Volume 44: Only Trusted Staff Can Defraud You
I talk to many dentists and I am surprised at the number of dentists that have been defrauded by their staff. There are many ways that individuals can defraud you. Generally it is not more than one employee. Due to the limited number of staff in some practices it is difficult to divide up the duties to have good internal control. If multiple staff members act in collusion they could get away with gross fraud for years unless the doctor or their spouse insert themselves into the system to keep an overview of certain key reports such as the deleted treatment or cancelled charges reports.
Some of the fraud is as simple as taking patient cheques to the bank to have them cashed “for the dentist” and then covering up the theft by cancelling the charge to the patient. This can be very costly as you will have:
a) the loss of the cash or cheque
b) to pay the government income tax for the income recorded before it was stolen if the cover-up did not reduce the gross revenue (a “double whammy”)
c) the feeling of betrayal within the team – loss of focus for the team
Other types of fraud have more long reaching implications – particularly when insurance companies are involved. If a staff member sends in false claims and diverts the cheques it is difficult to detect – and creates another “double whammy”. The insurance company will demand repayment of the funds fraudulently paid “to the dentist” if the procedures were not performed on the insured person and the cheques were intercepted by the “trusted” staff member. This type of fraud can be avoided by a separation of duties whereby the person who opens the mail is not involved in the billing or insurance claims.
Different computer programs have different procedures, but all programs will print off daily sheets. These sheets should be reviewed by the dentist and signed and retained as a permanent record. All adjustments (write-offs, deleted treatment reports, cancelled charges, etc.) should be reviewed by the dentist, signed and retained
Even when a fraud is detected it is often impossible or very time consuming to determine the extent of the theft, with limited hope of getting the money back. Yes, you can terminate the employee (use a lawyer) but a lawsuit to recover the money or obtain a conviction is generally not an option. An ounce of prevention is worth a pound of cure. Certainly, when hiring new staff check all references – but this is only the first step. Setting up good internal control procedures in your practice with the assistance of your accountant is the best long term protection. There are courses in fraud protection for dentists if you want to get directly involved. There is no department in the dental community to register individuals who have defrauded their dentist. This means that individuals can go from practice to practice without a track record.
If an employee is not a trusted employee it is difficult for them to steal from you as you are monitoring their work. The trusted staff member is the only one that can defraud you if you do not have the internal control procedures to protect your practice.
If you have been defrauded and would like to anonymously relate your situation to me to report in future Professional Advisory issues, I would be more than pleased to receive the information and to disseminate it to the dental community with full anonymity for you.
Graham Tuck, H.B.A., C.A. is the broker of Professional Practice Sales Ltd., which specializes in the valuation and sales of dental practices. He can be reached at (905) 472-6000 or
1-888-777-8825 or e-mail at: firstname.lastname@example.org
The Professional Advisory
- One Year Later
- Dealing with Unsolicited Offers
- Covid-19 Practice Sales Update
- When is the Right Time to Sell Your Practice and Why?
- Partnership Pitfalls
- The Real Cost of a Dental Practice Set-up
- Smaller Practice Realities
- Dental Market Update - 2019
- Creating Your Own Most Valuable Practice (MVP)
- Small Practice Economics
- The Market is Very Efficient
- How Can Dental Practice Values be Rising and Declining?
- Hygiene as a Value Driver
- The Value of a Good Team
- Is it Time to Move?
- Staging A Dental Practice
- The High Cost of Dying
- Patients - Attract and Retain
- Should I Stay or Should I Go?
- Is There a Buyer for Every Practice?
- Good, Better, Best - The Market has Spoken
- Buying Time
- Patients, Patience, Patients
- A Real Patient
- Why Do a Practice Valuation? I'm not Selling
- Irrational Exuberance or The New Normal?
- Do dental equipment and dental technology affect a practice value?
- Finding and Being a Mentor
- Bigger is Better
- Dave's Top Ten List for Buyers (Vendors should read this too!)
- How Well Do You Know Your Practice?
- Dave's Top Ten List for Vendors
- What will happen to dental practice Values in the next 10 years?
- Your Premises Lease is an Important Asset
- What are Associates Thinking?
- There is Life Outside the GTA
- When Is the Right Time to Sell My Dental Practice?
- Mergers are a Viable Option
- Is Your Associate an Asset or a Liability?
- Has your Practice Facility Kept Up With Your Billings?
- The 100 per cent of Gross Myth
- The Past, The Present and The Future
- Caveat Emptor
- Overpaid Long Term Staff
- Selling your Practice in Stages
- A Potential Pitfall of Selling Shares
- Value in Your Practice Through Balance
- Only Trusted Staff Can Defraud You
- To Own or Not to Own Practice Real Estate? That is the Question.
- Coping With A Large Patient Base
- Successful Dental Practice Transitions
- Taking Care of Business
- The Investing Dentist Phenomenon
- Two areas to focus upon that could negatively impact the value of your practice
- Organize your Debt in Order to Sell your Practice
- Having a Better Team
- How Do I Prepare My Practice For Sale
- How Do I Prepare My Practice For Sale? Part 3
- How Do I Prepare My Practice For Sale? Part 2
- How Do I Prepare My Practice For Sale? Part 1
- Advice to My Son or Daughter Graduating from Dental School
- Transition - What to Expect
- Discussion on Digital X-Rays
- Partnerships and Shotguns
- Strategic Planning - How to Get Started
- Calling All Vendors - Practices have Gone Up in Value
- Purchasers: Expect to Pay More for a Practice because of Lower Professional Corporation Tax Rates
- Matrimonial Practice Valuations
- Purchaser's Guide to Affording a Practice
- Location Improvements Throughout Your Career
- Small Practice Valuations
- Partnerships – The Best and The Worst
- Changing Location When the Opportunity Comes Along
- Visual Presentation of Your Practice
- Presentation of Charts
- Your Premises Lease Can Be Your Worst Enemy
- How to Select an Appraiser for Your Practice
- How Are Your Billing Ratios?
- It Pays to Invest in Your Tangible Assets
- The Importance of Separate Financial Statements
- Five Time Frame Levels to Sell a Practice
- 12 Suggestions to Safeguard Computer Data
- How to Buy a Visible Practice
- Why is there a shortage of good practices today?
- The Importance of Equipment in the Purchase of a Practice
- The Balanced Practice
- Will My Practice Be Saleable in The Future?
- Buyer Be Aware
- Excess Profit - The Second Key
- Patients and Profits are the Keys
- Plan Ahead