Protect Your Dental Practice from Embezzlement

Embezzlement has long been a prevalent problem within the dental industry. According to statistics published by the American Dental Association, 35% of dental practices have been embezzled once with 17% having been embezzled more than once. Read on to learn how you can protect your practice.  

The true cost of embezzlement  

Over the last decade, the incidence of embezzlement at dental practices has increased by over 34%. With embezzlement becoming a more common occurrence at dental practices, it’s become even more important to safeguard your practice.  

Beyond the immediate financial costs, embezzlement can also cost your practice: 

• Emotional costs 
• Physical costs 
• Legal costs 
• Reputation costs
• Compromised trust 

Keeping an eye out for possible embezzlement may seem like a juxtaposition with your caring and trusting behavior as a dental professional. But staying vigilant can help you reduce the risk of falling victim to embezzlement at some point in your career.  

How to protect your dental practice from embezzlement 

What is embezzlement?  

Embezzlement is distinguished from ordinary theft in that it is the taking of money or property by someone who is trusted, commonly at the workplace.  

Who is likely to commit embezzlement?  

At a dental practice, the entrusted person could be a long-time employee, office manager, or supervisor. While it can be hard to conceive that anyone on your team, particularly the highly trusted ones, can be capable of embezzlement, practice owners need to stay alert. This is because a person who commits embezzlement will leverage your trust to steal from your practice.  

What does embezzlement look like?  

Embezzlement can include: 

• Cash payments 
• Patient payments via check or charge details 
• Making personal payments with practice resources 
• Fund diversion 
• Direct theft of practice financial or physical resources 

Unfortunately, as employees commit embezzlement and find they can get away with it, they are likely to continue to steal.  

How does embezzlement work?  

An embezzler can follow more than one scheme. Their tactics can be simple or complex. 

Embezzlement can be classified in three large categories: 

1. Corruption: These can include kickbacks, extortion, and conflicts of interest.  
2. Asset misappropriation: Under this category, an employee can use cash skimming, check tampering, fictitious reimbursements, and other tactics to steal cash or other property.  
3. Fraudulent statements: Here, an employee can commit embezzlement through fictitious revenue, overstating or understating revenue, or concealing liabilities.  

In practice, this can look like: 

• A patient’s cash payment is pocketed without being recorded as paid 
• A patient cash payment is pocketed and then recorded as a “write-off” 
• Expenses and account records are falsified 
• Insurance claims are submitted for fake claims and the reimbursement is pocketed 

More technically savvy embezzlers can even hack into the office system as a system administrator. Entries can be controlled and manipulated to not leave an audit trail. 

The more scenarios you can be aware of the better prepared you can be to spot them and protect your financials. For more examples of what embezzlement can look like at a dental practice, review this ADA publication on how to protect your practice from embezzlement.  

Be thorough in your hiring process 

You cannot create an embezzlement-free system. But you can be more intentional and discerning when hiring your team members – especially those tasked with financial access. 

• Trace a potential hire’s reputation.  Learn all you can about their previous roles and employment – look for any red flags. 
• Be sure to ask for a candidate’s references from previous employers and complete a thorough background check.  
• Read between-the-lines on your reference checks. Listen to overall themes and watch out for overly vague or evasive responses.  

Be well-equipped with safeguards 

Once an employee is hired, it’s imperative that you protect your practice with safeguards against embezzlement. Security should be a standard operating procedure for your practice management system and software.  

• Create and deploy a thorough reporting system. Include checks-and-balances that tip towards accountability for all users. Our Denticon Practice Management Solution offers audit trails and granular user permissions to help practice owners monitor all user activity to protect their practice from embezzlement.  
• Establish daily, weekly, and monthly report reviews. Have more than one set of eyes looking through your records to spot any inaccuracies or suspicious data. 

Password protection: 

• Exercise good password hygiene so employees aren’t sharing the same password. 
• Be discerning about who aside from you has administrative permission on your system or software environment. 
• Keep passwords secure and not in open view (e.g. on post-its, in an accessible notebook, etc.) 
• Promote good password hygiene at your office by training each team member to keep their passwords secure.  
• Create passwords that are not intuitive (e.g. “dental practice,” etc.). Use best-practice password creation such as upper/lower case letters, symbols, numbers, etc. 

David Harris, Founder and CEO of Prosperident joined the Dental Economist Show to share his expertise on embezzlement. Check out the full episode here.

Be responsible for accountability controls and policies 

Embezzlers are often skillful manipulators.  

A skilled embezzler knows how to manipulate data, software, reports, and more. Stay a step ahead by building accountability and control into the access your team has to sensitive practice information. 

• Implement check protection procedures such as remote-deposit capture. Such a system can scan patient checks and “batches” them for immediate deposit into your bank account. 
• Ask your insurance provider network to have reimbursements directly deposited and reports sent to your practice. 
• Review your daily journal (also known as a day sheet) immediately and note any suspicious changes.  
• Regularly review your audit trail report. Look for adjustments, etc. 
• Batch your credit card statements daily and compare charges with your day-sheet. 
• Compare your daily bank deposit slip with cash and checks received. 
• Review patient sign-in sheets to compare/verify payment or adjustment totals with treatment provided. 
• Close out each month to prevent users from modifying or deleting transactions.  

Our Denticon Practice Management Solution allows you to easily run daily journal reports, audit trail reports, and control user rights to set who has rights to make adjustments or delete transactions.  

Train your team around your accountability protocols. And review them occasionally in your team meetings.  

• Do a quarterly reporting procedure audit with your team. Make sure your protocols are being followed. 
• Cross-train team members. This keeps more than one set of eyes and hands on your financial procedures. 
• Be aware of team members who are “territorial.” Encourage them to value their role while being willing to relinquish duties on occasion for the purpose of safeguarding accountability.  

Choose a secure solution that will help you monitor your sensitive data and help protect your dental practice from embezzlement 

Planet DDS’s Denticon is a proven cloud-based dental practice management solution in today’s market among solo private practices, private group practices, and emerging, midsize, and large DSOs. Denticon can help you prevent embezzlement by controlling security rights, user permissions, and user audit trails for every transaction by every single employee.  

Contact us for more information about how Denticon can help protect your practice from embezzlement.