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How to Prevent Theft in Dental Practices

February 14, 2022

Internal theft — also known as employee theft — occurs when an employee commits fraud or steals from their employer and practice. In the dental industry, opportunities for fraud result from a lack of internal controls and supervision, failure to prescreen employees and individual employees having too much control over accounting. Internal theft can come in many forms, such as cash theft, falsifying expense accounts or payroll, check fraud and unauthorized fund usage.

With so many means of theft, employees can easily conceal inflated expenses if you don’t regularly monitor these figures or your staff. Most dental practices are quite busy, and it can be easy to lose track of unauthorized transactions. An inventory management software can help you manage your internal controls, provide risk management processes, prevent theft and improve workflow efficiencies.

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    Risk Management for Dental Practices

    Embezzlement — a form of internal theft — within dental practices is not uncommon. According to the American Dental Association (ADA), one survey found nearly 46% of respondents said their dental practice experienced theft or embezzlement more than once.

    Here are some internal controls you can implement to prevent this theft in your dental practice.

    Develop Extensive New-Hire Procedures

    Your dental practice manages and shares confidential data such as insurance claims and checking account information. If not implemented already, every employee should undergo background checks that include criminal, educational and credit information. When bringing on new hires, you should also check any references, specifically from previous employers.

    While it might be commonplace to overlook these essential procedures, it’s important you check all employee records. Even if a potential hire wouldn’t directly handle financial or confidential information, you may promote them to those duties in the future.

    Check Your Financials Daily

    While you are busy with endless tasks in your practice, your employees are responsible for daily transactions, deposits and other day-to-day operations. Create an accounting manual that describes each employee’s responsibilities and have them sign off as they complete their daily and weekly tasks. You can check these numbers and tasks align with your expenses to help keep track of them.

    As the practice owner, ensure you fully understand your accounting software, can navigate it as easily as your employees and double-check all processes. You can purchase a software system that includes inventory management, order controls, reports and cash flow visibility.

    Assign Duties to Multiple Employees

    Fraud and theft are easier to hide when one person handles multiple tasks or steps at once. Segregating your duties among several employees ensures no individual controls the entire financial process.

    With purchase management software, you can view and control these transactions and easily identify which employees had access to specific controls. You can also delegate tasks that two or more employees must complete, ensuring they check each other’s work.

    Review completed work regularly to hold employees accountable if you or other employees catch any errors.

    Preventing Internal Theft

    Preventing internal theft starts with assessing your current processes and how you can improve them. Every dental practice should use time clocks and manual entries the doctor must initial or inspect. Receipts and cash should have the same balance every day, and thorough documentation — such as date, time and employee initial — should be logged with all transactions.

    For theft to occur in any form, there must be a:

    • Motive: A reason for the employee to steal
    • Opportunity: A chance to steal that offers easy access and minimal accountability
    • Rationalization: The employee will want to justify their behavior to feel their actions are acceptable.

    Preventing theft is easier to do when you remove any opportunity to do so. Some of these tips for controlling financial access can help make your practice more secure:

    • Reduce staff access to statements: Doctors or owners should have any practice bank statements and any other important financial information mailed directly to their residence.
    • Verify financial processes: The doctor should handle some money duties, such as authorizing account adjustments and check refund requests, checking reports and overseeing the payroll system.
    • Use a payroll service: If the payroll system is done through paper checks, the doctor themselves should handle the signing and mailing. A payroll service might be beneficial to reduce the number of staff having access to this process.

    Software reports are designed to assist in avoiding theft problems. However, if you do not review these reports, it becomes even harder to spot incorrect charges. Your software should provide complete visibility, linked payments and approval and decline features. This way, your staff will not be able to delete or conceal their actions regarding your expenses and account management processes.

    Dental Office Controls

    Aside from general internal controls, you can also implement employee and accounting controls in your dental practice. These controls will help you look out for suspicious behavior or unusual occurrences that may result from embezzlement or fraud.

    Employee Controls

    As a dental practice owner, it’s easy to focus most of your attention on patient care, but it’s just as essential to devote some time in your day to oversee other operations. Long-term employees may be more likely to commit theft or fraud because they are more familiar with the financial process of the practice. These employees may be the ones who oversee accounts receivable, accounts payable and other banking aspects.

    You should monitor for certain behaviors, including employees who:

    • Are often possessive of their duties and workspace and try to avoid sharing responsibilities or rotating positions.
    • Consistently come in early and leave late — this can be a warning sign that they are trying to conduct their fraud before and after hours to prevent being seen.
    • Are reluctant to take a vacation or have anyone else take over their processes. When new employees fill in, they may notice the discrepancies and illicit activity the out-of-office employee had been involved in.
    • Often complain about personal finances — this can be a red flag. These employees may speak about their frustration with unexpected expenses or being short on cash.

    Accounting Controls

    Reviewing your bookkeeping and accounting system can reduce the probability of employee theft. Tracking these financial aspects regularly also alerts employees that you are closely paying attention, which may discourage them from attempting theft. Some of these accounting and spending controls include:

    • Delegate tasks according to staff capacity: Though it will depend on the size of your practice, spread out your job functions to as many employees as possible.
    • Restrict staff access: Secure company checks where only authorized employees have access.
    • Ensure a proper audit trail: Require documentation for every check, such as a vendor invoice or credit card statement, and review them to see if they are justified.
    • Control access through your bank: Provide your bank with clear instructions and a list of approved vendors and authorized signers for all expenses.
    • Examine areas that go unnoticed: Keep an eye out for adjustments, increases in patient refunds, a decline in gross income or discrepancies between accounts.
    • Take patient complaints as a warning sign: Listen to patients’ concerns regarding their accounts or expenses, which can indicate theft and fraudulent activity.
    • Implement software in your practice: Purchase software to improve security controls and order dental supplies. It can also help you oversee processes and view history logs.

    Meet Your Dental Practice’s Needs With Method

    It can be challenging to handle all of your dental practice’s needs at once. With Method, we make it easy for you and your employees to manage and reorder supplies, gain visibility, create an approval process and drive results that can improve your bottom line. Method’s system has built-in controls to help prevent theft, manage cash flow and stop the back-end cash bleed.

    Our software is built specifically for dental practices for full, end-to-end inventory management to help you set dental office controls and keep your practice secure. Call us today at 1-800-742-2100 or request a demo online to learn more about the solutions we offer.