Slam the Door Shut on Embezzlers

[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 Webber, Wendy Askins, and David Harris.

[0:31] Talk about the issues that matter to you.

[0:42] Good evening, dental family. Thank you so much for joining us. I'm Wendy Askins, and I'm joined with my amazing co-host, Amber Webber, also from Texas, and David Harris from Halifax. Tonight, we're going to talk about slamming the door on thieves and embezzlement. Please submit your questions through Zoom. We love questions. The more detailed, the better.

[1:08] And anyone who submits a question and we read it aloud this evening is going to receive a copy of David Harris's book, The Art of Theft and the Science of Control. And that will come directly from David, so maybe I'll sign it for you. Right, Dave? Definitely. Yeah.

[1:26] Yeah. OK, so the session tonight is being recorded, and we're being live streamed on several different social media sites as well. And if you want to preview or review the session tonight, it will be posted tomorrow. As well, we have kind of a special thing. We're doing a little bit different this evening to thank you guys for joining us live. We're going to give you some special documents or some courtesy gifts from the three of us

[1:57] that aren't going to be available through recorded and posted sessions, because we just again want to say thank you for joining us live this evening. You can find us on other videos on our website and on YouTube and also on podcast. And once as always, we want to thank Altura Periodonics for providing continuing education for us this evening. Wendy, tell us about who's on the screen.

[2:30] This was one of my cases. Her name is Karen Tenney, and she was an Audi girl and she committed a theft through payroll. And we caught her and she was charged with a felony. So very happy about that. And that's a recent one as well. So well done.

[2:52] Yeah. Thank you. Well, it's summertime and we're all trying to stay cool. So we wanted to bring you a special summer series on how to prevent your practice, protect your practice from overheating. So we're really excited to bring some hot topics to you this summer.

[3:10] July 22nd, we're going to focus on external threats to your practice. Then we'll follow up on August 19th. Things employees should not be allowed to do. We definitely don't want your practice getting overheated from that. And September 23rd is going to be very exciting and very necessary for all of us in dentistry. Our special session is going to feature cybersecurity.

[3:31] So that's a big hot topic in the world right now. You will receive a registration link after tonight's webinar. So please follow that link and register for our protect your practice from overheating so we can all stay cool. All right. And Wendy and Amber, you probably don't know this, but I bet you tonight our Canadian live audience is really small. And the reason is that we have one team that is one game away from playing in the Stanley Cup finals in hockey.

[4:02] So if you're Canadian and you're listening to this on recording, I sure hope Montreal won tonight. And for those of you who are Canadian and who have chosen to forego hockey and join us here, you have my unending love. Let's talk about slamming the door shut. And we're going to have a few themes tonight. The first one is we're going to talk about watching finances, but we're also going to spend some time on employee behavior. This is something that you should all say every morning before breakfast.

[4:36] If I have an employee and they have financial responsibility, they need oversight. How much and when and things like that we'll discuss, but we just cannot have people handling money who have no supervision. We're going to talk about financial monitoring, which is which is really that supervision that I'm talking about. Amber's got a great concept that she calls the three D's, which are defined delegate and document. And I can't wait to hear from her on that. And we're going to talk about how not to hire an ambassador.

[5:11] And we, Amber, Wendy and I and really every every one of us at Prospernet have all had experiences with what are called serial ambassadors. So these are people who steal in one place and they get fired. And two weeks later, they're working across the street. So let's talk about how to slam the door shut on them. Let's look at behavior for a few minutes. And the first thing I want to tell you is this and the information I'm giving you on this slide came from a 2007 study that the American Dell Association did where they asked a bunch of dentists.

[5:45] If they'd been embezzled and for those who said, yes, one of the follow up questions was what tipped you off? How did you know that you had been stolen from? And the results are kind of surprising and they have some really big implications for how you control embezzlement in your practice. There were a lot of answers given to that question, you know, everything from my CPA found the embezzlement to I had an employee who didn't want to take vacation. And what I did was I went back and I categorized the answers into two categories. One was financial indicators of embezzlement and the other was behavioral.

[6:25] So your CPA finding the theft, which is pretty rare, that would be an example of a financial indicator or the day sheet not balancing to the bank deposit. Behavioral would be things like the person who didn't want to take vacation. And look at what happens here. Two thirds of embezzlement, more than two thirds of embezzlement was uncovered not because of a financial anomaly, but because of how the thief was acting. So when we're watching our practices, absolutely, we got to watch the pennies.

[6:58] But we also need to look at how our staff behave. So the obvious question is, what does embezzling behavior look like? I'm going to give you some of the most common warning signs. The first one is this. When somebody steals, they really want to be by themselves in their practice. There are a couple of reasons for that.

[7:20] First of all, they don't want the doctor poking his or her head into their workspace and saying, oh, Sally, what are you doing? And secondly, I know this sounds a little funny, but stealing takes concentration. And it's hard to muster that concentration when the phone is ringing and you've got patients wandering through the office. And, you know, the doctor looking for stuff and all those things. So thieves will tend to work their schedules so that they're alone sometimes and they will come in early or they'll stay late or they'll kind of slide into the office on Saturdays, but they'll get that alone time.

[8:00] The second thing, and I'll get I'm sure affirmation from Wendy and Amber on this, a lot of thieves display a fairly strong territoriality. And what I mean by that is they're possessive about their duties. It will often even extend to their workspace. You know, this is the person who in some cases will get upset because somebody else sat at their desk or touched their computer. And they don't want to take vacation in a lot of cases when a thief goes on vacation, they give up control of how information flows through the practice. So in stealing in certain ways, the practice may get calls from patients asking about their bills.

[8:41] If the thief is the one who answers those phone calls, they'll modify the patients and make them happy and it will never come to the doctor's attention. If the thief's gone, that doesn't happen. The cousin of territoriality is they don't want to cross train anybody to do any part of their job. Because cross training can lead to devolution and they don't want that to happen. The word that can strike terror into the heart of a thief is consultant. They know they can fool you.

