Lean management principals

How to eliminate waste in just about every operational process in your practice.

By Steve Schulz

As medical practices look ahead to 2013 for ways to control costs and improve operational efficiency, it is time to look at a couple of options.  One might be considered non-traditional but can yield interesting results, lean management.  And one may have been tried before, but if it’s been a while, it’s time to dust it off and do it again—implementing controls to combat employee theft.

Hiding in Every Corner

Lean management principles can help you eliminate waste in just about every operational process in your practice. If yours is like most practices, you’ll recognize these examples of waste:

  • Time spent waiting for precertifications, test results, medical records, patients and even physicians and other staff;
  • Repeated tasks such as completing forms, taking medical histories, retesting, re-entering data and making too many copies;
  • Physical movement of patients, equipment, records and staff;
  • Too little or too much inventory, resulting in excessive delays or costs;
  • Unnecessary motion such as walking, reaching, bending, lifting and searching;
  • Failures and errors reflected in coding, billing, order entries, missing or incomplete information, and employee hiring, and;
  • Rigid controls that stifle employee initiative, discount employee training and experience, and lead to low spontaneity in decision making.

With lean techniques, your practice will gradually eliminate tasks that don’t provide value to its patients. Look at it this way: Your practice’s operations are composed of a large number of processes that build on each other to create value for your patients and other consumers. Lean management scrutinizes each process, looking for activities that don’t deliver value, removing them and often redesigning the others. What’s left are process elements that actually create value.

Employee Theft: Don’t Take Chances with Your Practice

At a time when reimbursement rates are being squeezed, what you don’t need is someone surreptitiously removing money from your practice. Yet, that’s exactly what some staff members are doing to the practices that employ them.

Because medical practices are often an easy target, the amount of money that employees steal can quickly cripple the operation. For all industries nationwide, that amount runs into the billions of dollars, according to the Association of Certified Fraud Examiners’ 2010 Report to the Nations on Occupational Fraud and Abuse. Fortunately, there are ways to protect your practice.

The Risks

According to the MGMA, the most common forms of employee fraud were theft of receipts or cash on hand, altering or forging a check, submitting fictitious invoices, paying personal expenses with practice funds, and payroll or expense reimbursement fraud. These thefts went undetected for a median of eight months — 36 months when the stolen amount exceeded $100,000.

And, in most cases, employees who stole money worked alone. More than half had been with the practice for three or more years.

Combating Fraud

The best way to deal with employee theft is to keep it from happening in the first place. But this requires implementing sound internal controls, including:

Risk assessment. Examine your practice’s policies, procedures and processes for any faults in the system for protecting integrity and ethics. Conduct a risk assessment every two years or whenever there’s a major system change (such as new EHR) or personnel change (such as a new billing clerk).

Separation of staff duties. Avoid having a single employee in charge of purchasing and of approving and adding vendors. Although it may be difficult to spread duties among several employees in smaller practices, it’s critical to implement internal controls that let employees know they’ll likely be caught if they steal.

Also, never let a nonphysician employee sign checks — which is perhaps the easiest avenue for fraud. Instead, checks with invoices should be given to the appropriate physician for him or her to approve and sign.

Monitoring employee behavior. Look for telltale signs that an employee is involved with or considering fraud. For example, an employee who never goes on vacation or takes a day off may not want someone else to have access to his or her files. To combat this behavior, require all employees to take scheduled vacations.

Steve Schulz, CPA, CMPE,  is a partner with Mountjoy Chilton Medley LLP in Louisville.