November 30, 2023 • 59 mins
Welcome to The Dental Wealth Nation Show with your host, Tim McNeely! In this episode titled "Healers vs. Stealers: Protecting Yourself from Employee Theft in Dentistry," Tim McNeely is joined by expert guest David Harris to delve into the critical topic of safeguarding dental practices against employee theft.
Throughout the episode, Tim and David Harris tackle the emotional and financial impact of embezzlement in dentistry, providing valuable insights for dentists. They discuss the prevalence of embezzlement, debunk common misconceptions, and highlight the signs and behavioral indicators of potential embezzlement.
Additionally, they emphasize the importance of proactive measures to prevent and combat theft in dental practices, including the role of trusting but verifying, pre-employment screening, and good financial oversight. David Harris shares real-life experiences, offering a deep understanding of the motivations behind employee theft and advice on protecting dental practices from financial losses. The episode also delves into the role of dentists in overseeing financial activities, with a focus on the transition from manual systems to practice management software and the importance of monthly reporting and articulation.
Listeners can gain valuable knowledge from David Harris's expertise as he provides practical and actionable advice for protecting dental practices from theft. From debunking myths about embezzlement to emphasizing the need for prevention over cure, this episode equips dentists with essential insights into safeguarding their practices and hard-earned assets.
Tune in to The Dental Wealth Nation Show with Tim McNeely and guest David Harris as they provide invaluable guidance on protecting dental practices from employee theft, empowering dentists to navigate the complexities of wealth management in dentistry.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:04):
As a driven dentist, you see the world differently where some
see scarcity. You see abundance. When others wanna give
up, you keep going. You're building an amazing life
of significance. That means you can't rely Eye on ordinary
advice from ordinary advisers to get to your goals. You want
advice that's going to help maximize your net worth so you can take
(00:26):
even better care of the people you love, the causes you care
about, and make your dent in the universe.
But the fact is This advice remains hidden because
relatively few professionals are well versed in them, and the extremely
affluent don't care to let but you know about them. Join
us as we pull back the curtain to reveal the often hidden
(00:48):
advice and Strategies used by today's most successful
individuals and families. Welcome to Dental
Wealth Nation. Here's your host, Tim McNealy.
Welcome everyone to another edition of Dental Wealth Nation. And I
am so Excited about today because we're talking about a problem
(01:11):
that could be lurking in your office. Imagine walking
in one day and that long term office manager you've had or Front desk
person, all of a sudden you've discovered that they may have been
stealing with you. What would be going through your mind? What would you be thinking?
I know I wouldn't find that very pleasant, and that's why today is so
important. You're gonna know. By the time we finish today, you're gonna know why
(01:33):
embezzlement is actually a bigger problem than you've ever
imagined. You're gonna have a new awareness of how to protect what you've worked
so hard for from being unjustly taken from you. But most importantly
of all, you're gonna feel encouraged, and you're gonna know that there's
a solution for this problem that could be happening in your office. And And when
it comes to helping dentists protect themselves from employee theft, there's
(01:55):
no one better than David Harris. David Harris is dentistry's
crime fighter. And what I really love about David is that he's got
that hard job. He's got a difficult job of of fielding those calls
saying, That office manager who's worked for him for 20 years, I think
they're stealing. And as a trusted adviser, he gets to come
in there and help you get back on your feet And get your feedback on
(02:17):
your on the ground so that you can get back to doing what you love.
David, welcome to the show. I am so excited to be here,
Tim. Man, I mean, what what a what a crazy thing
to to to have happen, and and it's not a rare thing, is
it? Embezzlement happens quite a bit, doesn't it? The best number
I can give you is that about 70% of your audience,
(02:39):
7 0%, will get hit sooner or later. That's
7 out of 10 dentists. That that that's huge. And maybe
it's minor. You know? Maybe it's somebody stealing, pens
from the the The front desk or, you know, rounding their
hours up by 15 minutes or something like that, and maybe it's
1,000,000 of dollars. Wow. And and and this is you
(03:02):
know, it's a widespread problem, but it it's also
pretty niche. How did you get started in in in dealing with this
and and really working with embezzlement? Right? Who who says I wanna go
discover thieves? Well, I didn't. And and
how I got here is a pretty good story. I would like to tell
you that I had a vision. You know, I saw an opportunity, and I went
(03:24):
after the the truth was a lot more accidental
than that. So it it started in high school, and the phone call
came to my parents. And the basic, The gist of the phone call was it's
time for David and the school to stop wasting each other's time.
I was a couple of months into my sophomore year. So
suddenly, Tim, I was 15 years old, and I had a lot of time on
(03:45):
my hands. And 15 year olds with time
Don't always use it wisely. Pretty soon, the police were
coming by my parents' house with, some frequency. And,
eventually, I got put in front of a judge. And the
judge kinda to give you the the the chronology, this
was 1977. The judge kinda looked me up and
(04:07):
down, and he said to me, green or orange?
Yeah. I had a I had a look like that. Like, what are you talking
about? And he read my look, and he clarified. And he said, mister
Harris, I'm giving you a choice of what you can wear next week.
And suddenly, it occurred to me that orange is the color you wear in prison,
and, of course, green belongs to the army. So,
(04:30):
I said, green, please. And, went went
went off to the army. I was a little bit underage, but, this was right
after the end of the Vietnam War, and military Jerry was having trouble
making its recruiting quota, so they were, you know, somewhat forgiving.
And, recruiting sergeant helpfully stepped out of the,
out of the office to for a smoke break and left the photocopier unattended so
(04:54):
I could adjust my birth certificate. So away
I went. And to my surprise and
probably everybody else who knew me, I prospered.
I I did really well. I got promoted quickly, and
eventually, I get put in a position where I need a call needed a college
degree that, of course, I didn't have, or
(05:15):
a high school diploma for that matter. So the army sent me to
college, and I finished that
and, I was back working, and I actually broke my back. I was in a
a Jeep accident, and I broke my back. And I had a a year when
I couldn't really do much physically. So, After some discussion,
they sent me back to do my master's. And I finished my
(05:37):
master's degree, and I I served out the rest of my time.
In, 1987, I became a long haired civilian
and, went to work for a bank And didn't last very
long. You know, this this bank and I think probably you could say this about
most banks. They just insisted on making the same mistakes over and over
(05:58):
I was I was doing investigation there, and,
I quit one day, 1989. I was sitting at home and,
bored silly. Know, this is before there was a PVR or,
you know, Netflix or anything like that. I mean, what you what you got to
watch in August was exactly what the networks chose to give you, which was.
I was sitting there watching TV board, and my phone rang. And
(06:21):
when I answered it, it was A guy I'd been in a high school with
in my, quick trip there who had become a
dentist. And he said to me, David, I think my
front desk person is stealing from me, and I really don't have anyone else to
call. So his timing was
perfect. Like I said, I was just climbing the walls. And I said, okay.
(06:42):
I'll I'll come to your practice tonight after you close, and we'll we'll get to
the bottom up. So I went to this practice,
and this is before practice is computerized. So it was the old
pegboard system that people used to use. And, basically, there was a A card
called a ledger card for each patient that showed how much money they owed.
And, I I I got there, and this guy kinda shoved a
(07:06):
a tray full of these cards at me. I
said, no. We're gonna go at this a little bit differently. Show me where she
works. So he took me to her desk, and I started
going through her desk. Well, of course, my my friend's going bug eyed, and, you
know, like, can you do this? Well, yeah, I can. It's not actually her
desk. It's your desk. It's just you know, she she uses it when she works
(07:26):
for it. So I started going through her desk, and,
after a minute or two, I found what we call in the trade her
cheatbook. So this is where you know? And when when thieves
start corrupting the records of a practice, they have to keep track
of what's real and what's fiction. So now
(07:46):
it's more likely to be an Excel spreadsheet, but in those days, it was, like
a, you know, a grade school notebook. So I found taped under
one of her drawers the cheap book. And once I had that, the whole
thing unraveled pretty fast.
He'd he'd lost about $35,000, which is which is big numbers
then. And He wasn't happy about
(08:08):
the loss, but he was glad that I could I could wrestle it to the
ground quickly. So he hit me up for one more favor. He said, can
you come back in the morning? Because I'm gonna fire this woman, and
I don't feel like doing that by myself. Okay.
I'll I'll I'll I'm pretty sure I'll be bored tomorrow too. Let me let Let
me come back in the morning. So we got that done. My
(08:30):
friend promised to buy me dinner that I'll mention I'm still waiting for.
And I I I walked away kinda shrugging my shoulders and thinking, alright. That
was interesting, but I didn't really see a career.
2 weeks later, that changed in a hurry. And what
happened was I had an appointment in my own dentist office.
(08:51):
And I was about to go in. I had my hand on his door, and
I looked through the glass in his door. And sitting at my dentist's front desk
was The same woman I helped fire 2 weeks ago in my friend's
office. What I said next, I will not
repeat on your g rated show.
Yeah. I I sprinted to a payphone because, you know, in
(09:14):
1989, you just didn't carry a cell phone around. Called the
practice, used a little bit of deception and to get past the gatekeeper and talk
to my dentist. And when he picked up the phone, what I said to him
verbatim was, because I what I did was
I identified myself as a local orthodontist when when she
answered the phone as a way of getting put through to my dentist. So
(09:37):
when when he picked up the phone, I said, it's not doctor Jensen. I'm David
Harris. I'm the guy who's supposed to be in your chair right now, but
let me explain why I'm not. And I told him
about the time bomb that was sitting at his front desk, and he panicked and
hired me, and that was my first plan. By the
time I finished his work, the local Henry Schein rep realized what I was
(09:58):
doing. And he had a couple other dentists he had concerns about, and
suddenly, Tim, I was in business. Wow. So that's how
it started. You know, you talk about lightning
striking. That was it. Wow. That that's amazing. And
and going back to that that statistic you mentioned. Right? 7 out of 10. Right?
Approximately or is what we see. And, right, in in that
(10:21):
first case that that you mentioned, Why was the doctor even
suspecting that that something was going on? Are there are there some usual
signs of of activity or or something that That usually
triggers a doctor to say, you know, something's not adding up.
There certainly are. There are really 2 kinds of
warnings. The the first ones are financial ones. And what triggered
(10:44):
this doctor was a financial warning, and it was a patient complaining about their bill.
The other kind of warning signs are behavioral.
And a lot of times, the they're They're the ones that get
people caught. You know? The the American Dental Association did a
study where this question was kind of peripherally asked. And what
(11:04):
came out of the study was 68% of embezzlement
was detected by behavior, 32% by some kind
of financial irregularity. Now now right you you say a
patient complaining by their about their bill, and the first thing that hits me is,
like, that's probably not that unusual, is it? Well,
it's unusual when the complaint goes to the doctor. Ah,
(11:26):
okay. Most of the time when patients complain to the bill about their
bill, they're complaining to the Impezar. So that's
not, you know, that's not gonna get them caught. Okay. But in in in this
case, a patient said something to the doctor in the operatory.
That prompted the doctor to dig in a little bit deeper. So so it
really was just kind of a random comment from the patient mentioning
(11:49):
it to the doctor that helped the doctor to think, hey.
Something's probably going on here. Absolutely. And
that's really common. You know, the overwhelming
majority of embezzlement is caught by what I would
broadly call dumbass luck. You know, where
some unexpected chance occurrence causes the embezzlement to
(12:11):
come out as as opposed to kind of the planned operation of somebody's systems.
Another example, a a pretty big embezzlement I worked on early in my
career came to light when the thief broke her legs skiing 1 weekend.
