By 2009, my lifelong dream had taken shape: an independent endocrinology practice bustling with patients whose lives I was privileged to guide through the challenges of diabetes and all types of endocrine disease. With two office locations, three NPs, a temperamental EMR, and more than a dozen employees, my plate overflowed. I cherished the hard work and joy resulting from improving patients' lives and longevity and enjoyed the familial camaraderie of my team as we faced daily challenges with humor and grit.
Doctors traditionally like to do what we do best — practice medicine. I could have worn a crown that said “Doctor Only: Leave Me Out of Business Discussions." Gleefully oblivious to the business operations of my practice, my eyes glazed over when Dad, my trusty, dedicated office manager, attempted to engage me in non-medical discussions. I had zero interest in our group 401(k), our health insurance, the building mortgage, the cost of office supplies, or the bank balance. I assumed that if our lights remained on that the power bill had been paid. If we had enough to cover my employees’ salaries and other expenses then life remained good.
Until …
Until Dad suffered the ravages of dementia, with his mental faculties leached one neuron at a time. I grieved his decline as I witnessed his attempts to sign his name or dial a phone. I needed to find someone to fill his well-worn shoes. Fatefully, my long-term employee, let’s call him Richard, stepped up. I felt blessed that my skilled and “dedicated” employee, intimately familiar with the practice finances, could seamlessly fill the role.
With Dad confined in a memory care facility, grief fogged my brain, and I was slightly distracted from my usual dedication to the job at hand. Yet somehow, out of the blue, I developed a “sixth sense.” I smelled a rat. I pieced together visions of unopened mail, unpaid bills, our accountants’ unmet needs, and an unfamiliar large debit from my personal bank account. I became a forensic accountant overnight. Over one painstaking weekend I determined that Richard was stealing the farm.
My grief was rapidly replaced by a scathing anger and determination to save my practice from financial ruin. I spent the following year dissecting the unfamiliar angles of my business and acquiring reams of bank statements from the previous eight years. I stacked them on my office floor — each paper tower approached three feet in height.
I filed insurance claims for employee theft and after an exhausting period of rebuttals and denials, I finally recovered funds sufficient to soften the financial loss. I quickly learned Quickbooks, reconciled bank statements, restructured our accounts, familiarized myself with all our vendors and expenses, opened all mail, ran payroll, and conquered a myriad of other office management duties. If I had not been the victim of “white collar” crime, I would never have acquired the tenacity to become the master of my personal and professional destiny.
Richard never endured prolonged incarceration; neither did he provide substitutive remuneration of his admitted theft. My dealings with our legal system in prosecuting white collar crime were as effective as beating one’s head against a wall to treat a headache. Over four years, I spent inordinate time and energy to little avail other than assuring myself that I would never allow this to happen again.
My story is far from unique. MGMA (Medical Group Management Association) surveys reveal that some 80% of medical practices will experience theft or embezzlement by an employee at some point during their lifetimes. One report says three out of four physicians will be affected by embezzlement. In 2016, the U.S. health care industry reported a median of $437,016 in losses from employee theft, though multimillion-dollar thefts are documented when schemes run for years unchecked.
Small organizations with fewer than 100 employees, such as mine, are particularly susceptible to suffering fraudulent losses due to limited segregation of duties, trust-based relationships, and a lack of internal audits. The cash flow environment consisting of copays, cash, checks, and insurance reimbursements provide ripe entry points for financial diversion.
Embezzlement is often uncovered accidentally through patient complaints regarding balances, vendors reporting unpaid bills, or unusual bank statements transactions. In my case, no reconciliation occurred between the accounts receivable embedded in my EMR and the bank statements. My accountant never mentioned doing so. Staff reporting provides valuable information as often doctors are more attuned with the well-being of our patients than office inefficiencies and indiscretions. As I later studied the subject of fraud detection, I realized that my employee fit the uncanny description perfectly: Thieves rarely use their accumulated vacation time (because they fear leaving their post), they don’t request pay raises (as they have already taken care of that), and they are reluctant to teach others their specific duties (for fear of discovery).
The days of “just let me practice medicine” are over. Don’t remain ignorant of your business intricacies as I did. After all, the money your practice receives results from your efforts. In the current day and age, running a profitable practice remains challenging at best. Do not succumb to the temptation to just be a great doctor. Protect your assets and your practice with equal intensity.
Dr. Andrea Hayes, an endocrinologist and graduate of the University of Alabama School of Medicine with fellowship training at Vanderbilt University, founded and led one of the largest independent endocrine practices in Nashville for over 25 years. Her practice served patients across Tennessee with a focus on compassionate, community-based diabetes care. In 2021, she launched a concierge practice in Naples, Florida. Dr. Hayes is currently writing her first book, a memoir blending medicine and personal reflection, exploring her life as a doctor, patient, caregiver, and advocate for justice.
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