Do you know how common embezzlement is at dental practices? In 2019, an ADA survey revealed that 49% of dentists they polled had directly experienced embezzlement. The rhyme or reason why this happens is unknown, but it’s something that dental teams need to be aware of. It’s a hard topic to talk about but you won’t be able to prevent it if you don’t understand how it can happen.
In this article, you will learn how an insider can position themselves to embezzle your money and how you can prevent it from happening. You will also learn a few best practices for how to handle it if it is happening. You must understand how to prevent crimes like this from happening under your own (business) roof so that you can avoid the huge emotional and financial costs.
3 top embezzlement risks for private practice dental offices
Unfortunately, embezzlement is almost always committed by someone within the dental practice. It is typically a team member who has been working at the practice for at least a few months and has established a basic level of trust with the rest of the team and the dentist.
1. Lack of oversight – only one person dealing with all billing
A person looking to take money from the practice is usually working on billing in some capacity. More often than not, the reason they can move money around so easily is that there is not anyone overseeing their work.
We talked to a consultant at Prosperident, Dentistry’s Embezzlement Experts, who explained the four ways money flows through accounting functions in the practice: it’s received, recorded, deposited, and reconciled. And she recommended that no person should perform two or more functions and that the two should not be consecutive.
If they are the sole person making deposits from insurance payments into bank accounts, with no one looking over their shoulder, they can more easily take $50 here and there. One telltale sign that the person with sole responsibility for billing is up to something odd is that they are territorial about their position.
2. Virtual credit cards – not a secure method of payment from insurance companies
Some payment methods that you accept from insurance companies are less safe than others. Virtual credit cards, for example, are not a very secure method of payment.
A virtual credit card allows the insurance company to transfer money electronically with a temporary credit card number that is never used again. It’s one way for your practice to easily receive insurance payments for procedures covered by the patient’s plan.
Insurance companies provide the option to use virtual credit cards instead of paper checks for their own convenience – it saves them the overhead of printing and mailing checks. Plus, they can charge you a merchant fee every time a virtual credit card processes.
Virtual credit card funds can readily be stolen – which is why they are not safe methods of payment. Many insurance companies will try to auto-enroll your dental office into their VCC program, so make sure to always opt-out of the virtual credit card option instead of accepting it. Instead, use electronic funds transfers (EFTs) that will deposit straight into your bank account.
3. Access to bank accounts
You may let one or two team members have access to your bank account statements so that they can balance the numbers across the dental software and accounts – making sure everything matches. And you should have someone doing that! It’s important to keep everything balanced.
However, it’s not appropriate to give any team members access to the funds in your bank account, even if you trust them. Instead, for most business bank accounts, you can give them “view only” access so that they can see everything they need to, but cannot transfer your money anywhere.
If you’re using EFTs, they shouldn’t have to make any deposits, so they shouldn’t need bank account access.
5 ways to crack down on the risk of embezzlement at your dental practice
There are 5 steps you can take to reduce the risk of embezzlement at your dental practice. It’s important to create an environment where dishonest behavior isn’t tolerated or easy to commit.
1. Have more than one person responsible for billing
When there is no oversight or accountability when it comes to the person handling billing, that leaves a lot of room for someone to abuse your trust. You want to ensure more than one person is seeing the money come in and making sure it goes to the right place.
To combat this, have multiple people analyze the billing system you have in place. This means more than one person is balancing the numbers or overseeing the person who does do this. With multiple eyes on the money, someone is less likely to find an opportunity for embezzling.
2. Don’t give team members access to your bank account funds
Make sure you give your team members view-only access to the business bank account. They don’t need to be in your bank account for any other reason than to make sure numbers are balanced across all platforms (dental software).
3. Opt-out of virtual credit cards
As we mentioned, virtual credit card funds can be transferred into anyone’s bank account. They are not a safe and secure option for accepting insurance payments. Instead, opt for electronic funds transfers (EFTs). They will work as a direct deposit, and no team member will have to handle the payment for you to receive it.
4. Create a whistleblower policy
If this one sounds serious, it’s because it is. Embezzlement at a dental practice is almost always noticed first by a fellow team member working in admin. It can be hard to come forward when they notice something sketchy happening, especially when it’s someone they work with and have gotten to know.
They see this person every day, have probably formed a friendship with them, and don’t want to feel guilty or scared about what the consequences might be.
Create a system that allows a staff member to come forward with a concern like embezzlement anonymously, or in a way that protects their identity. This will create a safe environment and make your team feel more comfortable holding one another accountable.
5. Consider hiring an outsourced billing company to oversee the billing process
An outsourced dental billing company offers much more than expert billing services. While helping to streamline your billing and collect more, your remote team member also offers an objective, third-party perspective when it comes to your numbers.
If there’s anyone who is going to immediately notice if something is off when it comes to your billing, it’s your remote biller. They typically run daily deposit reports that keep track of all of your collected revenue. Because they’re constantly looking in your software to post payments on outstanding claims, they’re going to know when something doesn’t add up.
And because their success as an outsourced service depends on a clean billing system, they will have no qualms about reporting inconsistencies immediately to you, the dentist.
Take care of your dental practice and collect everything you’ve earned – catch red flags within your billing system
You’ve worked hard to earn the money your business has made. Don’t give someone you trust the opportunity to betray you. It sounds harsh, and hopefully, it never happens to you. But it’s always best to avoid the risks and protect your finances and all you’ve worked so hard to accomplish.
Dental ClaimSupport has helped dental offices minimize embezzlement risks, as well as speak up when something could be harmful to your financial health. To learn more about how hiring a dental billing company can help your practice see things an insider might not notice, visit our Learning Center.