Dental Office Front Desk Fraud? Ask More Questions.

My husband and I practice together. We recently hired a new FD person who came highly recommended from a couple of references provided on her resume. Things have been going well thus far. I recently got a call from someone who stated they worked with her in the late 90's and that she was fired from her position due to embezzlement.

Highly recommended by MORE THAN ONE reference and only ONE call from "someone".

According to this source, the dentist had proof that was in fact the case, but did not prosecute...just fired her.

The "dentist" had proof. Find out who the dentist is and call them.

I know that people can change. However, I now have a sick feeling and can't help but feel differently toward her.

That’s a shame after one call that hasn't been confirmed.

I have read many ways for safeguarding against embezzlement, and I am very hands on with reviewing adjustments, pt accounts, etc.....my FD person knows this. My concern is that I will be out very soon with the birth of our first child while my husband will still be practicing. (We also just moved our existing 2yr. old practice to a brand new office space). There are obviously lots of changes going on. I worry that she may see this as a prime opportunity to possibly try and "resort to her old ways".

So from this one call you've already made up your mind that she's a thief.

Maybe her previous 2 employers were taken for a ride by her but didn't know it.

True, maybe she stole from everyone in those offices and no one ever knew, maybe she knocked over a couple of banks too. You’re letting your mind wander...make the call to the dentist and find out!!!!!

Again, maybe she learned her lesson and wouldn't even think of going down that road again.

Again, one call and you're convinced that the story is true. Sorry, if it were me I’d be looking for third party confirmation before jumping to conclusions, maybe that's just me though. I do tend to give people the benefit of the doubt until THEY show that I shouldn't.

"Recently got a call from someone who stated they worked with her in the late 90's and that she was fired from her position due to embezzlement. According to this source, the dentist had proof that was in fact the case, but did not prosecute...just fired her."

I have to go back to this statement, call the doc & confirm this. What if this caller was simply sharing a story that was told to her 3 times over, you know how stories grow?

My brother recently quit a job he got through a head hunter. He tells me that about 2 weeks later he was talking to one of the folks he used to work with and the story the company told the headhunter was that they had to let him go because he wasn't qualified.

He knows why they told them this, they want a credit for some of the money they paid the headhunter. My brother calls the headhunter and tells them his side of the story. The result? His ex-employer won't be getting leads from this headhunter anymore.

Heck, maybe there was something going on between the dentist & your employee, she was fired & this is the story the dentist gave his other employees. My mind can wander too.

This post first appeared on DentalTown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

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100% Dental Practice Buy-Out Question

I need some help on figuring out if this 100% buy-out is a good deal or not. Really, I just need a little guidance from a 3rd party as I am in a dual representation situation. Here's the info:

I started temping for a Dr. in Arizona who became ill (stroke w/paralysis). He was only supposed to be out for a few weeks, but he has become worse. He is close to retirement, has worked a busy practice for 30 years and has decided just to sell out. The office manager begged me to look into buying the practice and so the conversation began with the seller's broker.

Here are some of the details:

Production:
2006 - $950K
2007 - $1.2 Million
2008 - On pace to do $1.4 million

Overhead is around 65%
He has a large marketing budget
Collection rate is superior at 99%
Active Patients - 3500
Refers out all endo ($240K worth in 2007), most surgery and most pedo (pedo portion of the practice has increased tremendously from 2006 to 2008, but he doesn't do any of the restorative work. I certainly would). I would also do most of the endo and surgery.

Purchase Price is $770K
The seller wants a short transition period.

I have a unique opportunity because I am seeing all of this from the inside. We are on pace to do $125K (me and 2 hygienists) this month despite him being gone for the past month. I have had no problem working the busy schedule and I can even turn it up a notch (and plan to). The staff is begging me to stay on and buy the practice. All the patients have seemed very open to me being there.

The negatives that I see are the overhead and size of the practice (only 4 ops with 1000 sq feet). The staff is way overpaid. I would like to increase to 6 ops and I am told that the lease company will allow an increase on the build out.

Please, let me know what you think. Also, what are some of the things that I should ask the broker? I certainly feel as though the broker is one-sided. I don't have an attorney who knows about this stuff. Any help would be great!

You're right, it does sound like a great opportunity for you. It sounds as though you can maintain & even continue to grow the practice which is fantastic. Based on the revenue #'s you stated and your ability to produce some work that was being referred out the price seems reasonable. Even the negatives you mention appear to be things you can change\control over time.

How's the equipment\technology? Anything substantial you'll have to replace within the 1st 5 years?

What's the breakdown of the revenues from 2005, 2006, 2007 between doctor & hygiene? Based on the revenues you state I doubt 3,500 active patnts is accurate, although still a healthy # with those revenues.

Will the seller take back a note? If so, over how many years?

You mention OH figures so I assume you've analyzed their financials for the past 3 years, if not you should.

Get details about the space lease and begin looking at the details & options now.

As you continue to do your due diligence you'll have more questions to ask. Sounds like you're headed in the right direction.

It's usually a 3 to 1 ratio - you're a little less than that which could indicate underproducing of dentistry, which is good for the buyer IF they can pick it up with add'l hours, speed or procedures.

Doc's exams are usually NOT counted towards hyg prod, radiographs are IF they take them.

This post first appeared on DnetalTown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

For more information or to sign up for our newsletter, please contact arose@dentalcpas.com

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Dental Payroll Question

I've got a small practice with 5 employees, and I've been doing the payroll and taxes myself with Quickbooks. I'm tired of doing it and thinking of having a service do it for me. I've talked with Paychex and they sound good for about 100 bucks a month I get full service tax and payroll. Anyone have any other recommendations? Anyone have any experience using Paychex?

As a dental CPA in a dental CPA firm I have a lot of experience comparing Paychex & ADP.

Back in the late 80's when we decided as a firm that handling payroll processing was NOT in our best interest as a service we started researching which payroll firms we would want to refer our clients to.

Paychex was our choice & they received nearly all of our referrals for many years.

Occasionally clients have issues with them & sometimes it's the clients fault, sometimes it's the dedicated payroll specialists fault.

We'd then refer to ADP or some of the other local services, like Primepay.

Most can do a decent job, however, it does seem to me that we get more client complaints about ADP when compared to Paychex & MORE of our clients use Paychex.

We also found that ADP's reporting after each payroll was too cumbersome for our clients, simply too much paper work which 75% wasn't even used\looked at.

Paychex reporting was much more streamlined & easier to read for most clients.

As a firm we used Paychex, switched to another local service, ADP bought them out so we wound up with ADP.

I wasn't involved in the selection process, however, I do understand that the reasons why our firm initially changed was cost & issues with our payroll specialist.

This post first appeared on DentalTown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

For more information or to sign up for our newsletter, please contact arose@dentalcpas.com

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