3-Step Process to Ensure Financial Accountability and Prevent Embezzlement in Your Practice

In Business by Dental Entrepreneur

Experts agree that it isn’t a matter of if you get embezzled from, it’s a matter of when. One of those experts is Susan Gunn of Susan Gunn Solutions. As a Certified Fraud Examiner working exclusively with dentists, Susan says that “if a dentist owns a practice for 30 years, some team member in those 30 years will steal. The degree of theft is dependent upon the oversight of the doctor and the brazen determination of the team member!” I couldn’t agree more! I will share why oversight is so important and how to provide it.

My first experience with embezzlement was before we had the kind of resources and information we have now, and it wrecked me. I took it personally. How could I hire someone with such a lack of integrity and character? How can someone repeatedly steal and yet show up for work without a care in the world? It happens every day, folks. And they’re getting away with it!

I had spent years dialing down how to hire for character, doing assessments, involving the team in the process. I had a pretty good track record and was proud of it. While that’s all good, it’s not good enough. There were three problems I had. The first was I didn’t listen to my gut, I knew we shouldn’t hire her (her answers were inconsistent and she wavered on ethics questions, but the team felt desperate for help and wanted her). The second was I never thought someone would steal from us (I don’t have the mind of the thief and was way too naïve, no longer). The third problem was I didn’t have a system to prevent what happened.

At that time I was the Director of Operations for a small group that was rapidly growing through acquisition. This practice was the first to be acquired, and because of what happened I immediately set out to develop daily and monthly systems of accountably that would position leadership in such a way that we projected a sense of tight cohesiveness in every aspect of the businesses. This is very important for everyone in the office to see, as perception is powerful and it sends a very strong message that we have an eagle eye on the business. That alone will cause someone to rethink stealing from you.

Before we acquired the second practice, I had created processes needed to facilitate a Monthly Financial Accountability Meeting. Along with the owner doctors and office managers, we made it a priority to set the monthly meetings in advance, we never missed a month. I brought the financials and other reports from QuickBooks, and the managers brought all coordinating reports so we could make sure the money in the bank matched what was in our practice management software, and that patients’ accounts were correct. Also, each manager had a “manager’s monthly practice update” that covered all KPIs of the practice. They gave an account of their practice, and feedback and direction were given. There are plenty of companies out there that will extract KPIs for you, and that’s great, but nothing can replace sitting down to review the numbers, creating a plan and having accountability for execution. These meetings are powerful to unify the leadership team in ways that you would never imagine.

I left that organization to start my own company doing dental start-ups and transition consulting. I trained every doc I worked with during that time to understand the importance of these systems and how to create a culture of accountability within the practice from the very start. I’ve stayed in touch with so many of them and they all have continued to hold monthly financial meetings.

I ended up merging my company with the Avitus Group to start Avitus Dental Management Solutions. While I was with ADMS I had the opportunity to travel the country speaking to dentists about embezzlement and sharing my story, as well as giving them a three-step process to ensure financial accountability in their practices. I’ve heard stories of embezzlement from doctors across this country, and most never prosecute. Worst of all, they don’t tell their colleagues that they were embezzled from and these thieves move on to their next victim. The worst-case a doc shared with me was a manager who stole more than $150,000 from him. He described her as a loyal friend of the family, hardworking, always at the office, never took a vacation, very protective of who posted insurance, because of course, no one could do it as well as she did. This is a common description of an embezzler. The doctor prosecuted and the manager went to jail – finally some justice!

The following three-step process is meant to be a guideline. The goal for me is to share anything that may help prevent embezzlement, bring awareness to the problem, and provide practical processes that build strong business leaders and teams.

3-Step Process to Ensure Financial Accountability in Your Practice

Step One – Recruitment & Employee Retention

Hire correctly, don’t just hire for skill, hire primarily for character. Contact me for interview questions that help you understand how to hire for character.

Vet every applicant with background checks and team involvement. Don’t settle – listen to your gut. Develop team agreements that will support the culture you desire to create. Share with all new hires. Show appreciation to the team. Seventy-nine percent of employees who quit their jobs cite a lack of appreciation. Sixty-five percent of employees report that they received no recognition or appreciation at their workplace in the past year. Have your training process established and in writing by using timelines to train.

