Joseph Rugg's Health Law Blog

In an article this morning, amednews.com warns that, because patients are paying more of their medical expenses and most deductibles and co-pay obligations reset on the first of the year, the risk of employee embezzlement increases with the significant amount of cash passing through the hands of medical office staffers. 

The article cites an MGMA November 2010 survey which found that “[n]early 83% of 688 practice managers were affiliated at some point with medical offices where employee theft occurred, … Nearly 45% of practice managers reported cash stolen before or after it was recorded on the books.”

I personally have had to counsel physician clients who discovered that a trusted, long-time office manager or other staff person had embezzled from the practice — a little here, a little there over many years until the total amount stolen added up to a substantial sum.  There is seldom much of a chance of recovery from the embezzler.  The current economic pressures will likely exacerbate this risk.

Types of activities that may occur: 

• Cash payments not being recorded or reconciled accurately
• Voiding or refunding charges to vendors or patients improperly or to the wrong person
• Theft of prescription pads and drugs for sale to others

Criminal background checks may not help, because the new employee may never have stolen before.

Good internal controls are critical.  Every practice should consult with its accountants, business insurers, lawyers, and other advisors to review its internal policies and procedures to insure that appropriate safeguards are in place.