Internal Fraud in Hospitals —Taking Control
Internal fraud in hospitals should be a concern to all administrators. Three examples of what can happen:
- This fraudster pled guilty to embezzling between $200,000 and $400,000 over a five-year period from the hospital where she worked. The theft was uncovered only after the hospital filed for bankruptcy.
- This former hospital executive pled guilty to embezzling $828,973, over an eight-year period by submitting phony invoices and manipulating internal accounting controls.
- A former hospital employee was sentenced to 3 ½ years in prison by a US court for embezzling more than $1 million from the hospital over a three year period by forging signatures and diverting checks to his personal accounts.
No matter how effective you perceive your internal controls—as the above cases reflect, there is always the threat of internal fraud in hospitals. Methods of internal fraud in hospitals also include abuse of refund accounts, accounting clerks opening mail, removing checks, and depositing them into personal bank accounts, and collusion with vendors.
Reduce risk to internal fraud in hospitals:
1) Recognize the Threat: Acknowledge that internal fraud in hospitals actually happens even in the best run operations. The dishonest employee who commits these crimes generally is in a position of trust, has greatest opportunity, is least suspected, and has minimal supervision.
2) Job Applicants: Internal fraud in hospitals is preventable. Reduce your risk by conducting comprehensive background and credit checks on all applicants applying for positions of trust.
3) Multiple Tasking: Segregate duties and reduce your risk to internal fraud in hospitals by ensuring that no one employee has the ability to affect every stage of a critical work process. For example, the employee who handles accounts payable should not open incoming mail, or be responsible for accounts receivable.
4) Supervisory Oversight: Proper monitoring helps to ensure that adequate internal controls are in place and enforced.
The above steps will help deter these crimes.
Read more on the steps being used to prevent internal fraud in hospitals. But a copy of Business Fraud: From Trust to Betrayal today!