Step Two – Daily Accountability to Ensure Accuracy of Treatment Documentation and Insurance Submission Accuracy

At the end of each day, the folder is placed on the doctor’s desk with the contents from the following checklist.
Master Schedule

  • Noting cancellation/rescheduling
  • No-shows/rescheduling
  • Same-day treatment added

Computer Reports

  • Day Sheet by the provider
  • Adjustments Day Sheet
  • Number of new patients scheduled that day and noting how they were referred
  • Deposit slip that shows each type of payment
  • Bank deposit slip prepared listing check totals, cash totals, credit card totals, and third party totals
  • Insurance Explanation of Benefits (EOBs) posted that day

Refund Request

  • Patient and insurance refund request with a copy of EOB and ledger printout indicating the reason for the refund. The doctor will review for accuracy and deliver to the bookkeeper to issue a refund.
  • Attach the Patient Refund Request form. Once the bookkeeper has issued the check, the refund request form is returned to the front desk to make the adjustment in the dental software.
  • The refund will be reconciled during month-end balancing.

Print Patient Care Call/Callback List for Dr.

  • Most impactful when doc calls. Internal marketing at its finest!
  • Include patient phone and email contact information.

Print the List of NP Due Tomorrow

  • Doc to call, introduce themselves, thank them for choosing your office and note they are looking forward to meeting them. Internal marketing for the WIN!
  • Include phone number and reason for the visit and any other important information that will be helpful for the doctor to know.

Reviewing Instructions for Provider

Review the Day Sheet by the provider with the master schedule. Look for any discrepancies, errors or changes that need to be made to completed procedure entries. Flag any changes.
If no changes are necessary each provider initials their production totals on the Day Sheet.

Review Adjustment Day Sheet for any mislabeled or unusual looking adjustments. Inquire about such items. Use insurance EOBs when necessary to confirm proper insurance posting practices.

Refunds and Credits Balances
Refunds to patients and insurance companies must be shown on the Adjustment Day Sheet. Refunds must be documented and the evidence approved by the doctor. Reminder – accounts must be reconciled with the EOBs before issuing a refund.

Wrap Up
Return the folder to the administrative desk after review. If no revisions are necessary the doctor signs off with a checkmark. If revisions are necessary updated copies are returned to the doctor’s desk in the folder for final review. The folder must include the original document as a reference. Documents are then filed by day and month in a three-inch binder or scanned to a folder.

Step Three – Preparing for the Monthly Accountability Meeting

After the bookkeeper has balanced the previous month’s bank statement, have the bookkeeper run the following reports from QuickBooks. Make sure to give the accountant or bookkeeper a due date so you stay on schedule with your monthly meeting.
The front desk will run corresponding reports from dental software. Manager to review all reports before the meeting to be sure you know that you are balanced between QB/the bank and your dental software.

  • Patient Collection Report – do both reports match?
  • Patient Refund Report – do both reports match?
  • Insurance Refund Report – do both reports match?
  • Care Credit/or Other Third-Party Fee Report – does it match the statement?
  • Merchant Credit Card Fee Report – does it match the statement?
  • Previous months P&L showing percentages of expenses and a separate detailed P&L for the bookkeeper only. Review all expenses and percentages, keeping a close eye on the following expenses: wages (22-25 percent), dental supplies (4-6 percent), lab fees (5-9 percent), office supplies (.4 percent), marketing (4-10 percent), rent (10 percent)
  • Managers Monthly Accountability Worksheet (contact me for sample)
  • Proof of QuickBooks Reconciliation Report and the bank statement ending balance match. Request a copy of the reconciliation report from the accountant and download a copy of the bank statement to compare.

Please note: Accountants and bookkeepers may not be tracking fees according to vendor type, as in Care Credit, Merchant Credit Card, etc. Simply request they create a sub-account under “bank fees” so you can easily confirm the fees are reconciling with your monthly statements from the vendor.
For questions or to request any of the forms mentioned please contact me at kim@professionaltransition.com

Kim McCleskey has worked in dentistry for the last 30 years. She spent those early years managing and leading large dental practices. Kim eventually served as Director of Operations overseeing multiple dental practices and specialized in the pre and post-acquisition process, until forming her own company, True North Dental Solutions. At True North, Kim focused on practice start-ups, practice management, and continued consulting through the pre and post-acquisition process.

Kim went on to merge her company with the Avitus Group to start Avitus Dental Management Solutions, a full service dental consulting firm to include building a successful in-house virtual dental billing company. Kim is a Certified Professional Business Coach and holds memberships with ADMC, DEN, and AADOM.  She is currently a Practice Transition Consultant with Professional Transition Strategies