AAHA survey suggests most practices are susceptible to embezzlement

Unfortunately, most businesses are at least somewhat susceptible to thievery and embezzlement. But how prevalent is embezzling in the veterinary world? Recently, AAHA NEWStat and Trends magazine surveyed a sampling of AAHA members to see how bad this problem is, what kinds of issues people are having, and what measures they have taken to respond to this threat.

About 86 percent of respondents said their practice had been a victim of embezzlement, however, less than 30 percent said they had won a criminal or civil case against the thief.

Most respondents (83 percent) reported that money was the thing that was stolen. Drugs and supplies each accounted for about 32 percent of stolen goods; services, 13 percent.

Of those who responded, roughly one-third reported that the approximate dollar amount of the theft or embezzlement was less than $1,000. A quarter lost between $1,000 and $5,000, and only about 6 percent said they were embezzled out of more than $100,000.

Close to 90 percent of practices who responded were general practices, and a majority (28 percent) reported annual revenues of more than $2 million. About 42 percent had between 10 and 20 staff members working at the practice. More than half (55 percent) said the front office staff was responsible for the theft, followed by veterinary assistants (35 percent); and practice managers/hospital administrators at 14 percent.

CSI: Veterinary

Many respondents told their stories of what had happened and how the perpetrator was discovered. Some of the cases involved a fair amount of detective work, and owners or managers had to become their own crime scene investigators.

For example, Amy Hurd, DVM, owner of Bristol County Veterinary Hospital in Seekonk, Mass., described how she found out about an employee who was using a copied key to access the controlled substance cabinet. The cabinet had an alarm, but the person could still get in during the day.

“I suspected a problem when our surgical patients were not becoming adequately sedated with their premeds and we were needing to give additional post-op pain meds,” Hurd said. “I also noticed that the bottles of Hydromorphone which were in ‘reserve’ in the back of the cabinet often had the cap off when I looked in the box. I got a magnifying glass and could detect a tiny pin prick at the far margin of the rubber stopper.”

She said that once the cameras were installed she reviewed the footage every night.

“So, I got three very clear videos of him taking the bottle from locked controlled drug cabinet, gathering his supplies of needles, 30cc syringe, and saline, and disappearing to the staff restroom, then later when the opportunity arose, returning the saline filled bottle to the cabinet. Arrangements were made for the police to come and arrest him and I explained to my staff what had happened. Two years later, after many court dates and his family going through three lawyers, he pleaded guilty and is a convicted felon.”

In cases where a practice was able to press charges and take the accused embezzler to court, the process often took years, and repayment plans were slow at best, respondents said. One office manager said her practice won a case against an embezzler, but the $30,000 he stole (by logging fake product returns for cash refunds) is being repaid at $70 per month.

Rick Campbell, DVM, owner of Willow Creek Pet Center in Cottonwood Heights, Utah, said his practice was the victim of an elaborate scheme that went on for years.

“The female employee was an incredible employee,” Campbell said. “She was impecable. She had no bad habits, always on time, very trusted and was married twice, both times to police detectives. She told stories about the cases her husbands worked on. She undoubtedly found out the ‘trick’ to her flawless embezzlement from her husbands cases."

The employee would swipe her own credit cards through the practice’s credit card machines, and then credit her personal account from the practice’s business account, Campbell said. Finally Campbell set up a trap with the police as witnesses to a transfer of $10,000. Even then it was hard to get justice, he said. Four years later, the woman was sentenced to serve 18 months in a federal penitentiary, but she was given more than 40 years to pay back the $250,000 she owed the practice.

“Some months we receive $350,” Campbell said. “I hope I live long enough to see it repaid.”

Words of wisdom

Many respondents, when asked what advice they had for other practices to prevent embezzlement, suggested not letting just one individual handle the money or inventory in the practice.

“Always have more than one person in charge and checking in all inventory,” said All Creatures Animal Hospital Manager Susan Lassiter, CVPM. “Trust your instincts and always be at least ‘two people deep’ in any system within the hospital.”

Keeping careful track of finances is also a key to stopping embezzlement, many said.

“Do weekly inventory counts on quick selling products: Frontline, Heartgard, Interceptor, things that can walk out your door,” said Stream Valley Veterinary Hospital Manager Donnica O’Neal. “Reconcile your monthly statements follow your income, track your daily transactions.”

Background checks on employees was a common piece of advice. Several respondents said that people they had fired for stealing or behavior problems were simply hired by another practice down the street. Having a security camera system in place was also echoed by many respondents, as was having several layers of checks and balances, especially for verifying cash deposits and other transactions.

Some embezzlement schemes involved people deleting or not logging cash transactions in the software system and pocketing the cash. Timothy McMillen, practice manager and co-owner of Braden Run Animal Hospital Corp., in Waynesburg, Penn., offered the following insights:

“These are must dos: (1) Keep your inventory low, (2) Count inventory on a regular basis, (3) Monitor your books daily, (4) Listen to your clients, (5) Use passwords so you can track who did what and keep them out of areas where they should not be.”

Look for an article with additional insights on this topic in an upcoming issue of Trends magazine.