July 1, 2024

Don’t Be an Easy Target for Fraud – 5 Steps to Avoid Losing Money

By Steven J. Anderson, Total Patient Service Institute, Founder and Chief Creative Officer 

Nearly 50% of dental practices are victims of fraud, theft and embezzlement. That startling statistic was the result of a survey conducted by the ADA Council on Dental Practices. The same report revealed that 46% of respondents have experienced theft or embezzlement more than once.  

The survey results reveal a problem all small businesses face. The good news is that there are some simple steps dental practice owners can take to avoid losing money to fraud and embezzlement.    

Checks and Balances 

The best advice I ever received from an accountant was to never trust your accountant!  What he meant was, every business should have checks and balances in place anytime money is involved. No system should operate on trust alone. Having checks and balances in your financial system is not only good for owners, it’s also good for team members. 

Putting a system in place to prevent fraud isn’t difficult and can be done by performing these five simple reviews every day. 

Five Daily Reviews to Eliminate Fraud 

1 – Review Patient Sign-In Sheet 

Double check to make sure every patient listed on the sign-in sheet actually showed up for their appointment. When a sign-in sheet is not checked regularly, it opens the door for an embezzler to add a patient’s name who didn’t come in. Now they have someone to whom they can attribute production that never happened, allowing the embezzler to misallocate resources and siphon off money in a different direction. If everyone knows the sign-in sheet is routinely monitored, it eliminates an easy pathway to fraud.  

2 – Review Daily Production Report  

Your provider production report details every procedure that was performed on a given day and which doctor, or hygienist performed the procedure. In your review, you are checking to make sure that all the patients who came for appointments that day show up on the report and that their treatments were properly recorded. A simple scan should be enough to make sure that nothing looks out of line. 

3 – Review Adjustment Report 

Your practice management software can produce this report which shows any billing adjustments that might have been made for services rendered. An adjustment can be any discount or write-off you give a patient. If your practice offers a 5% discount for payment in advance of treatment, that should show up in the adjustment report. If you have a marketing campaign that offers a 25% discount to new patients, that goes on the adjustment report. If a family member comes in and you don’t want to charge them, that goes on the adjustment report. In your review, you simply make sure the adjustments all make sense and align with what you have approved. 

4 – Review Bank Deposits  

Look at bank deposits to make sure what you see in your practice management software matches what you see on your deposit slip. Whenever a patient makes a payment, it should get recorded in the practice management software and the money should be deposited in the bank. Whether the patient paid by credit card, check or cash, everything should match.  

5  – Review Audit Trail Report 

If this is the first time you’ve ever heard of this report, you’re not alone. Only the practice owner should have access to the audit trail report, and you can get it from your practice management software. It’s one that rarely gets reviewed, but it’s a powerful tool to prevent fraud. The audit trail report details every keystroke that was made in the software, including every entry and every deletion. In your review, you are looking for items that have been deleted – in particular, any procedures and any payments – and whether anything looks out of line.  

This is a voluminous report, so it may feel overwhelming the first few times you review it.  Scan it for anything that has been deleted.  After you’ve done it a few times you’ll notice it becomes much easier to quickly identify the delete keystrokes and decide whether or not they suggest fraudulent activity.   

Daily Reviews are More Effective  

You’ll have a better chance of detecting and preventing fraud if you perform these reviews at the end of every day, while the activities for the day are still fresh in your mind. When each of these reviews are performed daily, they can be very quick and efficient. All of these reviews can be done in just a few minutes, and even the audit trail report can be completed quickly with practice.   

Bonus Tip – Don’t Accept Electronic Cards as Payment from Insurers 

If an insurance company tries to pay you using an electronic credit card, don’t let them. Require all insurance reimbursements to be made by check or direct deposit. Insurance companies are opting for electronic credit cards because it’s easy for them, but this form of payment completely lacks financial controls. If an insurer mails a $2,000 payment to you as a credit card, anyone in possession of that card can pocket and use it. The potential for mischief is high.   

Better for Everyone 

Even with the most ethical team members on the planet, a solid system of checks and balances is good idea. By not depending solely on trust, your team members are never put in the uncomfortable position of someone questioning their conduct. For those team members who might be tempted to embezzle funds, they are far less likely to try if it they know there is a check and balance for everything 

For a comprehensive checklist of the most important areas where you can create checks and balances in your practice, download a free copy of the eBook: The Five-Point Dailey Checklist by Steven J. Anderson:   

Click HERE 

If you would like to review the financial procedures at your practice, contact our team at the Total Patient Service Institute  1-877-399-8677 or Answers@TotalPatientService.com  We are proud to partner with Engage Advisors to help dental practice owners build strong and financially healthy businesses.