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How to protect your healthcare practice from internal theft

Apply these proactive strategies to understand, prevent, and correct embezzlement to help protect your healthcare practice’s integrity and financial health.

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Did you know: A 2019 study conducted by the American Dental Association (ADA) found that 47% of surveyed dentists admitted to being victims of internal theft? And, shockingly, 27% of the 47% reported experiencing theft multiple times. In the dynamic world of healthcare, where you dedicate yourself to patient care, a threat may loom in your practice: internal theft. This sneaky issue can challenge the integrity and financial health of a healthcare practice. So, why does it happen, and how can you stop it.

How internal theft happens in healthcare practices
Understanding why healthcare practices are vulnerable to internal theft requires recognizing the unique mix of clinical and business aspects of the industry. Unlike traditional business owners who typically undergo formal training in business management, many healthcare providers are primarily driven by a passion for patient care rather than entrepreneurial pursuits. These providers, though well-intended, may lack the comprehensive knowledge and expertise necessary to effectively oversee the financial operations of their practices, which leaves their practices more susceptible to embezzlement.
Likewise, the specialized nature of accounting in the healthcare industry further adds to the challenge of detecting and preventing internal theft. Unlike conventional businesses that operate under one accounting system, healthcare offices often utilize separate software for managing expenses and revenue. This separation can create vulnerabilities, making it easier for discrepancies between accounting records and bank deposits to go unnoticed without close supervision. Those who steal from within can exploit these structural weaknesses to hide their actions and avoid being caught.

How to help prevent internal theft from happening in your practice
To proactively address the threat of internal theft, it’s important to adopt a multi-layered approach that encompasses preventive measures, watchful monitoring, and swift intervention. Establishing robust internal controls is key, including measures like regularly checking accounting records, delegating tasks you might otherwise overlook, and restricting access. By supplementing these financial systems with internal processes, you can help deter potential theft and make it more difficult for criminals to operate.
Fostering a culture of transparency and accountability among staff members is instrumental in preventing internal theft, as well. Communicating organizational policies and expectations, coupled with regular training on ethical conduct and fraud awareness, can empower your employees to act with integrity. By instilling a sense of responsibility and commitment to ethical conduct, you can cultivate a workplace environment with a lowered risk of internal threat.

What to do if you suspect a problem
In the event you suspect internal theft, it’s important to promptly and discreetly investigate the potential issue at hand. To start, seek help from experts who know about healthcare finances and can investigate discreetly. Police departments often lack the expertise and time required for such investigations, which is why engaging industry-specific forensic accountants is crucial. Engaging the services of these professionals with expertise in healthcare practice management enables you to conduct thorough and impartial investigations while minimizing disruption to practice operations. These experts can leverage advanced forensic techniques and analytical tools to unravel the intricacies of fraudulent activity, provide actionable insights for remediation, effectively communicate findings to law enforcement, and facilitate prosecution if necessary.

What to expect during an investigation
Typically, investigations take about eight weeks from start to finish. If embezzlement is taking place, it usually becomes evident around week four or five of the investigation, and action is taken to address it, often involving the removal of the thief.
The cost of an investigation varies depending on factors like practice size, duration of investigation, and the complexity of practice management software. Smaller healthcare practices like a one-dentist, one-hygienist dental practice typically cost about $7,000 per investigation. However, a four-doctor oral surgery practice may attribute an investigation cost of around $15,000-$18,000.

In summary
Despite the potential risk of internal theft, owning a practice remains a rewarding journey filled with opportunities for growth and success. While threats like embezzlement may exist, they are preventable with the right measures in place. By fostering a culture of transparency, implementing robust financial controls, and vigilant monitoring, you can navigate these challenges and build a thriving practice that leaves a positive impact on your community.

Editor’s note: This article has been adapted from episode 34 of The Path to Owning It podcast. Listen to the episode for a more in-depth understanding of this topic and much more! 

This content is for informational purposes and does not constitute the rendering of legal, accounting, tax, or investment advice, or other professional services by neither Provide, its affiliates, nor Fifth Third Bank, and it is being provided without any warranty whatsoever. Please consult with appropriate professionals related to your individual circumstances.

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