And Monday morning, for the 1st time anybody could remember, she wasn't in the
office. And one of the
receptionists got 3 phone calls from patients, which were the same kind of thing
(12:35):
about their bills. And after the 3rd call, she went into,
the senior doctor's operatory, took him out of it, and said, you know, there's
something weird here, And he called me. Wow.
And that was about $600,000 that this woman had taken, which was
huge in 1991. Wow. Now now in
a little bit, I wanna touch on some protection strategies in being
(12:58):
proactive, but it really sounds like the majority of cases Or like
what you said, they're just they're randomly caught because there are no
procedures or or practices or systems in place to
identify these things. So it is that random comment or
or the patient saying something or, you know, you look at your bank statement, you're
like, why is there less money here? And so so So it sounds like a
(13:18):
lot of it is just being caught randomly instead of proactively.
No question. I mean, I think I think that very fact is
An indictment of doctor systems. Mhmm.
The other thing, though, is that we shouldn't ignore the behavioral
clues. And when we talk about those, I mean, let's let's make it more
(13:39):
concrete what kind of things are we talking about. Well, a lot of thieves
are reluctant to take vacation, I mentioned the woman who sort of was on an
involuntary vacation because she broke her leg, and that's when the the wheels came
off her wagon. A lot
of thieves like to do their stealing when they're alone in the office.
So they'll organize their schedules. You know? They'll get there before everybody
(14:01):
else, or they'll stay after The rest of the the the team leave,
or they'll kind of quietly slip into the practice on a weekend.
The one thing that can terrify a A thief is the word
consultant. So we get a fair number of calls
from consultants, and they always go the same way. You know? David, I've been a
consultant for 5 years, 10 years, whatever.
(14:25):
And, you know, I understand that not every staff member is overjoyed See me walk
through the front door, but I'm working at 1 office right now. And the pushback
I'm getting is well beyond the sort of normal resistance to
change, and I'm wondering what's behind
You know? So that's that's another
behavioral thing. The other thing I'll say is Thieves process
(14:48):
differently. So let's say you and I are walking down the
street in your town, and we see somebody's wallet fall out of their
pants in front of us. You know what? What most people
do is they stoop down. They pick up the wallet. They walk a little faster,
and they go back to whoever dropped it and said, sorry. Your wallet fell on
the ground. And a thief may end up doing
(15:10):
that too, but they're gonna ask a couple of questions before they do that you
might not. Like, I wonder if anybody else saw
that wallet fall. I wonder how much
money is in it. Based on those answers,
their behavior may be the same as yours. On the other hand, they may decide,
well, you know, okay. There's money in this wallet. Nobody saw it fall. I'll
(15:31):
just, I'll just keep it for me.
Wow. Well, Ray, let let's talk a little bit about the
the Why people embezzle? Right? In your
experience, right, are there some common reasons employees
embezzle? Yeah. In a broad sense, there are. There
(15:53):
thieves steal for one of 2 reasons, which are need and greed.
And needy thieves have something happening in their lives that
stresses their family finances. So if you if you want the
classic case, Tim, think of the economics of divorce. Mhmm.
And you start with 2 incomes supporting 1 household.
(16:13):
And from that, you evolve to 2 income supporting 2 households and throwing a
bunch of attorney bills. And suddenly, you
know, the the comfortable living that that people had before is
upset. And, sometimes in that situation,
people steal. Maybe there's an addiction. Maybe,
spouse lost his job. You know, there there are lots of potential
(16:35):
triggering factors, but it's a case where they just can't make the family
books balance each month and somebody's stealing to fill that hole.
And then you have greedy thieves, and they're They're a little bit different. I mean,
there's they they feel like society undervalues them,
and they're stealing what they think they should be paid in the 1st
(16:55):
place. And, you know, a lot of these
people will look at their doctor as basically this,
Lovable, high functioning moron with good hands.
Wow. Yeah. I said I know it's a huge oversimplification.
And if I If I were the audience, I might bristle at somebody describing me
that way, but that's that's the picture a lot of thieves have. And in
(17:18):
their world view, The only reason that doctor is successful
is because I keep her cheerful. And then when patients leave it,
I make sure they pay. And, you know, they they can sort
of talk themselves into a an otherwise unrecognized
partnership with the doctor, at least in their minds.
So they kinda convince themselves that they're entitled to this money, and then they take
(17:41):
what they've what they've convinced themselves they're entitled to. Yeah. Oh
my gosh. Wow. So so it's really like you said, it's need and
greed that are driving these things.
Yeah. Yeah. And, You know, the the way you can differentiate those
2 is how they spend the money. I mean, the the needy people pay the
rent, or they, you know, they put gas in the car. The greedy
(18:03):
people, you know, buy designer clothes or
they, buy front row concert tickets or,
you know, they buy that car that They could never afford on their salary.
Okay. And so so those are little clues too. If all of a
sudden the employee starts Showing up with things they probably
can't afford, that could be a sign that something's going on. It could
(18:26):
be. You know, we we should be a little cognizant that we don't
necessarily know everything about our our our people's finances. You know? And
sometimes, I've I've had calls where there was suspicion, but, you know, what
it turned out was, You know, somebody got an inheritance from from
their distant uncle or something like that. You know? There was something
else that the doctor didn't know about. Okay. But but I
(18:48):
you know, I'm I'm I'm agreeing generally with your point that that living beyond your
means is definitely a warning sign. Well but, I mean, I I think that also
raises an interesting question of, right, how do
you, you know, be proactive and have your eyes
open, But not necessarily be overburdening
either and accusing where you shouldn't be accusing, because I'm guessing
(19:10):
there's a balance in there somewhere. Well, the first thing I'll say
is I think a lot of dentists don't know their staff as well as they
should. And, you know, it's interesting when you when you look
at a dental office and you look at what happens at lunchtime.
You know, let's assume the whole office closes for lunch. Doctor
goes in their private operatory and they or the private office, and they go on
(19:32):
their computer and they, you know, they check the stock market or they surf porn
or whatever, You know, whatever they do at lunchtime. And,
the the staff all go in the break room together.
And, you know, it creates that insularity
where the doctor is not you know, the the doctor's only
interaction with staff happens During work, you
(19:56):
know, when there's a subject matter called a patient. One
thing I say to dentists is once a week, maybe twice a
week, Have lunch with your team. And, you
know, you might have to bribe them with food a little bit if they find
this kinda creepy at first because it's different than your pattern.
But make a point of sitting there in the break room with them for 40
(20:16):
minutes. You know? The the the stock market will wait,
And get to know them as people.
And then if you do that for a while, you'll understand who's,
got their eye on that new house. You know? Maybe even the offer's been accepted,
but they're not sure if they can qualify for the mortgage.
And you'll know, you know, who's whose husband is off work
(20:39):
because, you know, they had a workplace accident or
whatever. And you'll You'll you'll you'll start to have a much better picture
of what's driving your team. Wow. So,
really, just something as Simple is is getting to know your team and sitting
down with them once a week or every other week. That can be a protection
strategy just by getting to know your team, And, actually, we've
(21:00):
got some viewers watching and liking. If you've got questions for David, just go
ahead and put those below, and we'll we'll ask them live. So if you've got
questions on your practice or How you can protect yourself. Just go ahead and put
those below. We'd be happy to to answer them. So, David,
talking about protection strategies, right, we we mentioned getting to know your staff.
Are Are there some other safeguards that can be put in place
(21:22):
to protect your practice against embezzlement? Absolutely. There
are. You know? And I I could I could talk for hours
on this topic, but I'll keep it fairly tight.
The first thing is one thing that dentists in general
do a terrible job of his preemployment screening.
(21:43):
Dental practices most dentists thoroughly despise hiring staff.
And, you know, when when you feel that way about a job, you try to
make it as quick and painless as possible, and you don't do things
that are gonna prolong your agony like preemployment
screening. But, I'll I'll give your audience
a really Sobrink statistic, Tim. 70,000,000
(22:06):
Americans, which is 1 in 4 adults, has a criminal record.
Wow. So Even failing to do basic things
like a criminal records check
create a huge exposure to a practice. And not
just to embezzlement. I mean, you know, that's also the child molester, the,
(22:26):
you know, the the the ax murderer, the shoplifter, whatever who you're about
to So
criminal records check is part of it, but there's a lot more to preemployment screening
than that. You know, speaking with former
employers, if somebody's in a position where they
handle money, checking their credit status. If you
(22:49):
can do it, checking their driving record is a really good idea because one thing
we've noticed about these is that a lot of them have
Huge amounts of motor vehicle violations. And it's it's
stupid stuff. You know? Driving without a seat belt or, you
know, expired license plates or something like that. I think where it
comes from is that a lot of embezzlers have the belief That the rules that
(23:12):
apply to the rest of society don't don't also apply to them.
And, you know, check with your HR advisers before you start
doing this because there are some definite issues with,
getting a driving abstract as as part of a preemployment screening.
But if you can do it in a specific situation, you often learn a lot
about somebody by how they handle themselves behind the wheel.
(23:34):
Wow. That's fascinating. So I I know in the world of
of hacking and computer systems. Right? There's the the white hat
hackers, the the hackers that you hire to Come in and try to bust your
system and and find the vulnerabilities. Does that kind of thing exist within
the embezzlement world too? Is bringing someone in to really look
at those systems and kinda stress test where the weaknesses
(23:56):
are. It's funny you should ask that. We do 2 things
in At Prosperity, my company, the first thing we do is
and and what we're best known for is what we call our reactive services.
So that's where Somebody reaches out to us and says, you
know, I think or I've caught my staff member stealing red
handed, and now I need you to investigate and See what's really going
(24:19):
on. So that's the first thing we do. The second thing we do is proactive
work. And the idea here is very simple. It's to
Close the loopholes in a practice before an embezzler gets
there first. And it
it's no different, Tim, than if you were a dentist and I was your patient.
And I said to you, doctor McNealy, I wanna spend the least money
(24:43):
In my lifetime on my teeth, what should I do? And your answer would be
brush and floss like crazy and see our hygienist every 6 months
because The cost of doing those 3 things is a whole lot less
than the cost of me fixing what's gonna break if you neglect
them. And I'll say exactly the same thing here. Prevention
is much, much, much better than the cure. So we
(25:04):
offer that service where we will Find the weaknesses.
Help train the doctor in financial oversight
because they all say the same thing to us. There's nowhere to learn that.
We didn't get it in school. There's no, you know, there's no course. There's no
book. We we'll sit there with a doctor looking at at their
software together, Help them decide what reports they
(25:27):
need, understand what's in those reports, you know, what constitutes an
outlier, what what do you do when you find that outlier? And and they
all say, yeah. We you know, I've been practicing for 15 years, and this is
the first time anybody's done this with me.
Yeah. Wow. And do you cover some of these things in your
book, healer versus stealer? We do.
(25:49):
Yeah. There's there's a lot of good information there. So the the the book's called
Healers versus Steelers, how to outsmart the thief in your practice.
And it's available on Amazon and through lots of other fine booksellers.
It's my 2nd book. The the first one Was a little bit skimpier,
healers versus stealers, which I just happen to have here.
It's about 300 pages. And, you know, it deals with a
(26:13):
lot of situations. For example, there's a chapter on orthodontists because
the way that orthodontists get stolen from is a little bit different than, Say
a general dentist or a pediatric dentist. There's a
chapter on DSOs because, again, The
the theft patterns in DSOs are are a little bit different than what would happen
in an owner operated practice. So it it it deals with some
(26:35):
situations. There's a lot of The book that is devoted to
hiring and how not to hire somebody who's done this before.
And That feels like that's kind of the most Obvious step is don't
hire the thief in the 1st place. It it's so
true. The the only problem with that is that, you know, there are
serial ambassadors who will, victimize more than one practice.
