There are several reasons why medical practices are among the most common targets of organisational fraud and most practice owners are blind to it. Sadly, it’s your employees who are often the main culprits.

As a busy medical practitioner, it’s easy to trust your staff to have appropriately fulfilled their responsibilities, but avoiding the daily financial controls can leave you vulnerable to fraudulent activity.

What are the most common examples of fraud?

It is important to be aware that there are multiple ways to falsely remove funds from medical practice billing programs. Because of their size, many medical practices have one person in charge of the financial transactions. This makes it easy for cases of fraud to fall under the radar. Practices should have another person – ideally an independent advisor such as your accountant or bookkeeper – involved in the reconciliation of the finance functions.

Below are some of the more common ways a medical practitioner can be defrauded:

  • Incorrect payment posting – a dishonest staff member can back-post a payment to the previous month – or any other month – that has previously reported the monthly income. While this will change the prior monthly report, rarely do medical practitioners go back and regenerate past month-end reports. Internet banking could enable the staff member to divert and deposit amounts into their private account.
  • Providing bank account access to staff – staff should not be provided with access to pay invoices on behalf of the practice or approving the payment of bills over internet banking. By providing this authority to staff, medical practitioners have no visibility over the payments being made from their bank account and also which creditor is being paid. This type of access could lead to staff paying themselves or paying for supplies that the medical practitioner does not need, thus impacting cash flow.
  • Credit card refunds – be sure to review any credit card refunds that appear in account statements. A staff member can easily send a refund to their credit card account by swiping their personal credit card on the reader machine. There should be policies in place regarding refunds.
  • Combining personal bills with medical practice bills – a staff member who combines their personal bills with supplier bills can only be detected by reviewing the financial reports and noticing an increase in overhead expenses without any supplier changes and documentation. An example is an office manager who pays their personal Telstra phone bill when paying the practice’s Telstra phone bill.

What can you do?

It is vital that medical practitioners take appropriate steps to deter and detect fraud as soon as possible. Regularly review bank statements, including credit card statements, and stay alert to any signs that an employee is becoming secretive or reluctant to share tasks.

Be sure to:

  • Sign your own cheques if you use cheques in your business.
  • Ensure you sight invoices to pay and that you approve any use of your credit card so there is no unauthorised usage.
  • Send bank statements to your home not the office.
  • Don’t have one internal person handling all financial matters – segregate accounting duties and ideally engage a professional, independent financial advisor in the form of an external accountant or bookkeeper.
  • Have appropriate procedures around the employment of staff – which include performing background checks during the hiring process.
  • Engage an independent accountant to meet with you on a monthly or quarterly basis to discuss business performance against key performance indicators and budgets. By understanding the financial data of your business, you can identify any issues and fix them immediately rather than letting them grow into bigger issues.

Want to know more?

If you have any questions or would like to discuss your current situation or how Pilot can assist with setting up the right processes for your finance functions, feel free to contact Kristy Baxter or Angela Stavropoulos from Pilot’s Medical Services division on (07) 3023 1300.