[9:19] But somebody who thinks about dentistry as a business as opposed to a healing art and is not under the embezzler spell is a whole different story. So if you say to your staff, I've got great news, we're going to bring in a consultant and somebody pushes back really hard and threatens to quit. Let's let's wonder what's behind that. This person will cut ethical corners. And you know, if you and an embezzler are walking down the street together and you see somebody's wallet fall out of their pants. 50 feet in front of you.

[9:56] What you would probably do without giving it a whole lot of thought is bend down, pick up the wallet and walk a little faster and catch up to the person who lost it and say, here this fell out of your pocket. And the thief may do that too. But by a little different thought process, they'll ask themselves a couple of questions that you probably wouldn't like. I wonder if anybody else saw that wallet fall. And I wonder how much money is in the wall. Again, the outward behavior may be the same, but they get there via a very different process.

[10:27] And the final one, and this is just a basic observation about human nature. Honest people do not feel the compulsion to emphasize their honesty to others. So when one of your staff insists on telling you or showing you repeatedly how honest they are. Look out, that's that's not really congruent with honesty. So those are some of the behavioral signs. They're a lot more, but these are these are some of the most prevalent and really good ones to watch for.

[10:59] I always like to think of those behaviors as a lack of transparency. That's a really easy way for me to think about it. If you have someone that is stealing, they don't want to answer questions. They don't want anybody else in their accounts. They won't be transparent at all. But if you have someone who's working really hard for you and going above and beyond,

[11:22] they'll always be willing to tell you what's happening in their accounts and they'll always be willing to train. So I love the word transparency. Anyway, as human beings, it's nature or it's natural for us when we begin a relationship, be it a personal relationship, a friend relationship or even an employment or business partner relationship, that we have a period of testing to see if we can really trust that person, to see if what they're telling us is true and are their actions congruent with what their words are.

[12:03] Unfortunately, once we get through that testing period, we tend to rest on our laurels and set the bar at a high level of trust and just give over to them completely. Unfortunately at Prosperitant, we've had several clients who have gone through more than one investigation in their practice in general. I'm working on a case right now, which breaks my heart because the woman has been working for this client for over 25 years. And luckily, he noticed that her behavior had changed.

[12:49] And again, we were talking about transparency. She went from being transparent to being non-transparent. And all of those signs that David just talked about in the previous slide, all of those signs, she began to start showing those signs and he was concerned. And so he called Prosperitant and he said, you know, I know she's got some financial issues going on in her life. She's just filed for bankruptcy and had some other issues happen.

[13:21] Her behavior has changed and I'm concerned that something might be going on. And sure enough, unfortunately, he was right. So if we can think of trust not as a static concept, but as a fluid concept, something that's ever changing because our morals and values and our circumstances in life can change as we move along as well, we need to constantly be vigilant that trust is not a forever concept. It's a trust and verify type of movement or action.

[14:03] So true. One of the myths that just won't go away and I kind of touched on it a minute ago is that if embezzlement is happening, my account will find it for me. And I'm a CPA myself. I don't I haven't been in accounting practice for a very long time. But I'll say a couple of things to this.

[14:27] The first is that dentistry is different from almost every other business because it has split accounting records. So you've got practice management software that tracks revenue and accounts receivable. And you've got accounting software like QuickBooks, for example, the tracks, expenses and payroll and things like that. And that's first of all, it's in the big picture. It's nonsensical. If you went to your account and said, you know, I'm thinking of starting a business,

[14:55] I want to split the accounting between two pieces of software. The accountant would say, that's the dumbest idea I ever heard. I mean, there's no way that would work. And yet that's every dental practice. So accountants aren't used to that. It is just fundamentally illogical.

[15:10] The second thing is when you hire your accountants to do your end work, they very explicitly do not have a mandate to look for embezzlement. And you sign this thing called an engagement letter. And if you read it carefully, which I suspect is not a very popular activity. But if you did, it says very directly in there, we are not looking for embezzlement. I mean, of course, if we find it, we'll tell you, but it's not in our mandate.

[15:35] And the final thing is that they just do not have the experience or training or the thought process to really find embezzlement. And we have about 15 investigators that prosper in it. I am the only one who has CPA after his name. Most of them, well, all come from a dental background. Amber was a hygienist originally, and then an office manager, and then a consultant, and then an investigator. Wendy filled a lot of roles, including a practice manager of a big multi-practice office.

[16:10] But for the most part, accountants don't make great investigators for the kind of stuff we do. So CPAs are not all that likely to find stealing if it's happening. Let's talk about a daily review. And I just want to give a shout out. I said there would be very few Canadians on the webinar tonight. I did see one, my friend Evelyn Ramsey, who's a consultant.

[16:34] Hi, I have great to have you in the audience. And I know what you're sacrificing to be here. Let's talk about what to look at on a daily basis. And the first thing that I'm going to say is this, the reports that you review as a practice owner should be ones that you printed yourself. If you allow a staff member to print reports and hand them to you,

[16:57] you have no control over the assumptions under which those reports were generated. And what that opens the door to is selective reporting, where there's some stuff hidden from you. And if you have a chance to watch our webinar from last month, so that was the May 2021 webinar, one of our senior, one of our most senior examiners, Scott Clifford, described a huge massive case he was working on where the malfeasance was hidden by selective reporting. The second thing is this, as a practice owner, you need to take the approach that I'm going to look at

[17:38] all monetary transactions in my practice. I don't necessarily have to spend a lot of time doing this, but at a minimum, I better give the once over each day to all the transactions that have financial implications. So basically fees, payments, adjustments. It doesn't take long and it's easy to do at the end of the day when stuff is fresh in your mind. It's a whole lot harder to make sense of those same entries if you're looking at them two weeks later.

[18:09] Most of you who want practices know this, but you really need to look at adjustments because they are a pipeline through which a lot of money can be embezzled and concealed. We're going to use tonight generic names for reports from practice management software. So your software may have a name that's a little bit different for this, but you'll get the idea. Every software can generate a report that says, here are the insurance claims that we're filed today. So that's a really good day in report to look at.

[18:41] And if people were in and insurance claims were not filed on them, you need to wonder why. Intuitively, that doesn't make sense. And almost every practice can file claims electronically. So, you know, you hit a couple of buttons in the claim this thing. So that's a really good report to spend a couple of minutes on. Monthly oversight.

