The protocols of protection: How to avoid becoming a victim of employee embezzlement

Here’s an update to the story of a dentist who was the victim of embezzlement by an employee to the tune of more than $150,000.

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Several years ago, I told Dental Economics readers the story of a dentist who was the victim of embezzlement by an employee to the tune of more than $150,000. Here’s an update: As it turns out, the employee was recently located and arrested. Shockingly, she was working for another dentist! While she probably listed her last employer on her résumé due to the fact that she worked for him for more than 10 years, he was never contacted for a reference. 

It’s been a long, frustrating, and distressing road for this dentist, and it’s still not over. The red flags have now turned to blue lights, and the perpetrator has been apprehended. The judicial proceedings will likely linger for many months. Worse, it is unlikely that the dentist will ever recoup his financial loss. Plus, the feeling of betrayal still lingers with the doctor and staff. 

The results were more than a loss of income and a breach of trust. For quite a while after the incident, the doctor felt a sense of guilt, as if it were his fault that this had happened. He could not afford raises for his team. They were upset. Also, he was unable to invest in office upgrades that would have allowed him to improve patient care. 

The path that led to the discovery of illicit activities by this employee was long. While the theft had gone undetected by the business owner and staff for at least two years, I used an efficient, systematic approach to ferret out the culprit. I don’t believe that this particular practice would have been able to stop the financial bleeding without outside help. 

For now, I want to concentrate on steps you can take not to be a victim of this type of problem and also stress the importance of speaking to your peers about ethical responsibility. This doctor could have significantly lowered his chances of being exploited in this manner by setting up what I like to call the “protocols of protection.” Let’s review some of these basic, yet crucial, steps: 

  • Establish policies and protocols for hiring. 
  • Have job descriptions for accountability.
  • Set security measures with limited access.

Establish a hiring policy

I would venture most of us believe the majority of people operate in goodness and truth. But sadly, this is not always the case. While we can still maintain a positive outlook, we should be prudent when it comes to choosing those who work for us since they will impact our lives to an extent. When you let others into your life and give them responsibilities that can affect your future, 20 minutes of due diligence could conceivably protect your income and prevent frustration at a later time. The goal is to learn as much as you can about prospective employees who will be entering your professional life. The following steps can help.

Speak to the applicant’s former employers

First, don’t just accept a letter of recommendation. Before you consider interviewing, take a look at the applicant’s résumé and letters. It’s simple to pick up the phone and call former employers. Other dentists’ opinions can help with your decision. Ask questions, such as these: “Did he or she interact well with coworkers and patients?” “Was he or she diligent in following office protocol with respect to duties?” After all, you don’t want someone who will take shortcuts with, for instance, infection control. 

Besides getting a look at the applicant through the former employer’s eyes, you should point-blank ask this question: “Was he or she terminated for cause?” If so, ask more questions. Finally, ask this all-important question: “Would you rehire this person?” 

Conduct background checks

I suggest that you run a full background check including criminal history. At a minimum, search social media such as Facebook, LinkedIn, and Google to check for any red flags. If you have recent hires, it’s OK to run a background check at any time. The sooner you can take any necessary action, the better. If you don’t know where to start, you can purchase this and other such services. 

Use personality tests

While some might think this step is silly, consider the wide variety of personalities that make up your team. Have you ever experienced that one bad apple who can disrupt workflow and peace in your office? Also, if you hire a shy or timid treatment coordinator, is he or she going to have difficulty promoting your recommended treatment plans or collecting on them?

Use written job descriptions 

When employees clearly know their duties, they can better understand what you expect of them. Without job descriptions, some critical tasks can go undone as employees may think that others are performing them. Assigning ownership can empower team members with a sense of work pride and even lead to proactive improvements. Emphasize that they can still help out other team members as needed—you want to foster a feeling of cooperation in your office. Also, make sure that no single employee is in charge of critical matters. This will ensure a smooth workflow even in the case of sickness, vacation, or termination.

Establish security policies

This topic is broad, but basically, you want to set a system of fail-safe measures, as well as checks and balances. One thing you can do immediately is to set login passwords per employee. You need an audit trail to be able to see who is making adjustments and entries. In this dentist’s office, I was able to get directly into the practice management system without a password. This made for a longer investigative process since it appeared that several employees could have been the potential offender.

Set a policy of involvement for yourself

Your practice is exactly that—your practice. It all falls back to you. Create daily measures such as production and collection reports, insurance payments, and deposit reviews. Many dentists find closely reviewing these things bothersome or unpleasant. After all, you went into dentistry to practice dentistry, not accounting. However, your practice’s growth is critical to your success as a dentist and as a business owner. If you don’t like this idea and don’t want to review financials, at the very least you can hire an outside firm or consultant to do the reviews for you on a weekly, monthly, or quarterly basis. Consultants can also suggest which reports are most beneficial to review. 

Professional help is worth your consideration and investment. Most dentists don’t think twice about hiring an accountant to handle financial and tax matters. Having “outside eyes”—someone with the expertise to help you set and review protocols, create efficiencies, and perform the all-important financial investigations—can help alleviate some of your worries and concerns. 

Show responsibility to peers

I know I am not alone in feeling that dental professionals share an ethical obligation to their colleagues. What I found amazing (and not in a good way) was that the aforementioned embezzler was working in a dental office when she was arrested. Would you have hired this seemingly experienced insurance coordinator? Sure, the person presented well, and you were understaffed. It could happen if she showed up with a well-written résumé and story, and you failed to have hiring protocols in place.

If you find yourself in a situation where you have been embezzled, please prosecute! Don’t feel sorry for the perpetrator. Don’t be reluctant or embarrassed to prosecute since it’s likely these perpetrators will just move on to a different dental office, as in this case. 

When speaking to other dentists about your former employees, give an honest reference. Some dentists are simply glad to get rid of an employee if he or she doesn’t work out for some reason. It’s easy to tell another dentist that the employee was “OK,” “adequate,” or “just fine.” While it can be tricky in this aspect, be honest without bashing. Perhaps the reason the employee didn’t work out for you will not be an issue for the next practice. Maybe the person needs more training that you were not willing to offer at the time. It may be helpful to use phrases such as “in my opinion” or “it seemed to me,” when describing actions that are not clear-cut bad behavior. 

For a safer, more efficient work environment for you, your employees, your business, and your colleagues, implement or update these policies as soon as possible. This extra level of discretion can only provide protection and peace of mind, so you can focus on serving patients and expanding your practice.


JEANNE E. GIOVENCO, CDPMA, has more than 30 years of experience in the dental industry. She is the founder of GIO Dental Consulting, a company that provides strategic efficiency planning for dental offices to increase productivity, patient retention, treatment acceptance, and customer service that builds patient loyalty and referrals. She is a member of both the Academy of Dental Management Consultants and the American Association of Dental Office Management, and she holds certifications in practice management administration, radiation health and safety, CPR and first aid, QuickBooks, digital imaging management systems, and more. Contact her at jeanne@giodentalconsulting.com or (312) 315-0965.

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