All too often you hear about doctors being the victim of medical practice fraud. The theft or fraud often occurs by way of misappropriation of cash, often in small amounts over a long period of time. In one case I heard about, the staff member was pocketing the cash payments from patients. The loss to the doctor amounted to well over $100,000.
In this article I would like to explore why doctors are relatively ‘easy’ victims for medical practice fraud, and what you can do to protect yourself.
Causes of medical practice fraud
Doctors are time-poor and don’t always have the time or skills to check on their employees. Your practice manager or bookkeeper may make payments on your behalf, due to your time constraints. It is very easy to quickly lose track of what is happening financially in the practice. Someone might take advantage of this.
You place a lot of trust in your staff, and particularly your practice manager. So much perhaps that you have no control systems in place. Your accountant may not always be able to pick up any irregularities, as fraudsters can cover their tracks for many years.
Prevention of medical practice fraud
Ideally, you would separate some of the administrative and accounting duties such as accounts payable and receivable between different people, and appoint a designated control person. The process should involve two different people in a way that causes them to verify each other’s work as a result of the process itself. If your practice is relatively small, then separation of duties may not be an option. This means you will need to keep a close eye on the cash handling process and monthly accounts yourself.
Control systems are crucial to preventing medical practice fraud. First of all they will act as a deterrent and secondly they will help you identify irregularities. For example, you could set aside time every week to go through the outstanding payments, patient numbers and accounts payable.
You could also have a specialist firm undertake an audit of your systems and procedures, to identify any weak spots. Once a year, they may come in to undertake a ‘surprise’ audit, which will keep your employees on their toes.
Even with the very best controls in place, there is no way to absolutely protect or guarantee against medical practice fraud, but every doctor needs to take steps to minimise the opportunity for theft. Nowadays there are business insurance policies available that can protect you from the financial loss of theft or medical practice fraud, and you may need to consider this for complete peace of mind.
About Yves Schoof
I specialise in medical financial planning and coordinating the financial affairs of medical professionals. I have been recognised as one of the Top 10 financial planners in Perth and Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.
As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.
My first consultation is free. I allocate up to 90 minutes to discuss your personal circumstances and to establish how I may best assist you. Where you already have an existing adviser, I would be happy to offer a second opinion. I always quote a fixed dollar fee before we start working together.
Please contact me on firstname.lastname@example.org or call me direct on 0432 885 295. You can follow me on Twitter @YvesSchoof or connect with me on Linkedin to receive new articles.
Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.
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