Client Service Center

How to Avoid Fraud in your Medical Practice
Published on by CS3 Technology in Blog Posts


At this month’s Medical Group Management Association (MGMA) meeting for the Eastern Oklahoma Chapter, I learned about fraud that takes place in the work place. The presenter was Brett A. Johnson CPA/CFF.CFE, CFI with Eide Bailly who has over eight years’ experience in the field of forensic accounting, fraud detection and fraud prevention consulting. His presentation focused on the Who, Where and Why employees commit fraud. When identifying why fraud happens he said that according to the ACFE 2012 Report to the Nation that the number one reason for fraud is poor, circumvented or non-existent internal controls. He further went on to say that a common example seen of this was the lack of separation of duties. One such example that Brett shared was when the managing doctor of a physician practice “stumbled” across the fraud which implicated his accounting manager. It included diverted insurance payments, taking cash and misusing credit cards. And yes, she handled all of the accounting duties. The problem, as Brett mentions above, was that there was only one “set of hands” involved in managing revenue which provided opportunity. In another example for a medical distributor, the warehouse manager was selling inventory on eBay and pocketing the money. Once again, there were no controls in place such as separation of duties or systems in place like a warehouse management solution. My take away from the presentation was that when a business has processes or disparate systems that lack visibility there is opportunity for fraud. Meaning that, if you want to prevent fraud you have to be proactive. He went on to mention that it’s a good idea to always make sure that two sets of “eyes” are involved in all processes regarding money, think about conducting “surprise” audits throughout the fiscal year and make sure you have surveillance systems in place to protect inventory from “shrinkage”. My additional suggestion would be to invest in technology and accounting software that automates the manual and provides visibility through reporting and dash boarding. Accounting software implemented correctly can eliminate possible “silos” where fraud could occur and give immediate access to information that allows management to see the performance of the business and track “trends” that might be associated with fraud. Being proactive and investing in ways to eliminate fraud is worth it. Just a few numbers to leave with you about the costs of fraud as published in the ACFE 2012 Report to the Nation. •Median Asset Theft $120,000 •Median Corruption $250,000 •Median Fraudulent Statements $1,000,000 •Median Loss in the Healthcare Industry $200,000

(877) 496-1600

Logo for CS3 Technology.





This website is owned by CS3 Technology. CS3 Technology is independent from Sage and is not authorized to make any statement, representation, or warranties or grant any license or permission on behalf of Sage regarding any product, service, or website content. Certain materials made available on or through this website are owned by Sage and cannot be used without the prior written permission of Sage.