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Embezzlement - An Unfortunate Topic to Discuss for Business Owners

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Embezzlement is something no business owner wants to encounter. Unfortunately, the reality is that some of us will go through the troubles associated with such an issue.  Embezzlement is when someone in a position of trust, typically staff but potentially others, steals from his or her employer. In dentistry, there are three types of embezzlement. Intramural stealing: when staff is stealing from the dentist or a dentist is stealing from another dentist in a group practice setting. Direct embezzlement: when staff is stealing from the practice. And finally, indirect embezzlement: when staff is stealing from insurance companies, where the doctor will be held financially responsible. Indirect embezzlement is also commonly referred to as “midnight dentistry.”

 

Frequency of Embezzlement

                How often does embezzlement happen? Is this a valid concern? According to ADA studies, dentists have a 52 to 60 percent chance of embezzlement happening to us in some form or another. The average theft from filed cases is $109k, however, according to the Association of Certified Fraud Examiners, this number actually rises to $140k. The biggest case known to date is $1.9 million, which occurred over a five-year span. These numbers reflect only the amount of money stolen—not the lost time, productivity, or investigation costs.

                Dentists are easy targets. During dental school training, we are not sufficiently trained in business, and therefore many areas of the business model are left to a "trusted" employee. As dentists, we pay little attention to the administration of the dental practice. The embezzler can be motivated to find weaknesses in the systems we implement in our practices. Commonly, it is the “needy,” having recently gone through a financial crisis, who resort to embezzling. They could be stealing to make a number of different payments in their personal lives. A mortgage, divorce or a spouse losing their job, and addiction are all possible triggering events to motivate someone to embezzle. The “greedy” people steal for their egos; smart people who feel underappreciated and believe that you, as a dentist, are successful due to them. 

                There are many red flags in staff behavior to be aware of if you suspect embezzlement has occurred to you.  They are:

1.       Staff who are suspiciously dedicated, especially working unusual hours or who never take vacation and/or sick days

2.       Territorial about work or workspace

3.       Control freaks who want to control communication between patients and the practice

4.       Conspicuous displays of honesty

5.       Resistance to practice management software upgrades

6.       Resistance to increased involvement of consultants/accountants

7.       Attempting to exert control over choice of practice advisors

8.       The receptionist’s BMW is new, and bigger, than yours!

 

Could you be facing embezzlement in the near future? As young dentists, we are a target for being ignorant. While so many other aspects of running a business and dentistry weigh heavily on our minds, staff members are able to know that we are preoccupied to be concerned with the tasks that they complete each day.  Go with your gut instinct, and if something doesn’t feel right, investigate further!