(26:58):
In fact, the the most extreme one I saw hit 15 different practices
over about a 20 year period. Oh my word. She was like the
energizer bunny of of embezzlement.
But The other danger is the long term employee who
wakes up 1 morning and says, okay. I'm 57 years old.
There's no pension plan here. I'm not Really comfortable with the amount I
(27:20):
have in my four zero one k. And, you know, I better be like the
squirrel starting to hide some nuts for winter. And
we we see a lot of people who are working in a practice for 15
plus years, and then one day, they start stealing. So the The
hiring is is essential and, one of
the easiest, cheapest protections you can have, but it's not
(27:43):
a complete solution. The other thing that dentists do or should
do is what we call financial oversight.
You know? And and to make it as simple as I can, every practice has
practice management software. The software tracks 3 things,
Fees, in other words, what was charged to the patient, adjustments,
(28:03):
and payments. And Payments
are the amount that come in according to practice management software, and very
simply, payment should equal deposits. And
there are 2 kinds of dentists, Tim. There are those who sit there at the
end of each day with their report, and they go to their online banking, and
they make sure that the right amount went into the bank, and then there's the
(28:25):
other 85%. If you're
in that 85%, Stealing is easy.
If you don't know how much money should be going into the bank account today
and I'm your office manager, It is the easiest thing in the
world for me to just peel away some of your deposit and keep it myself.
And I don't have to do anything exotic in your software. I just
(28:48):
divert money. So if $32,000 was collected today, but I can
get away with depositing $31,200,
then I just put $800 in my pocket. Wow.
It so that oversight part, and we cover that in a lot of
detail in my book, And we also work extensively with with
(29:08):
dentists when we work with them 1 on 1 on that topic,
is so important. And the Good news. The the thing probably that people don't
realize is it takes a lot less time than they think if
you do it right. Yeah. That was gonna be my next question for you.
It is so often we think these things take a lot of time and effort.
Right? Because you gotta monitor and check and and look at all these things.
(29:32):
And so, you know, what is the time commitment to to get these things
set up and and and monitor everything? Well, the first thing I'll say
about that oversight is if you want it to be, it could be 0,
because What what has to happen
for for the reconciliation calculation is
(29:52):
mechanical. I mean, it could be done by your your your son in college.
There's nothing about that that requires a dentist. There are other parts of
monitoring that require not only dental knowledge, but somebody who is
there today and knew what happened. But in terms of due deposits
equal collections, it's mechanical. So it could be
outsourced, not delegated, not to a staff member because that's Kind
(30:14):
of like asking the fox if you if if he'd mind holding the
keys to the hen house while you go to the gym for an hour.
But it it does not have to be the doctor. The
second thing though is that we we have this
idea That that activity should happen at the end of each
day. And that comes from the old pegboard
(30:37):
manual systems that that preceded practice management software
because there really wasn't a good concept of a monthly report in pegboard. You know?
The the whole focus was tracking each day.
So at the end of the day, the doctor would check the deposit against collections
and assuming all is good, go home. And
That's still the mentality people have. If you wanna make this process
(30:59):
much, much easier, that's an activity that should be done
at the end of each month. In other words, do monthly
collections line up with monthly bank deposits?
And the the thing that makes That calculation harder
is timing differences. So think about a patient who pays
by credit card today, And the practice management
(31:22):
software captures that as a payment today. But
with most credit card companies, it takes a couple of days for that to to
get in your bank account. So if you're trying to look at what
happened today, today, you can't do it because, you know, there's sort
of this unknown piece that won't be settled for a couple of days.
On the other hand, when you expand the window and you look at a month
(31:44):
at a time instead of a day, Most of those timing differences have self
resolved. I mean, now the only stuff that's kind
of confounding you is The transactions that overhang the
the 1st day of the month and the last day of the month, which is
is a whole lot less as a percentage than What would
happen if you look at a day in isolation? And it's
(32:05):
just less work to do that calculation once than 20 times.
Yeah. There's another piece, though, that has to happen
when you move this to monthly, and it's called articulation.
And when I talk to a dentist about articulation, what they're thinking about is the
mandible and the maxilla and how they're supposed to fit. Yeah.
Exactly. How they're supposed to fit together.
(32:29):
And this is similar. What what the articulation calculation says is
this. If your practice was open 18 days this
month And in your left hand, you have
18 day end reports from your software, and in your right hand, you have
a month end report. If you totaled up the 18
reports for fees adjustments and payments, they should
(32:51):
exactly equal The totals on the month end report.
If they don't, Tim, what it means is somebody came in after hours and did
stuff they didn't want you to see.
So articulation is a way of making sure that everything that happened
this month was seen by you.
(33:11):
And it really is as simple as just matching up the the numbers
and making sure they match. Put it on a spreadsheet. Yeah. You know, it's a
it's a 10 minute job for for
somebody to do that. And, again, it does not have to be the doctor. It
shouldn't be a team member. But, You know, if you have a spouse who will
do it, if you have a kid in college, if your bookkeeper, we'll we'll
(33:32):
take this on. You know? There's there's somebody who will do that for
you, Probably for not a lot of money. I mean, you know,
if if if it's your son in college, you can just pay them a beer.
Yeah. Well, right I love that, because I think this starts hitting on just
just having a different thought process About how to think about
embezzlement in your practice. You don't have to be in there with the magnifying
(33:55):
glass looking at all the books and everything. You just gotta do some high
level things to make sure the numbers are are matching up.
Yeah. Now just before everybody thinks they're
free And, you know, they don't have to listen to the rest of this
this presentation. I will mention one thing. The the way
thieves look at the doctor is, Does the doctor oversee
(34:18):
the the balancing process that the office manager does? You know, that's the 15%
who do and 85% who don't. If the answer to that question is
no, then the way I steal is I just divert the deposit as we were
talking about. Mhmm. How do I steal if The
doctor is comparing collections against deposits. I can
still do it. It's a little bit hard, but now what I need to do
(34:39):
is trick the software into Lying about how much money
was collected. And I'm not gonna get into
details of how that happens, but what I'll say is In any practice
management software, it's possible. So you can you
can make the you can trick the software to under report collections.
And that's the, you know, that's the other thing you have to you have to
(35:02):
monitor for. In other words, do the do the dollars line up is question number
1. And question number 2 is, Now that I've put that
articulation safeguard in place to make sure that I'm seeing
every single transaction that happened this month,
do any of them not make sense?
Yeah. Right. Exactly. Right. Is there a patient refund that
(35:24):
Shouldn't have taken place or or whatever it is. 100 100% adjustment
on, you know, on a patient treatment. Yeah. Yeah. You know? Is there something
there that I look at it and say, wait a minute. That, You know, that
doesn't make sense. So so it really seems like there's kind
of different levels of protection that you you wanna put in, whether
it's Starting with the hiring and then looking at the monthly reporting
(35:45):
and the articulation and then, you know, even checking the practice management
software. So you've got different levels that you wanna look at as you're going through
this. Is that what I'm hearing? It is. And the the
total time commitment for a doctor to do
What we would tell them to do is probably less than 2 hours a
month. Wow. Well, and and For those who say
(36:08):
sorry. For those who say, you know, that's not what I signed up for.
You know, if you wanna be a practice owner, that
comes with some responsibility. Yeah. If you don't want that
responsibility, that's fine. But don't be a practice owner. Be an
associate. Work for DSO. You know? Go to an FQHC
or, you know, join join the military. I mean,
(36:31):
there are other for for the dentist who says, I want to be a pure
clinical dentist, and I don't wanna Get my hands dirty with any of this stuff.
There are plenty of outlets. You just that's the person who shouldn't be a practice
owner. Yeah. Or You need to build the team, the trusted team
who's not in the office who can help you do these things. Like you mentioned,
maybe it's the bookkeeper or the Stunning college or the the
(36:53):
spouse. Right? A a trusted adviser. The trusted adviser is
good. To, but, you know. The trusted adviser's good, but if you're a
business owner, you know, you have to wake up in the morning and say, alright.
With with the privileges that owning a business gives me
come some some burdens. Yeah. Absolutely. You know, I can
never switch off from this. I can never say you know,
(37:15):
I've handed that out to somebody, so I don't ever I have to think about
it again. And I Yeah. I talked to Dennis a lot about the difference between
delegation and abdication.
And Go go into that difference because because I think that's an important
differentiator for people to understand. Delegation
is, Tim, you're my employee or you're you're, an
(37:37):
independent contractor who I outsource to, and I'm giving you this job
to do, and I'm gonna Hold you accountable for that, and I'm gonna
enforce that accountability. An
advocation is when I say to you, Tim, Here. This is yours. I don't ever
wanna hear about it again. And a
lot of dentists abdicate when What needs to
(37:59):
happen is delegation.
And like I say, if you if you wanna advocate, no problem at all.
Just don't do it as a practice owner. Yeah. Well, and
even coming back to that, you know, on average about 2 hours a month, do
you have any stats on what the The average embezzlement from an
office ends up looking like in terms of dollar amounts? I can be
(38:21):
pretty precise on that one. The last time we looked From our files, it was
$109,000. A $109,000. I
That's the average. Wow. And so, you know, at
at 2 hours a month, you know, what is that? $55,000
an hour you're you're you're saving? That's a little less than that, I
think. But, you know, because it's 2 hours a month for your entire career as
(38:45):
a practice owner. Okay. But but it's that's a pretty good ROI
if you ask me. Yeah. And you know what? The money
tells part of the story and not all of it. Mhmm.
You know, a lot of dentists who are embezzled are
devastated emotionally. We we
Did an investigation for a guy last year, probably in his late
(39:08):
fifties. He had lost 100 and
$60,000 roughly, from
it. And once it was all cleaned
up, he had a young associate. He turned around in that associate
probably 5 years earlier than his initial plan was, and he sold the practice. And
he said, I, you know, I after After that experience,
(39:31):
I'm just not enjoying being a practice owner anymore.
So, you know, the the the emotional,
Damage from this can be significant. Oh, I I I would
imagine so because, right, oftentimes, these are trusted people in your office.
They're People you have a relationship with and right? And
there's just that sense of betrayal. And and so the emotional
(39:54):
toll, I I would guess, is Probably, in some cases, harder than the financial
tool. A 100% agree with you.
You know? The money you can replace. Yep. The stomach lining is
a little bit hard. Right? Yeah. It's a lot lot
harder to to replace that. So I'm I'm Tim McNealy. You've been listening to the
The Dental Wealth Nation Show, we've been talking with David Harris about
(40:16):
embezzlement. And and, David, I certainly understand that that it's a
much bigger problem than than we've ever imagined with 7 out of
10, 70% of dentists facing embezzlement at some point in
their career. And and we've been going through, you know, some of the ways you
can protect yourself from Having everything you've worked so hard for
from being unjustly taken, and and, you know, we've talked about some of those
(40:38):
protection strategies. We've talked about why people embezzle,
And, you know, even changing the the thought process. And I I wanna
dive in and talk a little bit about some embezzlement myths. Are there some
common misconceptions about embezzlement that you'd like to
dispel or some things that you hear dentists say that you're like, that's just not
even close to the truth?
(41:30):
He froze.
Hey there, folks. We got a temporary hang up. We're
waiting for David to Come back on.
(41:54):
It looks like there was a little Internet connection
issue, but we will be back shortly. And let's just
Hang out here and wait for him to pop back
on here. The
beauty of the the platform is the recording will take place, and
we can edit this all out. So it's gonna Worked
(42:16):
just fine. Give him a second to log back in
here.
Hey. Welcome back.
(42:39):
Welcome back. Tim. Hey.
Someone was embezzling our Internet connection, apparently.
