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Employee Theft, Is Your Practice Getting Ripped Off?

posted by Michael Jopling Partner, Accel Anesthesia, LLC on July 1, 2012

By Craig Adkins, Executive VP, Accel Anesthesia, LLC

July 1, 2012


Employee theft is a significant risk for most medical practices.  According to the MGMA, embezzlement costs group practices billions of dollars every year.  Their research goes on to say that even “honest” employees steal.  So if you thought your practice was immune to this risk, you could be wrong, and you could be losing thousands or even hundreds of thousands of dollars.


The amount of loss according to the Association of Certified Fraud Examiners (ACFE) is approximately $25 billion annually for all medical practices.  And the vast majority (86%) of these perpetrators are first-time offenders – they had never been charged with a fraud-related offense. So even if you think you’ve hired honest employees, who have clean backgrounds and no history of fraud, your practice is still far from immune to the risk of theft.


Preventing theft starts by taking a few important precautionary measures like checking references before you hire someone and performing background checks.  You should also route all checks that come to your practice via mail to a bank lock box.  Internal controls are also important – all transactions must be documented whether accounts payable, accounts receivable, refunds, adjustments, co-payments or write-offs.  Then you must reconcile your accounts.  Additionally, there are operational measures that you can implement to further reduce your risk of embezzlement.  One of the most important measures is to segregate duties.  For example the employee who prepares the accounts payable checks should be different than the employee (or physician) who signs the checks.  And then someone else should reconcile the bank account and review accounting entries.  Bank statements and blank checks should be secured so only the designated employee s, physicians, and/or accountants have access.


Beyond the usual safe guards, one of the best methods to prevent theft is to engage someone to perform independent audits of your files and payments. Even a bi-annual audit of random files can act as a deterrent. The key to security and loss prevention rests in barriers to keep staff members honest rather than spending the money to anticipate every possible thievery.   If employees know their work will be reviewed and do not know when that review will take place, they are far more likely do their work honestly and not steal.  The ACFE has found that organizations that use surprise audits have approximately 50% lower losses, and they detect embezzlement 37% sooner.


Key findings and highlights of the ACFE report, as well as the full report, can be found on their website at