Dental Support Organizations and Multi-location Practices are Vulnerable
While it is easy to understand the vulnerability of solo and small group practices to embezzlement, it is tempting to believe that bigger organizations, which may have better controls, professional management, and centralized services should be less prone to be victimized. Unfortunately, this belief does not hold up in practice, and many multi-site practices and DSOs face significant issues from employee theft. These entities face unique vulnerabilities:
- It is easier for thieves to rationalize stealing from a large entity.
- The accounting split between practice management and accounting software limits the ability of accountants or auditors to find fraud.
- For DSOs experiencing rapid expansion, control systems often lag behind the growth.
- Associated dentists and complicated earnout arrangements create vulnerabilities.
- Oversight of individual practices by staff without dental backgrounds often limits their ability to monitor deceptive transactions.
- Affiliating with specialist practices can pose additional risks.
- Centralization of functions creates an additional layer of embezzlement risk.
- EBITDA-based affiliation transactions are vulnerable to manipulation.
Prosperident Can Help
As the oldest and largest company specializing in the investigation of employee theft in dental entities, Prosperident works with everyone from emerging DSOs to some of the biggest to help them achieve a higher level of protection against embezzlement. Some of the services that we provide are:
- Performing investigations on practices where specific embezzlement concerns exist.
- Conducting stealthy rotating audit programs where we review an agreed percentage of a DSO’s practices annually.
- Assisting with the development of metrics to identify at-risk practices and those selected for audits.
- Performing “affiliation audits” to protect a DSO against acquiring an embezzlement issue.
- Reviewing internal controls and the functioning of enterprise-level departments to identify vulnerabilities to embezzlement.
- Assisting with pre-purchase diligence when financial information provided by a potential affiliate dentist is under question.