Hey, Tim. Can you hear me? I can hear you loud and clear.
(43:14):
I can hear you. Darn it. I can't hear you, Tim. Can you
hear Yeah. Let's try this real quick.
Audio. Yeah. I see my audio coming in.
So that's working.
(43:42):
Hello.
(44:05):
Tim? Yes.
Sorry. My computer completely froze there. Oh,
that's alright. I was just I was just making a joke. Someone
someone's embezzling our Internet connection.
It wasn't something you said. No. But, hey.
We'll we'll jump back in. I was talking about some common myths that
(44:28):
you hear. Are there some common misconceptions Within the
the dental practices that that you'd like to dispel?
All kinds. The first one is when I talk To a
lot of dentists about embezzlement, the picture they have is the theft of
$20 bills. And to be clear,
Cash is every thief's 1st choice, but it's certainly not their only
(44:51):
choice. I'm not gonna get into details here, but I will say
that it's not hard to Steal checks, to steal credit
card payments, or even to redirect electronic funds transfers.
So the first thing I'll say is you need to think a little bit broader
in The concept that you know, because you have some practices that even
stop taking cash completely in COVID, and they thought that, you know, that
(45:13):
would protect them Totally against embezzlement. It it will not.
Other myths, A lot of people think that
there's something that makes them immune. My staff have been with
me forever, or I work in a small town, and really embezzlement
only happens in big cities where you end up hiring people you don't know as
(45:35):
well. Or, gee, I'm a specialist, and, you
know, embezzlement is really something that afflicts those poor general dentists
Or whatever. I mean, people will come up with reasons why they're immune,
and none of them apply. No
thief says, You know, I really wanna steal, but I work in an ortho
(45:55):
practice. And, yeah, I I just can't steal from an orthodontist.
No. Embezzlement happens because somebody who works for
you decides that they have more rights to your money than you do.
End of story. That can happen anywhere. I mean, it has
it has nothing to do with you or your situation. And embezzlement
(46:16):
is all driven by A staff member and what they decide to
do.
Other myths. My accountant, if it was happening, my accountant would catch
it. Well, right, that that feels like a
real common and easy assumption to make is, right, my account was looking
at all these things. I should be safe. Right?
(46:38):
Yeah. No. First of all, most stealing
and dental practices happens on the revenue side. In other words, it's
theft of patient payments or insurance payments. In a lot
of other businesses when theft happens, it happens predominantly on the expense You
know, payroll, or or,
fraudulent purchases or something like that. And those things happen, but the the main
(47:01):
event in dentistry is revenue side theft.
Your accountants do not look at that at all. You know,
what people don't realize is that Unlike most
professions, dentistry keeps 2 sets of
books. In other words, there's practice management software that looks
after revenue, And there's accounting software like QuickBooks or something that
(47:23):
looks after expenses. And the 2 of them don't talk to each other, and the
accountants don't have any reason in in in what they're
doing to look at your practice management software, and yet that's where the bodies are
buried. Wow. So so really, right, the the whole
accountant myth really happens because the accountants are
are seeing the books Most likely after the embezzlement has
(47:45):
taken place. That's right. Well said.
And I can give you some numbers on this. When when you look at all
industries globally, so dentistry, but everything else as well, and you look at globally. So
dentistry, but everything else as well. And you look at how much or you
look at how embezzlement is uncovered. In in the
whole world, accountants find about 40% of the embezzlement that's ever
discovered. In dentistry, that number is more like 5%.
(48:09):
Wow. Yeah. So they're not your frontline of defense, and that's
a that's a very common misbelief.
So, really, that that what what is the frontline of defense then?
It's the doctor. And,
You know, possibly, if they have a bookkeeper or they they get
(48:31):
somebody, doing some very specific oversight for
them, that can constitute part of frontline. But my point is the normal
accounting process that your CPA firm goes through at the end of each year
is not very likely in dentistry to uncover a vessel.
Wow. So if if you're
a doctor, right, if you're if you're concerned about this as as well you
(48:54):
should, And you you take some time to to implement
some basic systems. Is this something you you gotta stay up
at night worrying about, or or can you have some confidence In the systems
that you actually put in your practice.
If they're good systems, and that's a big if.
Mhmm. But if if you've got good systems, they will go a
(49:16):
long way to helping you sleep. The the
systems that most Practices have, frankly, are terrible.
And, you know, I I look at a at a, you
know, a hypothetical 40 year old dentist now,
and they probably bought their practice from somebody who's
25 or 30 years older than there.
(49:40):
So that practice of systems were built in the time before there were
computers. They were probably also built
at the time when most dentists were male,
and what their wives did in general was run their office.
In other words, the economic interests of a husband and wife, you know,
until they decide to get divorced are completely parallel. And
(50:03):
a lot of systems were really designed to catch that occasional spouse who couldn't
add more so than any kind of dishonesty.
So the whole premise on which most systems are built is
well outdated.
(50:25):
Wow. And so, right, just coming back to some some closing
thoughts here. Right? We we've got your book, Steelers and Healers, and and and
give me a walk through of your 1st book and your 2nd book real quick.
The the first book is, is is fairly
short. It's it's quite light. I mean, if you can't read it in 3 trips
to the bathroom, you probably need a GI consult.
(50:49):
And, you know, it's, it it
it's a good Superficial treatment of the topic.
When I went to write the 2nd book, you know, and and and the first
one, Tim, was done on a bit of a timetable. In other words, my My
my marketing people gave me a deadline and said, you know, we need your manuscript
by July 1st. So I I I
(51:12):
did You know, it's it's it's a good worthwhile book. And as I say, if
you want a light treatment of the topic, that's the one. When I did
the 2nd book, which Took me another 3 years after the first one to get
out. I wrote the book I really wanted to write, and I had no time
pressure now, and I could go back and, write it, you know,
write a whole lot more detail. So my first book is about a 100 pages.
(51:33):
My second one's 350. And as I
say, a lot more detail, a lot of,
a lot more kind of procedural. Here's how to
whatever. You know? Here are the here's here's here are the questions to
ask some somebody's former employers when you're looking at hiring.
It's it's kind of at that level. And I I have to acknowledge some members
(51:56):
of my team because, my name is on the book as the author,
but, The the contribution of several members
of our team is pretty significant there. Wow.
Wow. Right. It takes a a team to to do anything. I
certainly learned that doing my first book. It's it's a lot of effort and a
lot of work, and, you you need the right people behind you. So
(52:18):
so coming to this problem, right, we know it's a a widespread problem. 70%
of dentists are are are will face some kind of embezzlement. What's the
awareness of the the problem and and how concerned
are doctors about this. And I ask that because in in my
industry, we've got this major disconnect
Between the things that doctors say they're concerned about, they say they're concerned
(52:40):
about asset protection, they say they're concerned about tax planning, they
They say they're concerned about transitioning their practice, but
then we ask a secondary question, which is, well, have you taken any action or
consulted anyone on these? And all of a sudden, those numbers are really,
really low. So major disconnect between kind of, yeah, I'm
concerned about this. I know it's a problem, But, no, I haven't done anything
(53:03):
about it. So do you find that's the same with dealing with embezzlement
and and really putting systems and processes in place in the practice
also? Definitely. I mean, cons being concerned is
free. Mhmm. Acting on those concerns tends to cost
money. Yeah. So the the the
first one is a lot easier to say yes to than the second one.
(53:25):
And we get exactly the same thing. You know? When I when I speak to
dentists in, in live audiences, one of the questions I tend
to ask them is, you know, would you like to contact us? Would you like
us to contact you about protecting your practice? And a a good proportion of
them will say yes. The proportion of that group
who will do anything It's pretty small because saying yes is
(53:46):
free, but there's there's some cost both in
in monetary outlay and also in their time and mental
energy To doing something. Yeah. Wow.
Well, based on this conversation, I'd prefer to have you in my
practice Before something happens, not after. I I
I'd prefer to pay that first cost instead of the second one.
(54:09):
You know, we had, one one of our victims who is an orthodontist
who lost $380,000 to his office
manager. When I asked him one day, and he he was nice enough to
record a video on this. I we we had the video on him, and and
the question was, you know, if you were gonna give
advice to another dentist based on your experience, what would it be?
(54:31):
And what he said and I'll I'll quote him as close to verbatim as I
can. You're not gonna get your money back. You're not gonna get your
sleep back. Just put the safeguards in place to prevent this.
Wow. Now I'll modify what he said a little bit. Everybody who's stolen
Trump gets some of their money back. It's a minority who
get it all back. So I think what he's saying is, you know, you're gonna
(54:52):
be out of pocket at some amount.
But, yeah, just put the safeguards in place. Do it. That was that
was his advice to every dentist. Yeah. And and I think
that's very, very sound advice. Right? It's almost like winning a
litigation. Right? You can go in a court case, you can get a big old
judgment from someone, but collecting on it's a whole another
(55:13):
problem. Yeah. And that's that's one of the
impediments to to getting your money back. I mean, most of the people who are
stealing your money are at least as good at spending it as they are at
stealing. Yep. Now one thing, you you were asking
about, miss. Another thing most dentists don't realize is that they all have
insurance coverage for this. Unfortunately, it tends to
(55:34):
be a modest amount, but Almost every dentist has $25,000
of insurance coverage. So if you've been stolen from,
that's Assuming the the proper groundwork is done,
that's pretty easy to get back. You know? If somebody took a 100,000
from you, getting the other 75,000 may,
be harder, but the first 25 is pretty easy to
(55:57):
get. So almost everybody who's been stolen from will be cash
positive at the end of At the end of our work.
Yeah. Wow. So, David, how can we get in touch with you? How
can doctors find you? Well, the easiest place probably
is our website, which is www.Prosperident,
(56:18):
prosperident.com,
or they can call us at 888
3982327. So
8883982327. Those are the
best ways. We're we're happy to talk to any dentist who says I have
concerns or I wanna protect myself or, I
(56:41):
just wanna make sure that it's not happening. You know, we we can deal with
any of those things. Yeah. Well no. And it's such an
important topic. So, you know, I I I I find that in my world, there
there's 5 chief concerns that the the doctors have. Number 1 is they
wanna make smart choices with their money. Number 2, they wanna mitigate their
taxes, but the 3rd biggest concern they have is they wanna make sure
(57:02):
their assets aren't unjustly taken through theft or some other
Unjust means, then they wanna get the estate planning, take care of the next
generation, and then about a third of them are very terribly inclined. But the
3rd biggest problem, the 3rd biggest concern they have is
asset protection, and that's why what you do is so important. And thank you
for being dentistry's crime fighter and getting out there And helping to
(57:25):
to not just solve the problems, but also prevent them, and and that's so
important. And so before we sign off here, any closing thoughts?
I will quote a former president. Trust,
but verify. Well said.
And and actually, you know what? We'll we'll we'll come back to that closing thought
because I think it's so powerful. And that that that's another lesson. So I I've
(57:48):
studied the the Super rich quite a bit. I don't have any super rich clients,
but I wanna learn from super rich. And and when I say super rich, I'm
talking people with a net worth north of half $1,000,000,000. And
they establish family offices. They build a team of the best the best
individuals. And one of these things that these family offices do
on a regular basis, actually every about 3 to 4 years is
(58:09):
they run a stress test of their plans. They wanna make sure it's gonna deliver
as promised. And just like you said, they wanna trust But
verify. And so I I I think those are words of wisdom, David.
Well, I'm glad to hear the billionaires agree with me. That's tremendously
reassuring. They they absolutely do, and they they do it on
a regular basis. In fact, they find it strange if they're not stress
(58:32):
testing things. And so well, hey. Thank you again
for sharing so generously and such an important topic, and
and I would encourage you if you're listing this right, Being concerned about something
is free. Taking action does take a little bit of cost both in your
time and money, but a little bit of prevention can go a long, long way.
