Imagine this: Dr. Thompson had built a thriving dental practice over twenty years ago. He’d weathered staffing changes and insurance headaches. But nothing could have prepared him for the devastating discovery—a trusted employee had been embezzling for years. Unfortunately, this story isn’t unique. While staffing shortages and low reimbursements dominate headlines, a more insidious threat lurks within dental practices: embezzlement.

Most are unaware of its occurrence, and many deny it could happen to them. William Hiltz (2023) says dentistry is one of the most embezzled professions, citing that 60% of dentists have been embezzled sometime during their careers. Other experts offer sobering statistics, as well. A 2019 ADA Council on Dental Practice survey found that about 49% of respondents had been embezzled, a staggering 22% more than in years past. In Healers versus Stealers: How to Outsmart the Thief in Your Dental Practice, David Harris (2023), CEO of Prosperident, a team of dental embezzlement experts, states that 70% of dentists will eventually experience this crime of relationship.

The incidence of embezzlement is increasing over time. In our exclusive interview, Mr. Harris (D. Harris, personal communication, May 23, 2024) cited a 2007 ADA survey, which found that 35% of dentists had already experienced embezzlement. He noted that by 2019, that number had risen to 47%. Further, the COVID pandemic brought a sharp uptick in the number of calls Prosperident received from concerned doctors. Harris attributes this increase in call volume to the shutdowns forcing doctors to learn their practice management software to post payments or enter emergency treatment without the usual support staff.

What Embezzlement Is

Embezzlement is a subset of fraud. Harris explains that it is a scheme of stealing and concealing the theft. It is an intentional and repetitive theft often perpetrated by diverting incoming funds called “skimming.” However, some bad actors steal time and resources or tamper with payroll. Harris remarked that the front office staff target revenue; however, the back office embezzles gold from crowns, endo files, handpieces, and supplies, which they resale. Embezzlers commonly use more than one scheme at a time, and some are serial fraudsters who move from office to office to avoid detection. From his experience, Harris (2023) finds that embezzlers make off with 2%-4% of the practice’s collections through a series of ongoing small thefts. Before they are discovered, the average thief will swipe $109,000!

Why Embezzle?

In our interview, Harris revealed that, in his experience, embezzlement is a crime of greed or need. He notes that the proportion of those who steal for greed versus need is a function of the current economic conditions. Harris believes that in our post-COVID environment and current economic downturn, the ratio is shifting toward need as people experience growing financial insecurity.

 Who Embezzles?

Citing the ADA Council of Dental Practice survey, Harris (2023) notes that embezzlers are more likely to occupy administrative roles (71%) than clinical roles (29%). Administrative staff who embezzle often occupy supervisory positions (36%) or are administrative assistants, treatment coordinators, or financial coordinators (32%). Some embezzlers are doctors who steal from their partners (10%). The commonality among the embezzlers is that they enjoy and often adamantly pursue trusting relationships with their victims.

Harris (2023) says embezzlers use one or more rationalizations to acquit themselves of their consciences. From idealizing themselves as the engine in the practice’s success to believing themselves entitled to more, equivocating that other people embezzle, or insisting they did not take very much, embezzlers deny responsibility or injury to the owner and normalize their misdeeds.

It is common for the embezzler to position themselves in the practice as the owner’s go-to for keeping the practice running smoothly. Often, these employees are seemingly dedicated to the office, staff, and patients. They may be hard workers willing to go the extra mile or work after hours. They may shun vacations and reject the help of others to perform tasks. They are often well-liked by other employees and patients and are known to be givers. In most cases, these behaviors are performed by conscientious employees who are what they seem. Unfortunately, embezzlers sometimes model these characteristics to keep their true intentions from being revealed.

Myths and Red Flags

Many dentists mistakenly believe they will never be embezzled. They cite several reasons, which include the following (Harris, 2023):

• I live in a suburban area or a small town.
• I pay my staff well, so their compensation keeps them loyal to me.
• My staff members are good people, and we are all on the same team with the same goals.
• I check day sheets regularly so I know if there are discrepancies.
• We don’t have many cash transactions, so there is little to steal.
• My practice management software prevents embezzlement from happening.
• I would notice the revenue decreasing if I were being embezzled.
• My accountant would notice any fraudulent activity.
• I call references when employees are hired.
• I know what is going on in my office.

Sadly, these ideas mistakenly keep dentists from noticing red flags that signal they are paying someone to victimize them. Some red flags that dentists may see include the following (Hiltz, 2023):

• Bringing the Bling: Embezzlers might exemplify standards of living that are disproportionate to their income. Buying luxury cars and expensive jewelry, enjoying elaborate vacations, or splurging on concert tickets for multiple friends is unlikely on a dental office salary. Some embezzlers even use the stolen funds to generously pay for others’ debts or give excessive gifts.
• Debt, Divorce, or Down on Their Luck: Financial hardships are intense pressures. Employees getting frequent collection calls or complaining about their money woes or debt load can be tempted to help themselves to your money.
• Corner Cutters: Sometimes embezzlers use situational ethics when handling patient and insurance charges. Beware of employees who cut ethical corners and feel entitled to do so. Be sure you don’t cut corners, like taking cash without reporting it or falsifying personal expenses as office expenses.
• Job Control: Employees who frequently ask to come in early or stay late to catch up may have legitimate reasons for the requests; however, embezzlers need privacy to work their scams. Fraudsters often resist changes in office policies or practices, especially changing practice management software, accountants, bookkeeping software, insurance posting, and patient billing. They frequently balk at getting additional help, stating the helper may interfere with their system. They may be slow to respond to requests for documents relating to the financial side of the practice.

