Rehab

How to prevent embezzlement in your outpatient rehab facility

Rehab Regs, March 18, 2003

No one wants to suspect their employees of stealing. But at the same time, no one likes losing large sums of money. Here's how to prevent greedy embezzlers from taking money from your practice:

Exert internal control
"One of the biggest problems that sets up embezzlement is a lack of internal control," says Richard Dixon, president of Dixon Kanary & Company, a health care consulting and education company in Augusta, GA.

Tip: Split the money-receiving sections of office work, says Dixon.

For incoming mail, do not have the same person open payments, make the bank deposits, and post the payments. "If the [same] person does all of those duties, basically they can steal whatever they want to steal," he explains.

The size of your practice dictates whether you can pass these jobs along to different people or whether you have to do one of these activities yourself. While this might not seem like a high profile task, Dixon says there are unseen benefits.

"Everyday, go to the bank and make the deposits yourself," he says. "This allows you to establish a rapport with the bank."

Track the cash
Embezzlement through the mail is easier to stop than money-skimming from out-of-pocket payments.

To curb both, split up mail and out-of-pocket payment duties. The person who takes the cash from patients should not be the person making the deposit.

Tip: Designate an office worker to fill out deposit slips, says Mary Marshall, MD, president of Management and Planning Services in Fernandina Beach, FL. Maintain a file for the receipts in your office. Also make sure to clip the day's receipts to a copy of the day's bank deposit slip.

Use patient billing as an additional monitor by sending statements promptly at the end of the month.

"The patient is providing an outside monitoring system because he or she will call and question the statement if payments are not reflected," Marshall says. "Even if the payment has been from an insurance company, the patient usually receives a notification that the payment has been made."

Let employees know that these checks and balances are not solely in place to prevent embezzlement, but also help employees avoid errors and missing funds.

Never let your guard down
"A lot of times, the people who embezzle are 'trusted employees' who do multiple tasks," Dixon says.

"It doesn't matter how well you trust somebody, you simply don't know what's going on in your employees' lives. Always keep your eyes open."

Researchers do not have a single concrete idea why embezzlement occurs. Dixon remembers a woman who worked for an office for several years and over the course of her employment embezzled a substantial amount of money. The reason? She wanted to buy her boyfriend gifts.

In most cases, embezzlers are discovered because the numbers just don't add up. Closely monitor your books: Even if you don't suspect that anyone is stealing from you, it makes good business sense.

"This is especially true for the health care industry, with private insurance or Medicare being slow to pay claims," Dixon says.

Consider the following tips when monitoring your accounts:

Constantly look at your accounts receivable report. This is one way to tell what is due to you and when it was supposed to be paid.

Balance all receipts (cash and checks) at the end of every business day against the patients you saw that day.

Monitor your aging reports monthly. Look into payments patients haven't made for more than 90 days. If you investigate why a claim has not been paid and discover that the patient can show proof of payment, you may have an embezzlement situation on your hands.

Balance your bank statement every month. Look at what is coming in and what is leaving, Dixon says.

Track your deposits and payments through a log program on your computer. Keep these separate from your office records and match these up at the end of every month.

Carefully check adjustments during reconciliation of bank statements or other records. This is a clever trick of embezzlers, according to Marshall.

"Potentially, there could be a receipt which has been posted, never deposited, and [then] an adjustment made to cover," she says.

Contract with a bookkeeper to complete the reconciliations. Don't appoint an employee who is involved in daily financial procedures.

"The bottom line is this," says Marshall. "Stay informed. Listen. Watch. Respond. And be involved."



Tips for getting money back

Make sure that every employee who handles money in your practice is bonded by your work insurance company, according to health care consultant Richard Dixon.

This will protect you against theft; plus, it's an inexpensive part of your facility's insurance. But keep in mind that if you contact the insurance company about the embezzlement case, you must, according to the law, inform the authorities.

If your employees are not bonded, make it a point to speak with your insurance company.

Other tips:

1. Call the police first in almost every case. This is the cardinal rule.

2. "If the person says they can immediately pay you back, then you may not have to call the police. But it's up to you," Dixon says.

3. The larger the amount of money stolen, the less of a chance that the person will be able to pay you back. "If you want restitution, you will probably have to deal with law enforcement," Dixon explains.

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