So So protect yourself. Protect the what you've worked so hard
(58:54):
for. David, thank you again for being an amazing guest. It was
my pleasure. Thanks for having me. We'll see you again here soon on the Dental
Wealth Nation show.
You've been listening to Dental Wealth Nation. We hope you've gotten
some useful and practical information from the show. Join us
next time as we pull back the curtain to reveal The often
(59:16):
hidden advice and strategies used by today's most
successful individuals and families and help maximize
your net worth so you can take even better care of the people you
love. Till next time. Make sure to hit the website at dentalwealthnation.com.
As a driven dentist, you see the world differently where some
see scarcity. You see abundance. When others wanna give
up, you keep going. You're building an amazing life
of significance. That means you can't rely Eye on ordinary
advice from ordinary advisers to get to your goals. You want
advice that's going to help maximize your net worth so you can take
(00:26):
even better care of the people you love, the causes you care
about, and make your dent in the universe.
But the fact is This advice remains hidden because
relatively few professionals are well versed in them, and the extremely
affluent don't care to let but you know about them. Join
us as we pull back the curtain to reveal the often hidden
(00:48):
advice and Strategies used by today's most successful
individuals and families. Welcome to Dental
Wealth Nation. Here's your host, Tim McNealy.
Welcome everyone to another edition of Dental Wealth Nation. And I
am so Excited about today because we're talking about a problem
(01:11):
that could be lurking in your office. Imagine walking
in one day and that long term office manager you've had or Front desk
person, all of a sudden you've discovered that they may have been
stealing with you. What would be going through your mind? What would you be thinking?
I know I wouldn't find that very pleasant, and that's why today is so
important. You're gonna know. By the time we finish today, you're gonna know why
(01:33):
embezzlement is actually a bigger problem than you've ever
imagined. You're gonna have a new awareness of how to protect what you've worked
so hard for from being unjustly taken from you. But most importantly
of all, you're gonna feel encouraged, and you're gonna know that there's
a solution for this problem that could be happening in your office. And And when
it comes to helping dentists protect themselves from employee theft, there's
(01:55):
no one better than David Harris. David Harris is dentistry's
crime fighter. And what I really love about David is that he's got
that hard job. He's got a difficult job of of fielding those calls
saying, That office manager who's worked for him for 20 years, I think
they're stealing. And as a trusted adviser, he gets to come
in there and help you get back on your feet And get your feedback on
(02:17):
your on the ground so that you can get back to doing what you love.
David, welcome to the show. I am so excited to be here,
Tim. Man, I mean, what what a what a crazy thing
to to to have happen, and and it's not a rare thing, is
it? Embezzlement happens quite a bit, doesn't it? The best number
I can give you is that about 70% of your audience,
(02:39):
7 0%, will get hit sooner or later. That's
7 out of 10 dentists. That that that's huge. And maybe
it's minor. You know? Maybe it's somebody stealing, pens
from the the The front desk or, you know, rounding their
hours up by 15 minutes or something like that, and maybe it's
1,000,000 of dollars. Wow. And and and this is you
(03:02):
know, it's a widespread problem, but it it's also
pretty niche. How did you get started in in in dealing with this
and and really working with embezzlement? Right? Who who says I wanna go
discover thieves? Well, I didn't. And and
how I got here is a pretty good story. I would like to tell
you that I had a vision. You know, I saw an opportunity, and I went
(03:24):
after the the truth was a lot more accidental
than that. So it it started in high school, and the phone call
came to my parents. And the basic, The gist of the phone call was it's
time for David and the school to stop wasting each other's time.
I was a couple of months into my sophomore year. So
suddenly, Tim, I was 15 years old, and I had a lot of time on
(03:45):
my hands. And 15 year olds with time
Don't always use it wisely. Pretty soon, the police were
coming by my parents' house with, some frequency. And,
eventually, I got put in front of a judge. And the
judge kinda to give you the the the chronology, this
was 1977. The judge kinda looked me up and
(04:07):
down, and he said to me, green or orange?
Yeah. I had a I had a look like that. Like, what are you talking
about? And he read my look, and he clarified. And he said, mister
Harris, I'm giving you a choice of what you can wear next week.
And suddenly, it occurred to me that orange is the color you wear in prison,
and, of course, green belongs to the army. So,
(04:30):
I said, green, please. And, went went
went off to the army. I was a little bit underage, but, this was right
after the end of the Vietnam War, and military Jerry was having trouble
making its recruiting quota, so they were, you know, somewhat forgiving.
And, recruiting sergeant helpfully stepped out of the,
out of the office to for a smoke break and left the photocopier unattended so
(04:54):
I could adjust my birth certificate. So away
I went. And to my surprise and
probably everybody else who knew me, I prospered.
I I did really well. I got promoted quickly, and
eventually, I get put in a position where I need a call needed a college
degree that, of course, I didn't have, or
(05:15):
a high school diploma for that matter. So the army sent me to
college, and I finished that
and, I was back working, and I actually broke my back. I was in a
a Jeep accident, and I broke my back. And I had a a year when
I couldn't really do much physically. So, After some discussion,
they sent me back to do my master's. And I finished my
(05:37):
master's degree, and I I served out the rest of my time.
In, 1987, I became a long haired civilian
and, went to work for a bank And didn't last very
long. You know, this this bank and I think probably you could say this about
most banks. They just insisted on making the same mistakes over and over
(05:58):
I was I was doing investigation there, and,
I quit one day, 1989. I was sitting at home and,
bored silly. Know, this is before there was a PVR or,
you know, Netflix or anything like that. I mean, what you what you got to
watch in August was exactly what the networks chose to give you, which was.
I was sitting there watching TV board, and my phone rang. And
(06:21):
when I answered it, it was A guy I'd been in a high school with
in my, quick trip there who had become a
dentist. And he said to me, David, I think my
front desk person is stealing from me, and I really don't have anyone else to
call. So his timing was
perfect. Like I said, I was just climbing the walls. And I said, okay.
(06:42):
I'll I'll come to your practice tonight after you close, and we'll we'll get to
the bottom up. So I went to this practice,
and this is before practice is computerized. So it was the old
pegboard system that people used to use. And, basically, there was a A card
called a ledger card for each patient that showed how much money they owed.
And, I I I got there, and this guy kinda shoved a
(07:06):
a tray full of these cards at me. I
said, no. We're gonna go at this a little bit differently. Show me where she
works. So he took me to her desk, and I started
going through her desk. Well, of course, my my friend's going bug eyed, and, you
know, like, can you do this? Well, yeah, I can. It's not actually her
desk. It's your desk. It's just you know, she she uses it when she works
(07:26):
for it. So I started going through her desk, and,
after a minute or two, I found what we call in the trade her
cheatbook. So this is where you know? And when when thieves
start corrupting the records of a practice, they have to keep track
of what's real and what's fiction. So now
(07:46):
it's more likely to be an Excel spreadsheet, but in those days, it was, like
a, you know, a grade school notebook. So I found taped under
one of her drawers the cheap book. And once I had that, the whole
thing unraveled pretty fast.
He'd he'd lost about $35,000, which is which is big numbers
then. And He wasn't happy about
(08:08):
the loss, but he was glad that I could I could wrestle it to the
ground quickly. So he hit me up for one more favor. He said, can
you come back in the morning? Because I'm gonna fire this woman, and
I don't feel like doing that by myself. Okay.
I'll I'll I'll I'm pretty sure I'll be bored tomorrow too. Let me let Let
me come back in the morning. So we got that done. My
(08:30):
friend promised to buy me dinner that I'll mention I'm still waiting for.
And I I I walked away kinda shrugging my shoulders and thinking, alright. That
was interesting, but I didn't really see a career.
2 weeks later, that changed in a hurry. And what
happened was I had an appointment in my own dentist office.
(08:51):
And I was about to go in. I had my hand on his door, and
I looked through the glass in his door. And sitting at my dentist's front desk
was The same woman I helped fire 2 weeks ago in my friend's
office. What I said next, I will not
repeat on your g rated show.
Yeah. I I sprinted to a payphone because, you know, in
(09:14):
1989, you just didn't carry a cell phone around. Called the
practice, used a little bit of deception and to get past the gatekeeper and talk
to my dentist. And when he picked up the phone, what I said to him
verbatim was, because I what I did was
I identified myself as a local orthodontist when when she
answered the phone as a way of getting put through to my dentist. So
(09:37):
when when he picked up the phone, I said, it's not doctor Jensen. I'm David
Harris. I'm the guy who's supposed to be in your chair right now, but
let me explain why I'm not. And I told him
about the time bomb that was sitting at his front desk, and he panicked and
hired me, and that was my first plan. By the
time I finished his work, the local Henry Schein rep realized what I was
(09:58):
doing. And he had a couple other dentists he had concerns about, and
suddenly, Tim, I was in business. Wow. So that's how
it started. You know, you talk about lightning
striking. That was it. Wow. That that's amazing. And
and going back to that that statistic you mentioned. Right? 7 out of 10. Right?
Approximately or is what we see. And, right, in in that
(10:21):
first case that that you mentioned, Why was the doctor even
suspecting that that something was going on? Are there are there some usual
signs of of activity or or something that That usually
triggers a doctor to say, you know, something's not adding up.
There certainly are. There are really 2 kinds of
warnings. The the first ones are financial ones. And what triggered
(10:44):
this doctor was a financial warning, and it was a patient complaining about their bill.
The other kind of warning signs are behavioral.
And a lot of times, the they're They're the ones that get
people caught. You know? The the American Dental Association did a
study where this question was kind of peripherally asked. And what
(11:04):
came out of the study was 68% of embezzlement
was detected by behavior, 32% by some kind
of financial irregularity. Now now right you you say a
patient complaining by their about their bill, and the first thing that hits me is,
like, that's probably not that unusual, is it? Well,
it's unusual when the complaint goes to the doctor. Ah,
(11:26):
okay. Most of the time when patients complain to the bill about their
bill, they're complaining to the Impezar. So that's
not, you know, that's not gonna get them caught. Okay. But in in in this
case, a patient said something to the doctor in the operatory.
That prompted the doctor to dig in a little bit deeper. So so it
really was just kind of a random comment from the patient mentioning
(11:49):
it to the doctor that helped the doctor to think, hey.
Something's probably going on here. Absolutely. And
that's really common. You know, the overwhelming
majority of embezzlement is caught by what I would
broadly call dumbass luck. You know, where
some unexpected chance occurrence causes the embezzlement to
(12:11):
come out as as opposed to kind of the planned operation of somebody's systems.
Another example, a a pretty big embezzlement I worked on early in my
career came to light when the thief broke her legs skiing 1 weekend.
And Monday morning, for the 1st time anybody could remember, she wasn't in the
office. And one of the
receptionists got 3 phone calls from patients, which were the same kind of thing
(12:35):
about their bills. And after the 3rd call, she went into,
the senior doctor's operatory, took him out of it, and said, you know, there's
something weird here, And he called me. Wow.
And that was about $600,000 that this woman had taken, which was
huge in 1991. Wow. Now now in
a little bit, I wanna touch on some protection strategies in being
(12:58):
proactive, but it really sounds like the majority of cases Or like
what you said, they're just they're randomly caught because there are no
procedures or or practices or systems in place to
identify these things. So it is that random comment or
or the patient saying something or, you know, you look at your bank statement, you're
like, why is there less money here? And so so So it sounds like a
(13:18):
lot of it is just being caught randomly instead of proactively.
