If you had to choose, which of these scenarios is worse?
#1: A patient pays $100. Your employee steals the $100 and covers the theft by recording a write-off of $100 on the patient’s ledger.
#2: Your fee is $500. Your employee tells the patient your fee is $400. The employee collects $400 from the patient and applies a $100 write-off on the patient’s ledger.
In both cases, you just lost $100.
So, how are theses two scenarios different?
In scenario #1, the employee’s actions benefited the employee by $100. Let’s call this scheme “Ma Barker”
In scenario #2, the employee’s actions benefited the patient by $100. Let’s call this scheme “Robin Hood”
It’s important to keep in mind that in real-life, Ma Barker and Robin Hood schemes do not involve a single event, in each scenario,
These events are repeated over time, and often result in staggering losses.
To illustrate a point, and to keep things simple, let’s imagine that:
- Both Ma Barker and Robin Hood repeated their schemes and caused a loss of $80,000 to the practice owner.
- Each practice owner has $80,000 in employee dishonesty insurance coverage.
The implications of a Ma Barker case are straightforward.
In the Ma Barker case, the employee stole money to line their own pockets.
When catch a Ma Barker employee stealing, you can justify terminating their employment on a “for cause” basis.
This means, do not have to pay severance to the employee and your unemployment tax will not increase.
After you have documented all of the Ma Barker losses, you can make a claim of $80,000 against your employment dishonesty insurance and you will get your money back. (in reality, most practice owners have far less that $80,000 in dishonesty coverage)
You can also report to the matter to police and criminal charges may result.
The implications of a Robin Hood case are not so straightforward.
Unlike the Ma Barker case, where the employee stole for their own benefit, Robin Hood cases involve employee’s who steal to provide a benefit to the patient.
Why do some employees act Like Robin Hood? What is in it for them?
All employees who perpetrate Robin Hood schemes get some some non-financial benefit for themselves.
- They may “hate collecting co-payments” or “calling patients for money”, and instead write off account balances or reduce fees.
- They enjoy favor and compliments from your patients, and that feels good.
Patients of a Robin Hood practice are unaware that the employee is really stealing from you. Patients feel that your employee is giving them a break, and being nice.
Robin Hood employees will often tell patients things like: “don’t worry if your insurance does not cover the full amount, I’ll make it work” or “I’ll reduce your payment by $100 today, so you will not be billed”
While these words are music to your patients’ ears, the problem is, Robin Hood employees foster and grow a culture of false entitlement among your patient base.
The implications of this can be devastating to practice goodwill.
Removing a Robin Hood employee from your practice often requires special handling. When you fire a Robin Hood employee, they will often defend their actions, claiming that you authorized their actions. Some Robin Hood employees end up suing the practice for severance or wrongful dismissal – win their case. (yes, this happens)
After the Robin Hood employee out of your practice, you decide to make a claim of $80,000 against your employment dishonesty insurance. Bad news: some employee dishonesty policies cover Robin Hood schemes, many do not.
More bad news: the Robin Hood scheme left behind a culture of financial entitlement your patients who are accustomed to not paying out of pocket.
So, when your office resumes proper billing for services, patients start to complain, many may leave.
Patients will say things like:
“Why do I have to pay now? I did not have to pay before!”
“I’m not paying for that”
“Can’t you make it work like Jenny** did? I only want to deal with her.” (**Jenny being the name of the Robin Hood employee)
Lastly, civil and criminal remedies are more difficult in Robin Hood cases.
So, if had to choose, I’d rather have a Ma Barker in my practice than a Robin Hood.