[19:04] One of the most important things, in my opinion, is reconciliation of the funds that are recorded in your practice management software with funds that are actually deposited in the bank. Now, luckily, this can be outsourced because it can take a lot of time. Big practice, small practice, multi-practice, solo practitioner, it doesn't matter. It takes a lot of time. Let me talk real quick about, or share with you real quick about exactly how to do that.

[19:34] As Dave said, a lot of people think that their CPA is reconciling their books for them at the end of the month, but actually they're not. So you can hire companies that specifically do reconciliation for you. Your CPA may have a bookkeeper in the office that they recommend you use. You could even use a staff member. As long as that staff member does not have access to your practice management software,

[20:04] because then it gets kind of squirrely where you have somebody posting it and you have somebody checking it. It's the same person, right? There's some separation of duties. But what you want to make sure of is that you have a staff member. But what you want to make sure of is that what you're looking at on the bank statement

[20:23] or on your care credit statement or on your merchant service statement for your credit cards, that matches what went into your bank account. I've had several clients who have said, well, the way that I reconcile is I take my merchant statement that comes from the credit card company and I match it to my bank statement. That doesn't catch embezzlement in your practice. What it does is it catches any type of mistake that the credit card company made, right?

[20:54] Because they're depositing. What you need to know is what was recorded in my practice management software and what actually went into the bank for me. You can do this on a daily basis or have someone do it on a daily basis for you. But again, it can be quite tedious. If you want to do that, that's fine.

[21:17] If you want to wait until the end of the month when you get your bank statement and then you want to go through all of your day sheets and your computerized deposit slips and you want to track back to your bank statement, that's perfectly fine as well. Wendy, I love that you mentioned that your practice management software is the key because there's that gray area. One thing, no matter what software you're doing,

[21:44] I think it's very important to take advantage of your software and look at all the different reports it has to offer. There's so many different things to know about the practice rather than just payments received or credit card statements that came through the practice. Some really key things to focus on that I'm passionate about

[22:01] is your insurance aging report. How long are you waiting for insurance to pay you? That's something that maybe hasn't come through to your bank yet. You produced that money, but what's the system? Talk with your team members. What's the transparency? Why haven't we gotten this payment?

[22:18] That's one great tool that you need to definitely look at on a monthly basis is that insurance aging report. Another one is adjustments. It's very common in dentistry to have adjustments in write-offs, especially because we are a network with insurance and there's a lot of moving parts and variables that can happen,

[22:35] but you really want to know the details of these adjustments. So, at a minimum on a monthly basis, you need to really narrow in on those adjustments and see how that's affecting your practice from an overall productivity standpoint. So, you won't be comparing that with your banking, but it's something that from a business owner

[22:54] or practice management standpoint, you really understand the details of that. Another key one that I know when you are one of the ones that really got me into this when I first came on to Cross-perident is deleted transactions. So, really look at what happened throughout the month

[23:10] that was deleted, what type of payments were deleted, where those accurately dealt with on those patient ledgers. Another one that I see in some practice management software is procedures are deleted because the incorrect procedure was posted to that patient account, so we had to delete it. That's common and that can happen,

[23:29] but the issue is if it becomes a constant issue in your practice, here's an opportunity from a business standpoint to review that and help get your team more efficient and thoroughly trained. Okay, what are we doing? Are we in a rush? What's happening?

[23:44] Are we not taking full advantage of our software? So, that one is also a key standpoint to understand our procedures being completed correctly. Does your staff need help? Is your software, are you using your software to with the greatest capability?

[23:58] There's a lot of things that that report will help you really focus on how the practice is operating on a daily minute-by-minute basis with patients. And another one that plays into that is modified transactions. So, you know, maybe we had to change the services on a procedure that was done or we entered the wrong payment type

[24:18] and we had to go back and change it, so we didn't necessarily have to completely delete that, but we had to modify that. So, again, a great tool for you to understand how is your team operating the practice? How can you help contribute to that practice success

[24:33] and know all the details and the moving parts that are occurring on a daily and monthly basis? Amber, I'm so glad that you made that point about reviewing these reports. It's not just about trying to find embezzlement or trying to stop embezzlement,

[24:51] but it's also a tool you can use that's very valuable to find out some of the weaknesses of your team where they need more training, even. Or, you know, if you have someone who continues to post a payment under the wrong payment method in the wrong payment category, you know,

[25:10] if you look at your deleted transactions, you can figure out that that person is struggling and they need some help in learning how to post payments correctly, so I'm so glad you brought that up. But let's dive a little bit deeper into some of these reports

[25:24] and exactly what you're going to be looking for, because it can be a little bit overwhelming at times. When we're talking about looking for adjustments, first of all, a lot of times thieves will hide or they'll use an adjustment to back. Okay, good.

[25:44] First of all, miscellaneous adjustments. Miscellaneous adjustments as a category of adjustment. Now, a category of adjustment is an accounting code. So, for example, say you have a senior citizen's discount. That it should be a write-off or a discount account, legitimate accounting code in your practice management

[26:08] software so that whenever you offer that, your staff member can go down for the drop menu and select discount senior citizens, right? It should be that specific. One thing that I highly discourage is a miscellaneous adjustment category and you would really be surprised how many people

[26:30] have that in their system. I just had a follow-up conversation with one of my clients today and that was the number one thing that his staff member was using, miscellaneous adjustments. What's it for? Is that legitimate?

[26:47] How do I verify it? There's no description. It just says miscellaneous, right? So, if you have that in your software, number one, I wouldn't say get rid of it, but I would say very sparsely used.

