The best defense against theft

You work hard.  You go out of your way to provide your patients with an outstanding experience both in terms of their comfort level and treatment outcome.  You tirelessly effort the addition of new patients to your practice.  You manage the day-to-day processes to keep everything running at the highest level.  You deserve to be paid for your effort.

When you are paid, you need to ensure that the funds make it from the patient/insurance company to your office and into your office’s bank account.  Unfortunately, as we see on occasion, the process of funds going from your office to the bank get interrupted when someone takes money for themselves.  We call that stealing and in at least 49 states, it’s against the law and can decimate your practice.

To avoid having to be the doctor who lost money to this person, you want to have processes in place to protect against potential theft (or simple sloppy handling of funds).  In our next post, we’ll lay out a whole control process, but today, I’d like to focus on an important part of the process: doing a regular deposit reconciliation.  In other words, you need to have a regular process to ensure that collections entered into your practice management system actually make it into the bank.

Regardless of the other processes you may have in the practice, you should be doing this on at least a monthly basis as a check to provide some comfort that cash is flowing to where it should. 

A deposit reconciliation is very simple in theory, and if you stay on top of it, it is very simple to do in practice as well.  Here are the basic steps:

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1. Have a method in your practice management system to define a deposit – We typically recommend that you make deposits daily, but you may get busy or not feel the need to run to the bank every day (especially if getting there is inconvenient).  As a result, you may make deposits every 2 days or 3 days.  Most practice management systems have an end of day or deposit process to enable you to do this.  Despite the presence of this feature, I am regularly surprised by the number of practices that do not use this simple tool.  If you are not using it, you should strong consider using it now.  At the end of the month, you should be able to run a deposit report from your standard reports.  If not, one should be customized.  If customization is not possible, just have a folder to save the deposit reports generated on the day you do a deposit.

2. Gather your deposit information from your bank(s) – Most websites allow you download the activity from the previous month either into your financial accounting software (like Quickbooks) or to a spreadsheet (which will work just as well).  Basically, you just want a listing of all the deposits for the month.

3. Compare the two – Easy enough.  If your practice makes a deposit on the 14^th of the month, you should see that deposit appear in the bank within at least 2 days of the date you entered the deposit and the two amounts should match exactly.

4. Investigate any differences – If you see a deposit report from your practice management software with an amount of $3,500 on the 15^th, but a deposit amount of $3,000 in the bank on that date, you need to investigate.  We’ll go deeper into investigating it a bit later in the week, but for now, start with investigating what part of the deposit was made in cash (those tend to end up missing in most cases when deposits don’t reconcile) and then see if any payment or combination of payments makes up that difference.  For example, in our $500 discrepancy above, the difference may consist of the $200 of cash paid and a $300 insurance check for that day.  There may be innocent reasons (the office manager simply forgot to include those things in the deposit) or sinister ones (someone has absconded with cash).  But at least you know what you are looking for.

Your initial reaction, especially if you run a practice of some size, may be, “Wow, this looks like a lot of extra time that I just don’t have.”  In that case, much of the process can be automated.  Automating the deposit information from the practice management software can usually be done by you, the practice management software company, any consulting firm worth its salt, an outside programmer or us.  Automating the bank download information can prove to be more challenging and may not be possible, but downloading a report monthly doesn’t take too much time.  Automating the comparison process is relatively easy in the hands of any of the entities noted above.  Investigating usually involves some legwork.

Again, we do note that this process comes after the deposits have been made and after any potential theft.  And it will not intercept all the potential shenanigans that may befall your practice.  As I mentioned earlier, we will get deeper into developing a complete process in our next post.  But what deposit reconciliation does do is to provide an important line of defense in ensuring that everything is running smoothly in the collection process. 

If you are not doing this, now is a very good time to start.  

If you have any additional questions or need a jumpstart to get going on the process, please let us know by clicking here.