit department. And a lot of it has to do with HIPAA compliance and, you know, state board compliance and helping doctors just maintain all things compliance. But it's really interesting and I'm interested for any other input on this.

[30:00] If I'm if I'm a DSO leader, should I be looking to my compliance officer and saying, what controls are we putting in place? What audit auditing procedures are we putting in place to make sure that, you know, we're we're things aren't slipping through our fingers and our money bags aren't falling off the back of the truck as we're driving down the road. I don't think can we should confuse compliance and internal audit,

[30:22] because in my mind, their their outlooks and their focuses are very different. You know, compliance is dealing with essentially externally imposed rules, whether it's OSHA compliance or HIPAA or credentialing with insurance companies that you're in network with, you know, it's somebody else's rules and you're trying to follow them, right? Internal audit needs to be a lot more creative

[30:46] and needs to ask questions like, you know, do the rules here make sense? You know, are we are we are we being effective? Are we, you know, are we getting value for the money that we spend on certain things? Should we, you know, should we take something that we're doing at the at the individual office level and centralize it? Or should we not?

[31:08] You know, so so they need to think of the business as a business, whereas compliance people tend to think of, I mean, I one friend of mine describes the compliance and his DSO as the Department of No, because they say any question we ask compliance, the answer is just no, it doesn't it doesn't matter what the question is, you know, is today, Tuesday, no.

[31:29] So there's a very different outlook. And I think when you when you look for the same person to exercise both functions, you know, it's kind of a right brain, left brain sort of thing. Yeah. And good auditors can think like criminal. When when I hired Amber, for example, and let's let's talk about Amber as a

[31:49] as a shining example, you know, the first thing I wanted to know from Amber was, you know, if you were a criminal and you were going to steal from a dental practice, how would you do it? And Amber gave some great answers. In fact, she in a practice she was working with discovered embezzlement, you know, before she started working with us.

[32:09] So there's a mindset there. And compliance people have a very different mindset. Yeah, the more OCD you are, the better the better you are at compliance and the worse you are at internal, the worse you are at internal audit, at least at the management level. This has been a fantastic conversation.

[32:27] I want to give a couple of summary points here. I think the bigger as you grow and I loved your statement there, David, as you grow, usually your systems and controls lag way behind the growth. It's we're excited about the growth. Let's bring this together.

[32:44] Let's build and grow. And there's opportunities right in the in the wake of I'm using the same system when I had two practices and now I'm supporting 15. And there's going to be some some not just minor gaps, but like some massive, you know, massive gorges between between sides of a canyon. But I think some of the key things are is as you grow,

[33:09] what I'm hearing is is the complexities as the complexity increases, so do the opportunities and so do the need to be thinking about what controls can be put in place and what types of things we can do to trust, but verify on an ongoing basis throughout the entire organization. And these these four areas you identified as a for DSO specifically, the introduction of associates is a new risk.

[33:34] The introduction, the introduction of any type of profit based compensation or earnouts is a whole new risk. Even doing affiliations, it presents a whole new risk of your due diligence and what are you getting? And then there's a whole new risk that's that arrives on scene. As soon as you go to centralized services or you start to centralize certain functions.

[33:58] So it really seems like, David, we probably are going to need to have a follow up and start to maybe unpack some of these because I think our listeners are going to be curious for maybe some more hands on, hey, what should be the three or four things I'm doing with associates to try to reduce the risk. And of course, everybody's going to be on a budget.

[34:16] Nobody wants to create too much constraint in the organization because we all want to grow. But I'm just interested, David, any final thoughts around that? And of course, anything that your team wants to add to? I'll make one comment and then turn it over to Wendy and Amber for final words. The one other thing can that I think, quite frankly, some DSO suffer from is what I call he risk.

[34:40] In other words, we're big, therefore, we must be smart. And, you know, I've seen some very big, sophisticated DSOs get brought to their knees in embezzlement terms by somebody who finished high school, you know, embezzlers have a lot more time to think about this problem than the people who they're stealing from. And also, in a lot of cases, they have some specific knowledge

[35:10] that the defenders don't. So it's an unequal battle and not necessarily tilted in the DSO's favor. And I've had DSO people who swear to me, you know, our systems are so good, we can't be embezzled. And I say, I can show you in five minutes how it's going to happen to you. Oh, I've been around you long enough.

