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In general, dental offices are small, close-knit entities where you would think embezzlement would not be a problem. But like most other businesses, it can be a problem and it does occur more often than you would expect.

Many times, the embezzler seems to be the perfect employee – working long hours, not expecting help, seeming to be in control of his or her job.  But, it is that control that allows some employees to take advantage of the situation and begin diverting money to themselves.

What’s the Most Common Form of Embezzlement that Occurs in a Dental Office?

The human mind is very inventive and there are undoubtedly many ways that embezzlement can occur. But, by far, the most common way to steal in a dental office is to take the cash. Often, it starts by “borrowing” from the petty cash fund.

An employee is “short” for lunch money or something minor, so they dip into the petty cash fund usually with the idea that they will pay it back. When they realize that no one knows they took the money and no one expects them to pay it back, the path may be open for more serious actions.

Perhaps a new patient or an emergency patient is seen in the office and he or she pays cash for the services they receive. The receptionist or other responsible employee may realize that the money can be pocketed if the patient is not listed in the computer at all. No office visit is recorded, no charge for services is entered, and no payment is shown.

This type of activity can be difficult to detect – your accountant will not be able to find it and your other employees will be unaware of it.  The only person in the office that is likely to detect it is the dentist.

At the end of each day, the dentist should compare the list of the patients seen with the daily report of charges and collections. If a patient has been seen but is not listed on the daily report, immediate action needs to be taken to detect what happened.

On an isolated basis, it could have been just an error. If it happens often, it is a serious problem. However, the very action of the dentist (or the dentist’s spouse) checking each day the list of patients seen with the charges and collections report will, in most cases, prevent an embezzlement from beginning.

How Can a Dentist Limit Embezzlement Risk?

The next most common form of embezzlement still involves cash but it occurs when patients make payments in cash and the payment is hidden on the computer. Let’s say Patient A has a balance on $500 on his or her account. And that patient drops by the office and makes a payment of $200 on the account.

The embezzler takes the cash but needs to cover up the fact that the patient account needs to be $300 instead of $500. This can be done by making an adjustment to the account in the amount of $200.

Because this type of embezzlement can grow into a serious problem, the ability to make adjustments to patient accounts needs to be limited and the employee making an adjustment needs to be identified and the adjustments need to be reviewed by someone other than the employee who books charges and payments.

There are other ways embezzlement can occur in the dental office but they would involve stealing insurance checks, diverting payments to an account in the name of the embezzlement, phony payments to suppliers and probably more. 

As we said, the human mind is very inventive. Fortunately, these methods are pretty complicated and are relatively rare in the dental office.

The lesson here, however, is that embezzlement can occur. It can have a devastating effect on both the dentist and the employee. And, in most cases, it can be avoided by some extra due diligence by the dentist and/or by the dentist’s spouse.

If an employee is inclined to be dishonest, knowing that there are some independent checks and balances may prevent them from slipping into dishonesty.

Expect the best behavior, but put safeguards in place against the worst.

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