pay us back, she wouldn’t have stolen it in the first place, so civilly, we know we’re probably not going to get any- thing back,” the physician said. Fraud and abuse, which includes embezzlement, happens more often in health care than in most other indus- tries, according to the Association of Certified Fraud Examiners’ (ACFE’s) 2016 Report to the Nations on Occupa- tional Fraud and Abuse. Health care ranked in the top five


among industries where the cases oc- curred, accounting for 6.6 percent of them. The median loss for health care cases was $120,000. Private companies accounted for


37.7 percent of fraud and abuse cases in the report, more than publicly owned companies, government orga- nizations, and not-for-profits. Organi- zations with fewer than 100 employ- ees accounted for 30 percent of cases, ranking first among group sizes. To view the 2016 ACFE report, visit tma


.tips/ACFEReport. Physiatrist Charlotte Smith, MD, a


“I [realized] I need to have some external checks and balances. And thank goodness that I did.”


member of the Texas Medicine Edito- rial Board who now practices in Se- attle, learned in the early 1990s how hard good help is to find and, ulti- mately, how sharp the distinction can be between competency and ethics. After starting her solo practice in


Austin, Dr. Smith struggled to find of- fice staff who could meet her needs. “I was in the early years and went


through quite a lot of different people, trying to figure out how to set up a practice. I was one of the people who went to the bank, got a loan, a line of credit, set up my own office, did my own employee manuals, bought furni- ture, the whole bit. And so a lot of this was trying to figure that out,” she said. She finally found an office manager


who seemed to be an ideal fit, until, Dr. Smith says, an external billing com- pany she was using caught the man- ager stealing checks from the prac- tice, which ultimately totaled about $15,000. Dr. Smith says the staffer was also forging prescriptions for narcot- ics and amphetamines.


56 TEXAS MEDICINE September 2016


“She was probably the best office manager I had in terms of competen- cies and in terms of being pleasant to work with and performing well on the job,” Dr. Smith said. “So I was hit blind.”


Although the money was important


to Dr. Smith, she says the bigger con- cerns for her were the drugs the office manager prescribed in her name. But once authorities confronted the office manager with the evidence, Dr. Smith says, she “admitted to everything,” eventually receiving probation. Dr. Smith says she subsequently


got “maybe three or four percent” of the stolen money back as restitution. “I would get very small checks, like


$17, $20,” she said. “And every time I deposited it, it just made me mad.”


AVOIDING FRAUD As her own practice got bigger over time, Dr. Smith noticed how adding other physicians, nurse practitioners, physician assistants, and employees meant more sets of watchful eyes. As a result, it was easier to avoid one per- son having control of too much in the office. For smaller practices, external au-


dits can provide a key check on poten- tial abuse of power. “She was basically the receptionist,”


Dr. Smith said of her former office manager. “She answered the phone. She prepared the billing stuff. She put charts together. She sent out medical records. It was a one-girl shop be- cause it was a small practice, and it’s very, very hard to have checks and bal- ances in a circumstance like that.” “That’s why, early on, I [realized]


I need to have some external checks and balances,” she added. “And thank goodness that I did.” Among the antifraud controls used


by victim organizations in the ACFE report, external audits of financial systems were the most popular, with nearly 82 percent of organizations us- ing an outside look at the financials. However, those external audits de- tected less than 4 percent of the fraud


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