Are your employees stealing from you?

Stealing time isn’t a tangible theft, but it is most definitely quantifiable – to the detriment of your clinic’s bottom line. Photo digitalista/Bigstock Did you know 95 percent of U.S. businesses experience employee theft?1 This is a huge problem nationwide, and each year companies lose $50 billion to employee dishonesty.1 Veterinary hospitals are no exception when it comes to employee theft. In fact, due to our “family like” environments, we are likely to experience theft in our hospitals because we trust everyone and do not always have safeguards in place. These are four main types of employee theft veterinary hospitals might experience: embezzlement; theft of inventory, equipment, or services; time clock theft, and theft of benefits. Embezzlement What is the difference between embezzlement and theft? “Put in very simple terms, embezzlement is basically stealing from your employer. The distinction between embezzlement and theft is the term ‘entrusting.’ It is the way in which the theft was committed. The Penal Code defines embezzlement as “the unlawful taking of something from another that has been entrusted to you.”2 One of my colleagues, Rhonda Bell, a CVPM and former practice manager in Floresville, Texas, experienced embezzlement at one of her previous veterinary hospitals. When she first started working as the practice manager, she noticed the previous deposits and daily transactions were off. She discovered for at least three years the previous office manager had not deposited any cash into the bank account. The end-of-day transaction report from the practice management software showed some clients paid with cash, but no cash was ever deposited. “During my investigation, I found the previous manager had embezzled over $29,000 from the hospital,” Bell says. “The practice owner had no idea because she had trusted this person.” After that, they put safeguards in place to discourage any further embezzlement. (See How to deter employee theft below for some solutions.) Theft of inventory, equipment, or services Have you ever noticed you were short on product? Employees stealing inventory is more common than you think. In fact, 43 percent of inventory losses are from employees.1 This type of employee theft can come in the form of office supplies, products, equipment, or even services. We know at the end of the day our employees will end up with 20 pens in their scrub pockets, but did you know they might actually be stealing other office supplies? At one of my previous hospitals, we had to start locking up the toilet paper because we noticed a large amount was missing. This was several years before the great toilet paper shortage of 2020. The wrong way for fleas to flee Are you counting your flea product? You should be. Becca Ferguson, a practice manager in Shawnee, Okla., discovered one of her employees stealing flea product. The employee was falsifying transactions and payments to smuggle the flea product out to sell to clients. “It took me about 12 hours of digging to prove it,” Ferguson says. “One good takeaway for her hospital was that “it started a better inventory management protocol in the end,” she added. A hospital employee stealing product and diverting it can be a sizeable form of inventory theft. Bell experienced this at one of her hospitals when it was discovered a previous employee had been throwing away flea product in the dumpster during their shift and coming back after hours to collect it out of the dumpster. This employee was part of a bigger ring of people who were doing this at multiple hospitals and selling the product illegally. After investigating further, the hospital leadership discovered thousands of dollars’ worth of flea product was missing from their hospitals. At one of my own previous hospitals, we had a problem with record-keeping and flea products. Bayer had a program if a client purchased a box of Advantage, they got two tubes for free, and Bayer would reimburse us in additional boxes of Advantage. Unfortunately, for about two years the receptionists were not consistent in logging the free tubes they were giving away, so we never received the replacement boxes. We lost thousands of dollars in free tubes because of inconsistent record-keeping. While it is not exactly stealing, it was caused by employee negligence. And for my part, I should have been double checking them. Are you paying attention to all the free things companies give the hospitals, like rebate VISA gift cards? A manager in Arnold, Mo., experienced this when it was discovered an employee handling the rebates stole $3,000 worth of gift cards that belonged to the hospital. I have also heard about other hospitals who have had team members divvy up rebate cards when they receive them without approval from management, or divvying them up fairly amongst the team. The wrong kind of self-serve What about your services? If an employee brings in their own pet, do you double-check they are charging themselves correctly? Many times, they might have an “I will do it later” mentality, and later never happens. Whether it is intentional or not, this is a problem in a lot of veterinary hospitals. In addition, many hospitals allow their employees to carry large balances on their bill that they promise they will “pay later.” But what happens when the employee leaves and has an outstanding bill? In most states you cannot deduct this debt from a final paycheck unless you have written authorization from the employee. Even then, there are specific rules about how much you can deduct from the final check. Time clock theft Another common way employees can steal from their employers is through their time clock. Two examples are employees clocking in or out for each other when they are not actually at work; or employees clocking in on time but not actually starting work for 10 or 15 minutes, or even altering their punches. At one of my previous hospitals, one of our employees discovered a way to download the time clock software to their phone so they could clock in and out when they were not in the building. We discovered this by watching video footage of my employee leaving the hospital and driving away. The video footage was time stamped at 7 p.m., and the employee’s clock out punch showed 7:20 p.m. After reviewing the time clock records, it appears that employee clocked in or out on their phone over 100 times, which cost the hospital thousands of dollars in stolen wages paid for time not worked. Practice manager Bell experienced time clock fraud at one of her hospitals, as well. “The employees figured out how to change the clock on the computer so it would not reflect if they were late.” There