Learn from The Past - Prevent Embezzlement in Your Medical Spa

Embezzlement and theft news for medical practices often happen, so why is it rampant?

Whether or not your practice has been affected by a previous embezzlement or theft case, you need to be wary about the security of your finances and data.

These are some simple measures you can prevent embezzlement in your medical spa. To learn more about other cases of embezzlement and not become a victim of it, you can sign up for this free course in our Training Academy.

A Free Embezzlement & Employee Theft Scams Course For Members

There are only two types of cosmetic clinics; Those who have have been stolen from, and those that don't know that they've been stolen from yet.

Every cosmetic clinic has this problem.

Every. Single. One.

And it's not hard to see why. Most people aren't bad, but there's always temptation, especially when it's easy or there are outside pressures or gripes that make it easy to justify taking just a little here and there. That little voice that says, "I'm the one doing the work. The patients love me. Everyone else is getting rich. I'm owed more...".

We're doing our part to help protect your clinic by taking our popular embezzlement guide and turning it in to a free course with video explanations and added it to the new Medical Spa MD Training Academy. You'll learn how how these scams work, and how you can protect your clinic from them.

This course is entirely free, and may just save your clinic.

In this course you'll uncover all kinds of creative, never-thought-of-that scams:

• A physician employee connecting his personal account to the credit card terminal.
• A PA injecting patients with saline and stealing Botox to run a side business.
• Laser technicians "up-selling" treatments and pocketing thousands in cash every week.
• A simple accounting scheme that drove a clinic into bankruptcy.
• A manager treating patients on weekends.
• Front desk staff using a simple credit card scam and skimming 3% of sales.
• And (unfortunately) many, many more...

These physicians and clinic owners weren't stupid. They weren't lax or taking their eye off of the ball. They were just victims of the myriad creative ways that these scams work, and they hadn't taken this course yet.

This course gives you the inside cheats, tricks and scams that people use every day, and the simple ways that you can prevent the vast majority from ever getting started in the first place. This course is for every physician, clinic owner, manager and employee working in cosmetic medicine.

Cosmetic Clinic Embezzlement: Bank Deposits

The following is a story from the Medical Spa Embezzlement & Employee Theft Scams Report which contains information for physicians and medspa owners to understand these scams and find out how to protect your cosmetic clinic.

The complete report is available for free to all Medical Spa MD members.

Beware anyone taking complete control of the books and the bank deposits.

Our embezzlement story has some classic elements: a break down in financial control procedures, an employee (bookkeeper) showing behavior changes and a drug problem, and a manager and a boss not paying close enough attention.

I have a solo private practice of plastic surgery with skin care services. At the time, we readily accepted cash payments, even for surgical procedures.

My practice manager was responsible to review the daily close, checking the work of the full-time bookkeeper. The manager was to make the bank deposit daily and attach the deposit receipt to the daily close. I would normally check our financial statements at my meeting with the manager every other week. It turns out that we missed one of our meetings, (because of schedule conflicts, being “too busy,” or the usual excuses/reasons that we end up skipping an administrative meeting) and I didn’t ask to see all the reports, anyway.

I became concerned when I noticed some behavioral changes in my bookkeeper, including erratic hours, late for work, leaving the office during the day.

When I discussed this with my manager, she noted that some of the daily reports were coming inconsistently.  I asked if the manager was getting the daily close and making the bank deposit;  my manager (now “buddies” with the bookkeeper) explained that the bookkeeper had taken this over “to help, since she saw I was so busy.”

The short story: the bookkeeper was pocketing all the cash and depositing/ recording only the credit card and check deposits, “cooking the books” to try to hide the missing cash. Fortunately, we discovered the ploy within a short time; our audit showed a loss of less than $11,000.

I brought in an HR attorney for the termination of the bookkeeper and the manager and filed a report with the Sheriff.

We subsequently learned the bookkeeper had developed a Vicodin/codeine habit from a fairly recent injury.

When the bookkeeper left the state, without forwarding address, and “could not be found,” we did not invest in prosecuting, on the advice of the attorney.

Lessons:

• Have secure financial/bookkeeping controls: Have a daily close. Make sure that the person who collects is different from the person who checks/records. Use a third person to make the deposit.
• Verify compliance with these procedures (“Trust, but verify!”).
•  No matter how “busy” you get, check the daily deposit.
• Hold yourself accountable,as well!

Erratic behavior is a warning sign of something worse. Trust your gut. If something “doesn’t seem right,” check it out, sooner rather than later.

Medical Spa Embezzlement & Employee Theft Scams Report

Download the new, free report for Members: Medical Spa Embezzlement & Employee Theft Scams... Reading it could save your clinic.

It's the guide to beating embezzlement and employee theft schemes in your cosmetic practice or medical spa.