[27:00] Number two, timing and plausibilities. For example, EFT payments or direct deposit insurance payments that go directly into your bank account. How timely are those posted? Are those posted a month after they've been deposited in your bank account and you see them a month later

[27:24] in your software? Another example is if you're going to take an insurance write-off or an insurance write-down for a capitation plan, that occurs, that write-off occurs whenever the insurance payment is received, right? So, for every one of those types of negative adjustments

[27:47] that you see, you should be able to look at the ledger and see an insurance payment posted and then the write-off taken off of there. Now, if you're reviewing these adjustments and you see out of nowhere an adjustment for a cap plan shows up, then you might need to start asking yourself

[28:10] some questions about how it just appeared without a payment. And then magnitude and appropriateness. These, like I said, they use adjustments and they often are drawn to a certain adjustment code, if that makes sense. So, what they'll do is they'll use that code

[28:34] to write-off balances that they're stealing from let me go back to using the senior citizens discount. Let's say you give a 10% discount to senior citizens and you're looking at that particular adjustment category that month and you've got like a hundred of them, right? Well, you know which patients you give a senior citizen discount to

[29:00] and you know you didn't give a hundred, you know you didn't see a hundred senior citizens that all got a discount, right? So, you would go back and make sure that you verify those particular adjustments in that category that seems to be inflated.

[29:16] And then my favorite, I always talk about it. Amber talked about the deleted payments and how important they are and deleted transactions and how important they are. The deleted transaction report can get pretty messy just because of human error.

[29:37] If you're not gonna look at anything else on that report, please look at deleted cash payments because as always, it's true today as it was 10 years ago when I started examinations or probably as long as David has been doing examinations, cash is still the number one target, right?

[30:01] So, when you're looking at your deleted cash payments, find the patient's name for the deleted payment, the name and the amount, go to the patient's ledger and find out what the resolution was. What I mean by that is you have a deleted cash payment. If on the ledger, a cash payment is reposted again

[30:23] and there's a little bit of change in it, that was a simple employee mistake and they typed in the wrong numbers. If you have a deleted cash payment and you see a check payment reposted on the patient's ledger, if that scenario was true and that really happened,

[30:42] that it was just an error, when you reconcile your bank statements to your software, your practice management software, it will be correct, right? Same thing goes, if you see a cash payment and it's reposted as a credit card payment, reconciliation of your merchant statement

[31:03] to your practice management software will prove that that was actually a credit card payment. If you see a cash payment that is deleted and when you look at the patient's ledger, it's posted as a discount or some type of a negative adjustment, call us

[31:23] because you probably have a problem. Yes, Wendy, that was one of the first things that I learned from you coming into prosperity and I've had several cases where I've seen that, so big, big, big tip. Now, moving on to dual insurance adjustments.

[31:40] Insurance is something that I'm passionate about for many reasons, but I've seen a lot of discrepancies in insurance adjustments and it doesn't always necessarily mean that there's fraud or embezzlement.

[31:53] A lot of it is just understanding how those adjustments, number one, need to happen in the practice software and if your practice software is set up correctly for how those payments are being received. A couple things that really stand out with dual insurance adjustments is

[32:09] sometimes you'll be in network with one insurance company that that patient has that covers dental services, however, the other one you may not be in network with. So this can get where insurance adjustments need to be very, very detailed and defined and need to understand

[32:25] if those adjustments are being done correctly. One of my recommendations that I see in a lot of practices is it'll just say PPO discount or insurance adjustment, just one broad statement. I definitely recommend that you get really, really detailed in the types of insurance adjustments that are occurring

[32:41] in your software and know the reasons so that when you do utilize your practice management software and you are printing those reports, it doesn't just say insurance adjustment and it's a big, huge blanket statement. That's similar to having that miscellaneous adjustment category

[32:56] that Wendy was talking about. So really understand the details. But one of the main things with those dual insurance adjustments is a couple things can happen. It'll end up as a debit adjustment to where the patient will have a credit and they shouldn't.

[33:12] So those are things you need to look for, the types of adjustments. It always isn't just a negative adjustment and a write-off. You need to really get into the details on that. Another thing that you want to focus on on dual insurance adjustments is did one insurance pay

[33:26] and then the other one was adjusted off. Was that claim actually sent? You want to make sure of that. And then also on dual insurance adjustments, you need to make sure that you look at those EOBs. Look at the documentation and that transparency.

[33:43] So when you're reviewing those in detail with your team members, you want to go over the documentation so that both of you have a clear understanding and you have that transparency and you can trust, but also verify that with your team members. Another thing that I'm really, really passionate about,

[34:01] especially recently because I've had several cases with this lately, is make sure, even though you're looking at your insurance aging report, are your claims being sent and generated how they should be? I have a case I recently finished up where the doctor actually had to write off quite a bit of income

[34:21] that was supposed to be coming his way just because the claims were not actually sent. And those adjustments started showing up in his software as insurance adjustment, insurance adjustment. And when we started looking at the details of those, it wasn't necessarily that the adjustment should have happened.

[34:37] It was that the claim was not sent in a timely fashion. So you want to really make sure of that. The other thing is if you're out of network and you have a payment going toward the patient or the patient pays you directly, make sure those claims are closed out

[34:54] so that you don't have a huge insurance aging report where you're looking for claims that necessarily they're properly handled. Let's talk about dashboards. So there are a lot of third-party add-on softwares that will work with your practice management software,

[35:13] harvest data from it, and give you extra information that you wouldn't have elsewhere. And there are a lot of good choices. You've probably heard some of the names like Dental Intel and Practice By Numbers and SeekaSoft. And in a lot of cases, they can

[35:30] give you information that is in your practice management software but just not readily available. The other advantage of dashboards is that if somebody's working with multiple offices that use different practice management softwares, then an example might be somebody who's consulting

[35:45] to tender for an office. What the dashboards do is they kind of homogenize the information so that if I'm looking at a practice that's using Dentrix or I'm looking at a practice that's using OpenDental, what I see as the consultant is the same.

[35:59] So a lot of DSOs, for example, and many DSOs have many different softwares, they find dashboards particularly helpful so that the people working with them don't really need to know much about any specific software. They can also help you spot practice opportunities.

[36:16] Some of the dashboards are really good at finding things like unbooked work that could be done. The question is, do they help find embezzlement? And the answer is, in general, no. The purpose of a dashboard is to give you a view

[36:32] from 10,000 feet up. And most of the time when embezzlement is found and certainly when our investigators find it, they're in the weeds looking, not taking a picture from an airplane flying over. So dashboards are great.

