---
title: Six Ways To Prevent Medical Office Theft
description: Six methods for preventing employee embezzlement at medical practices.
image: https://www.mbrbilling.com/hs-fs/file-16594562-jpg/images/employeetheft-resized-600.jpg
---

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# Medical Billing Blog

# Six Ways To Prevent Medical Office Theft

Posted by [Barry Shatzman](https://www.mbrbilling.com/blog/author/barry-shatzman) on Wed, Oct, 10, 2012 @ 15:10 PM

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![Six Ways To Prevent Employee Theft](https://www.mbrbilling.com/hs-fs/file-16594562-jpg/images/employeetheft-resized-600.jpg?width=369&height=369&name=employeetheft-resized-600.jpg)Chances are that you like all the members of your staff, and that you appreciate their integrity, loyalty and hard work; so the thought that one of them could be stealing from you is probably not at the top of your list of things to worry about today.  But if you’re leaving *everything* to your staff while you focus on patient care, you might very well be tempting them with an irresistible carrot.  

In fact, medical practices across the country lose an estimated $25 billion each year due to employee theft.  This comes from the Association of Certified Fraud Examiners (ACFE), who regularly gather and publish statistics related to fraud committed in many industries and countries.  People steal for a variety of reasons, including desperation, weekend plans, inadequate compensation, drug addiction, or just opportunity.  

According to the Medical Group Management Association (MGMA), groups of 10 or fewer providers accounted for 70% of the cases reported and 63% of the monies stolen; more than half of the cases had less than 5 providers.  The average embezzler starts out “borrowing” small amounts, has been employed by the practice for three or more years, steals for a time period of anywhere from a few months to a couple of years, and steals about $5,000 over that period of time.  Stealing usually isn’t a one-time event; in fact, once an employee gets away with theft the first time, it becomes more likely to continue.  

If yours is among the many medical practices that fall victim to employee theft every year, the reason is not likely to matter to you.  At the end of the day, you’ve lost hard-earned revenue, and your sense of trust and camaraderie has been offended.  And you probably have vowed never to trust so implicitly again. 

But instead of adopting a stringent “us vs. them” stance for interacting with your staff, it’s reasonable to make a few practical changes to your work flow to avoid winding up the victim of embezzlement in the first place. 

Many physicians naively trust staff to autonomously perform all the daily financial functions of the office, so they can focus only on patient care.  This approach cultivates an environment that leaves the provider particularly vulnerable to employee theft.  

- If your front desk staff not only takes co-pays (in cash), but also has the authority to write off balances or cancel appointments, there is no reasonable way for management to know if the practice received any cash, because there may not be any records to verify patient payments.  This is the most common scheme.  In fact, according to the MGMA, theft of cash receipts, cash on hand, and disbursements account for 72% of practice theft.  This type of embezzlement usually only comes to light when patients begin to complain that payments have not been credited to their accounts. 
-  Similarly, if your office manager can add vendors to your accounting software, but also has the authority to sign checks, it is easy to set up a fake vendor account and invoice the practice for medical or office supplies.  

However, you can easily eliminate the three conditions most likely to create opportunity for employee theft: implicit trust, concentration of duties, and lack of oversight.  Any one of these creates an opportunity to steal, and if all three exist, stealing can go on undetected for a long time.  The way to prevent employee theft is to reduce or eliminate circumstances that create opportunity, and institute procedures with built-in checks and balances.   

1. Hire a third party medical billing company and use a bank lockbox.  The billing service will become your first line of defense because they will be the first to hear from patients about missing payments. 
2. Conduct random audits.  It’s not necessary to watch every transaction, but you can randomly review your staff’s work. 
3. Review high risk areas (co-pays, mail, disbursements, patient refunds, and payroll).
4. Separate responsibility for financial functions wherever possible.  If one employee is responsible for accepting and depositing payments, make sure a different employee is responsible for applying payments to patient accounts and write offs.
5. Cross train multiple members of your staff and distribute different critical functions to more than one employee.  Eliminate circumstances that call for only one employee to have control over all the steps for any financial transaction.
6. Run background checks, but also verify references directly with any candidate’s previous employer(s).  According to MGMA research, 62% of perpetrators are never prosecuted, so unless a candidate was actually convicted of fraud, a background check will not reveal previous indiscretions.

By instituting a few basic changes, it is possible to greatly reduce the likelihood that your practice will fall victim to employee embezzlement.  This will make it easier *and safer* to trust your staff to perform their authorized job duties, without engendering a culture of suspicion. 

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