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    How to prevent employee embezzlement

    Unscrupulous staff members know there's more than one way to steal, so take steps to protect your practice


    George F. Indest III, JD, MPA, LLM
    Employee theft is more likely to occur in small medical practices rather than larger ones. And when it happens in smaller practices, it has a disproportionately larger impact. The public perceives employee embezzlement as something that only happens to a tiny minority of businesses and to those who are rich and can afford the loss, but this perception is not accurate. The U.S. Chamber of Commerce reports that one out of every three business failures are the direct result of employee theft. So regardless of the size of your practice, you should be concerned with employee theft and take action to prevent it.

    You're concentrating on providing quality care to your patients, so it can be difficult for you to closely monitor what your employees are doing. But numerous ways exist by which employees may steal from you:

    • theft of petty cash funds;
    • altering deposit statements;
    • writing company checks for personal expenses;
    • using a company credit card for personal purchases;
    • failing to accurately record cash transactions and payments and stealing them;
    • applying for company credit cards for themselves;
    • creating fictitious invoices and diverting the payments;
    • creating fictitious customers, patients, transactions, or vendors;
    • creating a phony bank account in the company's name and diverting payments to it;
    • issuing fake refunds to patients and taking the refunds;
    • billing for their own lab tests, medical supplies, or drugs under a patient's name; and
    • having the mail, bills, or payments directed to a different address.

    The opportunities for employee theft are many, and few thieves are caught. If you own a small medical practice, diligence should be your watchword. You can take steps to help prevent employee embezzlement, however. (For information on how to detect fraud, see "Warning signs".)


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