[36:47] There's a lot of potential for them in terms of trend. For the most part, they're probably not going to help you spot embezzlement.

[37:05] You're muted, Amber. I'm very, very passionate about the 3D. So define, delegate, and document. So let's talk about the true meaning of the word 3D. Let's talk about the true meaning of the word define, to show or describe someone or something

[37:24] clearly and completely the boundaries, right? The meaning and the scope. So that was one of the key things you need to do in your practice is define. You want to make sure, okay, let's define the rules, how things are going to be conducted,

[37:38] what I want to accomplish, how the practice management software will be treated, what I expect to happen at the end of each day closing, how money will be handled. I mean, there's so many variables. It's like rebuilding an engine,

[37:50] but you have to have a true definition of this, right? And sometimes that's hard because a lot of us think we go in and we're like, well, I know what I want to do, and so does the team. But you really need to have a true definition of all the rules of your practice.

[38:04] Then it comes to delegation. And this is where we talk a lot about separation of duties. So not one person should be able to complete all transactions or all procedures within the dental office. So you need to delegate, okay, I've defined my foundation, the rules, how I want things to be safeguarded in my practice.

[38:24] Now I need to delegate so I have true separation of responsibilities within my team and myself so that we have to have that communication and we have to follow the rules of the game. And so that's a big, big to do for me. So, but after you've completed all that,

[38:42] the key thing here is to document, right? So if we didn't write it down, it didn't happen. So for example, one clear definition that you need to have and you need to delegate to the proper team members, but then also document is an example of a discount policy. I've had several cases recently

[39:00] where multiple discounts were given to patients for variable reasons. It wasn't always used as a miscellaneous discount, but these discounts were widespread and there was no true definition of how to apply them when they could be applied

[39:18] and who had to authorize these discounts to happen in the practice. So that's just one example of the reason you need to follow those 3Ds that define delegate and document. In those 3Ds, you also need to have the steps

[39:32] of how it's recorded and who will be in charge of doing it, who will cross-reference. Like I said, the Robin Hood fraud that we're seeing where there's no true definition and delegation and documentation on how that's done,

[39:46] it allows you, after you've done a hard day's work, to be doing some dentistry for maybe less than what you thought you were comfortable with. And then the other thing is this documentation. It's not just writing one little piece of paper out and saying, here's the rules.

[40:03] There's really four key areas that I like to focus on that we see as something to safeguard your practice. Number one, your compensation. What are you going to be paying your employee and is that in writing? Have you agreed with that in writing?

[40:20] I know Wendy, along with myself, we've had some cases of payroll where an employee was compensated more than was verbally agreed upon, but there were some areas that we could not show

[40:32] that this employee was paid more than they should have been because there was actually nothing in writing that backed up part of what we found. And then the fraudulent conduct policy. This is a really important one

[40:45] because this is what outlines your definition of fraud and the action plan that will happen if something is detected, how you will bring in a third party and you give this to your employees and they acknowledge what's happened.

[41:00] If your employees just are handed a piece of paper just to read over and you talk about it and walk away, that's not enough. It has to be signed and true acknowledgement and understanding that you have both met. You've talked about it and you've documented it

[41:15] and they understand moving forward how this is going to work. The third one is when some of those rules are broken and you've defined and delegated how certain things are going to happen in the office. Adjustments or discounts are applied

[41:30] and they should not have been or outside that scope and that boundary that you have created. That is when that progressive discipline action has to be taken and it has to be documented. A verbal warning is not sufficient.

[41:44] This has to be written and agreed upon and acknowledged by both you and the team member. And then the fourth one that needs to help you, your team and everybody feel comfortable if they do see somebody not following the 3Ds that we've talked about.

[41:58] You also have a whistleblower policy. We've talked about this in previous webinars but it allows a team member who sees the 3Ds of your practice not being followed that they have the safety in having that and coming forward to you

[42:14] to help safeguard your practice and they don't worry about other team members finding out. So you need to also have that defined, delegated and documented. Yeah, Amber, maybe I'll just, because Amber made a good point about Robin Hood fraud

[42:29] and that's the first time that we've really used this term in a webinar. Maybe I'll just give a second of explanation about what it is. When we talk about Robin Hood fraud, we're talking about somebody in your practice

[42:41] essentially writing off balances for people they're not connected to. So this could be because they don't want to ask people for money or they feel sorry for somebody or maybe it's just trying to sabotage you.

[42:53] But when we talk about Robin Hood and Robin Hood, of course, was that rich and gave to the poor, we're talking about normally unauthorized adjustments. So

[43:05] it's something we see fairly regularly and I would say, ladies, that the trend is upward with it. In other words, we're seeing more over time and we just want to make the audience aware of the concept

[43:17] and what it means. Yeah, and can I add to that also, David, in the last few cases that I have been on, there was nothing documented as to how these

[43:29] adjustments were to happen and a lot of it was just verbal agreements with team members. So it was really, really hard for the owner, the practice owner to remember what the rules were and he said, oh, I think I approved

[43:41] that one for that patient, but the next patient maybe couldn't remember, right? I mean, what I always say and Amber and Wendy have heard this many times

[43:53] to convict somebody for fraud, you need one of two things. You either need documentation, which is what Amber's talking about where there's a clear discount policy, for example, and somebody violates it or you need deception.

[44:05] And deception is when you record events that are different than what really happened. So normally we need one of those two things to get a fraud conviction.

[44:17] So that's why Amber's discussion about documentation is so important. You know, if we're trying to nail somebody for payroll fraud, we need to be able to establish how much they should have been paid and you compare that to what

[44:29] they actually were paid. And if there's a difference you have a fraud case. If we ask somebody how much their office manager should be paid and the answer is, well, I hired her 10 years ago and we had

[44:41] a written employment agreement, but we've given her annual raises since there's no case there. That's exactly right. I love everything you're saying about that.

