Safes Are Designed to Keep Honest People Out

Hearing Health & Technology Matters
August 7, 2012

We interrupt this series of Econ 101 posts to bring you something a bit closer to home with no graphs or subscripts.  I cannot speak for my readers, but I for one am tired of thinking about Classical Economics, Supply and Demand Curves, and Price in general.  So… let’s do a Scarlett O’Hara and think about that tomorrow.

Today, let’s think about something light like…. stealing.  It doesn’t take an advanced degree to steal, which means that practice owners are targets for all sorts of folks that tramp through the office:  patients, repair people, but mainly staff.  On the other hand, it doesn’t hurt to have an advanced degree… say maybe in accounting… to not only steal but steal a lot — say $16 mil — and get away with it for a long time.  

Here are examples of thefts of different kinds that could happen in professional practices, clinics and institutions:

  • June 2012.  Nickel-diming by skimming cash is the time-tested way in which employees milk a business.  It’s easy, easy to overlook, and is often tolerated and goes unreported when the culprit is discovered.  Often they are just let go.  But those nickels and dimes can really add up, as demonstrated by the Yonkers librarian who pocketed $163,582 over seven years by pilfering 10 cent fines for late fees.  Described as  a “conscientious, trusted and well-liked longtime employee,” she was nevertheless brought up on charges and found guilty.  Oh yeah… she also had a gambling addiction.
    • Comment 1:  Dispensing practices are ripe for this sort of thing because of small item sales (batteries, ear drops, etc.) that are often purchased with cash.  
    • Comment 2:  Without cross-checks, daily accounting/reconciliation, and tight inventory control, the temptation is there and very hard to resist.
    • Comment 3:  I know this.  I saved my 8-year-old son from a life of crime by firing him from his front-office job in my practice after I discovered he was selling batteries on the side to his favorite patients.  They were getting a discount and he was pocketing the cash.  
    • Comment4:  The best thieves are people you like and trust, like your kids and longtime, conscientious employees.
    • Comment 5:  Where was this woman’s supervisor?  
    • Comment 6:  Where was the accounting system?
  • May 2012:  A hearing aid dispenser in a Houston ENT Clinic was charged with theft of $43,000 from 5 patients to whom she sold hearing aids off the books that were never sent to patients.  After a couple of months, patients called to find out why they hadn’t received them.  The dispenser told several to “Quit calling.”  Bond was set at $80K.   
    • Comment 1:  That’s $4300 per hearing aid.  See previous posts on Supply Curves to see why this dispenser was inclined to “Supply.”
    • Comment 2:  No fitting or follow-up?   Did hi HealthInnovation take its cues from ENT Clinics?  See previous posts on Supply Curves to see why reducing fitting costs is a good idea to decrease Marginal Costs, especially in a competitive market.
    • Comment 3:  Several months?  The things you can blame on snail mail.  
    • Comment 4:  “Quit calling”?  Did that work?
    • Comment 4:  Where was this dispenser’s supervisor?  
    • Comment 5:  Who was doing the Accounts Payable and why didn’t they notice charges for 8 extra hearing aids?  
  • May 2012: An SLP with an MA from Hofstra University was unmasked in New York, where she’d used false documents to inveigle her way into two different practices where she was employed as an Audiologist for nine years. The Nassau County District Attorney characterized the fake Audiologist as “nothing more than [a] con artist… who ha[s] shown a willingness to cheat, lie, and steal to get what [she] want[s].
    • Comment 1:  SLPs have always been jealous of Audiologists, but this is taking it too far.
    • Comment 2:  Who was in charge of checking her credentials?
    • Comment 3:   Didn’t anyone notice that she didn’t know how to perform audiology tasks, or might there be truth to that oft-stated calumny that monkeys (and SLPs) can perform hearing tests?{{1}}[[1]]DO NOT answer that![[1]]
    • Comment 4:  Maybe she’s a very talented crook–think Leonardo DiCaprio in Catch Me if You Can–with an advanced degree.
    • Comment 5:  Did any patients complain?
    •  Comment 6:  Did she steal any money? How did she get caught? 
    • Comment 7:  Where were her supervisors?   
  • November 2011:  A 53 year-old PhD medical researcher and institute director absconded with the data (bunches of notebooks and flash drives), after arranging for a guy she met in a bar to break in and steal the stuff.  He stored the stuff in a “Happy Birthday” bag, which may be appropriate considering that much of the published data may have been the result of wishful thinking on the part of the researcher.  The researcher was jailed without bond as a fugitive, but reportedly plans to take half of a  $1.5 million research grant with her when she’s out and gets another job.  Her former institute has gotten a restraining order against her.
    • Comment 1:  Who made this person Director of an Institute?
    •  Comment 2:  So much for peer review.
    • Comment 3:  Who “owns” the other half of that $1.5 mil research grant and how did they not notice data falsification and theft?
    • Comment 4:  Who issued her PhD?  It doesn’t take an advanced degree to know that you don’t arrange illegal acts with somebody in a bar.
    • Comment 5:  Directors need supervision just like everybody else.  What checks and balances did the Institute have in place? Restraining orders are kind of a last resort.
  • July 2011:  A 68 year old dispenser in California was arrested with bond set at $10K.  She owned a string of offices and apparently had excellent sales skills, since her reported crime centered around her ability to sell her clients their own hearing aids several times.  
    • Comment 1:  If any other dispensers or Audiologists in the area became aware of what she was doing, they had a duty to report her.  Maybe that is how she was caught….
    • Comment 2:  It is worth issuing a caveat emptor to your colleagues, friends, patients, and the community in which you practice.
    • Comment 3:  This is why you want to read resumes carefully and check out applicants’ references.  Do not hire people like this woman.  
    • Comment 4:  On the other hand, maybe hire her to train honest Audiologists in the art of selling…. (just kidding, but I’m just sayin’)
  • May 2010.  $125,000 was stolen from a business account by hackers after the office manager violated corporate policy by visiting a social networking site that brought malware into the office computer systems. Even worse, such corporate account take-overs–which debit large amounts from business accounts–are usually not covered by banks because the debits are unauthorized. 
    • Comment 1:  You need fraud insurance to cover things like this.
    • Comment 2:  Your computers need supervision just as your employees do.  Talk to your IT people about adequate protection.
    • Comment 3:  You need a new office manager.  If s/he thinks it’s OK to violate corporate policy, you can be absolutely sure that the rest of the staff will follow suit in a variety of ways.    

Some of these people could have been saved from themselves if the business had procedures in place to check and cross-check performance and money handling.  The take-home message of all the examples is that ultimately and daily, it’s you and only you who are in charge, and even you need someone to check on your performance and money handling (besides the IRS).

Stay tuned for the 2nd post in this series in coming weeks that revisits a few of these cases and asks questions that move the discussion from economic/legal to moral/ethical.  As mentioned at various times, economics and ethics are not the same and this is as good a place as any to start that discussion.

 photo courtesy of Difficult Gorilla

  1. I must take issue with your statement: “It doesn’t take an advanced degree to know that you don’t arrange illegal acts with somebody in a bar.”

    I would contend that MOST illegal acts begin with “somebody in a bar”.

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