In today's unpredictable environment of small or non-existent investment returns, job losses at an all time high, and collections low, both dentists and staff should pay extra attention to their practice's cash management policies and procedures.
During my own experience as an accountant, I have seen the following:
In each of these situations, some of which are malicious and some just messy, following proper procedures in cash management would likely have prevented the problems. The solution lies in a combination of checks and balances, proactive policies and system-wide accountability.
Dentists are often so consumed with patient care that they tend to be unaware of flaws in their cash management systems, which makes them particularly vulnerable to fraud. Unfortunately, far too many dentists have been victimized, either by employees in trusted positions or by poor controls in their cash management systems.
Consistency is Critical
Preventing cash-related fraud necessitates following consistent protocols. Deposits should always be tied to the practice management software's daily report, which should include all encounters, charges, collections and write-offs for the day. If 20 patients are seen on a particular day, the daily report should reflect 20 patients. The total deposits on the daily report generated from the practice management software should reconcile with the daily bank deposit slip plus any credit card receipts. The bank deposit slip should be reviewed by the office manager or dentist. If the dentist does not make his/her own deposits, the stamped deposit slip should be compared to the daily register. With this practice, a deposit slip should be prepared for each day that the practice has collections, regardless of the amount or when the deposit is actually made at the bank. It is imperative that each days bank deposit slip and credit card activity be entered into the dentist's accounting software (i.e. QuickBooks or Quicken), using the same date as the deposit slip. Following this practice should ensure that the collections for both systems agree. In addition the dentist or office manager should review the daily register to make certain that there are no unauthorized write-offs, discounts or returns.
How does your practice ensure that all patients seen on a particular day have been accounted for? If your office uses a sign-in sheet, make sure that the daily report agrees with the sign-in sheet. If your practice utilizes encounter forms, there should be an encounter form for every patient even if there were no charges incurred. Each and every patient seen on any given day should be accounted for, both in the appointment book and on the daily report. By comparing the appointment book to the daily report, it should be easy to identify discrepancies, not to mention deposits left in lab coat pockets and between car seats.
The People Part
Several of my cash management recommendations focus on personnel. Make sure you always do the following:
Beyond the Obvious
It's an unfortunate truth when people are desperate, the possibility of fraudulent activity increases. It's not enough to monitor petty cash. Dentists and their accountants need to look beyond the obvious. As a case in point at a mid sized dental practice, it was discovered that the insurance coordinator was consistently upcoding procedures in order to pad insurance reimbursements. For example, she would report a one surface amalgam (billable at $150) as a two surface amalgam (billable at $195). The extra $45 did not go into her pocket. It went to the practice unbeknownst to the practice owners, and her high collection yields earned her praise and hefty bonuses. While this may not seem as devious as someone who steals money, by submitting fraudulent information to insurance companies, she was putting the practice owners at risk of losing their dental licenses.
Paranoia Not Required
Despite these words of caution there is no need for paranoia. Rather, dentists should continue to do what they do best – care for patients and prevent disease. What is needed is a professional audit of cash-management techniques, plus an acknowledgment that bad things happen in good offices, especially those less aware of the possibilities.
This article appeared in the August 2009 Insurance Solutions Newsletter.