[44:53] Documentation, document document, even on your patient notes and charts. Okay, so now that we've slammed the door and if you find

[45:05] an em, if you find an embezzlement is occurring, what are some of the ways that you can recover money or stolen money? My passion happens to be the employee dishonesty insurance

[45:17] just because I love working with the insurance companies oddly enough on the other end of Amber. Anyway, when I speak with a lot of clients

[45:29] or even just out of if I'm doing an in-person speaking event, a lot of people will say, well, I don't have insurance for this. How do I get it? Here's the good news.

[45:41] You do. Most likely 99% you do. It's included in your property insurance. So if someone were to bash in your windows and steal everything out

[45:53] of your office, it would go under your property insurance. Think of it kind of the same way if somebody bashes in your monetary system and takes your money out or steals your money out, it's covered under your property insurance.

[46:05] Another thing that is important for you to know is that a standard policy is $25,000. So if you've ever heard of speak before, you've heard us throw around

[46:17] pretty big numbers. So re-recommend somewhere between coverage of $75,000 to $100,000 because if it happens to you

[46:29] when it happens to you, it's probably going to be in that range. It will cost you a couple of dollars to bump up the maximum payout insurance policy.

[46:41] So go ahead and bump it up. Also, a lot of people are hesitant about their insurance because most insurance companies require that a police report be filed.

[46:53] Now David and I had this conversation the other day in that he pointed out if you take a prosperity report

[47:05] of embezzlement findings to a police station and you tell them I want to file a police report. Here's the report. Here's what happened.

[47:17] Here's the amount. That doesn't necessarily mean that they're going to run right out and they're going to bring charges against that person because what I find are a lot of

[47:29] a lot of victims are anxious to reclaim on their insurance but they're still in love and they're hard for that employee and they don't want them to go to jail right? They don't want them

[47:41] to be charged with a felony. So I just won't say anything about that. I really don't have it.

[47:53] It's easy though Wendy. If you go to the police and you say I need to make an insurance claim and I need a file number from you but it's not important to me that anything happens to this person. The police have fairly full plates

[48:05] and the last thing they're going to do is chase down a thief when the victim says it doesn't matter to me what happens to them. It's really easy to turn the police off if that's what you want to do.

[48:17] That's if you don't want to file. You don't want the police to go after them. Anyway, so I'm sorry I got kind of off track there. Some other questions are

[48:29] does it cover Robin Hood theft which is what Amber was talking about and what Dave spoke about previously. In the insurance policies that I have read there has to

[48:41] be a direct personal benefit to the suspect most of the time for you to be able to file a claim.

[48:53] So what that basically means is if I next door neighbor comes in and I give them a 80% discount off your UCR

[49:05] and I don't advise you of that but I make the decision to do it to an insurance company that is not considered under theft

[49:17] that they would pay out in a claim because the suspect which would be me did not personally obtain that benefit or that property and then also investigation costs

[49:29] again it comes down to your policies your policy I've had a lot of clients with policies that the cost of the investigation associated attorney's fees

[49:41] cost of the client's fees for the work that they've done in the investigation and the time it took for them all of that can be covered as well it just depends on your policy.

[49:57] Let's talk about hiring for a minute and I see my friend Carl's in the audience Carl owns a company that does background investigations and he

[50:09] does this kind of service for dental practices so look him up Carl Slicer is his name you know we all have our own mental picture of what a criminal looks like

[50:21] probably if this person applied for a job at your practice you would have a lot of thought before you hired them the problem is that not all criminals look the way we think criminals look here are some

[50:35] pictures of embezzlers and they just look like everybody else a lot of dentists think that they can sort of give somebody some kind of smell test to see if they're going to be a problem or not

[50:49] and it's just not reliable embezzlers are in a lot of cases and they don't have the right term trusted employees as I say they just look like everybody else some of them teach Sunday school

[51:01] and we cannot tell with their eyeball or our gut instinct whether somebody has baggage or not and here's an example

[51:13] her name is well she's used several names Chernia Koski is one of them Fuchs is another her first name is Irina she's hooked a lot of dentists out of their money she

[51:25] has done she is the most prolific serial embezzler I've ever encountered she's kind of the energizer bunny of embezzlement and she has worked at and stolen from

[51:37] approximately 15 practices she's also served two prison terms and you know what she keeps getting hired she is able to convince the doctor who's

[51:49] interviewing her now that she is the answer to that doctor's prayers and every dentist I've ever talked to about hiring says that's one of the parts of my job that I absolutely hate

[52:01] and when you hate doing a job and you find a shortcut you take she's worked at at least five practices after her second prisoner she's gone to jail twice and five more dentists hire her

[52:15] but that should not be happening background checks are really important and there are a lot of areas of somebody's background to check but

[52:27] a criminal records check and speaking with former employers are two that I would never ever skip you know the irony of most bad hiring decisions is that the information was sitting right there I mean if you google search this woman

[52:39] you will find that she has about three pages on our hall of shame okay okay and five employers didn't even go that far okay this is the kind of information that may

[52:55] be out there that's generally fairly easy to find and you just need to resolve to know a little bit more about the people you're about to hire than most dentists do all right so

[53:09] because we are so appreciative of our live audience and we love that everybody has taken time at their end of their day to join us live we are doing some special giveaways for only those who have participated

[53:21] and you know ate your popcorn while you watched our embezzlement movies this evening number one you're going to receive our monthly monitoring spreadsheet it comes with some guidelines and instructions

[53:33] to give you direction and some overview on the oversight areas that we talked about this evening and then you're also going to receive our 10 site fraudulent conduct policy so that will help

[53:45] you tie in those 3Ds that we talked about earlier in the webinar Amber I'm so good you're my friend you're just so adorable

[53:57] Amber sent me you're so cute and so smart anyway you know as we begin to wrap up I just wanted to comment that we know that this

[54:15] is an embezzlement is a very serious topic and it's very heavy and a lot of people are interested in learning how to prevent

[54:31] embezzlement and I sometimes struggle with that word prevent because we can't control human nature that's why whenever I talk to a client and they're beating themselves up

[54:43] because they've been embezzled from you know my message to them is always this isn't your fault you didn't cause this to happen we can't control

[54:55] human nature what we can do is we can lock the door on it and we can catch it before it gets too far the only difference between a $10,000 embezzlement and a $100,000