No question. I mean, I think I think that very fact is
An indictment of doctor systems. Mhmm.
The other thing, though, is that we shouldn't ignore the behavioral
clues. And when we talk about those, I mean, let's let's make it more
(13:39):
concrete what kind of things are we talking about. Well, a lot of thieves
are reluctant to take vacation, I mentioned the woman who sort of was on an
involuntary vacation because she broke her leg, and that's when the the wheels came
off her wagon. A lot
of thieves like to do their stealing when they're alone in the office.
So they'll organize their schedules. You know? They'll get there before everybody
(14:01):
else, or they'll stay after The rest of the the the team leave,
or they'll kind of quietly slip into the practice on a weekend.
The one thing that can terrify a A thief is the word
consultant. So we get a fair number of calls
from consultants, and they always go the same way. You know? David, I've been a
consultant for 5 years, 10 years, whatever.
(14:25):
And, you know, I understand that not every staff member is overjoyed See me walk
through the front door, but I'm working at 1 office right now. And the pushback
I'm getting is well beyond the sort of normal resistance to
change, and I'm wondering what's behind
You know? So that's that's another
behavioral thing. The other thing I'll say is Thieves process
(14:48):
differently. So let's say you and I are walking down the
street in your town, and we see somebody's wallet fall out of their
pants in front of us. You know what? What most people
do is they stoop down. They pick up the wallet. They walk a little faster,
and they go back to whoever dropped it and said, sorry. Your wallet fell on
the ground. And a thief may end up doing
(15:10):
that too, but they're gonna ask a couple of questions before they do that you
might not. Like, I wonder if anybody else saw
that wallet fall. I wonder how much
money is in it. Based on those answers,
their behavior may be the same as yours. On the other hand, they may decide,
well, you know, okay. There's money in this wallet. Nobody saw it fall. I'll
(15:31):
just, I'll just keep it for me.
Wow. Well, Ray, let let's talk a little bit about the
the Why people embezzle? Right? In your
experience, right, are there some common reasons employees
embezzle? Yeah. In a broad sense, there are. There
(15:53):
thieves steal for one of 2 reasons, which are need and greed.
And needy thieves have something happening in their lives that
stresses their family finances. So if you if you want the
classic case, Tim, think of the economics of divorce. Mhmm.
And you start with 2 incomes supporting 1 household.
(16:13):
And from that, you evolve to 2 income supporting 2 households and throwing a
bunch of attorney bills. And suddenly, you
know, the the comfortable living that that people had before is
upset. And, sometimes in that situation,
people steal. Maybe there's an addiction. Maybe,
spouse lost his job. You know, there there are lots of potential
(16:35):
triggering factors, but it's a case where they just can't make the family
books balance each month and somebody's stealing to fill that hole.
And then you have greedy thieves, and they're They're a little bit different. I mean,
there's they they feel like society undervalues them,
and they're stealing what they think they should be paid in the 1st
(16:55):
place. And, you know, a lot of these
people will look at their doctor as basically this,
Lovable, high functioning moron with good hands.
Wow. Yeah. I said I know it's a huge oversimplification.
And if I If I were the audience, I might bristle at somebody describing me
that way, but that's that's the picture a lot of thieves have. And in
(17:18):
their world view, The only reason that doctor is successful
is because I keep her cheerful. And then when patients leave it,
I make sure they pay. And, you know, they they can sort
of talk themselves into a an otherwise unrecognized
partnership with the doctor, at least in their minds.
So they kinda convince themselves that they're entitled to this money, and then they take
(17:41):
what they've what they've convinced themselves they're entitled to. Yeah. Oh
my gosh. Wow. So so it's really like you said, it's need and
greed that are driving these things.
Yeah. Yeah. And, You know, the the way you can differentiate those
2 is how they spend the money. I mean, the the needy people pay the
rent, or they, you know, they put gas in the car. The greedy
(18:03):
people, you know, buy designer clothes or
they, buy front row concert tickets or,
you know, they buy that car that They could never afford on their salary.
Okay. And so so those are little clues too. If all of a
sudden the employee starts Showing up with things they probably
can't afford, that could be a sign that something's going on. It could
(18:26):
be. You know, we we should be a little cognizant that we don't
necessarily know everything about our our our people's finances. You know? And
sometimes, I've I've had calls where there was suspicion, but, you know, what
it turned out was, You know, somebody got an inheritance from from
their distant uncle or something like that. You know? There was something
else that the doctor didn't know about. Okay. But but I
(18:48):
you know, I'm I'm I'm agreeing generally with your point that that living beyond your
means is definitely a warning sign. Well but, I mean, I I think that also
raises an interesting question of, right, how do
you, you know, be proactive and have your eyes
open, But not necessarily be overburdening
either and accusing where you shouldn't be accusing, because I'm guessing
(19:10):
there's a balance in there somewhere. Well, the first thing I'll say
is I think a lot of dentists don't know their staff as well as they
should. And, you know, it's interesting when you when you look
at a dental office and you look at what happens at lunchtime.
You know, let's assume the whole office closes for lunch. Doctor
goes in their private operatory and they or the private office, and they go on
(19:32):
their computer and they, you know, they check the stock market or they surf porn
or whatever, You know, whatever they do at lunchtime. And,
the the staff all go in the break room together.
And, you know, it creates that insularity
where the doctor is not you know, the the doctor's only
interaction with staff happens During work, you
(19:56):
know, when there's a subject matter called a patient. One
thing I say to dentists is once a week, maybe twice a
week, Have lunch with your team. And, you
know, you might have to bribe them with food a little bit if they find
this kinda creepy at first because it's different than your pattern.
But make a point of sitting there in the break room with them for 40
(20:16):
minutes. You know? The the the stock market will wait,
And get to know them as people.
And then if you do that for a while, you'll understand who's,
got their eye on that new house. You know? Maybe even the offer's been accepted,
but they're not sure if they can qualify for the mortgage.
And you'll know, you know, who's whose husband is off work
(20:39):
because, you know, they had a workplace accident or
whatever. And you'll You'll you'll you'll start to have a much better picture
of what's driving your team. Wow. So,
really, just something as Simple is is getting to know your team and sitting
down with them once a week or every other week. That can be a protection
strategy just by getting to know your team, And, actually, we've
(21:00):
got some viewers watching and liking. If you've got questions for David, just go
ahead and put those below, and we'll we'll ask them live. So if you've got
questions on your practice or How you can protect yourself. Just go ahead and put
those below. We'd be happy to to answer them. So, David,
talking about protection strategies, right, we we mentioned getting to know your staff.
Are Are there some other safeguards that can be put in place
(21:22):
to protect your practice against embezzlement? Absolutely. There
are. You know? And I I could I could talk for hours
on this topic, but I'll keep it fairly tight.
The first thing is one thing that dentists in general
do a terrible job of his preemployment screening.
(21:43):
Dental practices most dentists thoroughly despise hiring staff.
And, you know, when when you feel that way about a job, you try to
make it as quick and painless as possible, and you don't do things
that are gonna prolong your agony like preemployment
screening. But, I'll I'll give your audience
a really Sobrink statistic, Tim. 70,000,000
(22:06):
Americans, which is 1 in 4 adults, has a criminal record.
Wow. So Even failing to do basic things
like a criminal records check
create a huge exposure to a practice. And not
just to embezzlement. I mean, you know, that's also the child molester, the,
(22:26):
you know, the the the ax murderer, the shoplifter, whatever who you're about
to So
criminal records check is part of it, but there's a lot more to preemployment screening
than that. You know, speaking with former
employers, if somebody's in a position where they
handle money, checking their credit status. If you
(22:49):
can do it, checking their driving record is a really good idea because one thing
we've noticed about these is that a lot of them have
Huge amounts of motor vehicle violations. And it's it's
stupid stuff. You know? Driving without a seat belt or, you
know, expired license plates or something like that. I think where it
comes from is that a lot of embezzlers have the belief That the rules that
(23:12):
apply to the rest of society don't don't also apply to them.
And, you know, check with your HR advisers before you start
doing this because there are some definite issues with,
getting a driving abstract as as part of a preemployment screening.
But if you can do it in a specific situation, you often learn a lot
about somebody by how they handle themselves behind the wheel.
(23:34):
Wow. That's fascinating. So I I know in the world of
of hacking and computer systems. Right? There's the the white hat
hackers, the the hackers that you hire to Come in and try to bust your
system and and find the vulnerabilities. Does that kind of thing exist within
the embezzlement world too? Is bringing someone in to really look
at those systems and kinda stress test where the weaknesses
(23:56):
are. It's funny you should ask that. We do 2 things
in At Prosperity, my company, the first thing we do is
and and what we're best known for is what we call our reactive services.
So that's where Somebody reaches out to us and says, you
know, I think or I've caught my staff member stealing red
handed, and now I need you to investigate and See what's really going
(24:19):
on. So that's the first thing we do. The second thing we do is proactive
work. And the idea here is very simple. It's to
Close the loopholes in a practice before an embezzler gets
there first. And it
it's no different, Tim, than if you were a dentist and I was your patient.
And I said to you, doctor McNealy, I wanna spend the least money
(24:43):
In my lifetime on my teeth, what should I do? And your answer would be
brush and floss like crazy and see our hygienist every 6 months
because The cost of doing those 3 things is a whole lot less
than the cost of me fixing what's gonna break if you neglect
them. And I'll say exactly the same thing here. Prevention
is much, much, much better than the cure. So we
(25:04):
offer that service where we will Find the weaknesses.
Help train the doctor in financial oversight
because they all say the same thing to us. There's nowhere to learn that.
We didn't get it in school. There's no, you know, there's no course. There's no
book. We we'll sit there with a doctor looking at at their
software together, Help them decide what reports they
(25:27):
need, understand what's in those reports, you know, what constitutes an
outlier, what what do you do when you find that outlier? And and they
all say, yeah. We you know, I've been practicing for 15 years, and this is
the first time anybody's done this with me.
Yeah. Wow. And do you cover some of these things in your
book, healer versus stealer? We do.
(25:49):
Yeah. There's there's a lot of good information there. So the the the book's called
Healers versus Steelers, how to outsmart the thief in your practice.
And it's available on Amazon and through lots of other fine booksellers.
It's my 2nd book. The the first one Was a little bit skimpier,
healers versus stealers, which I just happen to have here.
It's about 300 pages. And, you know, it deals with a
(26:13):
lot of situations. For example, there's a chapter on orthodontists because
the way that orthodontists get stolen from is a little bit different than, Say
a general dentist or a pediatric dentist. There's a
chapter on DSOs because, again, The
the theft patterns in DSOs are are a little bit different than what would happen
in an owner operated practice. So it it it deals with some
(26:35):
situations. There's a lot of The book that is devoted to
hiring and how not to hire somebody who's done this before.
And That feels like that's kind of the most Obvious step is don't
hire the thief in the 1st place. It it's so
true. The the only problem with that is that, you know, there are
serial ambassadors who will, victimize more than one practice.
(26:58):
In fact, the the most extreme one I saw hit 15 different practices
over about a 20 year period. Oh my word. She was like the
energizer bunny of of embezzlement.
But The other danger is the long term employee who
wakes up 1 morning and says, okay. I'm 57 years old.
There's no pension plan here. I'm not Really comfortable with the amount I
(27:20):
have in my four zero one k. And, you know, I better be like the
squirrel starting to hide some nuts for winter. And
we we see a lot of people who are working in a practice for 15
plus years, and then one day, they start stealing. So the The
hiring is is essential and, one of
the easiest, cheapest protections you can have, but it's not
(27:43):
a complete solution. The other thing that dentists do or should
do is what we call financial oversight.
