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 By Neil B. Gailmard, OD, MBA, FAAO, Editor June 23, 2010 - Tip #436 
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Employee Theft

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I'll bet this title got your attention and rightfully so. I think all practice owners and managers are aware that theft by employees most likely occurs in every practice, including their own. But how do you know how prevalent it is? And what can you do to prevent it?

What can be stolen?
Employee theft can occur in many ways; some not so obvious. The first step in preventing theft is to assume it is probably occurring in your practice to some degree already. To some extent, it is a cost of doing business, but I believe employers should make a strong effort to prevent theft before it becomes a major problem.

Consider if your practice is vulnerable in the following areas:

  • Cash. With most payments now in the form of credit cards, checks and insurance drafts, your exposure to losing cash is decreasing, but it is still by far the most attractive thing to steal. Cash can be stolen from your cash drawer or from a bank account when one employee has too much authority to transfer funds and write checks.
  • Fraud. One example might be an employee who sells optical products to friends under the table, so to speak. Eyeglasses are ordered through your lab supplier but no charges are ever entered for a patient. The employee (who always receives deliveries) retrieves the glasses when they arrive and delivers them to the buyer away from your office. The employee is paid privately for the glasses at a greatly discounted price. You would have to really scrutinize the lab invoices to notice this is going on.
  • Products. Employees can easily take products for their own personal use or their loved ones. This may include sunglasses, contact lenses, prescription drugs, low vision aids or anything else that's sold in your office.
  • Supplies. A common theft category is in the form of office supplies. From copy paper to toilet paper and from alcohol swabs to coffee, supplies are easy to take home.
  • Premiums, discounts and gifts. We often hear of employees making special deals with frame distributors and optical labs so they can personally receive free gifts in exchange for placing orders. I view these premiums as rightfully belonging to the practice. Even complimentary products or extreme discounts could be viewed as a form of theft if the benefit is not provided to all employees equally.
  • Time. Perhaps the most invisible form of theft is embezzlement of time. This could range from falsifying a time sheet or punching in for an absent friend to just wasting time while at work. The personal use of cell phones or office computers for texting, email, checking Facebook, internet surfing, and playing games are all forms of time theft.

In many cases, the techniques that are used for detection of theft are also a deterrent to theft. People don't want to be caught. If employees realize that management is aware and monitoring operations, theft is too risky.

  • Culture. Having a positive organizational culture that is built on fairness and respect won't guarantee a theft-free workplace, but it will go a long way in keeping basically honest people from taking advantage. Many people will steal as a form of evening the score if they believe they are being mistreated.
  • Policy. Develop strong office policies that must always be followed, which in turn reduces the temptation for theft. For example, be sure that staff members always print receipts for patients as they check out. Charges and payments that are held to be posted later make it too easy to overlook the posting and keep the money. Or turn a check in and take cash out.
  • Checks and balances. Have a routine that requires financial accuracy. The daily production report must always balance exactly with the cash drawer at the end of the day. Have two working cash trays with a predetermined amount of cash to start the day so the other cash drawer always stays with that day's production report until it is balanced. Any over or under cash amounts must be explained. Bank deposits should always match the day's receipts exactly in the form of cash, checks and credit card payments. Bank deposit receipts are returned to the owner and monitored.
  • Spot checks. Make a habit of routinely checking patient's account ledgers with the orders that are in the patient record. You can also check office computers to see what websites have been visited recently by your staff; just press CTRL H on any computer when the internet browser program is open and see what pops up.
  • Control authority. Be careful with who has the authority to write off account balances. Adjusting account balances is very common with insurance plans, but anyone who can write off balances has a great deal of power.
  • Good records. Keep an eye on frame inventory and track sales and total number of frames.
  • Multiple people. It is best to not have just one person always performing a job if possible. Theft occurs when no one else will notice.
  • Limited people. On the other hand, allowing everyone to work with cash or inventory opens you up for poor accountability. Theft occurs when there are many people who could have done it.
  • Supervision. A manager who supervises operations can greatly reduce opportunities for embezzlement.
  • The practice owner should always monitor accounts payable and sign or approve all checks.
  • Locks. It seems obvious, but locked drawers, cabinets and closets work well to prevent theft.
  • Video camera security systems. Video camera systems are actually quite affordable today and they are a strong deterrent to theft. There are do-it-yourself systems that can be easily installed or you can work with a local security company. Camera feeds run 24 hours per day and are viewable on a monitor and recorded on digital video recorders with large capacity hard drives. The videos from each camera can be stored for several days on the DVR and segments can be located by date and time and reviewed in fast forward mode. Many offices will have four to sixteen cameras positioned in key locations to monitor cash and inventory. Of course, these systems are also strong deterrents to shoplifting by the general public and can help assist in the event a theft or burglary occurs. Some cameras can also pick up audio and are useful in staff training. These systems can be accessed via the internet and the practice owner can view operations from any computer anywhere in the world. They can even be viewed on your cell phone!

Once you know
If you are certain that embezzlement has occurred, I would discuss the matter with an attorney familiar with employment law before taking any action. Accusing someone of theft and firing him or her over it can lead to more legal problems, especially if you can't prove it.

Best wishes for continued success,

Read Past Tips Neil B. Gailmard, OD, MBA, FAAO
Editor, Optometric Management Tip of the Week

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Send questions and comments to neil@gailmard.com.

Dr. Gailmard offers consulting services to eye care professionals through Prima Eye Group; information is available at www.primaeyegroup.com.

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