Taking cash payments in the treatment room, stealing Botox and fillers to inject their own patients, ordering fraud, trading extra services for large tips, or stealing your client database to sell or use... In a recent study, more than 82% of medical clinics reported experience with employee theft or embezzlement... that they were aware of. This new 40 page guide to beating embezzlement and employee theft schemes uncovers the hidden tactics behind how these scams work, and how you can find them before they capsize your business.

Embezzlement and employee theft are an unfortunate fact in almost every business, and especially in cosmetic medical practices. If you haven’t ever had to deal with this you’re extremely lucky since it has taken place in every clinic I’ve been personally involved with and the stories that are told by physicians and business owners are legion. If you think it can’t happen in your clinic you’re just whistling past the graveyard. It can. Don’t prepare yourself and it will.

Download this free members-only report >

Medical Spa Embezzlement & Employee Theft Scams

This report is designed to give you a fighting chance to identify how your business is at risk, to understand how these schemes work, and what you can do to minimize your risk and take action when you find a problem.

Here's some of what those who have already read this report are saying:

Great report! It should be required reading for all doctors — even for those of us who've been around!

Marguerite Barnett MD FACS PA, Mandala Medspa

A very eye-opening and sobering report. This is a must read for everyone!

Windie Hayano, The Skin Inc. Dermatology and Laser Center

Opened my eyes! The information in this report is invaluable! I hadn't even thought of some of the scams mentioned in these testimonials!

Lori Robertson FNP, Skin Perfect Medical Rancho

Great! ...after reading others experiences I realize that you just cannot be too careful when it comes to the financial security of your business.

Anne Talbot, Owner, Victorias Cosmetic Medical Clinic

This report will help other centers avoid going through what we had to endure and overcome.

Brian Sidella, Founder, Forever Young Medspa

You’re about to read the many stories that have been collected from clinics and physicians; from how a physician-employee put an extra account on a credit card terminal to deposit payments into his own checking account to how a NP would inject patients with straight saline and steal the Botox to use in her own side business... and a host of others... ordering fraud, trading extra services for large tips, or stealing your client database to sell or use, setting up false bank accounts, switching acocunts on the credit card reader... all of these scams are covered through real life accounts from the physicians and clinic owners who experienced them.

Some of the stories are almost beyond belief in their brazenness and the damage that was caused. In almost every case, the employee was a trusted team member. Do yourself, your family, and your business a favor and read this report. No matter what your experience has been, you're going to learn something important.

Have your own story? Submit it here for the next edition

Embezzlement & Employee Theft Can, And Probably Will, Happen To You.

Employee embezzlement and thefts are the most common crimes in any cosmetic practice... in fact, it's pervasive.

Believe me it can and it did happen to us. It’s still hard to believe that I saw the evidence and ignored it because I just could not believe what my eyes were seeing. Instead of going with my gut instinct I listened to a mountain full of lies from my Physician Assistant so the first lesson learned is trust what your eyes are seeing and rely less on distracting noise.

When all was said and done, our P.A. had stolen over the course of just 14 months, more than $200,000 in Botox, Fillers and Laser Treatments. 

How was she able to accomplish this?  The theft occurred in three primary ways.

1. With Botox/Dysport she would mix the proper dilution of 2.5 and then draw out a full syringe of properly diluted Botox and re-inject another syringe of saline. She would then take the syringe of Botox and put into her mini-cooler posing as a lunch box which she brought every day to keep it cold and then treat patients out of her house. The evidence of this was apparent with patients complaining of poor results. She would cover herself with some inventive lies such as; Botox out too long and I did not want to waste it, the refrigerator was not cooling to proper levels, she put the Botox in the freezer and the solution crystalized and weekend the Botox, I may have accidently put in too much saline and I used Dysport and it does not work as well as Botox.  Looking back I can clearly see the evidence but listened to her lies and excuses.
2. On fillers her number one excuse was that the product “leaked” while injecting and she was forced to use another syringe. Other excuses were the patient had a bad result so to keep them happy she offered a free syringe, a reaction that forced her to remove and re-inject later and I threw in some free syringes because she bought a package of Fractional Laser Treatments.  Most of the time, she was simply pocketing the syringes to again inject patients of our practice at her house.
3. Watch you consults and close ratios. We have been in a bad economy so this was hard to gage.  She would “feel” out the patient during the consultation and those who she believed would be players she would offer discounts for Fractional Laser, IPL’s, Matrix etc. if they paid her directly in the room in cash. I was tipped off by this from a competitor who called me and told her one of their patients told them about this. After firing my P.A. within weeks we had identified 36 patients who paid cash in the room.  She told those patients she was the co-owner so it was ok to pay in the room… To add insult to injury we had to complete their treatments as well.