You know? And and to make it as simple as I can, every practice has
practice management software. The software tracks 3 things,
Fees, in other words, what was charged to the patient, adjustments,
(28:03):
and payments. And Payments
are the amount that come in according to practice management software, and very
simply, payment should equal deposits. And
there are 2 kinds of dentists, Tim. There are those who sit there at the
end of each day with their report, and they go to their online banking, and
they make sure that the right amount went into the bank, and then there's the
(28:25):
other 85%. If you're
in that 85%, Stealing is easy.
If you don't know how much money should be going into the bank account today
and I'm your office manager, It is the easiest thing in the
world for me to just peel away some of your deposit and keep it myself.
And I don't have to do anything exotic in your software. I just
(28:48):
divert money. So if $32,000 was collected today, but I can
get away with depositing $31,200,
then I just put $800 in my pocket. Wow.
It so that oversight part, and we cover that in a lot of
detail in my book, And we also work extensively with with
(29:08):
dentists when we work with them 1 on 1 on that topic,
is so important. And the Good news. The the thing probably that people don't
realize is it takes a lot less time than they think if
you do it right. Yeah. That was gonna be my next question for you.
It is so often we think these things take a lot of time and effort.
Right? Because you gotta monitor and check and and look at all these things.
(29:32):
And so, you know, what is the time commitment to to get these things
set up and and and monitor everything? Well, the first thing I'll say
about that oversight is if you want it to be, it could be 0,
because What what has to happen
for for the reconciliation calculation is
(29:52):
mechanical. I mean, it could be done by your your your son in college.
There's nothing about that that requires a dentist. There are other parts of
monitoring that require not only dental knowledge, but somebody who is
there today and knew what happened. But in terms of due deposits
equal collections, it's mechanical. So it could be
outsourced, not delegated, not to a staff member because that's Kind
(30:14):
of like asking the fox if you if if he'd mind holding the
keys to the hen house while you go to the gym for an hour.
But it it does not have to be the doctor. The
second thing though is that we we have this
idea That that activity should happen at the end of each
day. And that comes from the old pegboard
(30:37):
manual systems that that preceded practice management software
because there really wasn't a good concept of a monthly report in pegboard. You know?
The the whole focus was tracking each day.
So at the end of the day, the doctor would check the deposit against collections
and assuming all is good, go home. And
That's still the mentality people have. If you wanna make this process
(30:59):
much, much easier, that's an activity that should be done
at the end of each month. In other words, do monthly
collections line up with monthly bank deposits?
And the the thing that makes That calculation harder
is timing differences. So think about a patient who pays
by credit card today, And the practice management
(31:22):
software captures that as a payment today. But
with most credit card companies, it takes a couple of days for that to to
get in your bank account. So if you're trying to look at what
happened today, today, you can't do it because, you know, there's sort
of this unknown piece that won't be settled for a couple of days.
On the other hand, when you expand the window and you look at a month
(31:44):
at a time instead of a day, Most of those timing differences have self
resolved. I mean, now the only stuff that's kind
of confounding you is The transactions that overhang the
the 1st day of the month and the last day of the month, which is
is a whole lot less as a percentage than What would
happen if you look at a day in isolation? And it's
(32:05):
just less work to do that calculation once than 20 times.
Yeah. There's another piece, though, that has to happen
when you move this to monthly, and it's called articulation.
And when I talk to a dentist about articulation, what they're thinking about is the
mandible and the maxilla and how they're supposed to fit. Yeah.
Exactly. How they're supposed to fit together.
(32:29):
And this is similar. What what the articulation calculation says is
this. If your practice was open 18 days this
month And in your left hand, you have
18 day end reports from your software, and in your right hand, you have
a month end report. If you totaled up the 18
reports for fees adjustments and payments, they should
(32:51):
exactly equal The totals on the month end report.
If they don't, Tim, what it means is somebody came in after hours and did
stuff they didn't want you to see.
So articulation is a way of making sure that everything that happened
this month was seen by you.
(33:11):
And it really is as simple as just matching up the the numbers
and making sure they match. Put it on a spreadsheet. Yeah. You know, it's a
it's a 10 minute job for for
somebody to do that. And, again, it does not have to be the doctor. It
shouldn't be a team member. But, You know, if you have a spouse who will
do it, if you have a kid in college, if your bookkeeper, we'll we'll
(33:32):
take this on. You know? There's there's somebody who will do that for
you, Probably for not a lot of money. I mean, you know,
if if if it's your son in college, you can just pay them a beer.
Yeah. Well, right I love that, because I think this starts hitting on just
just having a different thought process About how to think about
embezzlement in your practice. You don't have to be in there with the magnifying
(33:55):
glass looking at all the books and everything. You just gotta do some high
level things to make sure the numbers are are matching up.
Yeah. Now just before everybody thinks they're
free And, you know, they don't have to listen to the rest of this
this presentation. I will mention one thing. The the way
thieves look at the doctor is, Does the doctor oversee
(34:18):
the the balancing process that the office manager does? You know, that's the 15%
who do and 85% who don't. If the answer to that question is
no, then the way I steal is I just divert the deposit as we were
talking about. Mhmm. How do I steal if The
doctor is comparing collections against deposits. I can
still do it. It's a little bit hard, but now what I need to do
(34:39):
is trick the software into Lying about how much money
was collected. And I'm not gonna get into
details of how that happens, but what I'll say is In any practice
management software, it's possible. So you can you
can make the you can trick the software to under report collections.
And that's the, you know, that's the other thing you have to you have to
(35:02):
monitor for. In other words, do the do the dollars line up is question number
1. And question number 2 is, Now that I've put that
articulation safeguard in place to make sure that I'm seeing
every single transaction that happened this month,
do any of them not make sense?
Yeah. Right. Exactly. Right. Is there a patient refund that
(35:24):
Shouldn't have taken place or or whatever it is. 100 100% adjustment
on, you know, on a patient treatment. Yeah. Yeah. You know? Is there something
there that I look at it and say, wait a minute. That, You know, that
doesn't make sense. So so it really seems like there's kind
of different levels of protection that you you wanna put in, whether
it's Starting with the hiring and then looking at the monthly reporting
(35:45):
and the articulation and then, you know, even checking the practice management
software. So you've got different levels that you wanna look at as you're going through
this. Is that what I'm hearing? It is. And the the
total time commitment for a doctor to do
What we would tell them to do is probably less than 2 hours a
month. Wow. Well, and and For those who say
(36:08):
sorry. For those who say, you know, that's not what I signed up for.
You know, if you wanna be a practice owner, that
comes with some responsibility. Yeah. If you don't want that
responsibility, that's fine. But don't be a practice owner. Be an
associate. Work for DSO. You know? Go to an FQHC
or, you know, join join the military. I mean,
(36:31):
there are other for for the dentist who says, I want to be a pure
clinical dentist, and I don't wanna Get my hands dirty with any of this stuff.
There are plenty of outlets. You just that's the person who shouldn't be a practice
owner. Yeah. Or You need to build the team, the trusted team
who's not in the office who can help you do these things. Like you mentioned,
maybe it's the bookkeeper or the Stunning college or the the
(36:53):
spouse. Right? A a trusted adviser. The trusted adviser is
good. To, but, you know. The trusted adviser's good, but if you're a
business owner, you know, you have to wake up in the morning and say, alright.
With with the privileges that owning a business gives me
come some some burdens. Yeah. Absolutely. You know, I can
never switch off from this. I can never say you know,
(37:15):
I've handed that out to somebody, so I don't ever I have to think about
it again. And I Yeah. I talked to Dennis a lot about the difference between
delegation and abdication.
And Go go into that difference because because I think that's an important
differentiator for people to understand. Delegation
is, Tim, you're my employee or you're you're, an
(37:37):
independent contractor who I outsource to, and I'm giving you this job
to do, and I'm gonna Hold you accountable for that, and I'm gonna
enforce that accountability. An
advocation is when I say to you, Tim, Here. This is yours. I don't ever
wanna hear about it again. And a
lot of dentists abdicate when What needs to
(37:59):
happen is delegation.
And like I say, if you if you wanna advocate, no problem at all.
Just don't do it as a practice owner. Yeah. Well, and
even coming back to that, you know, on average about 2 hours a month, do
you have any stats on what the The average embezzlement from an
office ends up looking like in terms of dollar amounts? I can be
(38:21):
pretty precise on that one. The last time we looked From our files, it was
$109,000. A $109,000. I
That's the average. Wow. And so, you know, at
at 2 hours a month, you know, what is that? $55,000
an hour you're you're you're saving? That's a little less than that, I
think. But, you know, because it's 2 hours a month for your entire career as
(38:45):
a practice owner. Okay. But but it's that's a pretty good ROI
if you ask me. Yeah. And you know what? The money
tells part of the story and not all of it. Mhmm.
You know, a lot of dentists who are embezzled are
devastated emotionally. We we
Did an investigation for a guy last year, probably in his late
(39:08):
fifties. He had lost 100 and
$60,000 roughly, from
it. And once it was all cleaned
up, he had a young associate. He turned around in that associate
probably 5 years earlier than his initial plan was, and he sold the practice. And
he said, I, you know, I after After that experience,
(39:31):
I'm just not enjoying being a practice owner anymore.
So, you know, the the the emotional,
Damage from this can be significant. Oh, I I I would
imagine so because, right, oftentimes, these are trusted people in your office.
They're People you have a relationship with and right? And
there's just that sense of betrayal. And and so the emotional
(39:54):
toll, I I would guess, is Probably, in some cases, harder than the financial
tool. A 100% agree with you.
You know? The money you can replace. Yep. The stomach lining is
a little bit hard. Right? Yeah. It's a lot lot
harder to to replace that. So I'm I'm Tim McNealy. You've been listening to the
The Dental Wealth Nation Show, we've been talking with David Harris about
(40:16):
embezzlement. And and, David, I certainly understand that that it's a
much bigger problem than than we've ever imagined with 7 out of
10, 70% of dentists facing embezzlement at some point in
their career. And and we've been going through, you know, some of the ways you
can protect yourself from Having everything you've worked so hard for
from being unjustly taken, and and, you know, we've talked about some of those
(40:38):
protection strategies. We've talked about why people embezzle,
And, you know, even changing the the thought process. And I I wanna
dive in and talk a little bit about some embezzlement myths. Are there some
common misconceptions about embezzlement that you'd like to
dispel or some things that you hear dentists say that you're like, that's just not
even close to the truth?
(41:30):
He froze.
Hey there, folks. We got a temporary hang up. We're
waiting for David to Come back on.
(41:54):
It looks like there was a little Internet connection
issue, but we will be back shortly. And let's just
Hang out here and wait for him to pop back
on here. The
beauty of the the platform is the recording will take place, and
we can edit this all out. So it's gonna Worked
(42:16):
just fine. Give him a second to log back in
here.
Hey. Welcome back.
(42:39):
Welcome back. Tim. Hey.
Someone was embezzling our Internet connection, apparently.
Hey, Tim. Can you hear me? I can hear you loud and clear.
(43:14):
I can hear you. Darn it. I can't hear you, Tim. Can you
hear Yeah. Let's try this real quick.
Audio. Yeah. I see my audio coming in.
So that's working.
(43:42):
Hello.
(44:05):
Tim? Yes.
Sorry. My computer completely froze there. Oh,
that's alright. I was just I was just making a joke. Someone
someone's embezzling our Internet connection.
It wasn't something you said. No. But, hey.
We'll we'll jump back in. I was talking about some common myths that
(44:28):
you hear. Are there some common misconceptions Within the
the dental practices that that you'd like to dispel?
