Embezzlement is an age-old problem in all business sectors, and medical practices aren't immune. A smart embezzler may be hard to detect, but putting these checks in place will deter this behavior:

�        Discourage temptation. Bond all employees who handle funds. Bonding companies pursue and prosecute embezzlers, and potential thieves may be discouraged by the mere thought of the bonding company's actions.

�        Note excess cash. Be watchful of employees who help liquidate the change drawer when it's low, or those who cash checks for other employees. Also monitor staff members who appear to spend excessively.

�        Have written procedures. All procedures should appear in writing. Standard procedures make it easier to notice something wrong. One good office rule: All checks must be stamped "For Deposit Only" as they are received. This limits check use within your system. Also, don't allow several days' worth of deposits to accumulate.

�        Create paper trails. Any employee who handles receipts should keep a daily journal. This includes each cashier, as well as employees involved in check posting. Daily receipts should be matched against each journal. A supervisor should oversee daily reconciliations and be responsible for discrepancies. With this system, each person who handles receipts is accountable, and the supervisor is responsible to the administrator.

�        Separate jobs. If each receipt-handler is to be accountable to a specific paper trail, his or her tasks must be segregated. For example, the supervisor who makes deposits shouldn't be the same person who reconciles the journals to the receipts.

�        Verify bank records. Each bank deposit should have a dated and time-stamped receipt. This receipt is matched to the deposit slip and reconciliation of daily receipts. The administrator receives the entire paper trail and can detect any errors.

�        Have separate cash drawers. For accountability, each employee who handles cash should have a separate, lockable cash drawer, preferably with an individual fund for change.

�        Closely track adjustments. Limit how adjustments can be made on patients' accounts by using locking functions on the computer. Adjustments should be allowed only at designated terminals by employees with secured passwords. Each adjustment should be traceable to the employee who recorded the transaction. If it's easy to alter balances, opportunities for embezzlement will abound.
Every adjustment should be recorded in a daily journal of transactions, and the journal reviewed by the administrator. Pay particular attention to anything written off under the category of professional courtesy. Each of these entries should comply with the practice's standard operating procedures.

�        Analyze monthly trends. Condense monthly management reports into concise vital signs reports. Over time, these reports show trends in practice finances, and unhealthy signs can be detected.

�        Dangle the bait. If you have substantial reasons to suspect a specific employee, plant $20 in the cash drawer right after reconciliation is made and all money has been deposited. If the employee doesn't tell anyone about the money, your suspicion may be accurate.

�        Make an example. If you are victimized, take immediate action by assisting the bonding company, dismissing the employee and finding legal help. Other employees will notice and may be dissuaded from following the same path. However, employees also will notice if you don't take action.

Mark E. Kropiewnicki, J.D., LL.M., is a principal consultant with The Health Care Group, Inc., and a principal and president of Health Care Law Associates, P.C., in Plymouth Meeting, Pa. He regularly advises physicians and practices on their contracting matters and business law obligations. He can be reached at (800) 473-0032.