One of my friends, a 60-year-old dermatologist in a medium-sized town with a great patient following and deep roots in the community, recently shared an unfortunate story with me. While spending his time working hard, practicing great medicine, and focusing on taking care of his patients and people around him, he had more than $250,000 embezzled from him—by his own “loyal and trusted” employees of 11 years. What? How can this happen?
Truth be told, this provider is not alone. Unfortunately, there are many practices throughout the U.S. that are bleeding—losing money not just through blatant criminal activity such as embezzlement, but also through poor revenue cycle management (billing/collections) and procurement cycle management (purchasing).
For example, at the same time my friend’s employee was writing checks to herself and making personal purchases on his practice credit card, she also was not entering charges for patients that were seen, not billing patients, not posting payments accurately, not following up for payment, not working any of the accounts receivable, and so on—to the tune of hundreds of thousands of dollars lost over an extended period of time. All this, from a “loyal and trusted” employee who worked late nights, rarely took vacation, and was essentially in charge of his business.
Sadly, I’ve seen more medical practice embezzlement during our latest economic downturn, when financially stressed employees’ work ethic and decision-making are compromised. All the while, many dermatologists remain very trusting, believing that their highest paid staff who have been with them for years are watching out for the business while they focus on seeing and treating patients. While situations and dollar amounts differ, this scenario is playing out both in small communities and large cities.
Even the most business-savvy providers with extensive controls in place will face some type of loss—either employees stealing time, property, and cash, or robbing the practice of money by not performing their jobs.
Now, more than ever, it’s imperative that providers watch their business closely, know what questions to ask of their staff, and implement the proper controls and reports in order to identify symptoms of loss before it bleeds them out.
At the same time, many providers are scratching their heads wondering how much harder they have to work to continue making what they did yesterday. With lower Medicare and insurance reimbursements, along with higher deductibles, patients are saddled with more payment responsibility when disposable incomes are decreasing. This makes it more difficult for dermatologists to collect what they’re legally owed, not to mention increased write-offs as “bad debt”—ultimately hurting the provider.
Watch for future posts that will address key areas where providers are bleeding and losing cash flow that impacts their bottom line.
Thom Schildmeyer is co-founder and President of Aesyntix Health, Inc., which provides revenue cycle management and procurement cycle management (GPO) to physicians.
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