All kinds. The first one is when I talk To a
lot of dentists about embezzlement, the picture they have is the theft of
$20 bills. And to be clear,
Cash is every thief's 1st choice, but it's certainly not their only
(44:51):
choice. I'm not gonna get into details here, but I will say
that it's not hard to Steal checks, to steal credit
card payments, or even to redirect electronic funds transfers.
So the first thing I'll say is you need to think a little bit broader
in The concept that you know, because you have some practices that even
stop taking cash completely in COVID, and they thought that, you know, that
(45:13):
would protect them Totally against embezzlement. It it will not.
Other myths, A lot of people think that
there's something that makes them immune. My staff have been with
me forever, or I work in a small town, and really embezzlement
only happens in big cities where you end up hiring people you don't know as
(45:35):
well. Or, gee, I'm a specialist, and, you
know, embezzlement is really something that afflicts those poor general dentists
Or whatever. I mean, people will come up with reasons why they're immune,
and none of them apply. No
thief says, You know, I really wanna steal, but I work in an ortho
(45:55):
practice. And, yeah, I I just can't steal from an orthodontist.
No. Embezzlement happens because somebody who works for
you decides that they have more rights to your money than you do.
End of story. That can happen anywhere. I mean, it has
it has nothing to do with you or your situation. And embezzlement
(46:16):
is all driven by A staff member and what they decide to
do.
Other myths. My accountant, if it was happening, my accountant would catch
it. Well, right, that that feels like a
real common and easy assumption to make is, right, my account was looking
at all these things. I should be safe. Right?
(46:38):
Yeah. No. First of all, most stealing
and dental practices happens on the revenue side. In other words, it's
theft of patient payments or insurance payments. In a lot
of other businesses when theft happens, it happens predominantly on the expense You
know, payroll, or or,
fraudulent purchases or something like that. And those things happen, but the the main
(47:01):
event in dentistry is revenue side theft.
Your accountants do not look at that at all. You know,
what people don't realize is that Unlike most
professions, dentistry keeps 2 sets of
books. In other words, there's practice management software that looks
after revenue, And there's accounting software like QuickBooks or something that
(47:23):
looks after expenses. And the 2 of them don't talk to each other, and the
accountants don't have any reason in in in what they're
doing to look at your practice management software, and yet that's where the bodies are
buried. Wow. So so really, right, the the whole
accountant myth really happens because the accountants are
are seeing the books Most likely after the embezzlement has
(47:45):
taken place. That's right. Well said.
And I can give you some numbers on this. When when you look at all
industries globally, so dentistry, but everything else as well, and you look at globally. So
dentistry, but everything else as well. And you look at how much or you
look at how embezzlement is uncovered. In in the
whole world, accountants find about 40% of the embezzlement that's ever
discovered. In dentistry, that number is more like 5%.
(48:09):
Wow. Yeah. So they're not your frontline of defense, and that's
a that's a very common misbelief.
So, really, that that what what is the frontline of defense then?
It's the doctor. And,
You know, possibly, if they have a bookkeeper or they they get
(48:31):
somebody, doing some very specific oversight for
them, that can constitute part of frontline. But my point is the normal
accounting process that your CPA firm goes through at the end of each year
is not very likely in dentistry to uncover a vessel.
Wow. So if if you're
a doctor, right, if you're if you're concerned about this as as well you
(48:54):
should, And you you take some time to to implement
some basic systems. Is this something you you gotta stay up
at night worrying about, or or can you have some confidence In the systems
that you actually put in your practice.
If they're good systems, and that's a big if.
Mhmm. But if if you've got good systems, they will go a
(49:16):
long way to helping you sleep. The the
systems that most Practices have, frankly, are terrible.
And, you know, I I look at a at a, you
know, a hypothetical 40 year old dentist now,
and they probably bought their practice from somebody who's
25 or 30 years older than there.
(49:40):
So that practice of systems were built in the time before there were
computers. They were probably also built
at the time when most dentists were male,
and what their wives did in general was run their office.
In other words, the economic interests of a husband and wife, you know,
until they decide to get divorced are completely parallel. And
(50:03):
a lot of systems were really designed to catch that occasional spouse who couldn't
add more so than any kind of dishonesty.
So the whole premise on which most systems are built is
well outdated.
(50:25):
Wow. And so, right, just coming back to some some closing
thoughts here. Right? We we've got your book, Steelers and Healers, and and and
give me a walk through of your 1st book and your 2nd book real quick.
The the first book is, is is fairly
short. It's it's quite light. I mean, if you can't read it in 3 trips
to the bathroom, you probably need a GI consult.
(50:49):
And, you know, it's, it it
it's a good Superficial treatment of the topic.
When I went to write the 2nd book, you know, and and and the first
one, Tim, was done on a bit of a timetable. In other words, my My
my marketing people gave me a deadline and said, you know, we need your manuscript
by July 1st. So I I I
(51:12):
did You know, it's it's it's a good worthwhile book. And as I say, if
you want a light treatment of the topic, that's the one. When I did
the 2nd book, which Took me another 3 years after the first one to get
out. I wrote the book I really wanted to write, and I had no time
pressure now, and I could go back and, write it, you know,
write a whole lot more detail. So my first book is about a 100 pages.
(51:33):
My second one's 350. And as I
say, a lot more detail, a lot of,
a lot more kind of procedural. Here's how to
whatever. You know? Here are the here's here's here are the questions to
ask some somebody's former employers when you're looking at hiring.
It's it's kind of at that level. And I I have to acknowledge some members
(51:56):
of my team because, my name is on the book as the author,
but, The the contribution of several members
of our team is pretty significant there. Wow.
Wow. Right. It takes a a team to to do anything. I
certainly learned that doing my first book. It's it's a lot of effort and a
lot of work, and, you you need the right people behind you. So
(52:18):
so coming to this problem, right, we know it's a a widespread problem. 70%
of dentists are are are will face some kind of embezzlement. What's the
awareness of the the problem and and how concerned
are doctors about this. And I ask that because in in my
industry, we've got this major disconnect
Between the things that doctors say they're concerned about, they say they're concerned
(52:40):
about asset protection, they say they're concerned about tax planning, they
They say they're concerned about transitioning their practice, but
then we ask a secondary question, which is, well, have you taken any action or
consulted anyone on these? And all of a sudden, those numbers are really,
really low. So major disconnect between kind of, yeah, I'm
concerned about this. I know it's a problem, But, no, I haven't done anything
(53:03):
about it. So do you find that's the same with dealing with embezzlement
and and really putting systems and processes in place in the practice
also? Definitely. I mean, cons being concerned is
free. Mhmm. Acting on those concerns tends to cost
money. Yeah. So the the the
first one is a lot easier to say yes to than the second one.
(53:25):
And we get exactly the same thing. You know? When I when I speak to
dentists in, in live audiences, one of the questions I tend
to ask them is, you know, would you like to contact us? Would you like
us to contact you about protecting your practice? And a a good proportion of
them will say yes. The proportion of that group
who will do anything It's pretty small because saying yes is
(53:46):
free, but there's there's some cost both in
in monetary outlay and also in their time and mental
energy To doing something. Yeah. Wow.
Well, based on this conversation, I'd prefer to have you in my
practice Before something happens, not after. I I
I'd prefer to pay that first cost instead of the second one.
(54:09):
You know, we had, one one of our victims who is an orthodontist
who lost $380,000 to his office
manager. When I asked him one day, and he he was nice enough to
record a video on this. I we we had the video on him, and and
the question was, you know, if you were gonna give
advice to another dentist based on your experience, what would it be?
(54:31):
And what he said and I'll I'll quote him as close to verbatim as I
can. You're not gonna get your money back. You're not gonna get your
sleep back. Just put the safeguards in place to prevent this.
Wow. Now I'll modify what he said a little bit. Everybody who's stolen
Trump gets some of their money back. It's a minority who
get it all back. So I think what he's saying is, you know, you're gonna
(54:52):
be out of pocket at some amount.
But, yeah, just put the safeguards in place. Do it. That was that
was his advice to every dentist. Yeah. And and I think
that's very, very sound advice. Right? It's almost like winning a
litigation. Right? You can go in a court case, you can get a big old
judgment from someone, but collecting on it's a whole another
(55:13):
problem. Yeah. And that's that's one of the
impediments to to getting your money back. I mean, most of the people who are
stealing your money are at least as good at spending it as they are at
stealing. Yep. Now one thing, you you were asking
about, miss. Another thing most dentists don't realize is that they all have
insurance coverage for this. Unfortunately, it tends to
(55:34):
be a modest amount, but Almost every dentist has $25,000
of insurance coverage. So if you've been stolen from,
that's Assuming the the proper groundwork is done,
that's pretty easy to get back. You know? If somebody took a 100,000
from you, getting the other 75,000 may,
be harder, but the first 25 is pretty easy to
(55:57):
get. So almost everybody who's been stolen from will be cash
positive at the end of At the end of our work.
Yeah. Wow. So, David, how can we get in touch with you? How
can doctors find you? Well, the easiest place probably
is our website, which is www.Prosperident,
(56:18):
prosperident.com,
or they can call us at 888
3982327. So
8883982327. Those are the
best ways. We're we're happy to talk to any dentist who says I have
concerns or I wanna protect myself or, I
(56:41):
just wanna make sure that it's not happening. You know, we we can deal with
any of those things. Yeah. Well no. And it's such an
important topic. So, you know, I I I I find that in my world, there
there's 5 chief concerns that the the doctors have. Number 1 is they
wanna make smart choices with their money. Number 2, they wanna mitigate their
taxes, but the 3rd biggest concern they have is they wanna make sure
(57:02):
their assets aren't unjustly taken through theft or some other
Unjust means, then they wanna get the estate planning, take care of the next
generation, and then about a third of them are very terribly inclined. But the
3rd biggest problem, the 3rd biggest concern they have is
asset protection, and that's why what you do is so important. And thank you
for being dentistry's crime fighter and getting out there And helping to
(57:25):
to not just solve the problems, but also prevent them, and and that's so
important. And so before we sign off here, any closing thoughts?
I will quote a former president. Trust,
but verify. Well said.
And and actually, you know what? We'll we'll we'll come back to that closing thought
because I think it's so powerful. And that that that's another lesson. So I I've
(57:48):
studied the the Super rich quite a bit. I don't have any super rich clients,
but I wanna learn from super rich. And and when I say super rich, I'm
talking people with a net worth north of half $1,000,000,000. And
they establish family offices. They build a team of the best the best
individuals. And one of these things that these family offices do
on a regular basis, actually every about 3 to 4 years is
(58:09):
they run a stress test of their plans. They wanna make sure it's gonna deliver
as promised. And just like you said, they wanna trust But
verify. And so I I I think those are words of wisdom, David.
Well, I'm glad to hear the billionaires agree with me. That's tremendously
reassuring. They they absolutely do, and they they do it on
a regular basis. In fact, they find it strange if they're not stress
(58:32):
testing things. And so well, hey. Thank you again
for sharing so generously and such an important topic, and
and I would encourage you if you're listing this right, Being concerned about something
is free. Taking action does take a little bit of cost both in your
time and money, but a little bit of prevention can go a long, long way.
So So protect yourself. Protect the what you've worked so hard
(58:54):
for. David, thank you again for being an amazing guest. It was
my pleasure. Thanks for having me. We'll see you again here soon on the Dental
Wealth Nation show.
You've been listening to Dental Wealth Nation. We hope you've gotten
some useful and practical information from the show. Join us
next time as we pull back the curtain to reveal The often
(59:16):
hidden advice and strategies used by today's most
successful individuals and families and help maximize
your net worth so you can take even better care of the people you
love. Till next time. Make sure to hit the website at dentalwealthnation.com.
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