TheWealthyDentist.com™ Newsletter Archive – TWD – 041

News From The Wealthy Dentist #41: April 18, 2007

Editorial
by Jim Du Molin

Is It Easy To Embezzle from Dental Practices?

Embezzlement, theft and fraud are sad facts of life for many business owners – and, unfortunately, dentists are no exception. In fact, the complicated economics of dental practices can make embezzling easy to do and hard to catch.

I’m curious to know how many of you have uncovered evidence of theft in your practices – it’s the topic of our current survey question.  Next week I’ll report back on the results and share some of our dentists’ stories.
Plus, working as a dental management consultant for so many years, I’ve picked up dozens of anecdotes about theft. I think my favorite one might be the one about the teenage mail boy… always a classic! (Keep reading for that one.)

Two Million Dollar Swindle

But let’s start by reviewing the Olympia, Washington case that has brought dental embezzlement into the national spotlight. The bookkeeper of Fisher Jones Family Dentistry and her husband have pleaded guilty to stealing an unbelievable $1.9 million from the dental practice.

Between 1998 and her arrest in 2005, Lori Doughty apparently forged checks to pay off her personal credit cards, used company credit cards, and laundered money through her husband’s business. A forensic examiner followed the couple’s financial tracks and discovered the following purchases:

  • Clothes: $200,000
  • Restaurants: $100,000
  • Hotels: $185,000
  • Airline tickets: $74,000
  • Starbucks: $32,000.

In addition, the couple made substantial donations to local sports teams and schools, owned a boat, purchased expensive jewelry, and bought a 7-Series BMW with a license plate reading “ENVY US.”

Unfortunately, the dental practice’s losses were not insured. They have only recovered about $80,000 of the stolen money. Although the couple has been ordered to pay restitution, no one expects the couple will ever be able to pay
back the total sum. Though the dental practice has managed to stay in business, the practice’s two dentists say the theft has set back their retirement plans by ten years.

The bookkeeper entered guilty pleas on 15 of the 19 felony counts against her. Prosecutors dropped the organized crime charge for which she could have faced life in prison, and are recommending a ten-year sentence for her. Her husband claims that she led him to believe the money was from a legitimate source.

Nonetheless, he chose to plead guilty to four of the 18 felony counts he faced, saying he wants to protect his children from a trial. Prosecutors are asking for a prison sentence of a year and five months.

The Mail Boy Did It

Okay, now for my story! Some twenty years ago, I got a call from Concerned Doctor at Big Dental Practice, a successful ten-doctor operation. Well, Concerned Doctor couldn’t figure out how come the large, bustling practice didn’t seem to be turning a profit, so he asked me to look into it. (I’m not in the business of tracking down embezzlements anymore, but back then, I was directly involved in the financial management of dental practices.)

One day I got a call from the practice’s office manager. “I don’t know what to do,” she told me. “I’ve just received some checks that Concerned Doctor endorsed to our 17-year-old mail boy.” I think she was afraid she had uncovered some secret sugar-daddy love affair. But, I reasoned, if Concerned Doctor was really paying off his teenage lover, he would hardly ask me to investigate.

Well, of course it wasn’t a love affair. Concerned Doctor had no idea what the endorsed checks were about, as he hadn’t actually endorsed them. Teenage Mail Boy would open the practice’s mail, steal checks from insurance companies, forge the doctor’s signature, and keep the cash for himself, always erasing the original transaction from the practice’s computer system. Big Dental Practice ultimately calculated Mail Boy’s take at $110,000.

In the end, the practice wasn’t able to recover the money from the mail boy, but they didn’t lose it; the bank that had cashed the forged checks covered the loss. The practice was able to continue without problems.

And what of Teenage Mail Boy? It’s kind of a sad, karmic story. He was sent off to jail and eventually paroled to a halfway house. He got a job working nights at (where else?) a dental practice. One night while working alone, he fatally
overdosed on nitrous oxide.

Jim Du Molin

Survey: Insurance Companies

In this poll, we asked dentists: As dentists, what’s your gut feeling about dental insurance companies – friend or foe?

Great balls of fire! It’s clear that dentists are not fans of insurance companies. Eighty-nine percent of dentists
responded, “Foe. Insurance companies are in the business of looking out for themselves, not patients or doctors.” A mere 11% replied, “Friend. Dental insurance companies have expanded my practice and serve as an important
marketing source for new patients.”

Specialists were even more likely to see insurance companies as enemies than general dentists. On the other hand, female dentists were more likely to see the insurance industry as a friend than were male dentists.

Here are some of the comments our dentists had to share:

  • “Insurance companies are an unnatural intrusion into the purest relationship between two unrelated humans: care giver and receiver.”
  • “Patients with dental insurance are much more likely to agree to a treatment plan.”
  • “They are a necessary evil!”
  • “Insurance companies actually seem to cost a practice money.”
  • “Thieves without masks or guns.”
  • “They are a large source of the income that I receive in my practice so in that sense they’re a ‘friend,’ but they’re in it solely for the money.”

Read the full results.

Russia’s Teeth Are Looking Better and Better

For those of us who equate Russian dentistry with steel crowns, this story of a dental turnaround is welcome news.

What’s the latest must-have accessory among Moscow’s well-heeled? These days, it’s a beautiful smile! Straight, white teeth are in high demand, and today’s Russians are willing to spend some money to get them. Said one Russian woman, “When I see good teeth, I think this person has more
chances in life, and he’ll be more successful than a person who has bad teeth.”

Since 2000, Russians have more than doubled their spending on oral health products. The number of available products has also skyrocketed – you’ll find yogurt-based toothpaste, flavors like Jazz of Lemon Mint, and
international brands like Colgate and Rembrandt (only $14 a tube!). Especially in the country’s capital, cosmetic dental work has become increasingly popular. Said one Moscow dentist, “Your smile is your business card.”

It’s a vast improvement over Soviet times. According to the Russian Dental Association, the average 35-year-old in 1991 had 12-14 cavities, fillings or missing teeth. One American dentist recalled seeing a Russian exchange student in the early 1990’s: though the student had recently seen a Russian dentist, the American dentist found 21 cavities in the student’s mouth.

Unfortunately, having a beautiful smile seems to be rather more important than a healthy one. Some of Russia’s dentists are embracing capitalism a little too eagerly, and anecdotes about patients being taken advantage of are rampant. For example, there was the dentist who gave one patient 29 implants, twice as many as were actually required. Another dental center told a patient she had 14 cavities, when in fact her teeth were perfect.

Many Chinese Describe Dental Problems as “Rising Heat”

Traditional beliefs still play a powerful role in the lives of the Chinese – and it turns out that dentistry is no exception. Jacqueline Hom, a student at the Harvard School of Dental Medicine, examined the attitudes of Beijing residents on oral health. Her sample included patients, dental health professionals, and practitioners of traditional Chinese medicine.

The concept of shang huo (rising heat) was used by all to describe oral health problems. Patients suffering from symptoms such as tooth pain, gingival swelling, and a sore throat characterized their conditions as shang huo, and sought treatment from dentists or from “purging fire” herbal medicine. Dentists in China sometimes learn traditional Chinese medicine treatments for patients complaining of shang huo.

Source: ScienceDdaily.com new release 2007

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