were several employees involved in this time clock fraud. Once the practice owner discovered this scam, he put a program on the computer to prevent anyone from being able to change the clock. Theft of benefits It seems crazy to think someone can steal benefits, but it happens. One practice owner in Los Angeles, Calif., confided in me that he discovered his office manager had enrolled herself and her son on the hospital’s health insurance plan, but she was not deducting her portion of the premium from her paycheck. This cost the hospital thousands of dollars. Another system of fraud known to happen is the lack of deductions. “An employee with access to the payroll system can alter their checks to avoid paying the mandated deductions, state and federal, withholding taxes and social security, effectively leaving the employer to pay for them.”4 Although this might not be as common in veterinary hospitals, it is still something to double-check. How to deter employee theft Create a system of double checks so one person is not doing everything. The practice owner should randomly double-check the financial reports, the inventory supply, the time clock, the payroll reports, or anything else they think employees could be stealing. I know veterinarians are busy, but ultimately, they are the ones who will be affected if someone is stealing from their business. Consider these categories for check and balance opportunities: End-of-day closing. Every day someone should run the report from your practice management software and match up the transactions from that report to the credit card receipts, any third-party financing slips, cash, or any checks you have. This should be done daily. Any discrepancies should be thoroughly investigated. If you take cash, then the deposit slip should be compared to the end-of-day report to make sure they match, and to confirm the cash was taken to the bank. If you do take cash, you always start and end with the same amount in the drawer and, again, any discrepancies should be investigated. Inventory. If possible, keep your main supply of inventory items in a locked stockroom; distributing only a small amount into the clinic for use. At least one a year do an inventory count of every inventory item the hospital has and enter it into your practice management software. Most practice management software has inventory tracking capabilities. When you sell items, they should be deducted from your inventory; when you receive new items, enter the information from the invoices into the software. This will help keep a running total of your inventory in the hospital. For the unsold items, use the practice management software to track the monthly purchases of the items so you will notice if a significant amount is missing. You should review the inventory counts on items that are commonly diverted (like flea products) weekly to make sure they are not missing. Since veterinary hospitals also have controlled drugs, you need to make sure all the controlled drugs are logged after every time they are dispensed or administered. A running total of both your unopened and opened controlled drugs must be tracked, and any discrepancies must be investigated. Employee pet services. Do not allow employees to enter their own charges. Have a supervisor enter the charges for all employees. If you do not have any supervisors, then assign another employee to do it. The manager or practice owner should audit every employee bill to make sure they were charged for things correctly. I would also recommend avoiding letting them carry a balance for longer than 30 days so it does not get bigger. Time clock fraud. Use a time clock with a biometric system that uses either the employees’ thumb or their hand to clock in and out. This will prevent them from being able to use their phone or have someone else clock in or out for them. I know a lot of hospitals use the time clock on their practice management software, but unless it has a foolproof way that employees cannot commit fraud, I would not recommend using it. Theft of benefits. Review the monthly statements to see which employees are receiving health insurance and review the payroll report to confirm that those employees are having health insurance deducted. Do this the same for each type of benefit that you provide (dental, vision, etc.). It is also a good idea to randomly compare the deduction to the premium to make sure it is accurate. Seeing is believing – and proving. One of the best things hospitals can do is install video cameras in all areas of the hospital. This helps to not only help deter employees from stealing, but also for safety purposes. Put cameras on the outside of your building to help provide protection for your employees when they are coming in or going out to their cars late at night. Put a TV monitor in a public area (like treatment) where the employees can see the camera view. Embezzlement and theft are not something an employer wants to have to worry about, but implementing checks and balances is an easy way to prevent it from happening. Finally, don’t assume there’s a typical “type” of employee who is more likely to steal than others. In fact, according to one resource, “Beware of employees who work late and never take time off. They may be the workplace ideal (as opposed to those who always call in sick), but could be the perpetrators of theft … also those whose lifestyle and income don’t match.”5 Melissa Tompkins, BS, CVPM, PHRca, CCFP has worked in the veterinary field for over 18 years. She earned her BS in Animal Science from Cal Poly Pomona. She managed multiple hospitals, including general practice, specialty, and emergency before opening her own veterinary management consulting business in 2018. Tompkins is a certified veterinary practice manager, a professional in human resources for the state of California, as well as a certified compassion fatigue professional. She was the 2018 SCVMA’s Paraprofessional of the Year. She is also an active speaker and published author. References 20 Employee Theft Statistics You Need to Know in 2022 (safeatlast.co) What Is The Difference Between Embezzlement And Theft — California Criminal Defense Lawyer Blog — February 20, 2014 25 Jaw Dropping Statistics about Employee Fraud in 2015 (sheerid.com) How payroll fraud schemes work and what to look for (chiroeco.com) Steps to Follow If You Suspect an Employee Is Stealing (thehartford.com)

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Are your employees stealing from you?

Beyond money loss, veterinary hospitals can also experience employees stealing inventory, services, time, and even benefits.

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