[55:07] embezzlement is when you catch it oh yeah make sure you have systems in place so that no matter how hard an employee

[55:19] knocks on that and tries to get through your systems that they're not going to get around to you and they're not going to steal from you

[55:29] now's the time when if you have those questions we'd love to take them I've seen some coming in as we go and Amber and Wendy are going to feed them to me because it's their chance

[55:41] to put me on the hot seat if you want to contact us that's how to do it and let's see what we got alright who's up Amber? I'll start real quick

[55:53] okay Harold Slycer he brought something that I did forget to mention about dishonesty

[56:05] insurance and that is if you turn that claim of theft over to the insurance company and the insurance company pays out on that claim you give over the right to the insurance company

[56:17] to go and collect that money what's that word I can't ever say David? subordination yes you have an $80,000 loss and you claim on your insurance and you get

[56:29] $25,000 back from them then you and the insurance company go after the thief it kind of depends on the policy terms in which state you're in as to whether the insurance company recovers

[56:41] first or you do in most jurisdictions you get your money back first and once you're made whole then the insurance company can claim after that but it's called subrogation and really that means

[56:53] you're kind of assigning some of your money back to the insurance company that's a good point, thanks Carl and I have another one that's really important too Gary had asked for a little more

[57:05] explanation about reconciliation and why it's not okay to reconcile like the merchant statement with the bank statement

[57:17] you want to give that thought and see if you can explain it a little bit better? yeah absolutely I can what happens is very simple when a patient pays you by credit card a couple of days later

[57:29] the money goes into your bank account that's automatic it's computerized and it's more or less foolproof reconciling the merchant account statement against the bank

[57:41] account statement is very unlikely to prove anything what you really need to do is reconcile the merchant statement against your practice management software because if somebody is for example

[57:53] taking cash and putting it in their pocket and recording it as credit card payments that's where it's going to show up the credit card statement will always agree with the bank statement that's kind of a fool's errand you really need again

[58:05] to look at credit card versus merchant account and I'll give one more tip on credit card statements as well Wendy I know a lot of doctors who look at the day end tape that's printed out from the terminal

[58:19] the one in the little narrow paper and that's what they reconcile you need the monthly statement that the credit card company sends you if you rely on those daily tapes what you never know is

[58:31] whether there were transactions that took place on a Saturday when your practice was closed the monthly statement is where you need to go not the daily that's a good explanation and I'm sorry Amber

[58:43] let me I have two that I've lumped together so two people asked two separate questions with just about the same the same question so one person was saying

[58:55] if I suspect my office manager of stealing should I speak to my office manager about it and then follow up that with

[59:07] if you suspect what is the first step how do you not confront or do you call first if you suspect your first action should be

[59:20] to call somebody who's an expert and I guess by that I'm really talking about us we said in a previous webinar do not confuse somebody who knows 20% more than you do with an expert

[59:32] when you talk to us the first thing I'm going to say is no matter what you do do not let the suspect know that there are suspects if I'm stealing from you and I think I'm about to get caught

[59:44] the consequence of getting caught is that I'm going to go to jail the list of things that I will not do to prevent all that is really short do not confront the staff member

[59:56] until you have a lot more information than you do now first of all if you're wrong and there's some possibility that you're wrong about this you're going to ruin the employment relationship permanently I mean there's just no way

[1:00:08] you and that office manager will be able to work together again and if you're right you're going to be the person to see the acts that's about to land on because they may do something to try to protect themselves

[1:00:21] and you're going to be the victim of whatever they do next Amber Wendy anything you want to add to that no thank you I have a question

[1:00:33] someone wanted to know when looking at oversight what are the three reports that you think are the most important to look at if we're talking on a daily basis let's differentiate

[1:00:45] between daily and monthly on a daily basis I want to see the insurance claims file report that Amber mentioned and I want to see what is called in most practice management software a day end report

[1:00:57] or a day sheet or something like that and that just lists every transaction that happened in the practice for that day so if we're talking at end of day to me those are the big two on a month

[1:01:09] basis now what I want to look at is the month end report that's kind of just the bigger version of the day end report so the transactions for the whole month and if I guess if I had to pick two others

[1:01:21] I'm going to pick one that wasn't even on our list and this is a quickie it's an easy one to look at and it's pretty high heels ask your alarm company to send you

[1:01:33] what's called the access log or entry log so this is a report of who armed and disarmed your alarm and when they did it and it's your way of checking to see if somebody is kind of sneaking into your practice after hours

[1:01:45] so I'll put that one on the monthly list as one that takes very little time and has the potential to yield information beyond that wow could be

[1:01:57] to me okay I'll pick I'll go out and I'll pick the third one insurance aging report I want to know there are claims outstanding and why and as Amber said

[1:02:09] sometimes it's because claims aren't being closed properly okay that's benign sometimes they were never sent in the first place and sometimes they were sent and the insurance company came back with requirements you know they wanted narrative

[1:02:21] or they wanted radiographs or they wanted something and that never got fulfilled so a good barometer of your staff efficiency is really to look at that insurance aging report so those are my three but I think you could make good arguments

[1:02:33] as well. I'm glad you picked insurance aging because there's a question related to that the question is is the insurance aging report and the insurance

[1:02:45] accounts receivable report the same they measure the same thing but in different ways the the claims report

[1:02:57] looks the insurance receivables report tracks dollars so how much is owing from insurance you know and how much is over 30 and over 60 and over 90 and so on

[1:03:09] the insurance claims report looks at individual claims and whether a claim has been closed or not so you send a bill to insurance you get a payment back and an EOB and you enter the payment

[1:03:21] and adjustment if it's a PPO and then what happens in your software is that claim gets closed so the aging report tracks open claims and

[1:03:33] behind every open claim is some kind of action that's needed to get that claim closed so once dollars once claims in a sense they're measuring the same thing but I think your focus needs to be

[1:03:45] individual claims and we've had a lot of questions and I have to apologize because it's my fault I did not make this clear we've had several questions about how people obtain

[1:03:59] the continuing education code oh yeah oh that's very simple there's an email going out to you all in about four minutes and