The Medical Spa Embezzlement & Scams Report

Download the new Medical Spa Embezzlement & Employee Theft Scams Report 

Submit your own story about medical clinic embezzlement or theft here

After having gone through this we put in some practices that I wish we had done all along.  We now perform a Botox and filler audit every Friday. Every unit of Botox is logged onto a log sheet by patient and same for fillers. If we are off by more than 5% I will meet with my NP to go over the discrepancy.  On lasers shot counts are logged for every patient. As an example if Mary comes in for a Fractional Laser Treatment and the beginning shot count was 45,000 and ending shot count was 45,400 then the next patient for the same treatment should begin at 45.401. We also now provide to each patient our policy of ONLY paying for services at the front desk during check out.

I was also amazed to find out that every staff member suspected what was going on but was afraid to say anything because they did not want to cause any problems if they were wrong. Lastly review your insurance policy for theft coverage. I was mortified to find that ours only covered $10,000 which left us loses of about $200,000.00. We were able to absorb the losses but many others might have been forced to lay off staff or worse go out of business. As a non-physician owner I trusted far too much that a professional medical practitioner would not steel. I now understand all too well that the white coat which commands respect could also have hidden prison stripes and to use my eyes and cover my ears…

Update on 2012-07-25 18:41 by Medical Spa MD

Update: We're going to compile a report on embezzlement and employee theft in medical clinics.

If you have a story about an employee of fellow staf member who was stealing or embezzling, please help us all by submitting that story here: Submit your story about medical clinic embezzlement or theft:

Personally identifyable information so you can submit this story anonymously. 

Jeffrey W. Kronson, MD, of Gia Laser Aesthetic Center in Claremont CA

Talking medical spas with Dr. Jeffrey Kronson of Gia Laser Aesthetic Center in Claremont, California.

Physician: Jeffrey W. Kronson, MD, FACS
Location: Claremont, CA
Website: http://www.gialaser.com

Profile:  Jeffrey W. Kronson, M.D., F.A.C.S. is the founder of both the Whittier Vascular Surgery Center and Gia Laser Aesthetic Center and a Past-Chair of the Department of Surgery at Presbyterian Intercommunity Hospital in Whittier, California. He currently practices at Methodist Hospital in Arcadia and Huntington Memorial Hospital in Pasadena. Dr. Kronson is Board-Certified by the American Board of Surgery in both general and vascular surgery and is a Fellow of The American College of Surgeons.

He currently serves as Medical Director at Gia Laser Aesthetic Center, which he founded in 2007.

How did you get started in cosmetic medicine?  

I had a large varicose vein practice where I was treating literally thousands of legs that were pathological but I had a real hard time with the cosmetic needs of the patients, usually for an insurance or financial reason. I opened the Medical Spa as a way to engage these clients in services that they requested, giving them different options and avenues. From there, it grew into the full complement of injectables (Botox and dermal fillers) IPL, body contouring, medical aesthetics and cosmeceuticals.

Now we have a full service Medical Spa. It is run by 5 full time employees, as I am there 2 days a week or by appointment. Our average patient is 30-65, educated, upper-middle class and often executive. Being just outside LA proper, we see our fair share of A-list celebs who don’t want the paparazzi chasing them. We offer complete privacy, complementary car service and a discreet, professional standard that is difficult to find elsewhere.

How do you select and manage your staff? Did you encounter any problems?

I have a full-time manager who screens candidates, we interview them then together and make a decision. We are part commission and part salary. Before I had the excellent woman that is currently working with me now, I had DISASTERS in finding supervisory personnel. I unfortunately ran into theft, deceit and dishonesty. Right now, that is a thing of the past.

It is also very difficult to find an RN who is as good clinically as she is selling retail. We also have finally found such a person but we need one more.

What laser technologies are you currently using?

We use Syneron EMax, Velashape and Lipolite. I bought these systems from the end of 2007 to the middle of 2009. The non-invasive Elos technology continues to give us superb results with no down time.

The new systems are interesting, less expensive as the economy has fallen, but all seem to require less individual treatments and fewer patient visits. It stands to follow that most are more invasive or ablative, though there is no long-term data that I am aware of on all these new ones out there.

If there was such a product that clearly was faster, non-invasive and gave outstanding results, we would certainly entertain the idea of purchasing it.

What marketing strategies have you found effective for your clinic? 

• Social media (FB), the internet, many marketing sites.
• Clipper coupon ads
• Some print
• Glossy postcards
• Word of mouth, specials and invertising still the best.

What treatment/s generate the most revenue?

Lipolite and laser in general are most profitable as there are no disposables.

Any parting advice for other docs starting or running medical spas?

 Know everything. If there is a “rogue” RN operating outside the boundaries of your practices and policies, you will be meeting an attorney sooner rather than later;.

Doing this job well is a FULL-TIME commitment. It is far different to add a laser to an MD’s practice than to open a free-standing Medical Spa in addition to a busy practice. Learn finance. Hire people you trust. Know what you don’t know and hire someone to know it.

This interview is part of a series of interviews of physicians running medical spas, laser clinics and cosmetic surgery centers. If you'd like to be interviewed, just contact us.