Article Date: 2/1/2002

Fix This Practice
The Three Faces of Embezzlement
It could be going on right under your nose. Are you ignoring red flags?
By Richard S. Kattouf, O.D.

Q I've heard stories about embezzlement in businesses. Can you give me some examples of how this applies to optometry?

Dr. Chan, via e-mail

A: Embezzlement is a widespread problem and it spares no business or profession. The three major types of embezzlement are:

1. product

2. time

3. money.

Let's take a look at how these situations present themselves in optometric practices today.

Why buy your own?

Dr. Snyder presented my company with a fairly common problem. His accounts receivable was not in proper ratio. His accountant confirmed that the problem existed, but he didn't know how to determine the cause. So Dr. Snyder hired me to detect the problem.

After studying his patient charts and matching them to material invoices, it was obvious that the contact lenses his staff ordered far exceeded the number of contact lens fittings. This translates into either a huge in-house inventory or product embezzlement.

I discovered that the contact lens technician was ordering contact lenses through Dr. Snyder's office for her O.D. boyfriend and that she was receiving a small amount of money for each order. This had been going on for 2 years and amounted to more than $40,000 in stolen goods. My company helped Dr. Snyder collect all of his losses plus interest. I established a system of checks and balances to ensure that embezzlement could not occur again. For example, from that point on, the contact lens tech would have a budget and Dr. Snyder would initial all orders.

It's your call

When Dr. Simpson hired me for management consulting, I studied her profit and loss statements and found that her phone bills were eight times higher than the norm. I studied 1 year's worth of phone bills and noticed that certain phone numbers appeared repeatedly in the records.

As it turned out, three assistants were calling family members in three different states from the office phone. I set a policy to prevent this behavior and took the money out of each employee's paycheck in agreed-upon increments.

Whom do you trust?

Dr. Martinez wanted to add business computers to his office but because he felt that he was computer illiterate, he assigned the entire project to Jan, his trusted office manager of 12 years. The computer company was as naïve as Dr. Martinez, and it gave Jan the ability to establish deletion codes.

Over a period of 6 years, she embezzled $89,000. Once my company discovered the theft and that Jan was the culprit, I informed Dr. Martinez. He was more upset over the breach of trust than the fact that she stole from him.

Know the warning signs

As hard as these examples are to believe, they are common. Each embezzler I've interviewed thought he was "owed" the extra product, time or money.

Embezzlement problems exist only when there's a lack of checks and balances, boundaries and controls. A higher level of business awareness is vital. Don't be the doctor who only pays attention to the exam room. Develop a "state patrolman" mentality so your staff knows that you're aware of their behavior patterns, and you'll limit the chances that they'll take advantage of you. 

Dr. Kattouf is in private practice in Warren, Ohio, and he's president and founder of two management and consulting companies. If you'd like Dr. Kattouf to address an issue you have with your practice, call (800) 745-EYES or e-mail


Optometric Management, Issue: February 2002