[1:04:11] that will have a button in it that you can click it will take you to a web page and you'll certify that you attended and from there you'll get your certificate by email

[1:04:23] in about five more minutes really easy just wait for the email that's coming up in a few minutes and follow the instructions and you will be in possession of a certificate

[1:04:35] okay and another question just popped up and it's a I'm not giving a book away for that one by the way okay it's a really good one okay it says

[1:04:47] are you saying that no one besides the owner is allowed to make adjustments I had someone delete the cash payment after she had given a receipt to the patient then a few weeks later she I'm not gonna

[1:04:59] that sentence but it did not appear on the day sheet you two can figure out and Rocky can figure out what happened but I'm not gonna say it you know what happened yeah I know what happens

[1:05:11] so we're back to selective reporting you know the decision about how to handle adjustments is a really tough one I would like to say to you if you're in a small practice the best answer is practice owner is the only person

[1:05:23] who can make adjustments the only thing about that is that you are gonna set yourself up for a fair amount of pestering from staff who need to make adjustments because they want to close insurance claims

[1:05:35] and move on so if you know it's not wrong to do that but understand the the bother factor so next best is you delegate adjustments to office manager

[1:05:47] and then when you do that you need to do a couple of things the first one goes back to something Amber said a while ago do not allow people to make this miscellaneous adjustment over and over again and if anybody makes a miscellaneous adjustment

[1:05:59] they need to put in a narrative as to why when you think about adjustments your practice makes they fit nicely into some categories I mean we have PPO adjustments and we should be even more specific in other words we have PPO adjustment

[1:06:11] Delta we have PPO adjustment Humana we have PPO adjustment sigma and so on you have professional courtesy adjustments you know which might be if you're a specialist and you're treating the patients of

[1:06:23] you know you're treating a dentist a general dentist who's a referral source to you there's an adjustment for that you know there's friends and family there's an adjustment for staff dentistry there's an adjustment for the poor guy

[1:06:35] who's crowned in fifth three times you know and the number of adjustments that don't fit into any of those categories should be really really small the rule has to be

[1:06:47] if somebody's making a miscellaneous adjustment they need to type narrative as to what happened and why it doesn't fit in any other category when you have delegated the adjustments what you need to do then is monitor

[1:06:59] so you need to look at the adjustments and we gave you a whole list of things to look at in terms of timing I think this was Wendy's slide you know timing and magnitude and things like that you need to look at those adjustments

[1:07:11] and see if they make sense that is the end of the day if you're trying to look at a whole pile of adjustments at the end of the month and you don't really remember what happened with those patients

[1:07:23] it's a lot more difficult so that's one of those things that should happen in that ten or fifteen minutes that you spend at the end of each day and I'd like to make a point about this too because you know I always got to do it

[1:07:35] it's my favorite thing okay so basically what happened what I'm assessing happened from the description is that a patient came in paid cash was given a receipt which means it was posted in the software

[1:07:47] then I deleted the payment and then they made some type of transaction in which was to cover to cover the scheme

[1:07:59] but the way you could have found that was looking at your deleted transactions report because the cash was posted in the software and it was deleted reviewing your cash payment

[1:08:11] reviewing the deleted cash payments in your software would have caught that perfect example yeah it sure is okay so here's another one

[1:08:23] for a large practice with four to five people in the front office is it okay is it okay if all do the adjustments if the note is explained as to why I don't

[1:08:35] love that approach I would rather see in that case one person like the office manager be the person who makes adjustments or if there's one person who posts insurance payments

[1:08:47] that person might have adjustment privileges but no for five people I have them I think creates a monitoring challenge and it's it's fine to say they have to post an explanatory note but so what

[1:08:59] I mean I can get pretty good at making up explanations that you think are plausible you know and when you think about most of the adjustments that are made in a practice they really don't need

[1:09:11] explanation so if you're in network with Delta and you get paid and you adjust from UCR to contracted fee I mean I don't see a whole lot of point first of all in making somebody type a big long explanation for that

[1:09:23] I would rather see the proper code but I also want somebody with supervisory authority to be looking at yeah all right did we run

[1:09:35] our questions dry? we did sorry how would you go about telling another dentist not hire an individual

[1:09:47] because you know that the person they're going to hire has been suspected of embezzlement but was never prosecuted in charges were never brought on to that good question

[1:09:59] indeed I'm going to make an assumption here I'm going to make an assumption that you know that because that happened in your practice in other words this is a former employee of yours and the question is

[1:10:11] how do you let that other dentist know what you might do is say to that you know call that other dentist and say I see that Susie is working for you now I don't know if you know this

[1:10:23] but she used to work for me I don't recall you ever calling me or a job reference you might want to and you hang up the phone I like that

[1:10:35] and as soon as they can hit redial your phone will ring and it's their new employer who will say I'm calling for a job reference on Susie and then what you say and listen carefully here make sure you get this right

[1:10:47] what you say to whoever calls you is well since you asked I'm only going to answer one question about Susie and that's would you rehire her who's now getting kind of used to following your direction even if it's a little cryptic

[1:10:59] is going to say alright I'll play this game would you rehire Susie and your answer will be not in a hundred million years that's all you have to say don't say why don't say suspected of embezzlement or anything

[1:11:11] like that because that stuff in certain circumstances can get you sued on the other hand if you say under no circumstance that I could remotely imagine would I rehire Susie nobody can sue you for that

[1:11:23] that's talking about what you plan to do in the future so that's how you do it alright well we are actually over time and you know I know if I know there are some people who are

[1:11:37] ice hockey fans in the audience and they're just itching to go and catch the rest of the game so maybe at this point we'll thank our audience for hanging out with us tonight and we'll wish everybody a good night

[1:11:49] we will see you in just under a month on July 22nd um we've got a great session planned then and uh enjoy your summer night everybody

[1:12:01] night thanks for listening to the dental practice owners podcast brought to you by Prosperident you can contact Prosperident through its website

[1:12:13] 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 like to see

[1:12:25] in a future podcast we would love to hear from you Amber, Wendy and David will be back soon with another episode