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Are Fraud & Theft Hurting Your Practice?

By: Nextech | June 10th, 2021

Are Fraud & Theft Hurting Your Practice? Blog Feature

Fraud is one of those topics that no one really enjoys talking about. It can be uncomfortable to think that someone in your practice, even someone you are close to and believe you have a strong relationship with, would steal from you. But it happens. And you need to be aware of it because fraud and theft are far more common in healthcare practices than you might expect.

According to MGMA research, medical practices lose more than $25 billion annually through embezzlement. Not only is fraud expensive, but it is also fairly common. In fact, one study has projected that, during a period of five years, over 80 percent of all medical practices will experience some form of embezzlement. In general, 95 percent of all businesses suffer from theft in the workplace.

In this blog, we will briefly examine various types of fraud/theft, look at some examples of fraud/theft in healthcare, and offer some helpful strategies for detecting and avoiding it.

Be Aware of What Can Happen

Here are some of the most common things practices need to be on the lookout for:

  • Embezzlement – theft or misappropriation of funds placed in one's trust or belonging to one's employer (in this case, the practice).
  • Fraud – wrongful or criminal deception intended to result in financial or personal gain.
  • Physical Theft – the act of stealing items from your practice inventory for their own personal use or to illegally resell for monetary gain.
  • Identity Theft – theft of identity or login credentials, whether from a provider/doctor or patients, to commit fraud or theft.

Examples of Fraud & Theft in Healthcare

To give readers a better idea of how regularly the abovementioned kinds of fraud and theft can occur, let’s take a look at some modern-day examples. First, you have the case of a medical biller in Florida who committed fraud and allegedly used a physician's name and ID number to submit fraudulent claims to a Florida Medicaid health maintenance organization for medical services that were not actually provided. He allegedly altered the "pay to" information associated with the HMO's payment processor.


Then you have the case of two former employees of Beaumont Health and a medical supply distributor being charged with wire fraud for their alleged involvement in a scheme to steal medical devices/supplies from Beaumont Health so they could illegally resell them.

While employees are often seen as the most likely suspects, practice leadership can also be the culprits. Consider, for example, the case where a former healthcare executive was sentenced to 35 months in jail and ordered to pay over $1 million after pleading guilty to both embezzlement and tax evasion.

Even doing business with family is not the safeguard that people sometimes think it is. In fact, there was a case in 2018 where a 51-year-old woman in Aspen, CO was convicted of stealing $570,000 from her own sister’s medical practice. Even worse, she was employed at the practice as the office manager. So, the provider’s reward for giving her sibling a job was to be robbed by family.

How to Detect & Avoid Fraud/Theft

While all this information might make one prone to become a bit paranoid, try to resist that urge. Vigilance and a bit of constructive monitoring will serve you far better than paranoia. To identify possible fraud/theft in your practice, here are some strategies you should employ:

  • Auditing
    • Use best practices for internal checks and balances
    • Reporting function in EHR to check for suspicious items
    • When you print cash receipts, do so from the Practice Management system (do not use receipt books)
  • Be aware of suspicious activity
    • Staff members who never seem to take vacations or use their time off (it may be that they are worried that a temp replacement might discover what they are doing in their absence)
    • User permissions (be especially wary of anyone who regularly attempts to perform actions for which they do not have permissions in the system)
    • Staff members who are suddenly and inexplicably purchasing high-dollar items (i.e., new vehicle, jewelry, expensive shoes/bags, etc.)
    • Your bank statements are not matching up with the numbers in your Practice Management or Financial Management system
  • Technology & Solutions:
    • Implement the right Practice Management system so you can track the appropriate metrics
    • Have an integrated payments solution
    • Always run an annual Security Risk Assessment (SRA)
    • Perform a monthly inventory audit (this will help you identify when expensive items are “mysteriously” walking out the door)

For any practice, the potential for fraud/theft is an ever-present danger. However, with the right technology and a little awareness, you can make sure that your practice stays protected against this form of loss.

To learn how Nextech’s suite of specialty-specific solutions can help your practice reduce loss and avoid theft,  fill out this form and a member of our team will be in touch soon!