Our medical practice was a small business with about 100 to 150 patient visits a day. Each of us ran an individual business with shared overhead and employees. At that time patients paid small copays of $5 to $20, mostly in cash. We thought we had good record keeping but medical practices are actually easy to rob from because doctors have no idea what they are getting paid for a patient visit.
The documented visit charge is seldom paid in full by the insurance company. Partial payment arrives months later or not at all. Many charges are "written off" when it is clear no one is going to pay it. The partial payments are not standardized, so an $80 visit could be paid $12.53 or $45.01 or $62.33 and there was no way to know. The lag in payment not only kept us on the edge financially, it lent itself to fraudulent practices.
I thought I could tract accounts receivable by getting monthly reports from the bookkeeper but the holes in payment are just too big. How can disparities between billing and collections be identified when there is no standard payment for a charge?I tracked overhead expenses, signed all checks personally when attached to an invoice and did not use credit cards for office expenses. I often opened my own mail and spot checked insurance payments and denials. I thought I had a handle on the business of Medicine.
All of us were working very hard and our incomes were pretty poor. But as primary care doctors, we were used to that. I went years without self-funding a retirement account (much to my dismay now that I'm older!)I can't remember how we uncovered the fraud but our trusted bookkeeper, Steve, had a separate account at the bank where he was depositing money for himself. He took the cash co-pays from all of us. Not enough to be noticed, but enough to add up to tens of thousands of dollars over time. We never knew how much cash was stolen. He also deposited insurance checks and patient checks into his own account and reconciled the books so we never saw it. That amount totaled over $180,000 that we knew about, meaning there was much, much more that we will never be able to discover. Why the bank allowed a business check to be deposited into his personal account we will never know.
Did we prosecute? Yes, but the judgment we got against him never amounted to any reimbursement. The money was long gone. He never served jail time and is probably out there somewhere working in another medical practice. Embezzlement can happen to anyone in business and apparently happens frequently to doctors in private practice. Some say it cannot be prevented and given the crazy way medicine is reimbursed I would have to agree.
This post originally appeared at Everything Health. Toni Brayer, FACP, is an ACP Internist editorial board member who blogs at EverythingHealth, designed to address the rapid changes in science, medicine, health and healing in the 21st Century.
