Dental Embezzlement: It Can’t Happen to Me!

Dental Embezzlement: It Can't Happen to Me!Editorial
by Bryan Truitt and Jim Du Molin

Someone Is, Most Likely, Stealing from You at This Very Moment

“Embezzlement can’t happen to me!” Oh, really? It can, and statistics say there is a better than 75% chance it will! Those odds are worse than your chances of coming down with 95% of known terminal diseases.

Earlier this year, I did a survey of dentists on the topic of dental embezzlement. Over half of the respondents reported having discovered an embezzlement!

What is embezzlement?

It’s a $310 billion annual industry that has built itself into the single largest loss category for fidelity bond insurers. It is greater than the amount our national debt increases each year. It’s the “E” word no one likes to talk about or admit that it can happen to his or her dental practice.

Embezzlement or fraud or internal theft has been defined as “the fraudulent appropriation of property by a person to whom it has been entrusted.” Often, this may be your office manager, but it could just as easily be your financial management consultant, your hygienist, even your spouse.

Embezzlement doesn’t just happen to Fortune 500 companies and people other than yourself.

It is especially rampant in small businesses of all kinds and in particular dental, medical, legal and religious organizations. These are considered higher risk groups.

How many people do you know who have been ripped off? Don’t be too quick to say none. How many know they have been taken for a ride and admit it? That’s the key question.

Dentists, like most small business owners, often will not say anything because they are too embarrassed or ashamed. Embezzlement hurts small businesses the most, and it’s been known to drive them out of business.

Make no mistake about it: you are a highly trained professional, but you have the added responsibility of being the owner of a business that operates in many respects just like General Motors. Their numbers are larger and problems more diverse, but the bottom line is still the bottom line, and stress is a big part of everyone’s daily workplace.

The reason why dental practices are at high risk is because the dentist is the central figure generating the revenue stream that moves the practice forward. You’re the CEO, President, CFO, Vice President of Marketing and Sales, Vice President of Operations, Vice President of Administration and Personnel, and in some cases, all the other hats that must be worn, including maintenance.

Dentists do not have the time, the interest, or the resources to establish effective internal control systems (i.e., checks and balances) and monitor them on a regular basis. They want to be the best in their profession!

When you examine the problem closely, it is very clear why dentists are in the high risk group. You spent many years perfecting your clinical expertise; however, there were few courses to teach you how to run a business. You do not have an owner’s manual to help guide you through all the mine fields. Many times it is your first experience in the business world and most likely first experience in running a business. It’s a big responsibility to be “The Boss,” and it can have far-reaching effects on your practice, family, patients and financial matters.

The first thing most dentists do is to secure the services of a certified public accountant. This is certainly the proper course.

However, your accountant does not provide day-to-day operational execution – you do!

Obviously that is the key area for long-term success or failure. In 22 years, I’ve rarely seen an accountant uncover embezzlement in a dental practice.

You need to remember this stark point: one-third of your profession will retire in great financial shape; one-third will be comfortable; and one-third will be dead broke. Embezzlement only makes the picture grimmer, particularly since the odds are 90% against recovering more than 10% of your loss. There are better odds at the crap table, and you know what they say about casinos: they weren’t built by the winners.

It’s your job to take preventive measures against fraud, implement strict internal controls, and be vigilant and aware.

Done correctly, you should be able to make an additional 15% to 20% R.O.I. every year, have greatly improved peace of mind, and do what you love to do: dentistry. One last thought to leave you with: 99% of embezzlements are caught by accident.

This means that many embezzlements are going undetected due to lack of proper internal controls and monitoring.

The best ways to combat embezzlement are to:

  • Detect the warning signs.
  • Establish internal controls.
  • Bond employees.

Stay tuned… In the next few weeks, I’ll have more to say about embezzlement and what you can do to avoid it.

In the meantime, feel free to post your comments or share your own experiences.

About Jim Du Molin

+Jim Du Molin is a leading Internet marketing expert for dentists in North America. He has helped hundreds of doctors make more money in their practices using his proven Internet marketing techniques.

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