[35:27] Usually it's within five seconds. You can you can rock somebody back on their heels and they start questioning things pretty quickly. Absolutely. Anyway, that's my point. But I'll leave it to the ladies for the final word. Great. Amber, what are your thoughts from today?

[35:42] I mean, I totally agree. I think if somebody, as Wendy said earlier, finds the need and they're really out to steal from you, no matter how many systems you have or how perfect you think everything may be, they're going to find a way to to have a workaround. Even what it doesn't matter who's in charge or who's who's overseeing everything that they do.

[36:04] So I think that's where that trust but verify really, really comes into play where two heads are better than one. And that's the one thing I really see with DSOs is a system's great, but there still needs to be thinking about how would we handle a workaround or the trust but verify mode? Upstanding. Thanks so much.

[36:26] Wendy, how about you? I yeah, false sense of security just strikes me deep in my heart. And I hear it all the time from my clients there. But, you know, they say, how in the world did this happen to me? I have I have great systems.

[36:41] I I mean, I'm a tightly run organization and making money. How could this happen? And you just, you know, you end up taking your eye off the ball because you feel like everything is OK because everything is in place. And then you become an absentee leader of it. And once you take your hands off,

[37:03] and really anybody's free to do whatever they want. So that's it. Everything you said there is interesting, but there's one particular piece and I think those of us that have been in dental for a long time, we've got blinders on dental is a high margin business. It's one of the things that's actually driving consolidation in dentistry and why DSOs have reached such a level of efficacy and and and they continue

[37:25] to grow, those high margins sometimes are just by themselves. Create that hubris that they've talked about before of, well, if I'm doing really, really well and I'm just doing not quite as well, sometimes we're we tolerate and we don't jump in and we don't try to figure out that maybe there's some things going on or some foul play that needs to be looked at.

[37:46] Whereas if it's a difference between taking a paycheck home or not, then maybe there's a little more energy to have to dive in. So the high margins create a little bit of that hubris mentality, too, that we all benefit from or that we're all crippled by in dentistry, depending on which angle you want to look at it from. Right. Well, great, David and Wendy and Amber, it's been an absolute pleasure to have you.

[38:11] If our guests want to reach out or connect with you. I know I know David, Amber, Wendy, are you in the DSO secrets group as well? Or if not, we'll get you in that you are. OK, great. So on the Facebook page, go to DSO Secrets. If you're not in that group yet, please come and join. This is being broadcast live in there as well.

[38:28] So if you want to watch this in video format, you can and engage. Ask questions, anything on these topics, these these three are professionals. They're looking at it and doing it all day long. And anyways, it's been it's been a privilege. And some of my key takeaways today are we're all probably a little too cocky, need to be a little bit more humble

[38:49] about how our systems aren't perfect and how our controls probably aren't perfect. And the process of going from solo practice to group practice DSO at a larger scale, we need to be thinking as aggressively about developing our systems of controls and of our controls and protections as we are about adding EBITDA to the bottom line and doing affiliations and starting up all those de Novos. We need to constantly be evolving our systems rather than having those lag

[39:18] in the past because ultimately we love all of our listeners to proactively be addressing these problems with a group like yours or with their own internal resources, as opposed to trying to fix and repair and figure out what happened. As you said, David, you're the proactive. You guys do proactive consulting, but you do a lot of investigative work that finds things historically. Any final words, David?

[39:40] Yeah, it's just like dental care. You know, if I'm a patient and I want to spend the least on dental care over my lifetime, I should I should spend my money on prevention. If I want to spend more than restorative work is how I do that. You know, it's like the guy used to say on the Fram oil filter commercials, you know, you can pay me now or pay me later.

[40:03] Brilliant. We're going to end on that. Many, many thanks to all of you for joining in and listening today. This is a wrap on our episode. All things, vulnerabilities of DSOs from a fraud perspective. Happy day. Thank you.

[40:18] Thanks, Ken.

[40:24] Thanks for listening to the Dental Practice Owner's Podcast, brought to you by Prosperident. You can contact Prosperident through its website, www.prosperident.com or by calling 888-398-2327. If you have questions about this podcast, if you would like to discuss your practice or there is a topic you would

[40:45] like to see in a future podcast, we would love to hear from you. Amber, Wendy and David will be back soon with another episode.