Misinformation about Embezzlement

Unfortunately, one of those pesky business matters affecting many dentists is embezzlement.  Published statistics suggest that three in five dentists will be victimized by an embezzler in their careers.
Unfortunately, there is a lot of misinformation about how best to manage this problem.  Many well-intentioned advisors suggest that if the dentist simply checks more (or different) things each month, they will be able to detect embezzlement.
I recently made this response to a consultant who was advocating a checklist of things for a dentist to do or check monthly (I stopped counting at 80 items on the list):

“Respectfully, I think you are going at this in the wrong way.

I don’t have a specific objection to anything on this (very lengthy) list.  However, I do object strongly to the underlying philosophy, which is to suggest that the way to control embezzlement in a dental office is to turn the dentist into an untrained, under-equipped, part-time auditor.
Most dentists I know, when given a list of this length, will simply throw up their hands and ignore the list.  I haven’t tried to calculate the time that performing all tasks on this list would take, but I bet that it is 25 hours or more monthly.  Since the number of hours in a week is constant, this time would come either from clinical or family time, and both have considerable value.
The other problem with the “dentist as auditor” concept is that it ignores the adaptability of embezzlers.  Most successful embezzlers in dental offices are long-term employees.  Their seniority means that they know their doctor well, including what he or she looks at on a monthly basis (and more importantly, what is not scrutinized).  It is then simply a matter of finding a way to steal that is outside the dentist’s scrutiny.  If you start looking at more, or different, items the thief simply switches methodologies and carries on stealing.  Ultimately, there are fraud methodologies that NO system of controls and checks can stop.
Monitoring for fraud is actually far easier than most dentists and consultants think.  Regardless of the specific embezzlement methodologies being employed, the behavior of thieves is remarkably predictable.  Embezzlers want to control communication in their offices, do not want to take a vacation, resist upgrades or changes to practice management software, etc.  If dentists can learn to identify behaviors consistent with embezzlement, they can quickly realize when it is happening.  A benefit of the behavior-based detection approach is that it requires way less time than trying to self-audit, which means that it is far more likely that a dentist will do what is necessary.”

We have developed a scored behavior analysis checklist which is available in our electronic store at www.dentalembezzlement.com/store.

Don’t Underestimate the Embezzler

By David Harris MBA CMA CFE and Pat Little DDS FAGD CFE

As investigators, one thing we encounter every time we speak to a group of dentists is that, in the area of embezzlement, they consistently underestimate the capabilities of their opponents.

The most common question asked of us is, “Will this control/procedure/auditing step work?” followed by some procedural change that the questioner intends to implement. Normally, this change is designed to block a specific embezzlement methodology.

For example, one question recently asked in a presentation was whether using a “lockbox” system, where all mail gets delivered to a third party (which then opens the mail and inventories the contents), would prevent embezzlement.

This question is an example of denial of opportunity strategies for controlling embezzlement, because its goal is to block a specific embezzlement pathway.

While we don’t think that strategies of this type are necessarily bad ideas, we do believe that their effectiveness in controlling embezzlement is overestimated.

Embezzlement: It Can Happen in Your Practice!






Three out of five dentists will be embezzlement victims

Dr. Jones loved her practice, enjoyed her patients, and felt very lucky to go to work every day and do what she loved to do. She also was well aware that a major reason her work was so enjoyable was because her office manager handled the financial side of the practice effectively and efficiently. She could enjoy doing what she did best — helping patients improve their oral health — while not worrying about the financial details. In fact, she frequently bragged to other dentists about how lucky she was to find such a hard-working office manager. She was saying that right up until the day she found out the office manager had embezzled $150,000 from her practice!

How could this happen? How could she be so wrong about somebody she thought she knew so well? The surprising answer is that her story is not unique; embezzlement in the dental office happens far more frequently than most dentists realize. But don’t take my word for it. Join me in a conversation with David Harris, CEO of Prosperident — the only company in North America specializing in dental embezzlement prevention and detection— who has been investigating embezzlement in dental offices for more than two decades. You may be surprised at who is likely to embezzle from your practice and what it really takes to minimize your risk of being a victim.