While it is difficult to embrace, you cannot fully protect yourself from becoming a fraud victim. However, there are operational controls that, when implemented, may alert would-be embezzlers that their schemes are not likely to go unnoticed. If you are curious about embezzlement statistics, click here.

 

References

American Dental Association. (2019). 2018 CDP survey on employee theft in the dental practice. Center for Dental Practice.

Harris, D. (2023). Healers versus stealers: How to outsmart the thief in your dental practice. Tellwell Talent. Kindle Edition.

Hiltz, W. (2023). It’s a fact. Dentistry is one of the most embezzled professions. The Profitable Dentist. It’s a FACT. Dentistry Is One of the Most Embezzled Professions – The Profitable Dentist

 

Is your dental office feeling the squeeze? Rising costs and staffing woes are plaguing practices nationwide. But fear not, you’re not alone! Here are 5 key signs your dental practice needs a refresh, along with solutions to get you back on track:

1. You’re Struggling to Find Staff:

• Having trouble filling hygienist, assistant, or even front office manager positions? You’re not alone. The 2023 Dental Economics survey found hygienist shortages are at a staggering 79% in the Midwest! This can seriously impact your practice’s efficiency and production.

Solution: Rethink your recruitment strategy. Offer competitive salaries and benefits, and consider flexible scheduling options.

2. Patients Aren’t Coming in as Often:

• Short staffing can lead to longer wait times and a decline in patient care timeliness. Additionally, inadequate front office coverage can lead to communication breakdowns and missed appointments.

Solution: Streamline your scheduling and communication processes. Invest in technology that can automate tasks and keep patients informed.

3. Your Profitability is Taking a Hit:

• DeStefano (2023) reports that practices with staffing shortages experienced a 10% drop in collections in 2023. This could be due to reduced patient flow, inefficient billing processes, or outdated fee schedules.

Solution: Analyze your current fee structure. Consider raising fees by 5% annually to keep pace with inflation. Don’t be afraid to renegotiate with insurance providers, and consider alternative payment models like membership plans.

4. You’re Stuck in a PPO rut:

• While PPO plans offer predictable patient traffic, they often come with limitations on fee increases. This can leave your practice struggling to maintain profitability.

Solution: Explore alternative payment models like fee-for-service or membership plans. These models often offer more flexibility when it comes to setting fees. Also, make sure to contact your PPO payers and request a fee audit for your area. Use these ADA resources for help. This link will open to resources on renegotiating a contract and how to terminate relationships with payers. ADA Insurance Contract Support

5. Your Fees Haven’t Budged in Years:

• Inflation is a reality, and your fees need to reflect that. The 2023 Dental Economics survey found 65% of practices raised fees in the past year.

Solution: Conduct a thorough cost analysis and update your fee schedule accordingly. The survey provides a fee table by region as a helpful reference point.

Bonus Tip:

• Check out the 2023 Dental Economics Fee and Staffing Survey and our other blogs for even more insights and resources! Dental Economics 2023 Fee and Staffing Survey

 

So, you’re considering adding an associate dentist to your practice. You’re not alone! Many dentists explore this path to expand capacity, grow their practice, or plan for succession. But how do you know if it’s the right decision, and how do you ensure a successful outcome?

This three-part blog series examined the critical considerations for building a thriving dental associateship.

 

Part 1: Reasons to Hire 

We began by examining the common reasons dentists consider adding an associate. We also discussed evaluating your practice’s capacity before adding another provider. This evaluation involves both operational efficiency and the number of active patients you have. Industry experts suggest a dentist can typically manage 1,000-2,000 active patients.

 

Part 2: Timing Considerations

In Part 2, we explored the financial considerations of hiring an associate. Determining your practice’s profitability is a crucial first step for timing your hire. Your break-even point, the minimum revenue needed to cover your costs, is a key metric to master. Sufficient resources, including space, equipment, and staff, are also essential for a smooth transition.

 

Part 3: Finding the Right Associate

Part 3 focused on finding the perfect fit for your practice. We emphasized the importance of carefully crafting a job description that outlines the desired skills, experience, and personality traits, then explored the critical compensation component. Several compensation models exist, including salary, commission, or a combination. Clearly defining the associate’s compensation avoids future misunderstandings.

 

Next, we explored associate contracts, which are complex legal documents. We advise consulting an attorney to address all aspects of the working relationship, including compensation, benefits, termination clauses, and restrictive covenants.

When you are ready to interview, develop open-ended questions to delve into the candidate’s goals and work style. Be alert for red flags that might indicate a mismatch in expectations, and be careful to ask lawful questions.

 

Finally, we explored the offer and negotiation phase when the owner presents a formal employment offer. Provide a written offer outlining the job description, compensation package, and contract terms. Expect negotiation and be prepared to discuss and compromise on some terms.

 

Overall, careful planning is vital to a successful associateship. By evaluating your practice, developing a clear hiring strategy, and negotiating a well-defined contract, you can increase your chances of finding the right associate and building a thriving partnership.

 

Ready to take the next step? Consider referring to the resources provided throughout this series for additional guidance or contact us when you’re ready. We have also created a step-through graphic guide to assist you on your journey to successful associateship.