fix this practice
RICHARD S. KATTOUF, O.D., D.O.S.
Trust and Temptation
Even your most steadfast staff member could fall into this trap.
Q: My net income has been declining even though my gross (deposited) receipts are increasing. I am a busy doctor in the exam room without much time to oversee business operations and staff. My accountant and I suspect someone is embezzling from my practice, yet neither of us know how to determine what is being stolen or by whom.
Dr. G.R. Henne Via e-mail
A: Far too many of our colleagues have experienced a similar scenario. You must be aware that, as optometrists, we are unique in the health-care field. We serve as owner/managers of a clinic and a retail optical, yet as you stated in your question, you are too busy in the exam room to manage the staff and the organization. Let me share with you some real-life embezzlement situations.
Delegation run amuck
Dr. Diamond called my company with a similar scenario. After two days of evaluating patient records, receipts, schedules, payments, lab invoices and computer data, I found over $100,000 had been embezzled over a three-year period. Dr. Diamond had installed a new computer software program. He instructed Mary, his trusted manager of over twelve years, to handle the installation and staff training. Dr. Diamond indicated to Mary, that he was computer illiterate and wanted nothing to do with the implementation of the new software (a recipe for disaster).
Mary was an employee that any of us would have welcomed into our offices, but Mary took advantage of Dr. Diamond’s naïveté. She had all the access codes, which gave her the ability to delete transactions. When confronted with the evidence, Mary admitted her guilt. Dr. Diamond’s attorney and I drew up a contract that stipulated she make monthly payments plus interest until the debt was paid-in-full. If she missed a payment, legal prosecution would go forward.
Dr. Lozzin noticed a discrepancy in his profits and called my company. After a day of investigating, the trail led me to an excessive number of contact-lens (CL) invoices that did not match up with patient records. This indicated that either the practice had a large inventory of sellable CLs or someone was embezzling from the practice. I asked a staffer to show me the CL inventory and found it was very small.
I started interviewing employees and found that the contact-lens technician, Pam, had total freedom to order and open all CL boxes from all the vendors. I also uncovered that Pam was dating another optometrist. She was ordering contact lenses for her boyfriend from my client’s office and receiving a few dollars for each pair.
This is a classic case of over-delegation. You must periodically open spectacle and contact-lens boxes and match the invoice with a patient. When the staff is aware that the doctor is watching, they are far less likely to embezzle.
Many doctors have requested my assistance in analyzing their profit and loss (P&L) statements. Unfortunately, some opticians will sell products at reduced rates for cash. As in these last two cases, you must not over delegate.
Your accounting ledgers and P&L statements are “road maps” to analyze and operate your practice. Know the proper ratios. Do not wait until you see danger signs. Implement preventative procedures and check-and-balance techniques to be performed each day.
DR. KATTOUF IS PRESIDENT AND FOUNDER OF TWO MANAGEMENT AND CONSULTING COMPANIES. FOR INFORMATION, CALL (800) 745-EYES, OR E-MAIL HIM AT ADVANCEDEYECARE@HOTMAIL.COM. THE INFORMATION IN THIS COLUMN IS BASED ON ACTUAL CONSULTING FILES.
Optometric Management, Issue: May 2007